JCIT Spl. Range, Delhi V. Umang Dairies Ltd., New Delhi

ITA 1002/DEL/2019

AI Insights

The case involves an appeal by the JCIT against Umang Dairies Ltd. concerning the deletion of additions made by the AO, which were deemed as unexplained purchases related to gains in FAT & SNF. The CIT(A) had earlier deleted these additions, a decision which the Revenue challenged. The Tribunal referenced a similar case (ITA No. 1036/Del/2019) involving the same assessee for a different assessment year, where the Tribunal had upheld the CIT(A)'s decision. The Tribunal found that the issues raised by the Revenue were already covered in the previous decision and thus dismissed the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108480 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-02-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2019
• Other Referred Cases: ITA No. 1036/Del/2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 43B

Judgement Text

1 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH : “G” NEW DELHI ] BEFORE DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No. 1002/DEL/2019 (A.Y 2011-12) JCIT Special Range, Room No. 163A, C.R. Building, I. P. Estate, New Delhi PAN: AAACJ1322R (APPELLANT) Vs. Umang Dairies Ltd.3 rd Floor, Gulab Bhawan, 6-A, Bahadur Shah Zafar Marg, New Delhi (RESPONDENT) ORDER PER YOGESH KUMAR U.S., JM This appeal is filed by the Revenue against the order dated 27/11/2018 passed by CIT(A)-9, New Delhi for Assessment Year 2011-12. 2. The grounds of appeal are as under:- “1. Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 3,85,82,117/- made by the AO as un-explained purchases relating to the gain of 99.58MT Appellant by Ms. Monika Agarwal, CA Respondent by Sh. Narpat Singh, Sr. DR Date of Hearing 28.02.2023 Date of Pronouncement 28.02.2023 2 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. and 112.11MT of FAT & SNF respectively in the Trading account for the assessee. 2. Whether on the facts and circumstances of the case, the CIT(A) has erred in admitting the additional evidences and relying on such evidences which included a CA certificate for correcting the figure of quantity of milk procured for contract manufacturing. 3. Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 2,031/- made by the AO u/s 36(l)(va) of the Income Tax act, 1961, ignoring the Circular No. 22/2015 dated 17/12/2015 of CBDT vide which it has been clarified that provisions of Section 43B are not applicable for claim of deduction u/s 36(l)(va) of the Income Tax Act,1961 relating to employee’s contribution to Welfare funds. 4. The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.” 3. The Ld. Counsel for the assessee submitted that the above appeal is squarely covered by the Co-ordinate Bench for the Assessment Year 2012-13 in Assessee’s own case in ITA No. 1036/Del/2019. The Ld. DR has not disputed the above submission made by the assessee. 4. We have heard the parties and perused the material available on record and gave our thoughtful consideration. It is found that the similar additions have been made by the A.O. which has been ultimately challenged in ITA No. 1036/Del/2019 in Assessee’s own case for Assessment Year 2012-13 wherein the Coordinate Bench of the Tribunal has allowed the appeal the appeal of the assessee wherein it is held as under:- 3 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. “ 5. Heard and perused the record. Ld. Sr. DR submitted that Ld CIT(A) has fallen in error in deleting the unexplained purchases discovered by Ld. AO by extensive discussion of matter. Ld. AR however, relied the findings of Ld CIT(A), submitting that the evidence has been appreciated in correct perspective. 6. At the outset it is pertinent to mention that admittedly assessee has earned FAT & SNF gain which has already been offered for tax. Ld. AO has found a case of unexplained purchase. In this context Ld. CIT(A) has rightly observed and reasoned that then disallowance can be made by Ld. AO only in a case where claim for deduction for the purchases is also made. In the present case, no deduction qua purchase has been claimed so the Ld. AO erred in making addition for the so called alleged unexplained purchases. The question thus involved was not if there were unexplained purchases but not verifiable gains then the resultant action was to exclude such gains amount from taxing as an income. 7. Now primarily the Ld. CIT(A) has considered the agreement and remand report to conclude that the nature of business module was such that the gains were attributable to the contract work for Mother dairy. It can be observed that Ld. AO has proceeded on his own belief of the matter and assuming that ideally the quantum of FAT & SNF received from the Mother Dairy should tally with the FAT & SNF sent back in the contract processing work under taken by the assessee. Ld. CIT(A) relied Annexure: A-6 of Written submission, which the assessee company had submitted that w.e.f 01.04.2014, Mother Dairies Foods & vegetable Pvt. Ltd has reduced the processing loss from 1% to 0.8%. It was also evident from 4 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. correspondence exchanged by it and thus, Ld. CIT(A) has rightly held these facts are not theoretical. 8. Factually the Ld. AO concluded that MMPO returns submitted by the assessee do not include the contract/job work done by the assessee for Mother Dairy. Also, the trading account for the year does not includes stocks related to contract manufacturing. Ld. AO noted that the total quantities of opening stocks and procurement of milk during the year is reflected by the assessee as 36707.30 M.T. where as the milk procurement for contract manufacturing is only 1594.33 M.T. which is very about 4.34% of the total milk shown in the trading account. Thus, Ld AO doubted that the entire gain is owing to contract manufacturing. 9. However, what is established before Ld. CIT(A) is that the gain on account of reduction in process loss due to modern facilities is used for manufacturing of Ghee/Butter/SMP/DW/Other products, which is part & parcel of closing stock factored in trading account (part of MMPO report)/audited annual accounts. Therefore, the same is attributable to the contract work for Mother Dairies Ltd. 10. The assessee company established before the Ld. CIT(A) that there was typographical mistake in reporting of quantification of milk procured for contract manufacturing which was actually 159433 M.T (1594.33 lacs litres) instead of 1594.33 M.T as mentioned in audited reports. To substantiate the correct figure, a certificate given by the Mother Dairy Fruit and Vegetable Private Limited was submitted during the appellate proceedings which was also re-verified by Ld. CIT(A). This was bolstered by Ld. CIT by findings ; “The audited annual accounts of the appellant company 5 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. reveals that it has earned conversion/job charges of Rs. 16.83 Cr in the year under consideration and if per ltr conversion charges is calculated considering the figure of 1594.33 M.T milk processed as per AO allegation then it comes to Rs. 105.56 per Ltr whereas on certified figure, it comes to Rs. 1.06 per Ltr..” 11. The Bench is of considered opinion that assessment order under the Act has to be passed on cogent evidence and sound reasoning which is on the basis of verifiable events. The reasons may be subjective, however the reasons inducing the said belief must always be objective. The objective reasons should lead to the formation of the subjective belief that, income is liable for assessment. In the case in hand the Ld. AO has relied his belief that ideally the quantum of FAT / SNF received from Mother Dairy should tally with the FAT & SNF sent back on completion of processing work. However, he failed to appreciate that every business activity has some inherent peculiarities which bring some incidental profits to the businessman than may actually appear to a prudent mind. When raised before Revenue, same need to be appreciated without much emphasis on evidence of every thing being incorporated in agreements. In present case, even the assumptions on which, the Ld. AO proceeded, in absence of evidence, have been factually corrected by Ld. CIT(A) on basis of additional evidence and no interference in the same is called for. The grounds no 1 and 2 raised by the revenue have no substance. The same are determined against the Revenue. 12. As with regard to substantive ground no 3 Ld Sr DR was unable to cite any proposition of law then relied by Ld CIT(A), in its impugned order, to distinguish. So the same is also decided against the Revenue.” 6 ITA No. 1002/Del/2019 JCIT VS. UMANG DAIRIES LTD. 5. Since there is no change of circumstances emerges out of the record and also not been pointed out by the parties, by respectfully following the order of the Co-ordinate Bench for the Assessment Year 2012-13 in Assessee’s own case, we do not find any merit in the grounds of appeal of the Revenue, accordingly, the Appeal filed by the Revenue is dismissed. Order pronounced in the Open Court on today i.e. 28 th February, 2023. Sd/- Sd/- (Dr. B. R. R. KUMAR) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 28/02/2023 *R. N, Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI