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2015 (11) TMI 1127 - ITAT DELHI

2015 (11) TMI 1127 - ITAT DELHI - TMI - Addition on account of suppressed receipts - Additions on the basis of 26AS statement - CIT(A) deleted the addition - as per OLTAS information, 26AS details and also per TDS form 16A the amount has been credited to the account of the assessee by the company - whether there is no record with the company that the payment has been made directly to the retailers? - Held that:- As evident from affidavit a copy placed the assessee has categorically stated that t .....

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of the retailers to whom the related payments have been made. There is no material to come to the conclusion that assessee ever received any such coupons or payments nor the same are reflected in his books of accounts or bank statements. The fact that these payments are made by coupons and vouchers etc. can also not be put against the assessee since the assessee never received the same and there is no evidence to the contrary. Apparently, entire confusion has started from the fact that, perhaps .....

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deleted the addition - Held that:- The specific discrepancy pointed out by the AO has already been explained by the assessee and the Assessing Officer has in remand proceedings, accepted the explanation. The stock re cords were produced before the AO as well, and, therefore, an adverse remark b y the tax auditor ceases to be much relevant any way. In any case, there is nothing to show incorrectness of accounts and just because gross profit rate this year is lower the books of accounts cannot be .....

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onate to increase in sales. This approach proceeds on fallacious assumption that increase in an expense must correspond to increase in benefit by that increase in expenses. It is only elementary that relationship between an expense and the benefits arising from such an expense can never be so linear and static. The allowance for deduction, in any case, is not dependent on the result it prod uces. As long as expenses are supported by evidences and there is nothing to even call into question the f .....

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ot used for any of these purposes. No material is brought before us to controvert these findings. Accordingly, we see no reasons to disturb conclusion arrived at by the CIT (A) in respect of these disallowance. The same is the position with respect to addition on account of low drawings. The AO had estimated annual household expenses at ₹ 1,20,000 but then admittedly drawings of assessee and his wife, put together, are ₹ 1,58,000. No addition is called for in respect of this addition .....

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hilesh Gupta for the respondent ORDER Per Pramod Kumar: 1. This appeal, filed by the Assessing Officer, is directed against the order dated 18 th June, 2012, passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009-10. 2. In the first ground of appeal, the Assessing Officer has raised the following grievance : 1. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in law and fact .....

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y to the retailers. 3. The relevant material facts, as culled out from records before us, are as follows. The assessee before us is engaged in the business, inter alia, as distributor of Vodafone Essar Telecom Products for the district of Mahendragarh (Haryana). During the course of scrutiny assessment proceedings of this assessee, the Assessing Officer noted that while as per 26AS details in the database of revenue administration, the assessee has received ₹ 81,09,955 from Vodafone Essar .....

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that the AO s requisition directly to Vodafone Essar Digilink Ltd., on whether the amounts were paid by cheque or draft, remains unanswered. It was in this backdrop that the Assessing Officer made an addition of ₹ 58,78,256 on account of, what he termed as, suppressed receipts. While doing so, he also observed that it is unbelievable that payments were made (by Vodafone) in Vodafone currency and tax was deducted and deposited in Indian currency and that if at all it is accepted that there .....

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vailable on record, M/s. Vodafone made payment of ₹ 58,78,256/- to around 539 retailers in the juris diction of the assessee towards the promotional scheme of the company. No evidence has been brought on record by the AO that the amount of ₹ 5 8,78,256/- was either received or receivable by the assessee from M/s. Vodafone during the year under consideration. On the other hand, the enquiries made by the AO during the assessment proceedings and the remand proceedings reveal that M/s Vo .....

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of ₹ 5 8,78,256/- has in fact been received by the retailers as per the promotional scheme of M/s. Vodafone while making the payments directly to the retailers has resorted to deduction of TDS in the hands of the assessee as they were not having the PAN of various retailers. In view of the above, the addition made by the AO of ₹ 58,78,256/- is deleted and the grounds of appeal are allowed. 4. The Assessing Officer is aggrieved of the relief so given by the CIT(A) and is in appeal be .....

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een put against the assessee. We have also noted that, as evident from affidavit a copy of which is placed before us at page 26 of the paper book, the assessee has categorically stated that the impugned amount of ₹ 58,78,256 shown in form No. 26AS was neither received by me nor receivable to me and that the above stated amount of ₹ 58,7 8,256/- was directly paid by the Vodafone Essar Digilink Ltd to the retailers of the company, a complete list of which is provided by the company and .....

