M/S L.H. SUGAR FACTORIES PVT. LTD. V. COMMISSIONER OF INCOME TAX AND ANOTHER

IAPL/334/2016

AI Insights

The case involves M/S L.H. Sugar Factories Pvt. Ltd., the appellant, contesting additions made by the Assessing Officer regarding the production and sale of bagasse and sugarcane losses for the assessment year 2007-08. The Income Tax Appellate Tribunal (ITAT) had affirmed these additions, which were based on estimations and comparisons with another sugar factory's production. The Commissioner of Income Tax (CIT) had noted discrepancies in the Assessing Officer's approach, emphasizing the need to consider factors affecting bagasse recovery, such as the quality of sugarcane and the timing of the harvest. The High Court, upon reviewing the materials, agreed with the CIT's observations and remanded the case back to the tribunal for a thorough reconsideration.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 693355 (HC-NOT SPECIFIED)
• Appeal Type: Others
• Pronouncement Date: 16-08-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S C; PIYUSH AGARWAL; C S C; MANISH GOEL
• Assessee Lawyers: SUYASH AGARWAL; RAKESH AGARWAL
• Keywords: Assessment Year 2007-08; Estimation; Income tax appeal; Suppressed production; Sale of Bagasse
• Section: 260A

Judgement Text

"Court No. - 35 Case :- INCOME TAX APPEAL No. - 334 of 2016 Appellant :- M/S L.H. Sugar Factories Pvt. Ltd. Respondent :- Commissioner Of Income Tax And Another Counsel for Appellant :- Suyash Agarwal,Rakesh Ranjan Agarwal Counsel for Respondent :- S.C.,Piyush Agarwal And Case :- INCOME TAX APPEAL No. - 333 of 2016 Appellant :- M/S L.H. Sugar Factories Pvt. Ltd. Respondent :- Commissioner Of Income Tax And Anr. Counsel for Appellant :- Suyash Agarwal,Rakesh Ranjan Counsel for Respondent :- C.S.C.,Manish Goel Hon'ble Bharati Sapru,J. Hon'ble Ajay Bhanot,J. Heard learned counsel for the appellant Sri Suyash Agarwal and Sri Manish Goyal learned counsel for the department. As the controversy involved in both these appeals is identical, the same is being decided by a common judgment and order treating the Income Tax Appeal no.334 of 2016 as the leading case. The Income Tax Appeal no.334 of 2016 has been filed by the assessee under section 260A of the Income Tax Act, 1961 against an order passed by the tribunal dated 16.9.2015 for the assessment year 2007-08. The following questions of law sought are being sought to be answered: \"(i) Whether on the facts and circumstances of the case ITAT was justified in affirming the action of the A.O. in estimating the suppressed production and sale of bagasse at Rs.81,24,700 (1,62,494x50) ignoring the fact that the assessee has maintained complete records of bagasse as per Excise records on day to day basis and the same has not been rejected by A.O.? (ii) Whether the ITAT was justified in affirming the addition made by A.O. on account of sugarcane loss of Rs.8,80,500/- when the revenue has accepted such losses in previous years?\" The Assessing Officer has sought to make an addition towards the bagasse upon examining and comparing the production of bagasse in another sugar factory. The C.I.T. in appeal while examining the material on record, came to the conclusion that the Assessing Officer had failed to take into account the factors affecting the recovery of bagasse while making the assessment. The recovery of bagasse would necessarily depend upon the quality of sugarcane, at the start of the season and at the maturity of cane, for reasons that the recovery from the sugarcane also fluctuates from the start to the end. By the end of the season, the sugarcane begins to dry, recoveries of both sugar and bagasse are naturally affected. C.I.T. has also taken into consideration the fact that one the recovery of one factory could not be compared with another and on the other hand, the C.I.T. has also noted that the Assessing Officer had not brought any record to show and justify the addition but simply on the basis of another sugar factory, had made the addition. C.I.T. also records that there was nothing found by the A.O. to suggest that the assessee has sold bagasse outside his books of accounts. The tribunal without going into the reasoning adopted by the C.I.T. had acquiesced with the Assessing Officer. However upon examining the material on record, we do find that the addition has been made simply on account of recoveries made by another sugar factory. The assessee on the other hand states that it did produce the material before the Assessing officer to show what recoveries had been made and that everything was duly recorded in the books of account. The matter requires reconsideration. We send the matter back to the tribunal for reconsideration of these facts and and the material which is already on record. The matter on remand shall be decided in accordance with law. The appeals are thus disposed of finally. No costs. Order Date :- 16.8.2018 rk "