BHIMASHANKAR SSK LTD,PUNE vs. ACIT- CIRCLE-8, PUNE, PUNE

आयकर अपीलीय अिधकरण ”ए” Ɋायपीठ पुणेमŐ।
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES “A” :: PUNE

BEFORE SHRI R.K.PANDA, VICE PRESIDENT
AND SHRI VINAY BHAMORE, JUDICIAL MEMBER

आयकर अपील सं. / ITA No.1147/PUN/2024
िनधाᭅरण वषᭅ / Assessment Year:2012-13
Bhimashankar SSK Ltd.,
A/P. Pargaon, Tal.Ambegaon,
Dist-Pune – 412406. PAN: AAAAB0949G
V s
The ACIT,
Circle-8, Pune.
Appellant/ Assessee

Respondent / Revenue

Assessee by Shri Hanmant Dattatry Dhavle – AR
Revenue by Shri Amol Khairnar – CIT(DR)
Date of hearing
18/12/2024
Date of pronouncement 11/03/2025

आदेश/ ORDER

PER VINAY BHAMORE, JM:

This appeal filed by the assessee is against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] passed under section 250 of the Income Tax Act, 1961; dated 23.03.2024 for Assessment Year 2012-13. The assessee has raised the following grounds of appeal :
“1. On the fact and in the circumstance of the case and in law of the learned NFAC –Commissioner of Income Tax(Appeals) Delhi, has erred in disallowing and adding back an amount of Rs.42,23,17,760/- on account f Excess Cane Price Paid Farmers.

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2. On the fact and in the circumstance of the case and in law of the learned NFAC –Commissioner of Income Tax(Appeals) Delhi, has erred in disallowing and adding back an amount of Rs.71,99,261/- on account of Sale of Sugar at Concessional Rate.

Submission of ld.AR :

Prayer:-

-In Union Budget 2023, Hon. Finance Minister proposed to provide an opportunity to sugar cooperatives to claim payments made to sugarcane farmers for the period prior to the AY 2016-17 as expenditure.

- Accordingly, Section 155(19) inserted in the Income Tax Act, 1961
which is read as follows:

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(19) Where any deduction in respect of any expenditure incurred for the purchase of sugarcane has been claimed by an assessee, being a co- operative society engaged in the business of manufacture of sugar, and such deduction has been disallowed wholly or partly in any previous year commencing on or before the 1st day of April, 2014, the Assessing
Officer shall, on the basis of an application made by such assessee in this regard, recompute the total income of the assessee for such previous year after allowing deduction to the extent such expenditure is incurred at a price which is equal to or less than the price fixed or approved by the Government for that previous year, and the provisions of section 154 shall, so far as may be, apply thereto, and the period of four years specified in sub-section (7) of that section shall be reckoned from the end of previous year commencing on the 1st day of April,
2022. - Accordingly, Assessee have made Application before AO and the same is pending.

Therefore, this issue is required to be set aside to AO for re- examination of facts in light of Section 155(19) of the Income Tax Act,
1961.”

Submission of ld.DR :

Findings & Analysis :

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on 12.02.2015. The assessee preferred an appeal before the ld.CIT(A) which was partly allowed vide order dated 25.10.2016. The Assessee filed appeal before the ITAT. ITAT vide order dated
01.05.019 set-aside the issues for verification to the Assessing
Officer. The Assessing Officer passed an order under section 143(3) r.w.s. 254 r.w.s. 144B of the Act on 28.09.2021. In the said assessment order,
Assessing
Officer made addition of Rs.42,23,17,760.26 on account of excess cane paid over FRP.
Similarly, AO made addition of Rs.71,99,261/- on account of sale of sugar at concessional rates to its Members. Aggrieved by these additions, Assessee filed appeal before the ld.CIT(A).

We will discuss each issue hereunder :

Excess cane price paid to farmers over FRP :

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Rs.1,800/- per metric ton to Non-members for purchase of Sugarcane. For Sugar Season 2011-12, Assessee has paid
Rs.2,450/- per metric ton to its Members for purchase of Sugar
Cane. The assessing officer in the assessment order stated that FRP fixed by Central Government for purchase of Sugarcane was Rs.1801.90 per metric ton. However, the Assessing Officer has also observed that Maharashtra State Government has fixed the price at Rs.2450/- per metric ton, the said price is called “State Advised
Price”. The Assessing Officer held that Assessee has paid excess price for purchase of sugar cane and accordingly made addition.
Aggrieved by the same, assessee filed appeal before the ld.CIT(A).
The ld.CIT(A) in para no.4.5 held as under :
“4.5. Since specific remedy has been provided for in the Act in Section 155(19) with specified modalities thereof, this issue does not warrant any adjudication under the present appeal proceedings and is therefore, dismissed accordingly with liberty to the appellant to move appropriate petition before the AO as provided under Section 155(19) read with SOP issued vide Circular No.14 of 2023 as above. In the result, Ground
No.1 and 3 on the issue are dismissed.”

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mandatory for the ld.CIT(A) to decide each ground of appeal on merit.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty.
Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st
June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not ITA No.1147/PUN/2024 [A]

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the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote.

Sale of Sugar at concessional rate to its Members :

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“4.16 However, as noted by the AO, the appellant had not submitted these specific details before the AO for verification and even during the appeal proceedings only general contentions have been made that it fulfils the conditions laid down which cannot be accepted…………….

……………….

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The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, 'CIT(A)']. Apart from the afore-stated question, CIT(A) would take into account, whether the above-mentioned practice of selling sugar at concessional rate has become the practice or custom in the Co-operative Sugar Industry?; and whether any Resolution has been passed by the State Government supporting the practice? The CIT(A) would also consider on what basis the quantity of the final product, i.e., sugar, is being fixed for sale to farmers/cane growers/Members each year on month-to-month basis, apart from Diwali?

These are some of the questions which have not been addressed by the Authorities below in the impugned orders. The CIT(A) would be entitled to look into the Accounts and verify the basis for sale of sugar at concessional price on month-to-month basis. We, therefore, keep all questions of law and facts open.

Needless to add, the CIT(A) would give liberty to both sides to produce relevant documents.

For the above reasons, we remit the cases to CIT(A) to de-novo consider the matter.”Unquote

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8.3 In this context, it is important to refer to the circular of the Sugar
Commissioner
–
Maharashtra
State vide
Circular
No:“Outward No:CS/Admin-1/Circular/05 dated 01.03.2006”. The Sugar Commissioner of Maharashtra State has elaborately discussed the sale of sugar at concessional rate and given directions. The said circular is reproduced as under :
“Commissioner of Sugar

Maharashtra Rajya SakharSankul, Shivaji Nagar, Pune-5

Outward No:CS/Admin-1/Circular/05
Date:01st Date March, 2006

CIRCULAR

Sub: Sale of Sugar at concessional rate to members and employees of sugar factories of State

To give directions as per section 79A of the Maharashtra Co- operative Societies Rules, 1960

Ref: Govt. Letter SSK1005/25859/Letter No. 345/25S dated 14th
February, 2006

Terms and conditions and procedure to be followed for sale of sugar at concession rate was fixed through Circular from this office dated 13th
April, 2005 and 27th May, 2005. However, some of the factories have informed to this office that they have passed the resolution at their
Annual General Meeting/ Extra Ordinary General Meeting regarding not to adopt the provisions contained in this circular on sale of sugar factories are informed that Circular was issued u/s 79A of the Maha.
State Co-op Act 1960 pursuant to the decision taken at the meetings of Hon'ble Committee of Ministers on 1st September, 2005 and 30th
September, 2005 on sale of sugar at concession rate to the members and employees.

Since the provisions of the Act prevail over the Bye-Laws of the Society, sugar factories should sell the sugar at concession rate to their members and employees as per the directions given by the State
Government. It may be noted that, action can be taken against Board of ITA No.1147/PUN/2024 [A]

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Directors of the factories not obeying these directions under Section 88
of the Maharashtra State Co-operative Societies Act, 1960. Following are the directions as per the Section 79(A) of Maharashtra
Co-operative Societies Act, 1960:

After detailed discussion, following directions are given under Section 79 (A) of Maharashtra Co-operative
Societies Act, 1960

DIRECTIONS

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5. If a factory has crushed less than 50% in the previous season, then it will not be eligible for concession sale of sugar.

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Circular issued by Sugar Commissioner, Maharashtra State in 2006
needs to be considered as directed by Hon’ble Supreme
Court(supra). In 2006, the Sugar Commissioner gave specific directions under section 79(A) of the Maharashtra Co-operative
Societies Act, 1960. We have already reproduced the relevant paragraphs of ld.CIT(A)’s order. The ld.CIT(A)/AO has not answered following questions :-
 How many members have been provided sugar at concessional rate?

 Had those members supplied sugar cane to the factory?

 Had assessee factory crushed more than 50% in the previous season?

 What is the Rate at which the sugar was sold at concessional rate and What was the levy sugar rate and excise duty for that year?

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(1) If the State Government, on receipt of a report from the