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Income Tax Appellate Tribunal, ‘B’ BENCH, BENGALURU
M/s.Desai & Co. P.B.Road, Vidyanagar, Hubli. … Appellant Vs. Addl. Commissioner of Income-tax, Range-1, Navnagar, Hubli. … Respondent Appellant by : Shri S.V.Ravishankar, Advocate. Respondent by : Smt.Sreenandini Das, Addl.CIT Date of hearing : 14/11/2018 Date of pronouncement : 05/12/2018 O R D E R
Per INTURI RAMA RAO, AM :
This is an appeal filed by the assessee directed against e order of the ld.Commissioner of Income-tax(Appeals), Hubli, dated 30/12/2013 for the assessment year 2016-17.
Briefly, the facts of the case law are as under: The assessee is a partnership firm duly constituted under the Partnership Act. It is engaged in the business of dealing tractors and trax vehicles, spare parts accessories. The return of income for the assessment year 2016-17 was filed on 30/10/2006 declaring total income of Rs.59,10,997/-. Against the said return of income, the assessment was completed by the Addl.CIT, Range-1, Hubli, vide order dated 31/12/2008 passed u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] at total income of Rs.1,31,11,000/-.
Page 2 of 6 3. The brief factual background of this case is that after the receipt of the return of income, Assessing Officer issued notice u/s 143(2) calling upon the assessee to substantiate its claim regarding bad debts written off and claim of discount given by the assessee to the farmers. The explanation furnished in support of the above claims by the assessee was not accepted by the AO by holding that in the absence of documentary evidence the cash discount given to the farmers cannot be accepted. Further he disbelieved the contention that the agriculturists do not have any bank account as the farmers who purchased tractors have availed loans from banks. AO further observed that the discounts were not mentioned in the invoice and the credit notes issued by the assessee are not acknowledged by the farmers. Regarding bad debts written off, AO was of the opinion that bad debts written off were not forming part of earlier years income and the explanation that advance was given to the farmers in the form of margin money to purchase tractors was not accepted by AO. AO held that it is colorful device adopted by the assessee to avoid payment of tax. AO observed in the order that when the assessee was put on notice, on the above issues, the assessee filed revised return offering these items to tax on 30/12/2008. The AO accepted the revised return of income filed by assessee. However, it is to be noted that the revised return of income was filed beyond prescribed time limit.
4. Being aggrieved, an appeal was filed before the ld.CIT(A) contending that the AO out not to have taken cognizance of the revised return as it was filed beyond the prescribed time limit u/s 139(4) of the Act. It is further contended that the discount allowed to the customers by issuing credit notes are genuine and there is no reason to disbelieve the same and as regards the claim for bad debts claim it was claimed as bona fide, duly evidenced by entries in the books of account. It is further submitted that the AO had not properly appreciated the evidence brought on record in the form of credit note issued to the farmers in respect of discounts and the entries written off, evidencing write off of margin money given to Page 3 of 6 farmers which is claimed as bad debts. The ld.CIT(A), after considering the submissions, confirmed the findings of the AO as the appellant had failed to submit complete details of name, address of the party, invoice etc.
Being aggrieved, the assessee is before as in the present appeal raising the following grounds of appeal:
The assessee has also filled the following additional grounds of appeal.
We shall now take up the additional grounds of appeal as they go to the root of the matter. The assessee had filed additional grounds stating that the AO had not issued notice u/s 143(2) in respect of revised return of income filed by the assessee and consequently assumption of jurisdiction for making assessment is bad in law. He also placed reliance on the decision of the Hon’ble High Court of Karnataka in the case of CIT vs. M/s.IDEB Builedcon Pvt. Ltd.in dated 02/02/2016. Admittedly, revised return was filed beyond time limit prescribed u/s 139(4). Therefore, this return of income is non est in law. Therefore, the question of issuing notice u/s 143(2) does not arise. Accordingly, the additional grounds of appeal are dismissed.
As regards other grounds of appeal which challenge addition on account of bad debts written off and discount on tractors etc., from the perusal of the assessment order, it is clear that the AO had proceeded on the income shown in the revised return of income. Undisputedly, this revised return is non est in eye of law as held by us supra, therefore, the issue that comes up for consideration is such return is a valid material on record and the AO can look into it as a piece of evidence to come to conclusion as to the assessable income? It must further be noted that the assessee himself has Page 6 of 6 included in assessable income after due verification of the return of income. Therefore, return of income constitutes valid material for the purpose of making an assessment pursuant to original return of income. In other words, it is nothing but an attempt made by the assessee admitting these items as taxable income on being confronted by the AO during the course of assessment proceedings. No pleading were made as to why information filed in the revised return cannot be taken into consideration by the AO. The AO made the addition as agreed to by the assessee himself. It is not the case of the assessee that the additional income was admitted in the revised return based on the wrong assumption of facts or law. Therefore, we do not find that there is any reason for the assessee to agitate against the assessment order.
In the result, the appeal filed by the assessee is dismissed.