Vaghani Techno Build Limited, Ahmedabad V. The ACIT.,Circle-8, Ahmedabad

CO 191/AHD/2010

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1347 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 19-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S N DIVETIA
• Assessee Lawyers: D C MISHRA
• Keywords: Business income; Source of fund; Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO. 1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR:2004-05 ASSTT. CIT, CIRCLE-8, AHMEDABAD. VS VAGHANI TECHNO BUILD LTD. (FORMERLY KNOWN AS DHRUV MAKAHN (INDIA) LTD. PLOT NO.278-281, KAMALANAGAR HOUSE, P.O. BADARKHA, TAL. DHOLKA, DIST. AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO.AAACD 7725J APPELLANT BY SHRI D. C. MISHRA, SR. DR RESPONDENT BY SHRI S. N. DIVETIA, AR DATE OF HEARING: 26/8/2015 DATE OF PRONOUNCEMENT: 3/11/2015 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THESE TWO APPEALS ONE BY REVENUE AND THE OTHER BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A) VIII, AHMEDABAD, DTD. 23.02.2010. ASSESSMENT FOR AY 2004-05 WAS FRAM ED U/S 143(3) OF THE I.T. ACT, 1961 (IN SHORT THE ACT) ON 19.12.2 006 BY ITO, WARD- 1(4), AHMEDABAD. ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 2 2. ITA NO.1521/AHD/2010 FOR AY 2004-05 (REVENUES APPE AL) - THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APP EAL :- 1. THE LD. CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE DISALLOWANCE OF RS.4640880/- MADE B Y ASSESSING OFFICER ON ACCOUNT OF LOSS ON SALE OF LIV E STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE AO. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) XIV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ORDER OF THE AO BE RESTORED. 3. AT THE OUTSET, REVENUE HAS REQUESTED THE BENCH TO P ERMIT TO WITHDRAW THE APPEAL FILED BY THEM. THE LD. AR HAS N O OBJECTION. THEREFORE, THE REQUEST OF THE REVENUE IS ACCEPTED A ND THE APPEAL FILED BY THE REVENUE IS DISMISSED AS WITHDRAWN. 4. C.O. NO.191/AHD/2010 ASST. YEAR:2004-05 (BY ASSESSE E) 5. NOW THE QUESTION BEFORE US IS THAT IF THE MAIN A PPEAL IS WITHDRAWN THEN WHAT WILL BE THE FATE OF THE C.O. FI LED BY THE ASSESSEE? TO RESOLVE THIS ISSUE WE GO THROUGH THE P ROVISIONS OF SECTION 253(3) OF THE ACT AND THE RELEVANT PART OF IT SAYS THE MEMORANDUM OF C.O. SHALL BE DISPOSED OF BY THE APPE LLATE TRIBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE TIME S PECIFIED IN SUB- SECTION (3) OR SUB-SECTION (3A). THEREFORE, WE WILL HEAR AND DECIDE ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 3 THE ISSUES FILED BY THE ASSESSEE IN C.O. THE ASSESS EE HAS RAISED FOLLOWING GROUNDS IN THIS CROSS OBJECTION: 1.1 THE LD. CIT(A) HAS ERRED IN LAW AND OR ON FACTS IN CONFIRMING THE AMOUNT OF RS.20,09,696/- AS INCOME FROM OTHER SOURC ES AS AGAINST INCOME FROM SALE OF MILK CLAIMED BY THE APP ELLANT. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THAT RS .20,09,696 WAS INCOME FROM OTHER SOURCES AND NOT THE INCOME FR OM SALE OF MILK. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMI NG THAT THERE WAS NO SALE OF BUFFALOES OF RS.57,38,880/- AT RS.10,98, 000/- AND THEREBY RESULTING INTO A LOSS OF RS.46,40,880/. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS OUGHT NOT TO HAVE DISALLOWE D THE LOSS OF RS.46,40,880/- ON ACCOUNT OF SALE OF BUFFALOES FOR RS.10,98,000/- 3.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMI NG THE DISALLOWANCE OF EXPENSES RELATING TO BUFFALOES FOR RS.4,73,616/- . 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED DISALLOWANCE OF RS.4,73 ,616/-. 4.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.2 LACS OUT OF ADMINISTRATIVE EXP ENSES CLAIMED AT RS.4,67,194/- 4.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF RS. 2 LACS OUT OF ADMINISTRATIVE AND OTHER EXPENSES OF RS.4,67,194 /-. ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 4 5.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE APPELLANT COMPANY HAD NOT CARRIED OUT ANY BUSINESS ACTIVITIES NOR IT HAD SOLD THE BUFFALOES. 5.2 THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT TH E AO HAD NOT ALLOWED SUFFICIENT OPPORTUNITY OR ISSUED ANY SHOW C AUSE BEFORE MAKING THE HIGH PITCH ASSESSMENT. IT IS, THEREFORE, PRAYED THAT THE IMPUGNED DISALLO WANCE CONFIRMED BY THE CIT(A) MAY PLEASE BE DELETED. 6. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF DAIRY FO OD PRODUCT AND FILED ITS RETURN OF INCOME ON 4.10.2004 DECLARING T OTAL LOSS AT (-) RS.35,16,780. THE CASE WAS SELECTED FOR SCRUTINY AS SESSMENT AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE A CT AND INCOME WAS ASSESSED AT RS.48,53,700/- AFTER MAKING DISALLO WANCE/ADDITION TOTALING TO RS.1,30,62,768/-. HOWEVER, THE AO ALLOW ED CARRY FORWARD BUSINESS LOSS AT RS.36,80,719/-. THE BIFURCATION OF DISALLOWANCE /ADDITION MADE BY ASSESSING OFFICER AT RS.1,30,62,7 68/- HAS ARISEN OUT OF THE FOLLOWING :- 1. MILK SALE DISALLOWED AND TREATED AS UNACCOUNTED MONEY AT RS.20,09,696/- 2. RECEIPT FROM SALE OF BUFFALOES TREATED AS INCOME FROM OTHER SOURCES - AT RS.57,38,880/- 3. DISALLOWANCE OF LOSS INCURRED FROM SALE OF LIVE- STOCK AT RS.46,40,880/- 4. DISALLOWANCE OF EXPENSES AT RS.6,73,312/- TOTAL - RS.1,30,62,768/- BEING AGGRIEVED, THE RESPONDENT ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO VIDE HIS ORDER DATED 23.2.2010 ALLOW ED THE LOSS ON ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 5 SALE OF LIVE-STOCK AT RS.46,40,880/- AND CONFIRMED THE REMAINING DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFIC ER. 7. BEING AGGRIEVED THE ASSESSEE IS IN FURTHER APPEA L BEFORE THE TRIBUNAL. 8. FIRST WE TAKE GROUND NO.1.1 & 1.2 RAISED AGAINST CONFIRMATION BY CIT(A) OF THE DISALLOWANCE/ADDITION MADE BY THE ASSESSING OFFICER BY TREATING THE SALE OF MILK AT RS.20,09,696/- AS I NCOME FROM OTHER SOURCES. THE ASSESSEE COMPANY HAS SHOWN MILK SALE O F RS.20,09,696/- IN ITS AUDITED PROFIT AND LOSS ACCOU NT. THE ASSESSING OFFICER DID NOT RECEIVE ANY REASONABLE REPLY FROM T HE ASSESSEE COMPANY IN RELATION TO THE DETAILS REQUIRED WITH DO CUMENTARY EVIDENCE SHOWING MILK SALE AND THE ASSESSING OFFICE R OBSERVED THAT ASSESSEE COMPANY HAS NOT DONE ANY DAIRY ACTIVITY SI NCE 9.10.2002 AS THE BUSINESS PREMISES, WHERE DAIRY ACTIVITIES WE RE USED TO BE CARRIED OUT BY THE ASSESSEE COMPANY, WERE ATTACHED BY DENA BANK DUE TO DISPUTE WITH THE BANK AND THE ATTACHMENT WAS REVOKED IN THE MONTH OF SEPTEMBER, 2004; (DULY SUPPORTED BY THE C OPY OF ORDER). THE DISPUTE WITH THE BANK WAS SETTLED IN SEPTEMBER, 2004 AND NO DUES CERTIFICATE TO THE ASSESSEE COMPANY WAS ISSUE D ON 21.10.2004. FURTHER THE ASSESSING OFFICER CARRIED OUT SPOT VERI FICATION OF THE SAID PREMISES WHERE NO DAIRY ACTIVITY WAS BEING CARRIED OUT. THEREFORE, AS FOR THE YEAR UNDER APPEAL I.E. F.Y.2003-04 THE BUSI NESS PREMISES OF THE ASSESSEE WERE ATTACHED BY THE BANK AND THERE WA S NO POSSIBILITY TO CARRY ON ANY BUSINESS ACTIVITY. ASSESSING OFFICE R DID NOT ACCEPT THE ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 6 REVENUE SHOWN AS BUSINESS RECEIPTS FROM SALE OF MIL K AS GENUINE AND ACCORDINGLY TREATED IT AS UNACCOUNTED MONEY. 9. DURING THE APPELLATE PROCEEDINGS BEFORE LD. CIT( A), THE FIRST APPELLATE AUTHORITY DISMISSED THE GROUND OF THE ASS ESSEE BY OBSERVING AS UNDER :- 6.9 I HAVE CONSIDERED THE FACTS AND SUBMISSION OF THE LD. AR CAREFULLY. I HAVE ALSO GONE THROUGH THE REMAND REPO RT PREPARED BY THE ASSESSING OFFICER. AS REGARDS ASSESSING OFFICERS A CTION FOR TREATING THE SUM OF RS.20.09,696/- AS INCOME FROM OTHER SOU RCES IT IS SEEN THAT THE CONCLUSION DRAWN BY HIM IS BASED ON CORREC T APPRECIATION OF FACTS OBTAINING IN THE APPELLANTS CASE DURING THE RELEVANT PERIOD. THERE IS NO DISPUTE ABOUT THE FACT THAT THE APPELLA NTS PREMISES WAS ATTACHED BY DENA BANK. THE ATTACHMENT WAS REVOKED I N THE MONTH OF SEPTEMBER, 2004 AND NO DUE CERTIFICATE WAS ISSUED T O IT BY THE BANK ON 21.10.2004. THE ATTACHMENT REMAINED IN FORCE FRO M 9.10.2002 THEREFORE DURING ENTIRE FINANCIAL YEAR UNDER REFERE NCE THE BUSINESS PREMISES OF THE APPELLANT WAS KEPT ATTACHED BY THE BANK. THEREFORE, UNDER THESE CIRCUMSTANCES HOW THE APPELLANT CARRIED OUT ITS DAIRY BUSINESS HAS NOT BEEN PROVED WITH THE HELP OF COGEN T MATERIAL. SINCE VARIOUS DISCREPANCIES IN THE APPELLANTS CLAIM WERE DETECTED BY THE ASSESSING OFFICER AND SAME WERE BROUGHT TO ITS NOTI CE IT WAS INCUMBENT UPON IT TO REPEL THE SAME BY BRINGING NEC ESSARY SUPPORTING EVIDENCE ON RECORD. NEITHER DURING THE ASSESSMENT P ROCEEDINGS NOR DURING THE APPELLANT PROCEEDINGS EVIDENCE TO THESE EFFECT WERE NOT FILED. THEREFORE, UNDER THESE CIRCUMSTANCES I DONT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE ASSESSING OFFICER. IN VIEW OF THIS, THE GROUND TAKEN BY THE APPELLANT AGAINST THE SAME IS H EREBY DISMISSED. 10. DURING THE COURSE OF HEARING BEFORE US, LD. AR SUBMITTED THAT ASSESSEE COMPANY IS DOING BUSINESS ACTIVITIES REGUL ARLY SINCE 1994 AND IS REGULARLY SHOWING THE SALE OF MILK AND ALSO DREW OUR ATTENTION TO THE FACT THAT ASSESSEE COMPANY WAS HAVING LIVE S TOCK AT THE CLOSE ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 7 OF F.Y.2002-03 AND THE VALUE OF BUFFALOES SHOWN IN THE AUDITED BALANCE SHEET AS ON 1.4.2003 WAS SHOWN AT RS.92,67, 005/- AND THE SAME WAS THE CLOSING STOCK FOR THE F.Y.2002-03 WHIC H HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THE LD. AR ALSO SUBMITTED THAT AS THE ASSESSEE COMPANY WAS HAVING BUFFALOES IN THE OP ENING STOCK AND SOME OF THEM WERE SOLD DURING THE YEAR, SO, WHE N THE ASSESSEE COMPANY WAS HAVING BUFFALOES THEN CERTAINLY THERE H AS BEEN SALE OF MILK ALSO AND FURTHER SUBMITTED THAT - (A) THE COMPANY HAS SHOWN BUFFALOES AS LIVE STOCK I N THE AUDITED BALANCE SHEETS OF LAST SO MANY YEARS AND AL SO INCOME-TAX ASSESSMENT IS COMPLETED HENCE THERE IS N O DOUBT ABOUT THE ASSETS OF LIVE STOCK WITH THE COMPA NY . SECONDLY DENA BANK HAS TAKEN ATTACHMENT ON BUILDING AND PLANT & MACHINERY OF THE COMPANY AND TAKEN IN I TS POSSESSION DURING THE YEAR THEN IT IS NATURAL TO SH IFT THE BUFFALOES WHICH WERE GIVEN TO BHANWAD & RABARIES RESIDING NEARBY AREAS. THEY ARE MAINTAINING THE BUF FALOES AND SALE THE MILK AND DEPOSIT THE MONEY IN COMPANY AND ALSO TAKE MONEY FROM THE COMPANY FOR MAINTENANCE OF THE BUFFALOES. THE COMPANY HAS PREPARED VOUCHER FOR MILK SALE AND DEBIT BUFFALOES MAINTENANCE EXPENSES AS BUFFALOES EXPENSES. (B) THE COMPANY HAS NOT DONE ANY DAIRY PRODUCTION ACTIVITIES BUT CREATED THE INCOME FROM LIVE ASSETS OF THE COMP ANY AS MILK INCOME. IT IS NOT NECESSARY TO DO THE DAIRY ACTIVITIES TO SHOW THE MILK INCOME. MILK INCOME IS SHOWN AS INCOME IN THE PROFIT AND LOSS ACCOUNT SINCE LAST SO MANY YEARS AND INCOME TAX ORDER WAS PASSED U/S 143( 3) OF THE INCOME-TAX ACT FOR ASST. YEAR 2002-03. SUCH SITUATION OF THE COMPANY IS ARISEN DUE TO ATTACHMEN T AND RECOVERY DONE BY THE DENA BANK ON FIXED ASSETS OF T HE COMPANY SUCH AS LAND BUILDING AND PLANT & MACHINERY . ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 8 (C) THE MANAGEMENT OF THE COMPANY IS CHANGED AND I T IS TAKEN OVER BY VAGHANI FAMILY OF BOMBAY AS PER SEBI TAKEN OVER RULES & REGULATION IN THE MONTH OF SEPTE MBER, 2005 (COPY OF OFFER LETTER ENCLOSED). DUE TO CHANGE IN MANAGEMENT THE RECORD IS NOT AVAILABLE AND THE NAME & ADDRESS IS ALSO NOT POSSIBLE AS THERE IS NO LIVE ST OCK AS ON DATE WITH THE COMPANY. THE NEW MANAGEMENT HAS TRIED TO CONTACT OLD MANAGEMENT BUT AT PRESENT THEY ARE N OT AVAILABLE. HENCE WE ARE UNABLE TO PROVIDE NAME AND ADDRESS OF THE RABARIES AND BHANWAD TO WHOM WE HAVE GIVEN BUFFALOES FOR MILK SALE AND MAINTENANCE OF TH EM. 11. THE LD. DR SUPPORTED THE ORDERS OF LOWER AUTHOR ITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE OBSERVATIONS MADE BY THE ASSESSING O FFICER IS QUITE RELEVANT WITH REGARD TO THE FACT THAT THE BUSINESS PREMISES OF THE ASSESSEE WERE ATTACHED BY DENA BANK ON 9.10.2012 AN D THE ATTACHMENT WAS REVOKED IN THE MONTH OF SEPTEMBER, 2 004 WHICH MEANS THAT ASSESSEE WAS NOT HAVING THE REGULAR BUSI NESS PLACE TO RUN THE DAIRY ACTIVITIES AND THIS FACT OF ATTACHMEN T BY THE BANK IS ON RECORD AND HAS NOT BEEN CONTROVERTED BY THE ASSESSE E. 13. ASSESSEE HAS SHOWN SALE OF MILK DURING FINANCIA L YEAR 2002-03 AT RS.20,09,696/- WHEREAS IN THE PREVIOUS F.Y. 2003 -03 SALE OF MILK WAS SHOWN AT RS.6,51,615/- MEANING THEREBY THAT THE REVENUE OF THE ASSESSEE HAD INCREASED BY THREE FOLD EVEN IN THE SI TUATION WHEN ITS BUSINESS ACTIVITIES WERE HAULTED BY THE ATTACHMENT ORDER BY THE BANK. MOST OF THE LIVE STOCK WAS SOLD DURING THE YEAR AND LOW BUSINESS ACTIVITIES WERE CARRIED OUT. THEREFORE, BOTH THE FA CTS ARE CONTRADICTORY ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 9 I.E. ON ONE HAND THE REVENUE FROM SALE OF MILK HAS INCREASED AT THREE FOLD AND ON THE OTHER HAND, THERE WAS GREAT DOWN FA LL IN THE BUSINESS OF THE ASSESSEE AND ALSO ASSESSEE WAS NOT HAVING IT S OWN BUSINESS/FACTORY PREMISES TO RUN THE DAIRY BUSINESS . SALE OF MILK IN A DAIRY INDUSTRY IS BASED ON PROPER MECHANICAL SYSTEM IN WHICH MILK HAS TO BE STORED IN SPECIAL DAIRY INDUSTRY PLANT AN D THEREAFTER AFTER MEETING THE SAFETY STANDARD AND OTHER REGULAR ACTIV ITIES ATTACHED TO THE DAIRY INDUSTRY INCLUDING STORAGE OF MILK IN CHI LLING PLANT FOLLOWED BY PACKAGING MILK TO BE SOLD IN THE MARKET. NOT A SING LE PIECE OF EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE TO BOTH THE LOWER AUTHORITIES AS WELL AS BEFORE THE TRIBUNAL TO PROVE THE GENUINENESS OF THE SALE OF MILK. THE ONLY PLEA BY THE LD. AR TAKEN REPEATEDLY IS THAT THE ASSESSEE COMPANY WAS HAVING OPENING BALANCE OF BUFFALOES AND SOME BUFFALOES WERE SOLD AND THERE OUGHT TO HAVE BE EN MILK PRODUCTION WITH THE RESULTANT SALE WHICH CANNOT BE ACCEPTED UNDER THE GIVEN CIRCUMSTANCES. ACCORDINGLY, WE DO NOT FIN D ANY FORCE IN THE CONTENTIONS MADE BY THE ASSESSEE AND ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A ). ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 14. GROUND NO.2.1 & 2.2 AGAINST ADDITION SUSTAINE D BY CIT(A) BY WAY OF DISALLOWANCE OF LOSS OF RS.46,40,880/- AND T REATING OF RECEIPT FROM SALE OF BUFFALOES AT RS.10,98,000/- AS INCOME FROM OTHER SOURCES. THE ASSESSEE IN ITS FINANCIAL ACCOUNT HAS SHOWN THAT OUT OF THE OPENING BALANCE OF BUFFALOES SHOWN IN BALANCE S HEET 366 BUFFALOES HAVING A COST PRICE OF RS.57,38,880/- WER E SOLD DURING THE ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 10 YEAR AT RS.10,98,000/- RESULTING THEREBY LOSS OF RS .46,40,880/- (RS.57,38,880/- (-) RS.10,90,000/-) AND ASSESSEE RE CEIVED RS.10,98,000/- FROM SALE OF BUFFALOES. THE ASSESSIN G OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS BECAUSE OF LACK OF EVIDENCES AND SUPPORTING DOCUMENTS AND, THEREFORE, MADE TWO ADDIT IONS (I) ON ACCOUNT OF SOURCE OF FUNDS FOR PURCHASE OF BUFFALOE S AT RS.57,38,880/- AND (II) BY WAY OF DISALLOWANCE OF L OSS OF RS.46,40,880/- CLAIMED BY THE ASSESSEE IN THE PROFI T AND LOSS ACCOUNT ARISING FROM SALE OF LIVE STOCK. HOWEVER, LD. CIT(A ) EXAMINED THIS ASPECT AND HELD AS BELOW :- 6.10 IN REGARD TO ALLEGED SALE RECEIPTS OF BUFFALO ES AMOUNTING TO RS.57,38,880/- IT IS SEEN THAT THE APPELLANT MISERA BLY FAILED TO BRING NECESSARY EVIDENCE TO PROVE SUCH SALES BEFORE THE A SSESSING OFFICER. EVEN WHEN THE MATTER WAS REFERRED BACK TO ASSESSING OFFICER DURING APPELLANT PROCEEDINGS THE APPELLANT DID NOT BRING A NY EVIDENCE TO SUPPORT SUCH CLAIM. IT IS A MATTER OF FACT THAT DUR ING THE ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT PRODUCE EVEN FI VE PERSONS TO WHOM IT ALLEGEDLY SOLD BUFFALOES DURING THE RELEVAN T PERIOD. THE SURROUNDING CIRCUMSTANCES CLEARLY SHOW THAT NO SUCH TRANSACTIONS WERE MADE BY THE APPELLANT DURING THE RELEVANT PERI OD. THE ASSESSING OFFICER HAS RIGHTLY NALYZED THE FACTS IN THIS REGARD AND THESE HAVE NOT BEEN REBUTTED BY THE LD. AR DURING T HE APPELLATE PROCEEDINGS. THE APPELLANT HAS CLAIMED THAT SUCH BU FFALOES WERE SOLD FOR RS.10,98,000/- HAVING BOOK VALUE OF RS.57, 38,880/-. THE APPELLANT CONSEQUENTLY CLAIMED A LOSS OF RS.46,40,8 80/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT H AS ADDED A SUM OF RS.57,38,880/- AND THE AMOUNT OF RS.46,40,880/- CLAIMED AS LOSS HAS BEEN REJECTED BY HIM. IN THE TOTALITY OF FACTS AS DISCUSSED ABOVE, WHEN THERE IS NO EFFECTIVE SALES OF SUCH LIVESTOCK THERE CANNOT BE A LOSS OF RS.46,48,800/- THEREFORE, THE SAME HAS RIGH TLY BEEN DISALLOWED BY THE ASSESSING OFFICER. IN VIEW OF THI S, DISALLOWANCE OF ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 11 RS.46,80,800/- IS CONFIRMED. THE RECEIPT OF RS.10,9 8,000/- ALLEGEDLY SHOWN BY THE APPELLANT FROM SALE OF BUFFALOES IS RE QUIRED TO BE ADDED IN THE GIVEN CIRCUMSTANCES AS INCOME FROM OTHER SOU RCES. THEREFORE ON ACCOUNT OF BOTH THESE TRANSACTIONS THE ADDITION OF RS.57,38,880/- IS HEREBY CONFIRMED. 6.11 IT IS SEEN THAT THE ASSESSING OFFICER HAS MADE A SEPARATE ADDITION OF RS.57,38,880/-. SINCE THE ADDITION IN R ESPECT OF LIVESTOCK OF RS.57,38,880/- (RS.46,80,800/- + RS.10,98,000/- HAS ALREADY BEEN CONFIRMED IN THE PRECEDING PARA THERE DOES NOT REMA IN A GROUND TO ADD FURTHER RS.57,38,880/-. IN VIEW OF THIS THE ADD ITION OF RS.57,38,880/- IS HEREBY DELETED. AS THE REVENUE HAS WITHDRAWN ITS APPEAL, THE ISSUE WHICH IS BEFORE US IS TO BE EXAMINED, THE GENUINENESS OF LOSS OF RS .46,40,880/- WHICH WILL SIMULTANEOUSLY ALSO EXAMINE THE RECEIPT FROM SALE OF BUFFALOES AT RS.10,98,000/-. 15. THE LD. AR SUBMITTED THAT ASSESSEE HAS BEEN CAR RYING ON THE BUSINESS AS DAIRY INDUSTRY FOR LAST MANY YEARS AND REGULARLY ASSESSED TO INCOME-TAX AND ALSO REFERRED TO THE AUDITED BALA NCE SHEET WHEREIN OPENING STOCK OF BUFFALOES WAS SHOWN AT RS.92,67,00 5/- MEANING THEREBY THAT THE ASSESSING OFFICER HAS ACCEPTED THE CLOSING STOCK OF BUFFALOES FOR ASST. YEAR 2003-04 AT RS.92,67,005/-. THE LD. AR FURTHER SUBMITTED IN SUPPORT OF THE CLAIM OF LOSS FROM SALE OF BUFFALOES FOR RS.46,80,800/- BY SUBMITTING THAT OUT OF THE OPENIN G STOCK OF RS.92,67,005/- WHICH WAS THE COST PRICE OF 591 BUFF ALOES ASSESSEE SOLD 366 BUFFALOES DURING THE YEAR COSTING RS.57,38 ,880/-. THE SALE CONSIDERATION RECEIVED FROM SALE OF 366 BUFFALOES W AS RS.10,98,000/- AND ACCORDINGLY ASSESSEE INCURRED BUSINESS LOSS OF RS.46,40,800/-. ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 12 16. THE LD. DR SUPPORTED THE ORDERS OF ASSESSING OF FICER AND THE FIRST APPELLATE AUTHORITY. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT SEEMS THAT THERE IS SOME ANOMALY IN T HE DEPICTION OF THE TRANSACTION WITH REGARD TO THE SALE OF BUFFALOES. F ROM THE PERUSAL OF THE AUDITED BALANCE SHEET, THE TRANSACTION OF SALE OF BUFFALOES CAN BE GATHERED FROM THE FACT THAT AS ON 1.4.2003 ASSESSEE COMPANY WAS POSSESSING 591 BUFFALOES SHOWN AT A COST PRICE OF R S.92,67,005/-. DURING THE YEAR ASSESSEE COMPANY SOLD 366 BUFFALOES AT RS.10,98,000/- (COST OF 366 BUFFALOES WAS ARRIVED A T BY DIVIDING RS.92,67,005/- BY TOTAL NUMBER OF BUFFALOES I.E. 59 1 AND MULTIPLYING THE RESULT WITH 366 BUFFALOES SOLD WHICH COMES TO R S.57,38,880/-. THE ASSESSEE COMPANY HAS CLEARLY SHOWN IN THE FIXED ASS ETS SCHEDULE THAT AFTER REDUCING THE COST OF BUFFALOES SOLD FROM OPENING BALANCE OF BUFFALOES SOLD, THE ASSESSEE REMAINED WITH THE CLOS ING VALUE OF BUFFALOES AT RS.35,28,125/- WHICH MEANS THERE WAS N O PURCHASE OF BUFFALOES DURING THE YEAR AND ONLY TRANSACTION WAS THE SALE OF 366 BUFFALOES WHICH WERE PURCHASED BY THE ASSESSEE IN T HE YEARS BEFORE THE YEAR UNDER APPEAL, APPROXIMATELY COSTING AT RS. 57,38,880/- AND THEY WERE SOLD AT A LOSS OF RS.46,40,880/- AND THE SALE PROCEEDS RECEIVED FROM THE SALE OF 366 BUFFALOES WAS AT RS.1 0,98,000/-. THE ASSESSEE IS CLAIMING THE LOSS FROM SALE OF ASSETS ( LIVESTOCK) ACQUIRED BY IT IN THE PREVIOUS YEARS (AS SHOWN IN AUDITED BA LANCE SHEET). HOWEVER, ASSESSEE COMPANY WAS NOT ABLE TO PROVE THA T SALE OF ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 13 BUFFALOES ACTUALLY TOOK PLACE DURING THE YEAR. EVEN IN THE AUDITED FINANCIAL STATEMENT WHICH ARE BEING HEAVILY RELIED UPON BY THE ASSESSEE COMPANY, WE HAVE COME ACROSS A SPECIFIC NO TE GIVEN BY THE AUDITORS IN SCHEDULE-XII OF THE AUDITED BALANCE SHEET AT SL.NO.4 APPEARING AT PAGE 39 OF THE PAPER BOOK READS AS UND ER :- AS EXPLAINED TO US DURING THE YEAR UNDER REVIEW TH E COMPANY HAS DISPOSED OF 366 BUFFALOES AT RS.10,98,000/- RES ULTING INTO LOSS OF RS.46,40,880/-OUT OF 591 BUFFALOES AT THE B EGINNING OF FINANCIAL YEAR, NO EVIDENCE (S) IN THIS RESPECT HAS BEEN PRODUCED BEFORE US. THE ABOVE NOTE MAKES IT VERY CLEAR THAT ASSESSEE WA S NOT POSSESSING ANY DOCUMENTS TO SUBSTANTIATE ITS CLAIM OF SALE OF BUFFALOES EVEN AT THE TIME OF GETTING ITS ACCOUNTS AUDITED AND NEITHER WAS ABLE TO SUBMIT ANYTHING IN SUPPORT OF THE SALE OF BUFFALOES AT RS.10,98,000/- AT ANY TIME BEFORE THE LOWER AUTHORI TIES AND BEFORE US. 18. FROM THE ABOVE DISCUSSIONS IT SEEMS THAT IN TOT ALITY THERE IS NO DAIRY ACTIVITY CARRIED OUT BY THE ASSESSEE NOR IT S EEMS THAT IT POSSESSED LIVESTOCK OF BUFFALOES IN PHYSICAL FORM A ND THE OPENING BALANCE OF BUFFALOES IN ASSETS HAS BEEN USED TO CLA IM BUSINESS LOSS AS NEITHER THE ASSESSEE NOR THE AUDITED BALANCE SHE ET AS WELL AS THE WRITTEN SUBMISSIONS FURNISHED ARE GIVING ANY INDICA TION OF SUCH TRANSACTION. WE, THEREFORE, ARE OF THE VIEW THAT TH ERE WAS NO SUCH TRANSACTIONS OF SALE OF BUFFALOES DURING THE YEAR M EANING THEREBY THAT THE LD. CIT(A) WAS CORRECT IN DISALLOWING THE LOSS ALLEGEDLY CLAIMED BY THE ASSESSEE AND CONSEQUENTLY CIT(A) WAS CORRECT I N SUSTAINING THE ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 14 ALLEGED SALE OF BUFFALOES AT RS.10,98,000/- AS INCO ME FROM OTHER SOURCES. 19. GROUND NO.3.1 & 3.2 AGAINST THE ACTION OF CIT (A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES RELATING TO BUFFALOES FOR RS.4,73,616/-. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE MATERIAL ON RECORD. WE HAVE ELABORATELY DISCUSSED A BOVE, IN OUR FINDINGS GIVEN IN GROUND NOS.1.1 TO 2.2 THAT THE AS SESSEE WAS UNABLE TO PROVE THAT DAIRY BUSINESS WAS ACTUALLY CARRIED O N BY IT DURING THE YEAR UNDER APPEAL AS THE BUSINESS PREMISES WERE ATT ACHED BY DENA BANK AND THERE WAS NO POSSIBILITY TO RUN THE BUSINE SS AND NOR ANY EVIDENCE IS AVAILABLE ON RECORD TO VERIFY THAT ASSE SSEE HAS ACTUALLY CARRIED OUT ANY DAIRY BUSINESS ACTIVITY AT ANY OTHE R PLACE OTHER THAN ITS REGULAR BUSINESS/FACTORY PREMISES. AS SUCH WE F IND NO REASON TO DIFFER FROM THE VIEW TAKEN BY THE CIT(A) AND ACCORD INGLY UPHOLD THE ORDER OF CIT(A). THIS GROUND OF THE CROSS OBJECTION IS ALSO DISMISSED. 21. GROUND NOS.4.1 & 4.2 AGAINST CONFIRMATION OF DISALLOWANCE OF RS.2,00,000/- OUT OF ADMINISTRATIVE EXPENSES CLAIME D AT RS.4,67,194/-. IT SEEMS THAT ASSESSEE HAS WRONGLY R AISED THIS GROUND IN ITS CROSS OBJECTION BECAUSE LD. CIT(A) HAS ALREA DY GIVEN RELIEF TO THE ASSESSEE BY DELETING THE DISALLOWANCE OF RS.2,0 0,000/- MADE BY ASSESSING OFFICER BY OBSERVING AS BELOW :- ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 15 7.2 I HAVE CONSIDERED THE FACTS AND SUBMISSION OF THE LD. AR CAREFULLY. AS I HAVE ALREADY HELD ABOVE THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT WAS CARRYING THE DAIRY BUSINESS DURING THE RELEVANT PERIOD. THEREFORE, UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM FOR EXPENSES ALLEGEDLY FOR BUFFALOES AMOUNTING TO RS.4,73,618/-. IN VIEW OF THIS, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS HEREB Y CONFIRMED. AS REGARDS THE FURTHER DISALLOWANCE OF RS. 2 LAC OUT O F ADMINISTRATIVE EXPENSES, THE ASSESSING OFFICER HAS NOT GIVEN ANY R EASON FOR SUCH DISALLOWANCE. HE HAS ALSO NOT BROUGHT ON SUFFICIENT MATERIAL ON RECORD TO JUSTIFY SUCH DISALLOWANCE. IN VIEW OT THIS, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF ADMINISTRATIVE EXPENSE S IS HEREBY DELETED. THIS GROUND OF APPEAL IS THEREFORE ALLOWED PARTIALLY. AS THE REVENUE HAS WITHDRAWN ITS APPEAL, THEREFORE, THIS GROUND OF ASSESSEE HAS BECOME INFRACTUOUS AS THE ASSESSEE HAS GOT RELIEF AT CIT(A)S LEVEL. THIS GROUND IS DISMISSED AS INFRACT UOUS. 22. GROUND NOS.5.1. & 5.2 AGAINST THE FINDING OF CIT(A) WHO HAS NOT ACCEPTED THAT APPELLANT COMPANY WAS CARRYING ON ANY BUSINESS ACTIVITIES OR SOLD BUFFALOES AND FAILED TO APPRECIA TE THAT AO DID NOT ALLOW SUFFICIENT OPPORTUNITY OR ISSUED ANY SHOW CAU SE BEFORE MAKING HIGH PITCH ASSESSMENT. 23. WE HAVE ALREADY HELD ABOVE THAT ASSESSEE WAS UN ABLE TO PROVE THAT IT WAS CARRYING ON ANY BUSINESS ACTIVITY OR POSSESSING LIVESTOCK IN PHYSICAL FORM AND, THEREFORE, LD. CIT( A) WAS CORRECT IN HOLDING THAT APPELLANT HAD NOT CARRIED OUT ANY BUSI NESS ACTIVITY NOR IT HAD SOLD THE BUFFALOES. ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 16 24. AS REGARDS THE ALLEGATION MADE BY ASSESSEE COMP ANY THAT ASSESSING OFFICER HAD NOT ALLOWED SUFFICIENT OPPORT UNITY, WE FIND THAT THERE IS NO TRUTH IN THIS GROUND RAISED BY THE ASSE SSEE COMPANY WHICH CAN BE VERIFIED BY THE OBSERVATIONS OF ASSESS ING OFFICER IN HIS ASSESSMENT ORDER, THE RELEVANT PORTION OF WHICH REA DS AS BELOW :- 2. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS . IN THIS REGARD, NOTICE U/S 143(2) OF THE I.T. ACT, 1961 DTD T.26.07.2005 WAS ISSUED AND SERVED UPON THE ASSESSEE COMPANY BY RPAD . FURTHER, NOTICE U/S 143(2) & 142(1) OF THE ACT, DTD.19.06.20 06 ALONG WITH DETAILED QUESTIONNAIRE WAS ISSUED AND SERVED UPON T HE ASSESSEE COMPANY BY RPAD. ON THAT DATE NOBODY ATTENDED. FURT HER, LETTER DTD.02.08.2006 WAS ISSUED AND SERVED UPON THE ASSES SEE COMPANY ON 03.08.2006 FIXING HEARING ON 10.08.2006. NOBODY ATTENDED. ON 23.08.2006 SHRI ATUL VYAS, ACCOUNTANT, DULY AUTHORI ZED BY THE ASSESSEE COMPANY ATTENDED AND SUBMITTED THE PART DE TAILS AND CASE WAS ADJOURNED ON 30.08.2006. ON 30.08.2006 THE ASSE SSEE COMPANY FILED AN ADJOURNMENT LETTER AND ADJOURNMENT WAS GRA NTED ON 11.09.2006 AND ON THAT DATE NOBODY ATTENDED. ONE MO RE OPPORTUNITY VIDE LETTER DT.22.09.2006 WAS ISSUED AND ASKED TO S HOW CAUSE WHO PENALTY PROCEEDINGS U/S 271(1)(B) OF THE ACT SHOULD NOT BE INITIATED AND SERVED UPON THE ASSESSEE-COMPANY ON 22.09.2006 FIXING HEARING ON 26.09.2006. BUT ON THAT DATE NOBODY ATTE NDED AND PENALTY ORDER U/S 271(1)(B) OF THE ACT WAS PASSED ON 04.10. 2006. FURTHER LETTER DTD.09.10.2006 WAS ISSUED AND SERVED UPON TH E ASSESSEE ON ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 17 09.10.2006. THE A.R. OF THE ASSESSEE-COMPANY ATTEND ED AND SUBMITTED THE DETAILS. FROM THE ABOVE OBSERVATIONS OF ASSESSING OFFICER, I T IS AMPLY CLEAR THAT ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY OF B EING HEARD AND, THEREFORE, THIS GROUND OF THE ASSESSEE IS ALSO DISM ISSED. 25. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD NOV 2015 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 3/11/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO.1521/AHD/2010 ALONG WITH CO NO.191/AHD/2010 ASST. YEAR 2004-05 18 1. DATE OF DICTATION: 28/10/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 3/11/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 3/11/15 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: