M/S. VIKAS STRIPS LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 2585/DEL/2016Status: HeardITAT Delhi28 November 2023AY 2011-12Bench: SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, SHRI ANUBHAV SHARMA (Judicial Member)5 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that purchase returns, whether from the current or earlier year, cannot be considered as income of the assessee. Furthermore, since the purchase return was not debited to the Profit and Loss Account, it could not be disallowed.

What were the facts?

The assessee declared income and during scrutiny, the AO noticed a purchase return of Rs. 52,06,801/-. The AO added this amount to the assessee's income, believing it pertained to an earlier year.

What were the issues?

Whether a purchase return can be treated as income of the assessee and added to its total income.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA

For Appellant: Shri Kapil Goel, Adv
For Respondent: Shri M.P. Dwivedi, Sr. DR
Hearing: 23.11.2023Pronounced: 28.11.2023

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

This appeal by the assessee is preferred against order of the ld.

CIT(A) – 9, New Delhi dated 10.03.2016 pertaining to Assessment Year 2011-12.

2.

Solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 52,06,801/- on account of misconception towards purchase return.

3.

Representatives of both the sides were heard at length. Case records carefully perused.

4.

Briefly stated, the facts of the case are that the assessee filed its return of income on 20.09.2011 declaring an income of Rs. 44,81,210/.

1.

Return was selected for scrutiny assessment and, accordingly, statutory notices were issued and served upon the assessee.

5.

During the course of scrutiny assessment proceedings, the assessee was called upon to furnish copy of accounts of creditors alongwith their confirmations from whom purchase of goods has been made exceeding Rs. 10 lakhs.

6.

Necessary details were furnished.

7.

On perusal of such detail, the Assessing Officer noticed that in the account M/s Sail Authority of India Limited, there is an entry of Rs. 52,06,801/- on account of purchase return.

8.

The Assessing Officer was of the opinion that the said purchase return pertains to earlier year. Therefore, the same should have been accounted for in the earlier year. The Assessing Officer, accordingly, added Rs. 52,06,801/-.

9.

The assessee challenged the addition before the ld. CIT(A) but without any success.

10.

We have carefully considered the observations of the Assessing Officer. Whether purchase returns pertain to earlier year or the current year, we fail to understand how purchase return can become income of the assessee. Even otherwise, the said purchase return has not been charged to the Profit and Loss Account. Therefore, it cannot be disallowed.

11.

Considering the facts from all possible angles, we do not find any merit in the addition made by the Assessing Officer and accordingly, direct to delete the same.

12.

In the result, the appeal of the assessee in is allowed.

The order is pronounced in the open court on 28.11.2023 in the presence of both the rival representatives.

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