ITO, Ward - 9(2), Hyderabad V. M/s Healthy Heart Foods, Hyderabad

ITA 1537/HYD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87472 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Section: 143(3)

Judgement Text

ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1537/HYD/2012 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER WARD 9(2) HYDERABAD VS. M/S. HEALTHY HEART FOODS H.NO.18-4-42/14 SHAMSHER GUNJ, HYDERABAD PAN-AAAFL 7646 M (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAJAT MITRA, DR FOR ASSESSEE : SHRI S. RAMA RAO DATE OF HEARING : 05.03.2015 DATE OF PRONOUNCEME NT : 25 .03.2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) VI HYDERABAD DATED 20.07.2012, PASSED FOR A .Y 2009-10 U/S 143(3) OF THE ACT. 2. BRIEFLY STATED, THE ASSESSEE IS A PARTNERSHIP FI RM, FILED ITS RETURN OF INCOME ON 29.09.2009 ADMITTING INCOME FRO M MANUFACTURE OF EDIBLE OIL AND VEGETABLE REFINED OIL WITH A GROSS TOTAL INCOME OF RS.9,66,180/-. AO COMPLETED THE ASS ESSMENT AND ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 2 OF 11 ASSESSED THE INCOME OF THE ASSESSEE AT RS.1,53,92,6 93. AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE CIT (A) . 3. WITH RESPECT TO ADDITION OF RS.16,13,275 ON ACCO UNT OF DIFFERENCE IN SALES AS REPORTED TO THE COMMERCIAL T AX OFFICER AND AS RECORDED IN THE BOOKS OF ACCOUNTS, AO COMPARED T HE FIGURES OF SALES AS PER VAT RETURNS AND TRADING ACCOUNT IN THE BOOKS OF THE ASSESSEE ON THE ONE HAND AND THE SALES AS REPORTED BY THE CTO JADCHERLA VIDE HER LETTER DATED 23.11.2011 IN RESPO NSE TO THE ENQUIRY FROM THE AO, ON THE OTHER HAND AND FOUND A DIFFERENCE OF RS.16,13,275 AS FOLLOWS: SALES AS PER VAT RETURNS PROVIDED BY THE ASSESSEE VAT (RS.) 83,31,10,720 CST (RS.) 1,29,63,131 TOTAL (RS.) 84,60,67,064 SALES AS PER TRADING ACCOUNT SALES AS PER VAT STATEMENT AND CST STATEMENT PROVIDED BY VAT (RS.) 83,47,17,208 CST (RS.) 1,29,63,131 TOTAL (RS.) 84,76,80,339 4. ASSESSEE EXPLAINED THAT THERE WAS AN ERROR FOR T HE MONTH OF DECEMBER IN THE CERTIFICATE DATED 23.11.2011. THE A SSESSEE RELIED ON A CERTIFICATE DATED 16.6.2011. THE TURNOV ER FOR DECEMBER, 2008 WAS RS.10,03,68,648 WHEREAS AS PER T HE CERTIFICATE DATED 23.11.2011, THE TURNOVER WAS RS.1 0,19,71,512 ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 3 OF 11 (I.E. A DIFFERENCE OF RS.16,13,275/-). SINCE THERE WAS A DIFFERENCE BETWEEN THE TWO LETTERS VIZ., 16.06.2011 & 23.11.20 11, AO DID NOT ACCEPT THE LETTER DATED 23.11.2011 OBTAINED BY THE ASSESSEE AND ADDED THE SUM OF RS.16,13,275 TO THE TOTAL INCO ME. 5. AS PER THE CERTIFICATE