TaxTMI 
TaxTMI 
2018 (3) TMI 1093
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....cumstances of the case, CIT(A) has erred in restricting the addition of Rs. 41,17,986/- to Rs. 13,88,604/- by adopting the method of peak credit on monthly basis. 3. On the facts and in the circumstances of the case, CIT(A) has erred in violating the provisions u/r. 46(A) of the Income Tax Rules in not remanding the matter to the AO while accepting to take additional information during the appellate proceedings." The assessee has raised following ground in the cross-objection:- "01. The appellant has stated that CIT(A) has erred in deleting the addition of Rs. 4117986.00 made by A.O. on account of negative cash balance. The appellant has further stated that on the facts and in the circumstances of the case, CIT(A) erred in restricting the addition of Rs. 4117986.00 to Rs. 1388604.00 by adopting the method of peak credit on monthly basis. The CIT(A) has rightly deleted the addition of Rs. 4117986.00 on due verification and due consideration of the facts and circumstances of the case, however the addition of Rs. 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 ma....
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....ere filed before the Assessing Officer and the CIT(A). We are of the view that we have no mechanism to verify each and every entry to ascertain the position of negative cash balance on the basis of peak credit on daily basis. Hence, we set aside this issue and remand the matter to the file of the Assessing Officer for fresh consideration in terms of the above. This issue of Revenue's appeal and that of the cross-objection of the assessee is allowed for statistical purposes. 5. The next common issue in this appeal of the Revenue and the cross-objection of the assessee is as regards to the order of the CIT(A) in restricting the addition of Rs. 1,78,009/- instead of addition made by the Assessing Officer at Rs. 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 Rs. 6,67,480/- made by AO on account of disallowance of discount to Rs. 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 :- ....
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....imed that A.O. has wrongly calculated the figures for discount and has claimed that these are various types of produce in which appellant has given different percentage of discount as indicated in above submissions and had also claimed that 80% of discount received by appellant is to be passed on to the retailers by the appellant as per agreement with BSNL. Appellant has shown that various product give different commission like 6.5%, 7% and for this he has filed copy of two demand note of BSNL addressed to appellant. 8.4 In this year, appellant has got commission of Rs. 81.21 lakhs and if appellant has given 80% of this to retailers the total discount given to retailers should be Rs. 64.96 lakhs. However, appellant seems to have claimed more and, however, the claim of appellant of discount is restricted to 80% of Rs. 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 Rs. 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 ....
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....randi of the business. The CIT(A) has rightly hold the relationship of principal and agent between BSNL and assessee. It is also supported by the verdicts of Honourable High Court of Kerala in case of Vodafone Essar Cellular Ltd., Vs. Asstt.CIT dt. 17.8.10 and Honourable ITAT Cochin Bench in the case of S.Rahumathulla Vs. ACIT dt. 20.4.10. 05. The appellant has stated that "On the facts and in the circumstances of the case CIT(A) erred in deleting the addition of Rs. 14702811.00 made by A.O. u/s 40A(3) of the I.T. Act, 1961." The contention of the appellant is not correct. The CIT(A) has justifiably deleted the addition of Rs. 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 Rs. 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 o....