ITO, Hyderabad v. M/s Anand Food Products, Hyderabad

ITA 1245/HYD/2007 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 124522514 RSA 2007
Assessee PAN AAEFA2069B
Bench Hyderabad
Appeal Number ITA 1245/HYD/2007
Duration Of Justice 4 year(s) 2 month(s) 30 day(s)
Appellant ITO, Hyderabad
Respondent M/s Anand Food Products, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 18-07-2011
Next Hearing Date 18-07-2011
Assessment Year 2004-2005
Appeal Filed On 31-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE CHANDRA POOJARI ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO.1244/HYD/2007 ASSESSMENT YEAR 2003-04 ITA NO.1245/HYD/2007 ASSESSMENT YEAR 2004-05 THE ITO WARD 9(1) HYDERABAD VS M/S ANAND FOOD PRODUCTS HYDERABAD (PAN AAEFA2069B) APPELLANT RESPONDENT APPELLANT BY : SHRI K. VISWANADHAN RESPONDENT BY : SHRI K.A. SAI PRASAD DATE OF HEARING : 8.2.2012 DATE OF PRONOUNCEMENT : 30.3.2012 ORDER PER ASHA VIJAYARAGHAVAN JM . THESE TWO APPEALS PREFERRED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDERS PASSED BY THE CIT(A) VI HYDERABAD DATED 25.10.2007 AND THEY ARE PERTAINING TO THE A SSESSMENT YEARS 2003-04 & 2004-05. ASSESSMENT YEAR 2004-05: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFAC TURE OF BISCUITS ON JOB WORK BASIS FOR PARLE PRODUCTS WITH THE MATERIAL SUPPLIED BY PARLE PRODUCTS. BASED ON THE PRODUCTIO N FOR EACH MONTH THE ASSESSEE RAISED INVOICES ON PARLE PRODUCT S AND THE DETAILS OF MONTH WISE INVOICES ARE PLACED AT PAGE 3 OF PAPER BOOK. THE ASSESSEE INCURRED SOME EXPENDITURE ON BE HALF OF PARLE PRODUCTS AND CLAIMED THE REIMBURSEMENT OF THE SAME. ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 2 THUS THE ASSESSEE RECEIVED 3 KINDS OF PAYMENTS FRO M PARLE PRODUCTS I.E.: A) THE JOB WORK CHARGES AGAINST INVOICES RAISED B) REIMBURSEMENT OF EXPENDITURE C) DIRECT PAYMENT OF CENTRAL EXCISE (REIMBURSED). 3. THE ASSESSEE IS FOLLOWING SYSTEM OF OFFERING IN COME AS PER THE INVOICES RAISED. PARLE AT ITS END ON RECEIPT O F MONTHLY INVOICE RELEASES INTERIM ADVANCE/ADHOC PAYMENT AND DEDUCTED TAX AT SOURCE ON THAT PAYMENT. AFTER THE INVOICE IS DULY PROCESSED FOR QUALITY OF PRODUCTION AND QUANTITY OF PRODUCTION TH E FINAL AMOUNT DUE TO THE ASSESSEE IS ARRIVED AT BY PARLE P RODUCTS AND AFTER DEDUCTING THE INTERIM ADVANCE THE BALANCE AMO UNT IS PAID TO THE ASSESSEE AFTER DEDUCTING THE TAX AT SOURCE. THUS AGAINST THE COMPOSITE INVOICE FOR EACH MONTH THE ASSESSEE G ETS THE PAYMENT IN TWO INSTALMENTS AND TAX IS DEDUCTED ON E ACH PAYMENT AND TWO CERTIFICATES WERE GIVEN BY THE PARL E ACCORDINGLY. THE FINAL AMOUNT RECEIVED BY THE ASSESSEE MAY BE SL IGHTLY MORE OR LESS DEPENDING UPON THE ADJUSTMENTS MADE BY PARL E DEPENDING UPON THE QUALITY AND QUANTITY. THESE VAR IANCES WERE ALSO CONSIDERED BY THE ASSESSEE AND WAS OFFERED TO TAX AS INCOME UNDER THE HEAD INCENTIVES FROM THE PARLE PRODUCTS . 