Discounts given for prompt payment are legitimate business expenses and cannot be disallowed without corroborating evidence, particularly following a search where no incriminating materials were seized.

ORDER

Per Prashant Maharishi, Vice President

1. These are two appeals in ITA No.968/Bang/2024 for AY 2017-18 & ITA No.969/Bang/2024 for AY 2018-19 filed by M/s Anand Diagnostic Laboratory (the assessee/appellant) against the appellate order passed by the CIT(Appeals)-15, Bangalore dated 29.3.2024 and 25.3.2024 respectively wherein the appeals filed by the assessee against the assessment orders passed u/s 143 (3) of the Act for both the years were dismissed.

AY 2017-18

2. In ITA No.968/Bang/2024 the assessee is aggrieved by the appellate order and has raised the following grounds of appeal :-

“1. The order of the learned Commissioner of Income Tax (Appeal)-15, Bengaluru in ITBA/APL/M/250/2023- 24/1063626871(1), dated 25.03.2024 for the A.Y.2017-18 confirming the order of the Assistant Commissioner of Income Tax, Circle-2(4), Bengaluru under the provisions of section 143(3) r.w.s 153A of the act is opposed to the facts of the case and law applicable to it.

2. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred in confirming the disallowance of the claim of "Other Discounts" amounting to Rs.17,40,515/- ignoring the fact that, the said discount was allowed to the customer at the time of realization of dues and settling the accounts and under law there is no prohibition for allowing such discounts.

3. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred in confirming the disallowance of the claim of "Other Discounts" amounting to Rs.17,40,515/- with a finding that, such discount was not allowed in the bills raised and hence not allowable.

4. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred in confirming the disallowance of the claim of "Other Discounts" amounting to Rs.17,40,515/- with a finding that, no credit notes/debit notes or fresh bills were found at the time of search indicating allowing such difference and hence the said expenditure is not allowable.

5. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred in confirming the disallowance of the claim of "Other Discounts" amounting to Rs.17,40,515/- with a finding that, the other party would have claimed expenses on the entire bill without discount and hence allegedly not allowable as expenditure.

6. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred in confirming the disallowance of the claim of "Other Discounts" amounting to Rs.17,40,515/- giving a finding that, such amount is not allowable as bad debt also, allegedly for the reason that, the gross receipts have not been entered in the books and hence not allowable ignoring the fact that, the gross receipts in fact were entered in the books and hence the claim of "other discount" which is allowed as at the time of settlement of account with the customer.

7. The learned Commissioner of Income Tax (Appeals)-15, Bengaluru erred ignoring the fact that the claim related to A.Y.2017-18 and as on the date of search i.e., 29.11.2017, the return of income for the A.Y.2017-18 was already filed on the basis of audited books of accounts and the claim of "other discount" was on the basis of discount allowed to customers at the time of settlement and reflected in their ledger accounts of such audited cooks of accounts and there was no material seized during the course of search to draw an inference that, such "other discount" was in fact not allowed.

8. The learned Commissioner of Income Tax (Appeals)-1