M/s Crown Milk Specialties Pvt. Ltd., Mohali V. DCIT, Mohali

ITA 1096/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57691 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BEN CH A BEFORE SHRI H.L.KARWA, VP AND SHRI MEHAR SINGH, AM ITA NO. 1096/CHD/2011 ASSESSMENT YEAR 2007-08 CROWN MILK SPECIALITIES V D.C.I.T. CIRCLE 6(1), MOHALI PVT LTD, C-169 INDL ARA PHASE VIIIB MOHALI PAN: AACCC 3806 B (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 15.2.2012 DATE OF PRONOUNCEMENT: 5.03.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE, FOR ASSE SSMENT YEAR 2007-08, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CHANDIGARH DATED 17.8.2011 U/S 250(6) OF THE INCOME -TAX ACT (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THAT THE ORDER OF LD. CIT(A) IS BAD AND AGAINST THE FACTS AND LAW. 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 2,54,265/- TO THE TOTAL INCOME ON BASIS OF D IFFERENCE IN STOCK. 3. THAT THE LD. CIT(A) HAS ERRED BY NOT CONSIDERING LUMP SUM AGREED ADDITION OF RS. 70,000/- FOR ANY SUCH AD DITION. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTERNATIVELY OR WITHDRAWN ANY GROUND OF APPEAL BEF ORE FINAL HEARING. 3. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SEPARATE ADJUDICATION. 2 4. BRIEF FACTS OF THE CASE AS CULLED UPON FROM THE RELEVANT RECORD ARE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURING / PRODUCTION, MARKETING / SALES OF MILK PRODUCTS GHEE , SKIMMED MILK POWDER (SMP), SKIMMED MILK CONCENTRATE (SMC) ETC. THE ASSESSEE PURCHASES MILK FROM THE MILK SUPPLIER AND MAKES PAYMENT TO THESE SUPPLIERS ON THE BASIS OF FAT AND SNF CONT ENTS PRESENT IN THE MILK. THE PURCHASE PRICE OF THE MILK IS DEPEND ENT UPON THE PERCENTAGE OF FAT AND SNF. DURING THE COURSE OF AS SESSMENT PROCEEDINGS DETAILS WITH REGARD TO PURCHASE OF MILK IN TERMS OF QUANTITY OF FAT AND SNF AND YIELD OF FAT AND SNF OB TAINED FROM MANUFACTURING PROCESS WERE CALLED FOR AND THE SAME WAS COMPARED WITH THE QUANTITY OF FINISHED PRODUCTS SOLD AND CLO SING STOCK REMAINING AS ON 31.3.2006. IT WAS FOUND THAT DURIN G THE YEAR THE ASSESSEE PRODUCED AND SOLD 9,16,693 KG OF SKIMMED M ILK CONCENTRATE (SMC) WHEREAS AS PER QUANTITATIVE DETAI LS FURNISHED WITH THE AUDIT REPORT THE PRODUCTION AND SALE OF SM C WAS SHOWN AT 9,14,254 KG INDICATING A DIFFERENCE OF 2439 KG IN Y IELD AS UNDER: SMC AS PER YIELD OF SNF CONTENTS AS PER BOOKS DIFFERENCE IN (KG) PRODUCTION (KG) 916693 914254 2430 SALE (KG) 843693 841254 2439 CLOSING STOCK (KG) 73000 73000 NIL THE ABOVE FACTS WERE CONFRONTED TO THE MANAGING DI RECTOR, SHRI TARSEM KANSAL ON 6.11.2009 AND HE SUBMITTED TH AT MILK PRODUCTS ARE PERISHABLE COMMODITIES AND THE CLOSING STOCK HAS BEEN TAKEN AS PER THE ACTUAL YIELD. HE FURTHER SUBMITTE D THAT THE DIFFERENCE IS DUE TO THE FACT THAT THE DEPARTMENT H AD TAKEN THE FIGURE OF IDEAL YIELD (STANDARD YIELD). THE EXPLANATION O FFERED BY SHRI 3 KANSAL HAS BEEN CONSIDERED. BUT THE SAME HAS BEEN FOUND WITHOUT ANY SUBSTANCE. NEGLIGIBLE DIFFERENCE IN THE YIELD OF OTHER TWO MAJOR PRODUCTS I.E. GHEE AND SMP HAS BEEN FOUND. AS THE SAME YARDSTICK WAS USED TO WORK OUT THE YIELD / PRODUCTION OF OTHE R PRODUCTS I.E. GHEE AND SMP, THE YIELD OF SMC SHOULD HAVE BEEN FRE E FROM ANY VARIATION. NO COGENT EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE AS WHAT LED TO THIS SHORTFALL IN THE PRODUCTION OF SMC. ACCORDINGLY, I HOLD THAT THE SHORTFALL IN THE YIELD OF SMC HAS REM AINED UNEXPLAINED. ACCORDINGLY, AN ADDITION OF RS. 2,54,265/- (2439 KG @ RS. 104.25/- PER KG) ON ACCOUNT OF DIFFERENCE IN YIELD OF SMC IS BEING MADE TO THE INCOME OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS, RELEVANT PORTION OF WHICH IS REPRODUCE D BELOW: THE AO WRONGLY MADE ADDITION OF RS. 2,54,265/- ON ACCOUNT OF SHORT FALL IN YIELD AND APPLIED THE AVERAGE SALE RATE ON THE DIFFERENCE. IN THIS REGARD WE SUBMIT THAT THE MAIN SUPPLY OF PRODUCTS OF APPELLANT IS TO NESTLE AND THE NESTLE D OES NOT ALLOW ANY PAYMENT OF FAT, WHICH IS CONSIDERED AS IN CLUDED IN THE WEIGHT OF OTHER PRODUCT, RESULTING INTO DIFFERE NCE IN QUANTITY SOLD DURING THE YEAR. THE APPELLANT AGREED FOR ADDITION OF RS. 70,000/- O N ACCOUNT OF ANY DIFFERENCE IN YIELD OF FINISHED PRODUCTS ON THE ASSUMPTION THAT NO SUCH ADDITION WILL BE MADE SEPAR ATELY BY THE AO. HOWEVER, THE AO MADE ADDITION OF RS. 2,54, 265/- ON ACCOUNT OF SHORT FALL IN THE YIELD OF FINISHED GOO DS. HENCE THE ADDITION OF RS. 70,000/-, THOUGH AGREED BY THE ASSE SSEE, IS UNJUSTIFIED IN LIEU OF SEPARATE ADDITION OF RS. 2,5 4,265/- MADE SPECIFICALLY ON THIS ACCOUNT AS PER PARA 2 AND 3 OF ASSESSMENT ORDER. 6. THE LD. CIT(A) CONSIDERED THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. THE EXPLANATION GIVEN BY MANAGING DI RECTOR HIMSELF BEFORE THE AO REGARDING PRODUCTION OF SKIMMED MILK CONCENTRATE (SMC) WAS THAT MILK PRODUCTS ARE PERISHABLE AND CLO SING STOCK HAS BEEN TAKEN AS PER ACTUAL YIELD AND DIFFERENCE WAS B ECAUSE THE DEPARTMENT HAD TAKEN THE FIGURE OF IDEAL YIELD. TH E CONTENTION OF 4 THE APPELLANT NOW BEFORE ME IS THAT THE MAIN SUPPLY OF THE PRODUCTS OF THE APPELLANT IS TO NESTLE AND NESTLE DOES NOT A LLOW ANY PAYMENT OF FAT, WHICH IS CONSIDERED AS INCLUDING IN THE WEI GHT OF OTHER PRODUCTS, RESULTING INTO DIFFERENCE IN QUANTITY SOL D, BUT THIS EXPLANATION ALSO DOES NOT EXPLAIN THE DIFFERENCE IN YIELD. 7. THE APPELLANT HAS ALSO CONTENDED THAT APPELLANT HAD AGREED FOR ADDITION OF RS. 70,000/- ON THE ASSUMPTION THAT NO ADDITION WOULD BE MADE SEPARATELY BUT THIS CONTENTION OF THE APPEL LANT IS NOT RELEVANT TO THE ISSUE. THE AO HAS RIGHTLY MADE THE ADDITION ON ACCOUNT OF DIFFERENCE IN YIELD AND SNF CONTENTS AND AS PER BOOKS, WHICH ARE REFLECTED IN PRODUCTION AS WELL AS IN SAL E. THE ADDITION MADE IS ACCORDINGLY CONFIRMED. THUS, THE LD. CIT(A ), DISMISSED THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 7. WE HAVE CAREFULLY CONSIDERED THE FACT-SITUATION OF THE CASE AS ALSO THE ASSESSMENT ORDER AND THE ORDER PASSED BY T HE LD. CIT(A). HAVING REGARD TO THE FINDINGS OF LD. CIT(A) AND FAC T SITUATION OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE FINDING O F THE LD. CIT(A). THUS, THE FINDINGS OF THE LD. CIT(A) ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON 5 .03.2012 SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER CHANDIGARH, THE 5 .03.2012 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5