The Commissioner of Income Tax Vs. R.K. Rice Mills - Court Judgment

Excerpt:
- - 1,21,943/-made by the ao on account of suppression of yield of various products and by products of paddy milled, ignoring the fact that the assessee had failed to maintain record on this account and that the books of accounts had been rejected. ? 4. whether the decision of the tribunal deleting the additions made by the ao is perverse and bad in law and without application of mind?adarsh kumar goel, j.1. the revenue has preferred this appeal under section 260a of the income tax act, 1961 (for short, 'the act') against the order dated 31.3.2008 passed by income tax appellate tribunal, chandigarh, bench 'a' passed in ita no. 117/chandi/2007 in the case of m/s r.k.rice mills, rajpura v. income tax officer, rajpura for the assessment year 1997-98, proposing to raise the following questions of law:1. whether on the facts and in the circumstances of the case, the itat was justified in deleting the addition of rs. 1,21,943/-made by the ao on account of suppression of yield of various products and by products of paddy milled, ignoring the fact that the assessee had failed to maintain record on this account and that the books of accounts had been rejected.?2. whether on the facts and in the circumstances of the case, the itat was justified in deleting the addition of rs. 3,94,075/-made by the ao on account of low yield of rice and other by products from paddy milled belonging to government agencies ignoring the fact that the assessee had not maintained any stock register for the same.?3. whether on the facts and in the circumstances of the case, the itat was justified in deleting the addition of rs. 9,73,620/-made by the ao on account of difference in the value of stock of basmati hypothecated with the bank and depicting 'nil' stock in the books of accounts of the assessee ignoring the admitted malafide intention exhibited by the assessee.?4. whether the decision of the tribunal deleting the additions made by the ao is perverse and bad in law and without application of mind?2. the assessing officer made addition to the declared income by rejecting the books of accounts. it was held that the assessee had not maintained separate details of yield of rice in respect of paddy milled owned by it and the yield of paddy milled belonging to fci and punsup. the assessee had not kept the record for driage of paddy. the assessee declared different quantity of stock in different records. the ao after making comparison of the result of the assesee with the results of other rice shellers, made addition on account of suppression of yield of rice bran, phuck and phoose. similar addition was made in respect of suppression of yield of rice bran, phuck and phoose obtained out of the paddy owned by punsup and fci and addition was also made on account of investment from undisclosed source in purchase of paddy, difference in the stock statement maintained by the assessee and in the stock statement furnished to the bank. the additions were upheld by the cit(a). however, the tribunal set aside the order of the cit(a) and remitted the matter back to the file of cit(a). on second round, cit(a) reiterated its earlier order. on further appeal, the tribunal upheld the claim of the assessee. the reasons given by the tribunal are that there was no material to show suppressed sales or inflated purchase and the inference drawn was without any justification. the assessee was not given liberty to cross-examine the bank officials who claimed to have verified the stock. the observations of the tribunal are as under:it is unbelievable that all the eight parties mentioned by the assessing officer were having the same percentage of yields i.e. the yields taken into consideration by the assessing officer were at 65%, 2.5%, 5%, 2% and 20.5% in respect of rice, nakoo, rice bran, phack and phoose respectively while respective yields shown by the assessee were at 64.10%, 3.7%, 3.21%, 2.0% and 22%. it is noticed that the assessing officer without pointing out any mistake in the books of account maintained by the assessee and the stock register, made the addition by assuming that the yield shown by the comparable case ought to have been shown by the assessee. no other reason has been given for making the addition. in our opinion, the assessing officer was not justified in making the addition particularly when no suppressed sale was found and no inflated purchase was noticed by the assessing officer in the books of account maintained in regular course of business, by the assessee therefore the addition made by the assessing officer and sustained by the ld. cit(a) was not justified.xx xx xxxxxx xx xxxxthe assessing officer on the basis of photocopy of the stock statement, came to the conclusion that the assessee was having 732.21 qtls stock of paddy basmati as on 31st march, 1997 while the stock was shown 'nil' in the books of account. however, the original stock statement was not brought on record and even the assessing officer did not allow the assessee to cross examine the bank officials who claimed to have verified the stock as on 31st march, 1997. in the instant case, the assessing officer did not point out any mistake in the books of account maintained by the assessee. the method of accounting was followed consistently by the assessee and there was no change in the method of accounting, no instance of suppressed sale was pointed out by the assessing officer. in such type of cases, the stock register is the subject matter of verification by the excise authorities, in the present case, the said authorities had also not pointed out any mistake in the stock register maintained by the assessee. therefore, preference was to be given to the stock register in comparison to the photocopy of stock statement received by the assessing officer from the bank, particularly when original copy of that stock statement was not furnished at any stage.3. the above observation shows that the view taken by the tribunal was on appreciation of evidence and is not shown to be perverse. appeal under section 260a of the act is permissible only on substantial questions of law. if two views are possible, the view taken by the tribunal cannot be held to be perverse.4. no substantial question of law arises.5. the appeal is dismissed.