TaxTMI 
TaxTMI 
2004 (1) TMI 306
X X X X Extracts X X X X
X X X X Extracts X X X X
....lls) may be taken as submissions for all the four appeals. Similarly the submission 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, Chand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wn aforesaid sale of paddy as it is. It was found by the Revenue, on detailed enquiries, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erefrom were sold in the open market, either outside the 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Punjab Rice Mills. Whatever may have been the case it is 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....scellaneous petition of M/s Ganesh 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Vandna is assessed at Ropar at 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for purchasing the pay orders to 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 padd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of the Tribunal. The learned Departmental 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 and by-products....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 submitted that o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 the Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 decision of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 transportation of paddy from Kurali to Amritsar: PUR - 1050, 1499, 4851 & 6472 PSP - 7995, PJP - 7213, CHN- 5050, 5926 (iii) Photostat copies of letter received from M/s Rama Krishna Rice & General Mills, regarding returning of empty bags on 20th Oct., 1987, 4th Nov., 1987, 7th Nov., 1987, 5th Jan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 year under consideration and the owners were plying their trucks themselves and no record was available with them. However, the assessee did not produce the truck drivers and their log books and hence it has failed to discharge its onus to prove the genuineness of the paddy sales. From the ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 that it had purchased total paddy weighing 54,721 qtls. out of this sold 15,500 qtls. the remaining paddy comes to 39,245 qtls. (wrongly intimated actual figure comes to 39221) and the rice produce out of the above paddy comes to 25,902 qtls., therefore, there is a yield of 66 per cent of rice, 5 per cent of rice bran an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ran 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 assessee during the year was 1244.89 qtl. and the total paddy purchased was milled By the assessee in its own sheller. The total paddy purchased by assessee 1,244.89 qtl. Less: 5 per cent on account of dirt moisture, etc…. 62.25 qtl. 1,182.64 qtl. Yield of rice Basmati 70 per cent of total paddy milled 827.84 qtls. It is valued at 700 per qtl. as the assessee has neither shown its weight nor value 5,79,488. Yi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 28th Jan., 1988, again Rs. 3,00,000 in cash on 3rd Feb., 1988, Rs. 4,00,000 in cash on 15th Feb., 1988, Rs. 3,50,000 in cash on 24th Feb., 1988 and Rs. 1,87,550 in cash on 26th Feb., 1988 from Amritsar—a disturbed town—to Kurali to convert the same into pay orders. During the course of proceedings before me I called upon the ITO to visit Punjab National Bank, Kurali and find out who signed for the pay orders. The learned ITO contacted Shri V.P. Juneja, Manager, Punjab National Bank, on 12th Sept., 1990 but he was unable to present the original relevant vouchers.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven 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 Rs. 33,87,550 did appear by way of pay orders drawn of Punjab National Bank, Kurali, in the books of account of the appellant-firm… The onus to prove the genuineness of these deposits did lie upon the appellant. The appellant filed an explanation that the amounts aggregating to Rs. 33,87,550 represented sale proceeds of paddy but this explanation was found, on enquiries, patently false. "The burden is on the assessee, to establish the source and also to prove that it was not income. From when the receipt of money is admitted by the assessee, as it was, when a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 this year was 273; referring to paper book pp. 49 and 50, it was contended that regular books of accounts have been maintained by the assessee which the assessee claims to be with the Department and specific mention is made to paper book p. 11, P&L a/c, trading account, opening stock and it is contended that he purchased parmal paddy and he is maintaining quantitative stock also for this purpose pp. 6 and 7 of the paper book No. 2 have been referred; according to the assessee, point at issue is what p. 68 of the assessee depicts as to whether sale to Rama Kr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....havnagar 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 Departmental Representative forcefully contended relying upon paras 2 and 3 of the assessment order that yield shown is rejected and relying upon pp. 199 to 209 of Revenue's paper book, it is contended that it was on 6th Jan., 1988 that first draft assessment order was served on the assessee. Revenue's paper book, pp. 1 to 9 have been pressed into service to emphasise that although the first sales were on 2nd Nov., 1987 and 13th Nov., 1987 (as relied by the assessee) the dates of the drafts and the payments are much later. The learned senior Departmental Repr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sue. 