Sh. Prem Chand, Sunam V. ACIT, Sangrur

CO 43/CHANDI/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7159 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: SUDHIR SEHGALYOGESH KUMAR
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1059/CHD/2010 (ASSESSMENT YEAR: 2007-08) THE A.C.I.T., VS. SH.PREM CHAND, CIRCLE SANGRUR. PROP. M/S BRIJ RICE MILLS, SUNAM. PAN: ABHPC5448E AND C.O.NO.43/CHD/2010 ARISING OUT OF ITA NO.1059/CHD/2010 (ASSESSMENT YEAR : 2007-08) SH.PREM CHAND, VS. THE A.C.I.T., PROP. M/S BRIJ RICE MILLS, CIRCLE SANGRUR. SUNAM. PAN: ABHPC5448E (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SUDHIR SEHGAL/YOGESH KUMAR DEPARTMENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 16.04.2012 DATE OF PRONOUNCEMENT : 30.04.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED REVENUE IS AGAINST THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 17.6.2010 RELAT ING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT (IN SHORT THE ACT). THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE. 2. BOTH THE APPEALS OF THE REVENUE AND THE CROSS OB JECTION FILED BY THE ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER A ND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. 2 3. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY THE RE VENUE ARE AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,56,935/- OUT OF THE T OTAL ADDITION OF RS.10,11,835/-, MADE BY THE AO ON A/C OF UNDERSTATE MENT OF THE SALE CONSIDERATION OF HUSK,WITHOUT APPRECIATING THE FACT THAT THE ADDITION HAD BEEN MADE BY THE AO ON THE BASIS OF AVERAGE RATE OF PURCHASE BY THE REPUTED CONCERN IN THE SAME AREA, NAMELY INDIAN ACR YLICS, REFLECTING A REALISTIC AND TRUE PICTURE OF THE RATE PREVAILING D URING THE YEAR & AFTER GIVING DUE WEIGHTAGE ON ACCOUNTS OF LOADING/UNLOADI NG, TRANSPORTATION AND VAT. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW IN DELETING THE WELL REASONED AND LOGICAL ADDIT ION OF RS.3,36,6607-OUT OF THE TOTAL ADDITION OF RS.4,16,600/-, MADE BY THE AO ON A/C OF LOW HOUSEHOLD EXPENSES, WITHOUT APPRECIATING THE FACT T HAT EACH AND EVERY HEAD HAD BEE DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER. 4. THE GROUNDS OF APPEAL IN CROSS OBJECTION RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX(A), PATIALA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N REJECTING THE BOOKS OF ACCOUNTS U/S 145 (3) OF THE I.T. ACT, 1961 AS PER G ROUND NO.2 OF THE ORDER. 2. THAT THE WORTHY CIT (A) HAS ERRED IN UPHOLDING THE PART ADDITION OF RS. 2,54,900/- ON ACCOUNT OF SO CALLED UNDERSTAT EMENT OF THE SALE CONSIDERATION OF HUSK WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE PROPERLY AS PER GROUND NO . 3 OF THE ORDER. 3. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN CONFIRMIN G THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 1800/- BEING VALUE OF 200 BAGS OF BARDANA ON ACCOUNT OF SO CALLED DIFFERENCE IN BARDANA ACCOUNT AS PER GROUND NO.4 OF THE ORDER. 4. THAT THE WORTHY CIT (A) HAS ALSO ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 21,6617- BEING SO CALLED UNEXPLAINED DIFFERENCE IN VALUE OF 10.75 QTLS OF RICE @ RS. 201S/-PER QTL AS PER GROUND NO.5 OF HIS ORDER. 5. THAT THE WORTHY CIT (A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 80,0007- OUT OF TOTAL ADDITION OF RS. 4,16,600/ - ON ACCOUNT OF HOUSEHOLD EXPENSES AS PER GROUND NO. 6 OF HIS OR DER WITHOUT CONSIDERING THE FACTS OF THE CASE PROPERLY. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS A RICE MILLER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS VARIOUS ISSUES WERE RAISED BY THE ASSESSING OFFICER. THE ASSESSEE HAD PRODUCE D THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER FOUND CERTAIN DISCR EPANCIES IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND QUESTIONN AIRES IN THIS REAGARD 3 WERE RAISED. THE ASSESSING OFFICER WAS NOT SATISFI ED WITH THE REPLY GIVEN BY THE ASSESSEE AND THE BOOKS OF ACCOUNT WERE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T ON ACCOUNT OF FOLLOWING REASONS: A) DIFFERENCE OF 200 BAGS IN THE BARDANA ACCOUNT. B) DIFFERENCE OF 10.75 QTLS IN THE RICE BASMATI (OU T OF STATE ACCOUNT). C) SALE RATE OF HUSK ON ACCOUNT OF WHICH ADDITION O F RS.10,11,835/- WAS MADE. 6. FURTHER THE ASSESSEE WAS FOUND TO HAVE UNDERSTAT ED THE AMOUNT UTILIZED FOR HOUSEHOLD EXPENDITURE. AS PER THE ASS ESSING OFFICER AN ADDITION OF RS.4,16,600/- WAS MADE ON ACCOUNT OF LO W HOUSEHOLD WITHDRAWALS SHOWN BY THE ASSESSEE. 7. THE CIT (APPEALS) UPHELD THE REJECTION OF BOOKS OF ACCOUNT AS THE ASSESSEE HAD FAILED TO JUSTIFY THE DIFFERENCE IN RI CE BASMATI OUT OF STATE ACCOUNT AND ALSO IN THE BARDANA ACCOUNT. IN RESPEC T OF SALE RATE OF PADDY HUSK TOTALING RS.10,11,835/-, THE ASSESSEE HAD SHOW N THE SALE RATE AT RS.60/- PER QTL AS AGAINST THE VALUE OF OPENING STO CK @ RS.95 PER QTL. THE CIT (APPEALS) IN VIEW OF THE DIFFERENCE IN SALE PRICE AND PRICE OF OPENING STOCK HELD AS ON 1.4.2006, RESTRICTED THE A DDITION AT RS.30/- PER QTL ON THE CASH SALE OF PADY HUSK WEIGHING 8496.66 QTLS. THE ADDITION WAS RESTRICTED TO RS.2,54,900/- AND RELIEF OF RS.7, 56,935/- WAS GIVEN BY THE CIT (APPEALS). 8. THE NEXT ADDITION ON ACCOUNT OF BARDANA OF RS.18 00/- WAS UPHELD BY THE CIT (APPEALS) AND ALSO ADDITION OF RS.21,661 /- ON ACCOUNT OF 10.75 QTLS. OF RICE. THE ADDITION ON ACCOUNT OF HO USEHOLD EXPENSES WAS SCALED DOWN TO RS.80,000/- AND RELIEF OF RS.3,36,66 0/- WAS ALLOWED TO THE ASSESSEE. 4 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CI T (APPEALS) ALLOWING RELIEF TO THE ASSESSEE. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE ADDITION UPHELD BY THE CIT (APPEALS). 10. S/SHRI SUDHIR SEHGAL/YOGESH KUMAR APPEARED FOR THE ASSESSEE AND SHRI N.K.SAINI PUT IN APPEARANCE ON BEHALF OF THE R EVENUE AND PUT- FORWARD THEIR CONTENTIONS. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. GROUND NO.1 RAISED BY THE REVENUE IS IN RELATION TO THE DELETION OF ADDITION MADE ON ACCOUNT OF UNDERSTATEMENT OF SALE CONSIDERATION OF HUSK. THE ASSESSEE BY WAY OF GROUND NO.2 OF CROSS OBJECTION HAS RAISED THE ISSUE AGAINST THE PARTIAL ADDITION MADE ON ACCO UNT OF UNDERSTATEMENT OF SALE CONSIDERATION OF HUSK. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD REFLECTED THE SALE OF HUSK AT 303 47.15 QTLS FOR TOTAL SUM OF RS.48,90,270/- TO VARIOUS PARTIES. CERTAIN AMOUNT OF PADDY HUSK WAS SOLD TO M/S INDIAN ACRYLIC LTD. ON AN AVERAGE R ATE OF RS.253/- PER QTL AND WHEREAS TO OTHER PARTIES IT WAS SOLD IN CAS H @ RS.60 PER QTL. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE QUALITY OF PADDY HUSK SOLD TO M/S INDIAN ACRYLIC LTD. WAS H IGHER AS IS EVIDENT FROM THE PURCHASE PRICE OF THE HUSK PURCHASED BY TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION FROM ONE SHRI RAUNAK. IN RESPECT OF THE CASH SALE MADE BY THE ASSESSEE OF PADDY HUSK, THOUGH THE ASSESSEE HAD REFLECTED THE VALUE OF OPENING STOCK OF 9746.78 QTL S. OF HUSK AS ON 1.4.2006 AT RS.95 PER QTL, THE SAME WAS SOLD IN CAS H ON LOWER RATES BECAUSE OF THE DAMAGED QUALITY OF PADDY. THE ASSES SING OFFICER NOTED THE ASSESSEE TO HAVE CHARGED RS.80 PER QTL AGAINST ONE SALE AND RS.60 PER QTL AGAINST OTHER SALE. MOST OF THE SALES MADE BY THE ASSESSEE WERE CASH SALES. THE ASSESSEE HAD ALSO SHOWN THE VALUE OF CL OSING STOCK OF PADDY HUSK AT RS.95 PER QTL. IN VIEW OF THE ABOVE SAID C IRCUMSTANCES THE CIT 5 (APPEALS) RESTRICTED THE ADDITION TO RS.30 PER QTL ON CASH SALE OF PADDY HUSK WEIGHING 8496.66 QTLS. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HAS FA ILED TO BRING ON RECORD ANY EVIDENCE TO PROVE THAT THE QUALITY OF TH E OPENING STOCK HELD BY THE ASSESSEE HAD DETERIORATED, THE CASH SALE SHO WN BY THE ASSESSEE OF THE OPENING STOCK OF PADDY HUSK WEIGHING 8496.66 QT LS. AT AVERAGE RATE OF RS.65 PER QTL CANNOT BE ACCEPTED. WE ARE IN AGR EEMENT WITH THE ORDER OF THE CIT (APPEALS) IN RESTRICTING THE ADDITION TO RS.30 PER QTL ON CASH SALES RESULTING IN ADDITION OF RS.2,54,900/-. CONS EQUENTLY GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED AND ALSO GROUND NO.2 RAISED BY THE ASSESSEE IN THIS REGARD IS DISMISSED. 12. GROUND NO.3 RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS AGAINST THE ADDITION OF RS.1800/- BEING THE VALUE O F 200 BAGS OF THE BARDANA. ON PERUSAL OF THE ACCOUNT OF THE ASSESSEE THE ASSESSING OFFICER FOUND THAT THERE WAS A DIFFERENCE OF 200 BAGS OF BA RDANA IN THE BARDANA ACCOUNT. THE EXPLANATION OF THE ASSESSEE IN THIS R EGARD WAS THAT THE SAID BAGS HAD DETERIORATED BECAUSE OF CONSTANT USE AND M ARKET VALUE HAD BECOME ZERO. THE ASSESSEE HAD SHOWN OPENING STOCK OF BARDANA OF 48654 BAGS AND HAD PURCHASED 35179 BAGS OF BARDANA DURING THE YEAR AND HAD REFLECTED THE CLOSING STOCK AT 72248 BAGS OF BA RDANA. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE THAT IN THE CONSTANT U SE OF THE SAID BAGS IN THE PROCESS OF LIFTING OF PADDY RICE, ETC., GOT DET ERIORATED AND THE ASSESSEE HAD WRITTEN OFF VALUE OF 200 BAGS OF BARDA NA DURING THE YEAR WHICH IS NORMAL IN THE LINE OF BUSINESS BEING CARRI ED ON BY THE ASSESSEE. THUS WE DELETE THE ADDITION OF RS.1800/-. GROUND N O.3 RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS THUS ALLOWED. 13. GROUND NO.4 RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS AGAINST THE ADDITION OF RS.21,661/- ON ACCOUNT OF D IFFERENCE IN THE VALUE 6 OF 10.75 QTLS OF RICE. THE ASSESSEE IN ITS BOOKS O F ACCOUNT HAD REFLECTED A DIFFERENCE OF 10.75 QTLS IN THE BASMATI RICE OUT OF STATE ACCOUNT. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE. BUT THE ASSESSEE ONLY FILED COPY OF ACCOUNT OF RICE BASMATI AND POINTED OUT THA T THE SAME WAS ON ACCOUNT OF PILFERAGE DURING THE SALE AND WAS NEGLIG IBLE IN QUANTITY, WAS REJECTED BY THE ASSESSING OFFICER AND WAS CONFIRMED BY THE CIT (APPEALS). THE ASSESSEE HAS FAILED TO FURNISH ON R ECORD ANY EVIDENCE IN RESPECT OF CLAIM OF PILFERAGE AND IN THE ABSENCE OF THE SAME WE UPHOLD THE ORDER OF CIT (APPEALS) IN RELATION TO THE ADDIT ION OF RS.21,661/-. GROUND NO.4 RAISED BY THE ASSESSEE IN ITS CROSS OBJ ECTION IS THUS DISMISSED. 14. GROUND NO.2 RAISED BY THE REVENUE IN ITS APPEAL AND GROUND NO.5 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE I N RELATION TO THE QUANTUM OF HOUSEHOLD EXPENSES. THE ASSESSEE ADMITS THAT HIS FAMILY CONSISTED OF SEVEN MEMBERS I.E. HIMSELF, WIFE THREE SCHOOL GOING CHILDREN, FATHER AND MOTHER. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED THAT THE HOUSEHOLD EXPENSES WERE M ET OUT OF THE AGRICULTURAL INCOME OF HIS FATHER TO THE TUNE OF RS .1 LAC AND ASSESSEE HAD AGRICULTURAL INCOME OF RS.70,000/-, OUT OF WHICH RS .29,400/- WAS CONTRIBUTED TOWARDS HOUSEHOLD EXPENSES. THE ASSESS ING OFFICER TABULATED ITEM-WISE EXPENDITURE OF THE FAMILY ON AC COUNT OF KITCHEN EXPENSES, ELECTRICITY, PERSONAL, PETROL, FESTIVAL E XPENSES, ETC. AND MADE THE ADDITION. THE PLEA OF THE ASSESSEE WAS THAT TH E STANDARD OF LIVING OF THE FAMILY WAS VERY SIMPLE AND THE WITHDRAWALS MADE BY IT WERE SUFFICIENT TO MEET THE EXPENSES. IN THE PRECEDING YEAR THE HOUSEHOLD EXPENSES OF RS.85,000/- CLAIMED BY THE ASSESSEE WER E ACCEPTED VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER AHD ESTIMATED HOUSEHOLD EXPENSES AT RS.5,46,000/- AND A LLOWING THE CREDIT OF 7 RS.1,29,400/-, ADDITION OF RS.4,16,600/- WAS MADE. THE CIT (APPEALS) RESTRICTED THE ADDITION TO RS.80,000/-, AGAINST WHI CH BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. 15. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMS TANCES OF THE CASE AND THE NUMBER OF FAMILY MEMBERS AND EXPENDITURE ON THE EDUCATION OF SCHOOL GOING CHILDREN AND OTHER EXPENSES OF HOUSEHO LD, WE RESTRICT THE ADDITION TO RS.50,000/-. CONSEQUENTLY GROUND NO.2 RAISED BY REVENUE IS REJECTED AND GROUND NO.5 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 16. THE ASSESSEE BY WAY OF GROUND NO.1 HAD AGITATED AGAINST THE REJECTION OF BOOKS OF ACCOUNT. HOWEVER, IN THE ENT IRETY OF THE FACTS AND CIRCUMSTANCES AND DEFECTS POINTED OUT IN THE BOOKS OF ACCOUNT AND CONSEQUENT ADDITIONS MADE, WE UPHOLD THE REJECTION OF BOOKS OF ACCOUNT. 17. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF APRIL, 2012. SD/- SD/- (T.R. SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH APRIL, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8