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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the assessee against the order dated 10.02.2020 passed by the CIT(A)-5, Ahmedabad for the Assessment Year 2011-12.
The grounds of appeal raised by the assessee are as under :
“1. That the A.O. erred in restricting the disallowance to Rs.10000 out of Travelling expenses and Misc./Other expenses on the ground that a part of the expenses has to be disallowed out of these expenses ignoring the Tax Audit Report and, hence, the addition of Rs.10000 be deleted.
2. That the CIT(A) erred in observing that the A.O. has made out a good case for rejection of the book results u/s 145(3) of the Act although the pre-conditions for the rejection of books of account required to be fulfilled u/s 145(3) of the Act have not at all been fulfilled. It is, therefore, submitted that this observation of the CIT(A) be directed to be removed as it is against the law.
Page 2 of 5 3. That the CIT(A) erred in confirming the disallowance of the Extra discount of Rs.124700 allowed to the customers on account of the items sold being old, outdated and obsolete by observing that the A.O. has used Computer Data and perused the copies of the sale bills, both of which have been misconstrued. It is submitted that the amounts reflected in the sales bills have already been accounted for and taxed and no such Extra Discount of Rs.124700 was claimed as an expenditure in the P&L account. It is, therefore, submitted that the disallowance of the extra discount allowed to the customers be deleted and that the assessment be directed to be modified accordingly.
4. That the CIT(A) also erred in confirming the addition of Rs.1089780 in respect of the alleged discrepancy in stock derived at the time of the survey on 29/30-10-2010 without considering heavy discount being offered during the 'Annual Sale' in July and August, 2010 before the date of survey and without taking into consideration the appellant's representative's replies dt. 13-12-2013 and 26-12-2013 at all and also without producing any evidence in support of the belief of the A.O. that the stock should have been of Rs.66526487. It is submitted that there are no defects in the accounts and the G.P. for the F.Y. 2010- 11 is better than the G.P. for the F.Y. 2009-10 and the overall G.P. for the year has been accepted by the CIT(A) and, therefore, the addition of Rs.1089780 amounts to G.P. being taken as 27.23% (22276787/ 81809296 x 100) which is absolutely uncalled for, arbitrary and unjustified and accordingly, the same be deleted.
That the CIT(A) erred in confirming the disallowance of Employer's contribution to P.F. and E.S.I, aggregating to Rs.136941 on the ground that the same was deposited after the "Due Date' under the Act and the disallowance was covered by the Decision of the Honourable Gujarat High court in the case of State Road Transport Corporation - 366 ITR 170. It is submitted that the A.O had disallowed Employer's contribution and allowed Employees' contribution whereas this decision is applicable in case of Employees' contribution. It is, therefore, submitted that the Employer's contribution should be allowed in full and that the addition of Rs.136941 be deleted.”
The assessee carries on business of trading in Sarees and dress material. Return of income was filed on 28.09.2011 declaring total income of Rs.1,31,450/-. The Assessing Officer made various disallowances and additions and computed the total income at Rs.28,49,670/-.
Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
Page 3 of 5 5. The Ld. A.R. submitted that ground no.2 no prejudice has been caused to the assessee as it is related to rejection of books of account.
As regards ground no.1 related to travelling expenses, the Ld. A.R. submitted that the CIT(A) has not given opportunity to the assessee to produce the bills before the authority as due to certain circumstances those were not placed before the Assessing Officer.
As regards ground no.3 related to extra discount, the Assessing Officer has accepted the sale value and there was no separate claim made by the assessee in Profit & Loss Account. Thus, the CIT(A) could have allowed the extra discount which was given to the customers.
As regards ground no.4 in respect of discrepancy in stock, the CIT(A) has not at all considered heavy discount being offered during the annual sales. Thus, there is no business in the account of G.P. for the F.Y. 2010-11 is better than G.P. for 2009- 10. AR further submitted that overall G.P. for the year has been accepted by the CIT(A) and, therefore, the addition of Rs.10,89,780/- amounts to G.P. being taken as 27.23% which is arbitrary and unjustified.
As regards ground no.5, the said ground is against the assessee as the employee contribution was deposited after the due date of the PF and ESI Act but prior to the filing of the due date of return of income. The Hon’ble High Court of Gujarat in the case of State road Transport Corporation, 366 ITR 170 has held against the assessee.
The Ld. D.R. relied upon the Assessment Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record.
Ground no.2 is dismissed as the Ld. A.R. submitted that no prejudice will be caused to the assessee if the said ground is not adjudicated.
Page 4 of 5 13. As regards ground no.1, the CIT(A) has not looked into the evidences and the assessee has also not given the details of sale before both the authorities. Therefore, we are remanding back this issue to the file of the CIT(A) for proper adjudication and the evidence which will be produced before the CIT(A). Needless to say, assessee will be given opportunity of hearing. Ground no.1 is partly allowed for statistical purposes.
As regards ground no.3, extra discount was never separately claimed by the assessee in Profit & Loss account which is an admitted fact. Besides this, the Assessing Officer has also accepted the sales value. Therefore, the same should have been allowed by the Assessing Officer as well as the CIT(A). Therefore, ground no.3 is allowed.
As regards ground no.4, from the perusal of the assessment order as well as order of CIT(A) it can be seen that both the Revenue authorities has not taken cognisance of the submissions of the assessee regarding discrepancy in the stock in totality and in consequence to the earlier G.P. rate. Therefore, the issue is remanded back to the file of the Assessing Officer for proper verification and adjudication on the issue. Ground no.4 is thus partly allowed for statistical purposes.
As regard ground no.5, the same is dismissed as the Hon’ble High Court of Gujarat is against the assessee on the issue of delayed payment in employees contribution.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on this 25th day of March, 2022.