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 discharged the onus by producing copies of the invoices' sale bills, gate passes and by proving that payment has been received from the purchaser. He is also banking his case on ST-XXII sales-tax forms. That way the assessee claims to have discharged the initial onus cast upon the assessee. At assessee's behest, summons were also issued to various parties including the partner of the purchaser, Motor Union, etc., since the assessee wanted assistance from the Revenue to prove its case, that was done. This initial onus cannot be said to have been discharged by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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 to be so when we consider this in the context of normal human behaviour and the prevailing political climate in the State of Punjab. Be that as it may, on this issue we do uphold the impugned orders of the learned lower authorities, since factual inference of theirs cannot be departed from. This addition as such stands sustained. 17. As a regard the other addition, we will set aside the impugned order and restore the same to the file of the learned first appellate authority for fresh decision with the directions that he will meet the case of the Revenue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 this matter back 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 second, on account of sale of rice as contended by the Department. 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 profits, if any, with reference to the milling of paddy should be added in the assessee's hands. However, wish t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 out of total sale price determined at serial No. 2 the sale price to the extent of Rs. 33,87,550 already stood credited in books. Assessee's alternate plea as per para 11 of original order dt. 28th June, 1991 and para 3 of order I in M.A. dt. 22nd June, 1993. Having considered the above facts and relevant observations we are to observe that: (i) The AO after having computed the quantum of addition likely to be made on account of sale price of rice and by-products obtained by milling the paddy (claimed by the assessee to have been sold but, in fact was never sold) at Rs. 42,11,331 himself a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 form the sale price of rice, etc. than also the assessees having failed to establish that the cash was debited to books of account, and also having failed to establish that there was any sale of rice on such date, the only conclusion is that the assessees were having undisclosed cash with them (outside the books) and had used the same for purchase of pay orders, i.e., invest in pay orders was from such undisclosed funds available with the assessee outside the books of account. Therefore, the same was assessee's undisclosed income under s. 68/69A of the Act. (vi) For the sake of arguments if it is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tly 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 of amount to the extent added under s. 68/69A of the Act) but still the Tribunal had set aside the issue relating to this aspect back to the file of the first appellate authority for fresh decision with the directions to meet the case of Revenue made at the assessment stage. 13.5 Having analysed the original order of the Tribunal as above, we, now revert to the issue raised by the assessee by way of so-called alternate plea recorded in para 11 of the original order of the Tribunal dt. 20th Aug., 1991 and by way of miscellaneous application as recorded in the decision of the Hon'ble Tribunal dt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 whatever profit had accrued to the assessee on account of sale of paddy had already been recorded in its books of account and at best the Department could assess profits with reference to milling of paddy only, confirms beyond doubt that assessee was not referring to the addition having been made under ss. 68/69A of the Act. (v) From the contentions of the assessee what we have been able to understand and otherwise also is clear, is that by way of alternate plea the assessee had challenged the trading addition of Rs. 42,11,331 which the AO had made by considering the total sale price and by-produc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 made under s. 68/69A of the Act was under the deeming provisions under which an unexplained cash credit or unexplained investment/assets is liable to be taxed as assessee's income and has nothing to do either with the assessee's claim of sale of paddy as it is, or sale of rice and by-products. This type of addition is quiet independent of business income or any other addition likely to be made in trading account or in business income and had been confirmed by the Tribunal. Coming to the directions given in case of M/s Ganesh Rice Mills, as per para 5 of the Tribunal's order dt. 22nd June, 1993, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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: (i) The claim of M/s Ganesh Rice Mills that it had sold paddy, as it is, worth Rs. 33,87,550 to M/s Rama Krishna Rice & General Mills, of Gumtala, Amritsar during the period 2nd Nov., 1987 to 21st Jan., 1998 was found to be false, and no paddy was found to have been sold to this party or to any party. (ii) That the amount used for purchase of pay orders worth Rs. 33,87,550 during the period 2nd Jan., 1988 to 26th Feb., 1998 from Punjab National Bank was not contributed by M/s Rama Krishna Rice & General Mills or anybody else. (iii) That the assessee having not claimed the amount invol....