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2016 (1) TMI 488 - ITAT AHMEDABAD

2016 (1) TMI 488 - ITAT AHMEDABAD - TMI - Disallowance on account of loss on sale of live stock - Held that:- Both the facts are contradictory i.e. on one hand the revenue from sale of milk has increased at three fold and on the other hand, there was great down fall in the business of the assessee and also assessee was not having its own business/factory premises to run the dairy business. Sale of milk in a dairy industry is based on proper mechanical system in which milk has to be stored in spe .....

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ance of buffaloes and some buffaloes were sold and there ought to have been milk production with the resultant sale which cannot be accepted under the given circumstances. Accordingly, we do not find any force in the contentions made by the assessee and accordingly we do not find any reason to interfere with the order of ld. CIT(A). - Decided against assessee.

Disallowance of loss and treating of receipt from sale of buffaloes as income from other sources - Held that:- There is no dai .....

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llowing the loss allegedly claimed by the assessee and consequently CIT(A) was correct in sustaining the alleged sale of buffaloes as income from other sources.

Disallowance of expenses relating to buffaloes - Held that:- he assessee was unable to prove that dairy business was actually carried on by it during the year under appeal as the business premises were attached by Dena Bank and there was no possibility to run the business and nor any evidence is available on record to verify t .....

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usiness activity or possessing livestock in physical form and, therefore, ld. CIT(A) was correct in holding that appellant had not carried out any business activity nor it had sold the buffaloes. As regards the allegation made by assessee company that Assessing Officer had not allowed sufficient opportunity, we find that there is no truth in this ground raised by the assessee company which can be verified by the observations of Assessing Officer in his assessment order, thus it is amply clear th .....

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t for AY 2004-05 was framed u/s 143(3) of the I.T. Act, 1961 (in short the Act) on 19.12.2006 by ITO, Ward- 1(4), Ahmedabad. 2. ITA No.1521/Ahd/2010 for AY 2004-05 (Revenue s appeal)- The Revenue has raised following grounds in its appeal :- 1. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 4640880/- made by Assessing Officer on account of loss on sale of live stock. 2. On the facts and in the circumstances of the case, the ld. CIT(A)-XIV, Ahm .....

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ion before us is that if the main appeal is withdrawn then what will be the fate of the C.O. filed by the assessee? To resolve this issue we go through the provisions of section 253(3) of the Act and the relevant part of it says - The memorandum of C.O. shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in subsection (3) or sub-section (3A). Therefore, we will hear and decide the issues filed by the assessee in C.O. The assessee has raised .....

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was no sale of buffaloes of ₹ 57,38,880/- at ₹ 10,98,000/- and thereby resulting into a loss of ₹ 46,40,880/. 2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) has ought not to have disallowed the loss of ₹ 46,40,880/- on account of sale of buffaloes for ₹ 10,98,000/- 3.1 The ld. CIT(A) has grievously erred in confirming the disallowance of expenses relating to buffaloes for ₹ 4,73,616/- . 3.2 That in the facts and circumsta .....

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appellant company had not carried out any business activities nor it had sold the buffaloes. 5.2 The ld. CIT(A) has failed to appreciate that the AO had not allowed sufficient opportunity or issued any show cause before making the high pitch assessment. It is, therefore, prayed that the impugned disallowance confirmed by the CIT(A) may please be deleted. 6. Briefly stated the facts of the case are that the assessee is a limited company engaged in the business of Dairy Food Product and filed its .....

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- 1. Milk sale disallowed and treated as unaccounted money at ₹ 20,09,696/- 2. Receipt from sale of buffaloes treated as income from other sources - at ₹ 57,38,880/- 3. Disallowance of loss incurred from sale of live-stock at ₹ 46,40,880/- 4. Disallowance of expenses at ₹ 6,73,312/- Total - ₹ 1,30,62,768/- Being aggrieved, the respondent assessee preferred appeal before ld. CIT(A) who vide his order dated 23.2.2010 allowed the loss on sale of live-stock at ₹ 4 .....

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ssing Officer did not receive any reasonable reply from the assessee company in relation to the details required with documentary evidence showing milk sale and the Assessing Officer observed that assessee company has not done any dairy activity since 9.10.2002 as the business premises, where dairy activities were used to be carried out by the assessee company, were attached by Dena Bank due to dispute with the Bank and the attachment was revoked in the month of September, 2004; (duly supported .....

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the revenue shown as business receipts from sale of milk as genuine and accordingly treated it as unaccounted money. 9. During the appellate proceedings before ld. CIT(A), the first appellate authority dismissed the ground of the assessee by observing as under :- 6.9 I have considered the facts and submission of the ld. AR carefully. I have also gone through the remand report prepared by the Assessing Officer. As regards Assessing Officer s action for treating the sum of ₹ 20.09,696/- as i .....

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siness premises of the appellant was kept attached by the bank. Therefore, under these circumstances how the appellant carried out its dairy business has not been proved with the help of cogent material. Since various discrepancies in the appellants claim were detected by the Assessing Officer and same were brought to its notice it was incumbent upon it to repel the same by bringing necessary supporting evidence on record. Neither during the assessment proceedings nor during the appellant procee .....

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live stock at the close of F.Y.2002-03 and the value of buffaloes shown in the audited balance sheet as on 1.4.2003 was shown at ₹ 92,67,005/- and the same was the closing stock for the F.Y.2002-03 which has been accepted by the Assessing Officer. The ld. AR also submitted that as the assessee company was having buffaloes in the opening stock and some of them were sold during the year, so, when the assessee company was having buffaloes then certainly there has been sale of milk also and fu .....

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ntaining the buffaloes and sale the milk and deposit the money in company and also take money from the company for maintenance of the buffaloes. The company has prepared voucher for milk sale and debit buffaloes maintenance expenses as buffaloes expenses. (b) The company has not done any dairy production activities but created the income from live assets of the company as milk income. It is not necessary to do the dairy activities to show the milk income. Milk income is shown as income in the pr .....

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er enclosed). Due to change in management the record is not available and the name & address is also not possible as there is no live stock as on date with the company. The new management has tried to contact old management but at present they are not available. Hence we are unable to provide name and address of the Rabaries and Bhanwad to whom we have given buffaloes for milk sale and maintenance of them. 11. The ld. DR supported the orders of lower authorities. 12. We have heard the rival .....

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n sale of milk during financial year 2002-03 at ₹ 20,09,696/- whereas in the previous F.Y. 2003-03 sale of milk was shown at ₹ 6,51,615/- meaning thereby that the Revenue of the assessee had increased by three fold even in the situation when its business activities were haulted by the attachment order by the bank. Most of the live stock was sold during the year and low business activities were carried out. Therefore, both the facts are contradictory i.e. on one hand the revenue from .....

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t followed by packaging milk to be sold in the market. Not a single piece of evidence has been produced by the assessee to both the lower authorities as well as before the Tribunal to prove the genuineness of the sale of milk. The only plea by the ld. AR taken repeatedly is that the assessee company was having opening balance of buffaloes and some buffaloes were sold and there ought to have been milk production with the resultant sale which cannot be accepted under the given circumstances. Accor .....

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g balance of buffaloes shown in balance sheet 366 buffaloes having a cost price of ₹ 57,38,880/- were sold during the year at ₹ 10,98,000/- resulting thereby loss of ₹ 46,40,880/- (Rs.57,38,880/- (-) ₹ 10,90,000/-) and assessee received ₹ 10,98,000/- from sale of buffaloes. The Assessing Officer was not satisfied with the submissions made by the assessee during the assessment proceedings because of lack of evidences and supporting documents and, therefore, made two .....

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ssessing Officer. Even when the matter was referred back to Assessing Officer during appellant proceedings the appellant did not bring any evidence to support such claim. It is a matter of fact that during the assessment proceedings the appellant could not produce even five persons to whom it allegedly sold buffaloes during the relevant period. The surrounding circumstances clearly show that no such transactions were made by the appellant during the relevant period. The Assessing Officer has rig .....

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acts as discussed above, when there is no effective sales of such livestock there cannot be a loss of ₹ 46,48,800/- therefore, the same has rightly been disallowed by the Assessing Officer. In view of this, disallowance of ₹ 46,80,800/- is confirmed. The receipt of ₹ 10,98,000/- allegedly shown by the appellant from sale of buffaloes is required to be added in the given circumstances as income from other sources. Therefore on account of both these transactions the addition of & .....

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to be examined, the genuineness of loss of ₹ 46,40,880/- which will simultaneously also examine the receipt from sale of buffaloes at ₹ 10,98,000/-. 15. The ld. AR submitted that assessee has been carrying on the business as dairy industry for last many years and regularly assessed to income-tax and also referred to the audited balance sheet wherein opening stock of buffaloes was shown at ₹ 92,67,005/- meaning thereby that the Assessing Officer has accepted the closing stock of .....

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-. 16. The ld. DR supported the orders of Assessing Officer and the first appellate authority. 17. We have heard the rival contentions and perused the material on record. It seems that there is some anomaly in the depiction of the transaction with regard to the sale of buffaloes. From the perusal of the audited balance sheet, the transaction of sale of buffaloes can be gathered from the fact that as on 1.4.2003 assessee company was possessing 591 buffaloes shown at a cost price of ₹ 92,67, .....

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35,28,125/- which means there was no purchase of buffaloes during the year and only transaction was the sale of 366 buffaloes which were purchased by the assessee in the years before the year under appeal, approximately costing at ₹ 57,38,880/- and they were sold at a loss of ₹ 46,40,880/- and the sale proceeds received from the sale of 366 buffaloes was at ₹ 10,98,000/-. The assessee is claiming the loss from sale of assets (livestock) acquired by it in the previous years (as .....

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oes at ₹ 10,98,000/- resulting into loss of ₹ 46,40,880/-out of 591 buffaloes at the beginning of financial year, no evidence (s) in this respect has been produced before us. The above note makes it very clear that assessee was not possessing any documents to substantiate its claim of sale of buffaloes even at the time of getting its accounts audited and neither was able to submit anything in support of the sale of buffaloes at ₹ 10,98,000/- at any time before the lower authori .....

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of sale of buffaloes during the year meaning thereby that the ld. CIT(A) was correct in disallowing the loss allegedly claimed by the assessee and consequently CIT(A) was correct in sustaining the alleged sale of buffaloes at ₹ 10,98,000/- as income from other sources. 19. Ground No.3.1 & 3.2 - against the action of CIT(A) in confirming the disallowance of expenses relating to buffaloes for ₹ 4,73,616/-. 20. We have heard the rival contentions and gone through the material on rec .....

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such we find no reason to differ from the view taken by the CIT(A) and accordingly uphold the order of CIT(A). This ground of the Cross Objection is also dismissed. 21. Ground Nos.4.1 & 4.2 - against confirmation of disallowance of ₹ 2,00,000/- out of administrative expenses claimed at ₹ 4,67,194/-. It seems that assessee has wrongly raised this ground in its cross objection because ld. CIT(A) has already given relief to the assessee by deleting the disallowance of ₹ 2,00,0 .....

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ficer is hereby confirmed. As regards the further disallowance of ₹ 2 lac out of administrative expenses, the Assessing Officer has not given any reason for such disallowance. He has also not brought on sufficient material on record to justify such disallowance. In view ot this, the disallowance made by the Assessing Officer out of administrative expenses is hereby deleted. This ground of appeal is therefore allowed partially. As the Revenue has withdrawn its appeal, therefore, this ground .....

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carrying on any business activity or possessing livestock in physical form and, therefore, ld. CIT(A) was correct in holding that appellant had not carried out any business activity nor it had sold the buffaloes. 24. As regards the allegation made by assessee company that Assessing Officer had not allowed sufficient opportunity, we find that there is no truth in this ground raised by the assessee company which can be verified by the observations of Assessing Officer in his assessment order, the .....

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