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Income Tax Appellate Tribunal, DIVISION BENCH’A’, CHANDIGARH
Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’A’, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.1538/Chd/2017 Assessment Year: 2010-11
M/s Jai Luxmi Rice And Vs. The ITO General Mills, Ward-III VPO- Kishangarh Channa Moga Raikot - 141109 PAN No. AADFJ9282G
& ITA No.1539/Chd/2017 Assessment Year: 2010-11
M/s Ganesh Rice And Vs. The ITO General Mills, Ward-III Grain Market Moga Raikot - 141109 PAN No. AAEFG1045P (Appellant) (Respondent) Appellant By : Shri. Gaurav Sharma Respondent By : Shri. Manoj Kumar
Date of hearing : 13/06/2018 Date of Pronouncement : 14/06/2018
ORDER PER DR. B.R.R. KUMAR, A.M:
Both the above appeals have been filed by the assessee against the separate order of the Ld. CIT(A)-4, Ludhiana pertaining to Assessment Year 2010- 11. 2. The assessee has raised following ground in ITA No. 1538/Chd/2017: 1. That on the facts and the circumstances of the case, the Order of Learned CIT(A) is bad in law.
That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in confirming the addition of Rs. 6,44,228/- made by him on arbitrary and estimated basis. 3. That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in rejecting the Books of Accounts maintained by the Appellant Firm under Section 145(3) of the Act.
That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in making an addition of Rs. 6,44,228/- on account of alleged suppression of Sales in respect of Paddy Husk (Chhilka)
The assessee has raised following ground in ITA No. 1538/Chd/2017: 1. That on the facts and the circumstances of the case, the Order of Learned CIT(A) is bad in law.
That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in confirming the addition of Rs. 7,38,660/- made by him on arbitrary and estimated basis.
That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in rejecting the Books of Accounts maintained by the Appellant, Firm under Section 145(3) of the Act.
That the Worthy Commissioner of Income Tax (Appeals) has erred in upholding the action of the Assessing Officer in making an addition of Rs. 7,38,660/- on account of alleged suppression of Sales in respect of Paddy Husk (Chhilka)
Since the issue is similar in both the appeals the appeal no. 1538 is taken as the lead case. 5. The assessee is running a rice Sheller milling his own paddy as well as for the Government Agencies. The assessee has shown 66.33% of yield in the rice processing. 6. During the assessment proceedings it was observed that the average sale price of the paddy husk has seen shown at Rs. 156/- per quintal whereas the average rate of the same in the closing stock is shown at Rs. 225/- per quintal. As per the bills produced the Assessing Officer found that the paddy husk was sold by the assessee @ Rs. 160 to Rs. 200/- per quintal whereas the market average range is from Rs. 218/- to Rs. 230/- based on the information obtained by the Assessing Officer from the other millers. Hence, the Assessing Officer made addition of Rs. 6,44,228/- by applying the minimal sale price @Rs. 218/- per quintal. 7. The Ld. CIT(A) has confirmed the addition holding as under: 6.6 I have considered the observations of the Assessing Officer as made by him in the -sment order while making the impugned addition as well as in the remand report. I have also considered written submissions filed by the assessee firm through its learned AR vide letter dated 28.03.2016 as well as its counter comments on the report of the Assessing Officer on the issue under reference. I have further considered contents of the petition filed by the assessee firm for the admissions of additional evidence as well as additional evidences filed by the assessee firm to support its contentions with regard to sale rate of paddy husk shown by it in its books of account. I have again considered various judicial pronouncements relied upon by the learned AR of the assessee firm as well as other material placed by him on record. On careful consideration of the
assessment order, it has been noticed that the assessee firm has valued its opening stock of paddy husk (Chhilka) @Rs.200/- per quintal whereas the closing stock has been valued @Rs.225/- per quintal. It has also been noticed that the average sale rate of paddy husk has been shown by the assessee firm @Rs.l56/- per quintal which is far less than the valuation made by the assessee firm itself at the beginning and end of the year.When asked as to how the assessee firm had sold paddy husk @150/- per quintal on 01.04.2009 and 02.04.2009 when the same has been valued @200/- per quintal as on 31.03.2009 by the assessee firm itself, the assessee failed to file any satisfactory reply. When asked again as to why sale rate of paddy husk should not be applied in its case @218/- per quintal as another assessee of the same area namely M/s Sitla Rice and General Mills, Jagraon has sold paddy husk at an average rate of 218/-, the assessee firm again could not file any satisfactory reply. It has also been noticed that the Assessing Officer has confronted the average sale rates of paddy husk shown by M/s Sitla Rice & General Mills, M/s Tajpur Rice & General Mills and M/s BankeyBehari Rice Mills, Jagraonwhich were at Rs.218/-, Rs.273/- and Rs.230/- per quintal respectively to the assessee and the assessee firm could not justify its average sale rate shown by it by filing any justifiable explanation. The explanation furnished by the assessee firm was found to be of general nature and without any evidence. During the course of appellate proceedings, the assessee firm had filed many additional evidences including sale bills of M/s Goyal Agro Foods, Raikotand M/s Keshav Rice and General Millswhich have also sold paddy husk at the same rate as shown by the assessee firm. When asked as to whether the assessment in the case of M/s Goyal Agro Foods, Raikot and M/s Keshav Rice and General Mills has also been completed by the Department under section 143(3) of the Act, the learned AR of the assessee firm replied in the negative. On careful consideration of the rival contentions, I am of the opinion that even additional evidences produced by the assessee firm if admitted will not help it as the cases of M/s Goyal Agro Foods, Raikotand M/s Keshav Rice and General Millshave been accepted under section 143(1) of the Act and no scrutiny assessment has been made in these cases. Moreover, I am of the opinion that in the absence of scrutiny assessment in the cases of M/s Goyal Agro Foods, Raikot and M/s Keshav Rice and.General Mills, it cannot be said that M/s Goyal Agro Foods, Raikotand M/s Keshav Rice and General Millshave not suppressed the sales in respect of Paddy Husk. In view of these facts, I am of the considered opinion that the assessee firm has certainly suppressed its sales in respect of paddy husk and the Assessing Officer is fully justified in rejecting the books of account of the assessee firm under section 145(3) of the Act and thereafter making the addition under dispute. Under such circumstances, the action of the Assessing Officer in rejecting the books of account maintained by the assessee firm and thereafter making an addition of Rs.6,44,228/- in this case on account of alleged suppression of sales in respect of paddy husk (Chhilka) cannot be said to be unjustified and the action of the Assessing Officer in making an addition of Rs.6,44,228/-in this case is, therefore, upheld. In the result, the grounds No. 2, 3 and 4 of appeal taken by the assessee firm are dismissed.
From the above the following facts emerge as under:
• The value of husk per quintal as per Opening Stock – Rs. 200/- • The value of husk per quintal as per Closing Stock – Rs. 225/- • The value of husk per quintal as per Sale Account – Rs. 156/- • The value of husk per quintal determined by AO – Rs. 218/- • The value of husk per quintal as per Market Average – Rs. 218/- to Rs. 273/-. 9. Before us, the Ld. AR argued that the quality of the husk varies from mill to mill and higher value is given to better quality husk. Since every mill has got their
own manufacturing qualities the market price of the product of one mill cannot be compared to the production of the assessee’s mill. He relied on a number of case laws which have been duly perused. 10. Ld. DR relied on the orders of the Ld. CIT(A). 11. Having gone through the records and the arguments we find that the opening stock was valued @ Rs. 200/- per quintal. The assessee has sold at Rs. 156/- per quintal and the Assessing Officer altered the sale value at Rs. 218/- . Since there cannot be common price for the product of different millers in the market, ascribing the price of any other miller to the assessee also cannot be accepted. Since the assessee has shown value of the opening stock @ Rs. 200/- per quintal and based on the accepted principle of FIFO the value of the sale can be reasonably determined at Rs. 200/- per quintal and accordingly the Assessing Officer is hereby directed to compute the addition by giving relief of Rs. 18/- per quintal. 12. As a result, both the appeals are allowed for statistical purpose.
Order pronounced in the open Court.
Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 14/06/2018 AG
Copy to:
The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) The DR 5.