2011 (6) TMI 879 - AT - Income Tax

ITAT upholds CIT(A) decision on debit note, relief for AY 2004-05

The ITAT dismissed both the revenue's appeal and the assessee's cross-objection regarding the treatment of a debit note and relief granted by the CIT(A) ... - Issues involved: Appeal against CIT(A) order u/s 250(6) of the Income-tax Act, 1961 for AY 2004-05.Revenue's Grounds of Appeal:1. Dispute over treating Debit Note as genuine for profit reduction.2. Lack of basis for disallowance apportionment.3. Justification for relief on debit note u/s 40A(2)(b).Assessee's Grounds of Appeal:Concern over relief of Rs. 32,35,509/- allowed by CIT(A).Facts of the Case:- Assessee filed return for AY 2004-05 with total income of Rs. 13,60,620/-.- AO observed debit of Rs. 52,35,509/- on 29.2.2004 based on a supplier's debit note.- Debit note explained as rate difference adjustment by supplier.- AO disallowed Rs. 52,35,509/- citing colorful device to adjust profits.- CIT(A) deleted Rs. 32,35,509/-, confirmed Rs. 20,00,000/- addition.- Revenue appealed against CIT(A) decision.Arguments:- Revenue's DR supported AO's order.- Assessee's counsel backed CIT(A)'s decision.Judgment:- ITAT considered submissions, evidence, and lower authorities' orders.- CIT(A) decision reasoned and based on credible material.- CIT(A) confirmed Rs. 20,00,000/- addition, deleted balance Rs. 32,35,509/-.- ITAT found no infirmity in CIT(A) findings, dismissed revenue's appeal.- Assessee's CO not separately adjudicated, as revenue's appeal dismissed.- Appeal by revenue and CO by assessee both dismissed.Conclusion:The appeal and cross-objection were dismissed by the ITAT in the case involving the treatment of a debit note and the subsequent relief allowed by the CIT(A) for the assessment year 2004-05.