DATED 16.06.2011, THE TUR NOVER FOR DECEMBER IS STATED TO BE RS.10,03,68,648 AND THE AN NUAL TURNOVER IS RS.83,31,14,360. THIS IS ALSO THE FIGUR E REPORTED IN THE MONTHLY RETURN FOR VAT FOR DECEMBER, 2008. THE DATA AS PER THE CTOS STATEMENT DATED 23.11.2011 IS AS FOLLOWS: TURNOVER FOR DEC. 2008 RS.10,19,71,512 OUTPUT TAX RS. 40,14,746 THE AR SUBMITED THAT THE TAX PAYABLE @ 4% ON THE TU RNOVER OF RS.10,19,71,512 SHOULD HAVE BEEN RS.40,78,860 WHERE AS IF THE TURNOVER IS ACCEPTED TO BE RS.10,03,68,648, THE TAX PAYABLE RECORDED IN THE STATEMENT IS CORRECT. 6. THE LD CIT (A) HELD AS FOLLOWS: 4.3 I HAVE CONSIDERED THE FACTS ON RECORD. THERE IS VERY CLEARLY A DISCREPANCY BETWEEN THE CERTIFICATES DATED 16.06.2011 AND DATED 23.11.2011, BOTH ISSUED BY THE CTO JADCHERLA. THE PROPER COURSE FOR THE AO WOULD HAVE BEEN TO REFER THE MATTER TO THE CTO FOR VERIFICATION. THOUGH THIS HAS NOT BEEN DONE, I FIND THAT RECONCILIATION OF THE DISCREPANCY IS POSSIBLE ON TH E ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 4 OF 11 BASIS OF THE OTHER DOCUMENTS AND INFORMATION AVAILA BLE ON RECORD . 4.4 THE TURNOVER OF RS.10,03,68,648 IS EVIDENCED BY THE MONTHLY RETURN FOR VAT FOR DECEMBER, 2008 AS WE LL AS THE CERTIFICATE OF THE CTO, ZADCHERLA DATED 16.06.2011. FURTHER AS POINTED OUT BY THE AR, THE COMPUTATION OF TAX DOES NOT MATCH WITH THE TURNOVER REFLECTED IN THE CERTIFICATE DATED 23.11.2011. THE FACT THAT THE ASSESSEES CL;AIM IS IN CONFIRMITY WITH TH E VAT RETURN AS WELL AS THE CERTIFICATE DATED 16.6.2011 A ND THE FACT OF THE MISMATCH BETWEEN THE TURNOVER AND T HE TAX PAYABLE IN THE CERTIFICATE DATED 23.11.2011 LEN DS SUPPORT TO THE VIEW THAT THE FIGURE REFLECTED IN TH E CERTIFICATE DATED 16.6.2011 IS THE CORRECT FIGURE. THE ADDITION OF RS.16,13,275 IS THEREFORE, DIRECTED TO BE DELETED. 7. THE REVENUE HAS FILED GROUND NOS. 2 & 3 AS FOLLO WS: 2. THE LD CIT (A) HAS ERRED IN COMPLETELY IGNORING THE INFORMATION PROVIDED BY THE CTO JADCHERLA VIDE LETT ER DATED 23.11.2011 IN ALLOWING RELIEF TO THE ASSESSEE . 3. THE LD CIT (A) HAS ERRED IN NOT ALLOWING AN OPPORTUNITY TO THE AO TO CORRELATE THE CONTRADICTOR Y STATEMENTS PROVIDED BY THE CTO JADCHERLA AND INSTEAD HAS ERRED IN FINDING A CORRELATION BETWEEN THE VAT RETURN AND THE CERTIFICATE DATED 16.06.2011 ISSUED BY THE CTO. 8. THE LD DR POINTED OUT THAT THERE IS A DISCREPANC Y BETWEEN THE CERTIFICATE DATED 16.6.2011 AND 23.11.2011 BOTH OF WHICH HAS BEEN ISSUED BY THE CTO JADCHERLA AND THE PROPER COURSE WOULD BE TO REFER THE MATTER TO THE CTO FOR VERIFIC ATION AND ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 