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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI SANJAY GARG & SRI SANJAY AWASTHI
order
: October 17th, 2024 ORDER
Per Sanjay Awasthi, Accountant Member:
In this case there is a delay of 60 days. The appellant has filed condonation of delay petition, along with medical certificate in support of claim that the delay was on genuine grounds and deserves to be condoned. Some portions from the petition deserve to be extracted: “This is to bring to your notice that the appellate order was passed on 02.01.2024 by the Ld. CIT(A), NFAC u/s 250 of the Act for the captioned Assessment Year. Aggrieved by the impugned order, the appellant has preferred an appeal before the Hon’ble Bench of Income-tax Appellate Tribunal, Kolkata.
I.T.A. No.: 962/KOL/2024 Assessment Year: 2017-18 Jadwet Associates. As per the provision of Section 253(3), appeal before the Hon’ble Income Tax Appellate Tribunal against the order u/s 250, has to be filed within sixty days from the date on which the order sought to be appealed against is communicated. Further, as per the provision of Sec. 253(5), the Hon’ble Appellate Tribunal may admit an appeal after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period. In this connection, we would like to submit that our chief accountant, Mr. Balakrishnan, aged 72 years, who is entrusted with the income-tax matters of the firm had suffered a heart attack in the month of August, 2023, consequent to which he was admitted in the Hospital for a few days. At the time of discharge from the hospital, he was advised complete bed rest by the doctor and he has therefore been unable to resume office till date due to his critical health issues. For these reasons therefore, the appellant firm was inadvertently omitted filing an appeal against the same. It was only when the Jurisdictional Assessing Officer had initiated the proceedings of recovery of outstanding demand for the relevant AY 2017-18, that the appellant firm was informed that the appellate proceedings u/s 250 for the AY 2017-18 already stood completed vide appellate order dated 02.01.2024. Upon being apprised of this information, the partners of the appellant firm immediately retrieved records from the ITBA portal and arranged the relevant papers and shared the same with the tax counsel to advise for the way forward. The tax counsel, accordingly prepared the appeal which is now being preferred before the Hon’ble Bench. An affidavit from the Partner of the appellant firm is enclosed along with the petition.” 1.1. In the interest of justice and considering the genuineness of the claim, this appeal is admitted for adjudication.
The appellant is a distributor for Hindustan Unilever Ltd. for South Andaman region. The assessee was asked to file details of bank accounts and explain the deposits of cash during the demonetization period (09.11.2016 to 30.12.2016). It is seen that the Assessing Officer (hereinafter referred to as ld. 'AO') has recorded a finding to the extent that the assessee being a distributor for Hindustan Unilever Ltd. Would normally not have small cash sales. It is further recorded that though the cash book shows an opening balance of Rs. 4,28,792/- as on 01.04.2016, the closing balance is shown at Rs. 16,140/- as on 31.03.2017. The ld. AO further states that though the monthly balances are mostly in thousands, the figures point to Rs. 20,78,648/- for the month of October, 2016. Thereafter, the ld. AO gave the benefit of opening balances and proceeded to add an amount of Rs. 17,06,500/- out of the old notes Page 2 of 5 I.T.A. No.: 962/KOL/2024 Assessment Year: 2017-18 Jadwet Associates. deposited. 2.1. The second addition has been made out of the heads "other discount" and "scheme discount", where the ld. AO found that such expenses were not understandable considering the nature of business of the assessee. The ld. AO disbelieved the contention of the assessee from the fact that while the receipts totaled to Rs. 62,43,384/-, there was an expenditure of Rs. 63,24,222/-. Thus, the ld. AO concluded that there would not be any condition imposed by company M/s. HUL whereby the expenditure would be more than the receipts from sales. Thereafter, the ld. AO proceeded to disallow 10% of the expenditure debited under these heads, leading to an addition of Rs. 5,07,448/-. 2.2. Aggrieved with this action, the appellant approached the Commissioner of Income Tax (Appeals) [hereinafter referred to as ld. 'CIT(A)'] where the appellant is seen to not have responded to any of the notices for hearing of the said appeal. Thereby the ld. CIT(A) confirmed the action of ld. AO on both the grounds of addition to income. 2.3. Aggrieved with the action of ld. CIT(A), the appellant has approached the ITAT with as many as four grounds out of which ground nos. 2 & 3 are substantive and challenge the two impugned additions.
Before us, the appellant has filed a paper book running into 107 pages in which audited accounts for the year ended 31.03.2017, copy of ledger showing monthly sales during FY 2016-17, copy of cash book for the period 01.11.2016 to 30.12.2016 and some extracts from cash book and bank statements as evidence regarding the source of cash deposits in the bank account. 3.1. The ld. Counsel for the assessee took us through the monthly summary of cash account from 01.04.2016 to 31.03.2017 and pointed out that the transactions pertained to normal business activities and were not on account of any unexplained cash being deposited in the bank account. the ld. AR pointed out the following facts:
Page 3 of 5 I.T.A. No.: 962/KOL/2024 Assessment Year: 2017-18 Jadwet Associates. Transactions Closing Debit Credit Balance Opening Balance 4,28,792.93 Dr April 41,83,105.00 41,08,654.00 5,03,243.93 Dr May 34,85,489.00 33,26,633.00 6,62,099.93 Dr June 26,43,441.00 27,76,842.00 5,28,698.93 Dr July 28,73,893.00 29,11,782.00 4,90,809.93 Dr August 28,68,509.00 25,69,827.00 7,89,491.93 Dr September 39,03,383.00 41,46,841.00 5,46,033.93 Dr October 58,26,206.00 38,64,799.00 25,07,440.93 Dr November 12,64,126.00 31,14,762.00 6,56,804.93 Dr December 19,64,290.00 21,18,533.00 5,02,561.93 Dr January 25,36,205.00 24,92,968.00 5,45,798.93 Dr February 22,14,986.00 22,71,403.00 4,89,381.93 Dr March 17,66,160.00 22,39,401.93 16,140.00 Dr Grand Total 3,55,29,793.00 3,59,42,445.93 16,140.00 Dr 3.2. Regarding the second addition of Rs. 5,07,448/- out of discount allowed the ld. AR pointed out from the documents filed, the monthly credit notes, scheme discount allowed and other discount allowed during the year under consideration. He also took us through some credit notes which he had filed to illustrate the nature of such expenses.
3.3. The ld. D/R relied on the order of the ld. AO.
We have carefully gone through the orders of authorities below, the documents placed before us through the paper book and the averments of ld. AR/DR. It is seen in this case that there is no unusual pattern visible during the demonetization period and it is seen from the copy of ledger account that the appellant has deposited cash which was available to him immediately before the demonetization period. Accordingly, we are unable to persuade ourselves regarding the correctness of the action of the ld. AO and direct that the addition so made u/s 69A of the Act be deleted.
4.1. Regarding the addition out of disallowance from discount given to customers, the appellant has been able to demonstrate adequately that such a discount is visible in the bills of sale raised by him. It is felt that merely on the suspicion that the expenditure is more than the receipts, no disallowance is warranted from the two heads of expenditure as has been done by the ld. AO. Furthermore, the business exigency cannot be doubted since the billing itself has been made on the software provided by M/s. HUL. Since there is no Page 4 of 5 I.T.A. No.: 962/KOL/2024 Assessment Year: 2017-18 Jadwet Associates. clear finding that either the discounts are not genuine or even that they are unwarranted, the addition of Rs. 5,07,448/- is directed to be deleted. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 17th October, 2024. Sd/- Sd/- [Sanjay Garg] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 17.10.2024 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. Jadwet Associates, 1, Tower House, Aberdeen Bazar, Port Blair, Andaman and Nicobar Islands, 744101.
2. ACIT, Circle-3(2), Kolkata.
3. CIT(A)-NFAC, Delhi.
4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata
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