ITO Ward-1, V. Shiv Rice & General Mills,

ITA 2724/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8104 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-06-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 18-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE HONBLE SR. VICE PRESIDENT SHRI R.P. GARG A ND HONBLE JUDICIAL MEMBER, SHRI RAJPAL YADAV ITA NO.2724/DEL./2008 (ASSESSMENT YEAR : 2005-06) ITO, WARD 1, VS. M/S SHIV RICE & GENERAL MILLS, SONEPAT VILL. KHANDRAI, TEH.GOHANA, DISTT. SONEPAT. (PAN/GIR NO.AADFS1397K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGGARWAL, ADV. REVENUE BY : SHRI KISHORE B., SR.DR ORDER PER R.P. GARG, SR.VP THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) FOR 2005-06. THE FOLLOWING TH REE GROUNDS ARE RAISED IN THIS APPEAL: 1. ON FACTS AND IN THE CIRCUMSTANCES, THE LD.CIT(A ) HAS ERRED IN LAW AND FACTS IN REDUCING THE YIELD OF RICE FROM 72% TO 70% , IGNORING THE FACTS THAT HE HAS INCLUDED THE YIELD OF BROKEN RICE IN THE YIE LD OF RICE. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) HAS ERRED IN LAW AND FACTS IN REDUCING THE ADDITION FROM RS.6031 1 TO RS.5019 IGNORING THE FACT THAT ONLY ONE REQUISITION SLIP WAS ISSUED BY THE PETROL PUMP AND NOT BY THE CUSTOMER. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) HAS ERRED IN LAW AND FACTS IN ACCEPTING THE LOSS DECLARED BY THE ASS ESSEE AMOUNTING TO RS.22,60,357 ARRIVED AT ON THE BASIS OF HIS BOOKS O F ACCOUNTS WHICH HAVE ALREADY BEEN REJECTED BY THE ASSESSING OFFICER AND ACCEPTED BY THE LD.CIT(A) IN HIS ORDER. 2 AS REGARDS THE FIRST GROUND, THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAD SHOWN THE YIELD OF 65% WHICH ACCORDING TO THE ASSES SING OFFICER SHOULD HAVE BEEN 72%. HE ALSO REFERRED TO VOLUME III OF INVESTIGATION OF ACCOUNTS PUBLISHED BY THE DIRECTORATE ITA NO.2724/DEL./2008 (A.Y. : 2005-06) 2 OF PUBLICATIONS, NEW DELHI, ACCORDING TO WHICH THE YIELD IN RESPECT OF RICE IS SHOWN AT 70%. THE ASSESSING OFFICER, HOWEVER, ADOPTED THE R ATE OF 72% AND MADE AN ADDITION OF RS.23,70,693. THE COMMISSIONER OF INCOME-TAX (APPE ALS) RESTRICTED THE ADDITION TO 70% YIELD AS GIVEN IN THE VOLUME III OF INVESTIGATION O F ACCOUNTS PUBLISHED BY THE DIRECTORATE OF PUBLICATIONS, NEW DELHI BY OBSERVING IN PARA.6.2 AS UNDER: 6.2 THE ISSUE INVOLVED AND THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED. THE CASE LAWS REFERRED TO BY THE APPEL LANT ARE NOT RELEVANT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES INVOLVED IN THE CA SE; THE RATIO OF THESE CASE LAWS IS APPLICABLE WHERE BOOKS OF ACCOUNTS ARE MAINTAINE D BY AN ASSESSEE AND ARE DULY AUDITED AND THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS; IN THE APPELLANTS CASE A SURVEY WAS CONDUCTED, DIFFERENCE IN STOCK WAS FOUND AND THE APPELLANT HAS HIMSELF SURRENDERED MORE THAN RS.25 L ACS TO COVER UP THE DEFICIENCIES IN ITS BOOKS OF ACCOUNTS; THEREFORE, T HE BOOKS OF ACCOUNTS CAN NOT BE RELIED UPON. IT IS FURTHER BEING NOTED THAT THE AS SESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS IN PARA.5 OF THE ASSESSMENT ORDER AFTER TAKING INTO ACCOUNT THE PROFITABILITY AND YIELD ETC. DECLARED BY THE APPELL ANT. IN VIEW OF THE AFORESAID THE BOOKS OF ACCOUNTS ARE HELD TO BE NOT RELIABLE AND S HOWING TRUE PROFITS EVEN AFTER THE SURVEY OPERATION. THE SAME ARE HELD AS REJECTE D. SINCE THE RESULTS DECLARED BY THE APPELLANT HAVE BEEN REJECTED AND A YIELD RATE I S REQUIRED TO BE APPLIED, SOME BASIS HAS TO BE FOUND FOR APPLYING THE SAME. THE AS SESSING OFFICER HAS RELIED UPON VOL.III OF INVESTIGATION OF ACCOUNTS PUBLISHED BY THE DIRECTORATE OF PUBLICATIONS, NEW DELHI, WHICH ACCORDING TO THE ASS ESSING OFFICER SHOWS YIELD @ 70% IN RESPECT OF RICE; IT IS NOT CLEAR THEN HOW DI D THE ASSESSING OFFICER APPLIED THE RATE OF 72%. THE YIELD IS RESTRICTED TO 70% THE REOF. APPLYING 70% ON THE QUANTITY MILLED I.E. 28320.620 QTLS. (19824.443-184 08.330) WHICH EVALUATES TO RS.16,93,377/-, AFTER APPLYING A RATE OF RS.1195.80 PER QTL., AS ADOPTED BY THE ASSESSING OFFICER. THE ADDITION WORKS OUT TO RS.16 93377. THE SAME IS CONFIRMED TO THIS EXTENT. THE GROUND OF APPEAL IS PARTLY ALLOWED. 3. WE HAVE HEARD THE PARTIES AND CONSIDERED THE RIV AL SUBMISSIONS. THERE IS NOTHING IN THE ASSESSMENT ORDER AS TO HOW THE 72% RATE WAS ADOPTED BY THE ASSESSING OFFICER. THERE IS NO BASIS FOR THAT. THE COMMISSIONER OF IN COME-TAX (APPEALS), IN OUR OPINION, WAS JUSTIFIED IN RESTRICTING THE ADDITION @ 70% OF THE YIELD AND, THEREFORE, HIS ORDER DOES NOT CALL FOR ANY INTERFERENCE. IT IS ACCORDINGLY U PHELD. 4. AS REGARDS GROUND NO.2, THE ASSESSING OFFICER DI SALLOWED A SUM OF RS.60,311 BY OBSERVING THAT THE ASSESSEE HAD SUBMITTED FICTITIOU S BILL OF DIESEL AS EXPENSES. THE TWO BILLS ARE MENTIONED BY THE ASSESSING OFFICER ARE - (1) BILL NO.14316 ISSUED BY M/S CHANDAN SERVICE STATION, GOHANA ON 22.9.2004 AND TH E OTHER IS BILL NO.14992 ISSUED ON ITA NO.2724/DEL./2008 (A.Y. : 2005-06) 3 22.3.2005. THE ASSESSEE SUBMITTED THAT THE ALLEGED BILL NO.14316 WAS NOT A BILL, BUT A REQUISITION SLIP FOR THE SUPPLY OF 750 LTRS. OF DIE SEL. IT WAS ACTUALLY BILL NO.9542 DATED 22.9.2004. AS REGARDS OTHER BILL NO.14292 DATED 22 .3.2005, DIESEL OF 590 LTRS. WAS SUPPLIED TO THE ASSESSEE. THE COMMISSIONER OF INCO ME-TAX (APPEALS), THEREFORE, RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS.501 9 FOR WHICH BILLS WERE NOT PRODUCED BY THE ASSESSEE. 5. AFTER HEARING THE PARTIES, WE DO NOT FIND ANY RE ASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS THE DIE SEL WAS SUPPLIED TO THE ASSESSEE AND THERE IS NO RECORD TO HOLD THAT THESE WERE FICTITIO US BILLS AS OBSERVED BY THE ASSESSING OFFICER. 6. AS REGARDS GROUND NO.3, WE FIND THAT THE ASSESSE E HIMSELF HAD SHOWN THE NET INCOME OF RS.2,40,958, AFTER CONSIDERING THE SURRE NDERED AMOUNT OF RS.25,01,316 AT THE TIME OF SURVEY AGAINST THE LOSS DECLARED IN THE P&L A/C OF RS.22,60,358. IN THE CIRCUMSTANCES, THE ACCEPTANCE OF LOSS AT RS.22,60,3 58 AS ALLEGED IN THE GROUND HAS NO MEANING. THE INCOME OF THE ASSESSEE HAS BEEN COMPU TED ON THE BASIS OF NET ASSESSABLE AS PER THE RETURN OF RS.2,40,958 IN THE LOSS OF RS.22, 60,358. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS GROUND IS UPHELD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. 8. ORDER PRONOUNCED IN OPEN COURT ON 25.06.2009. (RAJPAL YADAV) (R.P. GARG) JUDICIAL MEMBER SR. VICE PRESIDENT DATED: JULY 08, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), ROHTAK. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT ITA NO.2724/DEL./2008 (A.Y. : 2005-06) 4