Assessment of sugar mills. - Income Tax - 1183/CBDT

INSTRUCTION NO. 1183/CBDT Dated : June 7, 1978 Section(s) Referred: 143 Statute: Income - Tax Act, 1961 The Directorate of Inspection in their F.No.Inv.III/DL (13)/68 dated the 28th October 1968 dealt with the effect of partial decontrol of sugar on sugar industry and suggested the points to be looked into and scrutinised at the time of assessment of sugar mills. It was pointed out inter alia that particulars regarding stocks of sugar held by various sugar factories, their production of sugar and actual release by the Government for free sale could be obtained from the Directorate of Sugar and Vanaspati, Department of Food, Government of India . 2. The public Accounts Committee (1977-78) in their 4th Report have observed that an ITO assessing a cooperative society engaged in manufacture of sugar had not checked up the figures of production and sale of free sugar as disclosed by the assessee with the figures available with the Directorate of Sugar Vanaspati before he completed the assessments. The Committee have recommended that the board should impress upon the assessing officers the need to scrutinise all the material facts with reference to official sources before the completion of any pending assessment. 3. In 1967 the Government introduced the scheme of partial decontrol of sugar under which a certain percentage of production was to be sold by the manufacturers to the authorised parties at controlled rates and the balance could be freely sold at the best prices it could fetch in the open market. The percentage of levy and free sugar are being prescribed from time to time by the Directorate of Sugar and Vanaspati who maintain a record of the quantities of sugar produced, despatched and delivered by each sugar factory in respect of each sugar year as also of the periodical releases of levy and free sale quotas. The records of the Directorate of sugar and vanaspthi, therefore provide an important source of information for checking the figures disclosed by the sugar mills during the course of their assessment proceedings. Similarly, valuable information is also available with the Central Excise authorities. In order to ensure adequate assessments being made the Board would impress upon the assessing officers the need to scrutinise all the material facts with reference to the information that can be gathered from various official sources. 4. Broad guidelines for dealing with cases of sugar mills and sugar dealers are given in chapter XIX of the book Investigation of Accounts. ITOs dealing with sugar cases should make themselves thoroughly familiar with these guidelines.