ITO, Ward-3, Suri, Birbhum V. Sainthia Rice & Oil Mills, Birbhum

ITA 447/KOL/2012

• Counselvise Citation: 44723514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DILIP KUMAR MITRA ADDITIONAL
• Assessee Lawyers: ARVIND AGARWAL

Judgement Text

I.T.A. NO . 44 7 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 44 7 /KOL . / 20 1 2 ASSESSMENT YEAR : 200 8 - 20 0 9 INCOME TAX OFFICER,.................... ..... .... ............ .. .APP ELL ANT WARD - 3 , SURI , AAYAKAR BHAWAN, LALKUTHIPARA, SURI, BIRBHUM - 731 101 - VS. - SAINTHIA RICE & OIL MILLS,......... ...... ................ . RESPONDENT KANDI ROAD, P.O. SAINTHIA, DIST. BIRBHUM - 731 234 [PAN : AA KFS 4309 J ] APPEARANCES BY: SHRI DILIP KUMAR MITRA, ADDITIONAL CIT, SR. D.R., FOR THE DEPARTMENT SHRI ARVIND AGARWAL , ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DEC EM BER 1 2 , 2 01 4 DATE OF PRONOUNCING THE ORDER : DEC EM BER 16 , 201 4 O R D E R PE R GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXXII , KOLKATA IN APPEAL NO. 7 0 / CIT( A ) - XXXII/11 - 12/ WD - 3(SURI)/R&T/KOL . DATED 29 . 1 2 .201 1 FOR TH E ASSESSMENT YEAR 200 8 - 0 9 . 2. IN T HE REVENUE S APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS: - I.T.A. NO . 44 7 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 2 OF 5 (1) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.18,12,676/ - ON ACCOUNT OF SUPPRESSION OF SALE. (2) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.78,52,232/ - ON ACCOUNT OF WORKING CAPITAL. 3 . SHRI DILIP KUMAR MITRA, ADDL. CIT, SR. D.R., REPRESENTED ON BEHALF OF THE REVENUE AND SHRI ARVIND A GARWAL , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE . 4 . AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. SR. D .R. THAT THE ISSUE IN THE APPEAL WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSED PADDY CRUSHING AND THE CORRESPONDING ADDITION ON ACCOUNT OF THE WORKING CAPITAL REQUIREMENT IN RESPECT OF THE SUPPRESSED PADDY CRUSHING. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD IN THE COURSE OF ASSESSMENT FOUND THAT THE CONSUMPTION OF ELECTRICITY HAD GONE UP. HOWEVER, THE TURNOVER OF THE ASSESSEE HAD NOT GONE UP CORRESPONDINGLY . C ONSEQUENTLY BY COMPUTING THE CONSUMPTION OF ELECTRICITY IN RESPECT OF THE CRUSHING OF PADDY FOR THE EARLIER YEARS, THE ASSESSING OFFICER HAD EST IMATED THE SUPPRESSION OF PADDY. THE SUPPRESSION WAS ARRIVED AT AND GROSS PROFIT ON THE SAID SUPPRESSION WAS ESTIMATED AT RS.18,12,676/ - AND THE CORRESPONDING WORKING CAPITAL REQUIRED WAS TAKEN AT RS.78,52,232/ - . IT WAS THE SUBMISSION THAT THE LD. CIT(APPE ALS) HAD DELETED THE ADDITION BY HOLDING THAT THE ASSESSEE MAINTAINED REGULAR BOOKS OF ACCOUNTS AND NO DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAD BEEN POINTED OUT. SO ALSO NO DEFECT HAD BEEN POINTED OUT NOR ANY DISCR EPANCY IN THE STOCK REGISTER NOR THERE WAS ANY EVIDENCE O F UNRECORDED PURCHASE OF RAW MATERIALS OR SALE OF FINISHED GOODS FOUND BY THE ASSESSING O FFICER. CONSEQUENTLY THE ADDITION MADE BY THE ASSESSING OFFICER HAD BEEN DELETED. IT WAS THE SUBMISSION THAT THE I.T.A. NO . 44 7 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 3 OF 5 ORDER OF THE LD. CIT(APPEA LS) WAS LIABLE TO BE REVERS ED AND THAT OF THE ASSESSING OFFICER RESTORED . 5 . IN REPLY, LD. A .R. SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HEMRAJ RICE MILLS IN ITA NO. 578/KOL/2011 DATED 30.09.2014, WHEREIN THE APPEAL OF THE REVENUE HAD BEEN DISMISSED IN SIMILAR CIRCUMSTANCES BY HOLDING AS FOLLOWS: - 8. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSED THE RECORD. WE FIND THAT THE AO HAS NOT BEEN ABLE TO POINT OUT ANY DEFECTS IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. NOTHING HAS BEEN BROUGHT ON RECORD THAT THERE IS ANY EVIDENCE OF SUPPRESSION OF SALES BY THE ASSESSEE. WE FIND THAT VARIATION IN THE CONSUMPTION OF ELECTRICITY CAN GIVE RISE TO SUSPICION, BUT IT CANNOT BE A CONCLUSIVE BASIS OF REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF SUPPRESSED SALES. IT IS NOT THE CASE OF THE AO THAT THERE IS ANY ABNORMAL VARIATION OF THE GROSS PROFIT RATIO. IT IS ALSO NOT THE CASE THAT THE G.P OF THE ASSESSEE IS NOT IN ACCORDANCE WITH INDUSTRY NORMS . THE CASE LAWS REFERRED BY THE LD.CIT(A) ALSO SUPPORT THE CASE OF THE ASSESSEE. IN THIS REGARD, IT IS WORTH WHILE TO REFER THE DECISION OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF MAHABIR PRASAD JAGDISH PRASAD (REFER TO SUPRA), WHEREIN THE HON BLE HIGH COURT HAS HELD AS UNDER: - THE ACCOUNT BOOKS OF AN ASESSEE CANNOT BE REJECTED ON MERE SUSPICION OR CONJECTURE UNLESS THE ACCOUNTS ARE KEPT IN SUCH A WAY THAT RELIANCE CANNOT BE PLACED UPON THEM. IF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SO DEFECTIVE THAT THERE IS A POSSIBILITY OF SUPPRESSION AND LEAKAGE, THE ACCOUNTS CAN BE REJECTED WITHOUT ANY FURTHER MATERIAL. BUT, IF THE ACCOUNTS ARE PROPERLY MAINTAINED WITH ALL THE RELEVANT DETAILS, IT IS NECESSARY FOR THE ASSESSING AUTHORITY TO PLAC E ON RECORD SOME MATERIAL TO SHOW THAT THE ACCOUNTS ARE NOT RELIABLE. THE FACT THAT THE CONSUMPTION OF ELECTRICITY SHOWN BY THE ASSESSEE WAS UNDULY HIGH CAN GIVE RISE TO A STRONG SUSPICION THAT THE ASSESSEE MIGHT HAVE SUPPRESSED ITS PRODUCTION AND THEREBY MIGHT HAVE UNDERSTATED ITS SALES. BUT, SUSPICION, HOWSOEVER STRONG IT MAY BE, CANNOT TAKE THE PLACE OF POSITIVE MATERIAL. EVEN IF THE SALES - TAX OFFICER IS ABLE TO DETECT ONE INSTANCE WHERE THE ASSESSEE MIGHT HAVE UNDERSTAND ITS SALES HE WOULD BE JUSTIFIED IN REJECTING THE ACCOUNTS AND MAKING AN ESTIMATE OF THE ESCAPED TURNOVER. BUT, THE HIGH CONSUMPTION OF ELECTRICITY ALONE CANNOT BE HELD TO BE A MATERIAL JUSTIFYING THE REJECTION OF THE ACCOUNTS PARTICULARLY WHEN THE ASSESSEE S ACCOUNTS HAD ONCE BEEN ACCEPT ED DURING THE REGULAR ASSESSMENT PROCEEDINGS. 8.1 SIMILAR VIEW WAS ALSO EXPRESSED IN THE CASES OF SATYANARAYAN PAREEK (SUPRA) AND THE NEW INDIA RICE MILL (P) LTD ( SUPRA). IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORD ER OF THE LD.CIT(A). ACCORDINGLY, WE UPHOLD THE SAME . IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE SUSTAINED. I.T.A. NO . 44 7 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 4 OF 5 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFIC ER HAS MADE THE ADDITION BY ESTIMATING THE PRODUCTION BY COMPUTING THE UNIT OF ELECTRICITY REQUIRED FOR CRUSHING 100 KG S . OF PADDY. ADMITTEDLY THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAD NOT BEEN REJECTED BY THE ASSESSING OFFICER NOR ANY DEFECT BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS . IN FACT, THE ASSESSEE HAS EXPLAINED THE REASON FOR THE HIGH CONSUMPTION OF ELECTRICITY . THE ASSESSEE HAS CATEGORICALLY STATED THAT ONLY ONE METER WAS USED FOR THE WHOLE FACTORY AND THE SAID OLD METER WAS CHANGED DURING THE REL EVANT ASSESSMENT YEAR AS ALSO THAT THE MOISTURE CONTENT WAS HIGHER DUE TO HEAVY RAIN AND THE DRYERS HAD TO BE USED SUBSTANTIALLY. THESE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN FOUND TO BE FALSE NOR HAVE BEEN REBUTTED. FURTHER A PERUSAL OF THE BALANCE - SH EET OF THE ASSESSEE CLEARLY SHOWS THE ADDITION OF ELECTRICAL ITEMS DURING THE RELEVANT ASSESSMENT YEAR , SUCH AS WEIGHBRIDGE, COMPUTERS , AIR - CONDITIONER, LCD TV AS ALSO PLANT AND MACHINERY. THEREFORE, THE INCREASE IN THE CONSUMPTION OF ELECTRICITY CANNOT B E SAID TO BE ASSOCIATED ONLY TO THE PADDY CRUSHING. IN THESE CIRCUMSTANCES , IT IS NOTICED THAT THE ISSUE BEING IDENTICAL TO THE ISSUE DECIDED IN THE CASE OF HEMRAJ RICE MILLS REFERRED TO SUPRA, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HEMRAJ RICE MILLS REFERRED TO SUPRA, THE FINDING OF THE LD. CIT(APPEALS) ON THIS ISSUE STANDS CONFIRMED. 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAND S DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DEC E M BER, 2014. SD/ - SD/ - SHAMIM YAHYA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 16 TH D AY OF DEC EM B ER , 201 4 I.T.A. NO . 44 7 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 5 OF 5 COPIES TO : (1) INCOME TAX OFFICER, WARD - 3, SURI, AAYAKAR BHAWAN, LALKUTHIPARA, SUR I, BIRBHUM - 731 101 (2) SAINTHIA RICE & OIL MILLS, KANDI ROAD, P.O. SAINTHIA, DIST. BIRBHUM - 731 234 (3) COMMISSIONER OF INCOME TAX (APPEALS) ( 4 ) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.