M/S Gauri Pati Udyog, Hardoi vs Assessee

M/s Gauri Pati Udyog, Vs Income Tax Officer, Madhoganj, Hardoi. Hardoi. PAN:AADFG6517B (Appellant) (Respondent)

Appellant by Shri Sanjay Saxena, C.A. Respondent by Smt. Swati Ratna, D. R. Date of hearing 22/06/2015 Date of pronouncement 30/06/2015

ORDER

PER A. K. GARODIA, A.M.

This is assessee's appeal directed against the order passed by learned CIT(A), Bareilly dated 18/08/2008 for the assessment year 2005- 2006.

2. The grounds raised by the assessee are as under:

"1. That the delay in filing the appeal may please be condoned as per facts stated above.

2. That the assumption of jurisdiction for re assessment by issue of notice u/s 148 of the I.T. Act, 1961, its continuation and culmination by order u/s 147/143(3) of the I.T, Act, 1961 is bad in law and the same is itself liable to be cancelled and the same may please be cancelled.

3. That the Id Commissioner on Income Tax ( Appeal), Bareilly erred on facts and in law in Dismissing the appeal 2

which was not correct as the contents of the order are contrary and the addition of Rs. 24,885/- towards sale of husk outside the books was not correct by estimating less wastage as against excess allowed in other cases of the Ward and no sales outside the books of account were found nor the books of account had been rejected on account of any defect."

3. It was submitted by Learned A.R. of the assessee that ground No. 1 is general and ground No. 2 is not pressed. Accordingly, we hold that no adjudication is called for regarding ground No. 1 and ground No. 2 is rejected as not pressed.

4. Regarding ground No. 3, it was submitted that the issue is covered as per the following Tribunal orders available on pages 1 to 14 of the paper book:

(i) Satya Sri Sai Rice Mill, Hardoi vs. Income Tax Officer in I.T.A. No.690/Lkw/2006 dated 13/09/2006

(ii) Mohit Industries, Kachhauna, Hardoi vs. Income Tax Officer Hardoi in I.T.A. No.691/Lkw/2006 dated 13/09/2006.

(iii) Shri Manni Lal Shah, Prop. Maa Vaishno Industries and Nagendra Nath Manni Lal, Hardoi vs. Income Tax Officer, Hardoi in I.T.A. No.692/Lkw/2006 dated 13/09/2006

5. Learned D. R. of the Revenue supported the orders of the authorities below.

6. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) by making following observations on pages 2 to 3 of his order, which are reproduced below for the sake of ready reference:-

"I have taken into consideration the written submissions of the AR and also perused the assessment order. It is noticed that the appellant hulled paddy 17915.75 quintal and production of paddy husk @ 25% is 4478.94 quintal. And after 3

allowing wastage of 20% i.e. 895.78 the balance salable paddy husk comes to 3583.16 quintal. If for the argument sake, as contended by the appellant, the wastage is taken at 50% (4478.94 - 50% - 2239.47 qtl). The appellant has shown the receipts from paddy husk at Rs.71,860. If this figure is divided with saleable paddy of 2239.47 qtl., it would give a sale rate of Rs.32.08. In the circumstances of the in my considered view the rate as applied by the AO at Rs.27/- per quintal only is found reasonable and hence the action of the AO is confirmed. In the result the ground of appeal as raised by the appellant fails."

6.1 From the above paras from the order of learned CIT(A), we find that in the assessment order, it is noted by the Assessing Officer that the assessee has shown income on sale of paddy husk @Rs.20/- per quintal. The Assessing Officer applied the rate of Rs.27/- per quintal for making addition of Rs.24,885/-. As per the order of CIT(A), as reproduced above, we find that it is noted by CIT(A) that if the wastage is accepted @50%, the selling price of husk comes to Rs.32.08 per quintal. Hence, the addition made by the Assessing Officer by applying the selling rate of Rs.27/- per quintal does not survive. We feel that no addition can be made by alleging selling rate of Rs. 27/- per quintal after stating that the selling rate as per the assessee is Rs.32.08 per quintal. We also find that the Assessing Officer has noted on page No. 1 that the assessee is situated in the remote area i.e. 40Km. away from Hardoi city. For this reason, the Assessing Officer applied rate of Rs.27/- per quintal as against the selling rate reported by other assessee i.e. M/s Jagannath Prasad Rice Mill, Hardoi for the assessment year 2005-06 @Rs.32/- per quintal. Considering these facts, we are of the considered opinion that the addition made by the Assessing Officer and sustained by learned CIT(A) is not justified because even as per the Assessing Officer, the selling rate of the comparable case is Rs.32/- per quintal and that too for next year. Admittedly, the assessee is situated in remote area. When the assessee is situated in remote area, the 4

selling rate obtained by such assessee is always low for two reasons. First reason is that there is always a cost for transporting the material from such remote area to the city, which is about 40 Kms. away from the Hardoi City in the present case and moreover, the assessee situated in remote area does not command the price prevailing in city area because of ignorance etc. Considering all these facts, we are of the considered opinion that the addition made by the Assessing Officer is not justified. We, therefore, delete the same.

7. In the result, the appeal of the assessee stands partly allowed.

(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:30/06/2015 *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