TaxTMI 
TaxTMI 
2020 (2) TMI 1271
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.... 1.2 It is submitted that in the facts and the circumstances of the case, and in law, the enhancement of assessed income is bad, illegal and void, as mandatory conditions for initiation as well as completion thereof were not fulfilled. 1.3 It is prayed that the enhancement be held as bad, illegal and void. WITHOUT PREJUDICE TO THE ABOVE: 2.1 The Id. CIT (A) erred in directing the A.O. to disallow the entire amount of outstanding liability of gift vouchers as on 3 1.03.2010 amounting to Rs. 2,17,97,617/-. 2.1 While doing so, the Id. CIT (A) failed to appreciate that: (a) Method of Accounting adopted by the Appellant to determine its liability on account of gift vouchers issued was a proper method, consistently and regularly adopted / followed by it over a period of time; and (b) sales (revenue income) with respect to gift vouchers are recognized as and when the vouchers are redeemed by the customers. 2.3 It is submitted that, in the fact and circumstance of the case and in law no disallowance of outstanding balance of gift vouchers as on 31st March, 2010 was called for. 3. The appellant craves leave to add,....
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....e 'gift vouchers' which though may not have been redeemed for more than 3 years. It was averred by the assessee that it had at no point of time refused to honor the 'gift vouchers' which were presented after the expiry date, and would in fact revalidate the same in any one of the ways viz. (i) allowing the customer to make purchases against the expired 'gift vouchers' by validating the same; or (ii) extending the period of validation of 'gift vouchers' in case if the customer did not wish to make an immediate purchase. On the basis of the aforesaid facts, the assessee tried to impress upon the A.O that its obligation to redeem the 'gift vouchers' did not cease despite lapse of time beyond the period for which the 'gift vouchers' were valid. However, it was admitted by the assessee that small fraction of the 'gift vouchers' which were issued would not come for encashment as the same may either be misplaced, destroyed by the customer, or the customer would have left the city for good. On a perusal of the records, it was observed by the A.O that the balance outstanding towards current liability of 'gift vouchers' for the financial year 2007-08, 2008-09 and 2009-10 was Rs. 3,22,15,623/....
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....come its income. On being confronted with the aforesaid facts, the assessee agreed that on an estimate basis 10% out of the total outstanding liability for the 'gift vouchers' could be held to have outlived its validity period and ceased to be a liability anymore. However, the A.O taking cognizance of the fact that disallowance to the extent of 20% of the outstanding liability of the 'gift vouchers' would serve the cause of justice, therein worked out the disallowance at Rs. 43,59,524/-. Accordingly, after making the aforesaid addition/disallowance the A.O scaled down the returned loss of the assessee to an amount of Rs. 1,82,07,280/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) was not persuaded to subscribe to the contentions advanced by the assessee. On the contrary, the CIT(A) being of the view that the total amount of the outstanding liability of Rs. 2,17,97,617/- for the 'gift vouchers' ought to have been disallowed, therein issued a notice under Sec. 251(2) of the Act, dated 18.07.2017, as per which the assessee was called upon to explain as to why an enhancement to the said effect may not be made in its case. As the subm....
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.... the assessee firm. On the basis of the aforesaid facts, as stated by the assessee, its chartered accountant Mr. Shenvi examined the postal acknowledgment available with the office of the CIT(A) and found that the order was received by Ms. Ranjana Jadhav, a housekeeping staff member of the assessee firm. On being informed about the aforesaid fact, it is stated by the assessee that he made necessary enquiry, wherein it was gathered that though Ms. Ranjana Jadhav had received the aforesaid order, but had misplaced the same. It is the claim of the assessee that Mr. Shenvi immediately on 19.02.2018 applied for a copy of the order passed by the CIT(A), dated 24.08.2017, which was provided to the assessee firm on 08.03.2018. After receiving the copy of the order of the CIT(A), it is stated that involving no further loss of time the appeal was filed with the Tribunal. The ld. Authorized Representative (for short 'A.R') for the assessee submitted that as the delay in filing of the appeal within the stipulated time period had occasioned on account of the aforesaid compelling circumstances which were beyond the control of the assessee, therefore, the same may be condoned. 7. Per contra, t....
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....d by the assessee that it was only pursuant to the fact gathered by its chartered accountant viz. Mr. Shenvi that the CIT(A) had disposed off the appeal vide his order dated 24.08.2017, which was thereafter served upon Ms. Rajana Jadhav, that the assessee was made aware of the said fact about the disposal of its appeal by the first appellate authority. Although, we are of the considered view that the assessee ought to have put his house in order and remained vigilant as regards the correspondence received from the Income Tax department, but then, in the totality of the facts of the case as had been deposed by the assessee by way of an 'affidavit', dated 17.03.2018, it can safely be concluded that the delay involved in filing of the present appeal was backed by reasons which does not smack of malafides or a dilatory strategy on the part of the assessee. Accordingly, in our considered view the aforesaid explanation of the assessee as regards the delay involved in filing of the appeal cannot be summarily turned down. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Ramnath Sao Vs. Gobardhan Sao (AIR 2002 Supreme Court 1202). Also, we find,....
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....disallowed the entire amount of the outstanding liability of 'gift vouchers' of Rs. 2,17,97,617/-. 10. We have given a thoughtful consideration to the facts pertaining to the issue under consideration and are unable to persuade ourselves to subscribe to the view taken by the CIT(A). As observed by us hereinabove, it remains as a matter of fact that the assessee in the normal course of its business for the last many years had adopted the policy of issuing 'gift vouchers' to its customers, which thereafter would be redeemed on a latter date as against the value of the items purchased. We are unable to find ourselves to be in agreement with the view taken by the CIT(A) that the entire amount of the 'gift vouchers' liability of Rs. 2,17,97,617/- reflected in the 'books of accounts' of the assessee on 31.03.2009 was to be treated as having been ceased and not outstanding on the said date. As a matter of fact, contrary to the aforesaid view taken by the CIT(A), we find that the department had consistently accepted the aforesaid practice of issuing of 'gift vouchers' by the assessee and the redemption of the same against the value of the items purchased subsequent thereto. As such, the....