High Court Of Punjab & Haryana
CIT vs. Patiala Distt. Co-Op. Milk Producers’ Union Ltd.
Section 145, 260A
Asst. Year 2004-05
Adarsh Kumar Goel & Daya Chaudhary JJ.
IT Appeal No. 446 of 2009(O&M)
19th August, 2009
Counsel Appeared :
Rajesh Katoch, for the Revenue
ORDER
By the court :
The Revenue has preferred this appeal under s. 260A of the IT Act, 1961 (for short, “the Act”) against order dt. 31st Dec., 2008 of the Tribunal, Chandigarh Bench ‘A’, Chandigarh passed in ITA No. 593/Chd/2008 for the asst. yr. 2004-05, proposing to raise following substantial questions of law :
“(i) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the findings of the CIT(A) by holding that there is no case for rejection of books of accounts, ignoring the fact that the assessee had failed to furnish the requisite separate trading and P&L a/c of trading of various commodities and that of the bottling plant and as such, in terms of s. 114 of Evidence Act, the AO was justified in taking an adverse view.
(ii) Whether on the facts and in the circumstances of the case, the Tribunal is legally justified in holding that CIT(A) is justified in coming to a particular conclusion, especially when Asstt. CIT’s letter dt. 28th Feb., 2008 addressed to the CIT(A) has merely affirmed the stand taken in the assessment order and nothing adverse had been pinpointed, even when the assessee had failed to furnish the requisite separate trading and P&L a/c of various commodities and that of the bottling plant.”
The assessee is a co-operative society engaged in the business of milk processing. It filed its return, declaring loss. The AO, rejecting the books of account, made assessment by applying GP rate of 22.29 per cent. The CIT(A) set aside the order of the AO and held that there was no justification for rejecting the books of account. The assessee had given explanation for decrease in sale. There was no infirmity in the valuation of stock. The assessee followed the same method of valuation consistently for the last so many years.
The Tribunal upheld the said view with the following observations : “We have considered the rival submissions and perused the material available on the file. Brief facts are that the assessee was engaged in the business of milk processing, declared loss of Rs. 33,91,918 in its return, filed on 29th Oct., 2004 which was accompanied by computation of total income-tax audit report, TDS certificate and other necessary documents. The assessee attended the assessment proceedings from time to time and furnished requisite information/details called for and the same were duly test-checked with the account books produced by the assessee. The AO assessed the returned income at Rs. 66,70,872 by rejecting the books of account by applying GP rate as per last year which resulted into addition of Rs. 1,00,47,230. Admittedly the method of accountancy was same as was for the earlier year. There is no denying the fact that the books of account were maintained with the same procedure. The assessee duly maintained all the bills, vouchers etc. The AO did not point out any defect in the books of account and applied GP rate as was in the earlier year. Admittedly, every assessment year is a separate and independent year which should be considered to the facts of that year. Even otherwise the AO has not given any basis while increasing the GP rate while comparing the rate of purchases and sales of the last year specially when the rate of purchases for the impugned assessment year considerably increased in comparison to last year. The conclusion as drawn in Para 3.2 of the impugned order is reproduced herewith : “During the appellate proceedings, the counsel for the appellant Shri Sanjay Goyal attended and argued that the reason for decrease in sale and GP rate is due to the fact that outsourcing for preparation of Ghee was done by supplying 8162860 litres milk to M/s Milk Specialities Ltd. Dera Bassi in 2002-03 and the appellant neither entered into agreement to prepare Ghee before the asst. yr. 2003-04 nor after that. He has also contended that the return shows that for the year 2002-03 conversion charges of Rs. 71,80,109 packing expenses of Rs. 7,18,109 and purchase tax of Rs. 32,57,072 are actually manufacturing expenses but do not shown in that expenses in manufacturing account rather these were shown in P&L a/c resulting into higher booking of GP by Rs. 1,11,55,290 in 2002-03. Considering these expenses as direct expenses the GP rate comes to 19.26 per cent for the year 2002-03 whereas for the year 2003-04 it is 19.22 per cent i.e. almost same as per last year. So, in this way there is no difference in GP rate. He also stated that a comparative chart for the last three years has been submitted during assessment which clearly shows that above-mentioned expenses are extraordinary for 2002-03 as compared to other years. So, reasons to be ascertained for such variance but AO fails to take into account this variance.”
If the facts mentioned in the afore-mentioned para and the conclusion drawn in para 3.6 of the impugned order, are analyzed we have not found any infirmity in the impugned order specially when the AO has not assigned any reason while coming to a particular conclusion specially when no defect was pointed out in the valuation of closing stock. The assessee has followed the Fifo method while valuing the stock at cost and copies of bills were submitted during assessment proceedings and the latest rates were available with the assessee in respect of its products. In the light of these facts it can be said that learned CIT(A) is justified in coming to a particular conclusion specially when Asstt. CIT vide letter dt. 28th Feb., 2008, addressed to the learned first appellate authority has merely affirmed the stand taken in assessment order and nothing adverse had been pinpointed. This letter was duly considered in the impugned order which was passed on 21st April, 2008. In the light of these facts, the stand of the learned CIT(A) is upheld.”
We have heard learned counsel for the appellant. Findings recorded above show that the same have been arrived at by appreciating relevant circumstances and are not shown to be perverse. No substantial question of law arises.
The appeal is dismissed.
[Citation : 328 ITR 615]
