Skip to main content

Only Profit Element in Sale can be treated as income not the Entire sale consideration

In Shri Nikhil Garg vs Vs ITO (ITAT Jaipur), appeal was filed before the ITAT against the order of the CIT(A).

Background

The Audit Party of I.T. Department observed a difference of Rs. 66,35,957/- between the total turnover declared in the Profit & Loss Account and Sales Tax Assessment Order and the AO completed the impugned reassessment u/s 143(3)/263 of the Act vide order dated 05.03.2015 by making addition of Rs.66,35,957 (difference in turnover). 

ld. CIT(A), who after considering the submissions of both the parties and material placed on record, dismissed the appeal filed by the assessee. Against which, the assessee has preferred the present appeal before the ITAT on the grounds mentioned above.

The Appellant submitted that the assessee has manifestly proved on record that the difference between the declared sales and the sales as per VAT return was “consignment sale” made by the assessee on behalf of the consigner (an independent party), therefore, the additions so made were completely contrary to the provisions of law and the facts and evidences available on record. the consignment sale was not considered as part of total sales of the assessee. and then the entire amount of 'Consignment Sales', thus, cannot be treated as the income of the assessee.

Judgment

The ITAT referred to CIT v President Industries (2000) 158 CTR 372 (Guj) and K Venkatesh vs Income Tax Officer (2016) 47 CCH 0447, held that whether the purported sale is “consignment sale” or “ordinary sale” is immaterial at this stage as even if the said sales undertaken by the assessee is treated as ordinary sale instead of consignment sale then also the entire sales cannot be treated as an income of the assessee. Thus, keeping in view the principles laid down by the Hon’ble High Court as well as the Coordinate Bench of the Tribunal, the ITAT was of the view that the entire sale consideration cannot be treated as income of the assessee but the addition could be made only to the extent of estimated profits embedded in sales,



Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more