Asstt. Commissioner Of Income Tax, Bareilly V. M/s L.H Sugar Factory Pvt. Ltd., Pilibhit

ITA 416/LKW/2013

• Counselvise Citation: 41623714 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Assessee Lawyers: AKSHAY KUMAR GUPTA
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.416/LKW/2013 ASSESSMENT YEAR:2007-08 ACIT RANGE 2 BAREILLY V. M/S L. H. SUGAR FACTORY PVT. LTD. CIVIL LINES PILIBHIT TAN/PAN:AAACL4597L (APPELLANT) (RESPONDENT) C.O. NO. 25/LKW/2013 [ARISING OUT OF ITA NO.416/LKW/2013] ASSESSMENT YEAR:2007-08 M/S L. H. SUGAR FACTORY PVT. LTD. CIVIL LINES PILIBHIT V. ACIT RANGE 2 BAREILLY TAN/PAN:AAACL4597L (APPLICANT) (RESPONDENT) REVENUE BY: SHRI. HARISH GIDWANI, D.R. ASSESSEE BY: SHRI. AKSHAY KUMAR GUPTA, C.A. DATE OF HEARING: 31 07 2015 DATE OF PRONOUNCEMENT: 16 09 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.10,74,40,604/- MADE BY A.O. ON ACCOUNT OF VALUATION OF STOCK OF SUGAR AT COST INSTEAD OF MARKET VALUE :- 2 -: AND TREATING IT AS INCOME FROM UNDISCLOSED SOURCES. 2. THAT THE ORDER OF LD. CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS.8,80,500/- MADE ON ACCOUNT OF LOSS/SHORTAGE OF SUGARCANE. 3. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS.1,00,000/- AND GRANTING RELIEF OF RS.2,11,522/- MADE BY A.O. ON ACCOUNT OF DISALLOWANCE OF RS.3,11,522/- UNDER THE HEAD MISCELLANEOUS EXPENSES. 4. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS.1,00,000/- AND GRANTING RELIEF OF RS.5,78,000/- WHICH WAS MADE BY THE A.O. UNDER THE HEAD REPAIRS AND MAINTENANCE EXPENSES. 5. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS.81,24,700/- ON ACCOUNT OF SUPPRESSED PRODUCTION AND SALE OF BAGGASSE. 6. THAT THE ORDER OF THE CIT(A) MAY BE CANCELLED AND THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 2. BESIDES SUPPORTING THE ORDER OF THE LD. CIT(A) ON GROUNDS NO.1,2 AND 5, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITIONS MADE ON ACCOUNT OF AD HOC DISALLOWANCES UNDER THE HEAD MISCELLANEOUS EXPENSES AND REPAIR AND MAINTENANCE EXPENSES BY FILING CROSS OBJECTION. 3. SINCE COMMON ISSUES ARE INVOLVED IN THE APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 4. APROPOS GROUND NO.1, IT HAS BEEN CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE INVOLVED IN THIS GROUND IS COVERED BY THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06, IN WHICH IDENTICAL :- 3 -: ISSUE OF ADDITION ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF SUGAR WAS MADE AND THE TRIBUNAL, FOLLOWING ITS ORDER FOR ASSESSMENT YEARS 1999-2000 TO 2004-05 IN THE ASSESSEES OWN CASE, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LD. D.R. DID NOT DISPUTE THESE FACTS. COPY OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06 IS PLACED AT PAGES 30 TO 33 OF THE COMPILATION OF THE ASSESSEE. 5. HAVING CAREFULLY EXAMINED THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06, WE FIND THAT IDENTICAL ISSUE WAS EXAMINED BY THE TRIBUNAL IN THE LIGHT OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 1999-2000 TO 2004-05 AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE AFORESAID REFERRED TO ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE WHEREIN THE RELEVANT FINDING HAS BEEN GIVEN IN PARA 16 TO 19 WHICH READ AS UNDER: '16. IN GROUND NO. 3 OF THE APPEAL(S) FOR ASSESSMENT YEAR 1999-2000 AND 2000-01, GROUND NO. 2 OF THE APPEAL FOR ASSESSMENT YEAR 20001-02 AND THE ONLY GROUND OF APPEAL FOR 2004-05, THE DEPARTMENT HAS DISPUTED THE OF THE LD. CIT(A) IN DELETING ADDITIONS (A) OF RS.2,36,73,436/- FOR ASSESSMENT YEAR 1999-2000, (B) DELETING THE ADDITION OF RS.3,38,82,314/- FOR ASSESSMENT YEAR 2000-01 (C) DELETING THE ADDITION OF RS.1,74,73,203/- FOR ASSESSMENT YEAR 2001-02 AND (D) DELETING THE ADDITION OF RS.2,71,72.,333/- FOR ASSESSMENT YEAR 2004-05, MADE BY THE A.O. ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF SUGAR RELYING ON :- 4 -: THE ORDER OF HIS PREDECESSOR FOR PRECEDING ASSESSMENT YEAR 1998-99. 17. DURING THE COURSE OF HEARING, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSES SUBMITTED THAT THE SAME VERY ISSUE ON SIMILAR FACTS HAD BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSMENT YEARS 1997-98 AND 1998-99 AND SIMILAR ADDITIONS MADE BY THE A.O, AND FURTHER DELETED BY THE LD. CIT (A) HAD BEEN CONSIDERED BY THE TRIBUNAL. HE SUBMITTED THAT THE TRIBUNAL IN ASSESSMENT YEAR 1998-99 HAS CONFIRMED THE ORDER OF THE LD. CIT (A) IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF SUGAR. HE FURNISHED A COPY OF THE SAID ORDER OF THE TRIBUNAL DATED 27.10.2006 IN SUPPORT OF HIS SUBMISSION. 18. HOWEVER, THE LD. D.R. RELIED ON THE ORDER(S) OF THE AUTHORITIES BELOW. 19. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW AS ALSO EARLIER ORDER OF THE TRIBUNAL DATED 27.10.2006. WE OBSERVE THAT THE TRIBUNAL HAS HELD THAT METHOD OF VALUATION ADOPTED BY THE ASSESSES COULD NOT BE DISREGARDED AS ASSESSEE HAS FOLLOWED, HENCEFORTH THE SAID METHOD OF VALUATION CONSISTENTLY. THE METHOD OF VALUATION, ADOPTED BY THE ASSESSEE WAS BONA FIDE. THEREFORE, THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD. CIT (A). SINCE THE DEPARTMENT HAS NOT BROUGHT ANY FACTS TO DISTINGUISH EARLIER ORDER OF THE TRIBUNAL DATED 27.10.2006, WE RESPECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL, UPHOLD THE ORDER(S) OF THE LD. CIT (A) AND REJECT GROUND 3 OF THE APPEALS FOR ASSESSMENT YEARS 1999-2000 AND 2000-01, GROUND OF APPEAL FOR ASSESSMENT YEAR 2004-05. :- 5 -: 6. SO RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 6. SINCE NO CONTRARY FACTS ARE BROUGHT ON RECORD DURING THE COURSE OF HEARING, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, FOLLOWING THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS CONFIRMED. 7. APROPOS GROUND NO.2, IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS CLAIMED SHORTAGE OF 17044 QUINTALS AGAINST SUGARCANE. THE ASSESSING OFFICER HAS COMPARED THE FACTS OF THE CASE WITH KISAN SEHKARI CHINI MILLS, MAJHOLA, KISAN SEHKARI CHINI MILL, PURANPUR AND KISAN SEHKARI CHINI MILL, BISALPUR, WHICH ARE ADJOINING MILLS OF THE ASSESSEE MILL UNDER CONSIDERATION AND ALSO BELONG TO THE SAME DISTRICT, SAME GEOGRAPHICAL AREA AND CLIMATE AND THEY HAVE CLAIMED NO SHORTAGE AGAINST SUGARCANE DURING THE PERIOD UNDER CONSIDERATION. IN THIS BACKGROUND, THE ASSESSEE WAS ASKED TO EXPLAIN THE CIRCUMSTANCES UNDER WHICH SHORTAGE OF 17044 QUINTALS AGAINST SUGARCANE HAS BEEN CLAIMED. IN RESPONSE THERETO, IT WAS CONTENDED THAT SUGARCANE IS A PERISHABLE ITEM AND THE WHOLE QUANTITY WHICH WAS PURCHASED AT CENTERS CANNOT REACH TO THE FACTORY IMMEDIATELY. THEREFORE, SOME QUANTITY OF SUGARCANE IS LOST IN TRANSIT BETWEEN THE CENTRE AND FACTORY. SINCE NO EVIDENCE WAS FILED IN THIS REGARD, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE. HE, HOWEVER, ALLOWED SHORTAGE OF 10,000 QUINTALS AGAINST SUGARCANE AND DISALLOWED THE BALANCE SHORTAGE CLAIMED BY THE ASSESSEE. HE ACCORDINGLY ESTIMATED THE COST OF DISALLOWED SHORTAGE @ RS.125/- PEER QUINTAL AND MADE ADDITION OF RS.8,80,500/-, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE :- 6 -: LD. CIT(A) AND REITERATED ITS CONTENTIONS. IT WAS ALSO CONTENDED THAT SOME FACTORIES DO NOT WEIGH SUGARCANE AT COLLECTION CENTRE, AND THEY JUST WEIGH SUGARCANE AT FACTORY, THEREFORE, IN THOSE CASES THERE WILL NOT BE ANY LOSS DURING THE TRANSIT. IT WAS FURTHER CONTENDED THAT WHEN COLLECTION IS MADE AT FAR FLUNG AND DISTANT CENTERS AND WEIGHMENT IS MADE AT SUCH CENTERS THEN THERE IS LOSS IN TRANSIT AND QUANTITY RECEIVED AT MILL GATE IS LOWER DUE TO CANE GETTING DRIED IN TRANSIT, AND SOME LOST IN TRANSPORTATION. MORE THE DISTANCE, THERE WILL BE MORE CHANCES OF DRIAGE AND LOSS AND IN CASE OF SUNNY DAYS, THERE WILL BE HIGHER DRIAGE. THE DRIAGE IS ONLY 0.16% OF THE TOTAL SUGARCANE PURCHASED IN THE YEAR UNDER CONSIDERATION. IT WAS FURTHER CONTENDED THAT IN ASSESSMENT YEAR 1994- 95, THE CLAIM OF LOSS WAS ALLOWED BY THE LD. CIT(A). 8. THE LD. CIT(A) RE-EXAMINED THE ISSUE IN THE LIGHT OF ASSESSEES CONTENTIONS AND HAS ALLOWED THE ENTIRE SHORTAGE CLAIMED BY THE ASSESSEE. WHILE ALLOWING THE CLAIM OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED IN HIS ORDER THAT BOOK RESULTS HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER AND THE VERY FACT THAT THE ASSESSING OFFICER HAS ALLOWED CREDIT FOR 10,000 QUINTALS PROVE THE FACT THAT THE ASSESSING OFFICER UNDERSTANDS THAT SHORTAGE ACTUALLY HAPPENS. THE REASON FOR SHORTAGE IN ONE FACTORY MAY ACTUALLY DIFFER FROM REASONS FOR SHORTAGE IN THE OTHER. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANYTHING TO JUSTIFY THE ADDITION ON 7044 QUINTALS OF SUGARCANE. 9. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SHORTAGE CLAIMED BY IT. MOREOVER, THIS IS NOT THE FIRST YEAR IN WHICH SUCH TYPE OF LOSS WAS CLAIMED. IF THE LOSS IS GENUINE, IT MIGHT HAVE BEEN CLAIMED IN EARLIER YEARS ALSO, AS THE ASSESSMENT YEAR INVOLVED IS 2007-08, BUT THE ASSESSEE HAS NOT PLACED ANY EVIDENCE ON RECORD WITH REGARD TO ANY CLAIM RAISED BY IT IN THIS REGARD IN EARLIER YEARS. THE :- 7 -: ASSESSING OFFICER HAS TAKEN INTO ACCOUNT THE OTHER CO-OPERATIVE SUGAR MILLS WHICH ARE LOCATED IN THE SAME LOCALITY AND SAME DISTRICT UNDER SAME GEOGRAPHICAL CONDITIONS AND IN THOSE CASES SUCH TYPE OF SUGARCANE LOSS WAS NOT CLAIMED. THEREFORE, IF THE ASSESSEE HAS CLAIMED SOME EXTRAORDINARY LOSS, THE ONUS IS UPON IT TO PLACE THE RELEVANT EVIDENCE ON RECORD. 10. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSEE HAS CLAIMED LOSS ON ACCOUNT OF SHORTAGE OF 17044 QUINTALS AGAINST SUGARCANE. BUT IN SUPPORT OF THIS CONTENTION, NO EVIDENCE WAS FILED. THE ASSESSING OFFICER HAS EXAMINED THE CASES OF OTHER SUGAR MILLS UNDER THE NAMES KISAN SEHKARI CHINI MILLS, MAJHOLA, KISAN SEHKARI CHINI MILL, PURANPUR AND KISAN SEHKARI CHINI MILL, BISALPUR, WHICH ARE ADJOINING TO THE MILL OF THE ASSESSEE AND WERE ALSO LOCATED IN THE SAME DISTRICT HAVING SAME GEOGRAPHICAL AREA AND CLIMATE AND IN THOSE CASES, NO SHORTAGE ON ACCOUNT OF SUGARCANE WAS CLAIMED. THE ASSESSING OFFICER, HOWEVER, ACCEPTED THE CONTENTION OF THE ASSESSEE OF SOME LOSS AND TREATED THE SUGARCANE LOSS OF RS.10,000 QUINTALS AND THE REST WAS DISALLOWED. THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION HAVING OBSERVED THAT THE ASSESSING OFFICER SHOULD HAVE UNDERSTOOD THE FACT OF SHORTAGE ACTUALLY HAPPENED AND THE REASON FOR SHORTAGE IN ONE FACTORY MAY ACTUALLY DIFFER FROM REASONS FOR SHORTAGE IN THE OTHER. DURING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED WITH REGARD TO THE SIMILAR TYPE OF SHORTAGE EVER CLAIMED IN EARLIER YEARS AND IN RESPONSE THERETO, NO DOCUMENTARY EVIDENCE WAS PLACED TO JUSTIFY THAT THE ASSESSEE HAS BEEN FACING SHORTAGE ON ACCOUNT OF SUGARCANE IN EARLIER YEARS ALSO. BEFORE THE LD. CIT(A), HE HAS CONTENDED THAT IN ASSESSMENT YEAR 1994-095 SUCH TYPE OF LOSS WAS ALLOWED, BUT THEREAFTER THE ASSESSMENT WAS FRAMED FOR SO MANY ASSESSMENT YEARS AS THE ASSESSMENT YEAR INVOLVED IS 2007-08, BUT :- 8 -: NO EVIDENCE IS PLACED ON RECORD TO ESTABLISH THAT SIMILAR TYPE OF LOSS WAS CLAIMED IN EARLIER YEARS AND WAS ALSO ALLOWED BY THE REVENUE. SINCE THE ASSESSEE HAS RAISED CLAIM OF LOSS ON ACCOUNT OF SUGARCANE, THE ONUS IS UPON IT TO PROVE IT BY PLACING RELEVANT EVIDENCE, BUT THE ASSESSEE DID NOT PLACE ANY EVIDENCE TO JUSTIFY THE CLAIM. THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE WITHOUT HAVING VERIFIED THE PAST RECORD OF THE ASSESSEE AND ALSO WITHOUT ANY EVIDENCE; WHEREAS THE ASSESSING OFFICER HAS REASONABLY EXAMINED THE LOSS AGAINST SUGARCANE AND ALLOWED IT UPTO 10,000 QUINTALS. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER WHO HAS RESTRICTED THE LOSS ON ACCOUNT OF SUGARCANE AT 10,000 QUINTALS AND THE REST WAS DISALLOWED. HE ACCORDINGLY ESTIMATED THE COST OF EXCESS LOSS CLAIMED AT RS.125/- PER QUINTAL AND MADE ADDITION OF RS.8,80,500/-. IN THIS ADDITION, WE FIND NO INFIRMITY AND WE CONFIRM THE SAME. ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED IN THIS REGARD. 11. APROPOS GROUNDS NO.3 AND 4 RELATE TO THE SUSTENANCE OF ADDITION OF RS.1 LAKH EACH AGAINST DISALLOWANCE UNDER THE HEAD MISCELLANEOUS EXPENSES OF RS.3,11,522/- AND DISALLOWANCE UNDER THE HEAD REPAIR AND MAINTENANCE OF RS6,78,700/-. IN THIS REGARD, IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE UNDER THE HEAD MISCELLANEOUS EXPENSES OF RS.3,11,522/- WHICH IS 2% OF THE TOTAL CLAIM OF RS.1,55,76,116/- HAVING NOTICED THAT THE ASSESSEE HAS NOT KEPT AND MAINTAINED VOUCHERS AGAINST THE EXPENSES CLAIMED UNDER THE HEAD MISCELLANEOUS EXPENSES. 12. SIMILAR IS THE POSITION WITH REGARD TO THE DISALLOWANCE AGAINST REPAIR AND MAINTENANCE, FOR WHICH THE ASSESSING OFFICER HAS DISALLOWED 1% OF THE TOTAL CLAIM OF RS.6,78,70,009/- RESULTING INTO AN ADDITION OF RS.6,78,700/- FOR THE SAME REASON THAT THE ASSESSEE HAS NOT :- 9 -: MAINTAINED VOUCHERS AGAINST EXPENSES CLAIMED UNDER THE HEAD REPAIR AND MAINTENANCE OF BUILDING AND MACHINERY. 13. AGAINST THE DISALLOWANCE, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS RESTRICTED THE SAME TO RS.1 LAKH EACH UNDER BOTH THE HEADS HAVING NOTED THAT THE ADDITIONS WERE MADE ON AD HOC BASIS. 14. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL. ON THIS ISSUE, THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST SUSTENANCE OF ADDITION OF RS.1 LAKH EACH UNDER BOTH THE HEADS. 15. THE LD. COUNSEL FOR THE ASSESSEE, IN THIS REGARD, HAS SUBMITTED THAT THE ADDITION WAS MADE ON AD HOC BASIS WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE MAINTENANCE OF ACCOUNT. WHEREAS THE LD. D.R. HAS CONTENDED THAT THE ASSESSING OFFICER HAS SPECIFICALLY NOTED IN HIS ORDER THAT ALL EXPENSES ARE NOT VERIFIABLE, AS THE ASSESSEE HAS NOT MAINTAINED BILLS AND VOUCHERS. 16. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAS SPECIFICALLY MENTIONED IN HIS ORDER THAT THE EXPENSES, WHICH WERE CLAIMED UNDER BOTH HEADS, ARE NOT SUPPORTED BY BILLS AND VOUCHERS, THEREFORE, ARE NOT OPEN FOR VERIFICATION, BUT THE LD. CIT(A) HAS DELETED THE SAME AFTER REDUCING THE ADDITION TO RS.1 LAKH EACH UNDER BOTH THE HEADS. IT IS ALSO NOTICED FROM THE RECORD THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE MAINTENANCE OF ACCOUNTS. HE MADE GENERAL OBSERVATION, BUT THE ASSESSEE HAS NOT PLACED ANY EVIDENCE ON RECORD TO JUSTIFY THAT ALL EXPENSES CLAIMED BY THE ASSESSEE ARE DULY VOUCHED AND OPEN FOR VERIFICATION. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT SOME ADDITION IS REQUIRED TO BE SUSTAINED AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS :- 10 -: RESTRICTED THE ADDITION TO RS.1 LAKH EACH. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 17. APROPOS GROUND NO.5, IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS NOT DISCLOSED PRODUCTION OF BAGASSE IN QUANTITATIVE DETAILS. HE ACCORDINGLY ASKED THE ASSESSEE TO FURNISH THE DETAILS OF BAGASSE AND FROM THE DETAILS, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE TOTAL BAGASSE WAS PRODUCED AT 34,37,149 QUINTALS OF WHICH PERCENTAGE IS DISCLOSED AT 32.47%. THE ASSESSING OFFICER HAS COMPARED THE CASE OF THE ASSESSEE WITH OTHER SUGAR FACTORIES LIKE KISAN SEHKARI CHINI MILLS, POWAYAN, DISTRICT SHAHJAHANPUR WHEREIN THE DISCLOSED PRODUCTION OF BAGASSE WAS 36 TO 37% OF SUGARCANE CONSUMED. IN THE LIGHT OF THE STATEMENT OF THE CHIEF ENGINEER OF OTHER FACTORIES, THE ASSESSING OFFICER HAS CONSIDERED THE PRODUCTION OF BAGASSE VERY LOW. HE HAS ALSO EXAMINED THE CASE RECORDS OF KISAN SEHKARI CHINI MILLS, MAJHOLA AND FOUND THAT THE SAID FACTORY HAS DISCLOSED PRODUCTION OF BAGASSE @ 34.22% DURING THE PERIOD UNDER CONSIDERATION. HAVING RELIED ON THE PRODUCTION OF BAGASSE BY DIFFERENT OTHER FACTORIES LOCATED IN THE SAME AREA, THE ASSESSING OFFICER HAS ESTIMATED THE PRODUCTION OF BAGASSE IN ASSESSEES CASE AT 34% RESULTING INTO EXCESS BAGASSE OF 1,62,494 QUINTALS. THE ASSESSING OFFICER ALSO OBSERVED THAT IN THE OPEN MARKET THE SALE RATE OF BAGASSE IS MORE THAN RS.50 PER QUINTAL AND ESTIMATED THE VALUE OF BAGASSE AT RS.82,24,700/- (1,62,494 X 50). ACCORDINGLY, THE ADDITION OF RS.81,24,700/- WAS MADE. 18. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT BAGASSE IS A SCRAP WHICH IS LEFT AFTER SUGAR CANE IS CRUSHED TO EXTRACT SUGAR CANE JUICE TO MAKE SUGAR. THE QUANTUM OF BAGGASE IS DEPENDENT ON QUALITY OF SUGARCANE, DRIAGE OF SUGAR CANE BEFORE CRUSHING DUE TO DELAY IN CRUSHING FOR ANY REASONS, EFFICIENCY OF :- 11 -: CRUSHING MACHINERY, EFFICIENCY OF HANDLING OF MATERIAL ETC. IT WAS FURTHER CONTENDED THAT THERE WILL BE HIGHER QUANTITY OF BAGASSE IF THERE IS POOR CRUSHING RESULTING INTO LOWER RECOVERY OF SUGAR. IT WAS ALSO CONTENDED THAT THE ASSESSEES SUGAR MILL IS ONE OF BEST SUGAR MILL IN THE AREA ON STANDARD OF SUGAR RECOVERY. THE RECOVERY OF SUGAR IS ABOUT 1 TO 2% HIGHER THAN OTHER SUGAR MILLS COMPARED BY THE A.O. AND WHEN SUGAR RECOVERY IS BETTER, NATURALLY QUANTITY OF BAGASSE GENERATED WILL BE LOWER. IT WAS FURTHER CONTENDED THAT THE YIELD OF SUGAR/BAGASSE DEPENDS ON VARIOUS FACTORS LIKE EARLY START OF SEASON, MATURITY OF CANE, CLIMATIC CONDITION, LATE CLOSURE OF SEASON, RAIN BEFORE START OF SEASON, POL PERCENTAGE IN CANE, DISEASE IN CROP AND OTHER VARIOUS FACTORS RELATING TO SUGAR CANE. THE FACTORS RELATING TO MANUFACTURING PROCESS ARE ALSO RELEVANT. THE TIME GAP IN SUGAR HARVEST TO SUGAR CRUSHING, TRANSPORTATION PERIOD, WEATHER CONDITIONS AFTER HARVEST OF SUGAR CANE AND DURING TRANSPORTATION AND AT THE TIME WHEN SUGARCANE IS WAITING FOR CRUSHING AT FACTORY ARE ALSO RELEVANT. THE LD. CIT(A) BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, HAS DELETED THE ADDITION MADE ON THIS ACCOUNT. 19. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT BEFORE THE LD. CIT(A) ASSESSEE HAS FURNISHED PERCENTAGE OF YIELD OF SUGAR AND BAGASSE FOR FIVE YEARS IN ITS MILL AND FROM A PERUSAL OF THESE DETAILS, IT APPEARS THAT IN ASSESSMENT YEAR 2008-09 THE YIELD OF SUGAR WAS 9.87% AND BAGASSE WAS ALSO AT 34.27%; WHEREAS IN THE IMPUGNED ASSESSMENT YEAR I.E. 2007-08, THE YIELD OF SUGAR WAS 9.59% AND YIELD OF BAGASSE WAS 32.47%. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT WHENEVER YIELD OF SUGAR IS BETTER, THE YIELD OF BAGASSE WOULD BE LESS IS NOT CORRECT AND SUSTAINABLE, AS IN THE YEAR 2006-07 THE YIELD OF SUGAR WAS OF 9.02% AND YIELD OF BAGASSE WAS 34.29%. IT WAS FURTHER CONTENDED THAT IN KISAN CO-OPERATIVE SUGAR MILL, :- 12 -: THE YIELD OF BAGASSE WAS BETWEEN 32.70% AND 34.03% DURING THE FINANCIAL YEARS 2003-04 TO 2006-07. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY TAKEN THE PERCENTAGE OF YIELD OF BAGASSE AT 34%. 20. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A) BESIDES REITERATING THE CONTENTIONS. 21. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND THE DETAILS AVAILABLE WITH RESPECT TO THE YIELD OF SUGAR AND YIELD OF BAGASSE, IT IS NOTICED THAT THE YIELD OF SUGAR AND YIELD OF BAGASSE VARIES FROM YEAR-TO-YEAR. IT WAS NEVER UNIFORM AND FOR THE SAKE OF REFERENCE, WE EXTRACT THE DETAILS AS UNDER:- ASSTT. YEAR YIELD OF SUGAR YIELD OF BAGASSE 2004-05 9.74% 32.13% 2005-06 9.61% 31.65% 2006-07 9.02% 34.29% 2007-08 9.59% 32.47% 2008-09 9.87% 34.27% 22. FROM THE PERUSAL OF THE ABOVE DETAILS, WE FIND THAT IN ASSESSMENT YEAR 2008-09, THE YIELD OF SUGAR WAS 9.87% AND YIELD OF BAGASSE WAS 34.27% WHEREAS IN THE IMPUGNED ASSESSMENT YEAR 2007-08, THE YIELD OF SUGAR WAS 9.59% AND YIELD OF BAGASSE WAS 32.47%. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT WHENEVER YIELD OF SUGAR IS LESS, YIELD OF BAGASSE WOULD BE MORE IS NOT CORRECT AND NOT SUSTAINABLE, BECAUSE IN THE IMPUGNED ASSESSMENT YEAR, THE YIELD OF SUGAR WAS OF 9.59% AND YIELD OF BAGASSE WAS SHOWN AS 32.47%. BUT IN ASSESSMENT YEAR 2008- 09, THE YIELD OF SUGAR WAS INCREASED AND YIELD OF BAGASSE WAS ALSO INCREASED. SIMILAR IS THE POSITION IN ASSESSMENT YEAR 2006-07 WHEREIN YIELD OF SUGAR WAS 9.02% AND YIELD OF BAGASSE WAS 34.29%. THEREFORE, YIELD OF BAGASSE IS TO BE EXAMINED IN THE LIGHT OF YIELD OF BAGASSE :- 13 -: PRODUCED BY OTHER SUGAR MILLS SITUATED IN THE SAME AREA. THOUGH THE ASSESSEE HAS CLAIMED THAT BAGASSE DEPENDS UPON VARIOUS FACTORS, BUT NO EVIDENCE IS PLACED ON RECORD THAT YIELD OF SUGAR WAS INCREASED FROM 9.59% TO 9.87% BESIDES INCREASING THE YIELD OF BAGASSE FROM 32.47% TO 34.27% IN ASSESSMENT YEAR 2008-09. THEREFORE, THERE IS NO CO-RELATION OF THE PRODUCTION OF YIELD OF SUGAR AND YIELD OF BAGASSE. WHILE ESTIMATING THE YIELD OF BAGASSE, THE ASSESSING OFFICER TOOK COGNIZANCE OF MILLS SITUATED IN THE SURROUNDING AREA. THEREFORE, WE ARE OF THE VIEW THAT WHERE THE ASSESSEE COULD NOT PLACE EVIDENCE BEFORE THE ASSESSING OFFICER WITH RESPECT TO LOW YIELD OF BAGASSE, THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE YIELD OF BAGASSE AS 34% WHEREAS THE ASSESSEE HIMSELF HAS SHOWN YIELD OF BAGASSE AT 34.29% IN ASSESSMENT YEAR 2008- 09. THE LD. CIT(A), WITHOUT TAKING COGNIZANCE OF THESE FACTS, HAS DELETED THE ADDITION MADE ON ACCOUNT OF YIELD OF BAGASSE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 23. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH SEPTEMBER, 2015 JJ:0709 :- 14 -: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR