ACIT, Sangrur V. Sh. Prem Chand, Sunam

ITA 205/CHANDI/2010

• Counselvise Citation: 20521514 RSA 2010
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHIR SEHGAL
• Assessee Lawyers: JAI SHREE SHARMA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.205/CHD/2010 (ASSESSMENT YEAR : 2006-07) THE A.C.I.T., VS. SH.PREM CHAND CIRCLE, SANGRUR. PROP. M/S BRIJ RICE MILLS, SUNAM. PAN: ABHPCS5448E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SMT.JAISHREE SHARMA, DR DATE OF HEARING : 16.02.2012 DATE OF PRONOUNCEMENT : 28.02.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PATIALA DATED 07.01.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961. 2. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS OF APPEAL BUT THE ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINS T THE DELETION OF ADDITION OF RS.6,31,562/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UN-DISCLOSED INCOME FROM THE SALE OF HUSK. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS RUNNING RICE SHELLER , WHERE THE PADDY WAS MILLED AND THERE WAS PRODUCTION OF RICE. THE ASSES SING OFFICER NOTED THAT THE ASSESSEE HAD PRODUCED 10836 QTL. OF HUSK D URING THE YEAR AND ALSO HAD OPENING STOCK OF 4044.93 QTL., BUT THERE W ERE NO SALE OF HUSK SHOWN BY THE ASSESSEE DURING THE YEAR. THE ASSESSI NG OFFICER FURTHER 2 NOTED THAT THE HUSK IS CONSUMED FOR THE PURPOSE OF BOILING THE PADDY IN THE BOILERS. HOWEVER, THE ASSESSEE HAD NOT PRODUCE D PAR-BOILED RICE DURING THE YEAR AND STILL NO SALE OF HUSK WAS SHOWN INSPITE OF HAVING OPENING STOCK AND PRODUCTION DURING THE YEAR. AS P ER THE ASSESSING OFFICER, THE ASSESSEE HAD SUPPRESSED THE SALE OF HU SK. THE ASSESSING OFFICER COLLECTED INFORMATION FROM VARIOUS AGENCIES AND AVERAGE RATE AT WHICH HUSK WAS PURCHASED BY THE SAID AGENCIES IS TA BULATED AT PAGE 2 OF THE ASSESSMENT ORDER. THE AVERAGE PREVAILING MARKE T RATE OF HUSK DURING THE YEAR, AS PER THE ASSESSING OFFICER, WAS RS.173/ - PER QTL. THE ASSESSING OFFICER ALLOWED CREDIT OF RS.50/- ON ACCO UNT OF TRANSPORTATION, LOADING/UN-LOADING AND MIDDLEMAN COMMISSION AND WAS OF THE VIEW THAT THE AVERAGE MARKET RATE OF HUSK WAS TO BE TAKEN AT RS.123/- PER QTL. AFTER ACCOUNTING FOR THE CLOSING STOCK OF HUSK SHOW N BY THE ASSESSEE AT 9746.78 QTL., THE SALE OF HUSK DURING THE YEAR, AS PER THE ASSESSING OFFICER, WAS 5134.65 QTL. AND APPLYING THE RATE OF RS.123/- PER QTL., THE VALUE OF HUSK SOLD BY THE ASSESSEE WORKED OUT TO RS .6,31,562/-. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WH Y THE SAME SHOULD NOT BE ADDED TO ITS INCOME. THE RELEVANT EXTRACT O F THE SHOW CAUSE NOTICE IS INCORPORATED UNDER PARA 4 OF THE ASSESSME NT ORDER. IN REPLY THE ASSESSEE SUBMITTED THAT ITS SHELLER WAS SELLA PLANT AND HAD HUSK BASED FURNACE. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT WE CONSUMED THE PADDY HUSK IN OUR HUSK BASED FURNACE FOR DRIAGE OF PADDY. IN THE OPERATION OF SHELLING OF RICE THE PADDY IS DRIED FO R MANUFACTURING OF RICE AND ITS BY-PRODUCTS AND THE EXPENSES OF PADDY DRIAG E ARE ACCORDINGLY BOOKED. THE ASSESSEE, HOWEVER, HAD NOT INCURRED AN Y SUCH EXPENSES. THE ASSESSEE CATEGORICALLY SUBMITTED THAT IT HAD NO T SOLD PADDY HUSK BUT HAD CONSUMED IT IN ITS FURNACE AND HENCE NO QUESTIO N OF ANY ADDITION. THE ASSESSING OFFICER REJECTED THE CONTENTION OF TH E ASSESSEE IN THE ABSENCE OF ANY EVIDENCE AND MADE AN ADDITION OF RS. 6,31,562/-. 3 4. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSES SEE OBSERVING THAT THE HUSK WAS USED IN DRYING OF PADDY THROUGH BOILER AND THERE WAS NO MERIT IN THE CONTENTION OF THE ASSESSING OFFICER TH AT THE PADDY HUSK WAS SOLD IN THE OPEN MARKET. THE BASIS OF THE ASSESSIN G OFFICER IN MAKING THE ADDITION ON ACCOUNT OF NON-PRODUCTION OF PAR-BO ILED RICE DURING THE YEAR BY THE ASSESSEE WAS FOUND TO BE WITHOUT ANY BA SIS. 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS). THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 6. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANC E ON THE ORDER OF THE CIT (APPEALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADDITION IN THE PRESENT CASE ON ACCOUNT OF SALE OF HUSK WAS MADE BY THE ASSESSING OFFICER PURELY ON SURMISES. THE ASSESSEE HAD SHOWN OPENING STOCK OF PADDY DURING THE YEAR AT 4044.93 QTL., PRO DUCTION DURING THE YEAR AT 10836.50 QTL. AND CLOSING STOCK OF HUSK AT 9746.78 QTL. THE CLAIM OF THE ASSESSEE WAS THAT THE SAID HUSK WAS UT ILIZED IN ITS PLANT ITSELF AS THE FURNACE OF THE SHELLER PLANT INSTALLE D IN THE PREMISES OF THE ASSESSEE WAS HUSK BASED. THE SAID HUSK WAS UTILIZE D IN THE AFORESAID FURNACE FOR DRIAGE OF PADDY. ADMITTEDLY, THE ASSES SEE HAD NOT MANUFACTURED RICE SELLA DURING THE YEAR BUT HAD UTI LIZED THE HUSK FOR DRIAGE OF PADDY AS THE RICE WITH LESS MOISTURE WOUL D FETCH BETTER PRICE IN THE MARKET. THE BASIS OF ADDITION IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER WAS NON-DECLARATION OF ANY SALE O F HUSK BY THE ASSESSEE DURING THE YEAR, THOUGH THERE WAS OPENING STOCK AND PRODUCTION MADE BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFIC ER HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO PROVE SALE OF HUSK BY THE ASSESSEE 4 OUTSIDE THE BOOKS OF ACCOUNT. IN THE ABSENCE OF TH E SAME AND THE CLAIM OF THE ASSESSEE THAT IT HAS UTILIZED THE HUSK PRODU CED BY IT IN ITS FURNACE FOR DRIAGE OF PADDY AND NON-BOOKING OF ANY EXPENDIT URE ON ACCOUNT OF DRIAGE OF PADDY DURING THE YEAR ESTABLISHES THE CLA IM OF THE ASSESSEE. WE ARE IN AGREEMENT WITH THE OBSERVATION OF THE CIT (APPEALS) IN THIS REGARD AND UPHOLDING THE SAME WE DISMISS THE GROUND S OF APPEAL RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH FEBRUARY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5