M/s. Gayatri Dairy Products Pvt. Ltd.,, v. The ACIT., Circle-9,,

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.487/AHD/2004 [ASSTT.YEAR 1999-00] GAYATRI DIARY PRODUCTS PVT. LTD. -VS- ASSTT. COM MISSIONER OF NR. CENTRAL BANK OF INDIA INCOME-TAX CIRCLE-9 NR. ANUPAM CINEMA KHOKHARA AHMEDABAD AHMEDABAD-380 008 PAN NO.AAACGS453C (APPELLANT) (RESPONDENT) REVENUE BY :SMT. NEETA SHAH SR-DR ASSESSEE BY: SHRI M.G. PATE L AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VIII AHMEDABAD IN APPEAL NO.C IT(A)VIII/AC.4/28/ 02-03 DATED 12-12-2003. THE ASSESSMENT WAS FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-4 AHMEDABAD U/S.143(3) OF THE I NCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28-0 3-2002 FOR ASSESSMENT YEAR 1999- 00. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER O N ACCOUNT OF UNEXPLAINED SALE OF GHEE CONVERTED FROM EXCESS FAT COMPUTED BY ASSESSIN G OFFICER. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-VIII HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ADDITIO NS OF RS.18 00 000/- MADE ON ACCOUNT OF UN-EXPLAINED SALES OF GHEE CONVERTED FROM EXCESS FAT COMPUTED BY THE ASSESSING OFFICER. ITA NO.487/AHD/2004 A.Y. 1999-05 GAYATRI DAIRY PRODUCTS P. LTD V. ACIT CIR-9 ABD PAGE 2 3. AT THE OUTSET IT IS TO BE STATED THAT THE TRIBU NAL HAS DECIDED THIS ISSUE IN ASSESSEES APPEAL IN ITA NO.487/AHD/2004 VIDE ORDER DATED 27-07-2008 AND THE HONBLE JURISDICTIONAL HIGH COURT HAS SET ASIDE THI S ISSUE IN TAX APPEAL NO.1831 OF 2008 DATED 19-01-2010 BY GIVING FOLLOWING DIRECTIONS IN PARA-6 AND 7 WHICH READ AS UNDER:- 6. THUS IT IS ON THIS HYPOTHETICAL BASIS ADDITIO NS ARE SOUGHT TO BE MADE. THE TABULAR FORM CLEARLY SUGGEST THAT THE OTHER TWO DAI RIES I.E. AMUL HAS ALSO 4.80 AND UTAM DAIRY HAS 4.70 OF FAT FOR THE SAME STANDAR D OF MILK FOR WHICH THE APPELLANT IS HAVING 4.79. THEREFORE THERE IS NO MU CH VARIATION EVEN IN COMPARABLE UNITS IN THE SAME BUSINESS FOR WHICH THE RE IS NO DISCUSSION OR EVEN A WHISPER AS TO WHETHER THE OTHER TWO DIARY UN ITS IN THE SAME BUSINESS HAVING THE SIMILAR MARGINS ARE ACCEPTED WHAT WAS T HE NEED OR REASON FOR MAKING OUT AN EXCEPTION FOR THE APPELLANT HEREIN PA RTICULARLY WHEN HE HAS GIVEN THE REASONS FOR JUSTIFICATION WHICH HAS NOT B EEN PARTICULARLY DEALT WITH AND MERELY ON THE BASIS OF THE HYPOTHECATION THE A DDITIONS ARE SOUGHT TO BE MADE. IT IS REQUIRED TO BE APPRECIATED THAT THE STA NDARD AS REQUIRED UNDER PREVENTION OF FOOD ADULTERATION ACT HAS TO BE MAINT AINED OR ADHERED TO FALLING WHICH THE COMPLAINT OR A CRIMINAL PROSECUTI ON MAY BE INITIATED. THEREFORE ON ONE HAND ONE IS REQUIRED TO ADHERE T O THE STANDARD AND IN THE PROCESS BY ABUNDANT CAUTION