M/s Radico Khaitan Ltd., Delhi V. DCIT, New Delhi

ITA 4358/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4204 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2015
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 6773/DEL/2015 ASSESSMENT YEAR: 2008-09 ITA NO. 4356/DEL/2015 ASSESSMENT YEAR:2009-10 ITA NO. 4357/DEL/2015 ASSESSMENT YEAR 2010-11 ITA NO. 4358/DEL/2015 ASSESSMENT YEAR: 2011-12 RADICO KHAITAN LTD., PLOT, J - 1/B-1, MOHAN CO-OP, INDUSTRIAL AREA, MATHURA ROAD, DELHI VS. DCIT, CENTRAL CIRCLE-31, NEW DELHI TAN/PAN: AAACA2513K (APP ELL ANT) (RE SPONDENT) A PP ELL ANT BY: SH . AJAY VOHRA, SR. ADV, SH. GAURAV JAIN, ADV & MS. MANISHA SHARMA, ADV RESPONDENT BY: SMT. SULEKHA VERMA, CIT DR DATE OF HEARING: 20 08 2019 DATE OF PRONOUNCEMENT: 23 08 2019 O R D E R PERSE PAVAN KUMAR GADALE, J.M.: THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF CIT(A)-30, NEW DELHI PASSED UNDER SECTION 153(A) AN D 250 OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2008-09. WHEREAS THE ASSESSEE ALSO FILED AN APPEAL AGAINST COMMON OR DER OF THE THE LD. CIT(A)-30 FOR THE ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 PERUSED UNDER SECTION 153A R.W.S. 143(3 ) AND SECTION 250 OF THE INCOME TAX ACT. 2. SINCE ALL THESE APPEALS ARE FILED BY THE ASSESSE E AGAINST THE ORDERS OF CIT(A), WHERE THE ISSUES ARE COMMON A ND IDENTICAL AND HENCE FOR THE SAKE OF CONVENIENCE THE Y ARE CLUBBED AND ARE HEARD TOGETHER AND COMMON CONSOLIDA TED ORDER IS PASSED. WHEREAS THE GROUNDS OF APPEAL IN P ARA 1 TO 1.3 ARE FOR THE ASSESSMENT YEAR 2008-09 ASSESSMENT YEAR 2009- 10, ASSESSMENT YEAR 2010-11 AND WHEREAS IN ASSESSME NT YEAR 2011-12 ASSESSEE HAS RAISED THE GROUNDS SIMILAR TO EARLIER YEARS PARA 1 TO 1.3 AND ALSO OTHER GROUNDS OF APPE AL 2 TO 2.2. THEREFORE, FOR THE SAKE OF CONVENIENCE, WE SHALL TA KE UP THE ASSESSEE APPEAL ITA NO. 4356/DEL/2015, FOR ASSESSME NT YEAR 2009-10 AND FACTS NARRATED. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE COMMISSIONER OF INCOME-TAX (A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE NOTIONAL ADDITION OF RS.36,29,637/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF ALLEGED SUPPRESSION OF INCOME FROM SALE OF WASTAGE. 1.1. THAT THE COMMISSIONER OF INCOME-TAX (A) ERRED ON F ACTS AND IN LAW IN CONFIRMING THE AFORESAID ADDITION, WITHOUT APPRECIATING THAT THE A SSESSING OFFICER HAD FAILED TO BRING ON RECORD ANY EVIDENCE TO PROVE THAT THE APPELLANT HAD RECEIVED ANY AMOUNT IN EXCESS OF THE DECLARED VALUE OF SCRAP. 1.2. THAT THE COMMISSIONER OF INCOME-TAX (A) ERRED ON F ACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSING OFFICER ENHANCED TH E RATE FOR SALE OF CATTLE FODDER BY RS.0.09 PER KG PURELY ON BASIS OF ESTIMATE, BY RELY ING ON EX-PARTE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER, WITHOUT SHARING THE RESUL T OF THE ENQUIRY CONDUCTED WITH THE APPELLANT AND WITHOUT POINTING OUT ANY DEFECTS IN T HE BOOKS OF ACCOUNT OF THE APPELLANT. 1.3. THAT THE COMMISSIONER OF INCOME-TAX (A) ERRED ON F ACTS AND IN LAW IN NOT APPRECIATING THAT THE VOLUNTARY DISCLOSURE OF ADDIT IONAL INCOME TOWARDS SALE OF WASTAGE IN THE STATEMENT UNDER SECTION 132(4), WITH OUT ANY INCRIMINATING MATERIAL FOUND IN SEARCH WAS SOLELY TO AVOID PROTRACTED LITI GATION AND COULD NOT LEAD TO THE CONCLUSION THAT THE APPELLANT HAD SUPPRESSED THE SA LE PRICE OR WAS MAKING SALES OUTSIDE BOOKS, OVER AND ABOVE THE AMOUNT SURRENDERE D FOR TAX IN THE RETURN FILED UNDER SECTION 153A OF THE ACT. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF S PRITS, COUNTRY LIQUOR, ALCOHOL AND IMFL AND ALSO GENERATIN G POWER BY USING BIO GAS FOR HIS CAPTIVE CONSUMPTION AND FILED THE RETURN OF INCOME ON 30.09.2009 WITH TOTAL INCOME NIL. A SE ARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED ON THE KHAITAN GROUP OF CASES INCLUDI NG THE ASSESSEE ON 15.2.2011 AND NOTICE UNDER SECTION 153A WAS ISSUED ON 21.2.2012 FOR THE ASSESSMENT YEAR 2009-10 . IN RESPONSE THE ASSESSEE FILED RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS. NIL WITH THE LOSS OF RS. 37,77,45,435 /- AND NOTICE UNDER SECTION 142(1) ALONGWITH QUESTIONNAIRE ISSUED. IN COMPLIANCE THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE DETAILS. THE ASSESSING OFFICER C ALLED FOR THE CLARIFICATIONS ON WASTAGE SALE BEING THE CATTLE FOD DER BY LETTER DATED 8.5.2013 TO EXPLAIN METHOD OF ACCOUNTING OF W ASTE GENERATED IN DIFFERENT PLANTS AND BASIS OF ARRIVING OF GENERATED WASTE SALE WITH QUANTITY AND LEDGER ACCOUNT REFLECT ING IN THE BOOKS OF ACCOUNTS. WHEREAS THE ASSESSEE FILED SUBMI SSIONS ON 14.5.2013 REFERRED A PARA 3.2 OF THE ASSESSMENT ORD ER. THE ASSESSEE HAS SUBMITTED THAT ASSESSEE HAS DISCLOSED A SUM OF RS. 1,61,31,720/- IN THE PRESENT YEAR TOWARDS THE S ALE OF THE WASTAGE WHEREAS THE ASSESSING OFFICER BASED ON THE SUBMISSIONS AND THE MATERIAL ON RECORD OBSERVED THA T THE ASSESSEE HAS SOLD THE WASTAGE GENERATED IN THE FORM OF ORGANIC MANURE 40329300 KG FROM 1.4.2008 TO 31.3.2009 AND DISCLOSED IN THE BOOKS OF ACCOUNTS @ 0.73 PER KG WI TH THE INCOME OF RS. 2,92,62,271/-. WHEREAS THE ASSESSEE I N THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE IN COME TAX ACT HAS DISCLOSED ADDITIONAL AMOUNT OF RS. 1,61,31, 720/- TOWARDS WASTAGE SALE AND THE VALUE MENTIONED AT RS. 1.13 PER KG AGAINST EARLIER 0.73 PER KG. THE AO OBSERVED THA T THERE IS A DIFFERENCE IN RATE AS PER THE BOOKS AND THE RATE CO NDUCTED FOR COMPUTATION OF INCOME AND FILING OF RETURN OF INCOM E UNDER SECTION 153A OF THE ACT. 4. THE AO FURTHER MADE OBSERVATIONS ON THE SEARCH PROCEEDINGS BY THE DDIT(INVESTIGATION) AND FOUND TH AT THE ASSESSEE WAS NOT DISCLOSING THE FULL AND TRUE SALE OF VALUE OF WASTE GENERATED DURING THE PRODUCTION OF IMFL AND W AS BEING SOLD OUTSIDE THE BOOKS OF ACCOUNTS. THE AO ON THE I NFORMATION OF FEW DISTILLERIES OF U.P. REGION CONSIDERED THE M ARKET VALUE OF WASTAGE AND ALSO THE CALCULATIONS MADE BY THE ASSES SEE @ 1.13 PER KG WHEREAS AO FOUND OTHER DISTILLERIES RATE IS 1.22 PER KG. HENCE, THE AO MADE AN ADDITION ON THE DIFFERENCE IN SALE VALUE OF WASTAGES NOT CREDITED IN THE BOOKS OF ACCOUNTS R S. 36,29,637/- AND WITH OTHER ADDITIONS ASSESSED THE I NCOME OF RS. 37,22,74,271/- AND PASSED THE ORDER UNDER SECTI ON 153A OF THE ACT ON 3.6.2013. 5. AGGRIEVED BY THE ORDER THE ASSESSEE FILED AN APP EAL WITH THE CIT(A) WHERE THE CIT(A) CONSIDERING THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF THE ASSESSEE REFERRED IN THE ORDER ON THE ADDITION OF SALE OF WASTAGES HAS CONFIRMED THE AOS ADDITION AND PARTLY ALLOWED THE APPEAL BY GRANTING RELIEF IN OTHER ADDITIONS. AGGRIEVED BY THE ORDER CIT(A), THE ASSESSEE HAS FILED THE APPEAL WITH THE TRIBUNAL. 6. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION ON ACCO UNT OF WASTAGES OF SALE PRODUCTS AND WHERE THE AO HAS CALC ULATED THE DISALLOWANCE OF RS. 36,29,637/- WITHOUT ANY BASIS. FURTHER THE AO HAS CONSIDERED THE RATE @ 1.22 PER KG WITHOUT EV IDENCE AND COULD NOT GET ANY COMPARABLE CASE IN THIS REGARD. T HE LD. AR SUBSTANTIATES HIS ARGUMENTS WITH THE MATERIAL PAPER S IN SUPPORT OF THE CLAIM MADE IN THE BOOKS OF ACCOUNTS. FURTHER THE LD. AR ARGUED THAT NO INCRIMINATING DOCUMENTS P ERTAINING TO THE ASSESSEE WERE FOUND AND SIMILARLY MADE SUBMI SSIONS FOR OTHER ASSESSMENT YEARS. THE LD. AR CONTENTION THAT BASIS FOR ADOPTION OF RATE BY THE ASSESSING AUTHORITY IS WITH OUT ANY DOCUMENTARY EVIDENCE VALUE AND THE LD. AR HAS RESTR ICTED HIS ARGUMENTS TO THE EXTENT OF THE GROUND OF APPEAL ONL Y AND FILED PAPER BOOKS TO SUBSTANTIATE CLAIM. 7. CONTRA THE LD. DR RELIED ON THE ORDER OF THE CIT (A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ENQUI RIES IN RESPECT OF ADOPTING THE RATE OF WASTAGE SALE OF CAT TLE FIELD FROM THE OTHER DISTILLERIES. THE ASSESSEE THOUGH CONSIDE RED THE RATE AT 0.73 PER KG IN THE BOOKS OF ACCOUNT BUT AT THE T IME OF FILING RETURN OF INCOME UNDER SECTION 153A OF THE ACT HAS ADOPTED RATE OF RS. 1.13 PER KG AND THERE ARE NO CLARIFICAT IONS WERE FILED FOR THE HIGHER RATE WAS ADOPTED. FURTHER ASSESSEE H AS BEEN INCREASING THE VALUE OF WASTAGE SALE OF CATTLE FODD ER EVERY YEAR AND SUPPORTED THE ARGUMENTS WITH THE WRITTEN SUBMIS SIONS AND PRAYED FOR DISMISSAL OF ASSESSEE APPEAL. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SOLE MATRIX OF THE DISPUTED ISS UE ENVISAGED BY THE LD. AR THAT THE RATE ADOPTED BY THE ASSESSIN G OFFICER AT 1.22 PER KG IS WITHOUT ANY BASIS. THE LD. AR REFERR ED TO THE PAPER BOOK AT PAGES 323, 324 WHERE THE GENERATION O F WASTE PROCESS HAS BEEN EXPLAINED. WHEREAS THE AO TREATED THE WASTE GENERATED AS CATTLE FODDER AND HAS ADOPTED THE STA TIC RATE CONSIDERING THE PREVAILING RATE OF WASTAGE GENERATE D IN THE ORGANIC MANURE ON IDENTICAL PRODUCTS IN THE RELEVAN T PERIOD AND WHEREAS THE ASSESSEES MAIN PRODUCTION PLANT IS SITUATED AT RAMPUR, U.P. AND AO BASED ON THE ENQUIRIES ADOPT ED THE RATE OF 1.22 PER KG. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE IN ORDER TO BUY PIECE WITH THE DEPARTMENT HAS INCREASED THE RATE OF WASTAGE TO 1.13 PER KG AND TO AVOID LITIGATION WHEREAS THE AO HAS ADOPTED 1.22 PER KG W ITHOUT ANY EVIDENCE AND THERE IS NO CLARITY IN RESPECT OF THE NATURE OF THE WASTAGE PRODUCED. THE LD. AR REFERRED TO THE PAGE 2 92 OF PAPER BOOK IN RESPECT OF THE VALUE OF WASTAGE SALE. THE CONTENTION OF THE LD. AR THAT THE CATTLE FODDER IS SOLD AT THE FA CTORY PREMISES AND THE ASSESSEE IS NOT INCURRING ANY OTHER EXPENDI TURE AND SUPPORTED WITH SUBMISSIONS. 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. WE FIND THE SUBMISSIONS OF THE LD. AR A RE DULY SUPPORTED WITH FACTS AND THE RATE ADOPTED BY THE AS SESSEE FOR THE SAID ASSESSMENT YEAR IN FILING THE RETURN FILED UNDER SECTION 153A WAS ONLY TO BUY PEACE. WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING AUTHORITY THOUGH ADOPTED THE RATE AT 1.22 PER KG BY GENERAL ENQUIRIES BUT THERE IS NO CONCRETE PROOF IN SUPPORT OF RATE AT 1.22 PER KG. IN THE PRE SENT CASE, THE ASSESSEE HAS CONSIDERED THE RATE OF WASTAGE SALE GE NERATED @ 0.73 PER KG IN THE BOOKS OF ACCOUNTS BUT WHEREAS AT THE TIME OF FILING OF RETURN OF INCOME UNDER SECTION 153A THAT ASSESSEE HAS ADOPTED RATE 1.13 PER KG. THE LD. AR ENVISAGED THAT TO BUY PEACE THE ASSESSEE HAS ENHANCED THE RATE BY 0.40 P ER KG AND DISCLOSED IN THE RETURN OF INCOME. WHEREAS THE ASSE SSING AUTHORITY WITHOUT ANY SUPPORTING EVIDENCE EXCEPT ME NTIONING THAT THE FEW DISTILLERIES OF U.P. REGION ALSO GENER ATES THE WASTAGE AND THEY ARE SELLING AT RS.1.22 PER KG. CAN NOT BE A BENCHMARK OF UNORGANIZED SECTOR. THE ASSESSING AUTH ORITY THOUGH MADE THE SPECIFIC OBSERVATIONS BUT COULD NOT SUPPORT WITH ANY LOGICAL AND DOCUMENTARY EVIDENCE. THEREFOR E, WE CONSIDERING THE OVERALL FACTS, MATERIAL AND THE SUB MISSIONS OF THE ASSESSEE ARE OF THE SUBSTANTIVE OPINION THAT TH E ADDITION OF THE ASSESSING OFFICER IS WITHOUT ANY COGENT EVIDENC E AND CANNOT BE SUSTAINED. THEREFORE, WE SET ASIDE THE O RDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELE TE THE ADDITION AND ALLOW THE GROUNDS OF APPEAL OF ASSESSE E FOR THE ASSESSMENT YEAR 2009-10. SINCE THE ASSESSEE HAS FIL ED THE APPEAL FOR ASSESSMENT YEARS 2008-09, 2010-11 AND 20 11-12 WHERE SIMILAR GROUNDS ARE RAISED EXCEPT ASSESSMENT YEAR 2011- 12 THERE ARE OTHER GROUNDS OF APPEAL WHICH ARE TO B E ADJUDICATED. ACCORDINGLY, THE RATIO OF DECISION OF THE ASSESSMENT YEAR 2009-10 ITA NO. 4356/DEL/2015 AS DI SCUSSED ABOVE SHALL APPLY TO ITA NO. 6773/DEL/2015 ASSESSME NT YEAR: 2008-09 ITA NO. 4357/DEL/2015 ASSESSMENT YEAR 2010- 11 WHERE THE GROUNDS OF APPEAL ARE SAME AND IDENTICAL AND MUTATIS MUTANDIS SHALL APPLY. IN THE RESULT THE ASSESSEES APPEAL IN ITA NOS. 6773/DEL/2015 AY 2008-09, ITA NO. 4356/DEL/2015 AY 2009- 10 ITA NO. 4357/DEL/2015 AY 2010-11 ARE ALLOWED. 10. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE ITA NO. 4358/DEL/2015 AY 2011-12. THE ASSESSEE HAS RAISED G ROUNDS OF APPEAL NO. 1 TO 1.3 WHICH ARE SIMILAR AND IDENTI CAL AS DISCUSSED IN THE ABOVE PARAGRAPHS, THE SAME DECISIO N SHALL APPLY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESS EE AS DECIDED IN PARAGRAPH NO. 9. THE ASSESSEE HAS RAISED OTHER THE GROUNDS OF APPEAL NO. 2 TO 2.2 WHICH ARE AS UNDER:- 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS.56,21,468/- MADE BY TH E AO ON ACCOUNT OF ALLEGED DISTRIBUTION OF UNACCOUNTED SURPLUS COMPUTED ON THE BASIS OF SHORTAGE OF STOCK OF EMPTY BOTTLES OF RADICO BRAND FOUND AT THE PREMISES OF THE BOTTLER NAMELY M/S N.V. DISTILLERIES & BREWERIES LTD. 2.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN H OLDING THAT THE BOTTLES FOUND SHORT HAD BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNTS A ND THE PROFIT ON THE SAME HAVE BEEN SHARED BETWEEN THE BOTTLING PLANT AND THE APPE LLANT, WITHOUT BRINGING ON RECORD ANY EVIDENCE TO SUPPORT THE SAME. 2.2 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN O BSERVING THAT THE APPELLANT HAD ENTIRE CONTROL OVER THE BUSINESS OF M/S N.V. DISTIL LERIES & BREWERIES LTD., IN TERMS OF THE BOTTLING AGREEMENT, AND , THEREFORE, PROPORT IONATE AMOUNT OF ALLEGED UNACCOUNTED SALES MADE BY THAT PARTY WERE TO BE ADD ED AS INCOME IN THE HANDS OF THE APPELLANT. 11. THE ASSESSING OFFICER IN THE ASSESSMENT PROCEED INGS FOUND THAT THERE IS A SHORTAGE OF STOCK OF EMPTY BO TTLES. THERE WAS SURVEY OPERATION U/S 133A ON THE BOTTLING PLANT OF M/S N.V. DISTILLERIES & BREWERIES LTD., ON 15.2.2011 WHE REAS INVESTIGATION WING FOUND 1,90,780 NUMBER OF EMPTY B OTTLES OF DIFFERENT BRANDS I.E. 8 PM, MAGIC MOMENT, CONTESSA RUM OF RADICO GROUP WERE FOUND SHORT PHYSICALLY. IT WAS SU BMITTED THAT THE PRODUCTS OF THE RADICO BRAND WAS MANUFACTU RED AND BOTTLED BY M/S N.V. DISTILLERIES & BREWERIES LTD., I N ITS BOTTLING PLANT ON BEHALF ASSESSEE-COMPANY AS PER THE PREVAIL ING AGREEMENT BETWEEN THE ASSESSEE AND THE M/S N.V. DIS TILLERIES & BREWERIES LTD. AS THE BOTTLES WERE RELATED TO RAD ICO KHAITAN LTD. AND A QUERY WAS RAISED TO THE ASSESSEE IN REGA RD TO THE DISPUTED ISSUE OF SHORTAGE OF BOTTLES. SINCE THERE WAS NO SATISFACTORY REPLY, THE ASSESSING AUTHORITY CALLED FOR FURTHER CLARIFICATIONS AND IT WAS EXPLAINED THAT THE M/S N. V. DISTILLERIES & BREWERIES LTD. IS ONE OF THE TIE UP UNIT FOR BOTT LING THE ASSESSEES PRODUCTS AND AGREEMENT WAS ENTERED IN TH IS REGARD. THE CONTENTION OF THE ASSESSEE THAT NET DISTRIBUTA BLE SURPLUS AFTER DEDUCTING THE EXPENSES AND BOTTLING C HARGES IS ACTUAL PROFIT AND TAXED AS INCOME IN THE HANDS OF T HE ASSESSEE. THE AO REFERRED TO AGREEMENT DATED 12.4.2004 FOR DI STRIBUTABLE SURPLUSES. WHEREAS THE AO HAS MADE A LIST OF BREAKU P OF BRANDS OF ASSESSEE COMPANY AND DISTRIBUTABLE SURPLU S AS UNDER:- ITEMS NO. OF CASES AMOUNT DISTRIBUTABLE SURPLUS (RS.) NO. BOTTLES DISTRIBUTABLE SURPLUS PER BOTTLE (RS.) 1 2 3 4 5 8 P.M. 220353 15701124 2644236 6.00 MAGIC MOMENT VODKA 42445 19669611 509340 38.62 CONTESSA RUM 212389 78324559 5703444 16.85 12. AND FINALLY MADE AN ADDITION BASED ON THE SHORT AGE AS UNDER:- BRAND ITEMS DISTRIBUTABLE SURPLUS PER BOTTLE (RS.) RATIO OF BOTTLES CALCULATED NO. OF BOTTLES RATE (RS.) OF DISTRIBUTABLE SURPLUS PER BOTTLE AMOUNT (RS.) 8P.M. 6.00 9.76% (6*100/61.47) 18640 6.00 1.11,84 0 MAGIC MOME NT VODKA 38.62 62.82%(38.62*1 00/61.47 119847 38.62 46,28,4 91 CONTE SSA RUM 16.85 27.41% (16.85*1 00/61.47) 52293 16.85 8,81,13 7 TOTAL 61.47 100 1,90,780 56,21,4 68 13. ON APPEAL THE LD. CIT(A) HAS DISMISSED THE ASSE SSEES CLAIM IN GROUNDS OF APPEAL IN RESPECT OF SHORTAGE O F STOCK. AGGRIEVED BEFORE THE TRIBUNAL THE LD. AR SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRME D BY THE CIT(A) IS BAD IN LAW AND REFERRED TO THE OBSERVATIO N OF THE LD. CIT(A)AT PAGE 19, 22 AND FILED PAPER BOOK AND AT PA GE 116 IN PARTICULAR REPLY TO FINANCIAL STATEMENTS AND SUPPOR TED JUDICIAL DECISIONS. CONTRA THE LD. DR SUPPORTED THE ORDERS O F THE CIT(A) AND RELIED ON THE OBSERVATIONS OF THE CIT(A) AND FU RTHER EMPHASIS THAT THE SHORTAGE OF BOTTLES HAS TO BE EXP LAINED BY THE ASSESSEE AND THE ONUS OF CLAIM SHOULD BE ESTABL ISHED BY THE ASSESSEE COMPANY FOR SHORTAGES AND ALSO THERE I S A CONTRAVENTION OF PROVISION OF EXCISE LAWS. THE ASSE SSEE COULD EXPLAIN WITH REASONS IN REGARD OF SHORTAGES. BEFORE THE APPELLATE PROCEEDINGS OR THE HONBLE TRIBUNAL AND P RAYED FOR DISMISSING THE GROUNDS OF APPEAL OF THE ASSESSEE. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. AR HAS BEEN EMPHASIZING THAT THE SHORTAGE IS NOT RELATED TO THE ASSESSEE COMPANY AND THE ASSESSEE COMPANY IS NOT RELATED TO M/S N.V. DISTILL ERIES & BREWERIES LTD. BUT IT HAS ONLY ENTERED INTO AN AGRE EMENT FOR MANUFACTURING OF ASSESSEES BRAND RADICO BRAND IN H IS BOTTLING PLANT. THE CONTENTION OF THE LD. AR THAT THE ISSUE OF SHORTAGES, HAS TO BE EXPLAINED BY THE M/S N.V. DISTILLERIES & B REWERIES LTD., WITH WHOM THE ASSESSEE HAS TIE UP. FURTHER TH ERE IS NO EVIDENCE TO TRACE THAT THE SHORTAGES HAS TO BE TAXE D IN THE HANDS OF THE ASSESSEE. WE CONSIDERING THE FACTS AND THE FINDINGS OF THE LD. CIT(A) FIND THE EXPLANATIONS OF THE ASSESSEE ARE NOT SATISFACTORY THOUGH THE LD. AR HAS REFERRED AND RELIED ON OBLIGATIONS AND WARRANTEES OF THE ASSESSEE AND S IMILARLY OF M/S N.V. DISTILLERIES & BREWERIES LTD. WE FIND THAT WITHOUT ANY RELATABLE CAUSE, THE BUSINESS OF BOTTLING CANNOT PR OCEED. FURTHER AGREEMENT WAS ENTERED WHICH IS NOT DISPUTED BY THE REVENUE BUT THE FACT REMAINED THAT THE ASSESSEE COU LD NOT EXPLAIN THE SHORTAGE OF STOCK THOUGH REFERRED TO TH E PERMISSIONS OF BOTTLING AGREEMENT. WHEREAS THE LD. AR CONTENTION THAT THE DIFFERENCE HAS TO BE EXPLAINED BY THE M/S N.V. DISTILLERIES & BREWERIES LTD., TO THE REVENUE B UT THE FACTS REMAIN THAT THE ASSESSEE HAS BUSINESS TIE UP WITH T HIS COMPANY VARIOUS BRANDS OF PRODUCTS, MANUFACTURED AN D BOTTLED BY M/S N.V. DISTILLERIES & BREWERIES LTD., I N THE BOTTLING PLANT. THE ASSESSEE HAS ACCEPTED THAT NET DISTRIBUTABLE SURPLUS AFTER DEDUCTING THE EXPENSES AND BOTTLE CHA RGES AS PER AGREEMENT ENTERED BY WITH M/S N.V. DISTILLERIES & BR EWERIES LTD., DATED 12.04.2004 AND THE DISTRIBUTABLE SURPLU S SHALL BE APPROPRIATED. WE FIND THERE ARE INTER RELATED TRANS ACTIONS WHICH THE REVENUE HAS RIGHTLY MADE OBSERVATIONS AND THE ASSESSEE COULD NOT OVERRULED THE FINDING OF THE REV ENUE WITH PROPER EXPLANATIONS OR EVIDENCES. ACCORDINGLY CONSI DERING THE FACTS AND CIRCUMSTANCES AND OBSERVATIONS, WE ARE OF THE SUBSTANTIVE OPINION THAT THE LD. CIT(A) HAS CONSIDE RED THE SUBMISSIONS, AGREEMENT AND RATIO OF DISTRIBUTABLE S URPLUS HAS PASSED A REASONED AND LOGICAL ORDER ON THIS GROUND OF APPEAL CONFIRMING THE ADDITION OF THE AO WHICH WE ARE NOT INCLINED TO INTERFERE AND UPHELD THE SAME AND DISMISSED THIS GR OUND OF APPEAL OF THE ASSESSEE FOR THE AY 2011-12 15. IN THE RESULT, THE ASSESSEE APPEAL FOR AYS 2008 -09, 2009- 10, 2010-11 ARE ALLOWED AND AY 2011-12 IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2019 . SD/- SD/- ( N.K. BILLAIYA) (P.K.GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD AUG, 2019 SH COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR DATE 1. DRAFT DICTATED ON 20.08.2019 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 23.08.2019 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.