Kapitan Distillery, Hyd, Hyderabad V. Addl. CIT, Range-11, Hyd, Hyderabad

ITA 562/HYD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3053 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 16-11-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: FORM 26AS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER I.T.A. NO. 562/HYD/2016 ASSESSMENT YEAR: 2011-12 M/S.KAPITAN DISTILLERY, HYDERABAD [PAN: AAEFK5917A] VS ADDL. COMMISSIONER OF INCOME TAX, RANGE-11, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. SRINIVAS, AR FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 16-11-2020 DATE OF PRONOUNCEMENT : 18-11-2020 O R D E R PER D.S. SUNDER SINGH, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-5, HYDERABAD, FOR THE AY.2011-12. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION OF RS.16,56,225/- AS SHORT ADMISSION OF BOTTLING CHARGES. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE FIRM HAS ADMITTED THE SUM OF RS.1,52,27,635/- TOWARD S BOTTLING CHARGES, WHEREAS THE ACTUAL BOTTLING CHARGES SAI D TO BE RECEIVED FROM M/S. SOVEREIGN DISTILLERIES PVT. LTD. , (SDL) IS TO THE TUNE OF RS.1,68,83,860/- AS PER FORM 26AS RESUL TING IN ITA NO. 562/HYD/2016 :- 2 -: SHORT ADMISSION OF RS.16,56,225/-. DURING THE ASSES SMENT PROCEEDINGS, ASSESSEE EXPLAINED THAT THE SHORT ADMISSIO N WAS DUE TO REDUCTION IN CONTRACTED BOTTLING OF SDL. AS AGAIN ST THE CONTRACTED BOTTLING OF 23,30,000 PROOF LITERS (PLS) EQ UIVALENT TO ABOUT 3,59,568 CASES, THE SDL NEGOTIATED AND REDUCED THE BOTTLING TO 21,30,000 PLS BY SURRENDERING OF 2 LAKHS PLS TO KAPITAN I.E. THE ASSESSEE. THIS FACT IS SUPPORTED BY TH E PERMISSION GRANTED BY THE COMMISSIONER OF PROHIBITION & EXCISE VIDE HIS 04/03/2011. THUS, THE ASSESSEE SUBMI TTED THAT THE CONTRACTOR, SDL TRANSACTED ONLY 21,30,000 PLS CONSISTING OF 328706 CASES AND THE CORRESPONDING BOTTLI NG CHARGES WORKED OUT TO RS.1,52,27,635/- WHICH WAS RECE IVED BY THE ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT THE S DL NEITHER PAID THE BALANCE AMOUNT NOR TRANSACTED THE REMA INING 2 LAKHS PLS, THEREFORE, ARGUED THAT THE ASSESSEE HAS R IGHTLY ADMITTED THE BOTTLING CHARGES OF RS.1,52,27,635/-.THE AO NOT BEING CONVINCED WITH THE EXPLANATION OFFERED BY THE ASS ESSEE TREATED THE DIFFERENCE AS INCOME AND ADDED BACK TO THE RETUNED INCOME. 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APP EAL BEFORE THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) ALSO GONE WITH FORM NO.26AS AND CONFIRMED THE ADDITION MADE BY THE AO. HENCE, THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT THE ASSESSEE IS IN THE MANUFACTURE OF BOTTLING OF IMFL. FOR THE AY.2011-12, ASSESSEE HAD THE LICENSED CAPACITY OF 62,20,800 ITA NO. 562/HYD/2016 :- 3 -: PLS WHICH IS EQUIVALENT TO 6.48 PER CASE AS PER IMFL, IT WORKS OUT TO 9,60,000 CASES AND OUT OF WHICH PERMISSION WAS GRANTED BY THE COMMISSIONER OF PROHIBITION & EXCISE, A .P., TO ENTER INTO TIE UP AGREEMENT WITH SDL FOR BOTTLING OF IMFL TO THE TUNE OF RS.23,30,000 PLS EQUIVALENT TO 3,59,568 CA SES. AS SDL COULD NOT BOTTLE AS PER THE TIE UP AGREEMENT, IT HAD REQUESTED COMMISSIONER OF PROHIBITION & EXCISE, FOR SURRENDER OF ALLOTTED CAPACITY TO THE EXTENT OF 2 LAKHS PLS TO THE AS SESSEE AND THE SAME WAS APPROVED BY THE COMMISSIONER VIDE O RDER DATED 04/03/2011. ACCORDINGLY, THE SDL WAS DEBITED WITH 328706 CASES OF OF IMFL AND RECEIVED THE SUM OF RS. . 1,52,27,635/- THE ASSESSEE SUBMITTED THE INFORMATION WITH REGARD TO LICENSED CAPACITY, AND BOTTLING CHARGES, PLS DEBITED TO SDL AS UNDER: S.NO. 1. LICENSED CAPACITY PERMITTED 21,30,000 PLS 2. EQUIVALENT NO OF CASES 328706 3. BOTTLING CHARGE/CASE RS.42/- 4. TOTAL BOTTLING CHARGES RS.1,38,05,652/- 5. SERVICE TAX THEREON @10.30% RS.14,21,982 BOTTLING CHARGES DEBITED TO SDL 1,52,27,635 5.1. THE ASSESSEE FURTHER SUBMITTED THAT SUM OF RS.1,68,83,360/- WAS NEVER RECEIVED BY THE ASSESSEE AND THE SAME WAS NEITHER BACKED BY THE FACTUAL NOR BASED ON PRODUCTION, HENCE ARGUED THAT THERE IS NO CASE FOR MAK ING THE ADDITION AND ACCORDINGLY, REQUESTED TO DELETE THE ADDIT ION AND ALLOW THE APPEAL. ITA NO. 562/HYD/2016 :- 4 -: 6. ON THE OTHER HAND, LD. DR ARGUED THAT AS PER FORM NO.26AS, THE ASSESSEE HAD RECEIVED THE SUM OF RS.1,68,83,360/-. THOUGH SDL WAS STATED TO HAVE PERMITTE D TO SURRENDER 2 LAKHS LITRES TO THE ASSESSEE, THE SAME WAS SUBJECT TO THE CONDITIONS MENTIONED IN THE ORDER DT.04-03-2011 OF COMMISSIONER OF PROHIBITION & EXCISE, AS PER WHICH THERE MUST BE AN AGREEMENT FOR RESCHEDULING OF THE AGREED QU ANTITY BETWEEN THE ASSESSEE AND THE OTHER PARTIES. ASSESSEE NE VER PRODUCED THE AGREEMENT NOR SUPPORTED HIS CONTENTION OF NON- RECEIPT OF THE AMOUNTS AS PER FORM 26AS. THUS, ARGUED THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE LD .CIT(A), HENCE REQUESTED TO UPHELD THE ORDER OF LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES THROUGH VIDEO CONFERE NCE AND GONE THROUGH THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE AS PER FORM NO.26AS, THE ASSESSEE WAS PAID A SU M OF RS.1,68,83,860/-, WHEREAS THE ASSESSEE HAS TAKEN THE A MOUNT OF RS.1,52,27,635/- IN THE BOOKS AND THERE WAS A DIFF ERENCE OF RS.16,56,225/-, WHICH WAS SHORT ADMITTED BY THE ASSESS EE AND THE SAME WAS BROUGHT TO TAX BY THE AO. THE CONTENTION O F THE ASSESSEE IS THAT SDL HAS NOT MANUFACTURED THE QUANTITY OF 23,30,000 PLS AS PER AGREEMENT ENTERED BY THE ASSESS EE AND THE SDL AND IT HAD SURRENDERED 2 LAKHS PLS AND BOTTLE D ONLY 328706 CASES CONSISTING OF 2130000 PLS, FOR WHICH THE ASSESSEE RIGHTLY DEBITED 328706 CASES AND ACCOUNTED T HE SUM OF RS.1,52,27,635/- ON ACCOUNT OF BOTTLING CHARGES AS PER THE ORDER OF COMMISSIONER OF PROHIBITION & EXCISE, DT.04 -03- 2011.WE FIND THAT THE AO HAS NOT VERIFIED THE ACTUAL AMOUNT RECEIVED BY THE ASSESSEE WHETHER IT WAS RS.1,68,83,86 0/- OR ITA NO. 562/HYD/2016 :- 5 -: RS.1,52,27,635/- FROM THE BOOKS OF ACCOUNTS OR THE BA NK ACCOUNT. NO FINDING WAS GIVEN IN THE ASSESSMENT ORDER WITH REGARD TO ACTUAL RECEIPTS AS PER THE BOOKS OF ACCOUNT AN D THE BANK ACCOUNT. WHEN THERE IS DIFFERENCE IN FORM NO.2 6AS AND THE BOOKS OF ACCOUNT, THE AO OUGHT TO HAVE VERIFIED TH E BANK ACCOUNT AND THE BOOKS OF ACCOUNT AND GIVEN A FINDING W ITH REGARD TO ACTUAL AMOUNT RECEIVED BY THE ASSESSEE BEFO RE MAKING THE ADDITION. THIS EXERCISE WAS NOT DONE BY T HE AO. SIMILARLY, THE COMMISSIONER OF PROHIBITION & EXCISE, PERMITTED THE DISTILLERIES TO SURRENDER 2 LAKHS PLS SUBJECT TO CER TAIN TERMS AND CONDITIONS. AS PER THE ORDER, THERE MUST BE A N AGREEMENT FOR RE-SCHEDULING OF THE AGREED QUANTITY BY BOTH THE PARTIES AS REQUIRED UNDER RULE 11 OF A.P. DISTILLERIE S RULES. SUCH AGREEMENT WAS NOT PLACED BEFORE THE AO, SUPPORTING THE SURRENDER OF PERMITTED CAPACITY. ALL THE ABOVE INFORM ATION IS REQUIRED TO DETERMINE THE ACTUAL AMOUNT RECEIVED BY THE ASSESSEE OR THE ACTUAL NUMBER OF CASES BOTTLED BY THE SD L. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE IS SUE NEEDS TO BE VERIFIED AT THE END OF THE AO AND OBTAIN THE DETAILS BY MAKING NECESSARY ENQUIRIES FROM SDL/ COMMISSIONE R OF PROHIBITION & EXCISE/ ASSESSEE WITH REGARD TO UTILIZED CAPACITY AND SURRENDER OF PLS. IT IS ALSO TO BE VERIFIED FROM THE BOOKS OF ACCOUNT AND THE BANK ACCOUNT WITH REGARD TO ACTUAL PAYME NTS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION AND RECONCILE THE SAME WITH FORM 26AS. HENCE, WE SET A SIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER TO BACK TO THE FILE OF AO TO REDO THE ASSESSMENT DENOVO AFTER MAKING THE D ETAILED ENQUIRIES. OF COURSE, THE AO NEED TO GIVE SUFFICIENT A ND REASONABLE OPPORTUNITY TO THE ASSESSEE. ITA NO. 562/HYD/2016 :- 6 -: 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER,2020 SD/- SD/- (P.MADHAVI DEVI) (D.S.SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED: 18-11-2020 TNMM COPY TO : 1.M/S.KAPITAN DISTILLERY, C/O.VASG ASSOCIATES, CHAR TERED ACCOUNTANTS, PENT HOUSE, KUBERA TOWERS, NARAYNGUDA, HYDERABAD. 2.THE ADDL.COMMISSIONER OF INCOME TAX, RANGE-11, HYDERABAD. 3. CIT(APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.