4. THE ASSESSING OFFICER COMPLETED ON 29.12.2006 T HE ASSESSMENT U/S 143(3) EXAMINED THE ISSUE OF GROSS RECEIPTS OFFERED TO TAX BY THE ASSESSEE THE AMOUNTS MENTION ED IN THE TDS CERTIFICATES ISSUED BY PARLE AND MADE THE ADDI TION OF RS.46 833/-. THE ASSESSING OFFICER MADE FURTHER AD DITION OF RS.67 44 387/- ON THE GROUND THAT SOME OF THE AMOUN TS MENTIONED IN CERTAIN OF TDS CERTIFICATES WERE NOT P ART OF THE GROSS RECEIPTS OFFERED TO TAX BY THE ASSESSEE. IT WAS SUBMITTED ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 3 BEFORE THE FIRST APPELLATE AUTHORITY THAT THE AMOUN TS IN QUESTION I.E. 15 07 294/- RS.10 67 827/- RS.13 26 737/- RS. 12 10 193/- RS.11 38 874/- ARE PART OF THE TOTAL AMOUNT OF RS.2 7 76 985/- FOR JULY RS.21 92 154 FOR OCTOBER RS.21 34 759/- FOR DECEMBER RS.27 45 296/- FOR FEBRUARY RS.28 01 590 FOR MARCH 2004. IT WAS ESTABLISHED BEYOND DOUBT THAT THE AMOUNTS MENTI ON IN TDS CERTIFICATES ARE ON ACCOUNT OF SPLITTING OF THE INV OICE INTO THE ADHOC ADVANCE AND THE FINAL PAYMENTS AND HENCE THER E IS NO SUPPRESSION OF ANY RECEIPTS WHATSOEVER. 5. THE CIT(A) AGREED AND ACCEPTED THESE SUBMISSION S AND AT PARA 13 OF HIS ORDER DATED 25.10.2007 HE OBSERVED A S UNDER: PARA.13: THE CLARIFICATIONS SUBMITTED BY THE LEARN ED COUNSEL DURING THE APPEAL HEARING HAVE BEEN CAREFULLY PERUSED. TH E PROCEDURE FOLLOWED BY PARLE PRODUCTS P LTD. IN PROCESSING THE JOB WORK CHARGES PAYABLE TO THE ASSESSEE /INTERIM ADVANCES PAID MONT HWISE AND NET BALANCE RELEASED EVERY MONTH HAVE BEEN ANALYSED. F ROM THE DOCUMENTARY EVIDENCE PRODUCED IT IS CLEARLY ESTABLI SHED THAT THE AMOUNTS STATED IN THE TDS CERTIFICATES AS POINTED O UT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AMOUNTING TO 15 07 294/- RS.10 67 827/- RS.13 26 737/- RS.12 10 193/- RS.11 38 874/- ARE PART OF THE TOTAL AMOUNT OF RS.2 7 76 985/- FOR JULY RS.21 92 154 FOR OCTOBER RS.21 34 759/- FOR D ECEMBER RS.27 45 296/- FOR FEBRUARY RS.28 01 590 FOR MARCH 2004. FROM THE ABOVE ANALYSIS IT IS PROVED THAT THE ASSESSING OFFICER HAD ADOPTED AN OVER SIMPLISTIC APPROACH IN ADDING VARIO US SUMS AS UNDISCLOSED TURNOVER OF THE ASSESSEE ONLY BECAUSE T HE AMOUNTS STATED IN THE TDS CERTIFICATES DID NOT EXACTLY TALL Y WITH THE SALE INVOICES RECORDED IN THE BOOKS OF ACCOUNTS OF THE A SSESSEE WITHOUT CARRYING OUT AN EXAMINATION OF THE BOOKS OF ACCOUNT S OF THE ASSESSEE AND THE MANNER OF PAYMENT OF BILLED AMOUNT S BY PARLE PRODUCTS PVT. LTD. AFTER MAKING VARIOUS DEDUCTIONS AND ADDITION TO THE BILLED AMOUNTS. FOR SUCH REASONS THE ADDITION S MADE TO THE ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 4 EXTENT OF 15 07 294/- RS.10 67 827/- RS.13 26 737/ - RS.12 10 193/- RS.11 38 874/- CANNOT BE SUSTAINED UNDER THE FACTS OF THE SITUATIONS AND HENCE STAND DELETED. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS IN ITA NO.1245/HYD/2 007 : 1. THE CIT(A) ERRED IN FACTS AND IN LAW IN NOT GIV ING THE MANDATORY OPPORTUNITY TO THE ASSESSING OFFICER AS R EQUIRED UNDER RULE 46A(3) OF THE IT RULES 1962 WHILE ADMIT TING ADDITIONAL EVIDENCE IN THE FORM OF RECONCILIATION O F RECEIPTS FROM PARLE PRODUCTS WITH RECEIPTS OFFERED IN THE PR OFIT AND LOSS ACCOUNT. 2. THE CIT(A) ERRED IN FACTS AND IN LAW IN ACCEPTI NG THE CLAIM OF THE ASSESSEE TOWARDS NEGATIVE VARIANCE AMO UNTING TO RS.7 18 133/- FROM THE GROSS RECEIPTS ON THE UNB ELIEVABLE PLEA THAT THE ACTUAL AMOUNT RECEIVED IS LESS THAN T HE AMOUNT MENTIONED IN THE TDS CERTIFICATE. 3. THE CIT(A) HAS ERRED IN FACTS AND IN LAW IN RE LYING ON A SPURIOUS RECONCILIATION STATEMENT SUBMITTED BY THE ASSESSEE THEREBY IGNORING THE VITAL FACTS THAT THE ADMITTED GROSS RECEIPTS AS PER THE ASSESSEES OWN STATEMENT SUBMIT TED BEFORE THE ASSESSING OFFICER WAS OF THE ORDER OF RS.3 80 34 356/- INCLUSIVE OF ADMITTED OUTSTANDING ADVANCE FROM PARLE AS ON 31.3.2004 OF THE ORDER OF RS.46 28 791/- WHICH IS RELEVANT SCHEDULE OF THE ASSESSEES BALANCE SHEET AS ON 31.3.2004 THAT NET O F ADVANCE OF RS.46 28 791/- THE GROSS RECEIPT BECOMES RS.3 34 05 565/- WHICH IS CLOSE TO THE FIGURE AS PE R THE TDS CERTIFICATE ISSUED BY PARLE I.E. NOT TAKING INTO A CCOUNT ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 5 ANOTHER TDS CERTIFICATE FOR RS.20 00 000/- WHICH IS TREATED AS ADVANCE AND HENCE ADDITION OF RS.19.69 LAKHS SHO ULD HAVE BEEN UPHELD AS REPRESENTING QUANTUM OF UNDERSTATEMENT OF INCOME BY THE ASSESSEE. 4. THE CIT(A) ERRED IN FACTS AND IN LAW IN ACCEPTING T HE VARIOUS DEDUCTIONS FROM TDS CERTIFIED GROSS RECEIPT S I.E. CENTRAL EXCISE REIMBURSEMENT REIMBURSEMENT OF OTHE R CHARGES NEGATIVE VARIANCE WHICH WERE NEVER A PART OF GROSS RECEIPTS AS PER THE CERTIFIED DOCUMENTS ISSUE D BY PARLE IN THE COURSE OF PROCEEDINGS RELATING TO ASSE SSMENT YEAR 2003-04. 