2018 (11) TMI 1334 - HC - Income Tax

Assessment u/s 153A - excess claim of wastage - AO estimated the wastage during the manufacturing process at 0.65%, whereas the assessee s claim was 7.90% - Held that - Tribunal has discussed in detail the process of refining the crude palm oil and palmolein, by means of re-treatment, bleaching and deodorizing. It is on findings on fact that the A.O s observations, were overturned by the First Appellate Authority and that confirmed by the Tribunal. The Tribunal has found that the reasoning given by the A.O. was a general one and not scientifically based. The statement given by the Production Manager is only regarding a part of the process, and therefore, the additions made on account of wastage was improper. The Tribunal was justified in not agreeing with the A.O. s determination as to the wastage. We find no reason to interfere with the fact finding of the Tribunal. Estimation of the shortage claimed on transportation - additions made by the A.O. on the basis that there was an excess claim - Held that - It is observed that the rates are finalised only after negotiations and at the time of booking, the rates are put as it is applicable to good quality oil. Apart from the two rates pointed out by the A.O., there is absolutely no other evidence to substantiate the case of under-invoicing as found by the A.O. The Tribunal has found that crude palm oil was imported from Malaysia and Singapore, through ships and necessarily the oil settled at the bottom is bound to be inferior than the oil at the upper level of the container. It is rightly pointed out that there are no duplicate books maintained with two rates contradicting each other and therefore the C.I.T. (Appeals) and the Tribunal rightly came to the conclusion that the additions made on this count were not appropriate. Suppression of sales by under-invoicing sales to M/s Sulekha Traders - The Tribunal has found that this is an issue identical to that of the Revenue s appeal for the assessment year 2003-04 and for the very same reason the addition on account of under-invoicing was improper and therefore the finding of the First Appellate Authority was overturned by the Tribunal, and rightly so. We find absolutely no reason to interfere with the finding of the Tribunal. - Decided against revenue

Summary

Issues:
1. Challenge to the common order of the Income Tax Appellate Tribunal by the Revenue.
2. Assessment challenges for the years 2001-02 to 2004-05.
3. Disputed assessments under Section 153A and Section 143(3) of the Income Tax Act, 1961.
4. Disputed wastage estimation during manufacturing process.
5. Disallowed transportation shortage claims.
6. Allegations of suppression of sales by under-invoicing.

Analysis:
1. The Revenue challenged the common order of the Income Tax Appellate Tribunal, where the Revenue's appeals were dismissed, and the assessee's appeal was allowed. The assessments for the years 2001-02 to 2004-05 were disputed, with common issues addressed under Section 153A and Section 143(3) of the Income Tax Act, 1961.

2. The main dispute revolved around the estimation of wastage during the manufacturing process. The Assessing Officer (A.O.) estimated wastage at 0.65%, while the assessee claimed 7.90%. The Tribunal found the A.O.'s determination of wastage to be unsubstantiated and overturned the additions made, stating the A.O.'s conclusions lacked scientific basis and factual evidence.

3. Regarding transportation shortage claims, the A.O. disallowed excess claims for the assessment years 2002-03 to 2004-05, citing lack of evidence of claims made to the Insurance Company. The Tribunal upheld the assessee's position, emphasizing that the A.O. arrived at conclusions without concrete evidence and that the disallowances were improper.

4. Allegations of suppression of sales through under-invoicing were also raised. The A.O. claimed under-invoicing for cash sales to specific traders, but the Tribunal found the A.O.'s evidence lacking, especially in differentiating rates for palm oil and palmolein. The Tribunal concluded that the additions made by the A.O. were not substantiated and were rightfully reversed.

5. The Tribunal further addressed specific instances of alleged under-invoicing for the assessment year 2003-04, highlighting the lack of substantial evidence beyond the rates found in the oil dispatch register. The Tribunal noted that the rates are finalized after negotiations and that the A.O.'s conclusions lacked additional supporting evidence.

6. Ultimately, the Tribunal rejected the Revenue's appeals and upheld the decisions of the lower authorities, finding no reason to interfere with the factual findings. The issues raised were predominantly factual in nature, and the Tribunal's decisions were based on detailed analysis and evidence evaluation, leading to the rejection of the Revenue's appeals.