The New India Rice Mill (P) Ltd., Hooghly v. DCIT, Circle - 2, Hooghly, Hooghly

ITA 355/KOL/2010 | 2005-2006
Pronouncement Date: 26-05-2010 | Result: Allowed

Appeal Details

RSA Number 35523514 RSA 2010
Bench Kolkata
Appeal Number ITA 355/KOL/2010
Duration Of Justice 3 month(s) 10 day(s)
Appellant The New India Rice Mill (P) Ltd., Hooghly
Respondent DCIT, Circle - 2, Hooghly, Hooghly
Appeal Type Income Tax Appeal
Pronouncement Date 26-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-05-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2005-2006
Appeal Filed On 16-02-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : KOLKATA [ BEFORE SHRI B.R.MITTAL J.M. & SHRI C.D. RAO A.M . ] I.T.A.NO. 355 (KOL) OF 2010 ASSESSMENT YEAR 2005-06 THE NEW INDIA RICE MILL (P) LTD. -VS- DY. CO MMISSIONER OF INCOME-TAX HOOGHLY (PAN-AABCT9296P) CIRCLE-2 HOOGHL Y. [APPELLANT] [ RESPONDENT ] APPELLANT BY : SRI SOMNATH GHOSH RESPONDENT BY : SRI SANJAY BARA S R. D.R. O R D E R PER SRI C.D. RAO A.M. : THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 27/01/2010 OF C.I.T.(A)-XXXVI KOLKATA FOR ASSESSME NT YEAR 2005-06. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASSESSEE READS AS UNDE R :- FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS XXXVI KOLKATA ACTED UNLAWFULLY IN UPHOLDING THE IMPUGNED ESTIMATED ADDI TION TO THE EXTENT OF RS.35 000/- TO THE TRADING ACCOUNT MADE BY THE LD. DEPUTY COMMISSI ONER OF INCOME TAX CIRCLE 2 HOOGHLY INDULGING IN SPECULATION SURMISE SUSPICIO N AND CONJECTURE ON THE ALLEGATION THAT THE PRODUCTION WAS NOT COMMENSURATE WITH THE Q UANTITY OF PADDY MILLED WITHOUT ADDUCING ANY PROOF FOR SUCH IMPUGNED ACTION IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PURPORTED FINDING ON THAT BEHALF IS WHOLLY ARBITRARY CAPRICIOUS ERRONEOUS FLAWED UNWARRANTED AND PERVERSE. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH CARRIES ON THE BUSINESS OF MILLING AND TRADING OF RICE. IN THE ASSESSMENT PROCEEDING F OR THE ASSESSMENT YEAR UNDER CONSIDERATION THE A.O. RESORTED TO AN ESTIMATED AD DITION IN THE SUM OF RS. 70 000/- TO THE TRADING ACCOUNT OBSERVING AS UNDER: - DURING THE PREVIOUS YEAR UNDER CONSIDERATION THIS RICE MILL HAS MILLED 11 600 QUINTALS OF PADDY TO PRODUCE 7 888 QUINTALS OF RICE @ 68%. A COMPARATIVE STUDY OF THE PRODUCTION OF RICE VIS--VIS CONSUMPTION OF PADDY ELECTRICITY (IN UNITS) AND DIESEL (IN LITRES) REVEALS THAT PRODUCTION IS NOT COMMENSURATE . HAVING REGARD TO THE DIFFERENT PARAMETERS INVOLVED LIKE REFRACTION LOSS DUE TO MO ISTURE EVAPORATION MECHANICAL/TECHNICAL SNAGS ETC. A SUM OF RS.70 0 00/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE CO. 3. THE ASSESSEE CAME IN APPEAL BEFORE THE C.I.T.(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF RS. 35 000/- AS REASONABLE ON THE FINDING AS UNDER: - ADMITTEDLY THE RATE OF PRODUCTION I.E. PRODUCTION OF RICE VIS--VIS PADDY IS MARGINALLY LOW COMPARED TO THE EARLIER TWO ASSESSME NT YEAR. HOWEVER THE PRODUCTION OF RICE VIS--VIS PADDY CANNOT BE SAME F OR ALL THE YEARS BECAUSE THE PRODUCTION RATE ALSO DEPENDS UPON FACTORS LIKE MOIS TURE REFRACTION MECHANICAL/TECHNICAL 2 SNAG ETC. CONSIDERING ALL I AM OF THE VIEW THAT AD DITION OF RS. 35000/- WILL BE REASONABLE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS COMPRISING OF CASH BOOK BANK BOO K GENERAL LEDGER PURCHASE REGISTER SALE REGISTER STOCK REGISTER PADDY HANDLING & MIL LING REGISTER SALARY AND WAGES REGISTER ETC AND SUCH ACCOUNTS ARE DULY AUDITED AS PER THE STATU TORY REQUIREMENTS U/S. 44AB OF THE ACT AND ALSO UNDER THE PROVISION OF S. 227 OF THE COMPA NIES ACT 1956. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD ACHIEVED YIELD OF 68% ON 11 6 00 QUINTALS OF PADDY WHICH RESULTED IN PRODUCTION OF 7 888 QUINTALS OF RICE. REFERRING TO PAGE 3 OF THE PAPER BOOK WHICH IS A COMPARATIVE STATEMENT OF 3 YEARS PADDY & POWER CONS UMPTION HE CONTENDED THAT THE SAID YIELD IS IN COMMENSURATE WITH THE PRODUCTION ACHIEV ED IN THE PRECEDING THREE YEARS. HOWEVER A.O. HAS ACTED ARBITRARILY IN OBSERVING TH AT A COMPARATIVE STUDY OF THE PRODUCTION OF RICE VIS--VIS CONSUMPTION OF PADDY ELECTRICITY (IN UNITS) AND DIESEL (IN LITRES) REVEALS THAT PRODUCTION IS NOT COMMENSURATE WITH INPUTS. I T WAS FURTHER CONTENDED THAT THE A.O. FAILED TO POINT OUT ANY DISCREPANCY IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE ALTHOUGH ALL THE REQUIRED DETAILS AND BOOKS OF ACCOUNTS WERE PRO DUCED BEFORE HIM AND ALSO COULD NOT BRING ON RECORD ANY COMPARABLE DATA TO PROVE THAT T HE CONSUMPTION OF PADDY ELECTRICITY AND DIESEL ARE NOT IN CONSONANCE WITH THE ACTUAL PRODUC TION FIGURE. THEREFORE THE IMPUGNED FINDING OF THE A.O. IN THIS REGARD WAS ONLY HIS PRE JUDICED OPINION WHICH RESULTED IN ARBITRARY ADDITION TO THE MANUFACTURING ACCOUNT OF THE ASSESSEE ON SURMISE AND CONJECTURE. THE C.I.T.(A) ALSO WITHOUT CONSIDERING THE FACTS AN D EVIDENCE ON RECORD IN PROPER PERSPECTIVE RESTRICTED THE ESTIMATED ADDITION TO RS .35 000/- AND THE SAME BEING WITHOUT ANY JUSTIFIED REASON AND BASED ON SURMISE SHOULD BE DE LETED. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND RELIED ON THE ORDER OF THE C.I.T.(A) AND SUBMITTED THAT THE C.I.T.(A) AFTER CO NSIDERING THE PRODUCTION OF RICE VIS--VIS PADDY OF THE YEAR UNDER CONSIDERATION IN COMPARISON TO EARLIER TWO YEARS HAS RIGHTLY RESTRICTED THE ADDITION TO RS.35 000/- AND THE SAME SHOULD BE UPHELD. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL PLACED BEFORE US. WE FIND THAT ADMITTEDLY THE ASSESSEE HAS MAINTAINED BOOKS OF ACC OUNTS AND OTHER DETAILS WHICH WERE PRODUCED AND VERIFIED BY THE A.O. IN COURSE OF ASSE SSMENT PROCEEDINGS. IT IS ALSO AN ADMITTED FACT THAT SUCH ACCOUNTS ARE DULY AUDITED A S PER THE STATUTORY REQUIREMENTS U/S. 44AB OF THE ACT AND ALSO UNDER THE PROVISION OF S. 227 OF THE COMPANIES ACT 1956 THE 3 COPIES OF WHICH ARE PLACED IN THE PAPER BOOK PAGES 24 TO 43. IN THE INSTANT CASE THE A.O. HAS NOT DISPUTED THE DOCUMENTATION REGARDING PURCHA SE OF PADDY COST OF ELECTRICITY AND DIESEL AND THEREFORE THE VERACITY OF THE PRODUCTI ON RECORDED CANNOT BE SIMPLY REJECTED ON MERE SUSPICION AND SUBJECTED TO ESTIMATE. FURTHER THE A.O. HAD NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY HIS CLAIM THAT THE PADDY MILLED C OMPARED TO ELECTRICITY AND DIESEL CONSUMED WAS NOT COMMENSURATE WITH THE ACTUAL PRODU CTION. IN FACT FROM THE COMPARATIVE CHART ENCLOSED IN PAGE 3 OF THE PAPER BOOK WE FIND THAT THE PERCENTAGE OF YIELD IS IN COMMENSURATE WITH THE PRODUCTION OF RICE DISCLOSED IN THE PRECEDING THREE YEARS WHICH IS @ 68%. THEREFORE THE C.I.T.(A) IN OUR OPINION W AS NOT JUSTIFIED IN RESTRICTING A PART OF THE ADDITION MADE TO THE TRADING ACCOUNT ON AD HOC BASIS ON THE ALLEGATION THAT THE RATE OF PRODUCTION OF RICE WAS MARGINALLY LOW. IN VIEW OF THE ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE AD HOC ESTIMATED ADDITION IN THE S UM OF RS. 70 000/- RESORTED TO BY THE A.O. AND SUSTAINED TO THE EXTENT OF RS. 35 000/- BY THE C.I.T.(A) IS WITHOUT BRINGING ON RECORD ANY EVIDENCE IN SUPPORT THEREOF OR POINTING OUT ANY DISCREPANCY IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE AND HENCE THE SAME WAS WITHOUT ANY BASIS. THE ADDITION SUSTAINED OF RS.35 000/- IS THUS DIRECTED TO BE DELETED AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE COURT ON 26.05.2010. SD/- SD/- [B.R.MITTAL] [C.D. RAO] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 26-05-2010 COPY FORWARDED TO : 1. THE NEW INDIA RICE MILLS (P) LTD. C/O. SOMNATH GHO SH ADVOCATE SEVEN BROTHERS LODGE PO- BUROSHIBTALA PS- CHINSURAH HOOGHLY-712 105. 2. DCIT CIRCLE-2 HOOGHLY. (3) THE C.I.T.(A)-XXXVI KOLKATA. 4. C.I.T. KOL- (5) THE DE PARTMENTAL REPRESENTATIVE ITAT KOLKATA. TRUE COPY BY ORDER (DKP) DY.REGISTRAR.