IF THE PERCENTAGE OF FA T IS LITTLE HIGHER TO AVOID ANY SUCH HASSLES WOULD IT BE JUSTIFIED TO MAKE ADD ITION ON THE GROUND THAT IT WAS FOR INCOME. MOREOVER THE STANDARD APPLIED TO THE PRESENT APPEL LANT WITH REGARD TO THE QUALITY OR THE STANDARD OF FAT HAS TO BE APPLIED UN IFORMLY TO OTHER UNITS AND ON COMPARABLE BASIS IF THE OTHER TWO UNITS ARE NOT QUE STIONED THERE IS NO JUSTIFICATION FOR SUCH ADDITIONS AS IT WOULD AMOUNT TO THE ARBITRARY AND WITHOUT ANY JUSTIFICATION. FURTHER BOTH THE AUTHORITIES HA VE NOT DISCUSSED ON HIS ASPECT AS TO THE COMPARABLE BASIS AND THE STANDARD IN OTHER TWO COMPARABLE CASES. THEREFORE HE PRESENT APPEAL DESERVES TO BE ALLOWED. 7. IN THIS VIEW OF THE MATTER WE QUASH AND SET ASI DE HE ORDER PASSED BY THE TRIBUNAL AND REMAND THE SAME TO THE TRIBUNAL FOR DE CIDING THE APPEAL AFRESH AND WE DIRECT THAT THE TRIBUNAL SHALL PASS SPEAKING ORDER DEALING WITH THE FINDINGS ARRIVED AT BY THE CIT (APPEALS) PARTICULAR LY KEEPING IN MIND THE ASPECT OF THE TWO COMPARABLE DAIRY UNITS AND THE ST ANDARDS APPLIED IN THEIR CASE WITH REGARD TO THE DIFFERENT PRODUCTS AND ALSO KEEPING IN MIND THE ASPECT OF STANDARD WHICH IS REQUIRED TO BE ADHERED TO UND ER THE PREVENTION OF FOOD ADULTERATION ACT TO AVOID ANY PROSECUTION OR CRIMIN AL LIABILITY. THE TRIBUNAL SHALL SPECIFICALLY RECORD THE CONTENTIONS RAISED BY THE APPELLANT AND THE WRITTEN SUBMISSIONS WHICH HAVE BEEN GIVEN BEFORE THE COMMIS SIONER (APPEALS) WHICH IS ALSO REFERRED TO BY LEARNED COUNSEL MR. J. P. SHAH FOR THE APPELLANT. 4. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF MILK MILK PRO DUCTS ETC. THE ASSESSEE IS SELLING THREE TYPES OF MILK AS PRESCRIBED UNDER STANDARD OF FAT AS REQUIRED UNDER PREVENTION ITA NO.487/AHD/2004 A.Y. 1999-05 GAYATRI DAIRY PRODUCTS P. LTD V. ACIT CIR-9 ABD PAGE 3 OF FOOD ADULTERATION ACT. ACCORDING TO ASSESSING OF FICER THERE ARE INFLATED FAT OF 31 980 KG. WHICH IS CONVERTED INTO GHEE OF 21 782 K G. FOR WHICH ADDITION WAS MADE. THERE ARE THREE DIFFERENT TYPE OF MILK AND THE FAT FOR THE WHOLE MILK WAS 6.16 AND FOR THIS ADDITION HAS BEEN DELETED BY THE CIT(A) AND TH ERE IS NO DISPUTE ON THIS. ONLY DISPUTE REMAINS BEFORE US NOW IS FOR STANDARD MILK. THE CIT(A) AS WELL AS ASSESSING OFFICER HAS COMPARED THE FAT CONTENTS OF STANDARD M ILK CLAIMED BY THE ASSESSEE- COMPANY AT 4.79% AS AGAINST THE PRINTED CONTENTS ON POUCH AND ACCORDINGLY NOTED THE EXCESS FAT CONTENTS AT 0.79 WHICH IS ABOUT 20% OF THE PRINTED FAT CONTENTS. THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER ON STANDARD MILK BY STATING THAT THE ASSESSEE-COMPANY IS CLAIMING UNREASONABLE HIGH MARG IN OF FAT CONTENTS OF STANDARD MILK AND ADDITION WAS CONFIRMED. 