Revenue appeal dismissed due to understated receipts in TDS Certificate & P&L account for AY 2010-11.

M/s Polisetty Somasundaram Tobacco Threshers Pvt. Ltd. Versus Asst. Commissioner of Income Tax, Circle-2 (1), Guntur

M/s Polisetty Somasundaram Tobacco Threshers Pvt. Ltd. Versus Asst. Commissioner of Income Tax, Circle-2 (1), Guntur - TMI Issues:
Understatement of receipts as per TDS certificate and P&L account due to redrying and threshing charges.

Analysis:
The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) regarding the under statement of receipts as per TDS Certificate and the P&L account concerning redrying and threshing charges for the Assessment Year 2010-11. The Assessing Officer (AO) reopened the assessment due to a discrepancy in redrying and threshing charges paid as per TDS certificates and the receipts offered in the P&L account. The AO found a difference of Rs. 1,07,32,284 between the receipts as per TDS Certificate and the income admitted by the assessee in the P&L account. The AO added this difference to the total income of the assessee. The assessee explained that the difference arose due to discounts offered to a specific customer for procuring business. The AO treated the difference as an understatement of receipts due to the failure of the assessee to provide evidence for the additional discount, resulting in an addition to the total income.

Upon appeal, the CIT(A) observed that the assessee had reconciled the receipts admitted in the Profit & Loss account and the TDS receipts, finding no difference. The CIT(A) noted that the additional discount given to the customer for procuring job work was not reflected in the TDS certificates, leading to the disparity in receipts. The CIT(A) also confirmed that the customer had admitted the additional discount received and paid taxes on it. The CIT(A) allowed the appeal of the assessee based on these findings.

The tribunal heard both parties and reviewed the case. It was established that the assessee had indeed allowed the additional discount to the customer, who had admitted it in their returns and paid taxes on it. The AO confirmed that the recipient had acknowledged the entire discount. Consequently, the tribunal upheld the CIT(A) order and dismissed the revenue's appeal. The cross objections filed by the assessee supporting the CIT(A) order were allowed due to the dismissal of the revenue's appeal.

In conclusion, the appeal of the revenue was dismissed, and the cross objection of the assessee was allowed, based on the reconciliation of receipts, acknowledgment of discounts, and tax payments by the recipient customer.