7. WITH RESPECT TO GROUND NO.1 THE LEARNED COUNSEL SHRI SAI PRASAD SUBMITTED AS FOLLOWS: THE LEARNED COUNSEL SUBMITTED THAT THE ENTIRE INFOR MATION EXAMINED BY THE CIT(A) WAS PRODUCED AND MADE AVAILA BLE BEFORE THE ASSESSING OFFICER WHO AFTER EXAMINING A LL THE DETAILS OF HIS ORDER MADE AN ADDITION OF RS.46 833/ -. IT IS FURTHER SUBMITTED THAT THE RECONCILIATION STATEMENT S REFERRED TO THE GROUNDS OF APPEAL WAS FILED BEFORE THE FIRST APPELLATE AUTHORITY AT HIS BEHEST AND THEREFORE THE PROVISION S OF SECTION 46A(3) DOES NOT APPLY TO THE FACTS OF THE C ASE. RELIANCE IS PLACED UPON THE DECISION OF THE MUMBAI HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH VS. CI T (231 ITR1). KIND ATTENTION IS INVITED TO THE DECISION O F MUMBAI TRIBUNAL IN THE CASE OF ITO VS. INDUSTRIAL ROADWA YS (305 ITR 219) (MUM) WHEREIN IT WAS HELD THAT WHERE THE ADDITIONAL EVIDENCE WAS OBTAINED BY FIRST APPELLATE AUTHORITY ON ITS OWN MOTION SUCH ADDITIONAL EVIDENC E NEED NOT BE MADE AVAILABLE TO THE ASSESSING OFFICER FOR HIS ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 6 CONSULTATION OR CONFRONTATION. HENCE IN THE RIGH T OF THE CASE LAW SUBMITTED ABOVE HE SUBMITTED THAT THE FIR ST GROUND DOES NOT SURVIVE. 8. WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED C OUNSEL AND SINCE THE ADDITIONAL EVIDENCE WAS MADE AVAILABLE ON THE REQUEST OF THE CIT(A) DURING THE COURSE OF THE PROCEEDINGS BEFORE HIM THE OBJECTION RAISED BY THE REVENUE WITH RESPECT TO VIOLATION OF RULE 46A IS NOT APPLICABLE. HENCE WE DISMISS THE R EVENUES APPEAL ON THIS ISSUE. 9. THE LEARNED COUNSEL POINTED OUT THAT THE CIT C ALLED FOR FURTHER DETAILS AND MADE AN ADDITION. THE OBSERVAT IONS OF THE CIT ARE AT PARA 14 ARE AS UNDER: PARA.14 ..... NEVERTHELESS SINCE THE ASSESSING O FFICER HAD NOT CARRIED OUT A COMPLETE RECONCILIATION OF THE PA YMENTS STATED IN THE TDS CERTIFICATES FOR THE WHOLE YEAR V IS-A-VIS THE GROSS TURNOVER RECORDED IN THE BOOKS OF ACCOUNTS AN D P&L ACCOUNT FOR FINANCIAL YEAR 2003-04 THE LEARNED COUN SEL WAS ASKED DURING APPELLATE PROCEEDINGS TO PREPARE A RECONCILIATION STATEMENT FOR THE WHOLE FINANCIAL YE AR 2003- 04 IN RESPECT OF THESE TWO FIGURES. ACCORDINGLY T HE LEARNED COUNSEL HAS PRODUCED RECONCILIATION. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SAI PRASAD SUBMITTED BEFORE US THE ORDER BY THE AO U/S 143(3) R.W.S. 263 OF THE ACT DATED 13.12.2009. HE FURTHER SUBMITTED THA T THE ISSUES RAISED AT GROUND NOS.2 TO 4 BEFORE US WERE EXACTLY THE ISSUES DISCUSSED BY THE CIT IN HIS ORDER U/S 263 WHEREIN T HE CIT DIRECTED THE AO TO REASSESS AS PER HIS DIRECTIONS. ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 7 11. WE HAVE PERUSED THE ORDER OF THE CIT U/S 263 AND WE FIND THAT AT PARA 2.4 THE CIT HAS DISCUSSED WITH RESPECT TO SUPPRESSION OF GROSS RECEIPTS WITH REFERENCE TO CER TAIN FIGURES WHICH ARE EXACTLY SAME AS THE FIGURES MENTIONED AT GROUND NO.3 OF THIS APPEAL. 12. EVEN THOUGH THE ORDER U/S 263 WAS STRUCK DOWN ON APPEAL BY THE TRIBUNAL BY ITS ORDER DATED 23.4.201 0 WHILE EXAMINING THE ISSUE OF SUPPRESSION OF GROSS RECEIPT S IN PURSUANCE TO ORDER U/S 263 THE AO DID NOT FIND IT NECESSARY TO MAKE ANY ADDITION ON ACCOUNT OF SUPPRESSI0ON OF ANY GROSS RECEIPTS. SIMILARLY REIMBURSEMENT OF EXPENSES HAS BECOME FINAL AFTER RE-VERIFICATION BY THE AO HENCE THE ORDER OF AO DATED 13.12.2009 PASSED U/S 143(3) R.W.S. 263 HAS BECOME FINAL AFTER RE-VERIFICATION BY THE AO. HENCE THE REVENUE CANNO T HAVE ANY GRIEVANCE. 13. IN THE ORIGINAL ASSESSMENT ORDER AT PARA 1 PA GE 3 THE AO HAS GIVEN A FINDING THAT THE ASSESSEE HAS FURNISHED PROOF OF PAYMENT OF CENTRAL EXCISE REIMBURSEMENT OF PARLE PR ODUCTS PVT. LTD. THE AO HAS ALSO GIVEN A FINDINGS THAT THE ASS ESSEE HAS NOT DEBITED THE CENTRAL EXCISE PAYMENT TO THE P&L ACCOU NT. HE ACCEPTED THE ASSESSEES CLAIM OF REIMBURSEMENT BY P ARLE PRODUCTS P LTD. HENCE GROUND NO.4 RAISED BY THE RE VENUE IN THIS APPEAL IS DISMISSED. 14. IN THE RESULT THE REVENUES APPEAL IS DISMISS ED FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.1245/HYD/2007. ASSESSMENT YEAR 2003-04 ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 8 15. THE GROUNDS OF APPEAL RAISED BY REVENUE ARE AS FOLLOWS: 1. THE CIT(A) ERRED IN FACTS AND IN LAW IN NOT GIV ING THE MANDATORY OPPORTUNITY TO THE ASSESSING OFFICER AS R EQUIRED UNDER RULE 46A(3) OF THE IT RULES 1962 WHILE ADMIT TING ADDITIONAL EVIDENCE IN THE FORM OF RECONCILIATION O F RECEIPTS FROM PARLE PRODUCTS WITH RECEIPTS OFFERED IN THE PR OFIT AND LOSS ACCOUNT. 2. THE CIT(A) ERRED IN FACTS AND IN LAW IN ACCEPTIN G THE CLAIM OF THE ASSESSEE TOWARDS NEGATIVE VARIANCE AMO UNTING TO RS.12 54 909/- FROM THE GROSS RECEIPTS ON THE UNBELIEVABLE PLEA THAT THE ACTUAL AMOUNT RECEIVED I S LESS THAN THE AMOUNT MENTIONED IN THE TDS CERTIFICATE. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE N EGATIVE VARIANCE IF ANY WOULD BE ADJUSTED FROM THE AMOUNTS PAYABLE SUBSEQUENTLY AND THE NET AMOUNT WOULD BE MENTIONED IN THE TDS CERTIFICATE. 4. THE CIT(A) ERRED IN FACTS AND IN LAW IN DELETING THE ADDITIONS TOWARDS LDO ESCALATION CHARGES OF RS.3 65 406/- AND RS.1 82 703/- BY FAILING TO APPRECIATE THE FACT THAT IN THE PROCESSING CHARGE DETAILS FURNISHED BY PARLE PR ODUCTS THERE ARE 4 CREDITS TO THE ACCOUNT OF THE ASSESSEE ON 31.3.2003 2 EACH FOR RS.3 65 406/- AND RS.1 82 70 3/- RESPECTIVELY AND ONLY 2 ENTRIES OUT OF THESE WERE R EVERSED LEAVING 2 CREDIT ENTRIES IN THE ACCOUNT OF THE ASSE SSEE FOR RS.3 65 406/- & RS.1 82 703/- WHICH REPRESENTS THE INCOME OF THE ASSESSEE AND OUGHT TO HAVE BEEN SUSTA INED IN THE APPEAL. ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 9 5. THE CIT(A) ERRED IN FACTS AND IN LAW IN IGNORIN G THE FACT THAT THE ADDITIONS OF RS.6 84 487/- TOWARDS DIFFERE NCE IN THE PROCESSING CHARGES AND RS.8 09 264/- TOWARDS INCENTIVES RECEIVED BY THE ASSESSEE WERE MADE BASIN G ON THE SPECIFIC INFORMATION FURNISHED BY PARLE PRODUCT S AND IN SUBSTITUTING A LESSER FIGURE OF RS.12 34 828/- ON C ONTRIVED AND ERRONEOUS RECONCILIATION STATEMENT BY THE ASSES SEE. 16. GROUND NO.1 HAS BEEN ALREADY DECIDED FOR THE A SSESSMENT YEAR 2004-05 IN ITA NO.1245/H/2007 AT PARA NO.8. 17. GROUND NO.2 & 3 HAS BEEN THOROUGHLY ANALYSED B Y CIT(A). 18. THE LEARNED COUNSEL SUBMITTED THAT FROM THE SU M OF RS.4 69 90 973/- THE DEDUCTION IS CLAIMED TOWARDS TRANSFER FOR CENTRAL EXCISE REIMBURSEMENT EXPENSES REIMBURSEMEN T TO THE EXTENT DEBITED TO PARLE OTHER CHARGES A/C . FURT HER DEDUCTION IS CLAIMED FOR THE NEGATIVE VARIANCES. DEPENDING ON T HE QUALITY AND QUANTITY OF PRODUCTION THE PARLE PRODUCTS ARRIV ED AT THE NEGATIVE VARIANCE AND INTIMATED IT THROUGH PROCESSI NG SHEETS. THE TOTAL NEGATIVE VARIANCES DURING THE FINANCIAL Y EAR 2002-03 ARE RS.12 54 909/-. 19. THE CIT(A) OBSERVED AT PARA NO.13 AS FOLLOWS: IT APPEARS THAT THE ASSESSING OFFICER AFTER OBSERV ING CERTAIN APPARENT DISCREPANCY IN THE GROSS PAYMENTS AS PER TDS CERTIFICATES AND THE JOB WORK CHARGES RECORDED IN THE P&L A/C HAD NOT PROVIDED AN OPPORTUNITY TO THE ASSE SSEE TO RECONCILE SUCH DISCREPANCY DURING ASSESSMENT PROCEE DINGS. SO ALSO THE ASSESSING OFFICER HAD NOT ASKED THE AS SESSEE TO EXPLAIN THE DETAILS OF VARIOUS PAYMENTS MADE BY THE ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 10 PARLE PRODUCTS P LTD. TO THE ASSESSEE SUCH AS INCEN TIVES ESCALATION CHARGES AND ALSO THE DETAILS OF DEDUCTIO N MADE FROM THE GROSS BILLS RAISED TOWARDS PROCESSING CHAR GES ON ACCOUNT OF VARIOUS FACTORS SUCH AS DIFFERENCE IN WEIGHT/DIFFERENCE IN QUALITY ETC. ACCORDINGLY THE ASSESSEE DURING APPEAL HEARING WAS DIRECTED TO PREPARE A RECONCILIATION OF THE TOTAL PAYMENTS MADE BY THE PA RLE PRODUCTS P LTD. AND VARIOUS ADJUSTMENTS MADE TO THE PROCESSING CHARGES BILLS RAISED BY THE ASSESSEE. FOLLOWING SUCH DIRECTIONS THE LEARNED COUNSEL FOR THE ASSESS EE HAD SUBMITTED THE RECONCILIATION. 20. THE CIT(A) ACCEPTED THE CLAIM OF ASSESSEE TOW ARDS NEGATIVE VARIANCE AMOUNTING TO RS.12 54 909/- AFTE R THE FINAL RECONCILIATION SUBMITTED BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A)AS THE NEGATIVE VARIANCE HAS BEEN ARRIVED ONLY AFTER A PROPER ANALYSIS OF THE BOOKS OF ACCOUN T OF THE ASSESSEE. GROUND NO.4: 21. THE LEARNED COUNSEL SUBMITTED BEFORE US THAT T HE CIT(A) HAS CONSIDERED AT LENGTH THE DETAILS AND GAVE A WEL L REASONED ORDER. THE REVENUE IN THIS APPEAL HAS NOT POINTED OUT ANY MISTAKES IN THE SAID ORDER. THE CREDITS IN THE ACC OUNT OF THE ASSESSEE IN THE BOOKS OF PARLE WERE ALL SQUARED UP BY DEBITS IN THE VERY SAME ACCOUNT AND THE VARIANCES MERGED IN T HE FINAL ADDITION MADE BY THE FIRST APPELLATE AUTHORITY. 22 . AT PARA 16 THE CIT(A) HAS POINTED PUT THAT T HE LEDGER ACCOUNT SHOWS TWO ENTRIES ONE PROVISION FOR ESCALAT ION OF CHARGES TOWARDS LDO CREDITED TO THE ASSESSEES ACCO UNT AMOUNTING TO RS.4 85 097/- AND ALSO A DEBIT ENTRY O F THE SAME ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 11 AMOUNT OF RS.485097/- INDICATING PROVISION OF LDO E SCALATION CHARGES NOW REVERSED. THE CIT(A) OBSERVED THAT THE AO HAS NOT BEEN EXAMINED SUCH A REVERSAL ENTRY FOR THE SAME AM OUNT ON THE SAME DATE IN THE ASSESSEE S LEDGER ACCOUNT AND THEREFORE DELETED THE ADDITION. AT PARA 17 THE CIT(A) HAS AG AIN OBSERVED THAT BY OVERSIGHT THE AO HAS NOT EXAMINED THE REVER SAL DEBIT IN THE LEDGER ACCOUNT WHILE CONSIDERING ONLY THE CRED IT ENTRIES AND DELETED THE ADDITION OF RS.10 33 206/- MADE BY THE AO. WE ARE IN AGREEMENT WITH THE DECISION OF THE CIT(A) ON THI S ISSUE SINCE THE AO HAS NOT TAKEN NOTE OF THE REVERSAL DEBIT ENT RIES WHILE CONSIDERING ONLY THE CREDIT ENTRIES. GROUND NO.5. 23. BEFORE THE CIT(A) THE LEARNED COUNSEL ADMITTE D THAT WHILE THE PRODUCTION INCENTIVES AND OTHER PAYMENTS ALLOWE D BY PARLE PRODUCTS P LTD TO THE ASSESSEE HAVE TO BE CONSIDERE D AS TAXABLE RECEIPTS. VARIOUS DEDUCTIONS/REDUCTIONS EFFECTED BY PARLE PRODUCTS P LTD. FROM THE GROSS PROCESSING CHARGES R AISED BY THE ASSESSEE SHOULD BE TAKEN INTO ACCOUNT. 24. DURING THE PROCEEDINGS BEFORE THE CIT(A) WITH RESPECT TO THE SUM OF RS.809264/- WHICH WAS ALLOWED BY THE PAR LE PRODUCTS TO THE ASSESSEE TOWARDS PRODUCTION INCENTI VE TO THE ASSESSEE IN THE FINANCIAL YEAR 2002-03 NOT DISCLOSE D IN THE P&L ACCOUNT THE ASSESSEE WAS ASKED TO PREPARE A RECONC ILIATION STATEMENT OF THE ACTUAL PAYMENTS MADE BY PARLE PROD UCTS P LTD. TO THE ASSESSEE DURING THE FINANCIAL YEAR 2002-03 A FTER CONSIDERING VARIOUS ADDITIONS AND DEDUCTIONS MADE O N THE GROSS PROCESSING CHARGES/JOB WORKS CHARGES BILLS RAISED B Y THE ASSESSEE. ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 12 25. THE CIT(A) HELD AS FOLLOWS: DURING THE APPELLATE HEARING AN ANALYSIS WAS MADE OF SUCH RECONCILIATION STATEMENT VIS.A VIS THE DETAILS FURNISHED IN THE PAPER BOOK AND THE WRITTEN ARGUMENTS FILED. ON SUCH ANALYSIS IT IS FOUND THAT THE RECONCILIATION NOW P REPARED IS IN CONFORMITY WITH THE DETAILS AVAILABLE IN THE PAY MENT VOUCHERS OF PARLE PRODUCTS PVT. LTD FOR THE ASSESSM ENT YEAR 2002-03. AS PER THIS RECONCILIATION THE NET INCOM E RECEIVED BY THE ASSESSEE FIRM FROM PARLE PRODUCTS P LTD. DUR ING FINANCIAL YEAR 2002-03 WORKS OUT TO RS.32076132/-. AS AGAINST THIS THE ASSESSEE HAD SHOWN TOTAL CREDIT I N ITS P&L ACCOUNT OF RS.30841304/-. AS SUCH THE DIFFERENTIA L AMOUNT OF RS.1234828/- CAN BE CONSIDERED AS ASSESSABLE INC OME FOR ASSESSMENT YEAR 2003-04 WHICH HAS TO BE ADDED T O THE RETURNED INCOME. IN THIS SENSE THERE WOULD BE NO REQUIREMENT TO MAK E ANY SEPARATE ADDITION OF PRODUCTION INCENTIVE FOR RS.80 9264/- AS DONE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IN THIS CONTEXT IT MAY BE PERTINENT TO MENTION THA T WHILE ANY INCENTIVES/ALLOWANCES CREDITED BY THE PAYER HAV E TO BE ADDED TO THE TURNOVER OF THE ASSESSEE TO THE EXTEN T IT IS NOT DONE SO IN THE ASSESSEES BOOKS OF ACCOUNTS IT WOUL D ALSO BE EQUALLY JUSTIFIED TO EXCLUDE THE VARIOUS DEDUCTI ONS AND REDUCTIONS MADE BY THE PAYER TO THE EXTENT THE ASSE SSEE HAD ALSO NOT EXCLUDED SUCH AMOUNTS FROM ITS GROSS TURNOVER. 26. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A ) SINCE THE DIFFERENTIAL AMOUNT OF RS.1234828/- IS TO BE CONSID ERED AS ASSESSABLE INCOME FOR THE ASSESSMENT YEAR 2003-04 A CCORDING TO ITA NO.1244 & 1245/H/2007 ANAND FOOD PRODUCTS HYDERABAD 13 THE RECONCILIATION STATEMENT FURNISHED BY THE ASSES SEE AND THE DEPARTMENT HAS NOT BROUGHT ANY MATERIAL TO CONTRADI CT THE SAME. 27. IN THE RESULT BOTH THE REVENUES APPEALS IN ITA NO.1245 & 1244/HYD/2007 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON: 30. 3.2 012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 30 TH MARCH 2012 COPY FORWARDED TO: 1. THE ITO WARD 9 (1) BLOCK NO.2D IT TOWERS HYDER ABAD 2. M/S ANAND FOOD PRODUCTS 16-1-486 SAIDABAD HYDERABAD 3. THE CIT(A)-VI HYDERABAD 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP/