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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER:
All the appeals of the Revenue are directed against the two common orders passed by the Commissioner of Income Tax (Appeals)-19, Chennai dated 28.09.2015 and 21.12.2015 and pertains to the assessment years 2005-06 to 2008-09, 2009-10 to 2011-12.
Since common issue arises for consideration in all the appeals, we heard the same together and disposing of by this common order.
There was a delay of 3 days in filing the appeal for the 2. assessment years 2005-06 to 2008-09 by the Revenue. The Revenue has filed a petition for condonation of delay. We have heard the Ld. representative for the assessee and the Ld. Departmental Representative. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal.
Shri S. Bharath, the Ld. Departmental Representative submitted that the assessee engaged in the business of purchase and sale of readymade textile items. There was a search operation in the premises of the assessee on 23.02.2011. On the basis of the material found during the course of search operation, notice was issued to the assessee calling upon the assessee to file the return of income. According to the Ld.DR, during the course of search operation, data which contains year-wise discount said to be given by the assessee for the periods 2005-06 to 2010-11 was found. Books relating to data- wise sales were also found. During the course of search operation, a statement was recorded from Shri Lalji G. Vora, Managing Director of M/s. Milan Textile Enterprises Pvt. Ltd. The Managing Director admitted that they are continuing the practice of giving discount voucher for a long time. Ultimately, the assessee claimed before the Assessing Officer atleast 4% of the gross sales may be allowed as genuine discount. The Ld.DR further submitted that the discount claimed by the assessee is not actual discount given to the customers on sales. The assessee also filed the return under Value Added Tax (‘VAT’) Act. The assessee admitted the actual sales in the return of income as Rs.5,46,46,955/-. But before discount it was determined as Rs.5,74,82,355/-. The difference of Rs.28,35,400/- for the assessment year 2005-06 and similar addition was made for other years in respect of the differences. However, on appeal by the assessee, the CIT(Appeals) directed the AO to allow 4% on gross sales as discount.
The CIT(Appeals) failed to consider that the claim of discount are bogus. According to the Ld.DR, no systematic record was maintained by the assessee with regard to discounted sales. The discount vouchers were prepared arbitratedly in order to reduce the taxable income of the assessee. In the Remand Report filed by the AO before the CIT(Appeals), it was clearly stated that there was no indication of any discount given to the customers. The Ld.DR further submitted that there was no nexus between the credit card payment sales bill and discount vouchers given by the assessee. According to the Ld.DR, when the assessee admitted the sales as per sales bill and filed the return under VAT Act, the same has to be treated as actual sales. Therefore, making further claim of discount is not justified.
On the contrary, Shri S.Sridhar, the Ld. counsel for the assessee submitted that the assessee admittedly engaged in the business of purchase and sale of readymade garments. The AO made an addition on the difference between the admitted sales in the incomes return and the value disclosed before discount. According to the Ld. counsel, in this kind of business after bills are generated at the respective sales counter, the customer request for discount.
Therefore the discount is not shown in the sales bill. But a separate discount vouchers were made. The AO disbelieved the claim of discount only on the ground that the customer signature was not found in the discount vouchers. The credit card scrolled filed by the assessee, the remand report submitted by the AO proved that the discount was allowed by the assessee. According to the Ld. counsel, the credit card sales scrolled is independent evidence. Therefore, the AO cannot doubt the same. According to the Ld. counsel total sales were taken in to consideration and percentage was deducted from the sales. Unless and until, the assessee gave a discount to the customer who are requesting for discount, the assessee may not able to carry on the business. The assessee’s claim before the AO that average of 5.5% of total sales value was given as discount. However, the CIT(Appeals) by considering the order for the assessment year 2004- 05 allowed discount of 4%. This Tribunal in by an order dated 23.01.2009 confirmed the order of the CIT(Appeals) for the assessment year 2004-05. Therefore, the 4% of the discount allowed by the CIT(Appeals) is reasonable.
We have considered the rival submissions on either side and perused the material available on record. The assessee is admittedly engaged in the business of readymade garments. It is common knowledge that when the customers purchase the readymade garments, they request for discounts after purchasing the same.
Normally the requests are made to the owner of the business premises after the sales bills were generated. The discounts are given to the customers. It would be given to the only customers who are requesting for such discounts. However, during some occasions like stock clearance, etc., discounts will be given uniformly to all the customers. From the order of the Assessing Officer it appears that on such special occasions, the discounts are shown in the sales bill itself.
Moreover, before the Sales Tax Department, the assessee has disclosed higher figure. The Cashier Shri M.N. Parmar has stated during the course of examination that he will receive the bill only as 6 to 2234/Mds/2015 I.T.A. Nos. 521 to 523/Mds/2016 per the amount mentioned in the sales bill. Therefore, there was a confusion whether the assessee received the amount mentioned in the sales bill or the discounted amount as claimed by the assessee.
In view of the statement recorded during the course of search operation, this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, the orders of both the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re- examine the matter afresh in the light of the material available on record and also the customary practice that is normal in this kind of trade, and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, all the appeals of the Revenue are allowed for statistical purposes.