2015 (3) TMI 678 - AT - Income Tax

Income from undisclosed sources - production of Baggase & its sale without accounting for in the books of accounts - CIT(A) deleted the addition - Held that - 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. The yield of main product or byproduct 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. - Decided in favour of assessee. Suppression of production of sugar and its sale - CIT(A) deleted the addition - Held that - 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 material brought on record by the Assessing Officer indicating sugar production suppression, thus no reason to interfere in the order of CIT(A)- Decided in favour of assessee. Addition u/s 43B - dispute on account of cess on tax - CIT(A) deleted the addition - Held that - Amount of cess is same i.e. ₹ 70,13,524/- at the beginning and end of the year. When this amount was outstanding on the first day of the accounting year, no addition is called for in the present year although the assessee would have been eligible for deduction if any payment would have been made by him in the present year. Therefore, the addition made by the Assessing Officer is not on scientific basis. Since the order of CIT(A) is cryptic, we feel it proper that this matter should go to the file of the CIT(A) for fresh decision by way of passing speaking and reasoned order. - Decided in favour of revenue for statistical purposes. Late deposit of employees deduction to Provident Fund for Factory and Federation Staff - CIT(A) deleted disallowance made u/s 36(1)(va) - Held that - Entire amount of P.F. contribution was deposited by the assessee before the due date of filing of return of income and therefore, the same is allowable as per the amended provisions of the Act. Therefore, we decline to interfere in the order of CIT(A) - Decided in favour of assessee. Addition of closing stock of sugar at ₹ 1,59,03,900/- including the excise duty of ₹ 9,70,660/- - CIT(A) deleted the addition - Held that - 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 ₹ 1,630/-, ₹ 1,665/-, ₹ 1,700/- and ₹ 1,735/- respectively per quintal as on 31/03/2006, in the present year, the assessee has applied a rate of ₹ 1,250/- ₹ 1,285/-, ₹ 1,320/- and ₹ 1,355/- per quintal respectively. If the same stock is lying then what is the basis of applying lower 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 - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Deletion of addition on account of production and sale of Baggase without accounting for it in the books of accounts.
2. Deletion of addition on account of suppression of production of sugar and its sale without proper accounting.
3. Deletion of addition under section 43B of the Income Tax Act, 1961.
4. Deletion of disallowance made under section 36(1)(va) of the Income Tax Act for late deposit of employees' deduction to Provident Fund.
5. Deletion of addition made on account of closing stock of sugar including excise duty.

Issue 1:
The Revenue appealed against the deletion of an addition of a substantial amount made by the Assessing Officer due to the production and sale of Baggase without proper accounting. The CIT(A) found that the main product, sugar, was an excisable commodity under the control of the Excise Department. The CIT(A) noted that no specific instance was provided by the Assessing Officer where the sale of Baggase was made outside the books of accounts. The ITAT upheld the CIT(A) decision, emphasizing that the addition made by the Assessing Officer lacked justification, especially based on a single case from a different assessment year.

Issue 2:
The Revenue contested the deletion of an addition made by the Assessing Officer regarding the suppression of sugar production and sale without proper accounting. The ITAT found that the Assessing Officer solely relied on a comparison with another case without providing substantial evidence of production suppression. The ITAT upheld the CIT(A) decision, stating that without adverse findings from the Excise Department or additional supporting material, there was no basis to interfere with the deletion of the addition.

Issue 3:
The Revenue challenged the deletion of an addition under section 43B of the Income Tax Act. The ITAT observed discrepancies in the assessment order and the CIT(A)'s decision regarding unpaid balances of purchase tax and cess. As the CIT(A) order was cryptic, the ITAT remanded the matter back to the CIT(A) for a fresh decision with a reasoned order after considering the details provided by both parties.

Issue 4:
The Revenue disputed the deletion of a disallowance under section 36(1)(va) of the Income Tax Act for late deposit of employees' Provident Fund deductions. The ITAT upheld the CIT(A) decision as the entire P.F. contribution was deposited before the due date, making it allowable under the amended provisions of the Act.

Issue 5:
The Revenue objected to the deletion of an addition on account of closing stock of sugar, including excise duty. The ITAT found the CIT(A)'s decision to be cryptic and lacking detailed reasoning. The matter was remanded back to the CIT(A) for a fresh decision with a comprehensive and reasoned order after providing an opportunity for both sides to present their arguments.

In conclusion, the ITAT partially allowed the Revenue's appeal for statistical purposes, remanding certain issues back to the CIT(A) for further consideration and detailed decisions.