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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the revenue is directed against the order passed by the CIT(Appeals), Bilaspur dated 18.09.2017, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s. 147 of the Income-tax Act, 1961 (for short ‘the Act’) dated 14.01.2015 for assessment year 2009-10.
This is the second round of appeal, wherein the order passed by the Tribunal disposing off the captioned appeal, vide its order passed in 08.08.2018 was on an earlier occasion recalled vide order passed in MA No.11/RPR/2019 dated 13.03.2023. The revenue has assailed the impugned order on the following grounds of appeal before us:
“1. Whether on the facts and circumstances of the case and on the points of the law, the Ld. CIT(A) was justified in deleting the addition of Rs.5,71,738/- made by the A.O on account of omission of 487 quintal of rice worth Rs.5,71,738/- advanced to DMO, from closing stock by the assessee? 2. The order of the Ld. CIT(A) is erroneous both in law and on facts. 3. Any other ground that may be adduced at the time of hearing of appeal.”
Succinctly stated, the assessee who is engaged in the business of rice milling had filed his return of income for A.Y.2009-10 on 27.09.2009,
3 ITO-2, Raigarh Vs. Shri Bijay Kumar Agrawal declaring an income of Rs.4,15,160/-. Original assessment was thereafter framed by the A.O vide his order passed u/s.143(3) of the Act dated 17.10.2011, determining the income of the assessee at Rs.5,60,985/-.
On a perusal of record, it transpires that the A.O on being tipped by the audit party about short accounting by the assessee of 487 quintals of rice valued at Rs.5,71,738/- in its “closing stock” for the year under consideration, had reopened his case u/s.147 of the Act.
During the course of reassessment proceedings, it was observed by the A.O that the assessee during the year under consideration had carried out custom milling as well as own milling of rice. It was observed by the A.O that though the assessee had from milling of his own 6650.08 Qntl of own paddy produced 4455.35 Qntl. of rice but had shown only 3938.35 Qntl. in his “closing stock” for the year under consideration. It was observed by the A.O that remaining 487 Qntl. of rice worth Rs.5,71,738/- which was advanced by the assessee to DMO did not form part of his “closing stock” for the year under consideration. The A.O on the basis of his aforesaid observation called upon the assessee to put forth an explanation as regards the suppression of 487 Qntl. of rice in his “closing stock”. As the explanation of the assessee did not find favour with the A.O, therefore, he concluded that the assessee had suppressed his “closing stock” by 487 Qntl of rice and 4 ITO-2, Raigarh Vs. Shri Bijay Kumar Agrawal made a consequential addition of the value of the same amounting to Rs.5,71,738/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) after deliberating at length on the facts which had led to the addition towards suppression of 487 Qtl. of “closing stock” of rice, found favour with the contentions advanced by the assessee and vacated the impugned addition. It was observed by the CIT(Appeals) that the A.O had failed to appreciate the correct factual position and had wrongly drawn adverse inferences in the hands of the assessee. For the sake of clarity the relevant observations of the CIT(Appeals) are culled out as under: “Decision — I have considered the rival submission. The reply filed before the AO as on 23/07/2014 by the assessee was not accepted by the AO. I have gone through the final accounts of the assessee enclosed in the paper book as annexure "A/2" page 25 which shows the production account and paddy account separately. The assessee had received 1508.55 quintal paddy for custom milling in the earlier year and 11458.62 quintal during the relevant assessment year from the government agencies. The opening stock of CMR paddy had been transferred for milling along with the paddy supplied by the government agencies. Assessee had purchased 7127.65 quintal during the year and 122.43 quintal was available as opening stock. The assessee had shown whole amount of paddy received during the year for milling whereas in the production account he had shown on credit side 3968.35 as rice account, 7677.00 as rice account CMR and rice account advance (CMR) 487 quintals respectively. The assessee had also sold paddy 2081.80 quintal. After sale of the paddy the assessee was having 6676.83 quintal paddy which included the paddy supplied by the government agencies in earlier years and shown by the assessee as opening stock (CMR). Thus, the assessee had transferred the rice account (CMR) as 7677 quintal and rice account (CMR) advance 487 quintal. The word advance has been misunderstood by the learned AO because he could not see the paddy account in which paddy stock (CMR) 1508.55 quintal paddy has been shown by the assessee as having been received by the government
5 ITO-2, Raigarh Vs. Shri Bijay Kumar Agrawal agencies in advance in the earlier years and the rice was to be supplied in the subsequent year and the assessee had done so by giving back 487 quintal rice. After careful consideration of the issue in hand, I do not find any difference in the quantity shown by the assessee in the production account. Since in the trading and profit and loss account only manufactured rice and sale has been mentioned and also job work receipts had been disclosed by the assessee, there was no question of showing the rice of 487 quintal belonging to the government agencies in his profit and loss account. Thus, there is no variation in the profit and loss account. In the closing stock at page 27 of the paper book, assessee had duly shown rice at DMO amounting to Rs. 5,71,738/-. Thus, I do not find addition made by the AO as sustainable. The same is hereby deleted because the rice of 487 quintal does not belong to the assessee. Since none of the rice belonging to the government agencies had been accounted for by the assessee in the trading account and it has been shown in the production account there is no requirement in the book keeping to show it as his closing stock. The proper course is left to the assessee is only to transfer the same in the balance sheet. The ground of appeal is allowed. (Relief : 5,71,738/-).”
7. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. As the assessee respondent despite having been intimated about the hearing of appeal had failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 25 of the Appellate Tribunal Rules, 1963 i.e, after hearing the appellant revenue and perusing the orders of the lower authorities.
The Ld. Departmental Representative (for short ‘DR’) had though relied on the orders of the lower authorities but could not point out any perversity in the observation of the CIT(Appeals) on the basis of which the 6 ITO-2, Raigarh Vs. Shri Bijay Kumar Agrawal impugned addition made by the A.O towards suppression of “closing stock” by 487 Qntl. of rice valued at Rs.5,71,738/- was vacated by him.
We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the contentions advanced by the Ld. DR. Although it is submitted by the Ld. DR that the assessee had suppressed his “closing stock” by 487 Qntl. of rice valued at Rs.5,71,738/- (supra), but he had neither placed on record any material to support his aforesaid contention nor pointed out any perversity in the observations of the CIT(Appeals). As observed by the CIT(Appeals), the assessee had duly disclosed 487 Qntl. of rice valued at Rs.5,71,738/- in his “closing stock” for the year under consideration. As no perversity in the observations of the CIT(Appeals) had been brought to our notice by the Ld. DR, therefore, we, finding no reason to dislodge his well reasoned order, uphold the same.
In the result, appeal of the revenue is dismissed in terms of our aforesaid observations.