ITO, Sitapur V. Shri Jai Prakash Bharita, Sitapur

ITA 646/LKW/2011

• Counselvise Citation: 64623714 RSA 2011
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-06-2012
• Assessment Year: misc
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWATI RATAN
• Assessee Lawyers: O P GUPTA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI MEHAR SI NGH , ACCOUNTANT MEMBER ITA NO. 646/LKW/2011 ASSESSMENT YEAR: 2005 - 06 THE INCOME - TAX OFFICER SITAPUR V. SRI JAI PRAKASH B HARITA S/O SRI NAGARMAL BHARITA PROP. M/S SANDEEP KUMAR & SANJAY KUMAR LOHARBAGH, SITAPUR PAN: AAAVPB2932K (APPELLANT) (RESPONDENT) C.O. NO. 11/LKW/2012 [ARISING OUT OF ITA NO. 646/LKW/2011] ASSESSMENT YEAR: 2005 - 06 SRI JAI PRAKASH BHARITA S/O SR I NAGARMAL BHARITA PROP. M/S SANDEEP KUMAR & SANJAY KUMAR LOHARBAGH, SITAPUR V. THE INCOME - TAX OFFICER SITAPUR PAN: AAAVPB2932K ( CROSS - OBJECTOR ) (RESPONDENT) DEPARTMENT BY: SMT. SWATI RATAN, D.R. ASSESSEE BY: SHRI. O. P. GUPTA, ADVOCATE DATE OF H EARING: 27.06.2012 DATE OF PRONOUNCEMENT: 02.07.2012 O R D E R PER S UNIL KUMAR YADAV : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 8,58,728 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF : - 2 - : UNDERVALUED CLOSING STOCK. THE ASSESSEE HAS FILED CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT(A). THE APPEAL AND THE CROSS OBJECTION WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED OR DER. 2 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE CLOSING STOCK OF THE ASSESSEE HAS BEEN UNDERVALUED. ACCORDINGLY HE ASKED THE ASSESSEE TO EXPL AIN AS TO WHY THE V ALUATION OF R ICE AT ` 997.68 PER QUINTAL, RICE BRAN AT ` 405 PER QUINTAL, PADDY HUSK AT ` 130 PER QUINTAL AND PADDY AT ` 587.29 PER QUINTAL , INCLUSIVE OF PURCHASE EXPENSES SHOULD NOT BE MADE. THE ASSESSEE VIDE REPLY DATED 9.8.2007 HAS STATED THAT HE HULLED TW O TYPES OF PADDY I.E. COMMON AND GRADE - I AND VALUATION HAS BEEN MADE ON THE BASIS OF AVERAGE RATE OF ` 560 PER QUINTAL. THE ASSESSEE HAS ALSO FURNISHED RATES OF COMMON RICE, GRADE - I RICE AS WELL AS BROKEN RICE. THE EXPLANATIONS FURNISHED BY THE ASSESSEE W ERE NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER OBTAINED THE RATE S FROM KRISHI UTPADAN MANDI SAMITI, SITAPUR WHO HAVE SUGGESTED THE RATE OF COMMON PADDY AT ` 560 PER QUINTAL, GRADE - I PADDY AT ` 590 PER QUINTAL, COMMON RICE AT ` 988 PER QUINT AL AND RICE GRADE - I AT ` 1037.10 PER QUINTAL. THE ASSESSING OFFICER HIMSELF HAS ALSO NOTED THAT THE RATES ARE SLIGHTLY VARIED DAY - TO - DAY. THE ASSESSING OFFICER ADOPTED THE RATES AS ON 31.3.2005 GIVEN IN THE CERTIFICATE ISSUED BY THE SECRETARY, KRISHI UTPA DAN MANDI SAMITI, SITAPUR AND VALUED THE CLOSING STOCK AT ` 54,32,439 AGAINST THE VALUE OF CLOSING STOCK DECLARED BY THE ASSESSEE AT ` 45,73,711 AND MADE THE ADDITION OF ` 8,58,728 TOWARDS UNDERVALUATION OF CLOSING STOCK. 3 . THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM AND THEREAFTER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 30.3.2009 RESTORED THE MATTER BACK TO THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THE : - 3 - : ISSUE ON M ERIT AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO THE ASSESSING OFFICER. CONSEQUENTLY, THE LD. CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER ON THE SUBMISSIONS MADE BY THE ASSESSEE AND IN THE REMAND REPORT, THE ASSESSIN G OFFICER HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE REGARDING THE RATES OF VALUATION OF CLOSING STOCK OF ALL ITEMS EXCEPT THE RATE OF RICE BRAN. THE LD. CIT(A) EXAMINED THE REMAND REPORT IN THE LIGHT OF ASSESSEES CONTENTION AND FINALLY ACCEPTED THE VA LUATION OF CLOSING STOCK AS DECLARED BY THE ASSESSEE AND DELETED THE ADDITION. 4 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE US AND PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 5 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUB MITTED THAT WHILE ADJUDICATING THE ISSUE THE LD. CIT(A) HAS CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER AND IN THE REMAND PROCEEDINGS THE ASSESSING OFFICER HAS ACCEPTED THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE WITH RESPECT TO ALL THE ITEMS E XCEPT THE RATE OF RICE BRAN , BUT FOR NON - ACCEPTANCE OF THE RATE OF RICE BRAN DECLARED BY THE ASSESSEE , NO EXPLANATION WAS FURNISHED BY THE ASSESSING OFFICER. THEREFORE, THE LD. CIT(A) HAS RIGHTLY ADJUDICATED THE ISSUE AND HIS ORDER DESERVES TO BE UPHELD. 6 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT IN THE FIRST ROUND, THE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING AN OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE AS WELL AS THE ASSESSING OFFICER AND THE LD. CIT(A) HAS CALLED A REMAND REPORT FROM THE ASSESSING OFFICER AND IN THE REMAND PROCEEDINGS THE ASSESSING OFFICER HAS ACCEPTED MOST OF THE CONTENTIONS OF THE ASSESSEE EXCEP T IN THE CASE OF RATE OF RICE BRAN, FOR WHICH NO EXPLANATION WAS FURNISHED AS TO WHY HE IS NOT ACCEPTING THE RATE DECLARED BY THE ASSESSEE. : - 4 - : MOREOVER, THE ASSESSING OFFICER HAS HIMSELF ADMITTED THAT THE RATES VARIES DAY - TO - DAY AND WHATEVER RATES QUOTED BY THE SECRETARY, KRISHI UTPADAN MANDI SAMITI, SITAPUR ARE LEVY RATES AND IT CANNOT BE SAID THAT ALL THE AGRICULTURAL PRODUCE ARE SOLD ON THAT VERY RATE. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT HE HAS RIGHTLY ADJUDICATED THE ISSUE UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. WE, THEREFORE, FIND NO INFIRMITY THEREIN. WE, HOWEVER, FOR THE SAKE OF REFERENCE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) AS UNDER: - THE CONTENTS OF THE ORDER HAVE BEEN C ONSIDERED AND SUBMISSION OF THE APPELLANT PERUSED. REMAND REPORT WAS ALSO OBTAINED FROM THE ASSESSING OFFICER. THE RELEVANT EXTRACT OF THE REPORT IS REPRODUCED AS UNDER: - AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND GOING THROUGH THE ASSE SSMENT ORDER, FACTS AVAILABLE IN THE RECORDS, THE REPORT OF THE UNDERSIGNED IS AS UNDER: - '.......THE ASSESSEE HAS SUBMITTED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSING OFFICER HAS NOT DISBELIEVED QUANTITY OF CLOSING STOCK BUT HAS E NHANCED THE VALUE IN MONETARY TERMS. RICE MILL UNIT DISCLOSED ESTIMATED PADDY COMMON 694.51 Q 379067.00@545.80 97861.00@572.80 GR. I 330.10 Q 194759.00@590.00 198984.0@ 602.80 CLOSING STOCK OF PADDY COMMO N WAS OF PURCHASE MADE FROM REGISTERED DEALERS AND NOT FROM FARMERS AT MANDI STHAL. TOTAL PURCHASE FROM REGISTERED DEALERS WERE MADE FROM 22.1.2005 : - 5 - : TO 2.2.2005 TO THE TUNE OF 899.25 Q. PURCHASE FROM FARMERS WERE MADE UPTO 18.1.2005 ONLY. PADDY GR I WAS P URCHASED FROM FARMERS. THE LAST PURCHASE WAS OF 330.10Q WHICH REMAINED IN STOCK @ 590 . 00 PER QUINTAL AND APPELLANT HAS DISCLOSED VALUATION OF CLOSING STOCK @ 590.00 PER QUINTAL. AVERAGE OF BOTH COMES TO RS. 560 AND ASSESSING OFFICER HAS ESTIMATED VALUATIO N @ 572.80 PER QUINTAL @ 602.80. AVERAGE COMES TO RS. 582.51, WITHOUT ANY BASIS. TAXES ON PURCHASE CAN NOT BE SAID TO BE A PART OF PURCHASE PRICE. RICE DISCLOSED ESTIMATED COMMON 2900 Q 2595500@895 5865200@988 GR.I 450 Q 451527@450 466694@103 7.10 BROKEN 1470.40Q 896944@610 BROKEN NOT A CCEPTED, ADDED COMMON 1452558 THE ASSESSING OFFICER HAS QUOTED THE RATES OF RICE IN HIS ASSESSMENT ORDER, OBTAINED FROM MANDI PARISHAD, WHICH ARE LEVY RATES. THE ASSESSEE HIMSELF HAS SOLD TO GOVERNMENT ON THESE RATES. THERE WAS LEVY SHARE IN CLOSING STOCK AND IT WAS ALL RELEASE SHARES AND WAS NOT SOLD IN A.Y. 2005 - 06, THIS SHARE WAS SOLD IN A.Y. 2006 - 07. VALUED THE ASSESSEE HAS SOLD COMMON @ 740/ - PER QUINTAL BILL NO. 28/9.4.05 8 95/ - THE ASSESSEE HAS SOLD RICE GR. I @ 975/ - PER QUINTAL BILL NO. 47/16.6.05 1,02,586/ - THE ASSESSEE HAS SOLD RICE BROKEN @ 570/ - PER QUINTAL BILL NO. 40/4.5.05 610/ - AND ASSESSEE HAS VALUED CLOSING STOCK MORE THAN SALES PRICE IN ANTICIPATION. THIS FACT SHOWS THE BONAFIDES OF THE ASSESSEE.' : - 6 - : REGARDING RICE BRAN, HE SUBMITTED IN THE REMAND REPORT THAT THE ASSESSEE HAS DISCLOSED 350 / - PER QUINTAL AND THE ASSESSING OFFICER HAS VALUED 390/ - PER QUINTAL AND YOUR GOODSELF HAS ACCEPTED THE SALES RATE OF RICE BRA N AS 350 / - PER QUINTAL IN TRADING UNIT. THE CLAIM OF THE ASSESSEE IS WITHOUT BASE & ALSO NOT JUSTIFIED. THE ASSESSING OFFICER HAS INCREASED THE VALUE OF CLOSING STOCK ON THE BASIS OF RATES OBTAINED FROM KRISHI UTPADAN MANDI SAMITI, WHICH IS REASONABLE & J USTIFIED. THEREFORE, THE APPEAL MAY BE DECIDED ON THE BASIS OF THE FACTS, MENTIONED IN THE ASSESSMENT ORDER. ' THE A.O. IN THE REMAND REPORT, HAS ACCEPTED THE SUBMISSION OF THE APPELLANT REGARDING RATES OF VALUATION OF CLOSING STOCK OF ALL ITEMS EXCEPT TH E RAT E OF RICE BRAN. HOWEVER, IN THE REMAND REPORT, HE DID NOT BRINING ANY FRESH MATERIAL ON THE RECORD TO ESTABLISH THAT THE RATE ADOPTED BY THE ASSESSEE WAS NOT CORRECT EXCEPT MAKING AN OBSERVATION THAT THE A.O. INCREASED THE VALUE OF CLOSING STOCK ON T HE BASIS OF RATES OBT A INED FROM KRISHI UTPADAN MANDI SAMITI, WHICH WAS REASONABLE AND JUSTIFIED. THIS OBSERVATION ITSELF LEADS TO THE CONCLUSION THAT THE A.O. WAS NOT HAVING ANY FACTUAL BASIS TO REJECT THE RATE ADOPTED BY THE ASSESSEE. THE ONLY BASIS OF AD OPTING ENHANCED RATE OF VALUATION WAS THE REPORT OF KRISHI UTPADAN MANDI SAMITI WHICH CANNOT BE CONSIDERED AS SACROSANCT BECAUSE THESE RATES ARE DETERMINED IN A PARTICULAR MANNER WHICH CANNOT BE APPLIED IN ALL THE CIRCUMSTANCES AND ALL THE TIMES FOR EVERY QUALITY OF A PARTICULAR PRODUCT. THE RATES ARE DEPENDENT UPON NUMBER OF FACTORS SUCH AS QUALITY OF PRODUCE, THE PREVAILING RATES IN THE MARKET, CONTENT OF MOISTURE IN THE PRODUCE AND DEMAND IN THE MARKET ETC. THEREFORE, THE OBSERVATION OF THE A.O., THAT TH E RATES FIXED BY KRISHI UTPADAN MANDI SAMITI ARE REASONABLE AND JUSTIFIED, DO NOT HAVE ANY RATIONAL OR : - 7 - : SCIENTIFIC BASIS. THEREFORE, IN MY CONSIDERED OPINION, THE RATE, ADOPTED BY THE A.O . , IN THE CASE OF RICE BRAN IS ALSO NOT JUSTIFIED. ACCORDINGLY, THE GR OUND OF APPEAL IS ALLOWED. 7 . SINCE NO INFIRMITY HAS BEEN POINTED OUT BY THE LD. D.R. IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER. 8 . SINCE THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A) IS CONFIRMED BY US IN THE FOREGOING PARAS, THE CROSS OBJECTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS. WE ACCORDINGLY DISMISS THE SAME. 9 . IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 02.07.2012. S D/ - S D/ - [ MEHAR SINGH ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2.7.2012 JJ: 2806 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR