Pentyala Atchaiah , Chilakaluripet V. ITO, Ward-2(1), Guntur

ITA 37/VIZ/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7787 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P S MURTHY
• Assessee Lawyers: R AMARAJU RAMAIA H
• Keywords: Principle of natural justice
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 37 / VIZ /201 8 (ASST. YEAR : 20 11 - 12 ) PENTYALA ATCHAIH , PROP. : M/S. SRI LAKSHMI AGRO PRODUCTS, D.NO. 15 - 302, PEDA MASJID ROAD , NEAR RAMKRISHNA VIDYALAM, CHILAKALURIPET, GUNTUR DISTRICT. V S . IT O , WARD - 2 , GUNTUR . PAN NO. AINPP 1605 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R AMARAJU RAMAIA H ADV. DEPARTMENT BY : SHRI P.S. MURTHY SR. DR DATE OF HEARING : 26 / 1 2 /201 8 . DATE OF PRONOUNCEMENT : 18 / 0 1 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , GUNTUR , DATED 1 2 /0 1 /201 8 FOR THE ASSESSMENT YEARS 20 11 - 12 . 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE PETITIONER SUBMITS THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) - 1, GUNTUR HAD PASS THE IMPUGNED APPEAL ORDER AGAINST THE PRINCIPLES OF EQUITY AND JUSTICE. 2. THE PETITIONER SUBMITS THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) - 1 GUNTUR HAD PASSED THE IMPUGNED APPEAL 2 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) ORDER WITH A SINGLE HEARING BY NOT GIVING SECOND HEARING TO PRODUCE EVIDENCE BEFORE HIM IS BY VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 3. THE PETITIONER SUBMITS THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) - 1 STATED IN THE APPEAL ORDER GROUND NO.2 AND 3 THE AP PELLANT HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE QUANTITY OF CERTIFIED SEED REFLECTED BY THE ASSESSING OFFICER AT 53,594/ - KGS. WITHOUT FINDING ANY DEFECT IN THE QUANTITY ARRIVED AT BY THE A.O WITH COGENT EVIDENCE, IT IS NOT POSSIBLE TO EXCEPT THE PL EASE. WHEREAS THE LEARNED A.O HAD STATED IN THE ASSESSMENT ORDER IN PAGE NO.4 IMMINENT DATES IN THE NEXT YEAR TILL THE CLOSING STOCKS ARE SOLD TO ARRIVE AT THESE PRICES, THE ASSESSEE HAS BEEN ASKED TO PRODUCE THE NEXT YEAR SALE BILL BOOKS AND ALSO GENERAL LEDGER. THE ASSESSEE PRODUCED ONLY ONE BILL BOOK FROM 3 - 4 - 2011 TOLO - 03 - 2012. THE ASSESSEE STATED THIS BOOK IS THE FIRST BILL BOOK. AS PER THE SALE BILL BOOK BILL NO. 1 ON 03/04/2011 JUTE SOWING SEED RATE PER QTL RS.29/ - ONLY AND ON 06/04/2011 SALE BILL JUT E SEED CERTIFIED SEED RATE PER Q TL IS RS.29.25/ - SAME EVIDENCE OF SALE CONSIDERATION BILLS ALREADY VERIFIED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER. SO THAT COGENT EVIDENCE IS PROVED. 4. THE PETITIONER SUBMITS THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) - 1 STATED IN GROUND NO.4 IN RESPECT OF FOUNDATION SEED. FOUNDATION SEED /BREEDER SEED WILL BE GIVEN TO FARMERS . THE FARMERS WILL GROW TO THE LEVEL OF FOUNDATION SEED (FS) WITH FREE OF COST. IT IS NOT MENT FOR SALE. SO THAT THE VALUE OF FOUNDAT ION SEED IS NIL. AS PER THE A.O S ORDER THE FOUNDATION SEED PURCHASED ON 20/04/2010 FOR RS.45.80 PAISE AND ITS GERMINATION IS ONLY 9 MONTHS FOR THE DATE OF THE PURCHASE . THE A.P.STATE SEED CERTIFICATION AGENCY CERTIFICATION IN FORM II STATED AS 'CERTIFICAT ION IS VALID UP TO A PERIOD OF NINE MONTHS FROM THE DATE OF SEED TESTING PROVIDED THE SEED IS STORED UNDER IDEAL CONDITIONS. USE OF SEED AFTER EXPIRY OF THE VALIDLY PERIOD BY ANY ONE IS ENTIRELY AT HIS RISK AND THE SEED CERTIFICATION AGENCY SHALL NOT BE RE SPONSIBLE TO HIM FOR ANY DAMAGE TO THE SEED. NO ONE SHOULD ACCEPT THE SEED IF THE CERTIFICATION TAG OR SEAL IS ABSENT OR HAS BEEN STAMPEDED WITH. THE PERSON TO WHOM THIS CERTIFICATE IS GRANTED IS ENTITLED FOR A CERTIFICATION TAG FOR EACH CONTAINED IN THE L OT AND SHALL A LLOW THE PROVISIONS FOR LABELING UNDER THE ACT' . 5. THE PETITIONER SUBMITS THAT IN RESPECT OF GROUND NO. 6 COST OR MARKET PRICE WHICHEVER IS LOWER SHOULD BE TAKEN AS THE VALUE OF THE CLOSING STOCK ,WHICH IS AS NET RELEASABLE VALUE 6. THE PETITIONER MAY BE PERMITTED TO FILE IF ANY GROUND TO 3 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) DISPOSED OFF THE APPEAL . 7. THE PETITIONER SUBMITS SET ASIDE THE IMPUGNED ORDER PASSED BY THE CIT AP PEALS GUNTUR - 1 . 3 . THE SUM AND SUBSTANCE OF THE ABOVE GROUNDS RAISED BY THE ASSESSEE IS ONLY RELATES TO VALU ATION OF CLOSING STOCK. 4 . FACTS OF THE CASE IN BRIEF ARE THAT ASSESSEE DEALING IN PURCHASE AND SALE OF S O W ING SEEDS , FILED HIS RETURN OF INCOME BY ADMITTING INCOME OF RS. 4,80,530/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT'). SUBSEQUENTLY, CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE AC T ON 26/02/2014. THE ASSESSEE IS DEALING WITH CERTIFIED SEEDS , LEBELLED SEED S , FOUNDATION SEED S . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT CLOSING STOCK WITH THE ASSESSEE CONSISTING OF THE FOLLOWING VARIETIES OF JUTE SEEDS: - A) CERTIFIED SEED 53,594 KGS. B) LABELLED SEED 3,083 KGS. C) FOUNDATION SEED 6,522 KGS. THE ASSESSING OFFICER HAS A S KED THE ASSESSEE TO PRODUCE THE DETAILS OF THE VALUATION OF CLOSING STOCK OF THE JUTE SEEDS. IN RESPONSE TO THE SHOW - CAUSE ISSUED BY THE ASSESSING OFFICER, A 4 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) LETTER DATED 22/02/2014 WAS FILED BY THE ASSESSEE , WHICH IS REPRODUCED AS UNDER: - I AM IN BUSINESS FIELD SINCE LAST 10 YEARS IN JUTE SEED PROCESSING. THE PURCHASE AND SALES PRICES ARE DEPENDS UPON THE MARKET CONDITIONS AND CONFIRMATIONS FROM SUPPLIERS AND DEALERS. AS ON 31 - 3 - 2011 THE CLOSING STOCK OF JUTE SEED IS 63199 KGS. MY LAST PURCHASES AS ON 27 - 3 - 2011 IS AT RS. 62.50, 61.50 AND 20.00 PER KG. THE LAST SALE PRICES ARE AT RS. 55, 46.85, AND 39.30 PER KG. DUE TO FALL IN MA RKET RATES PRICES ARE COME DOWN TO RS. 20.00 PURCHASE PRICE AND SALE PRICE IS RS.39.30 PER KG . DUE TO MY PAST EXPERIENCE AND THE PREVAILING MARKET CONDITIONS AND EXPECTED FUTURE PRICES ADOPTED THE MARKET VALUE IS RS.32.00. AF TE R D EDUCTING THE PROCESS LOSS AND TRANSPORTATION COST OF 8.08% , THE REALIZABLE VALUE IS TAKEN AS RS.29.25 FOR VALUATION OF CLOSING STOCK. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLAN A TION OF THE ASSESSEE OBSERVED THAT ON VERIFICATION OF THE BILL BOOKS SUBMITTED BY THE ASSESSEE, IT IS NOT IC ED THAT IT CONT AINS THE SALE INVOICE OF LABELLED SHEETS ONLY FROM 03/03/2011 TO 10/03/2012 EXCEPT TWO CERTIFIED SEED INVOICES AS ON 25/ 02/2012 & 01/03/2012 AT 65/ - AND QUANTITY SOLD IN EACH INVOICE IS 21000 KG. THUS, THE TOTAL QUANTITY SOLD IS 42000 KGS AT A PRICE OF 65/ - PER KG. SINCE, THESE RATES ARE IN THE END OF THE YEAR 2011 - 12 , THESE RATES CANNOT BE TAKEN AS REALIZABLE VALUES AS ON 31/03/2011 IN RESPECT OF CERTIFIED SEED S . HENCE, THE ONLY OPTION LEFT TO THE ASSESSING OFFICER IS TO ADOPT THE SALE PRICE OF CERTIFIED SEED IS AT RS. 55/ - AS ON 31/03/2011. THE LAST SALE PRICE PER KG. O F CERTIFIED SEED IS AT RS.55/ - AS ON 31/03/2011 BY WAY OF THREE DIFFERENT INVOICES IN THE 5 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) NAME OF PARAMOUNT ENTERPRISES, CHAGNDA BANDHA AT THE SAME PRICE. HENCE, THIS RATE IS TAKEN FOR VALUATION OF CERTIFIED SEED OF RS. 53,594/ - KGS , WHICH COMES TO RS. 29,47,670/ - . SINCE THE ESTIMATION IS NOT CARRIED ON PURCHASE PRICE , AND THE QUANTITY OF CLOSING STOCK REMAINED AFTER SET OFF OF PROCESS LOSS, AND THE S A LE PRICE WOULD TAKE CARE OF ALL SUCH LOSSES, FREE SAMPLES AND PROFIT MARGINS NO ADJUSTMENT ON ACCOUNT OF PROCESS LOSS NEED TO BE MADE. THE FREIGHT OUTWARDS EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT IS AT RS. 52,784/ - IN RESP ECT OF S A LES OF 8,93,920 KGS. , H ENCE, IT DOES NOT HAVE MUCH DIFFERENCE EXCEPT 0.09 PAISE PER KG. HENCE, THE SAME IS ALSO NOT GIVEN ANY ADJUSTMENT . AS STATED ABOVE, THE VALUE OF CLOSING STOCK OF CERTIFIED SEED AS ON 31/03/2011 IS ARRIVED AT RS. 29,47,670/ - . 5. THE ASSESSING OFFICER HAS OBSERVED IN RESPECT OF CLOSING STOCK OF LEBELLED SEED OF 3083 KGS, IT IS NOTICED FROM THE BILL BOOK OF THE YEAR 2011 - 12, THE FIRST SALES INVOICE MADE AS ON 03/04/2011 AT 29/ - IN RESPECT OF 16320/ - PER KGS. SINCE, THE SAID SALES QUANTITY COVERS THE ENTIRE QUANTITY OF LABELLED SEED CLOSING STOCK, THIS RATE OF RS. 29/ - IS ADOPTED AS REALIZABLE VALUE PER KG. HENCE, THE VALUE OF 3083 KGS. OF LABELLED SEED IS VALUED AT RS.89,407/ - . 6 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) 6. INSOFAR AS FOUNDATION SEEDS , CLOSING STOCK VALUE OF 6,522 KGS. , THE ASSESSING OFFICER HAS O BSERVED THAT THERE IS NO SALE INVOICES AVAILABLE IN THE FINANCIAL YEAR 2011 - 12 . MOREOVER, THE FOUNDATION SEEDS WERE PURCHASED ONLY ON ONE DAY ON 20/04/2010 DURING THE YEAR AND ALSO SALES WERE FROM 08/06/2010 TO 22/09/2010. THE LAST PURCHASE PRICE AS ON 20/04/2010 IS AT RS.45.80 PER KG. AND LAST SALE PRICE AS ON 05/09/ 2010 PER KG. IS AT RS. 125/ - . HENCE, THE SALE PRICE ON 05/09/2010 CANNOT BE TAKEN AS THE REALIZABLE VALUE AS ON 31/03/2011. IN VIEW OF THIS, THE AVERAGE SALE PRICE OF THE FOUNDATION SEED IN THE YEAR COMES TO RS.111/ - PER KG. ACCORDINGLY, HE VALUED THE CLOSING STOCK AT RS.7,23,942/ - (6522 KG S . X RS. 111) . ACCORDINGLY, HE HAS COMPLETED THE ASSESSMENT . 7 . BEFORE THE LD. CIT(A), THE ASSESSEE HAS RAISED AN OBJECTION THAT THE ASSESSING OFFICER HAS WRONGLY CALCULATED THE CLOSING STOCK WHICH IS NOT AT ALL SUBMITTED BY THE ASSESSEE. FROM THE ASSESSMENT ORDER IT IS VERY CLEAR THAT THE ASSESSING OFFICER HAS TAKEN THE CLOSING STOCK AS PER 3CD REPORT . THE ASSESSING OFFICER HAS QUANTIFIED THE OPENING STOCK AND THE SAME IS DISCUSSED IN THE ASSESSMENT ORDER AT PAGE NO.2 . BEFORE THE LD. CIT(A) THE ASSESSEE HAS NOT FILED ANY QUANTITATIVE BREAKAGE, THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. EVEN BEFORE US THE 7 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) ASSESSEE HAS NOT POINTED OUT ANY MISTAKE IN RESPECT OF QUANTITATIVE DETAILS FOUND BY THE ASSESSING OFFICER AS DISCUSSED AT T HE PAGE NO.2 OF THE ASSESSMENT ORDER. THEREFORE, WE FIND NO REASON TO INTE RFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS GROUND. HENCE, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 8 . THE ASSESSEE HAS RAISED ONE MORE OBJECTION BEFORE THE LD.CIT(A) THAT HE HAS NOT PURCHASED ANY LEBELLED SEED FROM 01/04/2011 TO 0 3/04/2011. T HE ASSESSING OFFICER MENTIONING SALE OF 16320 KGS . OF LABELLED SEED WHEN THE CLOSING STOCK AS ON 31/03/2011 AS PER THE ASSESSING OFFICER WAS ONLY 3083 KGS AND SUBMITTED THAT THE EXCESS QUANTITY TAKEN BY TH E ASSESSING OFFICER MAY BE RELATES TO CERTIFIED S EED . THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE LD. CIT(A), T HEREFORE, THE SAME IS DISMISSED . EVEN BEFORE US, THE ASSESSEE HAS NOT FILED ANY EVIDENCE , T HEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS OBJECTION. 9 . ONE MORE OBJECTION RAISED BY THE ASSESSEE IN RESPECT OF FOUNDATION SEED THAT THE RATE ADOPTED BY THE ASSESSEE AT RS.111 / - IS NOT CORRECT. THE LD. CIT(A) CONSIDERED THE SAME AND OBSERVED AS UNDER: - 8 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) THE APPELLANT CONTENDS THAT HE HAS NOT PURCHASED THE LABELLED SEEDS FROM 01 - 04 - 2011 TO 03 - 04 - 2011. THE ASSESSING OFFICER MENTIONING SALE OF 16,320 KGS OF LABELLED SEEDS WHEN THE CLOSING STOCK AS ON 31 - 03 - 2011 AS PER THE ASSESSING OFFICER WAS ONLY 3083 KGS. THE APPELLANT CONTENDS THAT THE EXCESS QUANTITY TAKEN MAY BE RELATES TO CERTIFIED SEEDS . IN THIS REGARD , THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE QUANTITY OF CERTIFIED SEEDS REFLECTED BY THE ASSESSING OFFICER AT 53,594 KGS. WITHOUT FINDING ANY DEFECT IN THE QUANTITY ARRIVED AT BY THE ASSESSING OFFICER WITH COGENT EVIDENCE, IT IS NOT POSSIBLE TO EXCEPT THE PLEA. THE ASSESSING OFFICER HAS CORRECTLY ARRIVED AT QUANTITY AND WITH DUE DILIGENCE WORKED OUT THE AVERAGE PRICE. HENCE, THESE GROUNDS OF APPEAL ARE DISMISSED. 10 . WE HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A) AND FIND THAT LD. CIT(A) HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND MODIFIED THE ORDER OF THE ASSESSING OFFICER AND CONSIDERED THE PURCHASE PRICE OF FOUNDATION SEED ON 20/04/2010 AT RS. 45.80 PAISE AND DIRECTED THE ASSESSING OFFICER TO ADOPT THE SAME . WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS OBJECTION . 11 . THE ASSESSEE HAS ALSO RAISED ONE MORE O BJECTION BEFORE THE LD. CIT(A) THAT THE ASSESSING OFFICER OUGHT TO HAVE BEEN ADOPTED THE COST OR MARKET PRICE WHICHEVER IS LOWER SHOULD BE TAKEN AS THE VALUE OF THE CLOSING STOCK CANNOT BE ACCEPTED . THE LD. CIT(A) CONSIDERED THE SAME AND OBSERVED THAT THE ASSESSEE HIMSELF STATED THAT THE VALUE IS WORKED OUT NET REALIZABLE METHOD. THEREFORE, THE ARGUMENT OF THE ASSESSEE HAS NO BASIS. WE FIND NO 9 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS OBJECTION . 12 . BEFORE THE LD. CIT(A), ONE MORE OBJECTION RAISED BY THE ASSESSEE IS THAT GERMINATION CREATE OF THE SEEDS IS ONLY 9 MONTHS FROM THE ISSUE OF CERTIFICATES , HENCE, TAKING THE VALUE BY THE ASSESSING OFFICER BEYOND 9 MONTHS IS NOT CORRECT . THE LD. CIT(A) HAS CONSIDERED THE OBJECTION RAISED BY THE ASSESSEE AND FOUND THAT ASSESSEE HAS NOT FILED ANY EVIDENCE IN RESPECT OF HIS OBJECTION, THEREFORE , LD. CIT(A) HAS DISMISSED THE SAME. BEFORE US ALSO NO EVIDENCE IS FILED, THEREFORE, SAME IS DISMISSED. THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF ACIT VS. PRABHAT AGRI BIOTECH LTD . [2015 (9) TMI 640 ITAT, HYDERABAD] HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 1 3 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 8 T H DAY OF JAN . , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 8 T H JAN . , 201 9 . VR/ - 10 ITA NO. 37 /VIZ/2018 ( PENTYALA ATCHAIAH ) COPY TO: 1. THE ASSESSEE PENTYALA ATCHAIH, PROP. : M/S. SRI LAKSHMI AGRO PRODUCTS, D.NO. 15 - 302, PEDA MASJID ROAD, NEAR RAMKRISHNA VIDYALAM, CHILAKALURIPET, GUNTUR DISTRICT. 2. THE REVENUE ITO, WARD - 2, GUNTUR. 3. THE PR. CIT , GUNTUR. 4. THE CIT(A) - 1, GUNTUR. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.