Shri Vinodkumar Mangaldas Patel, Ahmedabad V. The Income tax Officer,Ward-2(3), Ahmedabad

ITA 606/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94297 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: MANISH RAJVAIDYAA R
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND ANIL CHATURVEDI ACCOUNTANT MEMBER I.T.A. NO. 606/AHD/2012 (ASS TT. YEAR 2008-09) SHRI VINODKUMAR M. PATEL PROP. SHIVDHARA ENERPRISE, 4 GURUNANAK MARKET, PANCHKUVA, AHMEDABAD. PAN AOLPP 6130 M VS INCOME TAX OFFICER WARD 2(3), AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI MANISH RAJVAIDYA,A.R. REVENUE BY SHRI PRAVIN KUMAR, D.R. / DATE OF HEARING : 06- 08-2015 / DATE OF PRONOUNCEMENT: 28/08/2015 / O R D E R PER ANIL CHATURVEDI ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT (A)-6 AHMEDABAD DATED 16-1-2012 FOR ASSESSMENT YEAR 2008- 09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 2 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED I N THE BUSINESS OF MANUFACTURING AND TRADING OF PADDY, RICE ETC. IN TH E NAME AND STYLE OF SHIVDHARA ENTERPRISES. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 DECLARING TOTAL INCOME OF RS.1,84,620/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) BY ORDER DATED 20 TH OCTOBER, 2010 AND THE TOTAL INCOME WAS DETERMINED AT RS.10,90,430/-. AGGRIEVED BY THE ORDE R OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A) WHO VIDE ORDER DATED 16-1-2012 DISMISSED THE APPEAL OF THE ASSESSE E. AGGRIEVED BY THE ORDER OF LD. CIT (A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS WHILE CONFIRMING THE ADDITION MADE BY THE A.O. OF RS.8,86,192/- ON A CCOUNT OF SUPPRESSION OF PRODUCTION WHILE ALLEGING THAT THE F ALL IN YIELD IS TOTALLY BASELESS AND ON HIS OWN SURMISES AND CONJEC TURES AND BASELESS. 2. THE CIT (A) HAS ERRED IN LAW AND ON FACTS WHILE NOT CONSIDERING HA THE PRODUCT OF THE APPELLANT IS AN A GRICULTURAL PRODUCT AND BEING A NATURAL PRODUCT LOT OF FACTORS ARE INVOLVED WHICH ALSO DEPENDS ON THE SEASON OF THE YEAR AND TH AT ARE MUCH CHANGES IN YEAR BY YEAR AND THE YIELD OF THE YEAR I S NOT COMPARABLE. 3. THE CIT (A) HAS ERRED IN LAW AND ON FACTS WHILE NOT CONSIDERING THAT THE YIELD OF WHEAT DEPENDS ON THE QUALITY OF PADDY AND HAT THE YIELD OF THE PRECEEDING YEAR CANN OT BE TAKEN A BASE FOR THE CURRENT TEAR AS IT BEING A NATURAL PRO DUCT THE YIELD DEPENDS UPON THE NATURAL FORCES WHICH VARY FROM YEA R TO YEAR. 4. THE CIT (A) HAS ERRED IN LAW AND ON FACTS WHILE NOT CONSIDERING THE VARIOUS CASE LAWS REFERRED BY THE A PPELLANT. 5 UNDER THE CIRCUMSTANCES THE ADDITION ON ACCOUNT O F SUPPRESSION OF PRODUCTION OF RS.8,86,192/- MADE BY THE A.O. AD CONFIRMED BY THE CIT (A) IS REQUIRED TO BE DELETED. ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 3 6. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALTER, SUBSTITUTE OR MODIFY ALL OR ANY GROUNDS STATED HERE INABOVE AS THE FACTS AND CIRCUMSTANCES OF THE CASE MY JUSTIFY. 4. THOUGH VARIOUS GROUNDS HAVE BEEN RAISED BUT THE SOLITARY ISSUE IS WITH RESPECT TO ADDITION OF RS.8,86,192/-. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON VERIFICATION OF THE YIELD STATEMENT, ASSESSING OFFICER NOTICED T HAT THERE WAS CONSIDERABLE FALL IN THE YIELD OF RICE AND KANKI DU RING THE YEAR AS COMPARED TO THE PRECEEDING YEARS AND THE FALL BEING OF 3.30% AND 1.32% RESPECTIVELY. THE ASSESSEE WAS THEREFORE ASKE D TO SHOW CAUSE AS TO WHY THE YIELD SHOWN BY THE ASSESSEE FOR A.Y. 2007-08 NOT BE ADOPTED AND THE DIFFERENCE OF YIELD IN RICE AND KAN KI NOT TO BE TREATED AS SUPPRESSION OF PRODUCTION TO WHICH ASSESSEE INTE RALIA SUBMITTED THAT DUE TO LOW RAINFALL QUALITY OF PADDY WAS LOW WHICH HAS RESULTED INTO FALL IN THE YIELD. THE SUBMISSIONS OF THE ASSESSEE WAS N OT FOUND ACCEPTABLE TO THE A.O. AS ACCORDING TO THE A.O. THE FALL AND R ISE OF PRODUCTION/YIELD HAS NO CONNECTION WITH THE RAIN IN THE TYPE OF ACTI VITIES THAT WERE CARRIED OUT BY THE ASSESSEE. FURTHER, THE SUBMISSIO N OF THE ASSESSEE THAT THERE WAS INCREASE IN GROSS PROFIT WAS ALSO NO T FOUND ACCEPTABLE TO THE ASSESSING OFFICER AS HE WAS OF THE VIEW THAT TH E INCREASE WAS DUE TO THE INCREASE IN PRICE OF RICE AND KANKI. ASSESSING OFFICER THEREAFTER WORKED OUT THE SUPPRESSION OF PRODUCTION BY TAKING THE RATIO OF YIELD OF PRODUCTION OF RICE AT 70.81% AND THE YIELD OF PRODU CTION OF KANKI AT 3.07% , BEING THE PERCENTAGE OF YIELD THAT WAS SHOWN BY T HE ASSESSEE IN PRECEEDING YEAR. HE THEREAFTER BY APPLYING THE S ALE PRICE TO YIELD THAT WAS WORKED OUT BY HIM ON THE BASIS OF YIELD OF PREC EDING YEAR WORKED OUT THE SUPPRESSION OF PRODUCTION OF RICE AT RS.7,9 4,196/- AND THAT OF KANKI AT RS.91,996/- AND THUS THE TOTAL VALUE OF SU PPRESSION OF PRODUCTION WAS WORKED OUT BY HIM AT RS.8,86,192/-. AGGRIEVED BY THE ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 4 ORDER OF ASSESSING OFFICER THE MATTER WAS CARRIED B EFORE CIT (A) WHO UPHELD THE ORDER OF ASSESSING OFFICER BY HOLDING AS UNDER: 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE; ASSE SSMENT ORDER AND APPELLANTS SUBMISSION. ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF SUPPRESSION OF PRODUCTION AND NOT TO THE GROSS PROFIT. FOR MAKING ADDITION ON ACCOUNT OF SUPPRESSION OF PR ODUCTION, BOOK RESULTS NEED NOT BE REJECTED UNDER SECTION 145 . ASSESSING OFFICER DID NOT REJECT THE BOOK RESULTS AND THEREFO RE THE DECISIONS RELIED UPON BY THE APPELLANT ON THE ISSUE OF REJECT ION OF BOOK RESULT AND ESTIMATION OF GROSS PROFIT ARE NOT APPLI CABLE. APPELLANT IS PRODUCING RICE AND ITS BY PRODUCTS FRO M THE PADDY PURCHASED FROM FARMERS. THE REASONS GIVEN FOR LOW YIELD OF RICE AND KANKI DURING THE YEAR ARE- LOW RAINFALL, O VERALL LOW YIELD IN THE INDUSTRY AND FIRST YEAR OF OPERATION. ALL TH ESE REASONS WERE ELABORATELY DISCUSSED BY THE ASSESSING OFFICER. ON THE ISSUE OF LOW RAINFALL RESULTING IN LOW YIELD, ASSESSING OFFICER IS RIGHT IN REJECTING THE APPELLANTS CLAIM SINCE LOW RAINFALL WILL AFFEC T THE PRODUCTION OF PADDY AND NOT THE YIELD FROM PADDY. THEREFORE LOW R AINFALL WILL AFFECT THE PRODUCTION OF THE FARMERS AND NOT OF THE RICE MILL WHO ARE BUYING PADDY IRRESPECTIVE OF LOW PRODUCTION OR HIGH PRODUCTION OF PADDY. APPELLANT HAS NOT SUBMITTED ANY MATERIAL TO ESTABLISH THAT LOW RAINFALL ALSO AFFECTS YIELD OF RICE. AS RE GARDS OTHER ARGUMENT THAT THERE WAS AN OVERALL LOW YIELD DURING THE YEAR, APPELLANT DID NOT SUBMIT ANY AUTHENTIC MATERIAL FRO M THE GOVERNMENT DEPARTMENT OR ANY RELIABLE SOURCE. IN TH E ABSENCE OF ANY INFORMATION INDICATING THE TREND OF LOW YIELD D URING THE YEAR IN THE RICE MILL INDUSTRY, APPELLANTS ARGUMENT CANNOT BE ACCEPTED. EARLIER YEARS YIELD IS A REASONABLE BASIS TO FIND O UT THE CORRECT PRODUCTION. JUST BECAUSE ACCOUNTS ARE AUDITED AND Q UANTITY RECORDS ARE KEPT, APPELLANT CANNOT ABSOLVE FROM THE RESPONSIBILITY OF EXPLAINING LOW YIELD PARTICULARLY WHEN MOST OF T HE SALES ARE IN CASH. CONSIDERING THIS, APPELLANT WAS DUTY BOUND TO EXPLAIN THE LOW YIELDS WITH NECESSARY EVIDENCE AND THEREFORE TH E LOW YIELD OF THE APPELLANT DURING THE YEAR CLEARLY INDICATES SUP PRESSION OF PRODUCTION. SINCE APPELLANT SUCCEEDED THE BUSINESS FROM HIS FATHER, IT IS NOT HIS FIRST YEAR AND SUCH ARGUMENT WAS WRONGLY TAKEN BY THE APPELLANT. CONSIDERING THESE FACTS, I UPHOLD THE ADDITION OF SUPPRESSION OF PRODUCTION MADE BY THE A SSESSING OFFICER. THIS GROUND IS ACCORDINGLY DISMISSED. ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 5 6. AGGRIEVED BY THE ORDER OF CIT (A), ASSESSEE IS N OW IN APPEAL BEFORE US. 7. BEFORE US, LD. A.R., REITERATED THE SUBMISSIONS MADE BEFORE A.O. AND CIT (A) AND FURTHER SUBMITTED THAT DURING THE Y EAR UNDER CONSIDERATION THE G.P. HAS INCREASED FROM 4.39% TO 12.26%. HE FURTHER SUBMITTED THAT THERE IS NO STEADY YIELD OF PADDY AS IN ACCOUNTING YEAR 2004-05 THE YIELD WAS 70.85% WHEREAS IN ACCOUNTING YEAR 2005-06, THE YIELD WAS 68.63% AND IN ACCOUNTING YEAR 2007-08 THE YIELD WAS 66.20% AND ALSO POINTED TO THE WORKING OF YIELD FOR VARIO US YEARS WHICH WAS PLACED AT PAGE 57 TO 60 OF THE PAPER BOOK. THE LD. A.R. FURTHER SUBMITTED THAT THE YIELD OF RICE AND KANKI WAS COMP ARABLE TO OTHER ASSESSEES AND FOR WHICH HE REFERRED TO PAGE 55 AND 56 OF THE PAPER BOOK. THE LD. A.R. THEREFORE, SUBMITTED THAT THE ES TIMATION MADE BY THE ASSESSING OFFICER IS NOT SUPPORTED BY THE FACTS , BUT IS ON THE BASIS OF PRESUMPTION WHICH ACCORDING TO ASSESSEE WAS SUPP ORTED BY THE FINDING OF LD. CIT (A) WHO WHILE DECIDING THE PENAL TY ISSUE IN THE CASE OF THE ASSESSEE HAS NOTED THAT ASSESSING OFFICER HAD M ADE ADDITION ON ESTIMATED BASIS BY ESTIMATING THE YIELD AND HIS FIN DING WAS NOT BASED ON ANY SCIENTIFIC BASIS. HE SUBMITTED THAT CIT (A) HAD FURTHER NOTED THAT A.O. HAS NOT FOLLOWED THE APPROPRIATE METHOD FOR MA KING THE ADDITION. WITHOUT PREJUDICE TO THE FOREGOING THE LD. A.R. FUR THER SUBMITTED THAT THE A.O. CONSIDERED THE YIELD OF PRODUCTION AT 70.8 1% WHICH IS ACTUALLY THE OVERALL YIELD OF THE PRODUCTION OF RICE AND KAN KI BOTH FROM PADDY AND NOT RICE ALONE AND HAD THE A.O. WORKED OUT THE SUPPRESSION OF PRODUCTION ON THE BASIS OF YIELD FROM RICE, THE ADD ITION ON ACCOUNT OF SUPPRESSION SHOULD BE OF AROUND RS.5 LAC INSTEAD OF RS.8.86 LAC AS MADE BY ASSESSING OFFICER. THE LD. A.R. THEREFORE SUBMIT TED THAT THE ENTIRE ADDITION BE DELETED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. AND LD. CIT (A) AND FURTHER SUBMITTED THAT THE ARGUMENT TAKEN BY THE ASSESSEE BEFORE THE TRIBUNAL THAT THE A.O. S HOULD HAVE ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 6 CONSIDERED THE SUPPRESSION OF PRODUCTION ON THE BAS IS OF YIELD OF RICE AND NOT ON THE BASIS OF OVERALL YIELD IS RAISED BY THE ASSESSEE FOR THE FIRST TIME AND THEREFORE SHOULD BE IGNORED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPE CT TO THE ADDITION MADE ON ACCOUNT OF SUPPRESSION OF PRODUCTION. WE FI ND THAT A.O. HAS WORKED OUT THE SUPPRESSION OF PRODUCTION ON THE BAS IS OF YIELD IN THE CASE OF ASSESSEE OF PRECEEDING ASSESSMENT YEAR. BEF ORE US, ONE OF THE ARGUMENT RAISED BY THE LD. A.R. IS THAT SUPPRESSION HAS BEEN WORKED OUT ON THE INCORRECT BASIS AS THE A.O. HAS CONSIDER ED THE YIELD OF RICE AND PADDY WHEREAS HE SHOULD HAVE CONSIDERED THE YIE LD OF RICE ALONE AND IF IT WAS CONSIDERED, THE ADDITION SHOULD HAVE BEEN TO THE EXTENT OF RS.5 LACS AND NOT RS.8.86 LACS. WE FIND THAT THERE IS NO FINDING OF THE LOWER AUTHORITIES ON THE AFORESAID. WE FURTHER FIND THAT WHEN THE MATTER IN THE PENALTY PROCEEDINGS ON THE SAME QUANTUM ADDI TION WAS CARRIED BEFORE LD. CIT (A), THE PENALTY WAS DELETED AND THE REASON FOR DELETION OF PENALTY WAS THAT THE ADDITION WAS MADE BY A.O. O N ESTIMATE BASIS AND THAT THE FINDING OF A.O. IS NOT BASED ON ANY SC IENTIFIC BASIS AND THAT A.O. HAD NOT FOLLOWED THE APPROPRIATE METHOD FOR MA KING THE ADDITIONS. CONSIDERING THE TOTALITY OF AFORESAID FACTS THE NAT URE OF THE BUSINESS, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE ADDITI ON MADE BY THE A.O. IS NOT FULLY JUSTIFIED BUT CONSIDERING THE TOTALITY OF FACTS THE ADDITION IF RESTRICTED TO RS.6, LACS ON ESTIMATE BASIS WOULD ME ET THE ENDS OF JUSTICE. WE THUS DIRECT ACCORDINGLY. IN THE RESULT GROUND OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 7 9. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE COURT ON FRIDAY,THE 28 TH AUGUST,2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. DATE:- 28 -08-2015. PATKI. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! () / THE CIT(A), AHMEDABAD 5. $%& '', , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) ! '#$, &' / ITAT, AHMEDABAD 1. DATE OF DICTATION- 10-8-2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER :13-8-2015 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P .S./P.S. 21-8-2015 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 28-8-2015 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28-8 -2015: 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER ITA NO 606/AHD/2012 ASSESSMENT YEAR 2008-09 VINODKUMAR M. PAEL.. 8