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Income Tax Appellate Tribunal, DELHI BENCE ‘E’, NEW DELHI
Before: SHRI G.D.AGRAWAL, HON’BLE & SHRI KULDIP SINGH
ASSESSEE BY : Sh. Girish Aneja, CA REVENUE BY : Smt. Rinku Singh, Addl. CIT-DR Date of Hearing : 13 .05.2019 Date of Order : 14.05.2019
O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant Asstt. Commissioner of Income Tax (hereinafter referred to as 'the revenue') by filing the aforesaid appeal, sought to set aside the impugned order dated 31/03/2015 passed by Ld. Commissioner of Income Tax(Appeals)-Rohtak qua the Assessment Year 2010-11 on the grounds inter alia that :
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not right in deleting the sales tax liability of Rs. 1,87,00,688/-.
On the facts and in the circumstances of the case, the Ld. CIT(A) is not right in restricting the addition on account of low yield of rice bran to Rs. 13,97,641/- as against Rs. 25,69,000/- made by the AO, ignoring the comparable cases quoted by6 the Assessing Officer.
On the facts and in the circumstances of the case, the Ld. CIT(A) is not right in deleting the disallowance of Rs. 6,50,000/- on account of sales promotion expenses, ignoring the fact that the relevant bills/ vouchers were not produced by the assessee before the Assessing Officer.
The appellant craves leave to add or amend the grounds of appeal before the appeal is heard or disposed off.”
2. Briefly stated that facts necessary for adjudication of the controversy at hand are: The assessee firm is into the business of trading and manufacturing of rice and regularly following the merchantile system of accounting. AO noticed that the assessee has debited an amount of Rs. 1,87,00,668/- on account of sale tax, regarding which the assessee was called upon to furnish the supporting documentary evidence to justify its claim of sale tax during the year under assessment. Declining the contentions raised by the assessee, AO proceeded to conclude that the amount in question is not liability of the sale tax of the year under assessment as neither any such amount has been paid by the assessee nor accrued during the year under assessment and appears that the assessee has debited this amount to adjust the profit for its own convenience and thereby made an addition of Rs. 1,87,00,668/-.
3. AO further notice that the assessee firm has claimed yield of rice bran at 5.41% on the milling of his paddy. However, AO after perusing the history of showing yield of rice bran in the earlier year at 7.85% and 7.31% for A.Y. 2008-09 and 2007-08 respectively estimated the yield of rice bran at 7.25% and thereby made an addition of Rs. 25,69,000/- to the total income of the assessee.
4. Assessee debited an amount of Rs. 6,50,000/- in P & L Account under the head ‘Sales Promotion Expenses’. On failure of the assessee to produce bills / vouchers AO made disallowance thereof and added the amount of Rs. 6,50,000/- to the income of the assessee.
5. Assessee carried the matter before Ld. CIT(A) by way of filing the appeal who has deleted the addition by partly allowing the appeal. Feeling aggrieved the revenue has come up the Tribunal by way of filing the present appeal.
GROUND NO. 1 6. Undisputedly, assessee has brought on record additional evidence in the form of account of VAT input tax account from 01.04.2009 to 31.03.2010, trading account of VAT account for 2004-05 and 2010-11 available at page 53 to 56 of the paper book, and A/C of Rice bran sale A/c from 01.04.2009 to 31.03.2010 available at page 57 to 58 of paper book which the Ld. CIT(A) has relied upon to delete the addition, but without providing an opportunity to the AO to verify the additional evidences.
We have agreed in principle applied by the Ld. CIT(A) for deletion of addition made by the AO but the entire additional evidences brought on record by the assessee during the appellate proceeding is required to be verified by the AO. So we deem it appropriate to send this issue back to the AO to decide afresh after examining the additional evidences brought on record by the assessee. So ground no. 1 is determined in favour of the assessee for statistical purposes.
GROUND NO. 2 8. In so far as question of restricting the addition of Rs. 25,69,000/- to Rs. 13,97,641/- by Ld. CIT(A) is concerned AO has estimated the yield of rice bran to 7.25% as against 5.41% shown by the assessee by taking into consideration the yield of rice bran in A.Y. 2008-09 and 2009-10 @ 7.31% and 7.85% respectively. However, we are of the considered view that straight-way we cannot jump to the conclusion in estimating the addition qua the yield of rice bran by taking into account high yield shown in the earlier years by the assessee because it depends upon various other factors like quality of the paddy, quantum of paddy milled etc. So, we are of the considered view that the Ld. CIT(A) by taking into consideration the paddy milled and other factors has rightly assessed the yield of the rice bran at 6.25% and restricted the disallowance to Rs. 13,97,641/- as against 25,69,000/- made by the AO. So we confirm the findings returned by Ld. CIT(A), hence, ground no. 2 is determined against the revenue.
GROUND NO. 3 9. Assessee debited an amount of Rs. 6,50,000/- in P & L Account under the head ‘Sales, Promotion and Expenses’ which has been disallowed by the AO for want of documentary evidence. Before Ld. CIT(A) the Assessee has produced the documentary evidence in the form of full particulars of the firm who carried out sales promotional activities on behalf of the assessee along with certificate for deducting TDS but all these documents having been entertained in additional evidence, have not been got verified from the AO by calling a remand report. So we are of the considered view that this issue is also required to be sent back to the AO to decide afresh in view of the additional evidences entertained by Ld. CIT(A) after providing opportunity of being heard to the assessee. So ground no. 3 is determined in favour of the revenue for statistical purposes.
In view of what has been discussed above ground no. 1 and 3 are remanded back to the AO to decide afresh after providing an opportunity of being heard to the assessee. Resultantly appeal filed by the revenue is allowed for statistical purposs. Order pronounced in open court on this 14th Day of May, 2019.