TMI Blog2004 (1) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... ion advanced by the counsel for the respondents in case of M/s Bhasin Rice General Mills may be taken as submissions in all the four cases except his reply to the submissions of Smt. Rachana Singh in case of M/s Bharat Rice Factory. This position is accepted by the Bench as well as the parties. 4. It was further agreed to by the parties that the submissions will be advanced on the basis of facts and findings in case of M/s Bhasin Rice General Mills and the same will apply to other three cases also. Accepting this request the parties were allowed to make their submissions on the basis of facts of M/s Ganesh Rice Mills and M/s Bhasin Rice General Mills. 5. Before referring to the submissions of the parties, we are of the opinion that the issue involved in all these four appeals is common and can be decided by finding answer to the following question (framed by us): Question: "Whether, on the facts and circumstances in case of M/s Bhasin Rice General Mills, can it be said that the order of the CIT(A) dt. 29th Aug., 1996 passed in consequence upon the directions given by the Tribunal, Chandigarh Bench as per its order dt. 28th March, 1996, in appeals of aforesaid four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiries, that rice mills were adopting foul means and instead of showing the paddy as having been milled were showing the sale of paddy as it is with the motive of avoiding sale of levy rice to the District Food and Civil Controller—which was at the lower price than the market price, and to earn more profit by selling rice, obtained from the paddy (shown to have been sold as it is but in fact not sold), in the open market at higher price. The price of paddy, shown as having been sold as it is, but in fact not sold, was brought in the books of accounts by way of pay orders. The money so brought in books of account by way of pay orders was taken out either by taking away the sale price of rice and other by products obtained by milling the paddy (which was claimed to have been sold as it is, but was found to have not been sold) sold in the open market (without bringing the proceeds in the books of account) or by showing the fictitious purchase of rice in cash. In the former method the sale price received in cash was taken away and books were showing the receipt of amount brought only by way of pay orders against the alleged sale of paddy. Whereas in the latter method books show the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account or by inflating purchases to that extent. The alleged sale proceeds of paddy were introduced by the parties in their books of account but in fact it was introduced under one guise or the other. Since no break-up of the sale price of paddy has been given by the assessee, it has to be estimated on the basis of reserve price fixed by the Govt. plus indicate charges generally amounting to Rs. 20 per qtl. plus gross profit shown. As regards the yield of rice, rice bran, phuk and rice husk, heavy additions have been made by the assessee in comparison to the yield fixed by the Punjab Agricultural University, Ludhiana and the other concerned Departments. In making the estimate this aspect has also to be taken into consideration which is estimated at Rs. 3,50,000. No qualitative and quantitative details of paddy and its by-products are maintained by the assessee. The assessee sold 32,611 qtls. of paddy. The average cost price including incidental expenses, tax and the GP shown, was in the proximity of Rs. 180 per qtl. price of 32,611 qtls. of paddy @ Rs. 180 per qtl. works out to Rs. 58,69,980 which was sold outside the books of account and this fact has to be kept in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the order of the Tribunal dt. 28th March, 1996 that the CIT(A) had: (i) Upheld the action of the AO so far as ex parte orders were concerned, i.e. invoking of provisions of s. 144 was upheld. (ii) In case of M/s Punjab Rice Mills and M/s Mahalaxmi Rice Factory, CIT(A) had allowed reduction to the extent of Rs. 11,00,000 and Rs. 5,50,000 respectively and it is this relief against which Revenue was in appeal. Four respondents were in appeal before the Tribunal against the ex parte orders as well as quantum which has been determined by the AO and confirmed by the CIT(A) as under: Rs. (i) In case of M/s Bhasin Rice General Mills 64,00,000 (ii) In case of M/s Punjab Rice Mills 44,00,000 (iii) In case of M/s Bharat Rice Mills 15,00,000 (iv) In case of M/s Mahalaxmi Rice Factory 21,00,000 6.(v) The Hon'ble Tribunal as per its order dt. 28th March, 1996, set aside the orders of the CIT(A) in all the four cases and restored all the cases to the file of the learned first appellate authority to pass fresh orders after due opportunity to the assessees and in terms of directions given by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Rice Mills, the matter was reheard by the Hon'ble `Tribunal and vide its order dt. 22nd June, 1993, the matter was sent back to the first appellate authority with the direction that while working out the total income of the assessee, the addition should not be made twice—one by way of sale of paddy as shown by the assessee and second on account of sale of rice as contended by the Department. 3. Opportunity to the appellant was given as per direction of the Hon'ble Tribunal. Shri Sudhir Sehgal, counsel for the appellant filed before me the details of paddy account, yield of rice bran, phak and husk and the income was computed as per directions of Hon'ble Tribunal in the case of M/s Ganesh Rice Mills. These details and computation of income were sent to the AO for verification. The AO vide his letter No. 223 dt. 18th June, 1996 has calculated the income of the appellant at Rs. 1,68,528 as per directions of the Hon'ble Tribunal. However, on going through the calculations it was thought fit to call the AO to obtain some clarifications and after making the following amendments to the calculations submitted by the appellant. 4. The sale value of rice bran @ 213.62 per quintal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GIR No. 110-V and Ms. Rakesh is assessed with ITO, Barnala at GIR No. 1256-R. The AO is directed to verify the genuineness of the same and if found to be correct, no action would be called for. 7. As regards charging of interest under s. 217 is concerned, the same may be recalculated after giving effect to this order. 8. In the result, appeal is allowed." 7. It is against this order of the CIT(A) dt. 29th Aug., 1996, in case of M/s Bhasin Rice General Mills wherein the CIT(A) determined the total income at Rs. 3,07,478 which is before us by way of Revenue's appeal. The Revenue's appeals in other three cases are also against the similar orders of the CIT(A), i.e. against the determination of total income at Rs. 3,33,320 (In case of M/s Mahalaxmi Rice Factory) at Rs. 2,68,650 (In case of M/s Bharat Rice Mills) and at Rs. 3,03,555 (In case of M/s Punjab Rice Mills). 8.1 It was in view of these facts and circumstances that the learned Departmental Representatives, after referring to the orders of the Tribunal Chandigarh Bench in Miscellsneous Petition of M/s Ganesh Rice Mills arising out of ITA No. 1502/Chd/1990 for asst. yr. 1988-89 dt. 22nd June, 1993, decision in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that extent as assessee's undisclosed income under the deeming provisions of 68/69A of the IT Act, had been confirmed. (iii) The learned Departmental Representative further submitted that so far as directions of the Hon'ble Tribunal given as per para 5 of its order dt. 22nd June, 1993, passed while disposing Miscellaneous Petition of M/s Ganesh Rice Mills, are concerned the Tribunal had nowhere observed or held or directed that its findings as per para 16 of the order dt. 20th Aug., 1989 whereby the addition of Rs. 33,87,550 made under s. 68 had been confirmed should be reconsidered or deleted. According to the learned Departmental Representative the directions given by the Tribunal should be considered in the context of the alternative plea of the assessee, which, according to the learned Departmental Representative, was that there is double addition to the extent of Rs. 33,87,550 by way of bringing of sale price of alleged sale of paddy in the books of accounts (by the assessee itself) and secondly another addition to the same extent having been made by the AO considering the sale price of rice and by-products obtained from milling of the paddy (shown by the assessee as havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative therefore, submitted that if Department had not appealed against the order of the CIT(A) in M/s Ganesh Rice Mills passed after the Tribunal's directions it doesn't mean that the finding in that order of the CIT(A) may be accepted as universally correct proposition of law or of fact and Revenue has no right, under the law, to object to such findings in other cases. 