Sat Pal, Karta, Karnal v. ITO, Karnal

ITA 3608/DEL/2011 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 360820114 RSA 2011
Assessee PAN AAPJS1611E
Bench Delhi
Appeal Number ITA 3608/DEL/2011
Duration Of Justice 8 month(s) 9 day(s)
Appellant Sat Pal, Karta, Karnal
Respondent ITO, Karnal
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 30-03-2012
Date Of Final Hearing 21-03-2012
Next Hearing Date 21-03-2012
Assessment Year 2007-2008
Appeal Filed On 21-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SMT. DIVA SINGH JUDICIAL MEMBER ITA NO. 3608/DEL/2011 ASSESSMENT YEAR: 2007-08 SAT PAL KARTA M/S KASHMIRI LAL SAT PAL SONKRA ROAD TARAORI KARNAL. AAPJS1611E VS. ITO WARD 3 AAYAKAR BHAWAN SECTOR-12 U.E. KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VIKRANT GUPTA ADV. RESPONDENT BY : MS. SURJANI MOHANTY SR. DR O R D E R PER S.V. MEHROTRA A.M. THIS APPEAL IS FILED BY THE ASSESSEE AND DIRECTED AGAINST THE ORDER OF LD. CIT(A) DATED 23.03.2011 FOR A.Y. 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE (HUF) ENGAGED IN THE BUSINESS OF MANUFACTU RING AND SALE OF RICE. 3. THE ASSESSEE DECLARED TOTAL INCOME OF RS. 3 01 7 56/-. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 8 98 660/- INTER-ALIA MAKING AN ADDITION OF RS. 3 LAKH ON ACCOUNT OF LOW YIELD OF RICE. IN COURSE OF ASSESSMENT PROCEEDINGS BOOKS OF ACCOUNT CONSISTI NG OF CASH BOOK LEDGER STOCK REGISTER SALARY REGISTER SALE/PURCH ASE BILLS LABOUR EXPENSES VOUCHERS WERE PRODUCED BEFORE AO AND TEST CHECKED BY HIM. THE AO NOTICED THAT ASSESSEE HAD MILLED 42642 QUINT ALS OF PADDY AND OBTAINED 27455.65 QUINTALS OF RICE GIVING THEREBY Y IELD PERCENTAGE OF 64.39% WHEREAS IN THE IMMEDIATELY PRECEDING ASSESS MENT YEAR FROM THE ITA NO. 3608/D/2011 2 MILLING OF 52010 QTLS. OF PADDY 3362.65 QUINTALS OF RICE WAS OBTAINED THEREBY GIVING A YIELD OF 64.53%. THE AO OBSERVED THAT IN THIS LINE OF BUSINESS 65% YIELD IS NORMALLY DECLARED IN THE AREA OF TARAORI BY OTHER RICE SHELLERS. 3.1 HE FURTHER OBSERVED THAT YIELD OF RICE BRAN OBT AINED DURING THE YEAR WAS 4043.10 QUINTALS I.E. 9.48% AS AGAINST 4948 QUI NTALS AND 9.51% LAST YEAR. FURTHER THE YIELD OF PHUK HAD BEEN SHOWED AT 3.99% AS AGAINST 4% AND CHILKHA AT 2.93% AS AGAINST 4.50% IN THE LAST Y EAR. 3.2 THE AO REQUIRED THE ASSESSEE TO EXPLAIN REASONS FOR FALL AND FATE OF CHILKA PRODUCED DURING THE MANUFACTURING OF RICE. THE AO CONSIDERED THE ASSESSEES REPLY AND OBSERVED AS UNDER: - IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS MANUFACTURING SELLA RICE WITH THE HELP OF BOILER AND DRIER AND THE CHILKA IS CONSUMED. HE FURTHER SUBMITTED T HAT YIELD OF CHILKA IS ABOUT 2.93% OUT OF WHICH CHILKA HAS BEEN SOLD BY TH E ASSESSEE IN THE OPEN MARKET. DETAILS OF YIELD CHART OF BYE PRODUCT S FILED BY THE ASSESSEE SHOWS SHORTAGE AT 19.21% AS AGAINST 17.56% IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE SHORTAGE CLAIMED IS ALSO CONSIDERED TO BE EXCESSIVE. IN VIEW OF THE ABOVE FACTS AS NO OTHER PLAUSIBLE E XPLANATION WAS FILED EXCEPT THAT THE ASSESSEE HAS MANUFACTURED SELLA RIC E AND SINGLE STEAM RICE DURING THE YEAR AND NO RAW RICE HAS BEEN MANUF ACTURED AND THIS IS CAUSE OF DECREASE IN THE SALE OF CHILKA WHICH IS CO NSUMED IN THE MANUFACTURED PROCESS. IN VIEW OF THE FACT THAT THE YIELD PERCENTAGE OF RICE IS BEING DECLARED AT 65% BY OTHER RICE UNITS A ND THERE BEING ALSO LESS YIELD DECLARED BY THE ASSESSEE AS DISCUSSED AB OVE AN ADDITION OF RS. 3 LAKH IS MADE IN THE TRADING ACCOUNT IN ORDER TO COVER THE POSSIBLE LEAKAGE OF PROFITS I.E. DIFFERENCE IN PRODUCTION OF RICE AT 60 QTLS. X RS. 3500/- (RATE OF RICE BASMATI VALUED BY THE ASSESSEE ); DIFFERENCE YIELD PRODUCTION OF RICE BRAN AND PHUK ACCOUNT AS DISCUSS ED ABOVE TO COVER THE LEAKAGE OF PROFITS. 4. LD. CIT(A) CONFIRMED THE ADDITION OBSERVING IN P ARA 1.04 & 1.05 AS UNDER: - 1.04 IN THE WRITTEN SUBMISSIONS THE APPELLANT S UBMITTED THAT COMPLETE BOOKS OF ACCOUNTS INCLUDING STOCK REGISTER HAS BEEN MAINTAINED AND WAS PRODUCED BEFORE THE AO DURING AS SESSMENT PROCEEDINGS AND NO DEFICIENCY WAS POINTED OUT THERE IN. THE ITA NO. 3608/D/2011 3 APPELLANT FURTHER SUBMITTED THAT THE AO NOTED IN HI S ORDER THAT YIELD % IN THIS LINE OF BUSINESS IS BEING DECLARED AT 65% BUT NOT A SINGLE NAME HAS BEEN MENTIONED AND FINALLY SUBMIT TED THAT THE ADDITION WAS MADE ON ACCOUNT OF POSSIBLE LEAKAG E AND HENCE IS NOT CALLED FOR. 1.05 THE ISSUE IS CONSIDERED. THE APPELLANT TOOK THE PLEA THAT THE AO HAS NOT MENTIONED THE NAME OF ANY RICE SHELLER W HO HAS DECLARED YIELD OF RICE AT 65%. IN THIS REGARD IT IS NOTED THAT M/S SHIV SHAKTI RICE MILLS TARAORI HAS DECLARED YI ELD @ 65.96% IN THE YEAR 2006-07 RELEVANT TO THE A.Y.2007 -08 AND M/S SHAKTI RICE & GENERAL MILLS AT 67.04% IN THE A. Y. 2007- 08. IT IS WORTH TO MENTION THAT THE APPEAL IN BOTH THESE CASES HAVE ALSO BEEN REPRESENTED BY THE COUNSEL WHO HAS R EPRESENTED THE APPELLANT IN THE CASE UNDER CONSIDERATION. THE VALUE OF DECLINE IN YIELD OF RICE ITSELF WORKS OUT TO RS. 2 10 000/- AS IS STATED BY THE AO IN HIS ORDER. THE APPELLANT FURTH ER HAS NOT GIVEN ANY PLAUSIBLE EXPLANATION OF DECLINE OF YIELD OF OTHER BY PRODUCTS AS IS MENTIONED BY THE AO IN HIS ORDER. T HE YIELD OF CHILKA IS NORMALLY 18-19% WHEREAS THE APPELLANT DEC LARED THE SAME AT 2.93% ONLY. SOME OF THE INSTANCES ARE GIVE N BELOW: NAME OF THE PARTY MILLING OF PADDY PARMAL RICE PARMAL YIELD % PADDY HUSK YIELD % (I) M/S AGGRAWAL RICE & GENL. MILL 17100 QNTL. CUSTOM MILLING 2427.50.00 TOTAL= 19527.50 11115 QNTL. 65.50% 3712 QNTL. SALE RATE @ 70% PER QNTL. 19% (II) KOCHAR RICE MILL 3952.78 QNTL. 2624.24 QNTL. 65% 4580.35 SALE RATE @ RS. 84.65 PER QNTL. 19.39% CUSTOM MILLING 19617.35 TOTAL= 23610.13 (III) J.R. AGRO IND. CHEEKA 28912.33 QNTL. 18857.2 QNTL. 65.22% 7758.95 QNTL. SALE RATE @ RS. PER QNTL. 19% CUSTOM MILLING= 11924.25 QNTL. TOTAL= 40836.58 ITA NO. 3608/D/2011 4 QNTL. (IV) M/S. SHIVA GANESH IND. KKR 29644.58 QNTL. 19858.76 QNTL. 66.98% 17398USED IN BOILER ITO MAKE ADDITIONAL IN THIS POINT 20% CUSTOM MILLING 57345.50 QNTL. TOTAL 86990.08 QNTL. IN VIEW OF THE FACTS DISCUSSED ABOVE IT IS HELD T HAT THE TRADING RESULTS DECLARED BY THE APPELLANT ARE NOT RELIABLE AND HENCE THE SAME ARE HEREBY REJECTED AND TRADING ADDITION MADE BY THE AO IS HEREBY CONFIRMED. 5. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) TH E ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE WORTHY CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 3 LAKH MADE BY THE LD. AO AGAINST THE FACTS AND LAW AND O NLY ON THE BASIS OF CONJECTURES AND SURMISES AND AS SUCH IS NOT TENABL E IN THE EYES OF LAW. IT IS THEREFORE REQUESTED THAT THE ADDITION MADE B Y THE LD. AO BE KINDLY DELETED. 2. THAT THE APPELLANT CRAVES LEAVE TO AMEND/ADD MOR E GROUNDS OF APPEAL AT THE TIME OF HEARING WITH THE PERMISSION. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. ADMITTEDLY THE AO DID NOT REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND HAD MADE THE A DDITION SOLELY ON THE GROUND OF DIFFERENCE OF ONLY .61% YIELD PERCENT AGE FROM OTHER MANUFACTURES. THE ASSESSEE HAD EXPLAINED THE REASO NS WHICH WERE NOT REBUTTED BY THE AO AND ONLY ON THE BASIS OF COMPARA TIVE RESULTS THE ADDITION WAS MADE. THE DIFFERENCE IN PRODUCTION IT SELF WAS SO MINOR THAT IT DID NOT CALL FOR ANY ADDITION PARTICULARLY WHEN NO DEFECT WAS POINTED OUT IN ASSESSEES BOOKS OF ACCOUNT. THERE CANNOT BE AN Y THUMB RULE IN REGARD TO PRODUCTION RESULTS AND FOR MINOR DIFFEREN CES THE ADDITION SHOULD NOT HAVE BEEN MADE AT ALL WITHOUT POINTING OUT ANY SALE BEING OUT OF BOOKS OF ACCOUNT. WE THEREFORE SET ASIDE THE ORD ER OF LD. CIT(A) ON THIS ISSUE. ITA NO. 3608/D/2011 5 7. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2012 SD/- SD/- (DIVA SINGH) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 30.3.12 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR