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Income Tax Appellate Tribunal, KOLKATA BENCH “A”, KOLKATA
Before: SH.P.M.JAGTAP & SH. S.S.VISWANETHRA RAVI
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER
This appeal filed by the Revenue against the order dated 05.04.2016 passed by CIT(A)-12, Kolkata for AY 2011-12.
It is submitted by the Ld.DR that the appeal was filed with the delay of 19 days and on perusal of the affidavit dated -4.08.2016 filed explaining the said delay and upon hearing both the parties, we find that the reasons stated in the affidavit are bonafide and delay of 90 days is condoned.
Brief facts of the case are that the assessee is a firm, engaged in the business of trading in foreign liquor. The assessee filed its return of income declaring a total income of Rs.79,95,918/-. Notice u/s 143(2) of the Income Tax Act, 1961 (in short “Act”) was issued on 19.09.2012. The AO in the scrutiny proceedings determined the income of the assessee at Rs.1,20,98,276/- vide his order dated 26.03.2014 u/s 143(3) of the Act wherein he added an amount of Rs.12,00,000/- on account of unsecured loans from two persons of Rs. 6,00,000/- each and an amount of Rs.9,04,143/-; Rs.7,71,291/-; and 12,26,924/- on account of breakage; rebate; and sales scheme respectively.
Ground No.1 is relating to deletion of Rs.12,00,000/- made on account of unsecured loans by the AO. After hearing both the parties, we find AO added said sums each Rs.6,00,000/- stated to have been availed from two parties i.e. Shvratri Saha and Surja Saha for non-verification of creditworthiness, identity and for genuineness of the transactions. It is observed from the impugned order from para 3.2 that the assessee submitted confirmations from two parties before AO on 25.03.2014 i.e. One day prior to passing of assessment order i.e. 26.03.2014.
Therefore, it is clear that the confirmations for the said parties having advancing said loans to the assessee were there before the AO, but, could not be verified. We find that CIT(A) examined the said confirmations and found satisfied the identity of the said two parties and the amounts in question were old amounts and they were assessed to tax having valid PAN. It is pertinent to note that CIT(A) has co- terminus power with that of AO and having exercising such power examined the record and confirmations which were part of assessment record, found satisfied regarding the identity, creditworthiness and genuineness of the transactions.
Thus, we find no infirmity in the order of CIT(A) in deleting the addition made by the AO on account of treating us. Ground No.1 raised by the Revenue fails and it is dismissed.
Ground No.2, 3 and 4 are relating to issues regarding disallowance made on account of expenses relating to breakage, rebate and sales scheme expenses. After hearing both the parties, we find that the AO disallowed expenditure claimed by the assessee on above three heads for non-verification during the course of assessment proceedings whereas we find from the impugned order that CIT(A) examined books of accounts, relevant ledger account and audited accounts. The CIT(A) held that AO did not look into the accounts of the assessee properly and conducted assessment arbitrary. The Ld. AR submitted that there was no disallowances made on these heads in earlier years and the Revenue accepted said expenses claimed by the assessee. For better understanding, the relevant portion of CIT(A) is reproduced hereunder below:-
4.2. “I have considered the submissions of the appellant and perused the assessment order. In ground numbers 2, 3 & 4 the AO has disallowed amounts of Rs.9,04,143, Rs.7,71,2911 and Rs. 12,26,924/ on account of breakage, rebate and sales scheme respectively. It can be seen that the AO has passed a rather hurried order where no investigations worthwhile were carried out resulting in a non speaking order. The AO disallowed an amount of Rs. 9,04,114/ which was claimed as brokerage stating that the same could not be verified by the assessee during the assessment proceeding. The assessee is a dealer in foreign liquor and is a licensee bond holder. Brokerage is a common occurance in their trade and they have properly accounted for it in their books of accounts which were audited and filed during the assessment proceedings. A glance at their Ledger A/c copy of the breakage account shows all relevant details party wise/datewise and the amounts involved. The AO has not said as to why these evidences were not enough proof of this expense. Hence the addition is deleted. The AO has disallowed a rebate claimed of Rs 7,71,291/ simply by observing that Rebate seems to be no different from cash discount and therefore, the assessee's contention of claiming, rebate is rejected and the amount of Rs.7,71,291/ is added to the income of the assessee. The appellant has submitted that all relevant ledger account which were audited were filed before the AO which clearly establishes the genuinity of these expenses . I have perused all the relevant documents filed by the appellant and I find force in their contention. The AO has not made any other investigation as to why such an expense should be disallowed. Hence the addition is deleted. The AO has also disallowed a sales scheme claim of Rs. 12,26,924/ simply stating that sales scheme of Rs.12,26,924/ could not be differentiated in any manner whatsoever from cash discounts and since the assessee failed to verify, it is added to the total income of the assessee. The appellant has submitted that all details were submitted during the assessment proceedings. I have perused all the relevant Page | 3 documents filed by the appellant and I find force in their contention. The AO has not made any other investigation as to why such an expense should be disallowed. The same details and evidences were tiled before the AO but the AO chose to ignore the submissions such as audited accounts in an arbitrary manner. It is clear that the AO has not substantiated his action with any credible findings. He has simply concluded that these expenses are not allowable whereas it has been duly detailed with reference to the names of the parties & very much related to the business of the appellant. For reasons cited above, the addition is deleted.”
In view of the above, we find no infirmity in the order of CIT(A) and it is justified. Therefore, Ground No.2, 3 & 4 raised by the Revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 18.07.2018.