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statements. The fact that these payments are made b y coupons and vouchers etc. can also not be put against the assessee since the assessee never received the same and there is no evidence to the contrary. Apparently, entire confusion has started from the fact that, perhaps as a measur e of abundant caution, Vodafone deducted tax at source in respect of the vouchers etc and, for whatever reasons, stated, the name of distributor a s collective recipient of entire sum. On these facts, in our consi .....

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the discrepancies in the stock register has been arrive d before appreciating the way of stock register whereas discrepancies in the stock register has been arrived at after detailed examination and book version of the assessee has rightly been rejected by applying the provisions of section 145 of the Act. 9. During the course of the assessment proceedings, the Assessing Officer noted that as against GP rate of 1.90% in immediate ly preceding assessment year, the assessee has shown only 1.45% as .....

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produced the stock register though he has given quantitative details. He also noted that in any case tax auditor had stated that the assessee did not maintain stock records. When records were produced before the AO, he noted that one of the purchase bills was not entered in stock register, that E-Top-ups by the Vodafone were raised on C Series bills whereas al l Vodafone product billing was done on V Series bills. With these observations, he rejected the books of accounts as unreliable and adopt .....

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to the month of Oct. 2008 has been arrived at by the AO before appreciating the way the stock register is maintained by the assessee. This was explained in the written submissions before me along with the stock register , which have been forwarded to the AO. The AO has not made any adver se comments in this regard in the remand report. The AO similarly misdirected himself regarding the stock register for the month of Feb. 2008 (not the year under consideration) without confronting the assessee a .....

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g on record that the stock registers are not reliable. In view of the above, it is held that no case has been made out by the AO that the books of accounts are not reliable and complete warranting the rejection. The addition made by the AO on GP rate basis of ₹ 9,28,230/- is therefore deleted and the ground of appeal is allowed. 10. The Assessing Officer is aggrieved of the relief so given by the CIT(A) and is in appeal before us. 11. We have heard the rival contentions, perused the materi .....

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and just because gross profit rate this ye ar is lower the books of accounts cannot be rejected. In these circumstances , the conclusions arrived at by the CIT(A) do not require to be interfered with. We approve the same and decline to interfere in the matter. 13. Ground No. 2 is also dismissed. 14. In ground No. 3, the Assessing Officer has raised the following grievance : 3. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in law and facts in d .....

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he assessee. As against salary payment of ₹ 5,65,500 in the immediately preceding year, salary paid in the current year was ₹ 17,70, 037. In addition, payments of ₹ 7,91,716 were made for Vodafone Exclaim and Scheme A/c and ₹ 90,000 for sales promotion. The explanation of the assessee that all these payments are properly vouched and supported, that there is a phenomenal increase in sales and that payment of Vodafone Exclaim and Scheme for ₹ 7,91,716 was made as per .....

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are taken. Further, a large number of affidavits of the employees have been filed. The AO has not disputed the evidence furnished by the assessee. It is well settled law that the facts stated on affidavit cannot be simply disbelieved without examining the person or bringing adverse material on record. Instead of doing so, the AO has resorted to estimating the genuine salary on the basis of increase in turnover and yearly increase in salary. This action of the AO is clearly arbitrary and without .....

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ty and came to erroneous adverse conclusion. Since no material has been brought on record by the AO regarding the excess claim of salary expenses and further as the impugned addition has been made purely on estimate basis, the disallowance made by the AO is deleted and the ground of appeal is allowed. 16. The Assessing Officer is aggrieved of the relief so given by the CIT(A) and is in appeal before us. 17. We have heard the rival contentions, perused the material on record and duly considered f .....

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pense and the benefits arising from such an expense can never be so linear and static. The allowance for deduction, in any case, is not dependent on the result it prod uces. As long as expenses are supported by evidences and there is nothing to even call into question the factum of expense having been incurred, the disallowance of such expenses cannot be made for the reason that expense is excessive. In view of these discussion, as also approving the reasoning adopted by the CIT(A), we approve t .....

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36(1)(iii) of the I.T. Act. iii). On account of 1/6 th disallowance of expenses of ₹ 38,027/- out of car/motor cycle for personal use. (iv). On account of 1/6 th disallowance of expenses of ₹ 23,233/- out of telephone expenses for personal use. (v). On account of 1/6 th disallowance of expenses of ₹ 16,008/- out of shop expenses being not fully vouched. (vi). On account of 1/6 th disallowance of expenses of ₹ 70,676/- out of sales promotion being not fully vouched. (vii) .....

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