Income Tax Appellate Tribunal - Pune
Acit,Cir.-1,, Nashik vs Assessee on 23 January, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member,
and Shri R.K.Panda, Accountant Member.
ITA.No.797/PN/2011
(Asstt. Year : 2006-07)
ACIT, Circle-1,
Nashik. .. Appellant
Vs.
Smt.Aruna Nagraj Deore,
Atul Industries,
Plot No.1-39,
MIDC, Ambad,
Nashik. .. Respondent
Assessee by : Shri P.S.Shingte
Department by : Ms.Ann Kapthuama
Date of Hearing : 23.01.2013
Date of Pronouncement : 24.01.2013
ORDER
PER SHAILENDRA KUMAR YADAV, JM:
This appeal has been filed by the Revenue against the order of the CIT(A) wherein deletion of addition of Rs.14,33,921/- has been opposed.
2. Briefly the facts are that the assessee is an individual and is engaged in the business of manufacturing and trading in milk, sweets and milk products in the proprietary concern of M/s.Atul Industries. For A.Y. 2006-07 the assessee filed return of income declaring total income of Rs.6,36,120/- on 26.10.2006 and that was accompanied by Profit and Loss Account, Balance Sheet and Tax Audit Report. The Assessing Officer observed that the assessee has made sales to several parties, however, one such party was M/s.Atul Sweets which was the proprietary concern of her 2 husband's brother to whom the assessee granted discount @ 25% on sales, whereas no such discount was given to other purchasers. The stand of the assessee before the Assessing Officer was that discount to M/s.Atul Sweets was given because it was the retail customer, whereas the sales to other parties no discount was given because the parties viz. Hotel Taj Residency, Hotel Durga International, Hotel Sai Palace, etc., were the end users. Therefore, sales to these parties are made at MRP rates. The assessee also pleaded that it was a commercial decision taken out of business expediency. The Assessing Officer was not convinced and he held that the assessee has under invoiced her sales. He accordingly worked out the addition of Rs.14,33,921/- representing the estimated under invoicing of sales to M/s.Atul Sweets. Matter was carried before the First Appellate Authority who after considering the various submissions on behalf of the assessee, granted relief to the assessee. Same has been opposed before us by the Revenue.
3. The Ld. Departmental Representative submitted that the CIT(A) was not justified in deleting addition of Rs.14,33,921/- because assessee has given discount of 25% to M/s.Atul Sweets while similar discount was not given to other parties. This is not justified. Accordingly the order of the Assessing Officer should be restored. On the other hand Ld. Authorised Representative submitted that other customers cannot be treated at par with M/s.Atul Sweets because M/s.Atul Sweets is a customer and substantial supply is through him and supplies to the other parties are at MRP because they are end users. Basically Ld. Authorised Representative supported the order of the CIT(A).
4. After going through the above, we are not inclined to interfere with the finding of the CIT(A) who has granted relief to the assessee. As mentioned above, assessee is a manufacturer and trader in milk and milk products. The assessee has supplied these items to several parties which include M/s.Atul Sweets which happens to be proprietary concern of her husband's brother Shri Manik Maharu 3 Deore. The Assessing Officer has wrongly taken assessee's husband Shri Nagraj Deore as the proprietor of M/s.Atul Sweets. The assessee has given discount of 25% on total sales to M/s.Atul Sweets on the ground that it was a retail distributer in which there are certain factors viz., wastage and pilferage in transportation and establishment expenses and also the commodity sweets being of perishable nature and if not sold within a time, the resultant loss has to be borne by the retail distributor. The assessee, therefore, was obliged to pass on a discount of 25% to M/s.Atul Sweets to compensate for such loss. The stand of the assessee has been that it was commercial decision which was taken by the assessee out of business expediency. With regard to sales to other parties that are mentioned by the Assessing Officer in para 8 of the impugned assessment order it is seen that they are end users and the goods sold by the assessee to these parties on MRP. In this background, the CIT(A) found that the Assessing Officer has erred by observing that assessee should have granted similar discounts to all its customers. The Assessing Officer has tried to comment on the way business model of the assessee. Practically he tried to advise the assessee the manner in which its business has to be conducted. This is against settled legal position because it is the sole prerogative of a businessman to conduct his business in the manner he thinks best keeping in view the business interests in short as well as in long term. In so far as the profits can be reasonably deduced from the books of account and there is no deviation from the immediate past practice in accountancy, it cannot be said that the books of account are not reliable or any under invoicing was made. On the given facts there does not seem to be any evidence on record brought by the Assessing Officer to even suspect any under invoicing of the sales made to M/s.Atul Sweets. On these fact, therefore, it cannot be said that the assessee adopted any device to siphon out her profits in favour of other persons. Even there is nothing on record to suggest that there is a loss to revenue in any manner. The assessee has maintained proper quantitative details of the sweets and milk products that 4 were submitted to the Assessing Officer. Moreover, M/s.Atul Sweets is a retailer to the assessee while other persons compared by the Assessing Officer are end users. The equal should be treated equally but unequal should not be treated equally. M/s.Atul Sweets and others are not standing on equal footing so Assessing Officer was not justified to treat them to be equal to each other. Accordingly, the CIT(A) was justified in deleting the addition. We uphold the same.
5. In the result, the Revenue's appeal is dismissed.
Pronounced in the open court on this the 24th day of January, 2013.
Sd/- Sd/-
( R.K.PANDA ) ( SHAILENDRA KUMAR YADAV )
ACCOUNTANT MEMBER JUDICIAL MEMBER
gsps
Pune, dated the 24th January, 2013
Copy of the order is forwarded to:
1. The Assessee
2. The ACIT, Circle-1, Nashik.
3. The CIT(A)-I, Nashik.
4. The CIT-I, Nashik.
5. The DR "A" Bench, Pune.
6. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.