8.4 Having said as above, the learned Departmental Representatives after referring to the assessment order in case of M/s Bhasin Rice General Mills, submitted that the income estimated by the AO at Rs. 64,00,000 has to be taken as consisting of the following: (i) Addition of Rs. 58,69,980 have been made under the deeming provision of ss. 68/69A by considering the investment to this extent in purchase of pay orders or by way of cash brought in books in the garb of sale price of 32,611 quintals of paddy. Referring to p. 7 of the assessment order the learned Departmental Representative submitted that since the assessee, had not produced the books of accounts the information supplied by the District Food Supplies Controller, which was based on statement filed by the assessee, has to be taken t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent cases also, is that addition on account of undisclosed investment made under s. 68/69A stands confirmed and can't be disputed by any authority. According to the learned Departmental Representative, the direction were in relation to that part of the order of the AO, which may have resulted in double addition by consideration of the sale price of rice and other by products obtained as a result of milling of paddy (which was claimed by the assessee as having been sold) and not brought in books. 8.6 The learned Departmental Representative therefore, submitted that if we consider the correctness of the order of the CIT(A) dt. 28th March, 1996, which is under appeal in the present proceedings, in the light of scope of directions given by the Tribunal, which are same and similar to the directions given in case of M/s Ganesh Rice Mills, the first part of the order of the CIT(A) determining the additional income liable to be added by considering the price of the paddy (claimed to have been sold but, not sold) and the sale price of rice and other by-products obtained as a result of milling of that paddy was correct because under the accounting provisions it was the total sale of rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale price of paddy (which was already brought in the books of account by the assessee by way of pay orders). The counsel therefore submitted that there was nothing wrong in the findings of the CIT(A) in orders passed in consequence upon the directions given in the order of the Tribunal—in all the cases of all the four respondents. In support of his stand the counsel relied on the decision of the CIT(A) dt. 15th June, 1994 in case of M/s Ganesh Rice Mills for asst. yr. 1988-89, which was passed in consequence upon the directions of the Tribunal given as per Tribunal's order dt. 22nd June, 1993 passed in Miscellaneous Application and submitted that since the order of the CIT(A) has not been appealed against by the Revenue the context, scope and outcome of the directions of the Tribunal stands confirmed/finalised and the Tribunal should follow the same in present cases also. The learned counsel further submitted that on merits also, there cannot be any additions under s. 68/69A of the Act. Reliance was placed on the Third Member decision of Tribunal, Chandigarh Bench in case of M/s Bansal Rice Mills, Amloh, copy of which has been placed on record. 9.2 Alternately, the counsel su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling the paddy which was claimed by the assessee to have been sold but, in fact not sold, because that sale price of rice was not brought in the books of accounts. (iii) The amount of Rs. 33,87,550 which already should be credited in the books having been brought by way of pay orders and in the garb of sale proceeds of paddy. The learned Departmental Representative further submitted that it was in the context of the additions at serial No. (ii) that the Tribunal first set aside the issue relating to second addition, but when assessee claimed this addition in miscellaneous application to be double than the Tribunal, while deciding miscellaneous application, gave the specific directions which again related to addition at serial (ii) and (iii). The learned Departmental Representative reiterated, time and again, that combined reading of both the orders of the Tribunal in case of M/s Ganesh Rice Mills as well as the order in cases the respondent assessees leads to the one and the only one irresistible conclusion that addition under s. 68/69A had become final and order of the CIT(A) determining total income without including that addition are not in consonance with the direction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is to be sustained, it should be of the peak amount, the learned Departmental Representative submitted that this argument could be accepted only if respondents were able to establish from the books of accounts that the day, when they purchased the drafts, the sale proceeds of rice were available with them, otherwise this plea also cannot be accepted and in the present cases since all the respondents failed to produce the books of accounts intentionally and also having failed to establish as above, the benefit of concept of peak amount also is not available to them. 11. We have considered the rival submissions, facts and circumstances of the cases, both the decisions of the Tribunal in case of M/s Ganesh Rice Mills. original order dt. 28th June, 1991 and order in miscellaneous application dt. 22nd June, 1993, combined common order of the Tribunal in case of all the respondents (four assessees) before us dt. 28th March, 1996, orders of the CIT(A), which are the subject-matter of appeal before us and passed in consequence upon directions of the Tribunal dt. 28th March, 1996; decision of Hon'ble Tribunal, Chandigarh Bench (Third Member) in case of M/s Bansal Rice Mills, and the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of payments by the assessee is as under: Date Mode of receipt Amount 2-1-1988 Through pay order Punjab National Bank No. 642202 Rs. 3,00,000 6-1-1988 642207 6,00,000 7-1-1988 642209 2,50,000 12-1-1988 642210 3,00,000 13-1-1988 642220 2,00,000 18-1-1988 642225 3,00,000 28-1-1988 642234 2,00,000 3-2-1988 642248 3,00,000 15-2-1988 642270 4,00,000 24-2-1988 642281 3,50,000 26-2-1988 642286 1,37,550 Total 33,87,550 In order to verify the genuineness of the paddy sales, the assessee was required to produce the evidence in support of the same. The assessee produced the following documents in support of the genuineness of the paddy sales made to M/s Rama Krishna Rice General Mills, Amritsar: (i) Photostat copies of ST-XXII form bearing No. HH 561934 to 561943 and HH No. 561982 to 561986. (ii) Photostat copies of the gate passes issued by the assessee to the following trucks, which were used by the assessee for the transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the D.F.S.C., Amritsar had further intimated that above party of Amritsar has denied of having received the paddy, as it has been stated by Sh. Subhash Chander s/o Sh. Dwarka Nath, partner of the said firm on 27th June, 1989. Accordingly, the summons were issued for 12th Oct., 1989 to Sh. Subhash Chander s/o Sh. Dwarka Nath partner of the Amritsar party, but the same were received back with the postal remarks that on going time again addressee was not found available. Similarly, summons were also issued to the President, Truck Union, Kurali for 12th Oct., 1989. In response to which Sh. Mohan Singh, Munshi of the Truck Union attended but he failed to produce any record of office copies of the G.R.'s vide which the assessee stated to have transported the paddy. The assessee was informed to attend the office on 12th Oct., 1989 for cross-examining the witness, who attended but do not cross-examine the said Sh. Mohan Singh. The assessee was also informed to obtain dasti summons and produce a letter dt. 17th Oct., 1989 signed by one Sh. Raghbir Singh for President, Truck Union, Kurali, stating therein that the union was not in existence during the period relevant to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not shown Coarse rice/phuck — (Wt. not given. However, sales of phuck extracted from paddy of peral has been shown at Rs. 1,92,058 in the P EM.) However, the yield of rice and its by-products declared by the assessee is much less than the normal yield which should not be less than 95 per cent of the total paddy milled. The loss on account of dust, and other impurities seldom exceeds 1 per cent. The support price of paddy is fixed keeping in view the fact that it contains 18 per cent of less moisture. The moisture contents in the rice sold is never less than 14 per cent. The other by-products of rice contains moisture alone @ 14 per cent or above as they are normally stored in open and absorb moisture. Thus the overall loss on account of moisture alone cannot be more than 4 per cent. 4. The yield of rice, rice bran, phuck and paddy husk is being adopted @ 17 per cent, 5 per cent, 3 per cent 28 per cent respectively of 95 per cent of paddy milled. The assessee was required to produce any documentary evidence if he had purchased paddy at less than the support price containing more then 17 per cent moisture. In response to this, the assessee had stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) Sales made to other parties 4,122.48 28,014.25 qtls. Rice not shown in the books: 10,497.05 qtls. Its value is taken @ 296/09 per qtls. as the assessee has shown sale of rice to other parties at this rate 31,08,056 Yield of rice bran 5 per cent of total paddy milled 2,600.45 qtls. Less shown by the assessee 1,498.85 qtls. Rice bran sold by the assessee out of books 1,101.60 qtls. Its value is taken @ Rs. 213/62 per qtls. i.e. at the rate assessee has shown 2,35,324 qtls. Phuck 3 per cent of total paddy milled 1560.27 qtl. The assessee has neither shown its weight nor its value but the same is estimated at 125 per qtl. which comes to 1,92,058 Sale made outside the books 2,976. Yield of paddy husk 22 per cent of total paddy milled. 1,1,442.00 qtls. Less: 25 per cent consumed in drier 2,860.50 qtls. 8,581.50 qtls. The assessee has not shown its value or weight. The same is valued @ Rs. 30 per qtl. which comes to 2,57,460 Paddy (Basmati Account) Total paddy purchased by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worthy of consumption in its own sheller is without any basis and deserves to be rejected outright. In fact on 20th Jan., 1988 the appellant had sold 650 quintals of basmati paddy and again on 21st Jan., 1988 it had sold 550 qtls. of basmati paddy. On the other hand, it is found from the report of the ADI who probed into the genuineness of the transactions and which report was confronted to the appellant that the so-called, sale were made to a firm which categorically denied having purchased any paddy from the appellant-firm. Its so-called proceeds were received by the appellant by pay orders (not by cheques or drafts) from the said party at Amritsar. It is noted that pay orders were taken from Punjab National Bank, Kurali, i.e., the place of the business of the appellant-firm. The money was first deposited in cash with the bank to convert the same into pay orders. It does not stand to reason that the Amritsar party carried 3 lakhs on 2nd Jan., 1988, in cash, Rs. 6 lakhs in cash on 6th Jan., 1988, Rs. 2,50,000 in cash on 7th Jan., 1988, Rs. 3,00,000 in cash on 12th Jan., 1988, Rs. 2,00,000 in cash on 13th Jan., 1988, Rs. 3,00,000 in cash on 18th Jan., 1988, Rs. 2,00,000 in cash on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and thereafter onus were upon the appellant to produce Shri Subash Chand which the appellant failed to discharge. It is noted that the results, of all the enquiries conducted by the learned ITO were duly confronted to the appellant. After perusing the record, I am convinced that sufficient opportunity was given to the appellant to controvert the case which was ultimately made out against the appellant but the appellant instead of availing of the opportunity, adopted delaying tactics. Accordingly, the contention of the learned counsel that no opportunity was given to rebut the case, is rejected. 3.6 The contention of the learned counsel that goods were dispatched to M/s Rama Krishna Rice General Mills, Amritsar, through trucks hired at Kurali cannot be accepted, because in the first instance the appellant failed to produce GRs and secondly, it did not produce the President of the Truck Union, Kurali. The fact of the matter is that for wilful attempt to evade tax the appellant resorted to creating false evidence and forgery of documents by procuring bogus sales-tax forms, forging thereon bogus stamps and bogus signatures of the imaginary persons. 3.7 Credits aggregating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g time and again, the addressee was not found available"; (ii) That the above fact was brought to the onus was upon the assessee to produce Shri Subhash Chand but the same has not been discharged: (iii) That the ITO also-called upon the assessee to produce G.Rs. which were issued by the Truck Operators Union, Kurali; (iv) That in response to summons under s. 131, Shri Mohan Singh, Munshi of the truck union, attended but he failed to produce any record or office copies of G.R's vide which the assessee had stated to have transported the paddy; (v) That the assessee was present and did not cross-examine the above named Shri Mohan Singh: (vi) That the assessee was asked to produce the President of the Truck Union, Kurali but he failed to do so, hence the ITO concluded that the assessee had shown bogus sales for some "ulterior purpose', mainly to introduce its unaccounted money in the books of account in the garb of these fictitious sales. 8 9... 10. Coming to the merits, on behalf of the assessee it has been urged that assessee deals in permal-PR 100 per cent Rice and 75 per cent of the production is subject to levy, i.e., purchase by the Government and the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries reflect entries in favour of the assessee and the statements recorded have not been put to the assessee for cross-examination. 11. Alternatively, it is pleaded that the source of credits is assessee's books of accounts, since paddy has been milled and sold and what flows out of the sale, is the profits and in those terms the assessee's stand cannot be disbelievable. Again relying upon pp. 194, 193, 192 of the paper book and decisions reported as CIT vs. Bharat Engineering Construction Co. 1972 CTR (SC) 247 : (1972) 83 ITR 187 (SC), CIT vs. Madhavnagar Cotton Mills Ltd. (1976) 104 ITR 493 (Bom) and commentary from learned author Sampath Iynegar-1990 Edn., Vol. III, p. 97, which have been pressed into service to say that onus of proof is on the Revenue and not on the assessee and yet further that sale proceeds cannot be added since source is known and that source is books of accounts and business. Concludingly it has been contended that the assessee has discharged the initial burden placed on him. Since the purchaser is in trade, address is known, the party is genuine and is registered with the Sales-tax Department. 12. On behalf of the Revenue, the learned senior Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of these, it is contended that goods were never sold. He has also referred to 144A order for the proposition that everything has been confronted to the assessee. Relying on pp. 192 to 194 of the paper book, the learned senior Departmental Representative has contended that earlier assessments were framed under s. 143(1) of the Act, hence no support could be lent to the assessee on those bases. Concludingly, he has contended that it is a pure and simple case of fictitious entries and the orders of the learned lower authorities merit to be upheld on the issue. 13 14... 15. The assessee has filed the return of income and having appended therewith particulars of income and the copies of accounts, to prove the correctness thereof, the onus lay squarely on the assessee since it is an accepted principle of law and there cannot be two opinions on it that the onus lies on the person who alleges something. The assessee alleges and accordingly wants the Revenue to accept the return along with particulars of income and the accounts attached with the return claiming these to be correct ones, hence to prove that the onus is on the assessee. 16. The assessee claims that he has discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 19 lakhs whereas the first payment is in the vicinity of Rs. 6 lakhs and it is on 6th Jan., 1988. How and why, when the assessee himself is a miller, he had purchased huge volume of paddy and sold it is anybody's guess. The business of the assessee is milling i.e., a rice sheller and not a dealer in paddy and there is no reason that even assuming it to be so, a sheller/miller of Amritsar will purchase paddy from a miller/sheller from Kurali, since it is a common knowledge that Tarn Tarn and Amritsar and Rayya Mandi are well known rice belts and paddy growing areas. All the evidence on record which were at the assessment stage and which have since been confronted to the assessee lead to one and only irresistible factual inference and it is that there has been no sales but fictitious entries. The alleged purchaser has denied it. The ST-XXII forms have been found to be issued at Ferozepur whereas the assessee is located at Amritsar. Enquiries made by the Revenue from two State Government Departments, viz. DFC and the Sales-tax Department are adverse to the assessee. About the mode of payment shown by the assessee; these not only cast grave suspicion but cannot also be believed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion now is that as per the books of account, the assessee had shown sale of paddy amounting to Rs. 33,87,550. The Department has not accepted such a sale and has proceeded on the basis that such paddy would have been milled by the assessee. An addition of Rs. 33,87,550 has been confirmed by the Tribunal on the ground that the assessee had credited on equivalent amount as sale of paddy, whereas no such sale took place. The question, therefore, arises as to what should happen to the sale of paddy shown by the assessee which has not been taken out for purposes of adjustment of the trading results. If the Department pleads as it does, that the said paddy had been milled, then whatever profit accrued to the assessee on the sale of paddy has already been credited to the books of account in the shape of sale of paddy having been assessed at Rs. 33,87,550. We therefore, agree with the learned counsel for the assessee that only the resultant profit on account of milling should be added. Since this matter has not been processed by the lower authorities on these lines and the question of yield has already restored to the file of the first appellate authority, we consider it proper to send thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs. 33,87,550 under s. 68/69A by considering the credits brought in books by way of pay orders as unexplained or by considering the cash/amount involved in purchase of the said pay orders as assessee's own undisclosed income. (Investment) As per para 2 of assessment order reproduced by the Tribunal in paras 5 6 at p. 5 of the its order. 2. Addition of Rs. 42,11,331 On account of sale price of rice and by-products obtained by milling of paddy (which was claimed by the assessee to have been sold, but in fact was never sold) because such sale price was not credited in the books of account. Para 3 of assessment order as reproduced by the Tribunal in para No. 5 at pp. 5 to 8 of its order dt. 28th June, 1991. 3. Amount of Rs. 33,87,550 credited by the assessee by way of pay orders….. in the books of accounts and claimed to be on account of sale price of paddy which was never sold. It was assessee's case in M.A. that instead of addition at serial No. 2 above it is only the difference of amount sale price of rice and by-products at the Serial No. 2 and amount at serial No. 3 which could, at the most, be further added because ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From para 16 it is undisputed conclusion that the Hon'ble Tribunal had upheld all the findings given by the AO in para No. 2 of assessment year in case of M/s Ganesh Rice Mills and reproduced by the Tribunal in para 5 of its order dt. 20th Aug., 1991 and had in specific terms confirmed the addition of Rs. 33,87,550 made under s. 68/69A of the Act. 13.2 As a result of aforesaid factual findings the other facts which stand confirmed are as under: (i) The paddy amounting to Rs. 33,87,550, claimed by the assessee to have been sold to parties at Amritsar was never sold to them. (ii) The amount involved in purchase of pay orders, claimed by the assessee as receipt on account of sale price of paddy paid by the parties at Amritsar, was not contributed by those parties. (iii) The pay orders were purchased by the assessee with its own undisclosed income. (iv) The assessee had failed to explain the source of cash/amount involved in purchase of pay orders. (v) Though it was neither the assessee's case nor the assessee could have proved it. Even if had it been his case and if we, consider the same for the sake of arguments that amount/cash was claimed to have been available f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee having failed to explain and prove the source, the same was assessee's income under s. 68 of the Act and if it was not cash credit than the assessee having failed to explain and prove the source of the same was to be considered as assessee's undisclosed investment from undisclosed funds available outside the books of account but, brought in books by way of pay orders and therefore was assessee's undisclosed income under s. 69A of the Act. (ii) It is further clear that the Tribunal had confirmed all the findings of the AO which has resulted in addition under s. 68/69A of the Act and consequently had confirmed addition of Rs. 33,87,550 having been made under s. 68/69A of the Act. (iii) So far as findings of the Tribunal in para 17 of the original order are concerned, we are of the opinion those were with respect to the action of the AO for making a trading addition of Rs. 42,11,331 after considering the whole of the price of the rice and by-products obtained by milling the paddy (claimed by the assessee to have been sold but, in fact was not sold). (iv) Though the AO had made trading addition of Rs. 8,23,781 instead of addition of Rs. 42,11,331 (after allowing the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under s. 68/69A of the Act. (iii) From para 3 of the Tribunal's order passed in miscellaneous application of M/s Ganesh Rice Mills on 22nd June, 1993 it is revealed that the assessee's plea that there could not be a second addition of Rs. 33,87,550 first because the assessee has shown it as sale of paddy and secondly, because the authorities had come to a finding that no such sale of paddy have taken place and all these entries are fictitious, goes to show that what he was agitating was the trading addition of Rs. 42,11,331 and credit entries appearing as a result of pay orders and not the source of money involved/used for purchasing the pay orders i.e., the addition under s. 68/69A of the Act. Here again I would like to pose and observe that no authority had considered or observed that the credit of Rs. 33,87,550 was fake credit. The observations were with respect to sale of paddy and the amount received as sale price which had nothing to do with the actual credit and consideration of the same as assessee's income under s. 68/69A of the Act. (iv) The gist of submissions made on behalf of the assessee as recorded by the Tribunal in para No. 5 of the order, was that wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts obtained by milling the paddy (paddy claimed to have been sold as it is, but found to have not been sold at all) and not with respect to the cash credit of Rs. 33,87,550 falling within the ambit of s. 68/69A or the ownership of asset/money and undisclosed investment falling within the ambit of section under s. 69A of the Act, i.e., was not in the context of cash/credit but was in the context of sale price of paddy to be deducted out of sale price of rice and other by-products, brought in books by way of pay orders and in the garb of sale price of paddy. (viii) Even after having perused the so-called alternate submissions of the counsel recorded by the Tribunal in para 11 of its order dt. 20th Aug., 1991 and in para 3 of its order dt. 22nd June, 1993 in case of M/s Ganesh Rice Mills, word by word, sentence by sentence, individually as well as a whole and also the context in which the submissions were made and also the literal meaning of the same, I have not found even an whisper of grievance, which the assessee could have either intended or wished or tried to raise against the addition under s. 68/69A of the Act and it was, in our opinion, rightly so, because the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the first appellate authority with the direction that he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice…. One by way of sale of paddy as shown by the assessee and secondly by way of sale of price as contended by the Department", leave no scope for any doubt in the mind of law knowing persons that the Tribunal had never intended to reconsider it's order confirming the addition having been made under s. 68/69A nor had any intention to review that decision nor had set aside that addition of Rs. 33,87,550. There was no occasion or reason for doing so. (xii) Since the assessee had not appealed against the confirmation of addition made under s. 68/69A the same stood confirmed and no subsequent authority could or should have ignored or deleted the same while computing the total income of M/s Ganesh Rice Mills. 13.6 In nut sell, the effect of Tribunal's orders in case of M/s Ganesh Rice Mills—one dt. 20th Aug., 1991 disposing the main appeal of the assessee ITA No. 1502/Chandi/1990 for asst. yr. 1988-89) and second order dt. 22nd June, 1993 disposing off the assessee's miscellaneous application is that: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 13.7 In view of our aforesaid conclusion coupled with the fact that M/s Ganesh Rice Mills did not file appeal against the order of the Tribunal confirming addition under s. 68/69A of the Act as well as all other observations and findings arrived at by the AO, it is to be taken that addition under s. 68/69A stood confirmed by the Tribunal, had become final for all intends and purposes and cannot be reopened or reconsidered in the proceedings before us. 14. Coming to the cases before us, so far as the facts, which are relevant and useful to decide the issues before us are concerned and have been revealed from the records, have already been reproduced in para Nos. 6 7 of this order, however, some other facts are also found to be necessary (are already found to be on the records) which are as under: (1) In case of M/s Bhasin Rice General Mills: The total income of Rs. 64,00,000, estimated in exercise of powers available under s. 144 of the Act, was arrived at by considering and was inclusive of the following additions: (i) Addition of Rs. 58,69,980 under s. 68/69A of the Act on the same reasoning and basis as in the case of M/s Ganesh Rice Mills. (ii) Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 14,45,076 being the value of fictitious purchase of rice but, subject to set off against the addition under s. 68/69A as was in case of M/s Ganesh Rice Mills. 15. In the light of above facts and circumstances and our observations in the foregoing part of this order we are further of the opinion that since the directions given by the Tribunal, while disposing of appeals, of all these four respondents before us, are same and similar to the directions having been given in the case of M/s Ganesh Rice Mills the context in which the directions were given and the scope of directions given has to be same and to the same extent as we have analysed and to be and therefore we hold so. 16. Further, after having held as above, if we analyse the exact context and scope of the directions in the case of four respondents (before us) we have no hesitation to hold that: (i) The addition liable to be made at Rs. 58,69,980 in case of M/s Bhasin Rice General Mills; addition of Rs. 28,56,571 in case of M/s Punjab Rice Mills; addition of Rs. 12,36,885 in case of M/s Mahalaxmi Rice Factory and addition of Rs. 2,68,099 in case of M/s Bharat Rice Mills made under s. 68/69A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f paddy—quantity-wise) to be made by accepting the fact that paddy was not sold as it is, but, it was milled and rice and by-products obtained were sold, as was pleaded by the counsel for the assessee by way of alternate plea and with respect to which the directions were issued, there seems to be nothing wrong in these orders, except some objections by the learned Departmental Representative with respect to quantum of paddy considered by the CIT(A) in case of M/s Bharat Rice Mills which we will discuss later on. In other words, the orders of the CIT(A) to the extent of additional addition on account of total sale price of rice and by-products obtained by milling the paddy (it was claimed to have been sold as it is but, was found to have not been sold) after considering the sale price of paddy already brought in books (in the garb of sale price of paddy) or the computation of income from trading activities are concerned the same seems to be in accordance with the directions of the Tribunal and the CIT(A) should have stopped at that point, however, it is found that after having computed the quantum of business income as a result of milling of the paddy (claimed by the assessee to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment order passed under s. 144 was Rs. 15,00,000 only and the directions of the Tribunal, while setting aside the issue relating to the trading addition, being that in fresh proceedings the assessee should not be placed in a position where it should be worse off then it was before raising the alternate contention, the total income has to be restricted to Rs. 15,00,000 and that too subject to fresh computation of business income or additional business income likely to be added by the CIT(A), i.e., the addition likely to be made by meeting the Revenue's objection that the quantum of paddy considered by the CIT(A) should have been 22,528 quintals as against Rs. 14050.25 quintals taken by him. Since we are restoring the issue with respect to computation of additional addition, i.e., the issue relating to additional addition determined by him at Rs. 2,68,650 is being set aside and restored back to his file with the directions that the same may be recomputed after allowing the parties an opportunity of being heard and in case the total income, after considering the addition made under s. 68/69A amounted to Rs. 12,68,099 and other additions/business income computed by the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied his mind to the facts of the case. Any how, so far as present cases are concerned, neither there is such admission on the part of AO nor the CIT(A) have discussed this issue and that is why the Revenue is in appeal. Further, so far as the observations of the CIT(A) in the order of M/s Ganesh Rice General Mills that "it appears inconceivable that on the total turn over about Rs. 1,12,00,000 appellant would earn as high profit as Rs. 42,00,000 or Rs. 37,00,000" are concerned, we, without commenting on the intelligence of the CIT(A) and the theory invented by him for making such observations, can only say that the observations were not only irrelevant but were misplaced also, because, profit of the business is something else and total taxable income is something else. It is in many cases that the total taxable income may come even more than the total turnover, what to say to earn profit (equal to one third of the turnover). For example, if the additions are under the deeming provisions of s. 43B or under s. 40(A)(3) or under s. 68/69/69A/69B/69C of the Act etc., then the margin of profit or the total profit earned cannot be considered as basis so as to considered the justific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used for purchase of second pay order and, so on and so forth, otherwise, it is not even worth consideration what to say of acceptance. In the present cases, the assessees having failed to establish this fact, the plea fails. 25. Another plea taken by the counsel for the assessee that the total income determined by the CIT(A) in consequence upon the directions of the Tribunal was based on remand report submitted by the AO and therefore, there is no question of any mistake having been committed by the CIT(A). According to him it were the AO who had determined the total income as has been finally taken by the CIT(A). 26. Having heard the parties and in the facts and circumstances of the case, we are of the opinion that the assessee having failed to produce any evidence that the AO were called for to determine the total income. In remand report the AO's jurisdiction is restricted to the issue involved in remand report and it seems that the CIT(A) had called for remand report only with respect to the business income to be computed in view of the fact that the paddy, which was claimed to have been sold as it is, but was not sold, was milled. The CIT(A) also has nowhere said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Tribunal against the assessees. Yet another distinguishable fact is that in case of Bansal Rice Mills regular books of account were available for verification of assessee's stand that sale price of rice had been ploughed back in the books by way of sale price of paddy but this is not the case in the present cases, where the assessment had to be completed under s. 144 of the Act and this action as well as the findings that the assessees had deliberately withheld the production of the books of account to avoid detection of concealed income have been confirmed by the Tribunal and have become final. 29. In view of the above facts and circumstances and discussion we, with all respect to the Hon'ble Tribunal, are of the opinion that decision in case of Bansal Rice Mills is not applicable to the issue involved in present appeals. 30. In the result, our answer to questions framed in para No. 5 of this order is "No" and the Revenue's appeals in case of M/s Bhasin Rice General Mills, M/s Punjab Rice Mills M/s Mahalaxmi Rice Factory are allowed whereas, its appeal in case of M/s Bharat Rice Mills is allowed subject to our directions to the CIT(A) with respect to the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading account made to cover up the by-products obtained out of the paddy milled but shown as paddy sold. Therefore, the same was also liable to be taken into account. (iv) There were two fresh loans of Rs. 27,000 and Rs. 41,000 in the names of two parties. Further, the assessee had also debited huge expenses to the P L a/c and the genuineness whereof was not verifiable in the absence of books of accounts. (v) In the balance sheet the assessee had shown advance of Rs. 18,63,820 received from M/s Pawan Kumar Neeraj Kumar for sale of rice on consignment basis. However, the assessee had not reflected the closing stock of paddy sent for sale on consignment basis. 4. The assessee impugned the above additions in appeal before the CIT(A) who upheld the action of the AO in determining the total income at Rs. 64 lacs by observing as under: (i) The assessee had credited an amount of Rs. 51,47,782 for sale of paddy to two parties worth Rs. 32,83,962 and Rs. 18,63,820. But the assessee has not been able to prove the genuineness of these alleged sales of paddy. Therefore, the addition of Rs. 51,47,782 being credits on account of sales of paddy was liable to be confirmed. For this pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) In the books, the assessee had shown purchase of rice weighing 16,759 qtls. which is abnormal feature in the case of a rice sheller. This, according to the AO, was a bogus purchase shown in the books with a view to cover the yield of rice and other by-products realised on milling of paddy, which was shown as alleged sales of paddy. There was a difference of 9,899 qtls. in the rice shown as supplied to the District Food Supplies Department and as shown in the chart furnished along with the return of income. The value whereof comes to Rs. 28,31,430. This was also liable to be taken into account for estimating total income. (iv) The assessee had shown heavy expenses in the trading account and P L a/c correctness whereof could not be verified for want of books. (v) The assessee had shown investment of Rs. 1,30,709 in the construction of new building but correctness whereof could not be verified for want of books. Taking into account all these facts, the AO estimated the total income at Rs. 44 lakhs. 6. On appeal, the CIT(A) reduced the total income from Rs. 44 lakhs to Rs. 33 lakhs by observing as under: (i) Unexplained credits of Rs. 28,56,571 being bogus sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s weighing 43321 qtls. of paddy. Out of the same, the assessee claimed to have sold paddy weighing 7085 quintals for Rs. 12,36,885. Like other cases mentioned above, the AO treated credits of Rs. 12,36,885 being sale proceeds of paddy as unexplained. The AO completed the assessment on a total income of Rs. 21 lakhs by observing as under: (i) Rs. 12,36,885 being unexplained credits representing alleged sale of paddy weighing 7085 qtls. (ii) The assessee had shown purchases of rice worth Rs. 2,23,224, which was an abnormal feature in the case of a rice sheller. According to the AO, such purchases were shown with a view to reduce the profit earned. Thus, addition of Rs. 2,23,224 was called for on this account. (iii) In the books, the assessee had shown purchases of paddy weighing 43321 qtls. However, as per the information received from the District Food Supplies Controller, the assessee had reported purchases of paddy weighing 43976 qtls. Thus, the balance purchases of 655 qtls. worth Rs. 1,14,625 were unexplained and, therefore, addition on this count was also-called for. (iv) The assessee had shown total purchases of paddy at 43976 qtls. This quantity was actually mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider those afresh." Thus, all the appeals stood restored to the file of the learned first appellate authority and appeals of both the assessee and the Revenue were treated as allowed for statistical purposes. 12. In pursuance of the directions given by the Tribunal, the CIT(A) took up the appeals for fresh adjudication. The CIT(A) referred to the two orders of Tribunal, Chandigarh Bench i.e., order dt. 28th Aug., 1991 in the case of M/s Ganesh Rice Mills, Kurali for the asst. yr. 1988-89 and subsequent order dt. 22nd June, 1993 passed by the Tribunal after recalling its first order. He observed that the directions of the Tribunal in the second order were that while working out the total income of the assessee, the addition should not be made twice i.e., firstly by sale of paddy as shown by the assessee in the books and secondly on account of sale of rice and by-products as contended by the Revenue. During the course of hearing of appeals, the CIT(A) called upon the assessees to furnish working of income as per directions given by the Tribunal. The details and computation of income furnished by the assessees were also given to the AO for his counter-comments. Thereafter, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t both the parties were being assessed to tax. Accordingly, the AO was directed to verify the genuineness and if the same were found to be genuine, no addition should be made. As regards observations made by the AO that assessee had made investment of Rs. 1,30,709 in the construction of the building, the CIT(A) observed that in the assessment year under reference, the assessee had not made any addition to the same. Therefore, no addition was called for. The CIT(A) also observed that since there was no short supply of levy rice, no addition on account of evasion of purchase tax etc., as mentioned in the first order of the CIT(A), was called for. III. M/s Bharat Rice Mills, Santimajra (Kharar) ITA No. 1204/Chd/1996: 15. The CIT(A) computed the receipts from milling of entire paddy purchased at Rs. 14,53,831. Thereafter, the CIT(A) reduced the sale proceeds of paddy amounting to Rs. 12,35,182 and arrived at the income of Rs. 2,18,649. In addition, the CIT(A) added an amount of Rs. 50,000 being unexplained investment in the purchase of paddy and in this manner, the CIT(A) arrived at the total income of Rs. 2,68,650. The CIT(A) observed that the assessee did not obtain any extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions given by the Tribunal in the aforesaid order, the CIT(A) was justified in computing the total income at the figures mentioned above? 19. From the facts, discussed above, it is obvious that the CIT(A) has referred to the directions given in the order of Tribunal, Chandigarh Bench in the case of M/s Ganesh Rice Mills. Even in the consolidated order dt. 28th March, 1996 passed by Tribunal, Chandigarh Bench in these cases, the Tribunal had directed the CIT(A) to pass fresh orders in terms of directions given in the order dt. 22nd June, 1993 in the case of M/s Ganesh Rice Mills. It would, therefore, be in the fitness of things to discuss herein the facts and findings of the Tribunal recorded in the case of M/s Ganesh Rice Mills. 20. In the case of M/s Ganesh Rice Mills, the assessee had shown total purchases of paddy weighing 54721.26 qtls. Out of the same, the assessee claimed to have sold paddy weighing 15500 qtls. without milling. An amount of Rs. 33,87,550 was credited in the books being sale proceeds of paddy. Such sales were found to be bogus for which results of detailed enquiries made by the AO have been elaborately discussed in the assessment order. The AO observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed rice and other by-products, which were sold in the open market. 22. The assessee had also raised an alternative plea that since the case of the Revenue was that assessee had milled the paddy and obtained rice and other by-products, the source of credits on account of sale of paddy shown in the books should be considered from the sale of rice and by-products. Therefore, no addition was liable to be made in view of the fact that source was known and the same was from books of accounts and business, more so, when the AO had accepted the purchases shown in the books. However, Tribunal, Chandigarh Bench vide its order dt. 28th Aug., 1991 did not accept assessee's plea that sales of paddy shown in the books were genuine. Therefore, the order of the CIT(A) in sustaining the addition of Rs. 33,87,550 under s. 68/69A was upheld. This order was relied upon by the CIT(A) while deciding the first appeals in these cases. 23. As regards Revenue's appeals relating to addition of Rs. 8,23,781, the order of the CIT(A) was set aside and restored to his file for fresh adjudication with a direction to meet the case of the Revenue made at the assessment stage. The Tribunal, however, failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of trading results or actual profits, if any, with reference to the milling of paddy should be added in the assessee's hands. We, however, wish to make it clear that since this is an alternative contention of the assessee, the assessee should not be placed in a position where it should be worse off than it was before raising the alternative contention." 24. It may further be mentioned here that in pursuance of the above directions given by the Tribunal, the CIT(A) re-decided the appeals vide his order dt. 15th June, 1994. After referring to the directions given by the Tribunal and the finding recorded by the AO that part of the profits earned on milling of paddy and by-products was ploughed back in the books by way of sale proceeds of paddy, the learned CIT(A) computed the total income of M/s Ganesh Rice Mills at Rs. 4,05,703. While doing so, the CIT(A) reduced the amount of sale proceeds of paddy as shown in the P L a/c from the sale proceeds of rice and by-products obtained from milling of paddy. No addition under s. 68/69A was separately made. Both the Revenue and the assessee filed cross-appeals before the Tribunal against the aforesaid order of the CIT(A). In the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. 25. From the facts discussed above, following position emerges from the above referred orders. (a) The case of the Revenue is that the alleged sales of paddy were bogus and the assessee had in fact milled the paddy and obtained rice and by-products, which were sold in the open market. (b) Although the AO has made addition under ss. 68/69A on account of credits shown in the form of bogus sales of paddy, yet corresponding purchases of paddy have been accepted to be genuine because for the purposes of working out yield of rice and the by-products obtained from milling of paddy, the AO has worked out the same on the basis of entire purchases of paddy including the paddy sold as such. (c) The AO has himself adjusted the sale proceeds of paddy against the sale proceeds of rice and by-products obtained from milling of such paddy. In case these receipts were plain and simple bogus credits and he was of the view that sale proceeds of rice and by-products obtained from milling of paddy were not at all brought in the books, the AO ought to have made two additions, i.e., one under ss. 68/69A total sale proceeds of rice, rice bran, phuk and paddy husk obtained without adjusti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that requires to be decided by the Bench is whether the CIT(A) was justified in excluding the additions made under s. 68/69A while re-deciding the present appeals in terms of the directions given by the Tribunal in its order dt. 28th March, 1996. As mentioned above, the Tribunal has set aside all the additions including the additions made under s. 68/69A in its second order dt. 22nd June, 1993 in the case of M/s Ganesh Rice Mills. There is nothing in the order of the Tribunal dt. 28th March, 1996 for setting aside the first orders passed by the CIT(A) which could suggest that the Tribunal had upheld the additions under s. 68/69. Therefore, the CIT(A) was expected to consider this issue at the time of redeciding the appeals and Bench is also required to record its findings whether the additions made under s. 68/69A were indeed called for. No doubt, in the first order dt. 28th Aug., 1991 passed in the case of M/s Ganesh Rice Mills, the Tribunal had upheld the addition of Rs. 33,87,550 made under s. 68/69A. However, the alternative plea of the assessee was not dealt with by the Tribunal while deciding the appeal. Therefore, the assessee moved a miscellaneous petition, which was accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other by-products obtained from such milling were sold in the open market. In fact, the AO has himself accepted on p. 7 of the assessment order in the case of M/s Ganesh Rice Mills and as reproduced by my learned brother, JM, on p. 19 of the proposed order, that part of the amounts realised on sale of rice and its by-products were ploughed back in the form of credits in the books shown as proceeds from sale of paddy. The source of credits in the books is out of the sale proceeds of rice and by-products obtained from milling of such paddy. Therefore, the same stands explained. Even otherwise, the AO has himself adjusted estimated sale proceeds of rice and the by-products obtained from milling against the credits in the form of sale proceeds of paddy. For example, in the case of M/s Ganesh Rice Mills the AO had found the difference in the yield of rice and the estimated receipts of rice and other by-products obtained from milling of paddy at Rs. 42,11,331. This amount was arrived at after adjusting the yield of rice and by-products as shown in the books. Against the addition of Rs. 42,11,331, the AO himself adjusted an amount of Rs. 33,87,550 and made further addition of Rs. 8,23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income relatable to such turnover is required to be estimated. It is only such profit so embedded in the sales, that can be charged and not the entire sale proceeds. The present cases of assessees stand rather on stronger footing because the purchases have been accepted to be genuine by the Revenue authorities. The case of the Revenue is that the paddy shown as sold was in fact milled and sale proceeds of rice and other by-products obtained from such milling were ploughed back in the form of credits on account of sale of paddy. Thus, only the resultant profit earned on milling of paddy could alone be brought to tax. Further, it may be mentioned that while setting aside the orders of the CIT(A) and restoring the appeals to the file of the CIT(A), the Tribunal directed the CIT(A) to keep in view the directions given in its second order dt. 20th June, 1993 in the case of M/s Ganesh Rice Mills. The first order of the Tribunal in M/s Ganesh Rice Mills, where the Tribunal had upheld the addition under s. 68/69A was not even referred to. As discussed earlier, the CIT(A) re-decided the appeal in the case of M/s Ganesh Rice Mills where total income was computed at Rs. 4,05,703. No addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills as these additions have been accepted by these assessees. 29. The next issue, which requires to be decided by the Bench, is whether, learned CIT(A) was justified in determining the income at the figures mentioned in the respective impugned orders. As regards percentages of yield of rice, rice bran, phak and paddy husk, learned CIT(A) has adopted the same percentages as done in the case of M/s Ganesh Rice Mills. The assessee had filed an appeal against the order in the case of M/s Ganesh Rice Mills contesting the percentages of yield adopted by the CIT(A). The said appeal was decided by the Tribunal vide its order dt. 23rd Oct., 2002 in ITA Nos. 852 921/Chd/1994, where the order of the CIT(A) was upheld on this point. However, in that case also, the CIT(A) had allowed extra expenses of Rs. 1,50,000 incurred on milling of 15500 qtls. of paddy, which was shown in the books as sold. However, the Revenue had contested before the Tribunal that the extra expenditure allowed by the CIT(A) on milling was excessive. Considering the submissions of both the parties, we had held that it would be fair to allow deduction on account of expenses at Rs. 75,000, which was incurred on millin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DFSC, which means that the same had been duly reflected in the books of accounts though corresponding purchase of paddy was not shown in the books. The learned CIT(A) has also allowed credit for the entire quantity of yield of rice and other by-products as shown in the books, which is inclusive of yield obtained from milling of 655 qtls. of paddy. However, the CIT(A) has not taken into account 655 qtls. of paddy for the purpose of computing yield of rice and other by-products obtained therefrom. This is not correct. I, therefore, set aside the order of the CIT(A) and restore this issue to the file of the AO with a direction to estimate the yield of rice and other by-products at the rates mentioned in Annex.-A of the impugned order, obtained from milling of 655 qtls. and estimate the total receipts by applying the rates mentioned therein. The amount so worked out would be included in the total income of the assessee in addition to the income already computed by the learned CIT(A). I direct accordingly. Subject to the observations made hereinabove, the orders of the CIT(A) in determining the income at the amounts mentioned in the respective orders do not warrant any interference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the CIT(A) was justified in excluding deleting the additions made under s. 68/69A while passing the impugned orders?" Question No. 3 "Whether, on the facts and circumstances of the cases and directions given by the Tribunal, Chandigarh Bench in its consolidated order dt. 28th March, 1996 in assessees' appeals in ITA Nos. 1121/Chd/1992, 1130/Chd/1992, 1127/Chd/1992 and 1128/Chd/1992 (all relating to asst. yr. 1988-89) for restoring the appeals to the file of the CIT(A), the CIT(A) was justified in determining the taxable income at Rs. 3,07,480, Rs. 3,03,555, Rs. 2,68,650 and Rs. 3,33,320 in ITA Nos. 1202/Chd/1996, 1203/Chd/1996, 1204/Chd/1996 and 1206/Chd/1996 respectively." 2. The facts of the cases are fully and elaborately discussed by the two learned Members in their proposed orders and as this decision is to be read conjunctively with above orders, I deem it unnecessary to reproduce the detailed facts all over again. I would only be referring to the facts relevant to resolve the controversy. 3. All the four assessees in the period relevant to asst. yr. 1988-89 were carrying on the business of husking of rice. In their books of accounts (no books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot taken into account the last two lines of above directions providing "as regards other points, we express no opinion and the CIT(A) is directed to reconsider those points". The above direction clearly shows that the orders of CIT(A) were completely set aside and was not maintained on any issue. Omission to note above two lines has contributed to some extent in the view that the learned Member ultimately adopted in his proposed order. 8. As there is reference to direction dt. 22nd June, 1993 of the Tribunal given in the case of Ganesh Rice Mills (ITA No. 1502/Chd/1990 for asst. yr. 1989-90), it is necessary to take note of those directions also. The same are as below: "We have carefully considered the rival submissions as also the facts on record. The assessee in this case took the plea that it had sold paddy worth Rs. 33,87,550. The Revenue authorities, however, came to the conclusion that no such paddy had been sold by the assessee and that only entries had been passed. The Tribunal also confirmed the aforesaid addition of Rs. 33,87,550. The position now is that as per the books of account, the assessee had shown sale of paddy amounting to Rs. 33,87,550. The Department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 3,07,480 as per Annex. "A" which is given below: A. Paddy account Opening stock Nil Add: Purchases 46,058.000 46,058.000 Less: Closing stock 11,386.000 Paddy milled 34,672.000 The products obtained on the basis of the order of CIT(A) in the case of Ganesh Rice General Mills is as follows: B. Rice account Opening stock on the basis of previous balance sheet 1,051.73 Yield @ 66 per cent of paddy milled 22,883.528 23,935.25 Less: Closing stock on the basis of next year balance sheet 453.51 23,481.74 Sale value of rice @ Rs. 296 per qtl. 69,50,595.04 C. Rice bran acount Opening stock on the basis of previous balance sheet 41.28 Yield @ 5 per cent of paddy milled 1,733.608 1,774.88 Less: Closing stock on the basis of next year balance sheet 36.92 1,737.96 Sale value of rice bran at Rs. 213.62 per qtl. 3,71,263.00 D. Phuk account Yield @ 3 per cent of paddy milled 1,040 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. (i) M/s Bhasin Rice General Mills 58,69,980 (ii) M/s Punjab Rice Mills 28,56,571 (iii) M/s Mahalaxmi Rice Factory 12,36,885 (iv) M/s Bharat Rice Mills 12,68,099 12. Learned AM did not agree with the view expressed by the learned JM. He separately considered the case of each of the assessee and held that no addition on account of credits for fictitious sale of paddy was sustained by Tribunal in their order remanding the matter to the learned CIT(A). In fact, the Tribunal had specifically held that amount of sale proceeds of paddy credited in the books of accounts should not be added twice—once as sale of paddy and second time as profit for sale of products after milling the same (paddy). Learned CIT(A) was to determine the profit which the assessee derived on account of milling of paddy and the same was reasonably worked out by the learned CIT(A). Learned AM further held that the CIT(A) was required to determine the "total income" of the assessee as per directions of Tribunal and the same was correctly determined. The directions of the Tribunal were properly complied with. Learned AM made minor adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal but the Tribunal vide its order dt. 28th Aug., 1991 upheld the addition of Rs. 33,87,550 for credits representing bogus sales of paddy. 15. The assessee then moved a misc. application contending that addition of Rs. 33,87,550 was wrongly sustained as the said sum stood already credited in the books of accounts of the assessee. Thus, the sale of Rs. 33,87,550 was duly assessed as part of total income. The Tribunal accepted this contention of the assessee and issued directions dt. 22nd June, 1993. As per aforesaid directions, addition of Rs. 33,87,550 was not to be made twice—one by way of sale of paddy as shown by the assessee and second on account of sale of rice as contended by the Department. The addition of Rs. 33,87,550 was not sustained as the said amount already stood credited in the books of accounts of the assessee. Only profit from the milling of paddy was to be computed and added. Learned AM has analysed the order and has referred to the consequent order passed by the CIT(A) which was accepted by the Revenue authorities. Thus, as per ultimate order, there is no addition of Rs. 33,87,550 in the case of M/s Ganesh Rice Mills. 16. Learned JM in the proposed ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department of District Food and Civil Supplies Controller, Ropar and found that the assessee had sold paddy as per information given in their letter dt. 26th July, 1990 as detailed below: Within the district 18765 qtls. Out of State 13846 qtls. Total 32611 qtls. The AO held that no paddy was sold by the assessee. In fact, paddy was milled and rice and by-products were obtained which were sold outside the books of accounts. The sale proceeds of paddy represented unexplained investment and concealed income of the assessee. 18. The AO further observed that yield of rice bran, phuck, etc. shown was low in comparison to yield fixed by the Punjab Agriculture University. The AO accordingly held that a sum of Rs. 35,000 would be considered in making the 'estimate' of the income of the assessee. 19 The AO again reverts to the sale of paddy reported by the DFSC and held that 32611 qtls. of paddy was sold outside the books of account at the rate of Rs. 180 per qtl. and a sum of Rs. 58,69,980 realised. This fact was again to be kept in view in estimating the assessee's income, according to the AO. 20. From the trading account, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 58,69,980 and Rs. 59,64,694 under s. 68/69A of IT Act, 1961 for fictitious sale of paddy and purchase of paddy. The assessee did not produce books of account before the AO. Thus, no fictitious entries of sale of paddy were seen or noticed by the AO to apply even remotely the provisions of s. 68 of the Act. It is unimaginable that even without books of account, addition of cash credit or unexplained investment could be made in these cases. The assessment orders do not give any clue of any addition actually made under s. 68/69A of IT Act, 1961. It is not possible to hold that the AO made additions of Rs. 58,69,980, Rs. 59,64,694 and Rs. 60,00,000 under s. 68/69A of IT Act, 1961. When additions on line are not seen to be made on fair reading of the assessment order, it is not possible to hold that such additions were made on consideration of background in the case of M/s Ganesh Rice Mill. In my considered opinion, it is not permissible to go beyond the record of the case. The order of Tribunal which gave rise to the controversy came much later on surface than the assessment order in question. Thus on a fair and reasonable reading of the assessment order, I hold that no addition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice—one by sale of paddy as shown by the assessee and second on account of sale of rice as contended on behalf of the Revenue". The Tribunal further made the position clear by directing that either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profit if any, with reference to milling of paddy should be added. Where is the scope to hold that the addition of Rs. 33,87,550 was sustained by the Tribunal? There is not one but several clear indications in the order that credits aggregating to Rs. 33,87,550 were not only accepted but the amount was required to be set off and deducted from the ultimate trading results if actual profit of sale of paddy is not separately worked out. The argument of the Revenue that addition of Rs. 33,87,550 be sustained was specifically rejected by the Tribunal. In view of above clear observations, it is not possible for the Revenue to argue again that addition of Rs. 33,87,550 was sustained by the Tribunal. If above addition was sustained, on what issue the matter was remit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal considered the question for addition under s. 68/69A of the Act. Not only that, even the CIT(A) in some impugned orders has taken into account the addition made on account of cash credits which means addition under s. 68 of IT Act, 1961. In the light of above, I am hesitant in recording that no addition under s. 68/69A was made by the AO. In my considered opinion, it is not permissible for the Third Member to take a view contrary to the view taken by both the learned Members. Notwithstanding the legal position, I have no wish to further complicate the matter, I, therefore, consider it safe to agree with both the Members that in assessment order some additions under s. 68/69A were made by the AO and such additions were the subject-matter of the appeal before the Tribunal. The aforesaid finding, in my view, does not affect my aforesaid conclusion for the following reasons: (i) That when the matter was taken up by the Tribunal in the four cases, the entire assessments were set aside with the directions to the CIT(A) to re-compute the total income in de novo assessments. Nothing stated in the assessment order in the light of order of the Tribunal survived. The total income wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold, amounted to having set aside the addition made under s. 68/69A of IT Act, 1961, in all these cases, also?" "(ii) If the answer is in the affirmative, whether the CIT(A) was justified in excluding deleting the additions made under s. 68/69A while passing the impugned orders?" "3. Whether, on the facts and circumstances of the cases and directions given by the Tribunal, Chandigarh Bench in its consolidated order dt. 28th March, 1996 in assessees appeals in ITA Nos. 1121/Chd/1992, 1130/Chd/1992, 1127/Chd/1992 and 1128/Chd/1992 (all relating to asst. yr. 1988-89) for restoring the appeals to the file of the CIT(A), the CIT(A) was justified in determining the taxable income at Rs. 3,07,480, Rs. 3,03,555, Rs. 2,68,650 and Rs. 3,33,320 in ITA Nos. 1202/Chd/1996, 1203/Chd/1996, 1204/Chd/1996 and 1206/Chd/1996 respectively." 2. Hon'ble Vice President (now Hon'ble President), as Third Member, has concurred with the view of AM in all the aforesaid cases. Both the parties were heard again and both agreed that majority view should be given effect to. In conformity with the majority view, the impugned orders of CIT(A) in all the four cases are set aside and the issue is restored ..... X X X X Extracts X X X X X X X X Extracts X X X X
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