5 OF 11 HENCE THE SAME SHOULD BE SENT BACK TO THE AO DIRECT ING HIM TO VERIFY THE SAME. 9. WE HAVE HEARD THE LD COUNSEL FOR THE ASSESSEE WH EREIN HE HAS SUBMITTED THAT THERE WAS A MISTAKE COMMITTED BY THE CTO WHICH HAS BEEN PROVED BY THE PRODUCTION OF MONTHLY STATEMENTS FILED BEFORE THE SAID AUTHORITIES. THE LD COUNSEL F OR THE ASSESSEE FURTHER POINTED OUT IN THE STATEMENT RELIED ON BY T HE AO, THE TAX SHALL BE TAKEN AT RS.40,14,746. SUCH TAX IS WORKED OUT AT 4% OF THE TURNOVER. AT THE RATE OF 4% THE TAX OF RS.40,14 ,746 WOULD BE CORRECT, IF THE OUTPUT IS TAKEN AT RS.10,03,68,648, WHEREAS IF THE FIGURES SHOWN IS RS.10,19,71,512 WERE TO BE TRUE, T HE TAX PAYABLE WOULD WORK OUT TO RS.40,78,860. HENCE, IT WAS BROUGHT TO THE NOTICE OF THE AO THAT THERE IS AN ERROR IN T HE VAT LEDGER A/C. HENCE WE CONFIRM THE ORDER OF THE CIT (A) WHER EIN HE HAS HELD THAT THE FACT OF THE MISS-MATCH AND THE TURNOV ER IN THE CERTIFICATE DATED 23.11.2011 SUPPORT THE VIEW THAT THE FIGURE REFLECTED IN THE CERTIFICATE DATED 16.6.2011 IS THE CORRECT FIGURE. THIS GROUND OF APPEAL IS DECIDED AGAINST THE REVENU E. 10. GROUND NOS. 4 & 5 RAISED BY THE REVENUE ARE AS FOLLOWS: ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 6 OF 11 4. THE LD CIT (A) HAS ERRED IN HOLDING THAT THE VARIATION IN PURCHASES IS ONLY ON ACCOUNT OF NON TAXABLE PURCHASES BEING REPORTED IN THE CATEGORY OF TAXABLE PURCHASES IN THE SCHEDULE TO THE P&L A/C. 5. THE LD CIT (A) HAS ERRED IN HOLDING THAT THE TOT AL PURCHASES REFLECTED IN THE VAT RETURN AND AS REFLECTED IN THE SCHEDULE TO P&L A/C ARE ONE AND SAME. 11. WITH REGARD TO THE ADDITION OF RS.97,59,696 TOW ARDS DIFFERENCE IN PURCHASE OF OIL (RAW MATERIAL), AS PE R THE DETAILS OF PURCHASES IN THE VAT RETURNS OF THE ASSESSEE THE AS SESSEE HAD CLAIMED TO HAVE MADE THE FOLLOWING PURCHASES OF OIL (RAW MATERIAL): S.NO ITEM CLAIM ED AS TAXABLE FOR SALES TAX PURPOSE (RS.) CLAIMED AS EXEMPT FOR SALES TAX (RS.) TOTAL (RS.) 1 OIL (RAW MATERIAL) UNLOADING CHARGES 47,50,15,042 34,36,95,803 81,87,97,740* *INCLUDING UNLOADING CHARGES OF RS.86,895 ON THE OTHER HAND, THE ASSESSEE HAD RECORDED THE FO LLOWING PURCHASES OF OIL UNDER THE HEAD RAW MATERIAL IN T HE SCHEDULES TO THE P&L A/C. 1 CRUDE RICE BRAN OIL (AP VAT) PURCHASE A/C RS.7,50,05,246 2 CRUDE SUNFLOWER OIL (AP VAT) RS.36,96,03,148 ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 7 OF 11 PURCHASE A/C 3 CRUDE GROUND NUT OIL (AP VAT) PURCHASE A/C RS.3,04,93,543 4 CRUDE SUNFLOWER OIL (CST) PURCHASE A/C RS.96,72,803 5 CRUDE PALMOLINE OIL (IMPORT) PURCHASE A/C RS.12,34,25,000 6 CRUDE SUNFLOWER OIL (IMPORT) PURCHASE A/C RS.21,05,98,000 TOTAL RS.81,87,97,740 12. THE AO HELD THAT THE TAXABLE RAW MATERIALS (S.N O.1 TO 4 AS PER SCHEDULE ABOVE) AMOUNTED TO RS.48,47,74,740 WHE REAS THE TAXABLE RAW MATERIALS AS PER THE VAT RETURN WAS RS.47,50,15,042. HE BROUGHT THE DIFFERENCE OF RS.97 ,59,696 TO TAX AS AN EXCESS CLAIM OF PURCHASES. 13. IN THE COURSE OF APPELLATE PROCEEDINGS, THE AR HAS SUBMITTED THAT ALL THE PURCHASES WERE SUPPORTED BY THE REQUISITE VOUCHERS AND EVIDENCES AND THE AO HAD ALSO NOT FOUN D ANY EVIDENCE TO THE CONTRARY. THE AR ALSO SUBMITTED THA T THE TOTAL PURCHASES, INCLUDING BOTH TAXABLE AND EXEMPT PURCHA SE, AS PER THE BOOKS TALLIED WITH THE FIGURES IN THE VAT RETUR NS. ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 8 OF 11 14. THE CIT (A) EXAMINED THE FACTS AS STATED IN THE ASSESSMENT ORDER AND AS SUBMITTED BY THE AR. 15. THE CIT (A) HELD AS FOLLOWS: THE TOTAL PURCHASES (INCLUDING BOTH TAXABLE AND EXEMPT PURCHASES) IS IDENTICALLY REPORTED IN THE SCHEDULE TO THE P&L A/C AND IN THE VAT RETURN. IT IS, THEREFORE, REASONABLE TO ACCEPT, AS SUBMITTED B Y THE AR THAT THE DIFFERENCES HAVE ARISEN DUE TO SOME OF THE NON TAXABLE PURCHASES BEING REPORTED IN THE TAXABLE CATEGORY OF PURCHASES IN THE SCHEDULE TO TH E P&L A/C. FOR THE PURPOSE OF THE INCOME TAX ASSESSMENT PROCEEDINGS, THE DISTINCTION BETWEEN TAXABLE AND NON TAXABLE PURCHASE IS IRRELEVANT AND IT DOES NOT REALLY MATTER WHETHER A PARTICULAR PURCHASE HAS BEEN RECORDED BY THE ASSESSEE UNDER ONE OR THE OTHER CATEGORY SO LONG AS THE PURCHASE I S GENUINE. WHAT IS CRUCIAL IN THIS CASE IS THAT THE T OTAL PURCHASES AS REFLECTED IN THE VAT RETURN AND AS REFLECTED IN THE SCHEDULE TO THE P&L A/C IS THE SAME. HENCE, THE ADDITION IS DIRECTED TO BE DELETED AND THE GROUND OF APPEAL WAS ALLOWED. 16. AO OBSERVED THAT THERE IS A DIFFERENCE BETWEEN THE FIGURES SHOWN IN THE VAT RETURNS AGAINST THE PURCHASES AND THE PURCHASES AS RECORDED IN THE FINAL ACCOUNTS. THE TO TAL PURCHASES OF THE RAW MATERIAL ACCORDING TO THE ASSESSEE WAS RS.81,87,97,740. THE DETAILS OF SUCH PURCHASE ARE S UBMITTED IN THE SCHEDULES TO THE FINAL ACCOUNTS. THE AO AT PAGE NO.5 OF THE ORDER MENTIONS THAT THE TOTAL PURCHASES ARE TALLYIN G WITH THE SCHEDULES AND THE TABLES. HOWEVER, AO MENTIONS THAT THE TAXABLE ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 9 OF 11 RAW MATERIAL IS SHOWN IN THE SCHEDULES AT RS.48,47, 74,738 AND WHEREAS THE EXEMPTED TURNOVER WAS RS.33,40,23,000 A S AGAINST THE FIGURES SHOWN IN THE TABLE OF RS.47,50,15,042 A ND RS.34,36,95,803. ACCORDING TO THE AO THERE IS A DIF FERENCE OF RS.97,59,696 IN THE EXEMPTED RAW MATERIAL PURCHASES AND THEREFORE, ARRIVED AT SUCH AN ADDITION IN THE ASSES SMENT ORDER. 17. IT WAS SUBMITTED THAT SUCH AN ADDITION IS NOT J USTIFIABLE AS THE TOTAL PURCHASES ACCORDING THE ASSESSEE AND ACCO RDING TO THE AO IS THE SAME. IN THE CIRCUMSTANCES, NO ADDITION S HOULD HAVE BEEN MADE BY THE AO. 18. THE LD COUNSEL FOR THE ASSESSEE FURTHER EXPLAIN ED THE DIFFERENCE AS ARRIVED AT BY THE AO AS FOLLOWS: IT CAN BE SEEN AT PAGES 3 AND 4 THE DETAILS OF TH E SALES TAX PAID ON THE PURCHASES ARE NOTED. THE TOTA L TAXABLE PURCHASES WAS RS.58,99,78,683 AND THE EXEMPTED TURNOVER WAS RS.36,25,91,033. THE TOTAL PURCHASES AMOUNTED TO RS.81,67,97,740 WHICH TALLIES WITH THE FIGURES AS OBTAINED FROM THE COMMERCIAL TA X DEPARTMENT BY THE AO. AO MENTIONS THAT SOME OF THE TAXABLE TURNOVER WAS WRONGLY SHOWN IN THE EXEMPTED TURN OVER AND THEREFORE, THE AO IS OF THE VIEW THAT THE DIFFERENCE OF RS.97,59,696 IS TO BE ADDED. ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 10 OF 11 19. IN THIS REGARD IT WAS SUBMITTED THAT THE ASSES SEE FURNISHED DETAILS OF THE RAW MATERIAL PURCHASED MONTH-WISE FO R EACH OF THE CATEGORY BEFORE THE AO. IT WAS ALSO SUBMITTED THAT THE PURCHASES INCLUDE ALL TYPES OF PURCHASES OF ASSETS WHICH IS N OT TAKEN TO TRADING ACCOUNT, PACKING MATERIAL, CONSUMABLES, HUS K, CHEMICALS, FINISHED GOODS SEPARATELY. ASSESSEE ALSO SHOWN THE BOOKS OF ACCOUNTS TO THE AO MENTIONING THAT THE TOT AL OF THE PURCHASES EFFECTED ARE TALLYING WITH THE FIGURES AS FURNISHED BY THE ASSESSEE TO THE SALES TAX DEPARTMENT. 20. IT WAS SUBMITTED THAT THERE WAS NO EXCESS PURCH ASES RECORDED BY THE ASSESSEE. EACH PURCHASE MADE BY THE ASSESSEE IS SUPPORTED BY EVIDENCE. IT IS ALSO NOT THE CASE O F THE AO THAT THE PURCHASES ARE NOT SUPPORTED BY THE VOUCHERS AND EVIDENCES. FURTHER AT PAGE 61, STATEMENT BY THE SALE TAX AUTHO RITIES TOTAL IS TALLYING. 21. WE FIND THAT THE TOTAL PURCHASES AS REFLECTED I N THE VAT RETURN AND AS REFLECTED IN THE SCHEDULE TO THE P&L A/C IS THE SAME AND HENCE WE CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE GROUNDS RAISED BY THE DEPARTMENT ON THIS ISSUE. ITA NO.1537 OF 2012 HEALTHY HEART FOODS HYDERABAD PAGE 11 OF 11 22. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 25 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. INCOME TAX OFFICER WARD 9(2) 2 ND FLOOR, D BLOCK, IT TOWERS, AC GUARDS HYDERABAD 2. M/S HEALTHY HEART FOODS, H.NO.18-4-42/14 SHAMSHER G UNJ, HYDERABAD 3. THE CIT(A)-VI HYDERABAD 4. THE CIT VI HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER