M/S Bisalpur Kisan Sehkari Chini Mills ... vs Department Of Income Tax

Dy.C.I.T.-2, Vs. M/s Bisalpur Kisan Sehkari Chini Mills Bareilly. Ltd., Bisalpur, Distt. Pilibhit. PAN:AAAAB6708P (Appellant) (Respondent)

Appellant by Shri Anand Kumar Agarwal, C.I.T., D. R. Respondent by Shri S. K. Arora, C. A. Date of hearing 19/02/2015 Date of pronouncement 16/04/2015

ORDER

PER A. K. GARODIA, A.M.

Both these appeals are filed by the Revenue, which are directed against two separate orders of learned CIT(A), Bareilly dated 22/01/2014 for the assessment years 2006-2007 and dated 13/01/2014 for the assessment year 2008-09. Both the appeals were heard together and are being disposed of by way of this common order for the sake of convenience.

2. First we take up the appeal for assessment year 2006-07 i.e. I.T.A. No.246/Lkw/2014. Ground No. 1 is as under:

"1. That the Commissioner of Income Tax (Appeals ) is not justified in deleting the addition of Rs.47,99,382/- rightly made by the Assessing Officer under section 43B of the I.T. Act,1961 on account of late deposit of employees 2

contribution to the Provident Fund for Factory and Federation Staff, as the assessee failed to adduce any documentary evidence before the Assessing Officer during the course of the Assessment Proceedings."

3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision in assessee's own case for assessment year 2007-08 in I.T.A. No.71/Lkw/2014 dated 10/12/2014, copy of which is available on pages 151 to 157 of the paper book. In particular, our attention was drawn to Para 13 of the Tribunal decision.

4. We have considered the rival submissions. We find that in assessment year 2007-08 also, the issue in dispute before the Tribunal was regarding deletion of addition by the Assessing Officer on account of late deposit of employees' contribution to Provident Fund and it was held by the Tribunal in that year that since the entire amount of Provident Fund contribution was deposited before due date of filing of return, the same is allowable as per the amended provisions of section 43B of the Act. In the present year also, a clear finding is given by CIT(A) on page No. 4 of his order that all the amounts of Provident Fund has been deposited before the due date of filing the return. On page no. 2 of his order, CIT(A) has reproduced a chart regarding dates of deposit of Provident Fund contribution of various months and the last date of deposit is 17/11/2005 and therefore, the entire deposit was made before due date of filing of return. In fact the amount was deposited before the end of the financial year itself. Hence, by respectfully following the Tribunal decision in assessee's own case for assessment year 2007-08, we decline to interfere in the order of CIT(A) on this issue. Ground No. 1 is rejected.

3 5. Ground No. 2 is as under:

"2. That the Commissioner of Income Tax ( Appeals) is not justified in deleting the addition of Rs.3,37,96,178/- made by the Assessing Officer on account of suppression of production of sugar and its sale without recording entry in the books of accounts."

6. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the same Tribunal decision in assessee's own case for assessment year 2007-08.

7. We have considered the rival submissions. We find that in assessment year 2007-08 also, addition was made by the Assessing Officer by alleging suppression of production of sugar and its sale on the basis of the facts in the case of Kisan Sahkari Chini Mills, Puranpur. The Assessing Officer has noted in that year that Kisan Sahkari Chini Mills, Puranpur has reported yield of sugar at 9.15% whereas the assessee has shown the yield at 8.74%. This addition was deleted by the Tribunal in assessment year 2007-08 by making following observation in Para 7, which is reproduced below for the sake of ready reference:-

"7. We have considered the rival submissions. On this issue also, we find that the addition was made by Assessing Officer on this basis alone that in the case of Kisan Sahkari Chini Mill, Puranpur, yield of sugar was disclosed at 9.15% whereas the assessee has shown the yield of sugar at 8.74%. Apart from giving one case of Kisan Sahkari Chini Mill, Puranpur, no other basis has been indicated by the Assessing Officer for doubting the yield percentage reported by the assessee. In this regard, this is very important to note that production of sugar is directly under the control and supervision of Excise Department and this is not the case of the Assessing Officer that any adverse finding has been recorded by the Excise Department. In the absence of any adverse finding by Excise Department and also in the absence of any material brought on record by the Assessing Officer indicating sugar production suppression, we do not find 4

any reason to interfere in the order of CIT(A) on this issue also. Ground No. 2 is also rejected."

7.1 In the present year also, the Assessing Officer has adopted yield at 9% as against 8.37% reported by the assessee. The Assessing Officer has alleged in the assessment order that Kisan Sahkari Chini Mills, Puranpur has reported yield at 9.38% in the year under consideration as against 8.37% reported by the assessee. Hence, it is seen that the facts of the present year are identical to the facts in assessment year 2007-08. Since under similar facts, the addition was deleted by the Tribunal in assessment year 2007-08, we do not find any reason to take a contrary view in the present year and therefore, on this issue also, we decline to interfere in the order of CIT(A). Accordingly, ground No. 2 is rejected.

8. Ground No. 3 is as under:

"3. That the Commissioner of Income Tax ( Appeals ) is not justified in deleting the addition of Rs.38,41,184/- rightly made by the Assessing Officer on account of Production of Baggasse and its sale without accounting for in the books of account and treating Rs.38,41,184/- as income of the assessee from undisclosed sources."

9. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the same Tribunal decision in assessee's own case for assessment year 2007-08.

10. We have considered the rival submissions. We find that in assessment year 2007-08 also, similar issue was before the Tribunal as per ground No. 1 in that year and the addition was deleted by the Tribunal as per Para 4 and 4.1 of the Tribunal order, which are reproduced below for the sake of ready reference:-

5 "4. We have considered the rival submissions. We find that this issue was decided by CIT(A) by making following observations on page No. 3 of his order, which are reproduced below for the sake of ready reference:-

"I have taken into consideration the submission of the AR for the appellant and perused the assessment order. It is seen that the AO has referred to Annexure "11" of quantitative details in respect of production of Baggasse. The main product sugar is an excisable commodity, and the production is under the control of Excise Department. All the Excise records/return prescribed by the Excise Department were maintained by the assessee and no defect had been pointed out by the Excise department. RT-7(C ) the report being maintained by the assessee as per excise Rules and the yield of Baggase of 33.21% is as per report only. Further without pin pointing any single specific instance where the sale of baggase has been made outside without recording its entry in the books of accounts is only on the imagination of the A.O. In the circumstances of the case, the addition as made by the AO is deleted."

4.1 From the above observations of CIT(A), we find that a clear finding is given by the CIT(A) that the main product is sugar, which is excisable commodity and the production is under the control and supervision of Excise Department and not a single specific instance has been pointed out by the Assessing Officer where the sale of baggase has been made outside books. So far the assessment order is concerned, we find that in the assessment order, the Assessing Officer has referred to a case of Kisan Sahkari Chini Mill, Powanya for assessment year 92-93 whereas in the present case, the assessment year involved is 2007-08. The yield of main product or by-product is not constant in each and every case and every year. It is dependable on so many factors and therefore, merely on this basis that in the case of one assessee in one particular year, higher yield was recorded and that should be considered as yield of baggasse for all the assessees in all the years, is not correct. There is no other reason given by the Assessing Officer for doubting the yield of baggasse reported by the assessee in the Tax Audit Report. In our considered opinion, on the basis of a single case of a different assessee for one assessment order i.e. 92-93, the addition made by the Assessing Officer is not justified in the absence of any 6

other supporting material. We, therefore, hold that no interference is called for in the order of CIT(A) on this issue. Ground No. 1 is rejected."

10.1 In the present year, the Revenue could not point out any difference in facts and therefore, we do not find any infirmity in the order of CIT(A) in the present year. We decline to take a contrary view. Ground No. 3 is rejected.

11. Ground No. 4 is as under:

"4. That the Commissioner of Income Tax (Appeals ) is not justified in deleting the addition of Rs.4,08,94,043/- on account of closing stock of sugar including the Excise Duty of Rs.2,81,69,563/- which were rightly made by the Assessing Officer on account of closing stock of sugar including the Excise Duty of Rs.2,81,69,563/-. The CIT(A) has not considered the facts and circumstances as mentioned by the Assessing Officer in the assessment order."

12. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that in assessment year 2007-08 also, similar issue was before the Tribunal and in that year, the Tribunal restored back the matter to the file of CIT(A) for fresh decision as per Para 17 of the Tribunal order.

13. We have considered the rival submissions. We find that in assessment year 2007-08, similar matter was restored back by the Tribunal to the file of CIT(A) for fresh decision as per Para 17 of its order, which is reproduced below for the sake of ready reference:-

"17. There is no finding given by CIT(A) regarding the main objection of the Assessing Officer that the same stock for which the assessee adopted rate of Rs.1,630/-, Rs.1,665/-, Rs.1,700/- and Rs.1,735/- respectively per quintal as on 31/03/2006, in the present year, the assessee has applied a rate of Rs.1,250/- Rs.1,285/-, Rs.1,320/- and Rs.1,355/- per quintal respectively. If the same stock is lying then what is the basis of applying lower 7

rate in the present year is not clear and CIT(A) has not given any finding on this aspect. Hence, on this issue, we set aside the order of CIT(A) and restore the matter back to his file for deciding the issue afresh by passing reasoned and speaking order after providing adequate opportunity of being heard to both the sides. Ground No. 5 is allowed for statistical purposes."

13.1 Since there is no difference in facts in the present year, we set aside the order of CIT(A) on this issue and restore the matter back to his file for deciding the issue afresh by passing a reasoned and speaking order after providing adequate and reasonable opportunity of being heard to both the sides with similar directions as given by the Tribunal in assessment year 2007-08, as reproduced above. This ground is allowed for statistical purposes.

14. In the result, the appeal of the Revenue is partly allowed for statistical purposes.

15. Now we take up the appeal of the Revenue for assessment year 2008- 09 i.e. I.T.A. No.163/Lkw/2014.

"1. That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts in deleting the addition made by the Assessing Officer on account of low production/yield of Bagasse at Rs.29,31,485/- as the assessee has failed to produce documentary evidences during the course of assessment proceedings. The CIT (A) has not appreciated the findings given by the Assessing Officer in the assessment order passed."

16. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the same Tribunal order in assessment year 2007-08.

8 17. We have considered the rival submissions. Since this issue is squarely covered in favour of the assessee and no difference in facts could be pointed out by the Learned D.R. of the Revenue, we do not find any reason to take a contrary view in the present year and decline to interfere in the order of CIT(A). Ground No. 1 is rejected.

18. Ground No. 2 is as under:

"2. That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts in deleting the addition made by the Assessing Officer on account of low yield of sugar at Rs.10020843/- as the assessee has failed to produce documentary evidences during the course of assessment proceedings."

19. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessment year 2007-08.

20. We have considered the rival submissions. We find that the present issue is squarely covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 2007-08 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and earlier year and therefore, we do not find any reason to take a contrary view in the present year. Ground No. 2 is rejected.

21. Ground No. 3 is as under:

"3. That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts in deleting the addition made by the Assessing Officer on account of suppressed production and sale of Molasses at Rs.75,24,770/- as the assessee has failed to produce documentary evidences during the course of assessment proceedings."

9 22. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that as per page 3 of the assessment order, the addition was made by the Assessing Officer on the basis that by applying the yield percentage of 5.8%, the production of molasses should have been to the extent of 198380.53 quintals. Thereafter the Assessing Officer has noted that the assessee has disclosed production of molasses at 171017.72 quintals and worked out the difference of 27362.81 quintals. He submitted that the figure noted by the Assessing Officer in the assessment order regarding production of molasses disclosed by the assessee is not a correct figure. In this regard, he drawn our attention to page No. 15 of the paper book as per which the assessee has shown quantity of molasses manufactured during this year at 197289 quintals. He submitted that the production of molasses declared by the assessee is almost equal to the production of molasses estimated by the Assessing Officer in the assessment order at 198287 quintals and therefore, no addition is justified.

23. We have considered the rival submissions. We find that the basis adopted by the Assessing Officer for making this addition is that the production of molasses should have been to the extent of 198287 quintals and for this, the Assessing Officer applied yield percentage at 5.8% of the sugarcane crushed. Thereafter, the Assessing Officer has noted that the production of molasses disclosed by the assessee is not lower but this is factually incorrect because as per Annexure to Form 3CD on page No. 15 of the paper book, the production of molasses declared by the assessee is 197289.57 quintals and therefore, the production of molasses estimated by the Assessing Officer and disclosed by the assessee are almost equal and for such small difference in the production declared by the assessee and estimated by the Assessing Officer, no addition is justified. Hence, on this 10

issue also, we do not find any reason to interfere in the order of learned CIT(A). Ground No. 3 is also rejected.

24. Ground No. 4 is as under:

"4. That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts in deleting the addition made by the Assessing Officer on account of employer and employees Contribution of PF & GIS amounting to Rs.2,89,588/- as the assessee has failed to produce any evidences during the course of assessment proceedings."

25. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A).

26. We have considered the rival submissions. We find that the issue was decided by learned CIT(A) on the basis that the TDS deducted has been deposited before filing the return of income and therefore, no addition is justified on account of late deposit of TDS. This finding of CIT(A) could not be controverted by Learned D.R. of the Revenue and on this issue also, we do not find any reason to interfere in the order of CIT(A). This ground is rejected.

27. Ground No. 5 is as under:

"5. That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts in deleting the addition made by the Assessing Officer on account of employers and employees contribution towards P.P. and GIS of Factory Employees and Federation employees amounting to Rs.1,07,00,024/- as the assessee has failed to produce documentary evidences during the course of assessment proceedings."

28. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also 11

submitted that this issue is covered in favour of the assessee by the same Tribunal decision in assessee's own case for assessment year 2007-08.

29. We have considered the rival submissions. We find that as per the chart reproduced by CIT(A) in Para 8 of his order, the last date for depositing the PF contribution is 16/04/2008 and hence, in this year also, entire amount of PF contribution was deposited before the due date of filing the return of income and therefore, as per the Tribunal decision in assessee's own case for assessment year 2007-08, no addition is justified on account of late deposit of P F contribution. Therefore, on this issue also, we decline to interfere in the order of CIT(A). This ground is rejected.

30. In the result, the appeal of the Revenue stands dismissed.

31. In the combined result, the appeal of the Revenue for assessment year 2006-07 is partly allowed for statistical purposes whereas appeal for assessment year 2008-09 is dismissed.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:16/04/2015 *C.L.Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar