The ACIT, Guntur V. M/s. polisetty Somasundaram Tobacco Threshers Pvt Ltd, Guntur

ITA 330/VIZ/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9574 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 330 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 06 - 07 ) ASST.COMMISSIONER OF INCOME TAX CIRCLE - 2(1), GUNTUR VS M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD., GUNTUR [PAN : AABCP3549D] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO.19/VIZ/2017 (ARISING OUT OF I .T.A.NO.330 /VIZ/2016) ( / ASSESSMENT YEAR: 2006 - 07 ) M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD., GUNTUR [PAN : AABCP3549D] VS ASST.COMMISSIONER OF INCOME TAX CIRCLE - 2(1), GUNTUR / REVENUE BY : SMT. SUMAN MALIK, AR / ASSESSEE BY : SHRI G.V.N.HARI , AR / DATE OF HEARING : 12 . 1 2 . 2018 / DATE OF PRONOUNCEMENT : 20 . 1 2 .2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS ) [CIT(A)] - 1 , GUNTUR VIDE 2 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. I.T.A. . NO. 05/CIT(A) - 1/GNT /201 4 - 1 5 DATED 2 9 . 0 2 .201 6 AND THE CROSS OBJECTION FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A) FOR THE A SSESSMENT Y EAR (A.Y.) 20 10 - 1 1 . 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE UNDER STATEMENT OF RECEIPTS AS PER TDS CERTIFICATE AND T HE P&L ACCOUNT ON ACCOUNT OF RE DRYING AND THRESHING CHARGES. THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF RE DRYING AND THRESHING OF TOBACCO. FOR THE A.Y.2006 - 07, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,60,64,730/ - AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.1,72,80,022/ - . SUBSEQUENTLY, THE AO REOPENED THE ASSESSMENT FOR DISCREPANCY IN THE REDRYING AN D THRESHING CHARGES PAID AS PER TDS CERTIFIC ATES AND THE RECEIPTS OFFERED IN THE P&L ACCOUNT. THE AO FOUND THAT A SUM OF RS .1,07,32,284/ - WAS THE DIFFERENCE RELATING TO THE RECEIPTS AS PER TDS CERTIFICATE AND THE INCOME SHORT ADMITTED BY THE ASSESSEE IN TH E P&L ACCOUNT. THEREFORE, THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE AND REQUESTED THE ASSESSEEE AS TO WHY THE DIFFERENCE SHOULD NOT BE ADDED BACK TO THE INCOME. THE ASSESSEE EXPLAINED BEFORE THE AO THAT DURING THE A.Y. 2006 - 0 7, IT HAS RECEI VED THE RE DRYING AND THRESHING CHARGES OF RS.13,29,85,816/ - AND OFFERED DISCOUNT TO M/S POLISETTY SOMASUNDARAM 3 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. (M/S SOMASUNDARAM IN SHORT) A SUM OF RS.2,06,01,981/ - IN REDRYING CHARGES AND A SUM OF RS.13,28,760/ - IN PROCESSING CHARGES AGGREGATING TO RS. 2,19,30,741/ - FOR PROCURING THE BUSINESS AND THE BALANCE SUM OF RS.11,10,55,075/ - WAS OFFERED FOR TAXATION , THUS THERE IS NO DIFFERENCE AND NO SHORT ADMISSION OF INCOME . THE ASSESSEE SUBMITTED THE PARTY - WISE DETAILS OF THE RECEIPTS AND THE TAX DEDUCTED AT SOURCE. THE AO HAS CALLED FOR THE EVIDENCES FOR ALLOWING THE ADDITIONAL DISCOUNT TO M/S POLISETTY SOMASUNDARAM. D UE TO ASSESSEES FAILURE TO FURNISH THE EVIDENCE , T HE AO TREATED THE DIFFERENCE OF RS.1,07,32,284/ - ( I.E. 12,17,87,359 11,10,55,075 ) AS UNDER STATEMENT OF RECEIPTS AND ACCORDINGLY ADDED TO TH E TOTAL INCOME OF THE ASSESSEE AND COMPUTED THE TOTAL INCOME AT RS.2,67,97,014/ - BY AN ORDER DATED 24.03.2014. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS RECEIVED THE JOB WORK FROM M/S SOMASUNDARAM AND THE ASSESSEE HAS CARRIED ON THE JOB WORK OF OTHER COMPANIES ALSO. DURING THE ASSESSMENT YEAR, THE ASSESSEE UNDERTOOK THE JOB WORK OF REDRYING AND THRESHING OF TOB ACCO TO THE TUNE OF 2,49,18, 7 26 KG S OF TOBACCO WITH SIX COMPANIES AND RECEIVED A SUM OF RS.13,29,85,81 5 / - AND OUT OF WHICH M/S SOMASUNDARAM HAS ISSUED 4 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. 2,06,01,981 KG S INVOLVING THE CONTRACT VALUE OF RS.10,86,24,602/ - FOR THRESHING AND HAPPENS TO BE THE PREMIER CUSTOMER IN CONFERRING BUSINESS OF 82% OF ENTIRE THRESHING OPERATIONS CONDUC T ED BY THE ASSESSEE. DUE TO RECESSION IN TOBACCO TRADE, THE ASSESSEE HAS GIVEN ADDITIONAL DISCOUNT TO M/S SOMASUNDARAM FOR PROCURING THE BUSINESS AND THE PAYMENTS MADE BY M/S SOMASUNDARAM TO THE ASSESSEE COMPANY AS PER TDS CERTIFICATES WAS BEFORE ADDITIONAL DISCOUNT ALLOWED BY THE ASSESSEE AND HENCE, THERE WAS DIFFERENCE IN THE RECEIPT S AS PER TDS CERTIFICATES AND THE INCOME ADMITTED BY THE ASSESSEE. THE LD.CIT(A) ALSO OBSE RVED THAT RECIPIENT OF DISCOUNT I.E M/S SOMAS UNDARAM HAS ADMITTED THE ADDITIONAL DISCOUNT RECEIVED FROM THE ASSESSEE FIRM AND PAID TAXES THEREON. THE LD.CIT(A) HELD THAT THE RECEIPTS ADMITTED IN THE PROFIT & LOSS ACCOUNT WE RE RECONCILED AND THERE WAS NO DIFFERENCE IN THE INCOME ADMITTED AND THE TDS RECEIPTS. A CCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE HAS FILED THE APPEAL BEFORE US. 5. WE HAVE HE ARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, AS PER THE TDS CERTIFICATES, THE ASSESSEE HAS RECEIVED RS.12,17,87,359 TOWARDS REDRYING AND THRESHING CHARGES FOR THE FINANCIAL 5 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. YEAR 2006 - 07 AND ADMITTED A SUM OF RS.11,10,55,07 5 / - IN P&L A/C UNDER REDRYING AND THRESHING CHARGES, THUS THERE IS A DIFFERENCE OF RS.1,07,32,284/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAD RECEIVED IN FACT RS.13,29,85,8 16/ - AND ALLOWED THE DISCOUNT OF RS.2,19,30,741/ - AND ADMITTED THE BALANCE AMOUNT OF RS.11,10,55,075 / - FOR TAXATION AND THERE WAS NO DIFFERENCE. THE CIT(A) OBSERVED THAT THE ADDITIONAL DISCOUNT OF RS.1,07,32,284/ WAS GIVEN TO THE RECIPIENT M/S SOMASUNDARAM FOR PROCURING THE JOB WORK AND THE DIFFERENCE WAS DUE TO NON - REFLECTION OF DISCOUNTS IN TDS CERTIFICATES. THE LD.CIT(A) ALSO GIVEN A FINDING THAT THE ADDITIONAL DISCOUNT OFFERED BY THE ASSESSEE WAS ADMITTED BY M/S SOMASUNDARAM IN THE IR RETURNS OF INCOME AND PAID TAXES . THE LD.CIT(A) FURTHER OBSERVED THAT DUE TO RECESSION IN THE TOBACCO MARKET, THE ASSESSEE HAS ALLOWED ADDITIONAL DISCOUNT TO M/S SOMASUNDARAM WHO IS BULK CUSTOMER AND THE RECEIPTS IN THE TDS CERTIFICATES WERE BEFORE ALLOWING THE ADDITIONAL DISCOUNT. THE RE IS NO DISPUTE THAT THE ASSESSEE HAS ALLOWED THE ADDITIONAL DISCOUNT AND THE RECIPIENT M/S SOMASUNDARAM HAS ADMITTED THE ADDITIONAL DISCOUNT IN THE RETURNS OF INCOME AND OFFERED FOR TAXATION . THE OFFICE OF THE SR.AR HAS FILED A COPY OF AO S LETTER DATE D 16.08.2017 ADDRESSED TO SR.AR CONFIRMING THAT M/S SOMASUNDARAM , THE RECIPIENT HAS 6 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. ADMITTED THE ENTIRE DISCOUNT BY MEANS OF CREDIT ENTRY IN REDRYING AND THRESHING CHARGES IN THEIR BOOKS . SINCE THE AO HAS CONFIRMED THAT THE ASSESSEE HAS ALLOWED THE DISCO UNT AND THE RECIPIENT HAD ADMITTED THE ADDITIONAL DISCOUNT IN THE HANDS OF THE RECIPIENT, THERE IS NO CASE FOR MAKING THE ADDITION AGAIN IN THE HANDS OF THE ASSESSEE AND ACCORDINGLY WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVEN UE. 6. THE ASSESSEEE FILED CROSS OBJECTION SUPPORTING THE ORDER OF THE LD.CIT(A). SINCE THE APPEAL OF THE REVENUE IS DISMISSED, THE CROSS OBJECTION S OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER , 2018 . S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 20 . 1 2 .2018 L.RAMA, SPS 7 I.T.A. NO . 330 /VIZ/201 6 & CO NO.19/VIZ/2017 M/S POLISETTY SOMASUNDARAM TOBACCO THRESHERS PVT. LTD. / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE M/S POLISETTY SOMASUNDARAM TOBACCO, T HRESHERS PVT. LTD., GUNTUR 2 . / THE REVENUE ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), GUNTUR 3. THE PR. COMMISSIONER OF INCOME TAX, GUNTUR 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM