2022 (12) TMI 578 - AT - Income Tax

Tribunal rules in favor of assessee, deletes addition of Rs.9,01,602 for empty bottles refund

The Tribunal ruled in favor of the assessee, deleting the addition of Rs.9,01,602/- on account of refund of empty bottles. The Tribunal found no ... Reopening of assessment u/s 147 - income element on account of refund of empty bottles - HELD THAT:- It is an undisputed fact that assessee has duly reported the net amount as miscellaneous receipt in its P&L Account and offered the same for taxation in its return of income. It is also noted that the Excise Department of Govt. of West Bengal had issued an order wherein it is stated that “the refundable price of empty bottles in which country spirit of different quantities is supplied in capsule and labelled bottles shall be as follows throughout the State”. Evidently, ld. Counsel has demonstrated from the ledger account of miscellaneous receipt that there is no suppression of reporting of any income element on account of refund of empty bottles which formed the basis for the reassessment. Considering the facts on record, and the statutory requirement under the order of Excise Department, Govt. of West Bengal referred above, we hold that the addition made by the Ld. AO is to be deleted. Accordingly, ground taken by the assessee is allowed. Issues:1. Addition of Rs.9,01,602/- on account of refund of empty bottles.2. Discrepancy in reporting income from sales of empty bottles.3. Alleged suppression of income by the assessee.Issue 1: Addition of Rs.9,01,602/- on account of refund of empty bottlesThe appellant contested the addition of Rs.9,01,602/- made by the Ld. AO on the grounds of refund of empty bottles from two companies. The appellant argued that the refund of Rs.5/- per empty bottle to the buyers was subsequently accounted for as a refund to the assessee, with no profit element involved in the transaction. The Ld. CIT(A) upheld the addition, leading the appellant to appeal before the Tribunal.Issue 2: Discrepancy in reporting income from sales of empty bottlesThe Ld. AO observed that the appellant had not credited Rs.11,91,270/- in respect of empty bottle refund in the Profit and Loss Account, leading to a reassessment. The Ld. AO concluded that Rs.9,01,602/- remained undisclosed and added it to the total income. The appellant argued that the amount was duly reported as a miscellaneous receipt in the P&L Account and offered for taxation. The Tribunal noted that there was no suppression of income element regarding the refund of empty bottles and held that the addition made by the Ld. AO should be deleted.Issue 3: Alleged suppression of income by the assesseeThe appellant contended that there was no suppression on their part regarding the amount received against empty bottles and other miscellaneous receipts. The appellant presented detailed submissions, including ledger accounts and references to circulars issued by the Excise Department of the Government of West Bengal. The Tribunal, after considering the submissions and statutory requirements, concluded that the addition made by the Ld. AO was not justified and allowed the appeal of the assessee.In conclusion, the Tribunal ruled in favor of the assessee, deleting the addition of Rs.9,01,602/- on account of refund of empty bottles. The Tribunal found no suppression of income by the assessee and held that the amount in question had been duly reported and offered for taxation. The judgment highlights the importance of accurate reporting and compliance with statutory requirements in income tax assessments.