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TMI Blog2014 (7) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... e was incurred in cash cannot be the basis for making any disallowance - Act does not prohibits cash payments - the AO had not invoked the provisions of section 40A(3)of the Act - entire expenditure was not incurred in cash majority of the payments were by cheques - the genuineness of the expenditure is not in doubt, thus, the order of the FAA does not require any interference from our side – Decided against Revenue. - ITA No. 1301/Mum/2011, ITA No. 1896/Mum/2012, ITA No. 7266/Mum/2012 - - - Dated:- 30-6-2014 - Sh. D. Manmohan And Rajendra,JJ. For the Petitioner : Shri Ravindra Sindhu For the Respondent : Shri Jignesh R Shah ORDER Per Rajendra, AM Challenging the orders dated 18. 01. 2012, 19. 11. 2010 16. 10. 2012 of the CIT(A)-29, Assessing Officer(AO) has raised following grounds of appeal for the Assessment Year(AY. s. )2007-08, 2008-09 and 2009-10 respectively: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 48, 17, 497/- made on account of trade discount without appreciating the fact that the assessee is following mercantile system of accounting and therefore the discoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 2. Assessee-firm is engaged in the business of reselling of the Electrical Electronics Goods. Details of dates of filing of returns, incomes returned, dates of assessment and assessed incomes for the all the three AYs. can be summarised as under : AY. Returns filed on Returned Income Date of assessment Assessed Income 2007-08 19. 10. 2007 10. 48 Crores. 20. 12. 2009 11. 22 Crores. 2008-09 27. 09. 2008 13. 62 Crores. 30. 12. 2010 21. 21 Crores. 2009-10 30. 09. 2009 14. 71 Crores. 20. 12. 2011 18. 09 Crores. ITA No. 1301/Mum/2011-AY-2007-08:- 3. During the assessment proceedings, the AO issued notice u/s. 133(6) of the Act to various major suppliers from whom assessee had made purchases for the year under appeal. In response, those parties sent ledger accounts of the assessee as appearing in their books of account to the AO. He found that apart from effecting sales to the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 14. 9190 lakhs in the subsequent AY. s, that the AO had accepted the taxation of the above credit notes in those years, that the AO had also accepted the taxation of the credit notes pertaining to immediate preceding year in the AY during the year under consideration, that the AOs in the earlier years had passed the orders u/s. 143(3) of the Act, that there was no loss or leakage of revenue due to peculiar system of accounting consistently followed by the assessee and accepted by the department, that income had not accrued to the assessee during the year under consideration, that mere raising of a claim did not create enforceable legal right to receive income. Alternatively, it was argued that the AO should be directed to reduce from the income of the subsequent AYs the amount of ₹ 14. 17 lakhs added as the income for the year under appeal, that non-deduction of the said income from the subsequent AY i. e. 2008-09 would lead to double taxation of the same income. After considering the submission of the assessee and the assessment order, he held that the discount in question were not normal trade discount, that same were finalised after negotiations, that the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case, we are of the opinion that income from the trade incentives had not accrued to it during the year under appeal that the order of the FAA does not suffer from any legal infirmity. Therefore, upholding his order, we decide ground of appeal no. 1 against the AO. 7. Ground No. 2 deals with deleting the addition of ₹ 6. 05 lakhs on account of commission received. During the course of assessment proceedings, AO issued summons u/s. 133(6) of the Act to various finance companies, as he found that financing services were given to the customers by the assessee and for which it had received commission income. He further found that like trade discount, the assessee-firm had offered the income under the head commission received in the subsequent AY. instead of the year under appeal. Following his order for the trade discount, the AO taxed the amount in question i. e. , ₹ 6, 05, 548/-, to the total income of the assessee for the year under consideration. 8. In the appellate proceedings, assessee made the same submissions which were made for the trade incentives. After considering the submission of the assessee and assessment order, FAA held that issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure of ₹ 3. 90 Crores, was disallowed and added to the total income of the assessee. 11. Before the FAA, in the appellate proceedings, it was contended that the adhoc addition @ 5% of certain expenses made by the AO was without any basis, that the AO had not assigned reason for the said addition, that books of accounts and necessary vouchers/documents for the above expenses were produced before the AO, that incurring of expenditure in cash cannot be the basis for disallowance, that expenses in question did not fall within the purview of section 40A(3) of the Act, that the AO had not doubted incurring of the expenditure or the genuineness of the expenses, that expenses were incurred for carrying out the business of the assessee, that accounts of the assessee were audited by the Chartered Accounts u/s. 44AB of the Act, that there was no adverse remark in the audit report, that similar expenses were being incurred by the assessee in cash for over 20 years and same had been allowed in the earlier years in the scrutiny proceedin - gs, that the AO had made similar disallowance in the AY 2004-05, that FAA had deleted the addition, that the department did not file any appea ..... 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