Commissioner Of Income-Tax,Patiala v. Sunil Traders, Rajpura

Income-tax Reference No. 146 of 1999 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income-tax Reference No. 146 of 1999Date of decision: 9.9.2010 Commissioner of Income-tax,Patiala--- Petitioner Versus Sunil Traders, Rajpura --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT: Mr. Tajinder K. Joshi, Standing Counsel for thepetitioner. --- AJAY KUMAR MITTAL, J. At the instance of the Revenue, the Income-tax Appellate TribunalChandigarh Bench ‘A’, Chandigarh (in short “the Tribunal”), vide its orderdated 25.2.1998 passed in the appeal relating to the assessment year 1989-90,has referred the following question for the opinion of this Court: “Whether, on the facts and circumstances of the case, the Tribunalwas right in confirming deletion of addition of Rs. 3,79,600/- inthe absence of maintenance of stock register for production ofphuk, phoose, driage etc.” The facts as narrated in the statement of the case leading to the filing of the present reference are that it was observed by the assessing officerthat the assessee had husked 53507 quintals of paddy and obtained 34787 quintals of rice, which gave a percentage of 65.01. The yield of the rice branwas shown at 5.02%, phuk at 3.09% and husk at 19.34%. The assessing officerfound that in the milling register, the assessee had recorded daily production ofrice and rice bran on estimate basis without actual weighment and had also notkept any record for driage of paddy nor did the assessee maintain any stockregister for production of phuk and phoose. The sales of phuk and phoose weremore or less on cash basis and the bills issued did not disclose the weight of theitems sold. The assessing officer rejected the books after obtaining expertopinion of the Punjab Agricultural University and proceeded to work out thesuppression of yield of rice, rice bran, phuk and phoose. The assessing officermade the following additions: The Commissioner of Income-tax (Appeals) {in short “CIT(A)”}upheld the rejection of books of account and held that it would be fair andreasonable to work the yield of rice at 65.5% of paddy milled as against65.01% shown by the assessee. The CIT(A), thus, sustained the addition of Rs.93,600/- on account of low yield of rice. As regards the yield of rice bran, phukand husk, yield shown by the assessee was found to be reasonable andacceptable. The CIT(A), thus, allowed a relief of Rs. 3,79,600/- to theassessee. The Tribunal concurred with the view taken by the CIT(A) andadditionally also accepted the plea of the assessee regarding yield in respect ofrice and allowed relief of 93,600/- as well. The question aforesaid has beenreferred for the opinion of this Court. We have heard learned counsel for the petitioner and have perused the record. The question that arises for consideration of this Court is, whetherthe Tribunal was justified while affirming the view of the CIT(A) whichdeleted the addition of Rs.3,79,600/- that had been initially made by theassessing officer on account of low yield of rice bran, phuk and phoose. The Tribunal concurred with the view taken by the CIT(A) andadditionally also accepted the plea of the assessee regarding yield in respect ofrice and allowed relief of 93,600/- as well. The question aforesaid has beenreferred for the opinion of this Court. We have heard learned counsel for the petitioner and have perused the record. The question that arises for consideration of this Court is, whetherthe Tribunal was justified while affirming the view of the CIT(A) whichdeleted the addition of Rs.3,79,600/- that had been initially made by theassessing officer on account of low yield of rice bran, phuk and phoose. The yield of rice; rice bran, phuk and phoose from paddy cannotbe comparable with exactitude as paddy being an agricultural produce whichyields rice, rice bran, phuk and phoose can differ on account of various factorslike quality of seeds, availability of water resources, climatic condition likemonsoon, natural calamities and other similar factors. Further, it can vary fromplace to place, like yield in Punjab must not necessarily be equivalent to yieldin other States where climate and other conditions are different. Still further,even within the State yield of rice from paddy differs in various Districts itself.Therefore, to adopt tailor made formula for yield of rice and its by-productswould be a fallacy and would not give correct results. It shall depend uponfacts and circumstances of each case. In order to adopt such an approach, theAssessing Officer would be required to show that the books of accounts havenot been properly maintained as required under Section 145 of the Act and,therefore, method of comparison would be apt in such a situation. In theabsence of the same, it would not be legally justified to match the colourbetween two different cases. Contention of the assessee before the CIT(A) and the Tribunal wasthat non-maintenance of non-statutory record cannot be treated as a defect inthe books of account. The assessee had given detailed reply to the variousdefects pointed out by the Assessing Officer and had produced the books ofaccount consisting of cash book, ledger, stock register (paddy and rice), bills and vouchers, which were examined but no defect was noticed there either inthe books or the vouchers supporting them. Further, the CIT (A) and theTribunal on appreciation of the evidence had concurrently arrived at a findingthat the yield shown by the assessee of rice bran, phuk and phoose wasreasonable and, therefore, deleted the addition of Rs.3,79,600/-. No error orperversity could be pointed out in the finding recorded by the CIT (A) and theTribunal and, therefore, the conclusion arrived at by the Tribunal cannot besaid to be erroneous. The question of law referred by the Tribunal is, therefore,decided against the Revenue. The Reference stands disposed of. (AJAY KUMAR MITTAL) JUDGE September 9, 2010rkmalik/gbs (ADARSH KUMAR GOEL) JUDGE