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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) Addition of Rs. 59,64,694 or Rs. 60,00,000, which the AO was going to make on account of fictitious purchases of rice, bardana and phuck, etc., subject to set off against the addition under s. 68/69A, as was in case of M/s Ganesh Rice Mills. (iii) Fresh loan of Rs. 27,000 and fresh credit of Rs. 41,000 in the account of Mrs. Rakesh Bala Garg as well as disallowance liable to be made out of unproved expenses. Subject to set off against the addition under s. 68/69A, as was in case of M/s Ganesh Rice Mills. (2) In case of M/s Punjab Rice Mills: The total income of Rs. 44,00,000, estimated in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns 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 Act stood confirmed by the Tribunal. (i) That the issue relating to addition of Rs. 59,64,694 in case of M/s Bhasin Rice & General Mills, relating to addition of Rs. 43,77,245 in case of M/s Punjab Rice Mills, relating to Rs. 19,81,565 (Rs. 18,66,940 plus Rs. 1,14,625) in case of M/s Mahalaxmi Rice Factory and relating to addition of Rs. 14,45,076 in case of M/s Bharat Rice Mills, which were made on account of sale price of rice and low yield, etc. was set aside) was set aside (ii) That the Tribunal had set aside the aforesaid issue with the same directions as were given in case of M/s G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 have been sold as it is, but in fact not sold), the CIT stepped further and went on to hold (in case of M/s Bhasin Rice Mills…. at the end of para 3 of his order) that "total income is arrived at was Rs. 3,03,088 and after adding other income like rent and insurance the total income comes to Rs. 3,07,478 which is taken as the total income of the appellant". It is this extra jurisdictional finding of the CIT(A) which has been challenged by the Revenue before us. 19. After careful consideration of the totality of facts and circumstances of the cases and our observations findings and conclu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....um 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(A) comes to more than Rs. 15,00,000 then the excess will be ignored and the total income will be restricted to Rs. 15,00,000. 20. In view of above discussion the orders of the CIT(A) in case of M/s Bhasin Rice & General Mills, M/s Punjab Rice Mills and M/s Mahalaxmi Rice Factory are modified to the extent that the findings with respect to and relating to the determination of total income in case of M/s Bhasin Rice & General Mills at Rs. 3,07,478, in case of M/s Punjab Rice Mills at Rs. 3,03,555, in case of M/s Mahalaxmi Rice Factory at Rs. 33,33,320 and in case of M/s Bharat Rice Mill....
X X X X Extracts X X X X
X X X X Extracts X X X X
....servations, 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 justification of income arrived at as a result of application of deeming provisions and it is so, because additions made under these deeming provisions of the Act have nothing to do with the margin of profit or business profit or turnover. There may be case where, the turnover may even be nil but, due to the addition under deeming provisions the total income may be determined at crores. Anyhow, we are unable to accept the reasoning of the CIT(A) given in case of the M/s Ganesh Rice & General Mills for not taking the confirmed addition of Rs. 33,87,550, having made under s. 68/69A of the Act, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 remand report was with respect to the total income or with respect to addition under s. 68/69A of Act, (already confirmed by the Tribunal). In view of these facts and circumstances, the plea is rejected. 27. Coming to the decision of Hon'ble Tribunal Chandigarh Bench 'B' (Third Member) in case of Bansal Rice Mills, Amloh & Anr. vs. ITO & Anr. dt. 30th March, 2001 in ITA No. 1657/Chd/1990 & ITA No. 1727/Chd/1990, on which the counsel for the respondents had heavily relied, we, first of all would like to state that so far as the law relating to the necessity for following the precede....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd 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 remanded back to him. Joginder Pall, a.m.: January, 2003 I have gone through the proposed order of my learned brother Shri I.S. Verma, JM but with great respect to him, I have not been able to persuade myself to agree with the findings and conclusions drawn by him. I, therefore, proceed to write my dissenting order as follows: 2. My learned brother has already discussed in detail the facts in the case of M/s Bhasin Rice & General Mills, Kurali by extensively quoting from the assessment order, CIT(A)'s order and the orders of the Tribunal, Chandigarh Bench in this case and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot 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 purpose, the CIT(A) relied on the order of the Tribunal, Chandigarh Bench dt. 20th Aug., 1991 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the asst. yr. 1988-89. However, it may be mentioned that this order was subsequently recalled and vide order dt. 22nd June, 1993. Tribunal, Chandigarh Bench set aside the order of the CIT(A) and restored the issue to the CIT(A) for fresh adjudication. The detailed facts are discussed in subsequent paragraphs. (ii) In fact, the assessee had actually milled the paddy and obtained by-products such as rice, rice bran, phuk and paddy husk....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount 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 paddy. Here also, the CIT(A) relied on the order of Tribunal, Chandigarh Bench dt. 20th Aug., 1991 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the asst. yr. 1988-89. (ii) Extra benefit of Rs. 2 lakhs obtained by way of evasion of purchase tax, levy rice and other Govt. levies by showing sale of paddy which in fact was milled. (iii) Extra profit earned of Rs. 2.5 lakhs on milling of paddy, which was shown as sale of paddy. However, the CIT(A) did not accept further addition of Rs. 11 lacs on account of suppression of yield, unverifiable nature of expenses and investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 milled by the assessee. The yield shown in the books was less than the yield fixed by the Punjab Agricultural University. Therefore, by taking the higher rate of yield, the AO worked out the suppressed income on account of low yield at Rs. 18,66,940. This, according to the AO, was liable to be added. (v) Besides, the assessee had claimed huge expenses in the trading and P&L a/c. In the absence of books of accounts the correctness thereof could not be verified. Thus, taking into account all the above mentioned facts, the AO determined the total income at Rs. 21 lakhs. 10. On appeal, the CIT(A) reduc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved 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, the CIT(A) himself examined the computation of income as submitted by the AO and found certain discrepancies therein and the CIT(A) himself computed the total income in all the cases as under: I. M/s Bhasin Rice & General Mills, Kurali, ITA No. 1202/Chd/1996: 13. The CIT(A) considered the entire quantity of paddy purchased as milled and by taking the yield of rice, rice bran, phuk and husk at 66 per cent, 5 per cent, 3 per cent and 21 per cent respectively, as taken in the case of M/s Ganesh Rice Mills, worked out the total sale proceeds of these items at Rs. 75,33,791. While doing so, the CIT(A)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 benefit by evading purchase tax, levy rice etc. because the DFSC had reported that there was no short supply of levy rice supplied by the assessee. IV. M/s Mahalaxmi Rice Factory, Chhajumajra, ITA No. 1206/Chd/1996: 16. In this case also, the CIT(A) considered the total paddy purchased as milled and by following the same method as detailed in the earlier three cases and worked out the sale proceeds of rice and by-products at Rs. 15,11,457. After deducting sale proceeds of paddy amounting to Rs. 12,36,885, the CIT(A) determined the total taxable income of the assessee at Rs. 3,33,320. The CIT(A) also obse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 that assessee had in fact milled the paddy and obtained rice and other by-products. These had been sold in the open market. Thus, the AO rejected the claim of the assessee for sale of paddy and held that the assessee had in fact milled the paddy and rice and other by-products obtained were sold in the open market. The AO, therefore, held that credits on account of sale proceeds were liable to be added under s. 68/69A. However, the AO considered the entire quantity of paddy purchased as milled and by applying percentages of yield at 70 per cent, 5 per cent, 3 per cent and 22 per cent of rice, rice bran, phak and pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 deal with the alternative plea taken by the assessee. Therefore, the assessee moved a miscellaneous petition, which was disposed of by the Tribunal vide order dt. 20th Nov., 1992. The first order of the Tribunal was recalled. After hearing the parties, the Tribunal allowed the plea raised by the assessee by recording the following finding in para 5 of its order dt. 22nd June, 1993: "5. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 grounds of appeal taken by the Revenue, addition of Rs. 33,87,550 made under s. 68/69A was not even contested by the Revenue. It is clear from the following grounds of appeal taken by the Revenue in ITA No. 921/Chandi/1994 for the asst. yr. 1988-89. "1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in calculating the yield of husk at 21 per cent of 95 per cent of paddy milled (Permal and Basmati) against his decision in para 6 to adopt the yield of husk at 22 per cent of 95 per cent of paddy milled. 2. The learned CIT(A) has further erred in applying the rate of Rs. 15 per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 adjusting the addition made under ss. 68/69A. But, in none of the cases, the AO made two additions. Only difference between the rice and by-products obtained from milling of paddy and as shown in the books was added. (d) Even in the case of M/s Ganesh Rice Mills, which has been relied upon by the CIT(A), no addition under ss. 68/69A has ultimately been made by relying on the Tribunal's order dt. 22nd June, 1993 and the Revenue has accepted such order of the CIT(A). (e) Even in the present appeals, the Revenue has taken identical grounds to the effect that the CIT(A) was not justified in computing the taxable pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns 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 accepted and order was recalled. The submissions of the assessee before the Tribunal were that whatever profit had accrued to the assessee on account of sale of paddy had already been recorded in the books of accounts and what was required to be assessed was profit from milling of paddy only. The Tribunal accepted this plea of the assessee. The Tribunal had recorded a finding that only the resultant profit on account of milling should be added. The CIT(A) was accordingly directed that while redeciding the appeal he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elf 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. 8,23,781. If the stand of the Revenue was that credits in the form of sale proceeds of paddy had nothing to do either with the sale of paddy of rice and other by-products the AO ought to have made two additions i.e., an amount of Rs. 33,87,550 plus sale proceeds of rice and by-products obtained from milling of paddy, which were not at all brought in the books of accounts. The addition would have been made at more than Rs. 68 lakhs or so. This was not the case. Therefore, it is clear that the AO had added only the net difference after adjusting the addition made under s. 68/69A. Even in the present cases, the AO had....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 under s. 68/69A was made while redeciding the appeal. The Revenue filed an appeal against the order of the CIT(A). From the grounds of appeal, as reproduced in para 24 of this order, it is apparent that the Revenue had not even raised a ground relating to deletion of addition of Rs. 33,87,550 under s. 68/69A. This would show that the Revenue had interpreted the second order of the Tribunal in a manner, which would not justify any addition under s. 68/69A. In fact, even in the present cases, the Revenue has not specifically contested the addition under s. 68/69A. There is no such specific ground in the present a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 milling of 15550 qtls. of paddy. The expenses allowed therefore worked out to Rs. 4.82 per qtl. In all these cases, the learned CIT(A) has allowed extra expenses @ Rs. 4 per 65 kg. bag of paddy milled, which works out to Rs. 6.15 per qtl. Relying on our aforesaid order in the case of M/s Ganesh Rice Mills, I set aside the order of the CIT(A) for this limited purpose and restore the issue to the file of the AO for re-computing the total income by taking extra expenses on milling @ Rs. 4.82 per qtl. As regards the other points referred to by the AO in the respective orders, these have been duly dealt with by the CIT(A)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O 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 as these are found in conformity with the directions of the Tribunal given in the consolidated order dt. 28th March, 1996 and in the second order dt. 22nd June, 1993 in the case of M/s Ganesh Rice Mills. 30. In the light of detailed discussions in the preceding paragraphs, the orders of the CIT(A) are confirmed on all the issues except in regard to the issue of allowing additional expenses incurred on milling of paddy in all the cases and further re-computation of income in regard to milling of paddy weighing 655 qtls. in the case of M/s Mahalaxmi Rice Factory in accordance with the direction given in para ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 were produced), these assessees undisputedly showed the sale of paddy to the parties which the AO held, was bogus and fictitious. Credits shown on account of sale of paddy were held to be assessees' own money from "undisclosed sources". The AO further held that the assessees had suppressed yield of rice and other by-products like rice bran, phuk etc. and therefore, some addition was to be made on this count. He further found on enquiry from the office of the DFSC that the assessees did not show correct quantity of paddy purchased and milled. So this was another item of suppressed income to be considered whil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. 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 not accepted such a set aside (sic) 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 an 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....@ 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 1,040.168 Phuk sold 1,040.16 Sale value of phuk @ Rs. 125 per qtl. 1,30,020.00 E. Husk account Yield @ 21 per cent of paddy milled 7,281.120 Less: consumed in dryer @ 25 per cent 1,820.200 Husk sold 5,460.84 Sale value of husk @ 15 per qtl. 81,912.60 Total sales 7,53,3791.00 Purchase price of paddy consumed at Rs. 180.00 per qtl. on the basis of ITO's order 64,48,960.00 Profit from milling of paddy 12,92,830.00 Less: Expenses debited to trading account as per books 2,81,627.00 10,11,203.00 Less: Expenses debited to P&L a/c as per books 2,81,797.00 7,29,406.00 Less: Additional expenses @ Rs. 4 per bag of 65 kgs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as 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 adjustments in respect of expenses allowed and referred to in para 29 of his proposed order. In the case of M/s Mahalaxmi Rice Factory, learned AM held that the CIT(A) in the impugned order did not take into account the profit from milling of 655 qtls. of paddy which was not disclosed by the assessee as per information received from the DFSC. The said profit was directed to be computed and added to the total income. Subject to the above changes, the learned AM accepted the impugned orders of the CIT(A) as properly and correctly made. The learned AM specifically held that no additions under s. 68/69A of the Act could be made in the four cases now before me. 13. I have heard Smt. Saroj Deswal, the learned Departmental Representative for the Revenue and Shri Sudhir Sehgal for the assessee. I have given careful thought to the rival submissions of the parties. I have also examined the mate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 order has held that addition on sale of paddy reflected in the books of accounts stood confirmed by the Tribunal and, therefore, the learned CIT(A) had no jurisdiction to reconsider above addition. In order to prove the above point, learned JM had made detailed reference to case of M/s Ganesh Rice Mills. He has started with the assessment order and finished with the orders of Tribunal in original appeal and on misc. application. Reliance has been placed on extensive quotations from above referred to orders/decision. I have carefully considered the above references. In my opinion, the directions of the Tribunal dt. 28th March, 1996 r/w directions dt. 22nd June, 1993 are quite clear and only extra profit from milling of paddy stated to be sold as such, was to be determined. I would elaborate on the above in the following paras: 16.1 As already stated, all the four cases turn on iden....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 AO found that the assessee had shown purchases of paddy, rice, bardana and phuck etc., at Rs. 1,32,54,694. Out of the total purchases, the purchase of paddy was estimated at Rs. 72,90,000 (46.58 qtl. reported by DFSC @ Rs. 180 per qtl. approximately). The balance purchases of Rs. 59,64,694 (Rs. 1,32,50,694 minus Rs. 72,90,000) of rice and other by-products was held to be "abnormal" in the case of a rice sheller. The purchases were held to be fictitious and were held to have been made to cover up the by-products extracted out of paddy shown as sold but actually shelled. The calculation was stated to be the yard stick to arrive at the concealed income in this case. 21. The AO referred to unsecured loans of Rs. 27,000 and Rs. 41,000 in the name of Mrs. Rakesh Bala Garg and Ms. Vandana Bhasin. The genuineness of above loans was not verifiable in the absence of books of account. 22. In the ultimate para, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 under s. 68/69A of IT Act, 1961 Act was made in the assessment order. There are contradictions in the assessment order and the same cannot be said to have been passed in accordance with law. It was required to be and was rightly set aside by the Tribunal. Therefore, even if for the sake of agreement, it is accepted that addition under s. 68/69A was made by the AO, no such addition was sustained by the Tribunal. The entire assessment was set aside for de novo assessment in the light of directions of the Tribunal dt. 22nd June, 1993. 23.1 It is true that the first and basic order was passed in the case of M/s Ganesh Rice Mill and that order dt. 22nd June, 1993 was to be followed and applied in the four cases in hand. It is further true that addition of credits on account of sale of paddy was held to be bogus and was confirmed by Tribunal in original order and, therefore, necessity to move a Misc. Application arose in the abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined 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 remitted to the Revenue authorities? Further, in uncertain terms the Tribunal directed that addition of Rs. 33,87,550 should not be made twice—one of additions was accepted to be shown by the assessee in the sale of the paddy. The addition of the same amount was specifically prohibited to be made. The Tribunal used such strong words as "ensure" to convey its mind and intention. It would have been unfortunate if second addition inspite of clear prohibition contained in the directions of the Tribunal was made. Ironically, the stand of the Revenue is again the same. It is argued that the learned CIT(A) should have added Rs. 33,87,550 or the like amount in fresh assessment which the Tribunal specifically prohibited to be added. There is, therefore, no scope to hold that additions of Rs. 33,87,550 or of similar amounts were to be made or should have been made by the learned CIT(A). The directions of the Tribunal are clear and, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 was to be computed in the light of directions of the Tribunal and in accordance with law. It has rightly been computed of course, subject to minor changes made by the learned AM in his proposed order. I agree with the changes suggested by the learned AM as these are consistent and in line with assessment made in other cases. (ii) The CIT(A), in the impugned order, after making addition on account of cash credits, has deducted an identical amount on account of sale of paddy shown in the P&L a/c. Thus, the effect of addition on account of alleged cash credits has been neutralised. Learned CIT(A) has correctly read and given effect to the directions of the Tribunal. 25. I, accordingly, answer question Nos. 1 & 2 proposed under s. 255(4) in the affirmative. As far as question No. 3 is concerned, I hold that subject to small changes proposed by the learned AM, learned CIT(A) was justified in assessing the total income at ....