5. LD. COUNSEL FOR THE ASSESSEE SHRI M.G. PATEL ST ATED BEFORE US THAT THE PREVENTION OF FOOD ADULTERATION ACT PRESCRIBED STAN DARD AND ACCORDING TO THIS STANDARD FAT CONTENTS ARE TO BE MAINTAINED AND HE R EFERRED THE COMPARABLE CASES OF OTHER TWO DIARIES NAMELY AMUL DIARY AND UTTAM DIAR Y AND STATED THAT THEY ALSO ADHERED TO SAME STANDARD PRESCRIBED AND NO ADDITION S ARE MADE ON THIS FACT IN THIS CASE. ACCORDING TO LD. COUNSEL FOR ASSESSEE-COMPAN Y THE FAT CONTENTS ACTUALLY IS MORE THAN CONTENTS MENTIONED ON POUCH AND HE REFERR ED TO A COMPARATIVE CHART AS UNDER:- TYPE OF THE MILK AS PER THE ASSESSEE COMPANY FOUND ON THE POUCHES DIFFERENCE TONED 3.5 3 0.5 STANDARD 5.0 4.5 0.5 WHOLE 6.5 6 0.5 LD. COUNSEL FOR THE ASSESSEE ALSO DRAWN OUR ATTENTI ON TO THE COMPARATIVE ACTUAL KG. OF FAT OF THE ASSESSEE WITH OTHER TWO DIARIES NAMEL Y AMUL DIARY AND UTTAM DIARY FOR THE ASSESSMENT YEAR 1999-00. THE RELEVANT FAT CONT ENTS DECLARED BY THESE TWO DIARIES AND CHART SUBMITTED BY THE ASSESSEE WHICH READS AS UNDER:- A) WITH AMUL TYPE OF MILK LTRS. FAT ACTUAL AS PER GAYATRI FAT ACTUAL AS PER AMUL DIFF. IN FAT DIFF. IN KG. FAT ITA NO.487/AHD/2004 A.Y. 1999-05 GAYATRI DAIRY PRODUCTS P. LTD V. ACIT CIR-9 ABD PAGE 4 (I) WHOLE MILK 3235668.50 6.16 6.30 0.14 +4 529.94 (II) STANDARD MILK 6006322.50 4.79 4.80 0.01 +600.63 (III) TONED MILK 3212831.90 3.20 3.20 0.10 -3212.83 TOTAL KG. FAT: 1917.74 B) WITH UTTAM: TYPE OF MILK LTRS. FAT ACTUAL AS PER GAYATRI FAT ACTUAL AS PER AMUL DIFF. IN FAT DIFF. IN KG. FAT (I) WHOLE MILK 3235668.50 6.16 6.20 0.14 +1 294.27 (II) STANDARD MILK 6006322.50 4.79 4.70 0.09 +5405.69 (III) TONED MILK 3212831.90 3.20 3.30 0.00 0.00 TOTAL KG. FAT: -4111.42 THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HONBL E HIGH COURT HAS CLEARLY DIRECTED THE TRIBUNAL TO GO INTO COMPARATIVE FAT CONTENTS OF THESE TWO DIARIES AND ALSO THE REQUIRED STANDARD OF FAT CONTENTS TO BE ADHERED TO UNDER THE PREVENTION OF FOOD ADULTERATION ACT. HE STATED THAT IN VIEW OF THE CO MPARATIVE INSTANCE OF OTHER TWO DIARIES THE ASSESSEES FAT CONTENTS HAVE VERY MARG INAL DIFFERENCE AND ACCORDING TO LD. COUNSEL FOR THE ASSESSEE THERE IS NO GROUND FO R MAKING ADDITION FOR A MARGINAL DIFFERENCE OF 0.01% TO 0.091. 6. ON THE OTHER HAND LD. SR-DR SMT. NEETA SHAH RE LIED ON THE ORDERS OF THE LOWER AUTHORITIES AND STATED THAT HOW THE ASSESSEE- COMPANY CAN SUPPLY EXTRA FAT CONTENTS MILK TO THE CONSUMERS BEYOND THE PRESCRIBE D STANDARD. SHE ARGUED THAT THE COMMONSENSE POINT OUT THAT THE ASSESSEE-COMPANY WHI CH HAS TO BUY THE MILK FROM THE VARIOUS MANDALIS AND VILLAGE CO-OPERATIVES IN VILLAGES WHICH IS SOURCING POINT FOR THE DIARIES AND WOULD THESE DIARIES GETTING EXC ESS FAT FREE OF COST TO SUPPLY TO THE CONSUMERS. ACCORDING TO HER THE ANSWER IS NO AN D THE LOWER AUTHORITIES COMPUTED THE PRODUCTION OF EXCESS GHEE ON ACCOUNT OF EXCESS FAT DISCLOSED BY THE ASSESSEE BUT NOT PROVIDED TO THE CONSUMERS. ACCORDING TO HER THE ASSESSEE COMPANY CANNOT BE SO GENEROUS SO AS TO ADD EXTRA FAT BEYOND THE PR ESCRIBED STANDARDS UNDER PREVENTION OF FOOD ADULTERATION ACT. ACCORDINGLY SHE URGED THE BENCH TO CONFIRM THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACT AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH TH E DIRECTIONS OF HONBLE ITA NO.487/AHD/2004 A.Y. 1999-05 GAYATRI DAIRY PRODUCTS P. LTD V. ACIT CIR-9 ABD PAGE 5 JURISDICTIONAL HIGH COURT AND NOTED THE FACT THAT T HE COMPARABLE INSTANCE IN THE CASE OF AMUL AND UTTAM DIARIES WITH THAT OF THE ASSESSEE THE DIFFERENCE IN FAT IS VERY NOMINAL I.E. MARGINAL DIFFERENCE OF 0.01% TO 0.09. THE COMPLETE DATA HAS BEEN PROVIDED BY US IN PARA-5 WHEREIN THE ARGUMENTS OF LD. COUNSEL FOR THE ASSES SEE IS CONSIDERED. WE FIND FROM THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PREVENTION OF FOOD ADULTERATION ACT PRESCRIBED STAN DARD AND ACCORDING TO THIS STANDARD FAT CONTENTS ARE TO BE MAINTAINED AND THE COMPARABLE CASES OF OTHER TWO DIARIES NAMELY AMUL DIARY AND UTTAM DIARY AND THE ASSESSEE ALSO ADHERED TO SAME STANDARD PRESCRIBED AND NO ADDITIONS ARE MADE ON THIS FACT IN THIS CASE. WE FIND FROM THE FACTS THAT THE ASSESSEE-COMPANY HAS M AINTAINED THE FAT CONTENTS WHICH IS ACTUALLY MORE THAN CONTENTS MENTIONED ON POUCH. THE TABLE ABOVE REPRODUCED CLEARLY DEMONSTRATE THAT THE OTHER TWO DIARIES NAME LY AMUL DIARY AND UTTAM DIARY HAVE ALMOST THE SAME FAT CONTENTS FOR STANDARD MILK WITH THAT OF THE ASSESSEE. THERE IS NO MUCH VARIATION IN COMPARABLE UNITS IN T HE SAME BUSINESS AND THE LOWER AUTHORITIES HAVE MADE ADDITION JUST ON HYPOTHESIS A ND NOT ON FAT. THE ASSESSEE HAS ALSO ADHERED TO THE PROVISION OF PREVENTION OF FOOD ADULTERATION ACT TO AVOID ANY PROSECUTION OR CRIMINAL LIABILITY AND PROVIDED THE STANDARD MILK AS PER THE PRESCRIBED RULES. ACCORDINGLY WE ARE OF THE VIEW THAT THE AD DITION MADE AND CONFIRMED BY THE LOWER AUTHORITIES IS NOT ON FACTS RATHER IT IS ON H YPOTHESIS AND DESERVES TO BE DELETED. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 8. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS DAY OF 30 TH APRIL 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 30/04/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 4. THE CIT CONCERNS. 2. THE RESPONDENT. 5. THE DR ITAT AHMEDABAD 3. THE CIT(APPEALS)-VIII AHMEDABAD 6. GUARD FI LE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD