TMI Blog2004 (1) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... om the actual cost of the assets for the purpose of allowing depreciation and Investment Allowance. 2.2 Accordingly the appeal filed by the Revenue is allowed. 3. ITA No. 785/ASR/1989 is the appeal by the assessee in which the following grounds have been taken:- "1. The Ld. CIT(A) has erred in sustaining addition of Rs. 4,38,040 by treating the same as unexplained investment or sales of 466 MT of Rice Bran Extraction. 2. The Ld. CIT(A) has erred in not appreciating the assessee's explanation regarding loss caused in storage and transit of Rice Bran Extraction from Bhatinda to Gujarat. 3. The Ld. CIT(A) has erred in sustaining addition of Rs. 52,957 as unexplained investment, on 9800 Litres of Hexane. There is no justification for rejecting the assessee's explanation." Grounds of appeal Nos. 1 2 relate to the addition of Rs. 4,38,040 made by the Assessing Officer which has been confirmed by the CIT(A) relating to alleged unaccounted sales of 466 M.Ts of Rice Bran extraction. Briefly the facts are that the Assessing Officer while examining Schedule XVII of the Balance Sheet found the position of Rice Bran extraction as under:- Opening Stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 was 3.07% whereas in the case of M/s. Bhatinda Chemicals Ltd. for the Asstt. Year 1983-84 the shortage claimed was 3.62% and the trading results were accepted. For the Asstt. Year 1984-85 the shortage claimed by that assessee i.e. M/s. Bhatinda Chemicals Ltd. was 2.43% and the Assessing Officer made an addition of Rs. 50,000 which was reduced to Rs. 25,000 by the CIT(A). In respect of M/s. Roshan Lal Oil Mills Ltd. for the Asstt. Year 1985-86 the shortage claimed was 2.35% which was accepted by the Assessing Officer. Sh. Mohan Lal, Advocate, learned representative of the assessee was, however, fair enough to admit that this information was not furnished before the Assessing Officer as well as the CIT(A). 4.3 Sh. Mohan Lal, Advocate, has furnished a chart at page 1A of the Paper Book indicating the net loss of weight and shortage which occurred on account of transportation from the assessee's factory to the port and further loss from the port to the ship on account of loading and unloading in respect of five lots as a sample. It was submitted that the Rice Bran Extraction is dispatched from the factory of the assessee in trucks, it is unloaded at the Railway Station for loading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer for fresh adjudication after giving due and proper opportunity to the assessee to furnish the date with regard to the comparable cases of M/s. Bhatinda Chemicals Ltd. as well as M/s. Roshan Lal Oil Mills Ltd. or any other case of that region. The addition should be made after considering the explanation of the assessee and the information furnished in relation to the comparable cases as sell as the result of apeal filed by these assessees before the CIT(A) as well as the Tribunal. 7. Coming to ground of appeal No. 3, it is seen that the assessee has shown the stock of Hexane in its books of account at 23,160 Litres whereas as per the statement furnished to the bank as on 15-10-1983 the closing stock of Hexane was shown at 33,040 Litres. Thus the assessee has shown the closing stock of Hexane in its books less by 9,880 Ltrs. When required to explain about this discrepancy the explanation given by the assessee was that Hexane in the pipeline was not accounted for in the books of account and this was the method regularly employed by the assessee in earlier years also. However, it was conceded that the actual closing stock of Hexane was 33,040 Ltrs. as shown to the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory to the Port there was further loss in respect of two lots alone as a specimen weighing 20.300 Mt. tonnes. 13. Note appended at page 1(a) is to the effect that loss in weight on the high seas was in addition to the loss of weight which occurred in the process of despatch from factory to the Ships. 14. Likewise pages 8 to 10 which are photocopies of Lot No. 3 show that weight as per Shipping Bill was 50 Mt. Tonnes whereas final Bill was issued only for 32.250 Mt. Tonnes. Page 9 is the Certificate of analysis intimating the net weight at 32.250 Mt. Tonnes and it is considered expedient to reproduce the said final Bill as follows:- "European Grain Chipping Chhatar Extractions Ltd., 16, Finsbury Circus, Pvt. Ltd., Bhatinda, London. Through: Globe Marketing Service, Bombay. Your Ref. Our Ref. FLB Date 15th February, 1983 Dear Sirs, S.S. "Metohija" (025720) C/D 31-8-82 No. 30965/211 ref: MT. 32.250 Indian Rice Bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Bank and as per books was on account of the assessee not accounting for Hexane in the Pipelines, as explained by Shri Mohan Lal, Advocate. However, he has not appreciated that such position was in the earlier years also and since Pipelines could contain particular quantity of Hexane, it followed that 9,880 litres of Hexane had been in the Pipelines unaccounted for as in the beginning of the year also and, therefore, the variation got neutralised automatically because adjustment had to be given. In such view of the matter, there was no case for making addition as understated closing stock and in any case in the year under appeal, which is deleted. 19. In the result, according to me, the assessee's appeal is to be allowed on both the counts as also the Revenue's appeal because the dispute therein is covered by the Hon'ble jurisdictional Punjab and Haryana High Court as noted in para 2.1 of my brother's order. ORDER U/S 255(4) OF THE INCOME-TAX ACT, 1961 As there is a difference of opinion between us on the following point, we refer the same to the Hon'ble President of the Appellate Tribunal for further action as provided under section 255(4) of the Income-tax Act, 1961:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar and have gone through the orders of the learned departmental authorities. I have also carefully gone through the orders proposed by the learned Accountant Member and the learned Judicial Member. 5. The facts relating to the addition of Rs. 4,38,040 made by the Assessing Officer in respect of shortage of 466 MTs. of Rice Bran extraction by treating the same as unexplained investment or undisclosed sales have been elaborately discussed in the orders proposed by the learned Accountant Member and the learned Judicial Member. I, therefore, do not consider it necessary to repeat those facts. 6. Before dealing with the merits of both points of difference, it would be imperative to state that Board for Industrial Financial Reconstruction has after making an enquiry under section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 recorded its opinion that it is just and equitable that M/s. Chhatar Extractions Ltd. (the appellant) should be wound up. The said opinion was forwarded to the Hon'ble High Court for taking suitable action for winding up the company. The Hon'ble High Court, in view of the aforesaid opinion of B.I.F.R. ordered the company to be wound up and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led for where by and large the following facts exist: (1) the accounts are audited; (2) the statutory registers required by the State authorities to be maintained are kept and no defects are pointed out in such registers, records, etc.; (3) sales and purchases are fully vouched; (4) the yield in any given year compares favourably with the earlier years as also with reference to the norms fixed by the Department of Food Civil Supplies; (5) the orders of the tax authorities have proceeded on surmises and conjectures without pointing out any defect in the accounts and other records maintained. The aforesaid are "illustrative" and not exhaustive and particular facts in a given case have to be kept in mind. It is the duty of the Tribunal to correctly assess the tax liability of an assessee by considering all such grounds including additional grounds raised which go to the root of the matter and are relevant and incidental to the issue raised, provided the facts on the record. The estimation on account of percentage of rice and various by-products entails application of the proviso to section 145(1). The rule of consistency is an important aspect of tax proceedings and views should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to send back the matter to the Assessing Officer in relation to this point. The appeal relates to the assessment year 1984-85. More than 20 years have already passed. The Company has also been ordered to be wound up by the Hon'ble High Court. The company has suffered losses and is under bad financial position. The possibility of recovery of any tax appears to be negligible. Considering all these facts, I am inclined to agree with the view proposed by the learned Judicial Member of deleting the said addition of Rs. 4,38,040. 11. As regards the next addition of Rs. 52,957 made in respect of alleged unexplained investment in relation to 9,880 litres of Hexane being excess stock notified to the bank in the stock statement as compared to the stock as per books of account, the assessee explained before the learned departmental authorities that variation between the closing stock shown to the bank and as per books of account was on account of the fact that some quantity of Hexane remains in the Pipelines, at the end of the year which was not accounted for till the end of the relevant accounting year but was accounted for in the next year in consonance with such practice consistently ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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