SRI PRAVEEN KUMAR AGARWAL,DHANBAD vs. ACIT, CIRCLE-2, DHANBAD

ORDER

Per Shri Sonjoy Sarma, JM:

“1. For that ld. CIT(A) was not justified in restricting the disallowance to 10% on account of discount price/difference in tag price and selling price as against addition of 7.5% made by ld. AO.

Sri Praveen Kumar Agarwal 2. Brief facts of the case are that assessee is an individual engaged in the business of trading in sarees and salwar suits through his proprietary concern, M/s. Alankar Sarees having two retail counters one at Dhanbad and the other at Bokaro. The return of income of Rs. 44,95,110/- was filed by the assessee for assessment year in question and the case of the assessee was picked up for scrutiny assessment. A survey u/s 133A of the Act carried out on 30.11.2015 wherein certain documents were impounded and physical inventory of the stock was taken on the date of survey. In consequent to that the assessee filed reconciliation of stock whereby excess stock of Rs. 36,04,937/- was declared. In the assessment proceeding, the ld. AO observed that the assessee claimed deduction towards outdated, defective and rejected stock. The assessee pleaded that deduction claimed on account of damaged clothes and on certain clothes which have become out of fashion and are outdated which were not purchased by any of the customers or alternatively such goods are sold at much cheaper prices. The assessee substantiates its claim before the AO submitted the copies of cash memos as well as relevant sale bills of few such items were filed before the ld. AO. At the time of assessment proceeding, the ld. AR demonstrated from such cash memos and relevant sales memos that those goods were sold at much lesser price than tag price and pleaded that the deduction claimed by the assessee was justified and allowable. However, the ld. AO allowed the deduction @ 7.5% as against the deduction claimed at 15% by the assessee and the ld. AO by disallowing of Rs. 7,97,583/- added to the income of the assessee.

3. Dissatisfied with the above order passed by the ld. AO, assessee preferred an appeal before the ld. CIT(A). However, ld. CIT(A) considering the submission made by the ld. AR of the assessee partly allowed the appeal of the assessee with the direction to the AO to allow deduction @10% as against 7.5% allowed by the assessing officer.

4. Aggrieved by the above order passed by the ld. CIT(A), assessee is in appeal before this Tribunal. The ld. AR submitted that on similar circumstances, Hon’ble ITAT, Ranchi Bench, Ranchi in dated 02.12.2014 has Sri Praveen Kumar Agarwal allowed deduction to the extent of 15% and the ld. CIT(A) did not consider such argument made before him. Therefore, the order passed by the ld. CIT(A) required to be interfered by this Tribunal by allowing deduction to the extent of 15% on account of discount price in tag price as against the addition of 7.5% made by the ld. AO. He further submitted that the addition confirmed by the ld. CIT(A) restricting the addition to 10% is unjustified, illegal and fit to be deleted. On the other hand, ld. DR submitted that the claim of the assessee already allowed by the ld. CIT(A) by restricting the disallowance to 10% on account of discount price/difference in tag price and selling price as against addition of 7.5% made by the ld. AO. At the time of hearing the ld. DR submitted that while passing the order, the ld. CIT(A) duly considered the case law as referred by the ld. AR placed before this Tribunal while passing the impugned order and distinguish the same. Therefore, the order passed by the ld. CIT(A) is within the provisions of law and nothing required to be interfered by the Tribunal.