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2017 (4) TMI 909 - ITAT CHENNAI

2017 (4) TMI 909 - ITAT CHENNAI - TMI - Sale of manure in the nature of poultry droppings - CIT(Appeals) directed to exclude dropping of birds reared by contract farmers from stock available for sale - Assessment u/s 153A - Held that:- Assessing Officer had accepted the expert opinion insofar as it related to feed consumption of bird at 55-60 KGs for 60-weeks. However, when it came to poultry dropping, he refused to consider the opinion of the said expert. The said expert had clearly mentioned t .....

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self had estimated the droppings per year per bird at 14 KGs, which was higher than the estimation of 10 KGs per bird made by the expert. We are, therefore, of the opinion that the order of the CIT(Appeals) cannot be faulted on this count. - Insofar as bird droppings were concerned, Assessing Officer himself had excluded bird droppings of poultry raised by contracting farms. Such reduction in bird droppings, as noted by the Ld. CIT(Appeals), was to be based on the number of birds grown at co .....

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der Section 69B - Held that:- Assessee had estimated and admitted unaccounted income from sale of bird droppings and broken eggs during the course of assessment proceedings before the Assessing Officer. We have already upheld the order of the CIT(Appeals) with regard to deletion of additions made by the Ld. A.O. on additional income estimated from sale of bird droppings. In our opinion, the finding of the Ld. CIT(Appeals) that additional income from bird droppings for various assessment years co .....

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For The Respondent : Shri S. Sridhar, Advocate ORDER PER BENCH: These appeals filed by the Revenue are directed against a consolidated order dated 03.09.2015 of the Commissioner of Income Tax (Appeals) - 18, Chennai, for the impugned assessment years. 2. Grounds taken by the Revenue are similar for all the years, except for one other ground taken for assessment year 2010-11, which will be dealt with separately. The common grounds raised by the Department are concerned with an estimated addition .....

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ere also initiated in the premises of the group companies. In response to notice under Section 153A of the Act, assessee filed return for the impugned assessment years declaring the following income:- Sl. No. Assessment Year Date of filing of return u/s 139(1) Income originally returned u/s 139(1) (Rs.) Date of filing of return in response to 153A Notice Returned Income u/s. 153A (Rs.) Additional Income Offered (Rs.) 1. 2006-07 19.10.06 4,06,39,540 (Firm) 21.08.2013 4,18,70,540 12,31,000 2. 2007 .....

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tion132(4) of the Act, it seems he confirmed sale of manure in the nature of poultry droppings which were not accounted. He also stated that invoices were not raised by the assessee for sale of poultry droppings. The A.O., during the course of assessment proceedings, sought opinion from Professor & Head of Poultry Sciences, Veterinary College & Research Institute, Namakkal. The said Professor opined that the average poultry dropping per bird per annum would be 25 Kgs. Assessing Officer p .....

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78,43,238 TOTAL 51348.85 3,67,34,500 5. Explanation of the assessee was that against average annual feed of 36.5 Kgs per bird, the average poultry dropping per bird was only by 14 Kgs and not 25 Kgs as estimated by the Assessing Officer. Assessee reworked the possible earnings from sale of poultry droppings as under:- F.Y. 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 No. of parent birds at the close of the year in Nos. 209594 238276 257801 351069 418567 466585 437482 Average annual f .....

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ice of poultry droppings per annum per Tonn 600 640 680 710 740 760 760 Average manure total sales value per annum in Rupees 168000 197120 238000 308140 393680 457520 155800 From the above data, the assessee worked out the additional income from sale of poultry droppings as under:- F.Y. 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Average Poultry droppings used for own consumption per annum in Tons 1680 2848 2100 2604 3192 3612 1233 Average selling price of poultry droppings per annum .....

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rof. D. Narahari, Senior Vice President of Indian Poultry Science Association. The Ld. A.O. 6. After considering the evidence and details filed by the assessee, Ld. A.O. concluded that the expert opinion provided by the assessee had fixed average feed consumption of a bird at 55 to 60 KGs for a 60-week period. On an annual basis, as per the A.O., such feed consumption came to 49.8 KGs per annum per bird. Since assessee had itself estimated poultry dropping of 14 KGs on a feed of 36.5 KGs, as per .....

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ge price per ton 2006-07 ₹ 750 2007-08 ₹ 775 2008-09 ₹ 800 2009-10 Rs. 825 2010-11 ₹ 850 2011-12 ₹ 875 2012-13 ₹ 900 Thereafter taking 19.1 Kgs as the poultry dropping per bird and the rate as mentioned in the table above, he re-worked the income of the assessee from sale of poultry droppings for each of the year. Additions were accordingly made for each year. 5. Aggrieved, the assessee moved in appeal before the CIT(Appeals) for all the years. The CIT(Appeals .....

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was possible. Ld. CIT(Appeals) held that in the circumstances of the case, assessee s estimate of 14 KGs per bird was fair. 6. Coming to the question of rate adopted per ton, as per the Ld. CIT(Appeals), the market rate of poultry manure was only ₹ 1200 per tipper, viz. for a quantity of two tonnes. Thus, according to him, average price for manure was only ₹ 600/-. He held that the rate of ₹ 750 per ton fixed by the Assessing Officer for 2006-07 was incorrect. He directed the A .....

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stances of the case. According to him, Assessing Officer was having an expert opinion obtained by the Department which justified the quantity of poultry dropping fixed by the Assessing Officer. Further, as per the Ld. D.R., the CIT(Appeals) fell in error in giving directions to the Assessing Officer to exclude the birds grown through contract farms while working out the stock of poultry droppings available for sale. As per Ld. D.R., such exclusion would result in a lower number of birds than the .....

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of a parent bird? The commercial life (Not its full biological life) of a broiler parent bird is about 60 weeks. 2. What could be the average consumption of feed (in kgs) during the life time of a parent bird? During the above commercial life, a parent bird will consume around 55-60 Kgs of feed. 3. What could be the average poultry droppings of a parent bird during its life time? What could be the average poultry droppings of a parent bird with reference to its consumption (% of average consump .....

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4. What could be the moisture content (in %) per kg of poultry droppings? The moisture content varies between 80-85% for fresh droppings. However, as the droppings falls under the ground it will gradually loose the moisture level. Assessing Officer had accepted the expert opinion insofar as it related to feed consumption of bird at 55-60 KGs for 60-weeks. However, when it came to poultry dropping, he refused to consider the opinion of the said expert. The said expert had clearly mentioned that .....

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had estimated the droppings per year per bird at 14 KGs, which was higher than the estimation of 10 KGs per bird made by the expert. We are, therefore, of the opinion that the order of the CIT(Appeals) cannot be faulted on this count. 10. Coming to the question of estimation of reduction of bird dropping, for birds grown by contracting farms, the relevant observation of the CIT(Appeals) is reproduced hereunder:- 7.4 It is submitted before me that the appellant grows parent birds in his own farm .....

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ed for the purpose of arriving at bird droppings income. The assessing officer is directed to work out the bird droppings (manure) after excluding birds grown at contracting farms. Accordingly, the grounds raised in this regard are allowed for all the asst. years i.e. 2006-07 to 2012-13. Insofar as bird droppings were concerned, Assessing Officer himself had excluded bird droppings of poultry raised by contracting farms. Such reduction in bird droppings, as noted by the Ld. CIT(Appeals), was to .....

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o. 11. This leaves us to one more ground raised by the Revenue for assessment year 2010-11 which assails deletion of addition of ₹ 2,37,99,820/- made by the A.O. for unexplained investment, under Section 69B of the Act. 12. During the course of search, it was found that the assessee had acquired 63.18 acres of land from one M/s Valarmathi Farms Pvt. Ltd. The valuation shown in the registered deed was ₹ 5,30,40,000/-. A statement was recorded from Shri S.K. Shanmugam, Director of M/s .....

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In page 46 of the said notebook, the following information was recorded:- Road: 2.55 Kumar: 1.00 2.00 3.00 8.55 Document 3 8.58 Broker 20 8.78 3.00 5.78 It seems Managing Director of the assessee Shri Lakshmanan had accepted payment of such on-money. Assessing Officer required the assessee to explain the source of on-money payment of ₹ 3.366 Crores. In reply, it was stated by the assessee that a sum of ₹ 1,71,30,000/- were unexplained cash credits, ₹ 30,00,000/- was from unacc .....

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