DCIT, Hyderabad V. M/s Amrutha Varshini Dairy Farms(P)Ltd, Vijayawada

ITA 1209/HYD/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6243 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Assessee Lawyers: V CHANDRAMOULEESWRA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S.GANESAN AND SHRI AKBER BASHA ITA NO.1209/HYD/09 : A SSESSMENT YEAR 2007-08 DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 6, HYDERABA D V/S M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD., VIJAYAWADA ( PAN- AADCA 9677 P ) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. V.MADHUVANI RESPONDENT BY : SHRI V. CHANDRAMOULEESWRA RAO O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER OF THE CIT(A) I, HYDERABAD DATED 28TH OCTOBER, 2009 FOR THE ASSESSMENT YEAR 2007-08. 2. SMT. V.MADHUVANI, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT MAINT AINED PROPER VOUCHERS FOR THE PURCHASE OF MILK. THEREFORE, TH E ASSESSING OFFICER DISALLOWED THE EXPENDITURE CLAIMED AT THE RATE OF 5%. ON APPEAL BY THE ASSESSEE, THE CIT(A) DELETED THE ENTIRE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY FOLLOWING HIS OWN ORDE R FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE LEARNED DEPAR TMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE DEPARTMENT HAS FILED ITA NO.1209/HYD/09 M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD. VJA 2 APPEALS BEFORE THIS TRIBUNAL, BEING ITA NO.942 AND 94 8/HYD/2009 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 AND THIS TRIBUNA L, BY AN ORDER DATED 5TH MARCH, 2010, RESTORED PART OF THE D ISALLOWANCES MADE BY THE ASSESSING OFFICER FOR THOSE YEARS AND THUS PAR TLY ALLOWED THE APPEALS OF THE REVENUE. REFERRING TO THE ORDER OF THIS TRIBUNAL DATED 5TH MARCH,2010 FOR THOSE YEARS, SHE SUBMITTED THAT THE TRIBUNAL CONFIRMED DISALLOWANCE TO THE EXTENT OF RS.6 LAKHS AS AG AINST RS.13.90 LAKHS MADE BY THE ASSESSING OFFICER FOR THE ASSESSME NT YEAR 2005-06 AND TO THE EXTENT OF RS.15 LAKHS AS AGAINST RS.32.13 LAKHS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006- 07. THEREFORE, ACCORDING TO THE LEARNED REPRESENTATIVE, T HIS ISSUE IS COVERED BY THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2005- 06 AND 2006-07. 3. ON THE CONTRARY, SHRI CANDRAMOULEESWARA RAO, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS PURCHA SING MILK FROM THE VILLAGERS AND AS SUCH IT IS NOT POSSIBLE T O GET PROPER VOUCHERS AND BILLS FOR THE PURCHASE OF MILK FROM THE VI LLAGERS. HOWEVER, THE ASSESSEE PREPARED SELF-MADE VOUCHERS AND OBT AINED SIGNATURES OF FARMERS FROM WHOM MILK WAS PURCHASED. ALL VOUCHERS AND BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE ASSESSING OFF ICER. DUE TO VOLUMINOUS NATURE OF THE VOUCHERS, THE ASSESSING OFFICE R COULD NOT VERIFY THE SAME. THEREFORE, IT IS THE INABILITY O F THE ASSESSING OFFICER TO VERIFY THE VOUCHERS AND NOT THE DEFAULT ON THE PAR T OF THE ASSESSEE IN MAINTAINING PROPER VOUCHERS AND BILLS, THAT LED TO THE IMPUGNED DISALLOWANCES OUT OF THE PURCHASES MADE. ACCORDING TO THE L EARNED REPRESENTATIVE, THE ASSESSING OFFICER WITHOUT GIVING ANY REASON DISALLOWED EXPENDITURE TO THE EXTENT OF 5%. ACCORDING TO THE LEARNED ITA NO.1209/HYD/09 M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD. VJA 3 REPRESENTATIVE, UNLESS THE ASSESSEE PURCHASED MILK FROM THE FARMERS, IT COULD NOT HAVE SOLD THE MILK AND MILK PRODUCTS. THE REFORE, THE ENTIRE SALE WAS DEPENDENT UPON THE PURCHASES MADE BY TH E ASSESSEE. THEREFORE, THE AD-HOC DISALLOWANCE MADE BY THE ASSESSING O FFICER IS NOT JUSTIFIED AND THE SAME WAS RIGHTLY DELETED BY THE CIT(A). REFERRING TO THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 20 05-06 AND 2006-07, HE SUBMITTED THAT THIS TRIBUNAL HAS NOT TAKE N INTO CONSIDERATION THE SALE OF MILK AND MILK PRODUCTS AND THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE PURCHASED THE MILK FROM THE VILLA GERS. THEREFORE, ACCORDING TO THE LEARNED REPRESENTATIVE, TH E ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 MAY NOT BE APPLICABLE TO FACTS OF THE CASE FOR THE YEAR UNDER APP EAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. AS RI GHTLY POINTED OUT BY THE LEARNED REPRESENTATIVE FOR THE REVENUE, THE CIT(A) BY FOLLOWING HIS OWN ORDER FOR THE ASSESSMENT YEARS 2005-06 AND 2006- 07, DELETED THE DISALLOWANCE OUT OF EXPENDITURE ON P URCHASE OF MILK, MADE BY THE ASSESSING OFFICER. THE CIT(A) FOUND THAT THE RE IS NO EVIDENCE OF ANY INFLATION OF EXPENDITURE. THERE IS NO DEFECT POINTED OUT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER MADE AN AD-H OC DISALLOWANCE OUT OF EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASE OF MILK, WORKING OUT THE SAME AT 5% ON THE G ROUND THAT MOST OF THE VOUCHERS ARE SELF-MADE AND THEREFORE, THE SAME COULD NOT BE VERIFIED. FACT REMAINS THAT THE ASSESSEE PURCHASED MI LK AND SOLD THE SAME EITHER AS MILK OR AS MILK PRODUCTS. IDENTICAL FACTS AND CIRCUMSTANCES WERE EXAMINED BY THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07, BY A COORDI NATE BENCH ITA NO.1209/HYD/09 M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD. VJA 4 OF THIS TRIBUNAL. AFTER CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE, THIS TRIBUNAL FOUND THAT THOUGH THE CIT(A) WAS NO T JUSTIFIED IN DELETING THE ENTIRE ADDITION MADE BY THE ASSESSING OFFI CER FOR THOSE YEARS, THE AD-HOC DISALLOWANCE WORKED OUT AT 5% OF THE PURCHASES MADE BY THE ASSESSING OFFICER WAS ON HIGHER SIDE AND ACCORDI NGLY RESTORED PART OF THE ADDITIONS MADE BY THE ASSESSING OFFI CER, BY RESTRICTING THE DISALLOWANCE TO RS.6 LAKHS AS AGAINST RS.13 .90 LAKHS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005- 06 AND TO RS.15 LAKHS AS AGAINST RS.32.13 LAKHS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006-07. IN VIEW OF THE ORD ER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2005-0 6 AND 2006-07, AND CONSIDERING THE FACT THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AT 5% IS ON THE HIGHER SIDE, FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION ALSO, WE FIND IT REASONABLE TO SUSTAI N A DISALLOWANCE OF RS.15 LAKHS. THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER AT RS.51,11,493 IS RESTRICTED TO RS.15 LAKHS, TAKI NG INTO CONSIDERATION THE VOLUME OF BUSINESS AND THE CIRCUMSTANCES U NDER WHICH THE ASSESSEE PRODUCED THE MILK. ACCORDINGLY, WE MOD IFY THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DISALLOW RS.15 LAKHS OUT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASE OF MILK. 5. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE COURT ON 15.10.10 SD/- SD/- (AKBER BASHA) (N.R.S.GANESAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 15TH OCTOBER, 2010 ITA NO.1209/HYD/09 M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD. VJA 5 COPY FORWARDED TO: 1. M/S. AMRUTHA VARSHINI DAIRY FARMS (P) LTD., HH.NO.4 0=-1- 21/3, 1ST FLOOR, SURYA TOWERS, M.G.ROAD, VIJAYAWADA. 2. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 6, HYDERABAD 3. CIT(A) I HYDERABAD 4. COMMISSIONER OF INCOME-TAX (CENTRAL), HYDERABAD. 5. THE D.R., ITAT, HYDERABAD. B.V.S.