Manish Kumar, Barnala V. ITO, Barnala

ITA 194/CHANDI/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5062 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 194/CHD/2010 ASSESSMENT YEAR: 2006-07 SHRI MANISH KUMAR BARNALA, VS. THE ITO, BARNALA BARNALA PAN NO. AGJPK2864K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK GOYAL RESPONDENT BY: SH N.K.SAINI ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F CIT(A), DATED 16.12.2009 RELATING TO ASSESSMENT YEAR 2006-07, A GAINST THE ORDER PASSED UNDER SECTION 143 (3) OF THE I.T. ACT. 2. THE GROUND NO.1 RAISED BY THE REVENUE BEING GEN ERAL IN NATURE, IS DISMISSED. 2. THE ISSUE IN GROUND NO.2 IS AGAINST THE SALE RAT E TO BE ADOPTED ON SALE OF RICE HUSK. THE LEARNED AR FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE IS IDENTICAL AND IS COVERED BY T HE ORDER OF THE TRIBUNAL IN MANPREET SINGH DHILLON VS. ITO (ITA NO. 69/CHD/2 010) ASSESSMENT YEAR 2006-07 AND ORDER OF THE TRIBUNAL IN VARIOUS OTHER CASES. THE LEARNED DR PLACED RELIANCE ON THE ORDER OF THE CIT( A). 2 3. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIB UNAL IN ITA NOS. 161 TO 163/CHD/2010 IN THE CASE OF M/S RICE GRAM UD YOG SAMITI (REGD) AND OTHERS VS. ITO VIDE ORDER DATED 29.4.2010, WHE REIN THE TRIBUNAL IN TURN RELYING ON ITS DECISION IN THE CASE OF MANPREE T SINGH DHILLON VO ITO (SUPRA), ON IDENTICAL FACTS, HELD AS UNDER:- 5. WE FIND THAT SIMILAR ISSUE AROSE IN THE CASE OF SHRI MANPREET SINGH DHILLON VS ITO, WARD, NABHA (ITA NO . 69/CHD/2010 ASSESSMENT YEAR 2006-07). THE ASSESS ING OFFICER HAD MADE ESTIMATION OF THE VALUE OF HUSK SO LD BY ADOPTING THE RATES AT WHICH PURCHASES OF RICE HUSK HAD BEEN MADE BY M/S INDIAN ACRYLICS LTD, M/S MILKFED AND M /S UNITED BREWERIES AND AFTER MAKING ANALYSIS OF TREND OF MAR KET RATES, AN AVERAGE RATE HAD BEEN WORKED OUT TO CALCULATE TH E SALE VALUE OF THE RICE HUSK SOLD BY THE ASSESSEE. THE T RIBUNAL VIDE ORDER OF EVEN DATE IN THE CASE OF SHRI MANPREET SIN GH DHILLON VS ITO, WARD, NABHA (SUPRA) HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS SHOWN SALE OF HUSK. TOTAL QUANTIT Y OF HUSK SOLD DURING THE YEAR WAS 13,280 QUINTALS, OUT OF WHICH 3969 QUINTALS WERE SOLD TO M/S A.P. ORGANICS. THE AVERAGE RATE OF SALE TO M/S A.P. ORGANICS WAS RS. 99/-. THE SALE OF HUSK TO M/S A.P. ORGANICS HAD BEE N ACCEPTED BY THE ASSESSING OFFICER. FURTHER, THE ASSESSEE HAD SOLD HUSK WEIGHING 9310.40 QUINTALS IN CASH, ON DIFFERENT DATES AT DIFFERENT RATES AVERAGI NG BETWEEN RS. 89/- TO RS. 100/- PER QUINTALS. THE TOT AL SALE PRICE OF THE HUSK WAS SHOWN BY THE ASSESSEE WA S AT RS. 8,73,497/-. THE AVERAGE SALE PRICE WORKS TO RS. 93.81 PER QUINTAL. THE SAID SALES WERE MADE IN CASH AND ARE REFLECTED IN THE BOOKS OF ACCOUNT WHICH IN TURN ARE AUDITED BY THE AUDITORS. THE ASSESSING OFFICER COMPARED THE RATE OF SALES AT WHICH THE ASSESSEE HA D SOLD THE RICE HUSK WITH THE RATE OF PURCHASE BY THR EE DIFFERENT CONCERNS I.E. INDIAN ACRYLICS LTD, M/S MI LKFED AND M/S UNITED BREWERIES LTD. FROM THE PERUSAL OF T HE DATA INCORPORATED IN PARA 2.4 OF THE ASSESSMENT ORD ER WITH REGARD TO THE PURCHASE OF RICE HUSK REFLECTED BY THE SAID PARTIES, WE FIND THAT THE SAME IS AT VARIA NCE, AND AVERAGE RATE WAS APPLIED BY ASSESSING OFFICER. THE PLEA OF THE ASSESSEE WITH REGARD TO OVERHEAD 3 EXPENDITURE OF TRANSPORTATION, LOADING / UNLOADING AND MIDDLEMAN COMMISSION WAS ACCEDED TO BY THE ASSESSING OFFICER AND DEDUCTION OF RS. 50/- PER QUI NTAL WAS ALLOWED FROM THE NET RATE APPLIED MONTH-WISE. 7. THE ENTRIES IN BOOKS OF ACCOUNT DEPICT A TRUE STATE OF AFFAIRS UNLESS SOME EVIDENCE IS FOUND TO B E CONTRARY. IN THE ABSENCE OF ANY SUCH EVIDENCE, BEIN G FOUND AND BROUGHT ON RECORD, AGAINST THE ASSESSEE, THERE IS NO MERIT IN REJECTING THE BOOK RESULTS AND MAKINGS ADDITIONS ON ESTIMATE BASIS. THE BOOK RES ULTS SHOWN BY AN ASSESSEE CAN BE COMPARED WITH ANOTHER CONCERN IN CASE THERE ARE IDENTICAL CIRCUMSTANCES. MERELY BECAUSE TWO CONCERN /S ARE ENGAGED IN SAME BUSINESS CANNOT BE THE BASIS FOR ADOPTING THE RATES OF PURCHASE / SALE SHOWN BY ONE CONCERN AS THE RATES O F SALE / PURCHASE OF THE OTHER CONCERN. THE RESULTS S HOWN BACKED BY BOOKS OF ACCOUNTS CANNOT BE REJECTED ON T HE SURMISES THAT THE RATES OF PURCHASES / SALES SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IS AT VARIANCE WITH THOSE BY OTHER CONCERN, UNLESS IT IS PROVED WITH EVIDENCE THAT THE TRANSACTIONS UNDERTAKEN BY TWO WE RE UNDER IDENTICAL CIRCUMSTANCES AND TWO CONCERNS WERE DEALING WITH IDENTICAL COMMODITIES. THE ASSESSEE BEFORE US IS DEALING IN THE SALE OF RICE HUSK, WHIC H IS AN AGRICULTURAL COMMODITY AND MERELY BECAUSE THE SA LE RATE REFLECTED IN THE BOOKS OF ACCOUNT OF ASSESSEE IS AT VARIANCE WITH THE PURCHASE RATE SHOWN BY THREE CONCERNS, CANNOT BE THE BASIS FOR MAKING ADDITION I N THE HANDS OF THE ASSESSEE, IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD TO PROVE THE QUALITY OF PRODUCT DEALT IN BY THE TWO CONCERNS AND THE QUANTI TY PURCHASED / SOLD. FURTHER, IF WE COMPARE THE PURCH ASE RATES OF THE THREE CONCERNS INTER SE, THERE IS VARI ANCE OF RS. 150/- TO RS. 196/- PER QUINTAL FOR THE RICE HUSK PURCHASED BY THESE CONCERNS. IN THE FACTS AND CIRCUMSTANCES, WHERE NO DEFECT HAS BEEN FOUND IN TH E BOOK ENTRIES OF THE ASSESSEE, MERELY BECAUSE THE RA TES OF SALE OF RICE HUSK SHOWN BY THE ASSESSEE DO NOT T ALLY WITH PURCHASE RATES SHOWN BY ANOTHER CONCERN, CANNO T BE THE BASIS FOR REJECTION OF BOOK RESULTS AND ADOP TION OF AVERAGE RATE FOR COMPUTING THE VALUE OF HUSK SOL D BY THE ASSESSEE, DURING THE YEAR, IN THE ABSENCE OF AN Y EVIDENCE FOUND TO THE CONTRARY, IS NOT JUSTIFIED. H ENCE THE SAME IS REJECTED. 8 WE FIND NO MERIT IN THE WORKING OF THE VALUE OF SALE CONSIDERATION BY ASSESSING OFFICER OF 9310.40 QUINTAL OF RICE HUSK SOLD BY THE ASSESSEE. THE ASSE SSEE HAD PRODUCED THE LEDGER ACCOUNT TO JUSTIFY THE SALE OF RICE HUSK. THE COMPARISON MADE BY THE ASSESSING OFFICER WITH PURCHASES MADE BY THREE DIFFERENT PART IES DOES NOT STAND THE TEST AS THE RELEVANT DETAILS IN RESPECT OF THE PURCHASES MADE BY THEM ARE NEITHER AVAILABLE ON RECORD NOR WERE THEY MADE AVAILABLE TO 4 THE ASSESSEE. THIS BEING AN AGRICULTURE PRODUCT, NO SET STANDARD CAN BE LAID TO DETERMINE THE VALUE OF A PARTICULAR PRODUCT SOLD OR PURCHASED BY A PERSON VI S- -VIS THE SAME PRODUCT DEALT IN BY THE OTHER PERSON . THE ASSESSING OFFICER HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO JUSTIFY THE APPLICABILITY OF HIGHER VALUE AS COMPARED TO THE RATES REFLECTED IN THE BOO KS OF ACCOUNT OF THE ASSESSEE. IN THE ENTIRETY OF FACT S AND CIRCUMSTANCES WHERE THE SALE OF RICE HUSK SHOWN AT THE RATE OF 96.60 PAISA PER QUINTAL, SHOWN BY THE ASSES SEE IN THE PRECEDING YEAR, HAS BEEN ACCEPTED BY THE ASSESSING OFFICER VIDE ORDER PASSED U/S 143(3) OF T HE ACT, THE RESULTS SHOWN FOR THE YEAR MERITS TO BE ACCEPTED. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION OF RS. 1,04,819/- M ADE ON ACCOUNT OF UNDER VALUATION OF HUSK SOLD BY THE ASSESSEE. THE GROUND NOS. 2 & 3 RAISED BY THE ASSES SEE ARE THUS ALLOWED. 6. THE FACTS OF THE PRESENT CASES BEING IDENTICAL TO T HE FACTS BEFORE THE TRIBUNAL, IN SHRI MANPREET SINGH DHILLON VS ITO, WA RD, NABHA (SUPRA) AND FOLLOWING THE SAID RATIO, WE SET ASIDE THE ORDE R OF CIT(A) AND DELETE THE ADDITION MADE ON ACCOUNT OF ALLEGED LOWER RATE OF SALE OF RICE HUSK SOLD BY THE ASSESSEE. THE GROUND NOS. 2 RAISED BY THE ASSESSEE IS ALLOWED. 7. THE ISSUE IN GROUND NO.3 IS AGAINST DISALLOWANC E MADE ON ACCOUNT OF FREIGHT, DIESEL, PHOOSA HATAI EXPENSES, RAFU CH ARGES, REPAIR AND LABOUR CHARGES BEING NOT FULLY VOUCHED. THE ASSESSING OFF ICER DISALLOWED RS. 40,000/- OUT OF TOTAL EXPENDITURE CLAIMED UNDER VAR IOUS HEADS. THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS. 25,000/- . WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) IN RESTRICTING THE DISALLO WANCE TO RS. 25,000/- ON ACCOUNT OF UN-VOUCHED EXPENSES BOOKED BY THE ASSESS EE. THE LEARNED AR FOR THE ASSESSEE HAS ALSO NOT SERIOUSLY PRESSED THE SAID GROUND AND HENCE THE GROUND NO.3 RAISED BY THE ASSESSEE IS DISMISSED . 8. THE GROUND NOS. 4 & 5 RAISED BY THE ASSESSEE AR E AGAINST THE ADDITION OF RS. 30,000/- ON ACCOUNT OF ESTIMATION O F HOUSE HOLD EXPENSES. 5 THE ASSESSEE HAD SHOWN WITHDRAWAL OF RS. 60,000/- F ROM HIS CAPITAL ACCOUNT FOR HOUSE HOLD EXPENSES. THE CONTENTION OF THE ASSESSEE WAS THAT HE WAS STAYING IN A JOINT FAMILY WITH HIS PARENTS A ND HIS FATHER HAD CONTRIBUTED RS. 60,500/- FOR MEETING THE HOUSEHOLD EXPENSES. THE TOTAL WITHDRAWAL FOR HOUSEHOLD EXPENSES WAS CLAIMED AT RS . 1,20,500/-. THE ASSESSING OFFICER MADE AN ESTIMATED ADDITION OF RS. 30,000/- ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS WHICH WAS UPHELD BY T HE CIT(A). WE FIND NO MERIT IN THE ORDER OF THE AUTHORITIES BELOW IN M AKING ANY ADHOC ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES WITHOUT B RINGING ON RECORD ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAD EXPANDED MO RE THAN THE AMOUNT CLAIMED ON HOUSEHOLD EXPENSES. WE DIRECT THE ASSE SSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 30,000/-. THE GROUN D NOS. 4 & 5 RAISED BY THE ASSESSEE ARE THUS ALLOWED. 9. THE GROUND NO.6 RAISED BY THE ASSESSEE IS GENERA L AND IS DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD OF JULY, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD JULY, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR