M/s. SRK Tea Processing Industries Ltd., Kolkata V. ACIT, Circle - 2, Jalpaiguri, Jalpaiguri

ITA 1685/KOL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9281 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Assessee Lawyers: S M SURANA
• Keywords: Rejection of books of accounts
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , , , , , /AND , . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SRI C. D. RAO, AM] # # # # / I.T.A NO. 1685/KOL/2009 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 2003-04 M/S. SRK TEA PROCESSING INDUSTRIES VS ASSTT. COMM ISSIONER OF INCOME-TAX, LTD. (PAN-AAHCS 0233 P) CIRCLE-2, JALPAIGURI ( )* /APPELLANT ) (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI S. M. SURANA FOR THE RESPONDENT: SHRI S. K. MALAKAR !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-JALPAIGURI IN APPEAL NO.389/CIT(A)/JAL/05-06 VIDE ORDER DATED 15.07.2009 . THE ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-2, JALPAIGURI U/S 143(3) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2003- 04 VIDE HIS ORDER DATED 28.10.2005. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING GROSS PROFIT RATE ON THE BASIS OF PREVIO US THREE YEARS. FOR THIS, THE ASSESEE HAS RAISED THE FOLLOWING TWO EFFECTIVE GROUNDS: 1. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE LD. A.O. IN ADDING BACK RS.23,34,000/- BEING ALLEGED SALES OF SUPPRESSED PRODUCTION OF TEA BY APPLYING THE AVERAGE PRODUCTION RATE OF PRECEDI NG 3 YEARS WHEN THERE WAS NO DEFECTS IN THE AUDITED BOOKS OF ACCOUNT, DAY TO DA Y PRODUCTION REGISTERS AND THE PRODUCTION WAS DULY ACCEPTED BY EXCISE AND SALES TAX AUTHORITIES. 2. FOR THAT EVEN OTHERWISE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF ALLEGED EXTRA PRODUCTION/SALES OF SUPPRESSED TEA I GNORING THE EXPLANATION FILED BY THE ASSESSEE AND AUDITORS REPORT THAT THE BOOK S OF THE ASSESSEE WERE DULY AUDITED BY HIM AND NO DEFECT WAS POINTED OUT. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE TOOK US TO ASSESSMENT ORDER AND HE REFERRED TO THE VERY FIRST PAGE OF THE ASSESSMEN T ORDER (LAST PART), WHICH READS AS UNDER: ITA 1685/K/2009 M/S. SRK TEA PROCESSING IND. LTD. A Y 03-04 2 PERCENTAGE OF YIELD: THE ASSESSEE MANUFACTURED TEA FROM THE TEA LEAVES PLUCKED FROM ITS OWN GARDEN AND ALSO IT PURCHASED GREEN LEAVES F ROM OUTSIDE. IT IS FOUND THAT OUT OF TOTAL GREEN LEAVES OF 29,27,407 KG. TOTAL QUANTITY OF TEA PRODUCED WAS 5,53,969 KG WHICH COMES TO 18.93% OF THE TOTAL GREEN LEAVES CONSUMED FOR PRODUCTION. BUT IN THE PRECEDING YEARS THE PERCENTAGE OF YIELD WERE HIGHER THAN THAT OF THE YEAR UNDER SCRUTINY. A COMPARATIVE CHART IS GIVEN BELOW: A. YEAR QTY. OF GREEN LEAF USED FOR PRODUCTION (OWN + PURCHASED) QTY. OF PRODUCTION IN K.G. PERCENTAGE 2003-04 2002-03 2001-02 2000-01 29,27,107 KG. 23,46,313 KG. 25,12,482 KG. 25,33,054 KG. 5,53,969 KG. 5,27,504 KG. 5,84,937 KG. 5,25,891 KG. 18.93% 22.48% 23.28% 20.76% FURTHER, LD. COUNSEL FOR THE ASSESSEE TOOK US TO EN TIRE ASSESSMENT ORDER AND STATED THAT THERE IS NO IOTA OF WORD THAT BOOKS OF ACCOUNT ARE REJECTED BY THE ASSESSING OFFICER. HE STATED THAT CIT(A) SIMPLY CONFIRMED THE ADDITION DE SPITE A SPECIFIC GROUND RAISED BEFORE HIM REGARDING NON-REJECTION OF BOOKS OF ACCOUNTS. HE STATED THAT AGGRIEVED BY THE ORDER OF CIT(A),THE ASSESSEE IS IN APPEAL. WHEN THE SAME WAS PUT, THE LD. DR SIMPLY STATED THAT HE IS RELYING ON THE ORDERS OF THE LOWER AUTHO RITIES. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER HAS NOT R EJECTED THE BOOKS OF ACCOUNTS IN THE PRESENT CASE AND EVEN THE CIT(A) HAS NOT GIVEN ANY FINDING IN RESPECT TO THE SAME. THE CIT(A) SIMPLY GONE THROUGH THE ISSUE THAT THE GROSS PROFIT RATE, IN THE PRESENT ASSESSMENT YEAR FROM EARLIER YEARS, IS LOWER. WHET HER, ASSESSING OFFICER CAN ESTIMATE GROSS PROFIT RATE WITHOUT REJECTING THE BOOKS OF AC COUNTS OR NOT, WE ARE OF THE VIEW THAT FIRST PROVISO TO SECTION 145(1) OR SECTION 145(2) C AN BE INVOKED ONLY IF AND WHERE THE ELEMENTS ATTRACTING EITHER OF THOSE PROVISIONS ARE FOUND TO EXIST. IN THIS REGARD, THE ASSESSING OFFICER HAS TO GIVE A CLEAR FINDING TO TH AT EFFECT, ALONG WITH THE MATERIAL ON WHICH SUCH FINDING IS BASED, HAS TO BE MADE OUT AND GIVEN BY THE AO. NO ASSESSMENT UNDER FIRST PROVISO TO SECTION 145(1) OR 145(2) CAN BE MADE BY THE ASSESSING OFFICER WITHOUT REJECTING THE BOOKS OF ACCOUNT. THERE IS N O FINDING IN THE ASSESSMENT ORDER IN RESPECT TO THE FACT THAT THE ASSESSEES METHOD OF A CCOUNTING IS NOT A REGULARLY EMPLOYED METHOD OR WHETHER HIS INCOME, PROFITS OR GAINS CANN OT BE DEDUCED OR ACCOUNTS ARE INCOMPLETE OR INCORRECT IN THE PRESENT CASE. IN TH E ABSENCE OF THIS FINDING AND IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUNT, WE ARE UN ABLE TO ACCEPT THAT THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE GROSS PROFIT. AC CORDINGLY, WE ARE OF THE VIEW THAT THE ITA 1685/K/2009 M/S. SRK TEA PROCESSING IND. LTD. A Y 03-04 3 LOWER AUTHORITIES HAVE ERRED IN APPLYING GROSS PROF IT RATE ON THE BASIS OF EARLIER YEARS, WITHOUT REJECTING BOOKS OF ACCOUNT. WE ALLOW THE CL AIM OF THE ASSESSEE AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 6. ORDER PRONOUNCED IN OPEN COURT ON 11 TH DAY OF MARCH, 2011. SD/- SD/- . . , !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 11 TH DAY OF MARCH, 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. SRK TEA PROCESSING INDUSTRIES LTD. , C/O, S. M. SURANA, ADV. P-38, INDIA EXCHANGE PLACE, ARUN CHAMBER, 3 RD FLOOR, KOLKATA-700 001. 2 +,)* / RESPONDENT, ACIT, CIRCLE-2, JALPAIGURI. 3 . -$ / THE CIT(A), JALPAIGURI 4. -$ ( )/ CIT, JALPAIGURI. 5 . => +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$?/ BY ORDER, 1 /ASSTT. REGISTRAR .