M/S.KALYAN RICE AND GENERAL MILLS KARTAR vs. COMMISSIONER OF INCOME TAX JALANDHAR

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ITA/26/2001HC Punjab & HaryanaPHHC01042066200127 February 2020Bench: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN2 pages

AI SummaryRemanded

What did the High Court hold?

The High Court noted that it was not disputed that the sister concern had also reflected the transaction and that this was ultimately accepted by the revenue. In light of these changed circumstances, both learned counsel agreed that it would be appropriate to decide the matter afresh. Consequently, the impugned order of the revenue was set aside, and the matter was remanded back to the Assessing Officer for a fresh decision. The High Court did not decide the merits of the stock variation itself but rather directed a reconsideration based on the accepted transaction of the sister concern. Any pending civil miscellaneous applications were also disposed of as the main case was decided.

What were the facts?

The appeal was filed by M/s Kalyan Rice & General Mills (the assessee) against an order of the revenue that made substantial additions to income based on stock variation. The assessee's primary contention was that during the relevant period, it had a contract for milling rice. For a portion of this period, it lacked an electric connection and had its paddy milled by a sister concern, which it argued explained the stock variation. The authorities below did not accept this explanation. It was not disputed before the High Court that the sister concern had also reflected this transaction, and this was ultimately accepted by the revenue.

What were the issues?

1. Whether the stock variation, explained by the assessee as paddy milled by its sister concern due to a lack of electric connection, is a valid explanation, considering the sister concern's transaction was accepted by the revenue? (Question of mixed law and fact, concerning the interpretation and application of income tax provisions related to stock valuation and business income). Assessee's Contention: The assessee argued that the stock variation was adequately explained by the milling of paddy by its sister concern, a fact that was subsequently accepted by the revenue. This acceptance by the revenue for the sister concern's transaction should validate the assessee's explanation. Revenue's Contention: The revenue's initial action of making substantial additions on the basis of stock variation indicates their disagreement with the assessee's explanation. However, the judgment records no specific argument from the revenue before the High Court regarding the acceptance of the sister concern's transaction.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.26 of 2001 (O&M) Date of Decision : 27.02.2020 M/s Kalyan Rice & General Mills ...... Appellant versus Commissioner of Income Tax & anr. ...... Respondents CORAM : HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR.JUSTICE AVNEESH JHINGAN *** Present : Mr. Alok Mittal, Advocate for the appellant. Mr. Vivek Sethi, Sr. Panel Counsel with Mr. Varun Issar, Jr. Panel Counsel for the respondents. *** AJAY TEWARI, J. (Oral) 1 This appeal has been filed against the order of the revenue making substantial addition on the basis of stock variation. 2 The primary grouse of the appellant was that at the relevant period it had obtained the contract for milling rice. For some period it did not have an electric connection and it had got that some paddy milled from its sister concern and that explained the stock variation. The authorities below having not accepted this explanation, the present appeal has been filed. 3 Before us it is not disputed that the sister concern had also reflected this transaction and that was ultimately accepted by the revenue. 4 In these circumstances, both the learned counsel have agreed that it would be appropriate if the matter is decided afresh in view of the changed circumstances i.e. plea of the sister concerned having been accepted. POOJA SHARMA 2020.03.04 14:40 I attest to the accuracy and integrity of this document

-2- 5 Impugned order is set aside and the matter is remanded back. 6 Since the main case has been decided, the pending civil miscellaneous application, if any, also stands disposed of.

( AJAY TEWARI ) JUDGE ( AVNEESH JHINGAN ) JUDGE 27.02.2020 pooja sharma-I Whether speaking/reasoned Yes/No Whether Reportable : Yes/No POOJA SHARMA 2020.03.04 14:40 I attest to the accuracy and integrity of this document

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