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2015 (9) TMI 1302 - AT - Income TaxDisallowance of difference in the account of sundry creditor - assessee’s pleaded that though credit notes had been issued by ITC aggregating to ₹ 21,99,867/-, but in its books of a/c it did not account for the same because assessee had lodged the claim for ₹ 26,32,303/-, which the assessee continued to show in its stock register as a separate item - Held that:- The assessee, admittedly, was distributor of M/s ITC Ltd., and, therefore, had regular dealings with M/s ITC Ltd. Considering the nature of assessee’s business, the explanation given by assessee cannot be faulted, because the greeting cards are always year specific and the old stock become obsolete and cannot be used. This practice, therefore, is commercially prevalent in this line of business. Further, as regards the credit entries being not accounted for in assessee’s books of account, keeping in view the commercial practice, it cannot be denied that the assessee had to account for the credit notes because it is not that only ITC was required to confirm the balance, but even assessee could also be called upon by the AO to confirm the balance relating to ITC Ltd. in assessment proceedings of ITC. Therefore, it cannot be concluded that assessee was deliberately not accounting for the credit notes. Under such circumstances, normal commercial practice assumes significance and that has to be given due credence. In the stock register, maintained by assessee, the stock lying with ITC has separately been mentioned. Under such circumstance, we are of the opinion that the assessee’s explanation was quite reasonable, considering the business practice and, therefore, should have been accepted. In view of above, the addition made on this count is deleted. As regards the assessee’s explanation in respect of difference of ₹ 3,03,393/-, that the cheques issued were not presented by ITC, we restore this issue to the file of AO for verification of assessee’s claim with reference to the bank account, which has been filed in the paper book before us. Ground is allowed for statistical purposes.
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