ACIT, Circle-1(1), Tirupathi V. M/s. Galla Foods Ltd., Tirupathi

ITA 1230/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66538 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: E PHALGUNA KUMAR
• Keywords: Principle of natural justice; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1230/HYD/2012 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE (1), TIRUPATHI VS. M/S GALLA FOODS LTD., RESPONDENT TIRUPATHI. (PAN AACCG1486D) C.O. NO. 134/HYD/12 (IN ITA NO. 1230/HYD/2012 ASSESSMENT YEAR: 2009-10 M/S GALLA FOODS LTD., CROSS OBJECTOR TIRUPATHI. (PAN AACCG1486D) VS. ASST. COMMISSIONER OF INCOME-TAX, RESPON DENT CIRCLE (1)1, TIRUPATHI REVENUE BY : SMT. AMISHA S. GUPT ASSESSEE BY : SHRI E. PHALGUNA KUMAR DATE OF HEARING : 21/11/2012 DATE OF PRONOUNCEMENT : 27/11/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE CIT(A), GUNTUR, DATED 29/05/2012 FOR T HE ASSESSMENT YEAR 2009-10. THE ASSESSEE FILED C.O., WHICH IS IN SUPPORT OF THE ORDER OF THE CIT(A). ITA NO. 123 0/HYD/2012 & 134/HYD/12 GALLA FOODS LTD. 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS DERIVING INCOME FROM MANUFACTURING OF FRUIT PULP AN D JUICE. IT FILED THE RETURN OF INCOME FOR THE AY 2009-10 ON 25/09/20 10, DECLARING LOSS OF RS. 12,74,72,646/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY TO EXAMINE THE CLAIM OF DISPROPORTIONATE R EFUND VIS--VIS ADVANCE TAX PAID. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF PURCHASES OF MANGOES, VARIETY-WISE AND THE ASSESSEE HAD FURNISHED ALL THE DETAILS SUCH AS VARIETY, DATE OF PURCHASE, QUANTITY, RATE PER TONNE , TOTAL VALUE OF THE MANGOES PURCHASED ALONG WITH NAMES OF THE SELLE RS. WHILE COMPLETING THE ASSESSMENT, THE AO OBTAINED INFORMAT ION FROM THE MARKET YARD AT TIRUPATI AND KODUR IN KADAPA DIST. A ND THE AVERAGE RATE FOR THE VARIETY OF TOTAPURI MANGOES DURING M AY, JUNE & JULY 2008, WAS RS. 9,000/- PER TONNE, WHEREAS THE ASSESS EE HAD SHOWN ITS PURCHASE AT RS. 12,000/- PER TONNE AND PURCHASE D 13,056 TONNES. THEREFORE, THE AO OPINED THAT THE ASSESSEE HAD INFLATED THE PURCHASES AT RS. 3,000/- PER MONTH FOR THE VARIETY OF TOTAPURI MANGOES AND THE DIFFERENCE FOR 13,506 TONNES, WHICH COME TO RS. 4,05,18,000/- WAS ADDED TO THE LOSS RETURNED. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS, WHICH WERE EXTRACTED BY THE CIT(A) AT PAGES 3 TO 6 IN HIS ORDER. THE AR OF THE ASSESSEE, MAINLY, STATED T HAT THE AO HAD TO DEMONSTRATE THAT THERE IS OVERSTATEMENT OF PRICES A S THE ASSESSEE HAD PRODUCED ALL THE DETAILS BY PRODUCING THE VARIO US DOCUMENTS ITA NO. 123 0/HYD/2012 & 134/HYD/12 GALLA FOODS LTD. 3 WHICH IT MAINTAINED IN THE COMPANY CONTAINING THE D ETAILS LIKE VARIETY, DATES OF PURCHASES, QUANTITY, RATE PER TON , TOTAL VALUE OF THE MANGOES PURCHASED ALONG WITH NAMES OF SELLERS ETC. IT WAS CONTENDED THAT THE ABOVE DETAILS ARE VERIFIABLE SIN CE THEY HAVE ADDRESSES OF THE SELLERS. IT WAS POINTED OUT THAT THE PAYMENTS ARE THROUGH CHEQUES AND NOT BY CASH AND ALL OF THEM ARE FARMERS AND THE PURCHASES ARE NOT FROM MARKET. IT WAS THEREFORE CONTENDED THAT IF AT ALL THE AO IS SUSPECTING THE DETAILS FURNISHE D HE SHOULD HAVE DEMONSTRATED AS TO WHAT DEFECT HE HAS FOUND, WHICH THE AO FAILED TO DO SO. IT WAS SUBMITTED THAT THE IMPORTANT FACTOR T O BE CONSIDERED IS THAT THE PURCHASES ARE NOT FROM MARKET BUT ARE FROM FARMERS. IT WAS POINTED OUT THAT THE AO IS AWARE THAT THERE IS VARI ATION IN RATE BETWEEN THE MARKET AND THE FARMERS. IT WAS CONTENDE D THAT THE AO HAS NOT EXAMINED THE DETAILS AND CONDUCTED ENQUIRIE S SUMMONING THE FARMERS USING HIS OFFICE MACHINERY. THE AO COUL D NOT HAVE RESORTED TO DISTURB THE PURCHASE PRICE WITHOUT DISP ROVING THE DETAILS PRODUCED OR THE BILLS PRODUCED TO BE NOT GENUINE. I T WAS SUBMITTED THAT FOR RESORTING TO SUCH AN ACTION, IT IS ALWAYS REQUIRED FIRST TO REJECT THE BOOKS OF ACCOUNT AND MAKING ADDITION BY ESTIMATING THE PURCHASE PRICE IS ILLEGAL AND PER SE UNTENABLE. IN VIEW OF THE ABOVE SUBMISSIONS, THE AR OF THE ASSESSEE FINALLY SUBMITT ED THAT THE AO HAS NOT ONLY FOLLOWED THE SETTLED PRINCIPLE FOR MAK ING AN ADDITION HAS NOT MADE THE ASSESSMENT BY APPLICATION OF MIND TO THE MATERIAL PRODUCED BEFORE HIM, THE ADDITION MAY BE DELETED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) HELD THAT THE AO HAS NOT PROVED INFLATION OF PURCHA SE PRICE BY BRINGING ON RECORD PURCHASES MADE BY OTHERS DURING THE SAME PERIOD, THEREFORE, THE REVELATIONS FROM THE MATERIA L SUBMITTED AND ITA NO. 123 0/HYD/2012 & 134/HYD/12 GALLA FOODS LTD. 4 FACTS APPEARING FROM THE ASSESSMENT ORDER, THERE IS NO HESITATION IN HOLDING THAT THE ACTION OF THE AO IN ESTIMATING THE PURCHASE VALUE OF RS. 13,506/- TONS OF TOTAPURI VARIETY AT RS. 9000 /- PER TON AND REDUCING THE LOSS BY RS. 4,05,18,000/- IS NOT SUSTA INABLE BOTH IN LAW AND ON FACTS. THE CIT(A), THEREFORE, DIRECTED TO TH E AO TO DELETE THE ADDITION MADE. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US A ND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN LAW ON FACTS. 2. THE DECISION OF THE CIT(A) ERRED IN ALLOWING NEW EVIDENCE BY THE ASSESSEE BY WAY OF COPY OF REPORT GIVEN BY TRAN SGRAPH CONSULTING PVT. LTD AND ALSO COPIES OF PRESS CLIPPI NGS AT THE TIME OF APPELLATE PROCEEDINGS AND APPRECIATED THE A CT OF THE ASSESSEE. THE SAME IS NOT ALLOWABLE AS PER THE PROV ISIONS OF RULE 46A OF THE ACT. 3. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO, FOR THE AO HAD OBTAINED INFORMATION FROM THE MARKET YAR D AT TIRUPATHI AND KODUR IN KADAPA DIST. FOR THE VARIETY OF TOTAPURI DURING MAY TO JUNE, 2008 WAS RS. 9,000/- PER TONNE AS AGAINST RS. 12,000/- PER TONE CLAIMED BY THE ASS ESSEE. 4. THE LD. CIT(A) ACCEPTED THE ASSESSEES VERSION T HAT THE VARIETY OF TOTAPURI WAS PURCHASED ONLY FROM DAMA LA CHERUVU, BANGARUPALEM AND CHITTORE AND NOT FROM TIRUPATHI AND KODUR. THE INDEPENDENT AGENCYS REPORT HAS NOT MEN TIONED ABOUT THE RATES AT THE SPECIFIC AREAS IN ITS REPORT . BUT THE LD. CIT(A) APPRECIATED THE APPLICANTS VERSION. THE CIT( A) HAS NOT ADHERED TO THE PRINCIPLES OF NATURAL JUSTICE. 7. BEFORE US, THE LEARNED DR SMT. AMISHA S. GUPT, CONTENDED THAT THE NEW EVIDENCE FILED BY THE ASSESSEE BY WAY OF CO PY OF REPORT GIVEN BY TRANSGRAPH CONSULTING PVT. LTD. AND PRESS CLIPPINGS AT THE TIME OF APPELLATE PROCEEDINGS, HAS BEEN ADMITTED BY THE CIT(A) WITHOUT REMANDING THEM TO THE AO FOR VERIFICATION/E XAMINATION IS ITA NO. 123 0/HYD/2012 & 134/HYD/12 GALLA FOODS LTD. 5 AGAINST THE PROVISIONS OF RULE 46A OF IT RULES AND THE CIT(A) HAS NOT COMPLIED WITH THE SAME. THEREFORE, THE LEARNED DR SUBMITTED THAT THE MATTER MAY BE REMITTED TO THE FILE OF THE AO TO VERIFY/EXAMINE THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SHRI E. PHALGUNA KUMAR RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ORDER OF THE AO IS CONTRARY TO PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE AO HAS NOT PUT TO THE ASSESSEE AS TO WHERE FROM THE AO GOT THE MARKET PRICES TO ENABLE THE ASSESSEE TO EXPLAIN DISCREPANCY, IF ANY. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HAS NOT COMPLIED WITH PROVISIONS OF RULE 46A OF IT RULES, AS THE NEW EVID ENCE FILED BY THE ASSESSEE BEFORE HIM HAS NOT BEEN FORWARDED TO THE A O FOR HIS REPORT. WE ARE OF THE VIEW THAT IF THE SUBMISSIONS AND DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE IN SUPPORT OF IT S CASE BEFORE THE CIT(A), WERE NOT SUBMITTED BEFORE THE ASSESSING OF FICER. THE CIT(A) IS BOUND TO REMAND THE SAME TO THE FILE OF T HE AO FOR VERIFICATION/ EXAMINATION BEFORE DECIDING THE CASE AS PER PROVISIONS OF RULE 46A OF IT RULES. THE CIT(A) FAILED TO DO SO IN THIS CASE. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE AO TO RE-DECIDE THE IS SUE IN ACCORDANCE WITH LAW AFTER EXAMINING THE SUBMISSIONS AND DOCUME NTARY EVIDENCE, FILED BEFORE THE CIT(A) AFTER PROVIDING R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 123 0/HYD/2012 & 134/HYD/12 GALLA FOODS LTD. 6 10. THE C.O. FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE CIT(A) AND SINCE THE ORDER OF THE CIT(A) IS SET ASI DE AND THE MATTER HAS BEEN REMITTED TO THE FILE OF THE AO IN THE REVE NUES APPEAL (SUPRA), THE C.O. BECOMES INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND THE C.O. FILED BY THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 27/11/2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 27 TH NOVEMBER, 2012. KV COPY TO:- 1) ACIT, CIRCLE 1(1), AAYAKAR BHAVAN, K.T. ROAD, TIR UPATHI 517 507. 2) M/S GALLA FOODS LTD., C/O AMARA RAJA CAMPUS, RENIGUNTA-KADAPA ROAD, KARAKAMBADI, TIRUPATHI. 3) THE CIT (A), GUNTUR 4) THE CIT, TIRUPATHI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.