INCOME TAX OFFICER WARD 2, RAIGARH vs. SHRI BIJAY KUMAR AGRAWAL, PATHALGAON

This is the second round of appeal, wherein the order passed by the Tribunal disposing off the captioned appeal, vide its order passed in ITA No.286/RPR/2017 dated 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:

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,

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

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

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

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.