THE INCOME TAX OFFICER -1, BHILAI(CG) V. SHRI DA,PDJAR [RASSAD AGRAWA;, Durg

ITA 122/BIL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1329 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M DAS
• Assessee Lawyers: R B DOSHI
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI MUKUL K. SHRAWAT , JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER . IT A NO.12 2 / BLPR./201 1 ( ASSESSMENT YEAR : 20 0 7 08 ) INCOME TAX OFFICER - 1 AAYAKAR BHAVAN CIVIL LINES, BHILAI APPELLANT V/S SHRI DAMODHAR PRASAD AGRAWAL VILLAGE CHANDKHURI BALOD ROAD, DURG (C.G) PAN ACGPA6450J .... RESPONDENT REVENUE BY : SHRI S.M. DAS ASSESSEE BY : SHRI R. B DOSHI DATE OF HEARING 1 1 .06.2015 DATE OF ORDER 19 .06. 2015 O R D E R PER SHAMIM YA H YA, A .M. T HIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11 TH MARCH 201 1 , PASSED BY THE LEARNED CIT(A), BILASPUR, FOR THE ASSESSMENT YEAR 20 07 08 . THE GROUND S RAISED BY THE REVENUE ARE AS UNDER: SHRI DAMODHAR PRASAD AGRAWAL 2 1. WHETHE R IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` 6,61,433 , MADE BY THE A.O. ON HUSK AMOUNT. 2. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDIT ION OF ` 3,93,360, MADE BY THE A.O. U/S 69B OF THE I.T. ACT, 1961. 2 . AT THE OUTSET, WE NOTE THAT TAX EFFECT IN THIS CASE IS BELOW ` 4 LAKH FIXED BY THE CBDT FOR FILING APPEALS BEFORE THE TRIBUNAL AS PER ITS LATEST CIRCULAR. HOWEVER, SINCE THIS APPEAL WAS FILED PRIOR TO THE DATE OF THIS LATEST CIRCULAR AND THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE SAID CIRCULAR OF THE DEPARTMENT OPERATES PROSPECTIVELY, WE ADJUDICATE THE ISSUE RAISED ON MERITS. 3 . APROPOS GROUND NO.1, THE ASSESSEE IS DRIVING INCO ME FROM MANUFACTURING OF ARWA AND USNA RICE AND TRADING IN PADDY. THE ASSESSING OFFICER MADE ADDITION OF ` 6,61,433, PRESUMING THE SAME TO BE UNRECORDED SALE OF HUSK. ACCORDING TO THE ASSESSING OFFICER, THE HUSK PRODUCED COMES TO 20% OF THE PADDY MILLED, I .E., IN TERMS OF QUINTALS, IT WORKED OUT TO 6330.33 QUINTALS AND ESTIMATING THE SALE RATE OF ` 100 PER QUINTAL, THE ASSESSING OFFICER ADDED ` 6,61,433, PRESUMING THE SAME TO BE UNRECORDED SALE OF HUSK. SHRI DAMODHAR PRASAD AGRAWAL 3 4 . UPON THE ASSESSEES APPEAL, THE LEARNED CIT(A) DELETE D THE ADDITION BY HOLDING AS UNDER: 1.2 T HE RIVAL SUBMISSIONS HAVE BEEN CAREFULLY CONSIDERED WITH REFERENCE TO THE FACTS OBTAINING FROM THE RECORD. THE APPELLANTS EXPLANATION REGARDING CONSUMPTION OF HUSK FOR THE BOILER, WAS NOT PROVED AS FALSE. NO EVI DENCE WHATSOEVER WAS BROUGHT ON RECORD TO PROVE THAT THE APPELLANT HAD SOLD HUSK AS PRESUMED BY THE A.O. IT WAS NOT UNNATURAL THAT THE HUSK STORED IN OPEN AREA OF THE MILL, WAS CARRIED BY THE POOR VILLAGERS AND P ARTLY DESTROYED IN RAINS, BAD W E A THER, ETC. THE A.O. FAILED TO TAKE NOTE OF THE SIGNIFICANT FACT THAT THE MAIN BUSINESS OF THE APPELLANT WAS MANUFACTURING OF RICE AND ITS SALE AND NOT THE SALE OF HUSK AND HENCE THE APPELLANT WAS NOT ACCOUNTABLE ABOUT THE HUSK STORED OUTSIDE THE FACTORY PREMISES AS T O WHETHER IT WAS RUINED OR FLOWN. HUSK BEING OF VERY LOW VALUE ITEM, CONSIDERING THE MAIN INGREDIENT OF TRANSPORTING COST, THERE WAS NO DEMAND FOR PURCHASING HUSK, THE A.OS PRESUMPTION IN THIS REGARD WAS UNSUBSTANTIATED ON THE STRENGTH OF EVIDENCE. BEFORE MAKING SUCH HUGE ADDITION ON PRESUMPTIONS, IT WAS INCUMBENT UPON THE A.O. TO HAVE BROUGHT EVIDENCE ON RECORD AS TO WHOM THE ALLEGED SALE OF HUSK WAS MADE AND BY WHICH TRUCKS, THE HUSK WAS TRANSPORTED TO THE PURCHASERS. AS ALREADY STATED, SUCH NEEDED INVES TIGATION AND ENQUIRY FOR COLLECTION OF THE REQUIRED FACTS, WAS NOT CARRIED OUT BY THE A.O. WITHOUT BRINGING ANY EVIDENCE TO PROVE THE CONTRARY, THE IMPUGNED ADDITION WAS MADE ON PRESUMPTIONS AND ASSUMPTIONS. THIS IS OPPOSED TO THE DECISION IN DHAKESHWARI C OTTON MILLS LTD., (1954) 26 ITR 755 (SC) WHEREIN IT WAS HELD THAT IN MAKING THE ASSESSMENT, THE A.O. IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR MATERIAL AT ALL. SIMILAR ESTIMATED ADDITION MADE IN THE CA SE OF M/S. ANANTH RICE INDUSTRIES, RAIPUR ON THE ALLEGED GROUND OF THE UNRECORDED SALE OF HUSK, MADE ON PRESUMPTIONS AND SURMISES AND WITHOUT ANY CORROBORATIVE EVIDENCE, WAS DELETED BY THE HON'BLE ITAT NAGPUR BENCH IN ITA NO.280 (NAG.) /2008 DT. 26.08.2008 . FOR THE REASONS EXTENSIVELY ENUMERATED ABOVE, THE IMPUGNED PRESUMPTIVE ADDITION, UNSUBSTANTIATED ON THE STRENGTH OF EVIDENCE, IN MY CONSIDERED VIEW, IS UNSUSTAINABLE ON FACTS AND IN LAW. THE SAME IS, THEREFORE, DELETED. THE APPELLANT ACCORDINGLY GETS REL IEF OF ` 6,61,433. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. SHRI DAMODHAR PRASAD AGRAWAL 4 5 . THE LEARNED COUNSEL FOR THE ASSESSEE, BEFORE US, SUPPORTING THE ORDER OF THE LEARNED CIT(A), SUBMITTED AS UNDER: I) HUSK GENERATED IN ARWA RICE PRODUCTION ALSO USED AS F UEL TO PASS STEAM THROUGH PADDY FOR DRYING MOISTURE, SO AS TO MAKE ARWA RICE AS JUNA / STEAM RICE. JUNA / STEAM RICE COMMANDS BETTER PRICE; II) HUSK WAS THUS USED IN BOTH ARWA AND USNA RICE; III) SALE BILLS OF ARWA RICE SHOWING SALES OF JUNA / STEAM RICE PLACED AT PAGE NO.8 TO 14 OF PAPER BOOK; IV) IT IS IMPOSSIBLE THAT ENTIRE QUANTITY OF HUSK GENERATED WOULD BE SOLD. MAJOR PRODUCTION OF HUSK IS LOST BY FLOWING IN THE AIR, DESTRUCTION IN RAINS, USED FOR LEVELING THE MILL PREMISES, ETC. HUSK LEFT AFTER LO SS DUE TO NATURAL FACTORS WAS USED AS FUEL; V) A.O. HAS NOT FOUND OUT ANY INSTANCE OF SALE OF HUSK OUTSIDE THE BOOKS. ISSUE COVERED BY DECISION OF JURISDICTION ITAT IN THE CASE OF M/S. ANANT RICE INDUSTRIES ; VI) IN A.Y. 2005 06, UNDER SIMILAR CIRCUMSTANC ES, NO ADDITION MADE IN SCRUTINY ASSESSMENT. RELIANCE ON RADHASOAMI SATSANG V/S CIT, (1991) 193 ITR 321 (SC). 6 . PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IT IS UNDISPUTED THAT HUSK IS THE BY PRODUCT IN ASSESSEES OPERATION. THE ASSE SSEE HAS NOT MAINTAINED ANY RECORD WHATSOEVER IN THIS REGARD. HENCE, HE SUBMITTED THAT THE ASSESSING OFFICER IS ENTITLED TO MAKE NECESSARY ESTIMATED ASSESSMENTS IN THE ABSENCE OF COGENT EVIDENCE MAINTAINED BY THE ASSESSEE. HENCE, HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. SHRI DAMODHAR PRASAD AGRAWAL 5 7 . UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASSESSEE HAS CLAIMED THAT THOUGH HUSK IS THE BY PRODUCT, THE SAME IS USED IN ITS OWN BOILERS TO A LARGE EXTENT. THESE HUSKS LIE IN THE OPEN AND ARE SUBJECT TO RISK OF PILFERAGE AND DAMAGE BY RAIN AND STROM. THE ASSESSEE CLAIMS THAT IT IS NOT PRACTICAL TO MAINTAIN RECORD OF HUSKS. IN THESE CIRCUMSTANCES, ON SIMILAR REASONING, A CO ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ANANT RICE INDUSTRIES HAS DELETED SIMILAR ADDITIONS. HENCE, UPON CAREFUL CONSIDERATION, WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEES COUNSEL. WE AGREE THAT NO COGENT EVIDENCE HAS BEEN BROUGHT BY THE ASSESSING OFFICER THAT THERE IS ANY UNDISCLOSED SALE OF HUSK BY THE ASSESSEE. UNDER THESE CIRCUMSTANC ES, ON THE BASIS OF FACTS AND CIRCUMSTANCES STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND ALSO IN THE LIGHT OF THE DECISION OF THE CO ORDINATE BENCH OF THE TRIBUNAL, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF ` 6,61,433. GRO UND NO.1, RAISED BY THE REVENUE IS DISMISSED. 8 . APROPOS GROUND NO.2, THIS ADDITION WAS MADE BY THE ASSESSING OFFICER BY NOTING THAT STOCK SUBMITTED TO THE BANK BY THE ASSESSEE WAS AT A HIGHER FIGURE THAN THAT DISCLOSED IN THE ACCOUNTS. 9 . UPON THE ASSESSEES APPEAL, THE LEARNED CIT(A) DELETED THE ADDITION. SHRI DAMODHAR PRASAD AGRAWAL 6 10 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE MADE FOLLOWING SUBMISSIONS: I) QUANTITY OF STOCK OF DIFFERENT ITEMS WAS SHOWN MORE IN THE BANK STATEMENT WHILE ACTUAL QUANTITY WAS LESS; II) DAY TO DAY QUANTITATIVE DETAILS MAINTAINED. ENTRIES IN STOCK REGISTER SUPPORTED BY FINANCIAL BOOKS, WHICH ARE BACKED BY PURCHASE / SALE BILLS. STOCK VALUATION SHOWN IN THE BOOKS IS SUPPORTED BY AUTHENTIC STOCK REGISTER; III) A.O. HAS NOT POINTED OUT ANY DEFECT IN B OOKS / STOCK REGISTER OR ANY INSTANCE OF PURCHASE / PRODUCTION OUT OF BOOKS; IV) EXCESS STOCK WAS SUBMITTED TO BANK TO COVER THE CC LIMIT AND OUTSTANDING BALANCE IN CC ACCOUNT IF STOCK FIGURE AS PER BOOKS WAS SUBMITTED TO BANK, OUTSTANDING BALANCE IN CC A CCOUNT WAS NOT COVERED. INFLATED FIGURE OF STOCK COVER THE OUTSTANDING