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Facts
The assessee, engaged in trading electronic items, declared an outstanding balance of Rs.51.83 Lacs with a creditor. The Assessing Officer (AO) alleged an excess liability of Rs.51.99 Lacs and added Rs.29.41 Lacs (credit notes) and Rs.4.30 Lacs (cash discount) to the assessee's income. The CIT(A) confirmed these additions.
Held
The Assessing Officer rejected the assessee's books of accounts and made additions based on credit notes and cash discounts, alleging they were not accounted for. The assessee's representative argued that these credit notes were fully allowed amongst dealers, resulting in a net zero figure and were not routed through the Profit & Loss Account as per their consistent accounting policy. This benefit was passed on to customers.
Key Issues
Whether the addition of amounts related to credit notes and cash discounts was justified when the net effect was zero and the benefit was passed on to customers as per the assessee's accounting policy.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “SMC” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2014-15) Shri Ramesh Chandra Varshney ACIT -Circle-4(1)(1) बनाम/ Prop. M/s Akashdeep Electronics Aligarh Vs. Railway Road, Aligarh �थायीलेखासं./जीआइआरसं./PAN/GIR No.ABAPV-7652-G (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Pankaj Gargh, Adv.- Ld. AR ��थ�कीओरसे/Respondent by : Shri Shailendra Shrivastava – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 13-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of an order of learned Commissioner of Income Tax (Appeals), Aligarh [CIT(A)] dated 01-01-2018 in the matter of an assessment framed by Ld. AO u/s 143(3) vide order dated 30-12-2016. The sole grievance of the assessee is confirmation of addition of Rs.33.72 Lacs. Having heard rival submissions, the appeal is disposed- off as under.
From assessment order, it could be seen that the assessee had been engaged in trading of electronic items. The assessee reflected outstanding balance of Rs.51.83 Lacs against M/s Videocon Industries Ltd. However, as per confirmation, the debtor reflected balance of Rs.0.16 Lacs. The Ld. AO alleged that the assessee reflected excess liability of Rs.51.99 Lacs. After considering assessee’s reply, Ld. AO rejected the books and added the amount of credit note for Rs.29.41 Lacs and cash discount of Rs.4.30 Lacs to the income of the assessee on the allegation that the same were not accounted for by the assessee. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.
The Ld. AR has stated that credit notes so received by the assessee were fully allowed amongst the dealers and since the resultant figure was zero, the same was not passed through Profit & Loss Account. In support, Ld. AR placed on record copy of ledger account of credit notes / cash discount received and paid to the dealers. Upon perusal of the same, we find substance in this argument since the assessee has apparently passed on this benefit to its customers. The resultant figure is zero and accordingly, the said amount is not routed through Profit & Loss Account. This is the consistence accounting policy being followed by the assessee. Therefore, on the facts of the case, the impugned addition could not be sustained. We order so.
The appeal stand allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.