IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : 22.07.2019 1. ITA No. 266 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 2. ITA No.273 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar Respondent 3. ITA No.275 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar Respondent 1 of 9ITA No.266 of 2018 (O&M) 2 4. ITA No.300 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar Respondent 5. ITA No.301 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 6. ITA No.302 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 7. ITA No.303 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 2 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 3 8. ITA No.304 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 9. ITA No.308 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent 10. ITA No.310 of 2018 (O&M) Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar ...... Appellant versus Anthony F.R. Madasser, Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Colony Jalandhar ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR.JUSTICE HARNARESH SINGH GILL *** Present : Mr. Vivek Sethi, Advocate for appellant. *** 3 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 4 AJAY TEWARI, J. (Oral) 1. This order shall dispose of above mentioned ten appeals. Since common questions of law and facts are involved therein, they are being decided by this common order. For sake of convenience facts are being taken from ITA No.266 of 2018. 2. ITA No.266 of 2018 has been filed under Section 260A of Income Tax Act, 1961 (for short 'the Act') against order of Income Tax Appellate Tribunal, Amritsar Bench, Amritsar passed in MA No.34/(ASR)/2017 (arising out of ITA No.115(ASR)/2015) dated 06.11.2017 for Assessment Year 2011-2012. dispute relates to assessment years 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013. 3. These 10 appeals have been filed against orders of Income Tax Appellate Tribunal, Amritsar deciding 20 appeals (10 filed by Assessee and 10 filed by Revenue). 4. issue involved is whether allowance was to be given to Assessee for books and other study material out of which some were obtained on discount and some were sold at discount/distributed free of cost. 5. brief facts are that Assessee is proprietor of M/s Navjeevan Enterprises. He is ordained priest and his church runs several educational institutions in area. Through firm he was acquiring books and other study material for onward transmission to students in various schools aforesaid. return was selected for scrutiny and it was discovered that purchase bills were prepared by seller at MRP rates but discount ranging from 10% to 50% was 4 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 5 allowed and it was alleged that Assessee was selling books on MRP rates. 6. During proceedings before Assessing Officer Assessee placed some material to substantiate his assertion that he was selling books at discount. However, Assessing Officer held against him holding as follows :- 6.2 assessee is individual running business where books and other stationery items are sold on retail basis. He is not running charitable organization. assessee though is member of charitable/religious organization, as individual he is running business. His normal course of business is to run business and to earn profit. claim of assessee that he is doing charity by supplying free and discounted sets of books is unreliable and unsubstantiated. Even otherwise this is nothing but diversion of funds/income. It is kind of donation in name of religion. assessee in his personal capacity is free to do charity and give/part away his income to religious/charitable organization. assessee is free to deal with his income post tax, in manner he deems fit, but not at cost of tax. In this case, since assessee is closely connected with religious organization, has routed charity to organizations before paying appropriate taxes on net income Charity/donation has been included in cost of expenditure of his business and in turn assessee has reduced his profits to that extent. This is subterfuge to deflate true taxable income. income has been diverted before paying tax. This is not case of business expediency to do charity by giving extraordinary discount or free sales. assessee has inflated his expenditure in name of charity. charity has not been done for purpose of promoting business. This is not 5 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 6 normal course of activity in case of any retail book sellers. claim of assessee is unreliable, abnormal, and unreasonable and not normal usual trade practice of business of retail book seller. charity has neither been done for furtherance of business nor wholly and exclusively for purpose of business. In course of doing business certain activities are allowed but these should be for furtherance of business and expenses should be incurred wholly and exclusively for purpose of business or profession. In this case assessee has failed to establish that this act of charity was on account of business expediency and for furtherance of business. assessee has failed to show that charity was not on his personal account and has miserably failed to show connection between donation/charity and business of retail sale of books to schools. 7. And ultimately held that Assessee had not disclosed profits to tune of Rs.3,47,83,926/- and consequently assessed income at Rs.5,06,79,282/-. It may be mentioned here that similar is position for all years covered by these appeals. In appeal Commissioner, Income Tax accepted assertion regarding discounted/free sale of books and granted following relief :- 6.8 In view of above stated facts and in circumstances of case, trading addition made by Assessing Officer on account of undisclosed profits is restricted to Rs.1,78,35,234/- and balance addition of Rs.1,69,48,692/-, Rs.3,47,83,926/- (-) Rs.1,78,35,234/-] is directed to be deleted. In nutshell, assessee will get relief of Rs.1,69,48,692/- [Rs.3,47,83,926/- (-) Rs.1,78,35,234/-] out of total trading addition of Rs.3,47,83 result, ground No.2, 3 and 4 of appeal taken by assessee are partly allowed. 6 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 7 6.9 As addition has been worked out on cost of sales, no separate addition on account of discount allowed by assessee and on account of free distribution of books is required to be made again otherwise it will tantamount to double addition. Moreover, plea of assessee that he has made sales at discount and has also given books to teachers free of cost has been accepted in absence of any contrary finding. In view of these facts and in circumstances of case, separate addition of Rs.1,51,59,103/- made by Assessing Officer on account of free distribution of books and on account of discount allowed by assessee to poor students on recommendations of various school is directed to be deleted. In result, ground No.5 of appeal taken by assessee is allowed. 8. Both Revenue and Assessee further filed appeals before Tribunal. Tribunal found that CIT Appeal had allowed relief on account of free distribution of books after getting remand report from Assessing Officer and consequently dismissed appeals filed by Revenue and, gave some more relief to Assessee. subsequent miscellaneous applications for modification also having been dismissed present appeals have been filed. 9. primary contention of learned counsel for appellant before us was that there was no material on record to support conclusions arrived at by Commissioner as well as Tribunal. However, perusal of judgments reveals that material was there before Assessing Officer. In this connection reference may be made to following paragraphs of Order passed by Assessing 7 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 8 Officer (Annexure A-1) :- 1. We have already explained in detail procedure of discounted sale to your goodself and also provided details of sale at concessional sale vide para 4 of our letter dated 10/2/2014. These concessional sale is made to needy students by various schools and on recommendation of School authorities we make sale. We had also requested that these may be verified from respective schools principals. We had also submitted detailed procedure vide para 4 of our reply dated 03/03/2014. Even quarterly VAT 15 returns and yearly return VAT 20 was submitted vide para 11 of our reply dated 10/2/2014. No defect was pointed out in these VAT returns by your good self till date. We make entries at net sale and this practice is being followed regularly by assessee and accepted by department in earlier years. This trade practice is being adopted by all traders in this trade. 5. Regarding supplying of cost price of discounted items, we submit that books and stationery Items are supplied in every year at discount and concessional rates to various needy students of different schools as per directions of principals of various schools. Further, it is stated all documentary evidence in form of recommendatory letters from principals of various schools for supplying of free books to teachers have already been placed on your file. 6. In last hearing on 3/3/2014 before your goodself, it was explained that vouchers where payment has been made through account payee cheque has not been signed since payment has been made through a/c payee cheque and other vouchers such as conveyance, telephone, travelling etc. which has been referred are duly supported by bills which were attached with vouchers and which were also photo copied by your goodself. We are also enclosing details of salary paid during year. 8 of 9 ::: Downloaded on - 30-07-2019 15:07:17 ::: ITA No.266 of 2018 (O&M) 9 Likewise, reference may be made to following paragraph of order passed by Commissioner (Annexure A-2) :- iv). Then again since assessee is working on missionary spirit, he is required to sell books/stationery free of cost to needy students on recommendations of Principal of each school and for which list was given to Assessing Officer and along with that necessary confirmation from Principal were filed during course of assessment proceedings and which have not been doubted by Assessing Officer and cost of such books is Rs.48,87,251/-. 10. In circumstances, contention that there was no material is wrong. Assessing Officer disbelieved material while Commissioner and Tribunal believed same. view taken by Commissioner and Tribunal can not be said to be perverse or based on no evidence. No other question of law arises. 11. Appeals stand dismissed. 12. Since main cases have been decided, pending C.M. Applications, if any, also stand disposed of. (AJAY TEWARI) JUDGE (HARNARESH SINGH GILL) JUDGE July 22, 2019 pooja sharma-I Whether speaking/reasoned Yes/No Whether Reportable : Yes/No 9 of 9 Pr. Commissioner of Income-tax, Jalandhar-I, Jalandhar v. Anthony F.R. Madasser