2021 (12) TMI 820 - AT - Income Tax

Disallowance of rate difference and discount - HELD THAT - Assessee was consistently making the claim of discount and rate difference on the sale of seeds to its customers. Such claims though disallowed at the end of the AO, but the same were allowed by the CIT(A) and thereafter in appeal by the Revenue, order of the ld. CIT(A) was upheld by the Tribunal. Though the fate of earlier claim of the assessee was very much on record, the ld. AO has ritually rejected claim of the assessee year after year without making any logical end. It has time and again stated by the assessee, recorded by the ld. CIT(A) and taken note by the Tribunal that the assessee is giving discount/rate deduction to customers as per its business policy, which are supported by circulars issued from time to time. The entire payment has been reflected in the ledger account of various dealers and supported by the evidences. The ratio of discount to the turnover is very consistent from year 2008-09, which has been demonstrated before the lower authorities, so was the ratio of gross profit. There was nothing on record before the ld. AO that claim of the assessee was not genuine or non-existent, he has mechanically followed his predecessor's order to reject, otherwise a justifiable claim of the assessee. Therefore, as observed earlier, since identical issue has been considered in favour of the assessee by the co-ordinate benches of the Tribunal from the Asstt. Year 2010-11 upto the Asstt. Year 2012-13, following the same, we reject this ground of appeal, and dismiss appeal of the Revenue.

Summary

Issues:
Appeal against CIT(A) order deleting disallowance of rate difference and discount amounting to ?4,23,51,335.

Analysis:
The Revenue appealed against the CIT(A) order for the assessment year 2016-17, challenging the deletion of disallowance of rate difference and discount. The AO made additions without detailed discussion, relying on previous years' orders. The CIT(A) found similar issues in earlier years where the assessee's claims were allowed, leading to the deletion of additions. The Revenue contended that the claim was unjustified, while the assessee argued for consistency in allowing the claim based on business policy. The Tribunal noted the consistent claim by the assessee, supported by evidence and circulars. The AO mechanically rejected the claim without logical reasoning, despite the Tribunal upholding similar claims in previous years. The Tribunal dismissed the Revenue's appeal, following the precedent set in earlier decisions favoring the assessee.

The Tribunal emphasized the assessee's consistent practice of providing discounts and rate differences to customers, supported by ledger accounts and circulars. The CIT(A) highlighted the genuineness of the claim, pointing out the lack of adverse inferences by the AO and the consistent ratios of discount to turnover. The Tribunal found no evidence to suggest the claim was non-genuine. The Tribunal rejected the Revenue's appeal, citing the previous decisions upholding the assessee's claim and criticizing the AO's mechanical rejection without valid reasoning.

The Tribunal's decision was based on the established pattern of the assessee's legitimate claims, supported by evidence and business practice. The Revenue's appeal was dismissed due to the lack of substantial grounds to challenge the consistent allowance of the claim. The Tribunal upheld the CIT(A)'s decision to delete the disallowance, emphasizing the importance of logical reasoning and adherence to precedent in tax assessments. The judgment highlighted the significance of evidence-backed claims and the need for tax authorities to assess claims based on merit rather than mechanical adherence to past decisions without justification.