Rama Rice Co. V. The Income Tax Officer-cum-Assessing Officer, Faridakot (Punjab)

ITA/36/2002

AI Insights

The case involves M/s Rama Rice Co., a partnership firm engaged in rice shelling, appealing against the order of the Income Tax Appellate Tribunal, Amritsar, which pertained to the assessment year 1991-92. The primary contention was regarding the Tribunal's decision to adopt a specific yield for rice phak, which the appellant argued was arbitrary and not supported by adequate reasoning or comparison with similar cases. The Tribunal had previously partly allowed the appellant's appeal by deleting an addition made to the rice account but upheld the yield adopted for rice phak. The High Court's decision to remand the case was based on the lack of a clear finding on the applicability of Proviso to Section 145(1) and the absence of a cogent basis for the yield adopted.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 808052 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 03-01-2012
• Assessment Year: misc
• Other Referred Cases: Shanker Rice Co. v. Income Tax Officer, 249 ITR 44 (AT), Commissioner of Income Tax, Patiala v. Sunil Traders, Rajpura
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: KULDEEP SINGH
• Assessee Lawyers: SANDEEP GOEL
• Keywords: Assessment Year 1991-92; Income Tax; Rice Shelling; Yield Calculation; Proviso to Section 145(1)
• Section: 145(1); 260-A

Judgement Text

"ITA No.36 of 2002 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 36 of 2002 Date of decision: 03.01.2012 M/s Rama Rice Co. -----Appellant Vs. The Income Tax Officer-cum-Assessing Officer, Faridakot (Punjab) ----Respondent CORAM:- HON'BLE MR JUSTICE M.M.KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? Present:- Mr. Sandeep Goel, Advocate for the appellant. Mr. Kuldeep Singh, Advocate for the respondent. Ajay Kumar Mittal,J. 1. The assessee has filed this appeal under Section 260-A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 20.7.2001 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal”) in Appeal No.629 (ASR)/1993, relating to the assessment year 1991-92, claiming following substantial questions of law:- 1 ITA No.36 of 2002 i) Whether on the facts and in the circumstances of the case, the learned Tribunal is justified to make any addition in the total income of the assessee, when the learned Tribunal has held that proviso to section 145(1) is not applicable? ii) Whether on the facts and in the circumstances of the case, the order of Tribunal is perverse, whereby directions have been issued to adopt a particular yield in Rice Phak Account, without giving any basis for the same and ignoring the comparative yield shown by the other assessees, the details of which were duly furnished to the ITAT? iii) Whether in the facts and circumstances of the case, there are any reasonable basis for adopting the yield of rice phak at 2.70% when the Tribunal itself has accepted yield lower than the yield shown by the assessee himself, in other cases? iv) Whether the ITAT while deciding the case can adopt the different standards of yield, in the similar set of circumstances of different assessees, without any reasonable ground? v) Whether the learned ITAT is justified to ignore the written submissions made by the assessee and passing a non-speaking order on the issues involved? 2. Briefly, the facts may be noticed. The assessee is a partnership firm. It is engaged in the business of rice shelling at Kotkapura, District Faridkot. For the assessment year 1991-92 relevant to Accounting period from 1.4.1990 to 31.3.1991, the 2 ITA No.36 of 2002 assessee filed its return of income showing total income at Rs.1,77,300/-. The Assessing Officer by applying first proviso to section 145(1) of the Act computed increased yield in rice and rice phak accounts and made an addition of Rs.56,595/- in rice account and Rs.1,85,430/- in rice phak account. The assessment was framed on a total income of Rs.4,30,625/-. Aggrieved thereby, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) Bathinda, [in short, “the CIT(A)] who vide order dated 16.2.1993 dismissed the same. Thereafter, the assessee filed an appeal against the order of the CIT (A) before the Tribunal which was partly allowed by the order dated 20.7.2001. It was held by the Tribunal that addition of Rs.56,595/- in rice account was liable to be deleted in view of decision of the Special Bench of the Tribunal in Shanker Rice Co. v. Income Tax Officer, 249 ITR 44 (AT). It was also ordered to adopt the yield of rice phak at 2.70% against 1.28% shown by the assessee and 3.20% adopted by the assessing officer. Hence the present appeal by the assessee. 3. Learned counsel for the assessee submitted that the Tribunal was in error in adopting the yield of rice phak at 2.70% as against the actual yield shown by the assessee by invoking Proviso to section 145(1) of the Act. According to the learned counsel, the Tribunal had accepted the books of account when addition on account of yield of rice was deleted but the Tribunal without adverting to the applicability of Proviso to Section 145(1) of the Act has wrongly relied upon the decision of the Special Bench of the Tribunal in ITA No.627(ASR)/1993 in the case of M/s Vijay Rice Mills Kotkapura v. 3 ITA No.36 of 2002 ITO, Kotkapura, to sustain the addition on Rice Phak. It was urged that in case of agricultural produce, there have to be special circumstances for taking yield of one person as applicable to the other as agricultural produce depends upon various factors and varies from place to place and upon activities carried on the land. It was further contended that the books were wrongly and impliedly rejected by invoking Proviso to Section 145(1) of the Act as the Tribunal had not adverted to this aspect and had not recorded any finding relating to any infirmity in the books of account of the assessee. 4. On the other hand, learned counsel for the revenue supported the order passed by the Tribunal. 5. After giving thoughtful consideration to the respective submissions made by learned counsel for the parties, we find that the order of the Tribunal in so far as it relates to adopting the yield of rice phak at 2.70% as against the actual shown by the assessee is not based on cogent reasons. The Tribunal has not dealt with the question of applicability of Proviso to Section 145(1) of the Act and has not discussed any instances for adopting the yield at 2.70% as to how the case was comparable with the one which had yield of 2.70%. In the absence of any clear finding by the Tribunal, the order to that extent cannot be sustained. 6. Similar issue camp up for consideration before this Court in Income tax Reference No.146 of 1999 decided on 9.9.2010 (Commissioner of Income Tax, Patiala v. Sunil Traders, Rajpura), wherein it was held as under:- “The yield of rice; rice bran, phuk and phoose from paddy cannot be comparable with exactitude as paddy 4 ITA No.36 of 2002 being an agricultural produce which yields rice, rice bran, phuk and phoose can differ on account of various factors like quality of seeds, availability of water resources, climatic condition like monsoon, natural calamities and other similar factors. Further, it can vary from place to place, like yield in Punjab must not necessarily be equivalent to yield in other States where climate and other conditions are different. Still further, even within the State yield of rice from paddy differs in various Districts itself. Therefore, to adopt tailor made formula for yield of rice and its by- products would be a fallacy and would not give correct results. It shall depend upon facts and circumstances of each case. In order to adopt such an approach, the Assessing Officer would be required to show that the books of account have not been properly maintained as required under Section 145 of the Act and, therefore, method of comparison would be apt in such a situation. In the absence of the same, it would not be legally justified to match the colour between two different cases.” 7. Accordingly, the appeal is disposed of by remanding the matter back to the Tribunal to re-decide the same afresh in accordance with law. 8. The appeal is disposed of accordingly. (Ajay Kumar Mittal) Judge January 03, 2012 (M.M.Kumar) ‘gs’ Judge 5 "