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2015 (10) TMI 2181 - ITAT KOLKATA

2015 (10) TMI 2181 - ITAT KOLKATA - TMI - Advances received from customers who booked vehicle for purchase and consequently the advances were also adjusted against sale of vehicle - system of accounting - Held that:- There is no change of system of accounting followed by the assessee. Allowing the department to adopt a different approach altogether in this assessment year in question would create an anomalous situation as far as the assessee is concerned. The issue that the dealer receiving adva .....

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d no ambiguity in the system followed by the assessee.

From the details filed before us, Ld. DR could not point out the discrepancy in the same because these advances were adjusted against sales. When this was pointed out to Ld. Sr. DR, he stated that the assessee is unable to produce the PANs, names and addresses of the parties. He was specifically shown a tax/retail invoice wherein complete details were given except the PAN/Voter I. Card. In our view, PAN/Voter Identity Card is a KY .....

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see is arising out of order of CIT(A)-Durgapur in appeal No. 155/CIT(A)/DGP/2012-13 dated 26.03.2015. Assessment was framed by ACIT, Circle- 1, Durgapur u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for AY 2010-11 vide its order dated 19.03.2013. 2. The only issue in this appeal of assessee is against the order of CIT(A) sustaining the addition made by AO being the advances received from customers who booked vehicle for purchase and consequently the adv .....

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. Briefly stated facts are that the assessee company is a dealer in motor cycle of Hero Honda Motor Corporation Ltd. and also trading in spare parts and resale of two wheelers. The assessee during the course of assessment proceedings produced complete books of account and other supporting vouchers including sale and purchase bills and evidence regarding expenses. The AO examined the complete books of account and on perusal of audited Balance Sheet he observed that the assessee had declared the l .....

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e) and (f) Amount received as advance from party with date." According to AO, the assessee could not produce the details in respect to customers numbering 1022. The AO also issued summons u/s. 131 of the Act to the Directors of the company viz. Mr. Kamalesh Dutta, Mr. Chandan Dutta and Mr. Manab Dutta to file the details of advances received from customers along with cash book and status of advance from customers. According to AO, the director could not produce the details called for. But o .....

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d the action of AO by applying the provision of section 68 of the Act by giving the following final finding at para 7 as under: "7. Therefore taking into consideration the circumstances of the present case and the applicable legal position on the issue, it can be safely concluded that the A.O. was correct in law in resorting to the addition of ₹ 3,99,54,051/- by applying the provisions of s. 68 of the Act since the criteria of identity, creditworthiness and the genuineness of the tran .....

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nding areas. Being a private limited company, assessee's accounts are audited under the provisions of Companies Act, 1956 as well as under the Income tax Act u/s. 44AB of the Act. The assessee is following mercantile system of accounting. All the purchases of assessee are supported by suppliers' invoices and tax invoices, which are issued to customers for sale of motor cycles. The assessee explained before us that in case of motor cycle dealership, the product being of high demand and su .....

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ths round the year and accordingly, in the relevant financial year 2009-10 relevant to AY 2010-11, the balance as on 31.03.2010 was ₹ 3,99,54,051/-, which is the subject matter of present appeal as added by AO and confirmed by CIT(A). According to assessee, the advance was received by the assessee against booking of a particular make of motor cycle, which is not immediately available. As and when the same is received from Hero Motor Corporation Ltd. the same is delivered to customers after .....

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hat the above particulars asked for by the AO like asking information under KYC norms, which is not compulsory in case of Sale of Goods Act i.e. for sale of motor cycles or scooters. Ld. Counsel for the assessee filed complete paper book consists of pages 1 to 213, wherein the relevant information at Sl. No. 5 i.e. copies of money receipt issued to customers while booking and taking advance is given at pages 15 to 109, at Sl. No. 6 party wise details to whom motor cycle was delivered against adv .....

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customers is new evidence filed before the Tribunal for the first time otherwise all the evidence were before AO as well as before CIT(A), but this comparative chart is only compilation of sales and purchases as well the advances. It was explained that name of the customers with relevant receipt no. issued on receiving advance and amount of advance receipt were given. Even the addresses of customers therein relevant tax/sales invoices, which were produced before the AO as well as before CIT(A), .....

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customer account" and the same is squared up the moment motor cycle is delivered to the customer. According to Ld. Counsel, this can be verified from the books of account and AO has verified also. Ld. Counsel for the assessee particularly drew our attention to page 131 of the assessee's paper book wherein the customer's name and address is mentioned as Maya Gurung, A-Zone, Hostel Avenue, Durgapur-4, DT. Burdwan, invoice dated 23.04.2010 wherein advance of ₹ 38,000/- was adjus .....

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ses as is evident from the invoice attached in the paper book. The question arises whether the information called for by the AO in regard to PAN No., voter I. D Card etc. is required in the case of sale of goods. To this, our answer is 'no' because KYC norm does not apply to traders rather the assessee has complete name and address in the tax/retail invoice along with chassis no. of the two wheeler, engine no. and total price of two wheeler including the adjustment of advance received fr .....

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ening Balance 0 3051540 23473175 39954051 31735984 (ii)Received during the year 20780940 119261320 189008017 161719880 149832190 (iii)Adjusted during the year 117729400 98839685 172527141 169937947 144593368 (iv)Closing Balance as on close of the year 3051540 23473175 39954051 31735984 36974806 6. In view of the above facts and circumstances of the case, we are of the view that the assessee is consistently following this system of accounting where advances received from customers kept under the .....

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of tax invoice/retail invoice of sale of motor cycle wherein names, addresses of the parties including engine no. and chassis no. of the motor cycle is given. 7. We find that the assessee is following mercantile system of accounting, wherein it is receiving advance deposits from customers on account of sale of motor cycle being a dealer in automobile. Whenever the sale is taken place, within one to two months, these deposits are adjusted against sale price of the motor cycle. This fact is admitt .....

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