AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 38
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.... cheques issued by the assessee during the period and been deposited in the bank account of M/s. Ratna Enterprises and on the day of deposit, withdrawal of equal amount had been made. Further, the said party has neither issued cheque payment to any persons/party nor had it received any cheques from other party other than the assessee which shows that the so called payments made to M/s. Ratna Enterprises were a device to reduce its taxable income. 3. The appellant craves to amend or add any one or more grounds of appeal." 2. In ITA No.306(Asr/2013, the sole ground raised by the revenue is as under: "1. On the facts and circumstances whether the ld. CIT(A) was right in deleting the addition made by treating the expenditure as sale promotion on protective basis when the decision of the Ld. CIT(A) on quantum addition have been filed challenged before the Hon'ble ITAT, Amritsar." 3. First of all, we take up appeal of the Revenue in ITA No.207(Asr)/2013 where the brief facts as per AO's order at pages 2 to 10 are reproduced for the sake of convenience as under: "The assessee firm is trading in sale and purchase of Edible Oil, Refined Oil and Vanaspati ghee etc. On total sale of Rs.7....
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....2581 78,257,81 27. Advertisement & Publicity 03.08.2005 2584 27,718.59 28. Advertisement & Publicity 08.08.2005 2586 18,000.00 29. Advertisement & Publicity 24.08.2005 2590 57,206.25 30. Advertisement & Publicity 25.08.2005 2592 48,480.46 31 Advertisement & Publicity 26.08.2005 2593 72,154.68 32. Advertisement & Publicity 29.08.2005 2596 75,206.25 33. Advertisement & Publicity 30.08.2005 2597 45,703.12 34. Advertisement & Publicity 31.08.2005 2600 1,12,886.71 35. Advertisement & Publicity 3.9.2005 2601 63.149.62 36 Advertisement & Publicity 5.9.2005 2606 66,199.50 37. Advertisement & Publicity 6.9.2005 2607 49,649.62 38 Advertisement & Publicity 9.9.2005 2612 27,000.00 39. Advertisement & Publicity 15.9.2005 2616 69,099.75 40. Advertisement & Publicity 16.9.2005 2617 30,093.75 41. Advertisement & Publicity 22.9.2005 2618 66,375.00 42. Advertisement & Publicity 24.9.2005 2621 10,140.62 43. Advertisement & Publicity 29.09.2005 2622 78,468.75 44. Advertisement & Publicity 01.10.2005 2627 66,375.00 45. Advertisement & Publicity 07.10.2005 2635 31,050.00 46. Advertisement & Publicity 08.10.2005 2637 63,281.25 47. Advertisement & Publicity 14.10.....
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....hmir Bank Ltd. Residency Road, Jammu A/c No. 0076CD1999 and The J & K Bank, Gangyal A/c No.1455 and the amounts have been credited in A/c No.0076CD2084 in the name of M/s. Rama Enterprises, with The K & K Bank Ltd. Residency Road, Jammu. 2.2. After going through the information filed by the assessee and the information obtained from the banks, vide this office letter dated 08.12.2008, the assessee was asked to explain as under: "After test check of the information filed by you, it has been observed that you have shown debit balance of Rs.5,52,179.12 against the name of M/s. Ratna Enterprises, Ware House, Jammu as on 31.03.2006 whereas there was credit balance of Rs.1,88,816/- as on 1.4.2005. Your bank accounts maintained with J & K Bank Ltd. Gangyal Branch and Residencey Road Branch show that during the year you have made total payment of Rs.53,50,000/- on different dates through cheques. The copy of account as existing in your books of account shows that the said party has raised bills on different dates on account of 'advertisement and publicity'. You are required to furnish the following information on this account: i. Please furnish the complete name and address of the....
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.... credit balance of Rs.1,88,816/- as on 1.4.2005. Your bank accounts maintained with J & K Bank Ltd. Gangyal Branch and Residencey Road Branch show that during the year you have made total payment of Rs.53,50,000/- on different dates through cheques. The copy of account as existing in your books of account shows that the said party has raised bills on different dates on account of 'advertisement and publicity'. You are required to furnish the following information on this account: v. Please furnish the complete name and address of the party; in case of Proprietorship, please provide the name and complete address of the Proprietor; vi. Nature of the business carried out by the said concern alongwith its PAN number and particulars of ward/circle where same is being assessed. vii. Please furnish the original bills issued by the said concern on the basis of which you have credited its account as existing in your books of account; viii. Nature of 'advertisement and publicity' and how same has been accounted for in your books of account. 2. Please stated whether the partners of the assessee firm have relationship with the partners/proprietor of the said concern, if so, please justify....
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....f washing soap cost and thus the cost realization of washing soap has been credited to the said account head and stated that all the purchases of washing soap are properly accounted for in the books of account and all the payments had been made to the party through account payees cheques. During the course of discussion with the counsel of the assessee, he produced some purchase bills, which he stated to be original bills raised by M/s. Ratna Enterprises on account of sale of soap to the assessee and further stated that tehse bills are accounted for in the books of account in support of which he again filed a copy of account as existing in his accounts. However, no books of account were produced to verify the contention of the assessee. 2.5. After going through all the facts as bought on record and after perusal of the various documents brought on record, the counsel for the assessee was asked to justify the purchase of Washing Soap from M/s. Ratna Enterprises and its further sale to different parties. He was also asked to provide the particulars of the parties to whom the sales were made. It was also pointed out to him that as per the report of the auditors in Form No.3CD it has ....
