M/s. M.P.RICE TRADING CO., MAHASAMUND V. CIT, RAIPUR (CG)

ITA 257/BIL/2010

• Counselvise Citation: 25724714 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SHARMA
• Assessee Lawyers: R S KHEMKA
• Keywords: Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BILASPUR BE NCH BILASPUR BEFORE SHRI SHAILENDRA KUMAR YADAV (J.M) & SHRI R.K.PANDA(A.M) ITA NO. 257/BLPR/2010(A.Y.2006-07) M/S.M.P.RICE TRADING CO., STATION ROAD, P.O.MAHASAMUND (CG) PAN:AADFM 8705H (APPELLANT) VS. THE COMMISSIONER OF INCOME TAX, CIVIL LINESRAIPUR.(CG) (RESPONDENT) APPELLANT BY : SHRI R.S.KHEMKA RESPONDENT BY : SHRI M.K.SHARMA DATE OF HEARING : 06/02 /2012 DATE OF PRONOUNCEMENT : 10/2 /2012 ORDER PER SHAILENDRA KUAMAR YADAV, J.M, THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13/10/2010 OF CIT,RAIPUR PASSED UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2006-07. 2. THE CIT ON EXAMINATION OF ASSESSMENT RECORD FIN D THAT THE ORDER OF AO WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY NOTICE UNDER SECTION 263 OF T HE ACT DATED ITA NO. 257/BLPR/2010(A.Y.2006-07 ) ) 2 1/05/2009 WAS ISSUED TO THE ASSESSEE. THE CONTENT S OF THE NOTICE IS REPRODUCED AS UNDER: ON EXAMINATION OF YOUR INCOME TAX RECORD FOR THE A BOVE A.YS. 06-07, IT SEEMS THAT THE ORDER PASSED U/S. 14393) D ATED 19/12/2008 IN YOUR CASE BY THE ASSESSING OFFICER I S ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE IN THE FOLLOWING RESPECT:- THE ASSESSEE DERIVES INCOME FROM RICE MILLING AND S ELLING THE PRODUCTS AND BYE-PRODUCTS. BESIDES, THE ASSESSEE A LSO DERIVES INCOME FROM CUSTOM MILLING FOR THE STATE AGENCIES. DURING THE F.Y 2005-06 RELEVANT TO A.Y 06-07 THE ASSESSEE HAS MILLED 96023 QUINTALS OF PADDY WHICH INCLUDED 61000 QUINTA LS OF PADDY RECEIVED FOR CUSTOM MILLING. THE QUANTITATIV E DETAILS OF CUSTOM MILLING HAS NOT BEEN FURNISHED BY THE ASSESS EE. THE SAME HAS BEEN TAKEN FROM THE DETAILS OF RS. 21,35,8 06/- WHICH @ RS. 35/- PER QUINTAL GIVES THE QUANTITY OF CUSTOM MILLING PADDY RECEIVED AT 61023 QUINTALS OF PADDY. THE YIELD OF RICE, BROKEN RICE AND RICE BRAN (KONDA) HAS BEEN SHOWN AT 73.33%. THEREFORE, THERE IS A SHORTAGE OF 26.67% W HICH HAS NEITHER BEEN EXPLAINED BY THE ASSESSEE NOR HAS BEEN ENQUIRED BY THE ASSESSING OFFICER. AFTER EXCLUDING THE SHOR TAGE ON ACCOUNT OF MOISTURE, DUST AND DIRT ETC. AT ABOUT 5% , THE NET UNEXPLAINED SHORTAGE IS 21.67%. THIS REPRESENTS TH E QUANTITY OF HUSK OBTAINED WHICH HAS NOT BEEN DISCLOSED BY TH E ASSESSEE AND ALSO HAS NOT BEEN ENQUIRED BY ASSESSING OFFICE R. THE PREVAILING MARKET RATE OF HUSK DURING THIS YEAR OBT AINED BY THE ASSESSEE WAS RS. 20,80,800/-. THE ASSESSING OF FICER HAS ERRONEOUSLY NOT ASSESSED THE INCOME OF THE ASSESSEE TO THE EXTENT MENTIONED ABOVE. IN VIEW OF THE ABOVE FACTS, IT IS SEEN THAT THE ORD ER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE CIRCUMSTANCES IT HAS B EEN PROPOSED TO TAKE REMEDIAL ACTION U/S. 263. YOU ARE THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY ACTION U/S. 263 S HOULD NOT ITA NO. 257/BLPR/2010(A.Y.2006-07 ) ) 3 BE TAKEN. YOUR CASE IS FIXED FOR HEARING ON 19/08 /2010 AT 3.30 PM IN THE OFFICE OF THE CIT, RAIPUR, AT CENTRA L REVENUE BUILDING, CIVIL LINES. 3. IN RESPONSE TO THE SAME ASSESSEE MADE VARIOUS SU BMISSIONS AND HAVING CONSIDERED THE SUBMISSIONS ON BEHALF OF THE ASSESSEE THE CIT OBSERVED THAT AO IN THE IN INSTANT CASE HAS NOT MADE ANY SYSTEMATIC ENQUIRY ABOUT THE EXTENT OF HUSK WHICH C OULD HAVE BEEN PRODUCED IN THE ASSESSEES MILL DURING THE YEAR AN D TO WHAT EXTENT IT COULD HAVE BEEN USED IN THE BOILER OF THE ASSESS EE MILL. TO THIS EXTENT THE ORDER DATED 19/12/2008 PASSED BY THE A O IN THE INSTANT CASE WAS FOUND TO BE MADE WITHOUT PROPER EN QUIRY. SO THE CIT HELD THAT THE ORDER PASSED BY THE AO IS BOTH ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE DIRECTE D THE AO TO MAKE DETAILED ENQUIRY ABOUT THE QUANTITY OF PRODUCTION O F HUSK BY THE ASSESSEE RICE MILL DURING THE YEAR AND THE EXTENT O F ITS USE IN THE ASSESSEE BOILER AND THE VALUE OF THE BALANCE HUSK PRODUCED SHOULD BE BROUGHT TO TAX. 4. THE LD. A.R SUBMITTED THAT THE CIT WAS NOT JUSTI FIED IN HOLDING THE ORDER OF AO ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE SO AS TO INVOKE PROVISIONS OF SECTION 263 OF THE AC T. THE ORDER OF AO CANNOT BE SUBSTITUTED BY CIT ON THE BASIS OF SUBSTA NTIVE OBSERVATION. THE MAIN OBJECTION OF CIT WAS THAT TH E AO HAS NOT MADE SYSTEMATIC ENQUIRIES. IT SHOWS THAT THE AO HA S MADE ENQUIRIES BUT THEY ARE NOT UPTO THE MARK BEING NOT SYSTEMATIC. ITA NO. 257/BLPR/2010(A.Y.2006-07 ) ) 4 ACCORDING TO LD. A.R THE ENQUIRIES ARE SUBJECTIVE A PPROACH OF AO WHICH CANNOT BE SUBSTITUTED BY CIT UNLESS THERE IS A CLEAR MISTAKE BY AO IN ANY MANNER. THERE IS NOTHING ON RECORD T O SHOW THAT THE ENQUIRIES WERE NOT MADE BY AO. IN THE GARB OF PROV ISIONS OF SECTION 263 OF THE ACT THE CIT CANNOT SUBSTITUTE HIS WAY O F ENQUIRY DONE BY THE AO. THE CIT IS AT LIBERTY TO ENQUIRE PROCE EDINGS UNDER SECTION 263 WHEN THERE IS ABSENCE OF ENQUIRY AT THE END OF AO BUT HE CANNOT INVOKE PROVISIONS OF SECTION 263 OF THE A CT IN THE ABSENCE SYSTEMATIC ENQUIRY AS OBSERVED BY CIT IN THIS CASE. IN THIS VIEW OF THE MATTER THE ORDER OF THE CIT PASSED UNDER SECT ION 263 IS NOT JUSTIFIED AND THE SAME IS HEREBY QUASHED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF FEB. 2012. SD/- SD/- (R.K.PANDA) (SHAI LENDRA KUMAR YADAV)) ACCOUNTANT MEMBER JUDICIA L MEMBER BILASPUR, DATED. 10 TH FEB. 2012 ITA NO. 257/BLPR/2010(A.Y.2006-07 ) ) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R BILASPUR BENCH. (TRUE COPY) BY ORDER SR.PRIVATE SECRETARY, ITAT, BILASPUR BEN CH BILASPUR VM. ITA NO. 257/BLPR/2010(A.Y.2006-07 ) ) 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 6/2/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 7/2/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER