Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 0750 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-05-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
24-05-2016
Assessment Year
2003-2004
Appeal Filed On
12-02-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.92(ASR)/2016 ASSESSMENT YEAR:2003-04 PAN: AADFP8732D DEPUTY COMMR. OF INCOME TAX, VS. M/S. PARTAB PAPER MILLS LTD., CIRCLE-5, AMRITSAR. MUKUT HOUSE, THE MALL, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. A.N. MISRA, DR RESPONDENT BY: SH. SATISH BANSAL, CA DATE OF HEARING: 24/05/2016 DATE OF PRONOUNCEMENT: 26/05/2016 ORDER PER A.D. JAIN, JM THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2003-04, AGAINST THE ORDER, DATED 05.11.2015, PASSED BY THE LD. CIT(A), AMRITSAR. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-2, AMRITSAR ERRED IN DELETING ADDITION OF RS.73,26,906/- MADE BY THE AO BY REJECTING THE BOO KS OF ACCOUNTS OF THE ASSESSEE WITHOUT APPRECIATING THE F ACT THAT THE AO HAD GIVEN REASONABLE OPPORTUNITY TO ASSESSEE TO EXPLAIN THE DIFFERENCE IN YIELD RATES AND TO PRODUC E THE RELEVANT RECORDS, BUT THE ASSESSEE NEITHER COULD E XPLAIN THE DISCREPANCIES POINTED OUT BY THE AO NOR PRODUCE THE PRODUCTION RECORDS FOR VERIFICATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-2, AMRITSAR ERRED IN GRANTING THE RELIEF ON THE BASIS THAT THE ASSESSEE COMPANY WAS IN EXCISABLE UNIT AND THAT I WAS MAINTAINING DAY TO DAY PRODUCE REGISTER OF FINI SHED PAPER, WITHOUT APPRECIATING THE FACT THAT THE ASSES SEE DID ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 2 NOT PRODUCE ANY EXCISE RECORD TO EXPLAIN THE DIFFE RENCE IN YIELD RATES ETC. POINTED OUT BY THE AO DURING ASSES SMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-2, AMRITSAR ERRED IN DELETING ADDITION OF RS.73,26,906/- MADE BY THE A.O. WITHOUT REBUTTING VARIOUS JUDICIAL PRONOUNCEMENT OF HONBLE APEX COURT AND HI GH COURTS INCLUDING PUNJAB & HARYANA HIGH COURT RELIE D UPON BY THE A.O. 2. THE FACTS ARE THAT THE ASSESSEE-COMPANY IS IN TH E BUSINESS OF MANUFACTURE OF WRITING PRINTING PAPER AND NEWS PRIN TING PAPER. THE RAW-MATERIAL INVOLVED IN THE MANUFACTURING OF THE A BOVE PRODUCTION PROCESS IS WASTE PAPER, CHEMICALS, RICE HUSK AS FUE L, ETC. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE MADE SALES OF RS. 8,29,37,248/- WITH GROSS LOSS OF RS.8,41,85,900/- AND GROSS LOSS OF RS .4,08,93,410/- FOR THE EARLIER YEAR. NOTICE U/S 142(1) DATED 28.02.2006 WA S ISSUED TO THE ASSESSEE, AS UNDER: PERUSAL OF THE CHART FOR CONSUMPTION OF RAW MATERI AL AND PRODUCTION OF FINISHED GOODS SHOWS THE AVERAGE YIEL D AT 76.94%. IT IS SEEN TAT THE YIELD DURING THE YEAR VARIED FROM 6 8.36% TO 83.54%. ADMITTEDLY, YOU DO NOT MAINTAIN ANY DAY TO DAY PROD UCTION RECORD. UNDER THE CIRCUMSTANCES, YOUR TRADING RESULTS DESER VE TO BE REJECTED. YOU MAY FILE YOUR EXPLANATION, IF ANY, BY 16.03.2006. 3. IN THE REPLY FURNISHED BEFORE THE AO, THE ASSES SEE SUBMITTED THAT THE RATIO OF FINISHED GOODS PACKED TO RAW-MATERIAL CONSUMED CAN NEVER BE UNIFORM AS THERE CAN BE WORK IN PROGRESS OR UNPA CKED FINISHED GOODS. 4. THE AO, HOWEVER, REFUSED TO ACCEPT THE ASSESSEE S CONTENTION, OBSERVING THAT THE YIELD WOULD NOT TAKEN INTO CONSI DERATION THE WORK IN ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 3 PROGRESS OF THE UNPACKED FINISHED GOODS. THE AO OBS ERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOW N AVERAGE YIELD AT 76.94%, AS AGAINST THAT OF 82.19% FOR THE IMMEDIATE LY PRECEDING ASSESSMENT YEAR, I.E., A.Y. 2002-03. IT WAS OBSERVE D THAT THE YIELD FOR THE MONTHS OF APRIL AND MAY, 2002 HAD BEEN SHOWN AT 83. 11% AND 83.54%, RESPECTIVELY; AND THAT THIS GAVE AN AVERAGE YIELD A T 83.32%. THE AO WAS THUS OF THE VIEW THAT IT WOULD BE REASONABLE TO TAK E THE YIELD OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AT 83.32% . THE AO WORKED OUT THE SUPPRESSION OF PRODUCTION AS UNDER: CONSUMPTION OF RAW MATERIAL 6256.031 M. TONS PRODUCTION BY TAKING THE YIELD AT 83.32% AS DISCUSSED ABOVE 5212.525 M. TONS LESS: PRODUCTION DISCLOSED BY THE ASSESSEE. 4813.4 56 M.TONS SUPPRESSION OF PRODUCTION 399.069 THE AO APPLIED THE AVERAGE SALE RATE OF RS.18360 PER M. TON. ACCORDINGLY, THE SUPPRESSION WAS WORKED OUT AT RS.7 3,26,906/-, WHICH AMOUNT WAS ADDED TO THE ASSESSEES INCOME FOR ALLEG ED SUPPRESSION OF PRODUCTION. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION. 6. THE DELETION OF THE ADDITION AT THE HANDS OF THE LD. CIT(A) HAS BEEN CHALLENGED BEFORE US BY THE DEPARTMENT. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION CORRE CTLY MADE BY THE AO BY REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE; THA T WHILE DOING SO, THE LD. ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 4 CIT(A) FAILED TO APPRECIATE THAT THE AO HAD GIVEN A REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE DIFFEREN CE IN THE YIELD RATES AND TO PRODUCE THE RELEVANT RECORD, NEITHER OF WHIC H WAS DONE BY THE ASSESSEE; THAT THE LD. CIT(A) GRANTED THE RELIEF TO THE ASSESSEE WITHOUT TAKING INTO CONSIDERATION THE FACT THAT THOUGH THE ASSESSEE-COMPANY WAS STATED TO BE AN EXCISABLE UNIT, IT DID NOT PROD UCE ANY EXCISE RECORD BEFORE THE AO TO EXPLAIN THE DIFFERENCE IN YIELD RA TES, ETC., AND THAT THE LD. CIT(A) FAILED TO COUNTER THE JUDICIAL DECISIONS REL IED ON BY THE AO. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 8. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS C ORRECTLY DELETED THE ADDITION WRONGLY MADE; THAT THE ADDITION WAS, IN F ACT, NOT AT ALL CALLED FOR, SINCE THE AO HAD NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, NOR HAD THE AO BROUGHT ON RECORD A NY MATERIAL TO SUPPORT THE ALLEGED SUPPRESSION OF PRODUCTION AT TH E HANDS OF THE ASSESSEE; THAT NO DEFECT WAS ALSO POINTED OUT IN TH E EXCISE RECORD MAINTAINED BY THE ASSESSEE, WHICH WAS PUT BEFORE T HE AO; AND THAT AS SUCH, THERE BEING NO MERIT AT ALL IN THE APPEAL OF THE DEPARTMENT, THE SAME BE DISMISSED WHILE MAINTAINING THE WELL REASO NED ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. THE FACTS ARE NOT DISPUTED. THE I SSUE IS AS TO WHETHER THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MA DE BY THE A.O. THE ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 5 ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURE OF WRITING PAPER AND NEWS PRINTING PAPER. THE AO FOUND THE AVERAGE Y IELD OF THE ASSESSEE, AS AVAILABLE FROM THE CHART OF CONSUMPTION OF RAW-M ATERIAL AND PRODUCTION OF FINISHED GOODS, TO BE 76.94%. FOR THE ASSESSMENT YEAR 2002-03, THE AVERAGE YIELD WAS OF 82.19%. FOR THE M ONTH OF APRIL, 2002, THE YIELD WAS OF 82.19%. FOR THE MONTH OF MAY, 2002 , IT WAS 83.54%. FROM THIS DATA, THE AVERAGE YIELD CAME TO 83.32%, W HICH WAS TAKEN BY THE AO TO ESTIMATE THE SUPPRESSED PRODUCTION OF 399 .069 M.T. AMOUNTING TO RS.73,26,906/-. 10. IT WOULD BE APPROPRIATE TO HEREUNDER REPRODUCE THE MONTHLY CHART OF CONSUMPTION OF RAW MATERIAL (BEING WHITE RECORD /COPY PAPER) FOR PRODUCTION OF WRITING PADS AND OLD NEWSPAPER/OLD BO OKS FOR PRODUCTION OF NEWS-PRINT PAPER (APB 21), AS PRODUCED BEFORE TH E AO: WHITE RECORD NEWSPAPER TOTAL PRODUCTION YIELD & COPY & OLD BOOKS CONSUMED APRIL 427.172 66.060 493.232 409.9096 83.11 MAY 209.690 9.810 219.500 183.3783 83.54 JUNE 504.850 0.000 504.850 420.5023 83.29 JULY 756.440 0.000 756.440 622.7081 82.32 AUGUST 568.958 282.615 851.573 682.5669 80.15 SEPTEMBER 599.922 25.275 625.197 506.5608 81.02 OCTOBER 375.480 8.440 383.920 308.1011 80.25 NOVEMBER 115.300 271.880 387.180 268.4102 69.32 DECEMBER 306.874 222.325 529.199 365.8552 69.13 JANUARY 21,632 682.640 704.272 497.912 70.70 FEBRUARY 0.000 297.630 297.630 203.4644 68.36 MARCH 206.017 297.021 503.038 344.0874 68.40 TOTAL 4092.335 2163.696 6256.031 4813.4563 76.94 ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 6 11. THE ABOVE TABLE CATEGORICALLY SHOWS THE MONTH- WISE CONSUMPTION OF RAW-MATERIAL, CORRESPONDING TO THE MONTH-WISE PR ODUCTION AND THE RESULTING YIELD OF EVERY MOTH FROM APRIL, 2002 TO M ARCH, 2003. 12. NOW, FIRSTLY, THE AO HAS TAKEN INTO CONSIDERATI ON THE YIELD FOR THE MONTHS OF APRIL, 2002 AND MAY, 2002 ONLY, TO ARRIVE AT THE AVERAGE YIELD OF 83.32%, AS AGAINST THAT OF 76.94%, ARRIVED AT ON THE BASIS OF THE YIELD FOR THE TWELVE MONTHS COMPRISING THE ENTIRE YEAR. S O, THIS INITIAL ACTION OF THE AO IS FAULTY AND THE ESTIMATE BASED THEREON, AS SUCH, CANNOT BE TAKEN CORRECT. 13. THE ABOVE IS BESIDES THE FACT THAT THE ONLY FAC TOR WHICH WEIGHED WITH THE AO TO REJECT THE ASSESSEES BOOKS WAS THAT DURING THE YEAR, NO DAY TO DAY PRODUCTION RECORD WAS MAINTAINED BY THE ASSESSEE. NOW, THIS, OF ITSELF, CANNOT BE A VALID BASIS FOR REJECTION OF THE ASSESSEES BOOKS OF ACCOUNT, PARTICULARLY WHEN NOTHING WAS POINTED OUT BY THE AO TO HAVE MANDATED THE ASSESSEE TO MAINTAIN SUCH A DAY TO DAY RECORD OF PRODUCTION. 14. ACCORDINGLY, THE GRIEVANCE RAISED BY THE DEPART MENT IN SUPPORT OF THE REJECTION OF BOOKS OF ACCOUNT BY THE AO, HAS NO T MERIT AND IT IS REJECTED. 15. APROPOS THE OTHER OBJECTION RAISED BY THE DEPAR TMENT THAT THE ASSESSEE DID NOT PRODUCE THE EXCISE RECORD, APB-24 CONTAINS THE FOLLOWING CHART, WHICH GIVES THE MONTH-WISE PRODUCT ION AND CLEARANCE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03, SHOWI NG SEPARATELY, THE ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 7 RESPECTIVE CLEARANCE FOR WRITING AND PRINTING PRODU CTION, NEWS PRINT PRODUCTION AND WRAPPER PRODUCTION. MONTHWISE PRODUCTION AND CLEARANCE FOR YEAR 2002-03 MONT HS WRITING AND PRINTING NEWS PRINT WRAPP ER TOTAL WRITING & PR NEWS PRINT WRAPP ER TOTAL PRODUCTI ON PRODUCTI ON CLEARAN CE CLEARAN CE APRIL 365367.6 44542 0 409909.6 369623.6 53513 0 423136. 6 MAY 168446.3 932 14000 183378.3 155571.2 0 10000 165517. 12 JUNE 420502.3 0 0 420502.3 416425.4 0 0 416425. 4 JULY 622708.1 0 0 622708.1 590065.1 7488 4000 601553. 1 AUGU ST 637184.9 45382 0 682566.9 639125.9 0 0 639125. 9 SEPT 499333.8 7227 0 506560.8 486627.2 10068 0 496695. 2 OCT. 297101.1 0 11000 308101.1 226022.9 9054 11000 246076.9 NOV. 93804.2 174606 0 268410.2 117813.2 163890 0 281703. 2 DEC. 32250.2 333605 0 365855.2 1728 292514 0 294242 JAN 80028 417884 0 497912 64715 362590 0 427305 FEB 68586.4 134878 0 203464.4 134386 42710 0 177096 MAR. 60733.4 283354 0 344087.4 92391.4 217251 0 309642.4 TOTAL 3346046 .3 1442410 25000 4813456 .3 3294494 .9 115907 8 25000 4478572.9 SUMMARY WRITING & NEWS PRINT WRAPPER TOTAL PRINTING OPENING STOCK 0.0000 33.0780 0.0000 33.0780 ADD PRODUCTION 3346.0463 1442.4100 25.0000 4813.4563 TOTAL 3346.0463 1475.4880 25.0000 4846.5343 LE SS DESPATCHES 3294.4949 1159.0780 25.0000 4478.5729 CL OSING STOCK 51.5514 316.4100 0.0000 367.9614 ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 8 15.1. THIS CHART WAS FILED BEFORE BOTH THE AUTHOR ITIES BELOW. THOUGH IT DEPICTS MONTH-WISE CLEARANCE OF THE PRODUCTION ARTI CLES, NO OBJECTION WHATSOEVER THERE-AGAINST WAS RAISED BY THE A.O., ME ANING THEREBY, THAT THE FACTUM OF THE ASSESSEE-COMPANY BEING AN EXCISAB LE UNIT WAS NOT UNDER QUESTION AND THE CLEARANCES WERE TAKEN TO BE AS SHOWN. THAT BEING SO, IT NOW DOES NOT LIE IN THE MOUTH OF THE DEPARTMENT TO SAY THAT THE DIFFERENCE IN THE YIELD WAS NOT EXPLAINED BY TH E ASSESSEE BY PRODUCING ANY EXCISE RECORD DURING THE ASSESSMENT P ROCEEDINGS. TO REITERATE, IN THIS REGARD, THE ASSESSMENT ORDER IS A RESULT OF THE TWIN ACTS OF COMMISSION AND OMISSION BY THE AO, FOR WHICH REA SON, THE ASSESSEE CANNOT BE FAULTED, I.E., FIRSTLY, THE AO ACCEPTED THE CLEARANCE RESULTS QUA THE PRODUCTION OF THE ASSESSEE, MONTH-WISE, FOR THE WHOLE OF THE YEAR UNDER CONSIDERATION. THEREBY, THE AO WAS SATISFIED ABOUT THE CLEARANCE RESULTS, WHICH SHOW THE UNIT TO BE AN EXCISABLE UNI T, BECAUSE WITHOUT PAYMENT OF EXCISE DUTY, THE CLEARANCE, OBVIOUSLY, C OULD NOT HAVE BEEN POSSIBLE. THEN, THE AO ALSO DID NOT ASK ANY QUESTIO N OF THE ASSESSEE REGARDING PRODUCTION OF EXCISE RECORD, SINCE, EVIDE NTLY, THE AO DID NOT NURTURE IN SUCH OBJECTION. IT IS ONLY DURING THE PR ESENT PROCEEDINGS THAT THE DEPARTMENT HAS TAKEN THIS PLEA. 16. APROPOS THE DECISIONS RELIED ON BY THE AO, NONE OF THEM IS APPLICABLE TO THE FACTS OF THE PRESENT CASE, AS DIS CUSSED HEREINABOVE. TO MENTION AGAIN, THE PRESENT CASE, THE BOOKS OF ACCOU NT WERE REJECTED WITHOUT ANY DEFECT HAVING BEEN POINTED OUT THEREIN WHICH IS NOT PART OF ITA NO.92(ASR)/2016 ASSESSMENT YEAR: 2003-04 9 THE FACTUAL MATRIX IN ANY OF THE CASES REFERRED TO BY THE AO. TOO, THE ALLEGED SUPPRESSED PRODUCTION WAS ARRIVED AT BY THE AO ONLY ON THE BASIS OF ASSUMPTION & PRESUMPTION AND WHIMS & FANCIES, WI THOUT THERE BEING ANY MATERIAL WHATSOEVER BROUGHT ON RECORD TO SUPPOR T SUCH A CONCLUSION. THERE IS NO REBUTTAL TO THE CLEAR FINDI NG RECORDED BY THE LD. CIT(A), THAT THE YIELD OF WHITE PAPER IS HIGHER WHE REAS THAT OF NEWS PRINT IS LOW, BELYING, THE AOS CONCLUSION THAT THE YIELD OF PRODUCTION OF WRITING AND PRINTING PAPER IS THE SAME AS THAT OF NEWS PRIN T. 17. FOR THE ABOVE DISCUSSION, FINDING NO MERIT THER EIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJECTED. THE WELL REASONED ORDER OF THE LD. CIT(A) IS CONFIRMED. 18. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/05/ 2 016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 26/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. PARTAB PAPER MILLS LTD. AMRITSAR. 2. THE DCIT, CIRCLE-5, AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER
