2015 (4) TMI 582 - AT - Income Tax

Addition due to difference in turnover reported in books of accounts and in VAT returns - Non taxable purchases reported in the taxable category of purchases in books of account - Held that - We have heard the ld Counsel for the assessee wherein he has submitted that there was a mistake committed by the CTO which has been proved by the production of monthly statements filed before the said authorities. The ld Counsel for the assessee further pointed out in the statement relied on by the AO, the tax shall be taken at ₹ 40,14,746. Such tax is worked out at 4% of the turnover. At the rate of 4% the tax of ₹ 40,14,746 would be correct, if the output is taken at ₹ 10,03,68,648, whereas if the figures shown is ₹ 10,19,71,512 were to be true, the tax payable would work out to ₹ 40,78,860. Hence, it was brought to the notice of the AO that there is an error in the VAT ledger a/c. Hence we confirm the order of the CIT (A) wherein he has held that the fact of the miss-match and the turnover in the certificate dated 23.11.2011 support the view that the figure reflected in the certificate dated 16.6.2011 is the correct figure. Further, we find that the total purchases as reflected in the VAT return and as reflected in the schedule to the P&L a/c is the same and hence we confirm the order of the CI ,T (A) and dismiss the grounds raised by the Department on this issue.- Decided against the revenue.

Summary

Issues:
1. Discrepancy in sales figures reported to the Commercial Tax Officer and recorded in the books of accounts.
2. Discrepancy in the purchase of oil (raw material) as per VAT returns and recorded in the P&L account.

Analysis:
1. The first issue involved a discrepancy in sales figures, leading to an addition of Rs. 16,13,275 by the Assessing Officer (AO). The Appellate Tribunal considered certificates from the Commercial Tax Officer (CTO) dated 16.06.2011 and 23.11.2011. The Tribunal held that the turnover reported in the certificate dated 16.06.2011 was correct, as it matched the VAT return for December 2008. The Tribunal directed the deletion of the added amount, stating that the figure in the certificate dated 16.06.2011 was accurate, supported by VAT return and other documents.

2. The second issue involved a difference in the purchase of oil (raw material) as per VAT returns and the P&L account. The AO added Rs. 97,59,696 as an excess claim of purchases. The Appellate Tribunal noted that the total purchases reported in the VAT return and the P&L account were identical. The Tribunal held that the distinction between taxable and non-taxable purchases was irrelevant for income tax assessment. The Tribunal directed the deletion of the addition, stating that the total purchases matched in both records, and the discrepancy arose due to reporting non-taxable purchases as taxable in the P&L account.

In conclusion, the Appellate Tribunal dismissed the Revenue's appeal, ruling in favor of the assessee in both issues regarding the discrepancies in sales figures and purchase of oil. The Tribunal emphasized the importance of accurate reporting and matching figures in different documents for tax assessments.