2011 (6) TMI 879 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A) order u/s 250(6) of the Income-tax Act, 1961 for AY 2004-05.

Revenue's Grounds of Appeal:
1. Dispute over treating Debit Note as genuine for profit reduction.
2. Lack of basis for disallowance apportionment.
3. Justification for relief on debit note u/s 40A(2)(b).

Assessee's Grounds of Appeal:
Concern over relief of Rs. 32,35,509/- allowed by CIT(A).

Facts of the Case:
- Assessee filed return for AY 2004-05 with total income of Rs. 13,60,620/-.
- AO observed debit of Rs. 52,35,509/- on 29.2.2004 based on a supplier's debit note.
- Debit note explained as rate difference adjustment by supplier.
- AO disallowed Rs. 52,35,509/- citing colorful device to adjust profits.
- CIT(A) deleted Rs. 32,35,509/-, confirmed Rs. 20,00,000/- addition.
- Revenue appealed against CIT(A) decision.

Arguments:
- Revenue's DR supported AO's order.
- Assessee's counsel backed CIT(A)'s decision.

Judgment:
- ITAT considered submissions, evidence, and lower authorities' orders.
- CIT(A) decision reasoned and based on credible material.
- CIT(A) confirmed Rs. 20,00,000/- addition, deleted balance Rs. 32,35,509/-.
- ITAT found no infirmity in CIT(A) findings, dismissed revenue's appeal.
- Assessee's CO not separately adjudicated, as revenue's appeal dismissed.
- Appeal by revenue and CO by assessee both dismissed.

Conclusion:
The appeal and cross-objection were dismissed by the ITAT in the case involving the treatment of a debit note and the subsequent relief allowed by the CIT(A) for the assessment year 2004-05.