TMI Blog2018 (3) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... nt at 80%, which, in our view, is not the right procedure. In view of above facts and details submitted by the assessee, we are of the view that nothing is to be disallowed because the working given by the assessee regarding commission at 5% on recharge coupons is within the perfect limits. Accordingly, we delete the addition completely and allow this issue of the cross-objection of the assessee. This issue of Revenue’s appeal is dismissed. Application of provisions of Section 40A(3) in respect to purchase of sim cards, recharge coupons - Held that:- Issue to be decided in favour of assessee as relying on case of Vodafone Essar Cellular Ltd. Vs. Asstt.CIT [2010 (8) TMI 691 - KERALA HIGH COURT] as held relationship of principal/agent is there and appellant is getting only commission out of it. Hence, there is no sale purchase and section 40A(3) is not attracted. Not allowing credit for income surrendered during the course of survey - Held that:- As appellant has himself credited unaccounted income in books of account after surrendering it during survey, A.O. should have given credit of such disclosure to appellant vis-a-vis undisclosed income determined by A.O. for the current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the addition of ₹ 4117986.00 to ₹ 1388604.00 by adopting the method of peak credit on monthly basis. The CIT(A) has rightly deleted the addition of ₹ 4117986.00 on due verification and due consideration of the facts and circumstances of the case, however the addition of ₹ 1388604.00 on the method of monthly peak is not correct and it should have been on the basis of peak level of negative cash balance on daily basis. As submitted the maximum peak level of negative cash balance on daily basis is ₹ 95442.82. 3. Briefly stated, facts are that the assessee derives income from wholesale trading of country liquor, petrol pump (IOC), BSNL franchisee and retail country liquor shops. The assessee is a part of business concern called as Jaiswal Group of Gondia. A survey under Section 133A of the Income-tax Act, 1961 (hereinafter the Act ) was conducted in this group of cases on 14th December, 2007. In respect to this addition, the Assessing Officer noted that a peculiar feature of the sale account of the assessee shows that it is in the habit of recording sales in cash at ₹ 20,000/- per day or less. Since the assessee has not produced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer at ₹ 6,67,480/- on account of disallowance of discount on commission received from BSNL to retailers. For this, Revenue has raised following ground No.4 :- On the facts and in the circumstances of the case CIT(A) erred in restricting the addition of ₹ 6,67,480/- made by AO on account of disallowance of discount to ₹ 1,78,009/- holding that assessee has passed on at least 80% of commission received from BSNL to retailers. The assessee has raised following ground No.3 :- 03. The appellant has state that On the facts and in the circumstances of the case CIT(A) erred in restricting the addition of ₹ 667480.00 made by A.O. on account of disallowance of discount to ₹ 178009.00 holding that assessee has passed on at least 80% of commission received from BSNL to retailers. The addition of ₹ 667480.00 by disallowing the discount to retailers was based on wrong computation which was duly highlighted during assessment proceeding and also before the CIT(A). However CIT(A) has on due verification of records and documents and the method adopted by A.O. has reduced the disallowance to ₹ 178009.00 and the act is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given 80% of this to retailers the total discount given to retailers should be ₹ 64.96 lakhs. However, appellant seems to have claimed more and, however, the claim of appellant of discount is restricted to 80% of ₹ 81.21 lakhs claimed by the appellant and balance claimed by the appellant to the extent of 66.74809 64.96800 = 1.78009 is disallowed i.e. addition made by A.O. is restricted to this amount of ₹ 1,78,009/-. Aggrieved by the order of CIT(A), both came before the Tribunal. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the Assessing Officer, without any basis, disallowed commission straightaway at the rate of 10%. The assessee has furnished the detailed break-up of discount allowed and commission on sim cards and recharge coupons which is around 5% and 6.40%. From the figures submitted by the assessee regarding details of discount, it is clear that around 5% commission was given by the assessee but Assessing Officer has wrongly worked out the percentage as 6.10%. We find that even the CIT(A) has restricted the discount at 80%, which, in our view, is not the right procedure. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is not correct. The CIT(A) has justifiably deleted the addition of ₹ 14702811.00 as there is no sale/purchase in between franchisor and franchisee. The action of CIT(A) is supported by the above verdicts referred in Sl.No.4 above. 10. Briefly stated, facts are that the Assessing Officer disallowed the purchase of sim cards and recharge coupons payments made in contravention of Section 40A(3) amounting to ₹ 1,48,02,811/-. Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A), following the decision of Hon ble Kerala High Court in the case of Vodafone Essar Cellular Ltd. Vs. ACIT in ITA No.1742 of 2009 and others dated 17th August, 2010, observed that there is no sale and purchase in the case of the assessee and hence, the provisions of Section 40A(3) of the Act do not apply. For this, he observed in paragraph 9.3 as under :- 9.3 However, appellant has claimed that there is relationship of principal and agents and between appellant and BSNL and hence appellant can give cash collected on behalf of principal and section u/s 40A(3) is not attracted. Appellant has placed reliance on the judgment of Kerala High Court in case of Vodafone Essar Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are reproduced in paragraph 5.3 and read as under :- 5.3 As appellant has himself credited unaccounted income in books of account after surrendering it during survey, A.O. should have given credit of such disclosure to appellant vis-a-vis undisclosed income determined by A.O. for the current assessment year. But appellant has already taken cash and deposited it in its books and all the additions made by A.O. in this order are on issues not related to survey viz., stock difference or any specific defect to be given set off amongst this suomoto crediting of cash of five lakhs. Hence, I do not find any reasons to telescope the addition made by A.O. to the extent of ₹ 5 lakhs surrendered by the appellant and immediately credited in cash book that is separate undisclosed income offered by the appellant not related to issues raised by A.O. in assessment. Hence, this ground is dismissed. 15. We find no infirmity in the finding of the CIT(A) and, hence, the same is confirmed. 16. In the result, the appeal of the Revenue and the assessee and the cross-objection of the assessee are disposed of in terms indicated above. Decision pronounced in the open Court on 05.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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