Jai Jawan Rice Trading Co., Kaithal v. ITO,, Kaithal

CO 41/CHANDI/2009 | 2006-2007
Pronouncement Date: 09-12-2010 | Result: Dismissed

Appeal Details

RSA Number 4121523 RSA 2009
Assessee PAN AADFJ9767F
Bench Chandigarh
Appeal Number CO 41/CHANDI/2009
Duration Of Justice 1 year(s) 5 month(s) 13 day(s)
Appellant Jai Jawan Rice Trading Co., Kaithal
Respondent ITO,, Kaithal
Appeal Type Cross Objection
Pronouncement Date 09-12-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 09-12-2010
Date Of Final Hearing 10-11-2010
Next Hearing Date 10-11-2010
Assessment Year 2006-2007
Appeal Filed On 26-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 620/CHD/2009 ASSESSMENT YEARS: 2006-07 THE ITO VS. M/S JAI JAWAN RICE TRADING COMPANY WARD-3 KAITHAL KAITHAL PAN NO. AADFJ9767F & C.O.NO. 41/CHD/2009 (IN ITA NO. 620/CHD/2009) ASSESSMENT YEARS: 2006-07 M/S JAI JAWAN RICE TRADING COMPANY VS. THE ITO KAITHAL WARD-3 KAITHAL PAN NO. AADFJ9767F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI PANKAJ JAIN ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME-TAX (A) KARNAL DATED 16.3.2009 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST ORDER PASSED U/S 143(3) OF THE ACT. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REV ENUE. 2 2. BOTH THE APPEALS OF THE REVENUE AND CROSS OBJECT ION FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN I TA NO. 620/CHD/2009 ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 3 28 200/- MADE ON ACCOUNT OF LOW YIELD OF NAKKU IRRESPECTIVE OF THE FACT THAT NAKKU IS NOT A PART OF RICE AND IT IS NOT SUPPLIED TO THE GOVT. AGENCIES WITH RICE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 73 544/- MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK OF HUSK AS TH E ASSESSEE ITSELF HAS SHOWN SALE OF HUSK AT AN AVERAGE RATE OF 57/- PER QTL. DURING THE YEAR AND THE ASSESSEE FAILED TO FIL E ANY DOCUMENTARY EVIDENCE THAT THE CLOSING STOCK OF HUSK WAS OF INFERIOR QUALITY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELEING THE ADDITION OF RS. 42 708/- M ADE ON ACCOUNT OF VALUATION OF CLOSING STOCK OF RICE IRRES PECTIVE OF THE FACTS THAT THE CLOSING STOCK OF RICE WAS OUT OF THE PURCHASE MADE AT THE END OF THE FINANCIAL YEAR. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN REDUCING THE ADDITION OF RS. 25 000/- OUT OF THE TOTAL ADDITION OF RS. 50 000/- MADE ON ACCOUNT OF U NVOUCHED AND INADMISSIBLE EXPENSES CLAIMED UNDER THE HEAD W AGES AND LABOUR IRRESPECTIVE OF THE FACT THAT A REASONA BLE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER OUT OF THE TOTAL EXPENSES CLAIMED AT RS. 9.78 946/-. 4. FROM THE PERUSAL OF RECORDS IT IS OBSERVED THAT THE REVENUE EFFECT INVOLVED IN THIS APPEAL IS LESS THAN RS.2.00 LAKHS. IN VIEW OF THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CAMCO COLOUR CO. [254 ITR 565 (BOM.)] CIT VS. PITH WA ENGG. WORKS REPORTED IN [276 ITR 519(BOM)] AND CIT VS. ZOEB Y. TOPIWALA [284 ITR 3 379 (BOM.)] THE APPEAL IS NOT MAINTAINABLE. FURTH ER THE ISSUE WAS ALSO CONSIDERED AT LENGTH BY THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN CIT VS. M/S OSCAR LABORATORIES PVT LTD [324 ITR 115(P& H) AND IT WAS HELD THAT EFFECT SHOULD BE GIVEN TO THE INSTRUCTIONS ISS UED BY CBDT WHEREIN M ONETARY LIMITS WERE PRESCRIBED BY RESTRAINING THE R EVENUE FROM FILING APPEALS EXCEPT WHEN THE TAX EFFECT WOULD BE HIGHER THAN THE PRESCRIBED LIMITS . IT WAS FURTHER HELD THAT AN APPEAL SHOULD NOT BE FILED ONLY TO PRESS A PROPOSITION OF LAW UNLESS IT RESUL TS IN AN ADVERSE INFERENCE AGAINST THE REVENUE. THE VERACITY OF FILI NG AN APPEAL MUST BE GAUGED WITH REFERENCE TO THE TAX WHICH IS LIKELY T O BE RECOVERED BY THE REVENUE ON THE SUCCESS THEREOF. IF THE PROPORTION OF THE AFORESAID RECOVERY OF TAX AS AGAINST THE EXPENSES INCURRED IN PURSUING THE APPELLATE REMEDY IS NEGLIGIBLE AND THERE IS NO OTHER ADVERSE EFFECT THE INFERENCE SHOULD BE THAT THE REMEDY OF APPEAL WOULD BE AN EXE RCISE IN FUTILITY. IN SUCH AN EVENTUALLY AN APPEAL SHOULD NOT BE FILED. THE HON'BLE COURT FURTHER REFERRING TO INTRODUCTION OF SECTION 268A O F THE ACT BY THE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.1999 HELD AS UNDER :- IT IS APPARENT FROM THE OBJECTS FOR THE INSERTION OF SECTION 268A INTO THE 1961 ACT THAT ALL TECHNICAL OBJECTIONS AVAILABLE TO AN ASSESSEE AGAINST WHOM TH E REVENUE CHOSE NOT TO FILE AN APPEAL CAME TO BE RENDERED NUGATORY IN CASES WHERE THE REVENUE HAD NOT FILED AN APPEAL ON ACCOUNT OF THE NEGLIGIBLE TA X EFFECT INVOLVED. 5. THE HON'BLE COURT CONCLUDED BY HOLDING THAT THE LEGISLATURE IN ITS WISDOM CLEARLY DESIRED TO GIVE STATUTORY EFFECT TO ALL INSTRUCTIONS ISSUED ON THE SUBJECT OF MONETARY LIMITS FOR REGULA TING FILING OF APPEALS RETROSPECTIVELY. ACCORDINGLY ALL INSTRUCTIONS LAY ING DOWN MONETARY LIMITS FOR FILING APPEALS (WHICH WERE ISSUED ON OR AFTER APRIL 1 1999) BY 4 A DEEMING FICTION OF LAW MUST BE TREATED AS HAVING BEEN ISSUED UNDER SECTION 268(1) OF THE 1961 ACT . THE HON'BLE COURT THUS REJECTED THE PLEA OF THE REVENUE BEFORE IT THAT AN APPEAL CAN BE FILE D BY REVENUE IN ALL CASES WHERE A SUBSTANTIAL QUESTION OF LAW ARISES AN D RIGHT OF REVENUE CANNOT BE REJECTED. 6. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUN JAB & HARYANA HIGH COURT IN CIT VS. M/S OSCAR LABORATORIES PVT. LTD. (SUPRA) AND CBDT INSTRUCTIONS VIDE ITS CIRCULAR DATED 27.03.200 0 WHEREIN POLICY DECISION HAD BEEN TAKEN BY THE BOARD NOT TO RAISE QUESTIONS OF LAW WHERE THE TAX EFFECT IS LESS THAN THE AMOUNT PRESCRIBED I N THE INSTRUCTIONS WITH A VIEW TO REDUCE LITIGATION WE FIND NO JUSTIFICATION TO PROCEED WITH THE APPEAL HAVING TAX EFFECT LESS THAN RS.2.00 LAKHS. THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. C.O. NO. 41/CHD/2009 8. THE GROUNDS OF CROSS OBJECTION RAISED BY TH E ASSESSEE IN C.O. NO. 41/CHD/2009 ARE AS UNDER:- 1. BECAUSE OF ACTION OF CIT(A) IS UNDER CHALLENGE O N FACTS AND LAW FOR AN ADDITION OF RS. 98 240/- REGARDING VALUA TION OF THE BARDANA ON WHICH ASPECT THERE HAS NOT BEEN REND ERED ANY DECISION IN PURSUANCE TO THE MATERIAL ON RECO RD. 2. BECAUSE OF ACTION OF CIT(A) IN UPHOLDING THE DIS ALLOWANCE OF RS. 101340/- IS BEING CHALLENGED ON FACTS AND LA W. SIGNIFICANTLY THE FINDING REGARDING COMMERCIAL EXP EDIENCY HAS NOT BEEN RECORDED. 3. BECAUSE OF ACTION OF CIT(A) IN UPHOLDING VARIOUS DISALLOWANCES FOR RS. 74 660/- IS BEING CHALLENGED ON FACTS AND LAW. SIGNIFICANTLY THE DISALLOWANCE ARE ADHOC AND CONTRARY TO THE TRIBUNAL ORDER OF DIVISIONAL BENCH AND EXCESSIVE. 5 9. THE LD. AR IN RESPECT OF GROUND NO.1 RAISE D POINTED OUT THAT THE SAID GROUND NO.8 RAISED BEFORE THE REVENUE WAS NOT ADJUDICATED UPON THE CIT(A). THE LD. DR FOR THE REVENUE POINTED OUT THAT THE SAID GROUND REGARDING VALUATION OF BARDANA WAS NOT RAISE D BEFORE THE CIT(A) AND GROUND NO. 8 WAS ONLY DISALLOWANCE OF RS. 10 00 0/- OUT OF BARDANA EXPENSES. FROM THE PERUSAL OF THE RECORD WE FIND THAT THE ONLY ISSUE RAISED BY THE ASSESSEE VIDE GROUND NO.8 BEFORE THE CIT(A) WAS DISALLOWANCE OF RS. 10 000/- OUT OF BARDANA EXPENSE S. NO GROUND OF APPEAL HAS BEEN RAISED BY THE ASSESSEE AGAINST ADDI TION OF RS. 98 240/- REGARDING VALUATION OF BARDANA. ACCORDINGLY THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION BEING NOT MA INTAINABLE IS DISMISSED. 10. THE ISSUE IN GROUND NO.2 IS AGAINST THE DIS ALLOWANCE COMPUTED OUT OF INTEREST EXPENSES FOLLOWING THE RATIO LAID D OWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ABHISHEK INDUSTRIES VS. CIT (286 ITR 1) (P&H). THE LD. AR FOR THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO THE CONTRARY. WE ARE BOUND BY THE RATIO DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK I NDUSTRIES VS CIT (SUPRA) AND THE DISALLOWANCE IN THE CASE OUT OF INT EREST ACCOUNT HAS BEEN COMPUTED RELYING ON THE RATIO DOWN BY THE HON'BLE C OURT. UPHOLDING THE ORDER OF CIT(A) WE DISMISS THE GROUND OF APPEA L RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION. 11. THE LAST ISSUE RAISED BY THE ASSESSEE IS AGAI NST THE RESTRICTION OF DISALLOWANCE OUT OF SEVERAL EXPENSES INCLUDING WAGE S AND LABOUR PADDY EXPENSES RICE EXPENSES RICE MILL REPAIR AND BARDA NA EXPENSES. THE 6 ASSESSING OFFICER HAD DISALLOWED RS. 50 000/- OUT O F WAGES AND LABOUR EXPENSES AND RS. 10 000/- OUT OF REPAIR EXPENSES R ICE EXPENSES AND BARDANAS EXPENSES. THE CIT(A) RESTRICTED THE DISAL LOWANCE OUT OF WAGES AND LABOUR EXPENSES TO RS. 25 000/- AND UPHELD THE OTHER DISALLOWANCES. THE LD. AR FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF RS. 25 000/- OUT O F WAGES AND LABOUR EXPENSES. WE FIND NO MERIT IN THE PLEA OF THE ASSE SSEE KEEPING IN VIEW THE NATURE OF BUSINESS AND THE EXPENDITURE OF RS. 9 78246/- INCURRED BY THE ASSESSEE ON ACCOUNT OF WAGES AND LABOUR EXPENSE S DISALLOWANCE OF RS. 25 000/- OUT OF SUCH EXPENSES IS UPHELD. THE D ISALLOWANCE OUT OF THE OTHER EXPENSES TOTALING RS. 30 000/- IS ALSO UPHELD . THE GROUND NO.3 RAISED BY THE ASSESSEE IS THUS DISMISSED. 12. IN THE RESULT BOTH THE APPEAL OF THE REVENU E AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF DECEMBER 2010. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9 TH DECEMBER 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR