Dy.Commissioner of Income Tax, Bareilly V. M/s Bisalpur Kisan Sehkari Chini Mills Ltd., Pilibhit

ITA 71/LKW/2014

• Counselvise Citation: 7123714 RSA 2014
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K ARORA
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.71/LKW/2014 ASSESSMENT YEAR:2007 - 08 BISALPUR KISAN SEHKARI CHINI MILLS LTD., BISALPUR, DISTT. PILIBHIT. PAN:AAAAB6708P VS DY.C.I.T., CIRCLE - 2, BAREILLY. (RESPONDENT) (APPELLANT) SHRI VIVEK MISHRA, CIT, D. R. APPELLANT BY SHRI S. K. ARORA, FCA RESPONDENT BY 15/10/2014 DATE OF HEARING 10 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, BAREILLY DATED 04/11/2013 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. GROUND NO. 1 OF THE REVENUES APPEAL, READS AS UNDER: (1) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.60,55,210/ - RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PRODUCTION OF BAGGASE & ITS SALE WITHOUT ACCOUNTING FOR IN THE BOOKS OF ACCOUNTS AND TREATING IT AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES, AS THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT ON PAGE NO. 2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED A COMPARABLE CASE ALSO AND THEREFORE, THE ORDER OF CIT(A) SHOULD 2 BE REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD BE RESTORED. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) BY MAKING FOLLOWING OBSERVATIONS ON PAGE NO. 3 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - I HAVE TAKEN INTO CONSIDERATION THE SUBMISSI ON OF THE AR FOR THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. IT IS SEEN THAT THE AO HAS REFERRED TO ANNEXURE '11' OF QUANTITATIVE DETAILS IN RESPECT OF PRODUCTION OF BAGGASSE. THE MAIN PRODUCT SUGAR IS AN EXCISABLE COMMODITY, AND THE PRODUCTION IS UNDER THE CONTROL OF EXCISE DEPARTMENT. ALL THE EXCISE RECORDS/RETURN PRESCRIBED BY T HE EXCISE DEPARTMENT WERE MAINTAINED BY THE ASSESSEE AND NO DEFECT HAD BEEN POINTED OUT BY THE EXCISE DEPARTMENT. RT - 7(C ) THE REPORT BEING MAINTAINED BY THE ASSESSEE AS PER EXCISE RULES AND THE YIELD OF BAGGASE OF 33.21% IS AS PER REPORT ONLY. FURTHER WITHOUT PIN POINTING ANY SINGLE SPECIFIC INSTANCE WHERE THE SALE OF BAGGASE HAS BEEN MADE OUTSIDE WITHOUT RECORDING ITS ENTRY IN T HE BOOKS OF ACCOUNTS IS ONLY ON THE IMAGINATION OF THE A.O. IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION AS MADE BY THE AO IS DELETED. 4.1 FROM THE ABOVE OBSERVATIONS OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY THE CIT(A) THAT THE MAIN PRODUCT IS SUGAR, WHICH IS EXCISABLE COMMODITY AND THE PRODUCTION IS UNDER THE CONTROL AND SUPERVISION OF EXCISE DEPARTMENT AND NOT A SINGLE SPECIFIC INSTANCE HAS BEEN POINTED OUT BY THE ASSESSING OFFICER WHERE THE SALE OF BAGGASE HAS BEEN MADE OUTSIDE BOOKS. SO FAR THE ASSESSMENT ORDER IS CONCERNED, WE FIND THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REFERRED TO A CASE OF KISAN SAHKARI CHINI MILL, POWANYA FOR ASSESSMENT YEAR 92 - 93 WHEREAS IN THE PRESENT CASE , THE ASSESSMENT YEAR INVOLVED IS 2007 - 08. THE YIELD OF MAIN PRODUCT OR BY - PRODUCT IS NOT CONSTANT IN EACH AND EVERY CASE AND EVERY YEAR. IT IS DEPENDABLE ON SO MANY FACTORS AND THEREFORE, MERELY ON THIS BASIS THAT IN THE CASE OF ONE ASSESSEE IN ONE PARTICULAR YEAR, HIGHER YIELD WAS RECORDED AND 3 THAT SHOULD BE CONSIDERED AS YIELD OF BAGGASSE FOR ALL THE ASSESSEES IN ALL THE YEARS, IS NOT CORRECT. THERE IS NO OTHER REASON GIVEN BY THE ASSESSING OFFICER FOR DOUBTING THE YIELD OF BAGGASSE REPORTED BY THE ASSESSEE IN THE TAX AUDIT REPORT. IN OUR CONS IDERED OPINION, ON THE BASIS OF A SINGLE CASE OF A DIFFERENT ASSESSEE FOR ONE ASSESSMENT ORDER I.E. 92 - 93, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED IN THE ABSENCE OF ANY OTHER SUPPORTING MATERIAL. WE, THEREFORE, HOLD THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CI T(A) ON THIS ISSUE. GROUND NO. 1 IS REJECTED. 5. GROUND NO. 2 OF THE REVENUES APPEAL, READS AS UNDER: (2) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,12,04,331/ - MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF SUPPRESSION OF PRODUCTION OF SUGAR AND ITS SALE WITHOUT ACCOUNTING FOR IN THE BOOKS OF ACCOUNTS. 6. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THIS ISSUE ALSO, WE FIND THAT THE ADDITION WAS MADE BY ASSESSING OFFICER ON TH IS BASIS ALONE THAT IN THE CASE OF KISAN SAHKARI CHINI MILL, PURANPUR , YIELD OF SUGAR WAS DISCLOSED AT 9.15% WHEREAS THE ASSESSEE HAS SHOWN THE YIELD OF SUGAR AT 8.74%. APART FROM GIVING ONE CASE OF KISAN SAHKARI CHINI MILL, PURANPUR, NO OTHER BASIS HAS BEEN INDICATED BY THE ASSESSING OFFICER FOR DOUBTING THE YIELD PERCENTAGE REPORTED BY THE ASSESSEE. IN THIS REGARD , THIS IS VERY IMPORTANT TO NOTE THAT PRODUCTION OF SUGAR IS DIRECTLY UNDER THE CONTROL AND SUPERVISION OF EXCISE DEPARTMENT AND THIS IS NOT THE CASE OF THE ASSESSING OFFICER THAT ANY ADVERSE FINDING HAS BEEN RECORDED BY THE EXCISE DEPARTMENT. IN THE ABSENCE OF ANY ADVERSE FINDING BY EXCISE DEPARTMENT AND ALSO IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER INDICATING SUGAR PRODUCTION 4 SUPPRESSION, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. GROUND N O. 2 IS ALSO REJECTED. 8. GROUND NO. 3 OF THE REVENUES APPEAL, READS AS UNDER: (3) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.2,44,09,510/ - UNDER SECTION 43 B OF THE I.T.ACT,1961. 9. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO DRAWN OUR ATTENTION TO PAGE NO. 83 OF THE PAPER BOOK CONTAINING THE ANNEXURE TO TAX AUDIT REPORT IN WHICH THE DETAILS REGARDING UNPAID DUTY IS AVAILABLE. HE POINTED OUT THAT THE AMOUNT IN DISPUTE ON ACCOUNT OF CESS ON TAX WAS THE SAME ON THE FIRST DAY OF THE YEAR AND ON THE LAST DAY OF THE YEAR I.E. RS.70,13,524/ - AND THEREFORE, NO DISALLOWANCE IS CALLED FOR ON THIS ACCO UNT IN THE PRESENT YEAR. REGARDING PURCHASE TAX, HE SUBMITTED THAT OUT OF OPENING BALANCE OF RS.95,35,732/ - , THE PAYMENT WAS MADE IN THE PRESENT YEAR TO THE EXTENT OF RS.46,26,353/ - AND FOR THIS , DEDUCTION WAS CLAIMED AND IS ALLOWABLE U/S 43B AND THE REMA INING AMOUNT OF OPENING BALANCE OF RS.49,09,379/ - OUTSTANDING ON THE LAST DAY OF THE YEAR IS NOT REQUIRED TO BE ADDED IN THE PRESENT YEAR BECAUSE THE SAME WAS ADDED IN THE PRECEDING YEAR. REGARDING THE AMOUNT OF PURCHASE TAX INCURRED IN THE PRESENT YEAR O F RS.61,92,214/ - , HE SUBMITTED THAT AN AMOUNT OF RS.14 LAC S WAS PAID BEFORE THE DUE DATE O F FILING OF RETURN OF INCOME AND THEREFORE, DISALLOWANCE OF NET AMOUNT OF RS.47,92,214/ - IS REQUIRED TO BE MADE. IN RESPECT OF EXCISE DUTY , HE SUBMITTED THAT THE OPE NING OUTSTANDING BALANCE OF RS.28 1.69 LACS WAS PAID IN THE PRESENT YEAR AND CLOSING OUTSTANDING BALANCE OF RS.225 .10 LAC S WAS PAID BEFORE DUE DATE AND THEREFORE, NO DISALLOWANCE IS JUSTIFIED IN THE PRESENT YEAR. 5 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ORDER OF CIT(A) IS VERY CRYPTIC WHEREAS THE ASSESSING OFFICER HAS MADE ADDITION IN RESPECT OF OPENING UNPAID BALANCE OF PURCHASE TAX AND CESS OF RS.1192.22 LAC AS WELL AS CLOSING OUTSTANDING BALAN CE OF PURCHASE TAX OF RS.124.86 LAC. WHEN WE EXAMINE THE DETAILS AVAILABLE ON PAGE NO. 4 OF THE ASSESSMENT ORDER AND PAGE 83 OF THE PAPER BOOK , WE FIND THAT THE AMOUNT OF CESS IS SAME I.E. RS.70,13,524/ - AT THE BEGINNING AND END OF THE YEAR . WHEN THIS AM OUNT WAS OUTSTANDING ON THE FIRST DAY OF THE ACCOUNTING YEAR, NO ADDITION IS CALLED FOR IN THE PRESENT YEAR ALTHOUGH THE ASSESSEE WOULD HAVE BEEN ELIGIBLE FOR DEDUCTION IF ANY PAYMENT WOULD HAV E BEEN MADE BY HIM IN THE PRESENT YEAR. THEREFORE, THE ADDITIO N MADE BY THE ASSESSING OFFICER IS NOT ON SCIENTIFIC BASIS. SINCE THE ORDER OF CIT(A) IS CRYPTIC, WE FEEL IT PROPER THAT THIS MATTER SHOULD GO TO THE FILE OF THE CIT(A) FOR FRESH DECISION BY WAY OF PASSING SPEAKING AND REASONED ORDER. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION. THE CIT(A) SHOULD PASS A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES . GROUND NO. 3 IS ALLOWED FOR STATIS TICAL PURPOSES. 11. GROUND NO. 4 OF THE REVENUES APPEAL, READS AS UNDER: (4) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 36(1)(VA) OF THE I. T. ACT, ON ACCOUNT OF LATE DEPOSIT OF EMPLOYEES DEDUCTION TO PROVIDENT FUND FOR FACTORY AND FEDERATION STAFF. 12. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT A CLEAR FINDING IS GIVEN BY LEARNED CIT(A) THAT THE ENTIRE AMOUNT OF P.F. CONTRIBUTION WAS DEPOSITED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME 6 AND THEREFORE, THE SAME IS ALLOWABLE AS PER THE AME NDED PROVISIONS OF THE ACT. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE . ACCORDINGLY, GROUND NO. 4 IS REJECTED. 14. GROUND NO. 5 OF THE REVENUES APPEAL, READS AS UNDER: (5) THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNTS OF CLOSING STOCK OF SUGAR AT RS.1,59,03,900/ - INCLUDING THE EXCISE DUTY OF RS.9,70,660/ - . 15. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESS EE SUPPORTED THE ORDER OF LEARNED CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ON THIS ISSUE ALSO, THE ORDER OF CIT(A) IS VERY CRYPTIC. THIS ISSUE WAS DECIDED BY HIM BY MAKING FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE ISSUE . THE METHOD OF VALUATION OF CLOSING STOCK OF FREE SUGAR AT COST PRICE OR MARKET PRICE WHICHEVER IS LOWER, HAS BEEN FOLLOWED DURING THE YEAR BY THE APPELLANT WITHOUT ANY CHANGE AND THE SAME METHOD HAS ALWAYS BEEN ACCEPTED BY THE DEPARTMENT IN THE PAST YEA RS ALSO. AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 17. THERE IS NO FINDING GIVEN BY CIT(A) REGARDING THE MAIN OBJECTION OF THE ASSESSING OFFICER THAT THE SAME STOCK FOR WHICH THE ASSESSEE ADOPTED RATE OF RS. 1,630/ - , RS.1,665/ - , RS.1 ,700/ - AND RS.1,735/ - RESPECTIVELY PER QUINTAL AS ON 31/03/2006 , I N THE PRESENT YEAR, THE ASSESSEE HAS APPLIED A RATE OF RS.1,250/ - RS.1,285/ - , RS.1,320/ - AND RS.1,355/ - PER QUINTAL RESPECTIVELY. IF THE SAME STOCK IS LYING THEN WHAT IS THE BASIS OF APPLYI NG LOWER RATE IN THE PRESENT YEAR IS NOT CLEAR AND CIT(A) HAS NOT GIVEN ANY FINDING ON THIS ASPECT. HENCE, ON THIS ISSUE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR DECIDING THE ISSUE AFRESH BY PASSING REASONED AND SPEAKI NG 7 ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. GROUND NO. 5 IS ALLOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR