Sampat Sachin Sarees Pvt. Ltd. v. Assistant Commissioner of Income-tax, Circle, Rajasthan
[Citation -2017-LL-1004-6]

Citation 2017-LL-1004-6
Appellant Name Sampat Sachin Sarees Pvt. Ltd.
Respondent Name Assistant Commissioner of Income-tax, Circle, Rajasthan
Court HIGH COURT OF RAJASTHAN
Relevant Act Income-tax
Date of Order 04/10/2017
Judgment View Judgment
Keyword Tags assessment proceeding • additional evidence • rejection of claim • books of account • question of law • revised return • cash discount • short payment
Bot Summary: Most importantly, the confirmations of dealers regarding the percentage of discount allowed and the value of such discount in the copy of accounts in the books of account of the dealers, were duly furnished. Counsel for the appellant has taken us to the order of AO where it has been observed as under:- So keeping in view the aforesaid discussion and considering, copy of accounts collected u/s 133(6) and from assessee it is conducted that assessee has allowed no discount on sales. So not 10 but 100 discount claimed is disallowed and added to the total income of the assessee amounting to Rs. 67,98,640/-. o., the claim of the appellant s towards the discount allowed and claim as business expenses. Regarding the issue of non-mentioning of the discount allowed in the bills is concerned, the AO has failed to appreciate the fact that the impugned transactions were of nature of cash discount as such, which were to be given at the time of receipts of payment from the buyers the same can not be anticipated and entered in advance, while preparing the sale bill at initial stage of such transactions. v. The most important aspect is that even in the remand report date 28.6.2011; the present AO has also confirmed the genuines and correotness of the appellant s claim of discount as allowable expenses, as he has found all the details and documents, submitted during the assessment proceeding and also u/r 46A of the Act, in order. The AO has given shaky observations that it appears that the assessee follows the system of giving discount to the customers.


HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 35 / 2015 Sampat Sachin Sarees Pvt. Ltd., having its registered office at Jain Marg, Sardarshahar, District Churu, Rajasthan, through its Director, Sh. Sachin Bachawat s/o Sh. Sampat Mal Bachawat Aged about 36 Years and Resident of C-3, Narupath, Narain Singh Circle, Jaipur (Rajasthan). Appellant Versus Assistant Commissioner of Income Tax, Circle Jhunjhunu, Rajasthan. Respondent For Appellant(s) : Mr. Prakul Khurana For Respondent(s) : Mr. Daksh Pareek for Mr. Sameer Jain HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 04/10/2017 1. By way of this appeal, appellant has challenged judgment and order of tribunal whereby tribunal has allowed appeal of department and dismissed cross objection of assessee. 2. This court while admitting matter framed following substantial question of law:- (a) Whether Ld. ITAT in exercise of its power u/s 254 of Act can travel beyond scope of ground of appeal before it to interfere with (2 of 7) [ITA-35/2015] uncontested findings/issues between parties? (b) Whether under facts and circumstances of case order of Ld. ITAT reversing relief allowed by Ld. CIT(A) by doubting veracity of additional evidences, in absence of any objection/ground of appeal being raised by revenue is not without jurisdiction? 3. Earlier this court has directed counsel for appellant to place on record remand report. relevant abstract of remand report reads as under:- additional evidences and contentions raised by appellant vide letter dated 21/05/2011 have been examined vis-a-vis above four findings. At outset, it needs to be appreciated that in assessment order dated 06/12/2010, there is no mention of any non-compliance on part of assessee, or non submission of any details/evidences. On other hand, most of evidences submitted during appellate proceedings were in some from or other, also presented during assessment proceedings. Most importantly, confirmations of dealers regarding percentage of discount allowed and value of such discount in copy of accounts in books of account of dealers, were duly furnished. In absence of any contrary findings in assessment order, it can be assemed that there was no non-compliance on part of assessee and no anomaly/discrepancy was noticed in evidences filed by assessee or obtained during assessment proceedings. After considering submissions made, at least one thing which appears to be apparent is, that appellant company does follow definite system of allowing cash discount in credit Bills and VPP(DOD) Bills which appears to be genuine. discretion for allowing or not allowing cash discount is sought to be retained until actual receipt of amount and thereby incentive for dealer to make timely and full payment is made available. Perusal of P&L a/c does reveal that no bad debt or short payment expenses have been claimed. During remand proceedings, assessee also claimed that this system of cash Discount is not new but has been followed in all group concerns since (3 of 7) [ITA-35/2015] inception of business. 4. Counsel for appellant has taken us to order of AO where it has been observed as under:- So keeping in view aforesaid discussion and considering, copy of accounts collected u/s 133(6) and from assessee it is conducted that assessee has allowed no discount on sales. So not 10% but 100% discount claimed is disallowed and added to total income of assessee amounting to Rs. 67,98,640/-. P&L expenses:- During original assessment dated 28-7-2008 following expenses were noticed:- 1. Shop expenses Rs.2,84,030/- 2. Staff welfare Rs.1,57,414/- 3. Rafoo expenses Rs.3,26,817/- 4. Packing expenses Rs.22,45,043/- Total Rs.31,13,304/- In absence of proper vouchers 10% of these said claimed expenses were denied during original assessment and were added to total income. Addition on this account worked out at Rs.3,11,330/-. During denovo, assessment proceedings position is same, as no further vouchers were produced. So assessee failed to substantiate his claim of expenses. In such circumstances 15% of these expenses is further disallowed and added to total income amounting to Rs. (Rs.3113304X15%)=Rs.4,66,995/-. 5. He contended that while considering matter CIT(A) has specifically observed as under:- Ld. AR also stated that AO has also made certain inquiries u/s. 133(6) of Act, with clients of appellant, in this regards and no discrepancy was observed on this account. He also referred contents of remand report dated 28.6.2011 of AO, wherein no adverse finding was given in this regard. In light of above rival stands and details/documents submitted during present proceeding, I have reached to following conclusion- I. From assessment order, it can be seen that (4 of 7) [ITA-35/2015] AO has not pointed out any valid and serious discrepancy I.r.o., claim of appellant s towards discount allowed and claim as business expenses. Rather, it is evident that he has disallowed claim of appellant in summary in cryptic manner, without providing any evidence/relevant material in this ragard. ii. It is also felt that reasons/justifications, given in assessment order, are found totally unrelated and irrelevant to issue under consideration. above conclusion/imprecation is based on following factual position.: -Regarding issue of non-mentioning of discount allowed in bills is concerned, AO has failed to appreciate fact that impugned transactions were of nature of cash discount as such, which were to be given at time of receipts of payment from buyers, therefore, same can not be anticipated and entered in advance, while preparing sale bill at initial stage of such transactions. -Similarly, it is also felt that another reasons of AO i.e. non-mentioning of description of goods in sales bills has nothing to due with issue of discount allowed by appellant as such. -The AO also raised another unrelated issue, i.e. appellant has not received any discount on its purchases; therefore, their claim of discount allowed of early payments is also not admissible as such. In my view they are, altogether, two different and unconnected matters and can not be co-related to arrive at any conclusion. -The AO also referred meager NP rate of appellant, in compared to rate of discount allowed, to justify rejection of claim of discount expenses. above reasoning and logic of AO is difficult ot understand or appreciate, unless some relevant tangible materials are also brought to link above aspects. AO has not done needful in this regard. Iii. From assessment order, it is also evident that AO has not brought any positive and cogent incriminating material/evidence to substantiate his case or to prove that claim of appellant, I.e.o., discount expenses, was bogus or inadmissible as such. On contrary, result of verification made u/s 133(6) of Act made by him, rather suggested that discount allowed was dually shown/confirmed by recipient of same. (5 of 7) [ITA-35/2015] iv. confirmations of client s submitted towards discounts aspect, submitted u/r 46A during present proceeding, further supports claim of appellant. v. most important aspect is that even in remand report date 28.6.2011; present AO has also confirmed genuines and correotness of appellant s claim of discount as allowable expenses, as he has found all details and documents, submitted during assessment proceeding and also u/r 46A of Act, in order. 6. He contended that only one ground was taken by department which reads as under:- (i) CIT(A) has passed perverse order, in facts & circumstances of assessee, by holding that expenses of Rs.67.98 Lakhs claimed for discount given was in order even while assessee himself had surrendered 10% thereof, in its revised return filed on 12.03.2009. (ii) appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at time of hearing of appeal. 7. Tribunal while considering matter has reversed finding of CIT(A) holding as under:- We have heard rival contentions and perused materials available on record. There is no merit in contention of ld. AR that this almost third round of assessment and period of 4 years has clapsed between assessment and end of accounting period. ld. CIT(A) has neither referred to date of filing of additional evidence nor contents thereof. remand report was submitted by AO vide his letter dated 28.6.2011. In absence of details as to application for admission of additional evidence, even three months time is given for application and receipt of remand report and it can be assumed that assessee filed application for additional evidence somewhere in March 2011 i.e. after five years from end of financial year. Thus in our considered view, there is no mention as to what evidence was filed and filing of additional evidence suffers latches of (6 of 7) [ITA-35/2015] time gap of five years and there is no mention of reason for accepting delay of filing of additional evidence. conduct of assessee thus assumes suspicion as to why it took five years for additional evidence which is part of regular books of account. In remand report also, AO has behaved in blue hot and blue cold manner. On one hand, admission of evidence is questioned on basis of indolent behaviour of assessee. In remand also, AO has given shaky observations that it appears that assessee follows system of giving discount to customers. In our considered view, findings of remand report contain lot of contradictions. We find merit in arguments of ld. DR that it was burden on assessee to establish and file cogent materials instead ld. CIT(A) has untenable fastened on AO. Similarly, relief has been given by ld. CIT(A) by wrongly observing that AO has briefly and unreasonably rejected claim of discount of assessee. In our considered view, both findings of ld. CIT(A) suffer from untenability and findings from vagueness looking at entirety of facts and circumstances of case. Thus we see no tenable justification in ld. CIT(A)s order granting relief based on fantastic additional evidence by sweeping observations and irrelevant consideration. 8. Counsel for respondent has supported order passed by tribunal. 9. We have heard counsel for parties. 10. Taking into account that tribunal in para 3.9 as referred above has given contrary finding to report which is placed on record has not considered five grounds which has weighed with CIT(A). 11. Without entering into merits of case, we are of opinion that order of tribunal is required to be quashed and set aside. matter is remitted back to tribunal. 12. It is made clear that we have not expressed any opinion on (7 of 7) [ITA-35/2015] merits of question of law which we have admitted and it will be open for parties to agitate same before tribunal. 13. appeal stands allowed to aforesaid extent. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Bmg 65. Sampat Sachin Sarees Pvt. Ltd. v. Assistant Commissioner of Income-tax, Circle, Rajasthan
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