The ITO, Patan Ward -4, Mehsana v. M/s Bhumi Industries, Kadi

ITA 1636/AHD/2005 | 2001-2002
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 163620514 RSA 2005
Assessee PAN AACFB8866B
Bench Ahmedabad
Appeal Number ITA 1636/AHD/2005
Duration Of Justice 6 year(s) 8 month(s) 12 day(s)
Appellant The ITO, Patan Ward -4, Mehsana
Respondent M/s Bhumi Industries, Kadi
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-10-2008
Date Of Final Hearing 14-02-2012
Next Hearing Date 14-02-2012
Assessment Year 2001-2002
Appeal Filed On 17-06-2005
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY AM ITA NO.1636/AHD/2005 (ASSESSMENT YEAR:-2001-02) THE INCOME-TAX OFFICER PATAN WARD-4 MEHSANA V/S M/S BHUMI INDUSTRIES RANGPURDA TA: KADI PAN: AACFB 8866 B [APPELLANT] [RESPONDENT] ASSESSEE BY :- DR. K SHYAM PRASAD SR. DR REVENUE BY:- SHRI S N DIVATIA AR DATE OF HEARING:- 14-02-2012 DATE OF PRONOUNCEMENT:- 29-02-2012 O R D E R PER D K TYAGI (JM) :- THIS IS REVENUES APPEAL AGAINST AN ORDER DATED 16-03-2005 PASSED BY THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS)-XXI AHMEDABAD [HEREINAFTER RE FERRED TO AS THE LEARNED CIT(A)] FOR ASSESSMENT YEAR 2001-0 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- [1] THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT OR RS.2 56 674/-. [2] THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION MADE ON ACCOUNT OF UNEXPLAINED SUPPRESSED SALES OF RS.2 56 487/-. [3] THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION MADE ON ACCOUNT OF THE DIFFERENCE BETWEEN TWO VALUES OF CLO SING STOCK 2 SHOWN BY THE ASSESSEE IN THE TRADING ACCOUNT AND IN THE ANNEXTURE F TO THE AUDIT REPORT. [4] THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN RELYING UPON THE SUBMISSIONS MADE BY THE ASSESSEE. [5] ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [6[ IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSES SING OFFICER BE RESTORED TO THE ABOVE EXTENT. 2 THE FACTS OF THE CASE AS NOTED BY THE LEARNED CIT (A) IN HIS ORDER ARE AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A SSESSING OFFICER TAKING THE AVERAGE PERCENTAGE OF YIELD OF 40.01% SH OWN BY THE APPELLANT CALCULATED THE PRODUCTION OF KALYAN SOFT COTTON FOR VARIOUS MEANS ON THIS BASIS MATCHING THE FIGURE OF STOCK AV AILABLE WITH THE APPELLANT WITH THE SATES MADE BY THE APPELLANT IN O THER MONTHS. THE ASSESSING OFFICER WORKED OUT SALE OF KALYAN SOFT CO TTON IN EXCESS OF THE STOCK AVAILABLE TO THE EXTENT OF RS.6841 KGS IN THE MONTH OF SEPTEMBER 2000. HE ALSO WORKED OUT THE DIFFERENCE I N THE CLOSING STOCK AS PER THE CHART PREPARED BY HIM AND AS PER T HE BOOKS MAINTAINED BY THE APPELLANT TO 6836 KGS THE ASSESSING OFFICER ASKED THE APPELLANT TO EXPLAIN THE ABOVE DIFFERENCES. THE APP ELLANT REPLIED VIDE HIS LETTER DATED 22-3-04 EXPLAINING AS UNDER:- WITH REFERENCE TO ABOVE MATTER AND IN REPLY TO YOU R NOTICE WE HEREBY STATE AS UNDER:- YOUR HONOUR HAS ASKED FOR THE MONTH-WISE DETAILS OF PURCHASES AND PRODUCTION WHICH WE HAVE ALREADY SUBMITTED YOU . FURTHER YOUR HAS ASKED FOR THE DETAILS IN RESPECT OF CONSUM PTION AND PRODUCTION FOR WHICH WE CLARIFY THAT AS OURS IS AN AGRO BASED PRODUCT AND ALSO A SEASONAL BUSINESS WHERE THE DAIL Y PRODUCTION AND CONSUMPTION AND CONSUMPTION REGISTER IS NOT POS SIBLE TO MAINTAIN. HOWEVER WE HAVE KEPT THE RECORD OF THE M ONTHLY BASE WHICH ARE SUBMITTED HEREWITH FOR YOUR REFERENC E. FURTHER 3 YOUR HONOUR HAVE CALCULATED DIRECTLY 40.01% A PRODU CTION FOR KALYAN SOFT COTTON WHICH IS NOT PERMANENTLY IT IS AN AVERAGE OF THE YEARLY PRODUCTION AND WHICH MAY BE HIGHER OR LO WER. THE INDIVIDUAL MONTHLY PRODUCTION IS ENCLOSED HEREWITH FROM IT REVEALS THAT IN CERTAIN MONTHS IT IS HIGHER DUE TO THE WEATHER EFFECT AND ALSO DUE TO THE QUALITY OF THE KAPAS. SO THE AVERAGE OF PRODUCTION PERCENTAGE 40.01% MAY NOT BE FOR ALL THE MONTHS. WE HAVE GIVEN THE DETAILS OF THE PERCENTAGE OF INDI VIDUAL MONTHS AND ALSO AVERAGE OF THE YEARLY PRODUCTION. FROM THE SAID DATA IT REVEALS THAT THERE IS NO STOC K DIFFERENCE WHICH YOUR HONOUR HAVE CALCULATED. FURTHER THERE IS NO EXCESS SALE OF THE KALIAN STOC K TO THE AVAILABLE STOCK AND THE SALE IS DONE FROM THE AVAIL ABLE STOCK AND THE SALE IS DONE FROM THE AVAILABLE AND THERE IS NO SHORTAGE OF THE STOCK. SO THE CLOSING STOCK AS PER THE BOOKS 24786 IS CORR ECT AND THERE IS NO DIFFERENCE. WE HOPE THAT THE ABOVE CLARIFICATION WILL BE SUFFIC IENT FOR YOUR NOTICE AND WILL CONSIDER THE EXPLANATION DUE TO THE AGRO BASED BUSINESS AND THE PRODUCTION IS DEPENDING ON THE WEA THER AND QUALITY OF THE RAW MATERIAL....' 3 THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE RE PLY OF THE ASSESSEE OBSERVING THAT THE ASSESSEE HAD NOT MAINTA INED DETAILS OF CONSUMPTION PRODUCTION OR STOCK ON DAY TO DAY BASIS . THEREFORE IN ABSENCE OF SUCH IMPORTANT RECORD THE FIGURES OF PRODUCTION REPOTTED BY THE ASSESSEE ARE WITHOUT ANY BASIS AND COOKED UP. HE ALSO NOTED THAT THE C.A HAD NOT MENTIONED IN HIS AU DIT REPORT ANY VARIATION IN DIFFERENT YIELD AT THE DIFFERENT TIME OF PRODUCTION. THE DETAILS CONTAINED IN THE CHART SUBMITTED BY THE ASSESSEE ARE NOT SUPPORTED BY ANY RECORDS. WITH THIS OBSERVATION THE 4 ASSESSING OFFICER REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND PROCEEDED TO MAKE ADDITIONS OF THE UNE XPLAINED INVESTMENT IN THE STOCK OF RS.2 56 674/- AND SUPPRE SSED SALES OF RS 2 56 487/-. 4 AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FI LED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A ) HAS DELETED BOTH THE ADDITIONS WITH THE FOLLOWING OBSER VATIONS:- AT THE TIME OF HEARING OF APPEAL THE LD. AUTHORIZ ED REPRESENTATIVE OF THE APPELLANT FILED WRITTEN SUBMISSIONS. HE REPE ATED THE EXPLANATION OFFERED BY THE ASSESSING OFFICER AND SUBMITTED FURT HER AS UNDER:- THE APPELLANT BEGS TO SUBMIT THAT THE ADDITION OF R S.2 56 674/- AS UNEXPLAINED INVESTMENT IN EXCESS SALES OF 6841 KGS OF KALYAN SOFT COTTON IS WHOLLY UNJUSTIFIED BOTH ON FACTS AND IN L AW. FIRSTLY IT IS NOT CLEAR FROM THE IMPUGNED ORDER AS TO HOW THE ASSESSI NG OFFICER HAS WORKED OUT EXCESS SALE OF 6841 KGS. OF KALYAN SOFT COTTON FOR THE PURPOSE OF MAKING THE ADDITION. IT APPEARS FROM THE CHART GIVEN AT PARA 3 ON PAGE 2 OF THE ORDER THAT NEGATIVE CLOSING STOC K OF 6841 KGS. HAS BEEN WORKED OUT BY ASSESSING OFFICER WHICH HAS BEEN TREATED AS EXCESS SALES. HOWEVER THE ASSESSING OFFICER HAS RA ILED TO APPRECIATE THAT THERE CANNOT BE ANY NEGATIVE STOCK EVEN AS PER THE SAME CHART BECAUSE THERE WAS A CLOSING STOCK OF 141816 KGS. AT THE END OF AUGUST 2000 WHEREAS THE SALES FOR THE MONTH OF SEP TEMBER 2000 WERE 121657 KGS. THUS THERE IS NO EXCESS SALES EVE N AS PER THE SAID CHART SECONDLY THE ASSESSING OFFICER HAS WORKED OU T THE PRODUCTION FOR FOUR MONTHS SHOWN IN THE SAID CHART BY ASSUMING THE AVERAGE YIELD OF 40.01 % WHICH ITSELF IS A MERE PRESUMPTION AND S URMISE MUCH LESS NO SUCH WORKING COULD BE MADE ON THE BASIS OF AVERA GE FIGURES. THIRDLY EVEN ASSUMING FOR A MOMENT THAT THERE IS A N EXCESS SALES THERE COULD NOT BE ANY ADDITION IS AS MUCH AS THE E NTIRE SALE PRICE HAS BEEN BROUGHT TO TAX AND IT CONSIST ALSO OF THE PURC HASE COST AND THERE CANNOT BE ANY SEPARATE ADDITION. AS REGARDS THE ADDITION OF RS.2 56 487/- AS SUPPRES SED SALES OF 6836 KGS. OF KALYAN COTTON IT IS SUBMITTED THAT THE ASS ESSING OFFICER HAS WORKED OUT THE CLOSING STOCK AS ON 31.3.2001 AT 317 12 KGS. AS AGAINST 5 24876 KGS. SHOWN IN THE BOOKS ON THE BASIS OF PRESU MPTION AND SURMISE OF AVERAGE YIELD AT 40.01%. SINCE THE INITI AL STEP OF MAKING THE EXERCISE OF PRODUCTION SALES ETC. BY ADOPTING AVER AGE YIELD IN ITSELF IS WRONG. THE CONSEQUENTIAL CONCLUSIONS ARE ALSO WRONG . THE PRODUCTION FIGURES ARE THE DERIVED FIGURES ON THE BASIS OF AVE RAGE YIELD AND NO ADDITION COULD BE MADE ON THE BASIS OF SUCH FIGURES . IT IS NOT THE CASE OF ASSESSING OFFICER THAT THERE WAS AN ACTUAL PRODU CTION OF 83260 KGS. FOR MARCH 2001 SO THAT THE CLOSING STOCK COULD BE W ORKED OUT AT 31712 KGS HENCE THIS ADDITION SHOULD BE DELETED.' I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE RELEVANT FACTS OF THE CASE. AS MENTIONED ABOVE THE ASSESSING OFFICER HAS WORKED OUT THE FIGURE OF PRODUCTION OF KALYAN S OFT COTTON ADOPTING THE AVERAGE PERCENTAGE YIELD OF 40.01%. TH E AVERAGE OF ANY FIGURES ITSELF INDICATES THAT THERE HAS TO BE INSTA NCES OF TOWER AND HIGHER FIGURES. THE AVERAGE OF ANY FIGURES DENOTES THE MEAN VALUE OF SO MANY FIGURES. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS ITSELF IN THE REPLY OF THE APPELLANT IT HAD BEEN CLAIMED THAT THE APPELLANT HAD MAINTAINED RECORD OF CONSUMPTION PRODUCTION ON MONT HLY BASIS. I AGREE WITH THE CONTENTION OF THE APPELLANT THAT BEI NG AN AGRO BASED PRODUCT THE YIELD (PG 3) WILL VARY IN DIFFERENT MON THS OF THE YEAR. IN THE MONTHS OF APRIL & MAY WHEN THE WEATHER CONDITIO NS ARE DRY THE PRODUCTION YIELD IS DEFINITELY HIGHER. AS THE ASSES SING OFFICER HAS NOT BROUGHT ANY INFORMATION ON RECORD TO CONTROVERT THE CLAIM OF THE APPELLANT THAT PRODUCTION YIELD WAS HIGHER IN THE I NITIAL MONTHS OF THE YEAR AND ALSO THE FACT THAT FIGURES WORKED OUT BY T HE ASSESSING OFFICER WAS NOTHING BUT A SIMPLE CALCULATION AND WAS NOT BA SED ON ANY OTHER RECORD I HOLD THAT THE ADDITIONS MADE ON THE BASIS OF WORKING OF EXCESS SALES DIFFERENCE OF STOCK WERE NOT REQUIRED AND THEREFORE THE ADDITIONS OF THE AMOUNT OF RS.2 56 674/- OF UNEXPLA INED INVESTMENT AND RS.2 56 487/- OF UNEXPLAINED SUPPRESSED SALES A RE DELETED. 5 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US. THE LEARNED DR SUPPORTE D THE ORDER OF THE AO. 6 6 THE LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) AND REITERATED THE SUBMISSIONS M ADE BEFORE HIM. 7 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS O F PRODUCTION OF AGRO BASED PRODUCTS AND HAS MAINTAINED RECORD OF CO NSUMPTION / PRODUCTION ON MONTHLY BASIS. WE FURTHER FIND THAT T HE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVER T THE CLAIM OF THE ASSESSEE THAT THE YIELD OF THE ASSESSEE WAS HIG HER IN INITIAL MONTHS OF THE YEAR DUE TO FAVOURABLE WEATHER CONDIT IONS. THE OBSERVATION OF THE LEARNED CIT(A) THAT THE FIGURES WORKED OUT BY THE AO WHILE MAKING THE ADDITIONS WERE NOT BASED ON ANY MATERIAL ON RECORD HAS NOT BEEN CONTROVERTED BY TH E REVENUE BEFORE US. IN VIEW OF THIS WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE SAME IS HEREBY UPHELD. 8 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 29-02-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 29-02-2012 COPY OF THE ORDER FORWARDED TO: 7 1. M/S BHUMI INDUSTRIES RANGPURDA TA: KADI 2. THE INCOME-TAX OFFICER PATAN WARD-4 MEHSANA 3. CIT CONCERNED 4. CIT(A)-XXI AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-B AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD