TaxTMI 
TaxTMI 
2016 (1) TMI 488
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.... 3. It is, therefore, prayed that the order of the ld. CIT(A) XIV, Ahmedabad may be set aside and that of the order of the AO be restored. 3. At the outset, Revenue has requested the Bench to permit to withdraw the appeal filed by them. The ld. AR has no objection. Therefore, the request of the Revenue is accepted and the appeal filed by the Revenue is dismissed as withdrawn. 4. C.O. No.191/Ahd/2010 Asst. Year:2004-05 (by assessee) 5. Now the question before us is that if the main appeal is withdrawn then what will be the fate of the C.O. filed by the assessee?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 following grounds in this Cross Objection: 1.1 The ld. CIT(A) has erred in law and or on facts in confirming the amount of Rs. 20,09,696/- as income from other sources as against income from sale of milk claimed by the ap....
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....om sale of buffaloes treated as income from other sources - at Rs. 57,38,880/- 3. Disallowance of loss incurred from sale of live-stock at Rs. 46,40,880/- 4. Disallowance of expenses at Rs. 6,73,312/- Total - Rs. 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 Rs. 46,40,880/- and confirmed the remaining disallowances/additions made by the Assessing Officer. 7. Being aggrieved the assessee is in further appeal before the Tribunal. 8. First we take ground No.1.1 & 1.2 raised against confirmation by CIT(A) of the disallowance/addition made by the Assessing Officer by treating the sale of milk at Rs. 20,09,696/- as income from other sources. The assessee company has shown milk sale of Rs. 20,09,696/- in its audited profit and loss account. The Assessing 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 act....
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.... taken by the appellant against the same is hereby dismissed." 10. During the course of hearing before us, ld. AR submitted that assessee company is doing business activities regularly since 1994 and is regularly showing the sale of milk and also drew our attention to the fact that assessee company was having 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 Rs. 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 further submitted that - (a) The company has shown buffaloes as live stock in the audited balance sheets of last so many years and also income-tax assessment is completed hence there is no doubt about the assets of live stock with the company . Secondly Dena Bank has taken attachment on building and plant & machinery of the company and taken in its possession during the year then ....
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....e 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 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 special dairy industry plant and thereafter after meeting the safety standard and other regular activities attached to the dairy industry including storage of milk in chilling plant 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 c....
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....880/- claimed as loss has been rejected by him. In the totality of facts as discussed above, when there is no effective sales of such livestock there cannot be a loss of Rs. 46,48,800/- therefore, the same has rightly been disallowed by the Assessing Officer. In view of this, disallowance of Rs. 46,80,800/- is confirmed. The receipt of Rs. 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 Rs. 57,38,880/- is hereby confirmed. 6.11 It is seen that the Assessing Officer has made a separate addition of Rs. 57,38,880/-. Since the addition in respect of livestock of Rs. 57,38,880/- (Rs.46,80,800/- + Rs. 10,98,000/- has already been confirmed in the preceding para there does not remain a ground to add further Rs. 57,38,880/-. In view of this the addition of Rs. 57,38,880/- is hereby deleted." As the Revenue has withdrawn its appeal, the issue which is before us is to be examined, the genuineness of loss of Rs. 46,40,880/- which will simultaneously also examine the receipt from sale of buffaloes at Rs. 10,98,000/-. ....
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....took place during the year. Even in the audited financial statement which are being heavily relied upon by the assessee company, we have come across a specific note given by the auditors in schedule-XII of the audited balance sheet at sl.no.4 appearing at page 39 of the Paper Book reads as under :- "As explained to us during the year under review the company has disposed of 366 buffaloes at Rs. 10,98,000/- resulting into loss of Rs. 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 Rs. 10,98,000/- at any time before the lower authorities and before us. 18. From the above discussions it seems that in totality there is no dairy activity carried out by the assessee nor it seems that it possessed livestock of buffaloes in physical form and the opening balance of buffaloes in assets has been used to claim business loss as neither the assesse....
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....al 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 of assessee has become infractuous as the assessee has got relief at CIT(A)'s level. This ground is dismissed as infractuous. 22. Ground Nos.5.1. & 5.2 - against the finding of CIT(A) who has not accepted that appellant company was carrying on any business activities or sold buffaloes and failed to appreciate that AO did not allow sufficient opportunity or issued any show cause before making high pitch assessment. 23. We have already held above that assessee was unable to prove that it was 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....