TMI Blog2015 (8) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ook entries based on credit and debit notes have not been disputed. Similarly, the amounts transacted were not claimed as expenditure and represented only quantified amounts of incentives provided as per sales and distribution policy of the GPI, they cannot be held as cash payments by any stretch of imagination. These glaring facts could not be controverted by the learned Sr.D.R. In view of the foregoing, we find no infirmity in the order of the learned CIT(A), which are based on proper appreciation of facts and law and are upheld. - Decided against revenue. - ITA No. 749/JP/2012 - - - Dated:- 13-2-2015 - R. P. Tolani, JM And T. R. Meena, AM,JJ. For the Appellant : Mrs Neena Jeph For the Respondent : Shri P C Parwal ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives/promotional schemes are declared by the GPI. Consequent to such distribution, the details of the sales as incentives is provided to the assessee on the basis whereof the relevant debit notes are raised by the assessee on GPI, which are duly compensated by GPI by corresponding credit notes. (d) The Assessing Officer took an adverse inference ignoring the real nature of the transactions through debit and credit notes in accordance with the distribution policy/incentives schemes declared by the GPI. Merely because these entries were routed by the assessee through its cash book, ld. Assessing Officer arbitrarily applied Section 40A(3) of the Act without appreciating the real nature of the book entries. Thus Assessing Officer, wily nily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification carried out by the AO itself showed that M/s Godfrey Philips India Ltd. had not shown any cash receipt from the assessee firm in their books of account. It is a fact on record that the assessee was a distributor of GPI. The GPI carried out various sales promotion activities through various retailers like Panwala Shops, Retails Shops, Kirana Shops etc. for display of its products by way of Hoardings, Glow Sign Boards, Display Counters, Brand shops etc. For inducing these shops keepers for displaying the products of the company, it provided them incentive of a particular value depending upon the location of the shops, periodicity of the display etc. This was distributed through the salesmen. The salesmen after distribution of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who accepted the payments in cash only. The AO alleged that as per the instruction of the GPI, the cash was made available by the assessee which was utilized by the sales persons of the company. Thereafter the assessee raised the debit note on the company which in turn issued credit note to the assessee. However, there was no evidence on record that cash was made available by the assessee to the sales person on instructions of the GPI. In fact from the record, it was evident that assessee, through the sales person, provided the incentives to shop keepers/panwalas/retailers etc. and on getting the complete details, it raised the debit note against which the company issued the credit note. Section 40A(3) applies when the payment or the aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee might, by making entries which were not in conformity with the proper principles of accountancy, conceal profit or show loss and the entries made by him could not, therefore, be regarded as conclusive one way or the other. What was necessary to be considered was the true nature of the transaction and whether in fact, it had resulted in profit or loss to the assessee. On the contrary, the AO had categorically mentioned in para (iii) on page 4 of the assessment order that none of the amount alleged to be paid in cash, was found entered in the cash book. If that was the case, the impugned disallowance U/s 40A(3) made by the AO had no basis. Under these circumstances, the disallowance made by the AO has no legs to stand and can't be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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