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....rchase and sale vouchers and other misc. vouchers, therefore, it is difficult to believe the story. 2.6. This fact is further strengthened by the fact that the assessee firm has floated only one Scheme which was valid from 20.12.2005 to 31.01.2006 and the said scheme provided as under: "Jumbo family is here with a grand Bonaza Introductory for our valued customers for Taj Mahal Bakery, Powerman Soya Been refined oil and VIP Mustard Oil Grade-1. 1) i) On purchase and delivery of 300 boxes of Taj Mahal Bakery: One Mobile Phone worth Rs.2800/- ii) On purchase and delivery of 500 boxes of Taj Mahal Bakery : Any one item i.e. Mobile Phone or Room Heater worth Rs.5000/- iii) On purchase and delivery of 750 boxes of Taj Mahal Bakery: Any one item i.e. Mobile Phone or colour TV worth Rs.8000/- 2. i) On purchase and delivery of 600 tins Powerman refined soyabeen oil: One Mobile Phone worth Rs.2800/-. ii) On purchase and delivery of 600 tins Powerman refined soyabeen oil: Any one item i.e. Room Heater or Mobile Phone worth Rs.5000/- iii) On purchase and delivery of 1200 tins Powerman refined soyabeen oil: Any one item i.e. colour TV or mobile phone worth Rs.8000/-. 3. i) One purchas....
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.... shown at Rs.302.60 and the closing balance in the account as on 31.3.2006 is Rs.236.60. During the period only the cheques issued by the assessee firm have been deposited in the said account and on the day of deposit, withdrawals of the equal amount have been made. The cheques through which the withdrawals have been made are also mostly in seriatim which shows that neither M/s. Ratna Enterprises has issued any cheque payment to any other person/party nor has it received any cheques from some other party than the assessee. Copies of some of the cheques issued by the assessee have been obtained from the bank alongwith copies of the pay-in-slips. The details of which are given hereunder: S.No. Cheque No. Date of cheques Amount in Rs. 1 5044749 17.06.2005 2,50,000 2. 5044773 06.07.2005 4,00,000 3 5044775 24.08.2005 6,00,000 4. 5044777 3.9.2005 6,00,000 5. 5044778 04.10.2005 4,00,000 These cheques alongwith pay-in-slips form Annexure-A to this order. A perusal of these cheques and pay in slips reveals that the person who has prepared the cheques and the person who has deposited these cheques as per pay-in-slips in the account of M/s. Ratna Enterprises is one and the same p....
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....issible expenditure having been debited by the assessee to reduce its profitability. This will also cover any other discrepancy in the trading results which could not be verified in the absence of books of account. As the assessee has furnished inaccurate particulars of its income, therefore, penalty proceedings u/s 271(1)(c) of the Income tax Act, 1961 are also initiated separately." 3. The Ld. CIT(A) deleted the additions for the reasons mentioned in his order and the relevant findings at pages 7-8 of the order are reproduced as under: "There is no denial by the AO that free gift scheme was in place. The then pamphlet of free gift of soap with Jumbo brand Mustard Oil of different pack was also placed before me in the appellate proceedings. The appellant floated two schemes, one for customers and other for shopkeepers. For customers, scheme pertaining to sale of small pouches of 1 Kg, 2 Kg and 5 Kg. of edible oils was under operation where free gifts of washing soap were given, while for bulk purchase by shopkeepers of big packs of tin and boxes free gifts of Color TV, Mobile Phone, Room Heater etc. were in place. The appellant vide its letter dated 30.10.2008 has stated about s....
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....eposited in the said account of M/s. Ratna Enterprises have been withdrawn on equal amount on the day of deposit itself. The cheques through which the withdrawal have been made are also mostly in seriatum which shows that neither M/s. Ratna Enterprises has issued any cheque to any other person nor it has received any cheque from other parties that the assessee. Perusal of these cheques and pay-in-slips reveal that person who has prepared the cheques and the person who has deposited these cheques as per pay-in-slips in the account of M/s. Ratna Enterprises is one and the same person as is evident from the hand-writing on these documents and the date of deposit and date of withdrawal is also the same, which proves that it is one man show. The assessee has not discharged its onus to prove expenditure claimed as genuine and explanation has been found to be not satisfactory. The Ld. DR further argued that copy of the scheme was not provided to the AO and no details have been furnished to whom such free gift, as claimed has been distributed. The assessee could not provide particulars of the parties to whom such sales have been made i.e. the parties to whom free gifts have been made. It i....
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....grounds of the Revenue are allowed. In the result, the appeal of the Revenue is allowed. 7, Now, we take up the appeal of the Revenue in ITA No.306(Asr)/2013. The brief facts as per AO's order are reproduced for the sake of convenience as under: "While going through the Schedule-2 for value of fringe benefit it is observed that under the head sales promotion the assessee has shown only expenditure of Rs.2,31,247/- and Rs.2,31,271/-. However, during the course of assessment proceedings under the Income tax Act, it has been noticed that in addition to these expenditures made on sale promotion, the assessee has also debited an expenditure of Rs.46,09,004/- in the trading account of M/s. Rama Enterprises, Ware House, Jammu. Keeping in view the detailed discussion as held in the assessment order framed under Income tax Act, the same amount is taken as sale promotion on protective basis as per the provisions of section 115WB(2)(D) of the Income tax Act, 1961 and 20% of it is charged to fringe benefit tax which works out to Rs.9,21,800/-." 8. Before, the ld. CIT(A), the assessee made the submissions and the ld. CIT(A) deleted the same vide paras 4.1 & 4.2 as under: "4.1. The addition ....