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Facts
The assessee's actual purchases exceeded those recorded in books, a difference attributed to input VAT and benefits from credit notes/schemes totaling ₹ 6,22,624/-. The Assessing Officer made an addition of the entire difference, which the CIT(A) partly upheld by confirming the addition related to credit notes/schemes of ₹ 6,22,624/-, while accepting the VAT reconciliation. The assessee appealed, contending that these benefits reduced purchase cost and increased profitability, thus the addition was unwarranted.
Held
The Tribunal observed that the reconciliation was available to the lower authorities. It held that the amount of ₹ 6,22,624/- represented genuine benefits like time payment schemes and credit notes received by the assessee on purchase price. Therefore, the Tribunal found the addition confirmed by the CIT(A) to be unsustainable and directed its deletion.
Key Issues
Whether the addition made by the Assessing Officer and partly confirmed by the CIT(A) on account of credit notes and schemes received by the assessee, which reduced the purchase price, was sustainable in law.
Sections Cited
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri R.K. Mittal, AR. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 21/08/2025 Date of pronouncement 21/08/2025 O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC, Delhi in Appeal No. CIT(A), Ranchi/10772/2019-20 dated 28/06/2024 for the A.Y. 2017-18.
Shri Rajiv Mittal, ld. A.R. is represented on behalf of the assessee and Shri Khubchand T. Pandya, ld. Sr. DR is represented on behalf of the revenue.
It was submitted by the ld. AR that the assessee had before the Assessing Officer provided the details in the regard to the difference between the actual purchases at ₹ 10,17,88,434/- and that as recorded in the books at ₹ 9,84,96,442/- to be on account of input VAT to an extent of ₹ 26,61,368/- and the credit notes and other schemes received by the assessee to an extent of ₹ 6,22,624/-. The Assessing Officer did not accept the same and P a g e 1 | 3
ITA 318/Ran/2024 Kirit Kumar Thakkar Vs ITO made an addition of ₹ 32,91,992/-. It was a submission that on appeal, the ld. CIT(A) accepted the VAT reconciliation to an extent of ₹ 26,61,368/- but did not allow the assessee's claim in regard to the credit notes and schemes to an extent of ₹ 6,22,624/- received by the assessee. It was a submission that both the authorities failed to appreciate that the purchases were shown less by ₹ 6,22,624/- and this was on account of the schemes and the credit notes received and this in fact only went to increase the profitability of the assessee. It was a submission that the credit notes received were liable to be allowed and the addition deleted. The ld. Authorised Representative has filed a reconciliation which reads as follows: Purchase as per Purchase Register 10,17,80,434 Less Inpt Vat included above 26,61,368 9,91,19,066 Less Schemes and Credit Notes received 6,22,624 9,84,96,443 Purchase as per Audit Report 9,84,96,443 It was a submission that the addition as confirmed by the ld. CIT(A) is liable to be deleted.
In reply, the ld. Sr.DR vehemently supported the order of the ld. CIT(A) 5. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that this reconciliation was available before the Assessing Officer and before the ld. CIT(A). The amount of ₹ 6,22,624/- which has been confirmed by the ld. CIT(A) is nothing but the benefits received by the assessee in respect of purchase price on account of the various schemes such as in time payment etc. and the credit notes. This P a g e 2 | 3
ITA 318/Ran/2024 Kirit Kumar Thakkar Vs ITO being so, we are of the view that the addition as confirmed by the ld. CIT(A) to the extent of ₹ 6,22,624/- is unsustainable and the same stands deleted. 6. In the result, the appeal of the assessee is allowed. Order announced in open court on 21st August, 2025. Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated: 21/08/2025 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File
Sr. Private Secretary, ITAT, Ranchi
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