A.G. OIL INDUSTRIES, Jaipur V. ITO, TONK

ITA 62/JPR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3013 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Rejection of books of accounts
• Section: 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER ITA NO. 62/JP/2013 ASSTT. YEAR : 2008-09 PAN : AACFA 2058 A M/S. A.G. OIL INDUSTRIES VS. THE ITO C/O RADHEYSHYAM VIJAY, SHASTRI NAGAR TONK KASHI KUNJ, TONK (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL SHARMA RESPONDENT BY : MS ROSHANTA MEENA DATE OF HEARING : 08.05.2013. DATE OF PRONOUNCEMENT : 08-05-2013 ORDER DATE OF ORDER :08/05/2013. PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 11 .10.2012 OF LD. CIT (APPEALS)- III, JAIPUR RAISES THE FOLLOWING GROUND :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 1,67,805/- TOWARDS ESTIMATED UNACCOUNTED YIELD OF OIL. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM MANUFACTURING / TRADING OF MUSTARD OIL / OIL CAKES AND OIL SEEDS. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS EXTRACTED OIL WEI GHING 285195 KG FROM MUSTARD SEED WEIGHING 823560 KG FOR THE YEAR UNDER CONSIDERATIO N GIVING YIELD OF 34.629% AS AGAINST YIELD OF 35.83% IN THE IMMEDIATELY PRECEDING YEAR. THE AO ALSO OBSERVED THAT THE STOCK REGISTER / PRODUCTION REGISTER ARE NOT MAINTAINED S EPARATELY FOR DIFFERENT QUALITIES OF SEEDS, THEREFORE, IN ABSENCE OF VERIFICATION OF QUALITY OF SEEDS, THE PROPER / ACTUAL ANALYSIS OF 2 YIELD OF OIL IS NOT VERIFIABLE. THE ASSESSEE HAS FA ILED TO JUSTIFY THE NIL QUANTITY OF RAW MATERIAL UNDER THE PROCESS ON EACH WORKING DAY IN T HE PRODUCTION REGISTER. SOME OF THE RAW MATERIAL DEFINITELY HAS REMAINED UNDER PROCESS IN THE MACHINES BUT IN THE PRODUCTION REGISTER THE ENTIRE QUANTITY OF RAW MATERIAL HAS BE EN SHOWN AS CRUSHED. THEREFORE, THE FIGURES ADOPTED IN THE PRODUCTION REGISTER ARE NOT ACTUAL FIGURES BUT IMAGINARY AND APPARENTLY BY TABLE COMPUTATIONS. THE ASSESSEE HAS NOT MAINTAINED ANY INCOMING AND OUTGOING REGISTER FOR VERIFICATION OF THE PRODUCTIO N WHICH IS NECESSARY TO MAINTAIN IN MANUFACTURING UNITS FOR RECEIPT AND DISPATCH OF RAW MATERIAL / FINISHED GOODS. THE INVENTORY OF STORES AS WELL AS CONSUMPTION OF IT ON DAY TODAY BASIS IS NOT MAINTAINED. THE PRODUCTION REGISTER / MANUFACTURING DOES NOT CONTAI N ANY DAY TODAY DETAIL FOR SHORTAGE OF VARIOUS LOTS AND IN ABSENCE OF THIS RECORD, VERIFIC ATION OF YIELD IS NOT POSSIBLE IN THE CASE. AFTER CONSIDERING THE ASSESSEE'S EXPLANATION THAT S EED WAS OF LOWER OIL CONTENT, THE AO RECORDED A FINDING THAT THE BOOKS OF ACCOUNT MAINTA INED BY THE ASSESSEE ARE NOT CORRECT AND COMPLETE AS ACTUAL YIELD IS NOT COMPUTABLE IN THIS CASE.. HE, THEREFORE, REJECTED THE BOOKS OF ACCOUNTS BY APPLICATION OF PROVISIONS OF S ECTION 145 OF THE ACT AND PROCEEDED TO ESTIMATE THE INCOME BY APPLYING YIELD RATE OF 35 % AS AGAINST 34.629% DECLARED BY THE ASSESSEE. THIS RESULTED INTO A TRADING ADDITION OF RS. 1,67,805/-. ACCORDINGLY, THE INCOME STOOD ASSESSED AT RS. 1,73,255/- AS AGAINST RETURNE D INCOME OF RS. 5,450/-. 3. THE LD. CIT(A) UPHELD THE REJECTION OF ACCOUNTS AS WELL AS ESTIMATION OF INCOME AND DISMISSED THE APPEAL BY THE ASSESSEE. 4. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE ASSESSEE HAS NOT ASSAILED THE ACTION TO REJECT THE BOOKS OF ACCOUNT FROM WHICH CORRECT INCOME OF THE ASSESSEE COULD NOT BE DEDUCED FOR THE YEAR UNDER CO NSIDERATION. THE ASSESSMENT ESSENTIALLY, THEREFORE, WAS TO BE MADE TO THE BEST JUDGEMENT OF THE ASSESSING AUTHORITY. IN 3 THIS CASE, I HOWEVER, DO NOT FIND ANY RATIONALE IN APPLYING THE YIELD RATE OF 35% PARTICULARLY WHEN THE YIELD OF OIL IN THIS TYPE OF INDUSTRIES AS REPORTED BY THE MINISTRY OF AGRICULTURE IS 30% TO 33% . DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAS DISCLOSED YIELD OF 34.629% WHICH IS FOUND MORE THAN THE NORMAL YIELD OF OTHER SIMILAR INDUSTRIES. THE ASSESSEE'S PAPER BOOK ALSO REVEALS THAT THE ASSESSEE HAS REPORTED SHORTAGE IN RAW MATERIAL AS WELL AS IN FINISHED GOODS. THE S HORTAGE REPORTED DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF YIELD IS 1.847% AS AGAI NST REPORTED SHORTAGE OF 1.294%.THERE IS NO GOOD EXPLANATION FOR SUCH SHORTAGE ON RECORD. IN THE ENTIRE CONSPECTUS OF THIS CASE, I CONSIDER IT REASONABLE TO SUSTAIN THE TRADING ADDIT ION AT RS. 67,805/- ONLY AS AGAINST RS. 1,67,805/-. THE ASSESSEE GETS RELIEF OF RS. 1.00 LA C ONLY 5. IN THE RESULT, THE ASSESSEE'S APPEAL STANDS PART LY ALLOWED AS PRONOUNCED IN THE OPEN COURT ON 08-05-2013 SD/- ( B.R. JAIN ) ACCOUNTANT MEMBER JAIPUR, MISHRA COPY FORWARDED TO :- M/S. A.G. OIL INDUSTRIES, TONK THE ITO, TONK. BY ORDER THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 62/JP/2013) AR ITAT JAIPUR.