BALANCE. RELIANCE ON: ITO V/S JAGDIP KANJIBHAI 66 TTJ (AHD.) 199 CIT V/S N. SWAMY, 241 ITR 363 (MAD.) CIT V/S LAXMI ENGINEERING INDUSTRIES 308 ITR 279 (RAJ.) ACIT V/S MANGALAM PUBLICA TIONS 317 ITR (AT) 48 (COCHIN). V) STOCK STATEMENT SUBMITTED TO BANK ONLY TO COMPLETE FORMALITY. FIGURES COVERING THE CC LIMIT ARE GENERALLY REPORTED. VI) STOCK AS ON 31.03.2009 WAS NOT PHYSICALLY VERIFIED BY THE BANK AS THERE WAS NO PLEDGE OF STOCK; VI I) SALES TAX DEPARTMENT ACCEPTED THE FIGURES OF CLOSING STOCK. RELIANCE ON CIT V/S ANANDHA METAL CORPORATION 273 ITR 262 (MAD.). HIGH COURT HELD THAT UNLESS THE SALES TAX AUTHORITIES DISPUTE THE CLOSING STOCK, THE RETURN ACCEPTED BY THE SALES TAX AUTHORITI ES IS BINDING ON THE INC OME TAX AUTHORITIES; VIII) STOCK STATEMENT CANNOT BE CONSIDERED AS PROOF OF INVESTMENT. CONDITIONS OF SEC. 69B NOT FULFILLED. SHRI DAMODHAR PRASAD AGRAWAL 7 11 . PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 12 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ADDITION IN THIS CASE HAS BEEN SOLELY MADE ON THE GROUND THAT THERE WAS A DIFFERENCE BETWEEN STOCK AS SUBMITTED TO THE BANK OF BARODA AND AS SUBMITTED IN THE A CCOUNTS. IT IS NOT THE CASE THAT THERE WAS ANY EVIDENCE ON RECORD THAT THE BANK HAD MADE ANY PHYSICAL VERIFICATION OF STOCK AS ON THE DATE OF STOCK. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IN THIS REGARD, ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF STOCK STATEMENT SUBMITTED TO BANK. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE , IN THE BACKGROUND OF CASE LAWS RELIED UPON HAVE TO BE ACCEPTED. ACCORDINGLY, THE ORDER OF THE LEARNED CIT(A) IS UPHELD. GRO UND NO.2, RAISED BY THE REVENUE IS DISMISSED. 13 . I N THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 19 TH JUNE 2015 SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER RAI PUR , DATED : 19 T H JUNE 2015 SHRI DAMODHAR PRASAD AGRAWAL 8 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE ; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A ) ; ( 4 ) THE CIT, BILASPUR CITY CONCERNED ; ( 5 ) THE DR, ITAT, RAIPUR ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY SR. PRIVATE S ECRETARY / ASSISTANT REGISTRAR ITAT, RAIPUR SHRI DAMODHAR PRASAD AGRAWAL 9 DATE INITIAL ORIGINAL DICTATION PA D IS ENCLOSED AT THE END OF FILE 1. DRAFT DICTATED ON 11 . 6 .2015 SR.PS 2. DR AFT PLACED BEFORE AUTHOR 12 .6 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 12 . 6 .2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 15.6.2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19.6.2015 SR.PS 6. DATE OF PRONOUNCEM ENT 19.6.2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 19.6.2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / 19997 98 2000 01 / / / / / / / / / /