THE ACIT, CEN.CIR.-2, RAJKOT V. VIJAY PROTEINS P. LTD., JUNAGADH

ITA 716/RJT/2003

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7365 (ITAT-RAJKOT)
• Duration Of Justice: 8 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-12-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 08-10-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: M P SARDA
• Keywords: Income from undisclosed sources; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.716/RJT/2003. (ASSESSMENT YEAR 1994-95.) THE A.C.I.T., VS. VIJAY PROTEINS P. LTD., CC-2, RAJKOT. OUTSIDE MAJEWADI GATE, JUNAGADH. (APPELLANT) (RESPONDENT) DATE OF HEARING : 20-12-2011 DATE OF PRONOUNCEMENT : 22 -12-2011 REVENUE BY : SHRI M. K. SINGH, D.R. ASSESSEE BY : SHRI M. P. SARDA, C.A.. O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE REVENUE AG AINST THE ORDER DATED 03-07-2003 OF CIT (A)-IV, RAJKOT DELETING THE ADDIT ION OF RS.2,70,543/- BEING THE DISALLOWANCE OF EXPENSES ON PURCHASE OF RAIDA. FOR THE ASSESSMENT YEAR 1994- 95.. 2. BRIEFLY STATED THEE FACTS ARE THAT ASSESSEE IS A COMPANY ENGAGED IN BUSINESS OF EXTRACTION OF OIL FROM OIL SEEDS. FOR T HE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TAX ABLE INCOME OF RS.1,94,660/-. THE AO FRAMED THE ASSESSMENT U/S.143(3) WHEREIN HE INTER ALIA DISALLOWED RS.2,70,543/- BEING EXPENSES ON PURCHASE OF RAIDA FROM THREE HUFS. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) DELET ED THIS ADDITION FOR THE DETAILED REASONS GIVEN IN PARA-3 OF THE IMPUGNED ORDER WHICH READS AS UNDER:- 3. SINCE THE VIEW IS TAKEN THAT IT WAS POSSIBLE TO CULTIVATE RAIDA ON THE AGRICULTURAL LAND OWNED BY THE THREE HUFS, IT WAS N OT IMPOSSIBLE FOR THE THREE HUFS TO SUPPLY THEIR AGRICULTURAL PRODUCE TO THE APPELLANT COMPANY. THE ASSESSMENT ORDER DOES NOT SHOW THAT THE APPELLA NT COMPANY PURCHASED RAIDA AT RATES IN EXCESS OF THE PREVAILIN G MARKET RATES. UNDER THESE CIRCUMSTANCES THE PURCHASE BY THE APPELLANT C OMPANY IS A GENUINE ITA NO.716/RJT/2003 2 AND NORMAL MARKET PURCHASE WHICH DOES NOT JUSTIFY A NY DISALLOWANCE. ACCORDINGLY IT IS HELD THAT THE AMOUNTS SPENT BY TH E APPELLANT COMPANY ON PURCHASES FROM THE THREE HUFS CANNOT BE DISALLOWED. ACCORDINGLY, THE FIRST AND SECOND GROUNDS OF APPEAL ARE ALLOWED. TH E THIRD GROUND OF APPEAL AGAINST THE CHARGING OF INTEREST U/S.243B IS PARTLY AND CONSEQUENTIALLY ALLOWED WITH A DIRECTION THAT THE I NTEREST MAY BE RECALCULATED IN THE LIGHT OF THE EFFECT OF THIS ORD ER. 3. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SHRI M. K. SINGH APPEARED AND POINTED OUT THAT THE LD. CIT(A) DELET ED THE ADDITION ON THE GROUND THAT CULTIVATION OF RAIDA CROP IS NOT IMPROBABLE IN AGRICULTURAL LAND BELONGING TO THREE HUFS. HE POINTED OUT THAT ADDITION OF WHAT W AS CLAIMED AS AGRICULTURAL INCOME IN THE ASSESSMENTS OF THE THREE HUFS WHOSE A DDED AS INCOME FROM UNDISCLOSED SOURCES IN THE ASSESSMENT ORDER HAD BEE N APPEALED AGAINST. THEREFORE, IN ORDER TO KEEP THE BETTER ALIVE, THE S ECOND APPEAL IS FILED AGAINST THE ORDER OF LD. CIT(A). AS AGAINST THIS, SHRI M. P. SA RDA, APPEARING ON BEHALF OF THE ASSESSEE PRODUCED THE COPY OF TRIBUNAL ORDER IN THE CASE OF THREE HUFS WHEREIN, THE APPEAL OF THE REVENUE AGAINST THE LD. CIT(A) S ORDER HAS BEEN DISMISSED. ON THE STRENGTH OF THIS TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 1993- 94, THE COUNSEL OF THE ASSESSEE SUBMITTED THAT VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 5. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BA SIS OF THIS PURCHASE OF RAIDA MADE FROM THREE HUFS IS ONLY ON THE BASIS OF VIEW TAKEN IN ASSESSMENT OF THREE HUFS THAT IT IS NOT POSSIBLE TO PRODUCED RAIDA. IN THE CASE OF THREE HUFS, IN THE ASSESSMENT YEAR 193-94, THE TRIBUNAL HAS HELD THAT IT WAS POSSIBLE TO CULTIVATE RAIDA ON THE AGRICULTURAL LAND OWNED BY THEM. THER EFORE, IT WAS NOT IMPROBABLE FOR THE THREE HUFS TO SUPPLY THEIR AGRICULTURAL PRO DUCE TO THE ASSESSEE-COMPANY. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS GIVEN COGENT REASON FOR DELETING THE ITA NO.716/RJT/2003 3 ADDITION OF RS.2,70,543/- WHICH WAS MADE BY AO BY D ISALLOWING THE EXPENSES ON PURCHASING RAIDA IS FAIR AND REASONABLE. THEREFORE , WE INCLINED TO UPHELD THE ORDER OF LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN THE OPEN COURT ON 22-12-2 011. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT :22-12-2011. NVA/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-XXI, AHMEDABAD 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT