TaxTMI 
TaxTMI 
2023 (9) TMI 833
X X X X Extracts X X X X
X X X X Extracts X X X X
....animal product, the payments related to purchased are covered under Rule 6DD of the Income-tax Rules, 1962, hence the disallowance of Rs. 61,39,71,805/- being the amount paid in cash for purchase of meat made by the Assessing Officer and sustained by CIT (Appeals) is arbitrary, untenable, unjust, bad in law, against rule of consistency and at any rate very excessive. 4) The above grounds of appeal are independent and without prejudice to one another." 3. When the case was called for hearing neither the assessee nor any authorized representative appears. However, an application seeking adjournment was received through email wherein, Shri Vijay Garg, General Manager (Finance) requested for adjournment by submitting that he is suffering from eye flue and the advocate is not interested in appearing before the bench and they are trying their best to engaged a new advocate. This appeal is pending since 2014 and the order-sheet reveals that the assessee sought adjournment on 13.09.2017, 24.01.2018, 20.04.2018, 05.07.2018, 26.11.2018, 02.05.2019, 25.07.2019, 16.10.2019, 14.11.2019, 16.01.2020, 04.03.2020, 10.12.2020, 17.02.2021, 19.04.2021, 21.06.2021, 01.09.2021 and thereafter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rary disallowances based on presumption and surmises is bad in law. It is also a contention of assessee that that meat, which is an animal product, the payments related to purchased are covered under Rule 6DD of the Income-tax Rules, 1962, hence the disallowance of Rs. 61,39,71,805/- being the amount paid in cash for purchase of meat made by the Assessing Officer and sustained by CIT (Appeals) is arbitrary, untenable, unjust, bad in law, against rule of consistency and at any rate very excessive. 6. On the strength of the above submissions and contentions the assessee prayed deletion of disallowance made by the AO and upheld by the ld CIT(A). 7. Now we turn to evaluate the stand of the AO and basis taken by the ld CIT(A) in sustaining the disallowances. The ld CIT DR supporting the orders of the authorities below submitted that after considering the entire facts the AO reached to a conclusion that there was no material difference in the situation prevailing in present AY 2010-11, from the earlier assessment year from 2004-05 to 2009-10 wherein identical disallowance was made in the case of assessee. The ld CIT DR further submitted that after considering the totality of the fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ases was also examined in the preceding years. While during the course of the assessment proceedings for the assessee had categorically submitted that the raw material i.e. carcass had been purchased through agents, as also the assessee took the plea that the purchases of raw materials i.e carcass was made directly from the growers/farmers/villagers. In the in the case of the assessee for AY 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10 the AO invoked the provisions of section 40A(3) and disallowed 20% of the cash purchases by holding that the cash purchases had been made through agents known to the assessee in big towns with adequate banking facilities. Therefore, the AO held that the case of the assessee did not fall under the exclusionary conditions of Rule 6DD(f). The issue of cash purchases was also examined during the assessment proceedings for A.Y. 2004-05, 2005-06, 2006-07, 2007-08 & 2008-09. For AY 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10, as already stated above, the assessee took the plea that the purchases had been made directly from the growers/farmers/villagers and so it was argued, by the assessee, that its case was covered by Rule 6DD(f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rer cheques, the payments are treated to have been made in cash only. These, purchase bill summary also does not contain the details of daily purchases rather shown the purchased for a week or so. No other details or purchase letter was furnished, though specifically asked for the same. 4.6 The aforesaid facts clearly show that the assessee has no documentary evidence to prove that purchases are being made from individual growers/villagers/farmers. Thus, the assessee's claim that the purchases are being made directly from the individual growers/villagers/farmers are false and unacceptable. 4.7 As far as assessee's claim vide point (b) above that it has made purchases through company's agent, to verify this claim query was raised, in the case under consideration assessee's reply shows that the so called agents are of individual growers/villagers/farmers and not of the assessee company. So Rule 6DD(f) is not applicable in the case of the assessee company. 4.8 It is also pertinent to point out that the assessment order for A.Y. 2004- 05 states that Mr. Mohd. Ali Shyaukat, Sr. Manager Accounts in his statement recorded on oath on 26.12.2006 ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h purchases. The details show that the appellant had made payment in respect of purchases of Rs. 25,23,81,862 by cheque. Further, an amount of Rs. 23,39,05,551 was paid to 54 individuals in respect of raw material supplied. Out of this, all individual payments were above Rs. 20,000 and made in cash except a payment to Mr. Sultan, R/o Sultanpur of Rs. 17,000. Further, in respect of raw material supplied, it is observed that an amount of Rs. 36,64,10,738 was paid to 25 persons on different dates and on each date, payment made in cash exceeded Rs. 20,000. The payment made to NJV for sheep of Rs. 24,33,00,896 was also made in cash. Other than this, to the 14 farmer groups, payment of Rs. 3,39,55,869 was also made in cash, for purchase of veal (young cattle). The appellant for this purpose, paid deboning and processing charges of Rs. 97,96,049 and processing charges rendering of Rs. 13,65,600 to M/s HAIL. 7.2.2 As the appellant failed to furnish details including PAN, complete address regarding such 'lead persons' during the course of hearing on 06.12.2013, the Ld. AR of the appellant was asked to furnish written confirmation of 'lead persons' through whom purch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iduals. For example, in the month of March, 2010, from the Indian Bank A/c of the appellant, cash cheques were paid to one Mr. Annu Aslam on different dates. In the month of February 2010, cash cheques were primarily on several dates to Raees Aslam, Hakimuddin, Nazar Aslam, while in the month of January 2010, payments were primarily made in cash to Bobby Zafar, Ezaz Ershad, Hakeem Aslam, Javed Aslam, Mudassr Aslam, Sultan Ahmed and Hakeem Aslam. In the month of December 2009, cash payment was made to Imran, Manoj John, Shahnawaz, Nadim and Joseph. It is apparent that the cash payments made were to certain specific individuals only on different dates, whose names keep repeating on several occasions. Therefore, the plea of the appellant that "in the business of meat procurement, suppliers keep changing and the appellant is not able to keep track of them" is not supported by the facts. 7.4 In order to verify the identity and genuineness of such transactions, I had directed the Ld. DCIT Circle 12(1), New Delhi to conduct enquiries regarding the identity of such persons and the genuineness of transactions with them. The Ld. AO issued notice under Section 133(6) to the following....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee is false and unacceptable. The AO proceeded to note that the assessee reply shows that the so called agents are of individual growers/villages/ farmers and not of the assessee company so Rule 6DD(f) was found to be non-applicable in the case of the assessee. 13. The AO further noted that the assessment AY 2004-05 stated that Mr. Mohd Ali Shyaukat, Sr. Manager Accounts in his statement recorded on oath on 26.12.2006 had also admitted that the identity of the so called suppliers cannot be verified from the books of accounts maintained by him and the assessee has made purchase, payments have been in cash is violation of section 40A(3) of the Act are clarly applicable in the case of the assessee and the benefit of exception envisages under Rule 6DD(f) of the Rules is not applicable to the case of the assessee. 14. From first appellate order, we note that the ld CIT(A) partially deleted the addition by observing that some payments were made through account payee cheques and the part addition of Rs. 25,23,81,862/- was deleted. The ld CIT(A) further observed that the amount of Rs. 36,64,10,738/- was paid to 25 persons on different dates and on each date, payment was made in ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h purchase of the assessee in violation of section 40A(3) of the Act then also the assessee is consistently making purchase in violation of said provision in cash and hence the ld CIT(A) was right in concluding that the benefit of section 6DD(f) is not available to the assessee as per facts and circumstances of the case. 16. We are in agreement to the conclusion drawn by the ld CIT(A) that the assessee is not eligible for benefit of exceptions enumerated under Rule 6DD(f) of the Rules as appellant failed to prove identity of suppliers and genuineness of the purchase made in cash. Therefore, he was right in relying on the proposition rendered by the Hon'ble Kerala High Court in case of CV George and Sons Vs. ACIT (supra). On perusal of the ITAT Bangalore Bench in case of CIT Vs. Ranukeswara Rice Mills (supra) we are in agreement with the conclusion drawn by the ld CIT(A) that in that case the payment was made by appellant for purchase of agricultural produce through an agent one M/s. K. Parameswarappa & co. called as (KP) and hence that case was covered under the exceptions granted under 6DD(f) of the Rules. 17. In the present case the assessee could not establish that the pur....