INCOME-TAX OFFICER vs. M/S. SHREE BALAJI UDYOG, JALNA

The brief facts of the case as emanating from the records are : The assessee is a partnership firm engaged in extraction of oil and manufacturing of Soya De Oil Cakes (DOC). The assessee filed its return of income for the impugned assessment year on 30-09-2011 declaring total income as „Nil‟. In scrutiny assessment proceedings, the Assessing Officer inter alia made additions on account of : i. Suppression of yield of soya crude oil Rs.46,95,397/-; and ii. Under valuation of closing stock of soya crude oil Rs.21,67,103/-.

Shri S.N. Puranik appearing on behalf of the assessee vehemently defended the findings of Commissioner of Income Tax (Appeals) in respect of the aforesaid additions made by the Assessing Officer. The ld. AR submitted that the additions have been made merely on surmises and conjectures. The assessee has maintained proper books of account and

Per contra, Shri N. Ashok Babu representing the Department vehemently defended the assessment order and prayed for reversing the findings of Commissioner of Income Tax (Appeals) on both the issues.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The Department is in appeal against the additions deleted by the Commissioner of Income Tax (Appeals). The Assessing Officer during assessment proceedings had inter alia made addition on account of suppressed yield of finished goods and under valuation of closing stock. A perusal of assessment order shows

It is a well settled law that when the Assessing Officer does not believe the books of assessee, the onus shifts on the Department to prove that the assessee has failed to report the correct income that is liable to be taxed. In the present case, the Assessing Officer failed to discharge the onus heavily cast upon him before making the addition. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in

In ground No. 4 of the appeal, the Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in deleting the addition of Rs.21,67,103/- made by Assessing Officer on account of under valuation of closing stock. The assessee has been consistently valuing its closing stock on market value or cost, whichever is less. The assessee is regularly maintaining closing stock on FIFO method. The method of valuation of closing stock regularly followed by the assessee was accepted by the Revenue in past. This is the first year when the Assessing Officer has raised question over the valuation of closing stock. A perusal of assessment order shows that the Assessing Officer at the time of making addition on account of under valuation of closing stock has referred to the rates of soya crude oil as on 31-03-2011 in the case of M/s. Gauri Agrotech Private Limited. No reason whatsoever has been given by the Assessing Officer for selecting the rates of M/s. Gauri Agrotech Private Limited. The Assessing Officer has not carried out any enquiry to come to a conclusion that the quality of oil extracted by the assessee and M/s. Gauri Agrotech Private Limited is same quality. The Assessing Officer has disturbed valuation of closing stock merely on self presumptions and whimsical figures without assigning any reasons. No valid reason has been assigned by the Assessing Officer for rejecting the valuation of closing stock made by assessee. The Commissioner of Income Tax (Appeals) has rightly deleted the addition and we see no reason to interfere with the well reasoned findings of the First Appellate Authority. Accordingly, ground No. 4 of the appeal by the Department is dismissed.

The ground Nos. 5, 6 and 7 of the appeal by Revenue are general in nature, hence, require no adjudication.

In the result, the appeal of Revenue is dismissed sans merit.

The assessee has filed Cross Objections by raising following grounds: “1. Honourable CIT(A) has not erred in deleting the additions made by Assessing officer, Assessing officer made additions alleging law yield of finished goods Rs.46,95,387/- and under Valuation of Respondent prays closing stock Rs.21,67,103/- to uphold CIT(A) order on these two deletions by CIT(A). 2. Honourable CIT(A) has erred in confirming the addition of Rs.10,54,539/- alleging Interest on Interest free advance to sister concern. Same may please be deleted. 3. Honourable CIT(A) has erred IS confirming the -addition of Rs.4,91,571/- for burden purchases. Same may please be deleted. 4. CIT(A) has erred is not granting just and equitable relief by deleting/reducing additions made by Assessing officer. 5. Respondent prays to add, alter, amend, and/or withdraw the Ground/ s as occasion may demand.”

The ground No. 1 of the Cross Objections is in support of findings of Commissioner of Income Tax (Appeals) with respect to deleting of addition on account of suppression of yield of finished goods and under valuation of closing stock. We have upheld the findings of Commissioner of Income Tax on both the counts, thus, the ground No. 1 of Cross Objections has become infructuous and hence, the same is dismissed as such.

In respect of ground Nos. 2 and 3 of Cross Objections, the ld. AR has fairly admitted that the assessee had raised these grounds in a separate appeal in ITA No. 789/PUN/2016 for the assessment year 2011-12. The said appeal of assessee was dismissed by the Tribunal vide order dated 18-04-2018. Since, the issues raised in ground Nos. 2 and 3 of Cross

The ground Nos. 4 and 5 of the Cross Objections are general in nature and hence, require no adjudication.

In the result, the Cross Objections filed by the assessee is dismissed.

To sum up, the appeal of Revenue, as well as, Cross Objections filed by the assessee are dismissed.