THE AJNALA CO-OP SUGAR MILLS LIMITED, AMRITSAR V. THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE-5, AMRITSAR

ITA 534/ASR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2077 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL
• Keywords: Rejection of books of accounts
• Section: 143(3); 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 534/Asr/2018 Assessment Year: 2014-15 The Ajnala Coop. Sugar Mills Ltd. Bhalla Pind, Teh. Ajnala, Amritsar [PAN: AAAAT 0924F] Vs. The Asstt. Commissioner of Income Tax, Circle-4, Amritsar (Appellant) (Respondent) I.T.A. No. 555/Asr/2018 Assessment Year: 2014-15 Deputy Commissioner of Income Tax, Circle-4, Amritsar Vs. The Ajnala Coop. Sugar Mills Ltd. Bhalla Pind, Teh. Ajnala, Amritsar [PAN: AAAAT 0924F] (Appellant) (Respondent) Appellant by : None Respondent by: Sh. Manpreet Singh Duggal, Sr. DR Date of Hearing: 10.05.2022 Date of Pronouncement: 29.06.2022 ITA Nos. 534&555/Asr/2018 The Ajnala Coop. Sugar Mills Ltd v. Asstt/DCIT 2 ORDER Per Anikesh Banerjee, JM: Both the Appellants are filed against the orders of the ld. Commissioner of Income-tax (A)-2, Amritsar (in brevity of the Act) bearing appeal no. 10387/2016- 17 order dated 27.08.2018 order passed u/s. 250(6) of the Income-tax Act 1961 (in brevity of the Act) for the A.Y 2014-15.The said impugned order was originated from the order of the ld. Assistant Commissioner of Income-tax, Circle-4 (in brevity of the A.O.) date of order 29.12.2016 passed u/s. 143(3) of the Act. 2. The brief fact is that the Revenue filed the appeal before us bearing ITA 555/ASR/2018. In this appeal the Assessing Authority recalculated the turnover of the assessee on the basis of out of books sale proceeds of bye product, Bagasse of Rs.9,41,15,320 and out of sale proceeds on average recovery of sugar taken at 9.4% i.e. 7,00,89,308/-. The ld. A.O rejected the books of accounts and calculated N.P. @3% in the given line of the business and calculated the net income from the total assessed turnover, Rs. 51,01,58,015/- which is amount of Rs.1,53,04,740/-. The estimated calculation as per assessment order is extracted as follows: 07. Estimation of reasonable income from trading: i) Total declared turnover of the assessee: Rs.34,59,53,387/- ii) Out of books sale proceeds of by-products: Rs. 9,41,15320/- ITA Nos. 534&555/Asr/2018 The Ajnala Coop. Sugar Mills Ltd v. Asstt/DCIT 3 iii)Out of books sale proceeds at average recovery of sugar taken at 9.4% : Rs. 7,00,89,308/- Total assessed turnover: Rs. 51,01,58,015/- Taking a reasonable Net profit rate of 3% in the given line of business, net income from the total assessed turnover works out to Rs.1,53,04,740/-.” 2.1. Also the addition was made on ceased liabilities /s. 41(1) amounting to Rs. 35,66,283/- and contravention of provisions on the income us 43B(a) amounting to Rs, 5,08,208/-. Confirming addition of Rs. 16,07,145/- of Agricultural income taken as Income from Other Sources. Aggrieved assessee filed an appeal before the CIT(A) against the order of the ld. A.O. The ld. CIT(A) deleted the addition of the ld. A.O. only upheld the agriculture income amounting to Rs.16,07,145/-. Being aggrieved the Revenue filed the appeal before us. 2.2. In ITA No. 534/ASR/2018 was duly filed by the assessee against the order of the ld. CIT(A) for upholding the addition amounting to Rs.16,07,145/- related agricultural income claimed by the assessee in the Profit and Loss account. Being aggrieved the assessee filed the appeal before us for judicious consideration. 3. For the brevity we are taking together both the appeals, during our adjudication. But the ld. CIT(A) filed a single order. The ld. Sr. DR Mr. M.S. Duggal argued that the order of the ld. CIT(A) is erroneous. In one hand the Appellate Authority accepting the rejection of books of accounts and on other hand ITA Nos. 534&555/Asr/2018 The Ajnala Coop. Sugar Mills Ltd v. Asstt/DCIT 4 rejected the estimation made by the ld. A.O. He pointed out at page no. 8 of the ld. CIT(A) which is extracted as follows: “Therefore, the AO held that books of accounts of assessee are defective on two counts- One, assessee had not recorded the quantity and value of its bye products and secondly it has not recorded sale value of these bye product in its sales account. Therefore, the book version of assessee was considered incomplete and faulty in determining the true income of the assessee. Assessee was given show cause notice for rejecting the books of accounts of assessee, but in the reply furnished by assessee, there was no rebuttal to the proposal for application of section 145(3) of the Act. The AO pointed out that the counsel of assessee filed a written explanation from General manager of assessee Mill in which it was admitted that fly ash of 49278 quintals was produced and sold for Rs 530, 109/- during the relevant financial year, which itself proves that the books of accounts of assessee were defective. This admission of the General Manager of the appellant Society is a pointer to the fact that the books of accounts of the appellant were incomplete and incorrect to the effect that the sale of fly ash worth Rs 530, 109/- was not recorded therein. Accordingly, the AO was justified in rejecting the books of accounts of assessee u/ s 145(3) of the Act which action of the AO is upheld”. 3.1. The ld. Sr. DR further pointed out that the ld. CIT(A) has deleted the estimation of addition of books sale of fly-ash amounting to Rs.5,04,660/- but in the order the ld. CIT(A) wrongly mentioned at Rs.5,30,109/-. So, the amount is liable in correction. 4. The ld. CIT(A) relied on the rule of consistent. Accordingly he add taking cane-yield to sugar as a percentage of sugar cane crushed by appellant from 2008- 09 to 2014-15. But on the other hand the method of calculation which was adopted by the ld. A.O. was not properly adjudicated by the ld. A.O. ITA Nos. 534&555/Asr/2018 The Ajnala Coop. Sugar Mills Ltd v. Asstt/DCIT 5 4.1 The ld. Counsel of the assessee submitted a Paper Book where he claimed that this income of Agricultural Rs.16,07,145/- was accounted for and the nature of the income duly described in page No. 9 of the Paper Book of the assessee. 5. We considered the rival submissions and the documents available in the record. The ld. Sr. DR rightly pointed out in one hand ld. CIT(A) accepting the rejection of books of accounts by invoking provision of section 145(3) of the Act and on the other hand rejected the addition made by the A.O. During the adjudication of appeal, the ld. CIT(A) has not come on any conclusion relied to the calculation of profit of the assessee. The ld. A.O. calculated the turnover based on scientific method and speaking order was passed in respect of addition. Related the agricultural income the ld. Counsel of the assessee filed documents related to nature of agricultural income which is kept in the record. Considering the above- mentioned discussion, we are setting aside the issue before the ld. CIT(A) for further adjudication Denovo. On the other hand the assessee should get reasonable opportunity for its case. 6. In the result ITA No.555/ASR/2018 and ITA No. 534/ASR/2018 are allowed for statistical purposes. Order pronounced in the open court on 29.06.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member ITA Nos. 534&555/Asr/2018 The Ajnala Coop. Sugar Mills Ltd v. Asstt/DCIT 6 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order