TaxTMI 
TaxTMI 
2018 (3) TMI 379
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....ee is a partnership firm engaged in the business of Manufacturing and Sale of Homeopathic Medicines and had filed its return of income for the Asst Year 2007-08 on 31.10.2007 declaring total income of Rs. 8,36,313/-. The entire books of accounts were produced and there is no allegation that they suffer from any defect liable to be rejected. The ld AO did not reject the books of accounts in the assessment proceedings. The assessment was completed u/s 143(3) of the Act on 29.12.2009 determining total income at Rs. 11,09,145/-. Later the ld CIT sought to revise this assessment as erroneous and prejudicial to the interest of the revenue on the ground that the assessee had claimed double deduction on account of freight and forwarding charges in the sum of Rs. 6,33,344/-. The assessee submitted before the ld CIT as under:- "The total freight and forwarding charges were paid for goods consigned through transporters to the various parties and these charges were paid by the parties on our behalf as consignment notes are on "to pay basis" and for which the assessee has credited the parties accordingly. Hence, the assessee has debited the freight and forwarding charges to the profit ....
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.... the profit and loss account. The reported inclusion of the freight and forwarding charges in the sale amount credited to the manufacturing account gives rise to an anomaly because the outward freight charge partakes the character of an indirect expenditure which has been borne by the consignees. The assessee's contention on the impugned issue smacks of a thoroughly inconsistent accounting practice which defies common logic. This appellant fallacy/discrepancy embedded in the assessee's accounting treatment could not at all be satisfactorily explained by the Ld. AR. On the contrary, he fairly conceded that the freight and forwarding charges should not have been included in the turnover and that this erroneous inclusion arose out of emanated from the method of raising the sale invoices as per the sales Tax Act. In other words, the ld. AR failed to refute the aforesaid discrepancy. There is no ambiguity as to the assessee's claim of double deduction of the same expenditure i.e. freight and forwarding charges. Once the liability of the freight and forwarding expenditure has been borne by the consignee, the assessee firm is precluded from claiming the same expenditure in its profit and ....
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....e referred to the statement of sales submitted on 16.2.2012. The ld AO observed that this view of the assessee cannot be accepted as the copies of invoice of sale submitted during the course of assessment proceedings clearly show that the total outstation sale was arrived at after deduction of freight and forwarding charges amounting to Rs. 6,33,344/- and again debited the same amount to profit and loss account leading to claim of double deduction . Accordingly, the ld AO disallowed the same in the re-assessment. 7. The ld CITA held that the ld CIT u/s 263 of the Act had directed the ld AO to make disallowance of Rs. 6,33,344/- towards freight and forwarding charges and the ld AO had only followed the directions of the ld CIT which is binding on him. Once the ld AO follows the orders of his superior, by making an addition, the assessee cannot be aggrieved on the same. The assessee should have preferred an appeal before the Tribunal against the order passed by the ld CIT u/s 263 of the Act, which was admittedly not done by the assessee herein. Hence the assessee has to suffer in the instant scenario and accordingly the appeal filed by the assessee before him is not maintainable a....
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.... there is no need for the ld CIT to mention in his order directing the ld AO to give opportunity of being heard to the assessee. We further find that the ld AO also had understood the language of section 263 order passed by the ld CIT as a denovo proceeding only. This is evident from the fact that the ld AO had issued fresh notice u/s 142(1) of the Act on 5.12.2012 and had called for the entire books of accounts of the assessee. The assessee had also appeared before the ld AO and produced the books of accounts before the ld AO in the giving effect proceedings to section 263 of the Act. Hence it is only a denovo assessment directed by the ld CIT u/s 263 of the Act. Hence the assessee had not lost its legal right to prefer an appeal before the ld CITA in case if he is aggrieved on a disallowance / addition made by the ld AO in the second round of proceedings. This is irrespective of the fact that the assessee had not preferred any appeal against the section 263 order before this tribunal. Hence we hold that the appeal filed by the assessee before the ld CITA is maintainable and the ld CITA ought not to have dismissed the appeal in the instant case. We find that the reliance placed by....