HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
INCOME TAX TRIBUNAL APPEAL NO.632 OF 2006
JUDGMENT: (per Hon'ble Sri Justice Laxmi Narayana Alishetty)
The present appeal has been filed under section 260-A of
Income Tax Act, 1961 (for short the "Act") aggrieved by the
order passed by Income Tax Appellate Tribunal, Bench-B,
Hyderabad (for short "Tribunal") in ITA No.987/Hyd/2003,
dated 23.06.2006 for the Assessment Year 2000-2001.
2. We have heard the learned counsel Sri Dundu
Manmohan learned counsel for the appellant and
Ms. K.Mamatha, learned Senior Standing Counsel for the
respondent.
3. The brief facts leading to filing of present appeal are as under:
4. The appellant is in the business of purchase of buffaloes by procuring them from various places in the state of Andhra Pradesh through agents and selling the same to M/s. Alkabeer Exports Ltd., which is an exporter of meat to various foreign countries. The livestock/cattle are transported in the regular PSK,J & LNA,J ITTA No.632 of 2006 2 course in motor lorries on day-to-day basis and each truck can contain only 8-9 buffaloes. The buffaloes when transported in motor lorries/trucks are made to stand continuously for more than 10 hours at a stretch and as most of these buffaloes are almost at the last stage of their life their capacity to withstand such long journeys while standing is minimal which result in fatality at the rate of 3% to 7%.
5. In this process, the appellant had purchased a total buffaloes of 15,081. The appellant filed return of income for the Assessment Year 2000-01 declaring a taxable income of Rs.1,25,840/- and also has shown an agricultural income of Rs. 30,000/-. The Assessing Officer (for short "AO") had taken up the return of income for scrutiny and had raised a doubt with regard to total number of buffaloes purchased which are 15,081 and sold to M/s. Alkabeer Exports Ltd which are numbered 13,949. Therefore, the AO addressed a letter dated 18.02.2003 to appellant to explain the reasons with regard to the discrepancy in total number of buffaloes sold to M/s. Alkabeer Export Ltd. The appellant furnished his explanation vide letter dated 06.03.2003 that on an average of 5% animals will die in transit and said fatality shall be considered while computing actual number of buffaloes which is as under:-
PSK,J & LNA,J ITTA No.632 of 2006 3 Total purchase of buffaloes 15,081 Less:5% deceased 754 Balance 14,327
6. As per the expenditure, the total purchased value of M/s. Alkabeer Exports Ltd shown as Rs. 2,85,97,283/-. Along with the said reply, the appellant also enclosed a certificate issued by M/s. Alkabeer International Ltd., which shows that the fatality of the rate of buffaloes would be at an average between 3% to 7%. The AO on consideration of clarifications/ explanations provided by the assessee, came to conclusion that the assessee has not made any claim of such loss due to the death of the animals in the profit and loss account enclosed to the return of income or in the Audit Report enclosed to the return. Therefore, the claim of deceased animals at 5% numbering 754 is only an afterthought to explain the discrepancies and to match the figures with the information received from M/s.Alkabeer Exports Ltd. The AO did not accept the claim of appellant of death of 754 buffaloes and made addition of Rs.11,93,582/- which is estimated cost of 754 buffaloes @ Rs. 1583 (per buffalo) and finally determined the total income at Rs. 13,19,422/- vide order dated 31.03.2003.
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7. Aggrieved by the order, dated 31.03.2003 passed by AO, the appellant preferred appeal before the Commissioner of Income Tax (Appeal)-2, Visakhapatnam. The Commissioner of Income Tax (Appeals) (for short, 'the Appellate Commissioner') vide order dated 13.05.2003 had substantially allowed the claim of the appellant while holding that the loss claimed due to the death of buffaloes during the transit cannot be denied in full and held loss at Rs. 80,000/- and deleted the balance amount of Rs. 11,13,582/-.
8. Aggrieved by the order dated 13.05.2003, the AO preferred appeal before the Tribunal, Hyderabad in I.T.A.No.987/ Hyd/2003. The Appellate Tribunal, vide order dated 23.06.2006 set-aside the order of the Appellate Commissioner and restored the order of AO.
9. Aggrieved by the order of Tribunal, dated 23.06.2006, the present appeal is filed by the appellant.
10. Learned counsel for the appellant contended that the Tribunal had overlooked trade practice and prudent business expediencies in this line of business and not considered certificates furnished by the appellant on the issue of average rate of fatality of buffaloes in transit of long journey. He further PSK,J & LNA,J ITTA No.632 of 2006 5 submitted that Tribunal grossly erred in not considering the crucial factual evidence on the face of assessment record and perverse finding contrary to law. He would further submit that certificate issued by the Veterinary Doctor clearly shows the fatality rate of 5% to 10% of animals during transit which was also ignored. He finally, submits that Tribunal is not justified in setting-aside the order of the Tribunal and thus prayed for setting-aside the order dated 23.06.2006 passed by the Appellate Tribunal.
11. Per contra, learned counsel for the respondent submitted that the order passed by the Tribunal is proper and the Tribunal has recorded cogent reasons while setting-aside the order of the Appellate Commissioner and does not warrant interference by this Bench. The learned counsel for the respondent referred to reasons recorded by the Tribunal at paragraph-5 of the order, particularly the relevant portion which is as under:-
"It is an admitted fact that 15,081 buffaloes were purchased and what was given to Alkabeer Exports Ltd. Is only 13,949 buffaloes. When Alkabeer Exports Ltd., confirms that 13,949 animals were purchased by them, we do not find any justification in the explanation of the assessee that the buffaloes were sold on weight basis. If actually the meat was sold, Alkabeer Exports Ltd., may not have the details of PSK,J & LNA,J ITTA No.632 of 2006 6 individual animals. In this case, both the assessee and Alkabeer Exports Ltd. Confirmed that 13,949 buffaloes were sold and there was a shortage of 1,132 buffaloes. In view of the above, we are unable to accept the explanation of the assessee that what was sold was meat and not individual animals. In our opinion, what was sold were only individual animals and, therefore, it is for the assessee to explain where the 1,132 animals had gone. In the absence of any valid explanation, in our opinion, the AO has rightly made the addition.
12. Learned counsel for the respondent further pointed out the observation of the Tribunal at paragraph-6, which reads as under:
"The CIT(A) found that the loss claimed by the assessee due to death of buffaloes cannot be denied in full. However, he observed that the loss was on the higher side. When the CIT(A) says that the loss was on the higher side, he deleted the addition to the extent of Rs.11,13,582/- without any basis. As we have already observed, if at all there was death of the animals, it should have been noticed by the assessee and details would have been available with the assessee. The asessee, being in the regular trade of purchase of buffaloes for several lakhs of rupees, cannot claim that he has no details of death of the animals. In the absence of any details regarding death of animals, we do not find any justification in the claim of the assessee on estimate basis".
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13. The order of the AO, dated 31.03.2003 indicates that the AO has considered the material, evidence in detail and recorded reasons for his conclusion. On other hand, the Appellate Commissioner vide his order dated 13.05.2003 had relied upon information provided by the assessee while partly allowing the appeal thereby deleting a sum of Rs.11,13,582/-. However, but the Appellate Commissioner had neither referred to detailed observations of the AO nor recorded reasons while overriding the conclusions of the AO.
14. It is relevant to refer to discrepancy in the certificate, dated 08.04.2003 issued by Veterinary Assistant Surgeon wherein, the name of the signatory is mentioned as Animal Doctor. The contention of the counsel for the appellant that in view of the cow vigilante, the buffaloes were being transported for long distance without any break during the transit and thus, it invariably result in death of some of buffaloes cannot be accepted in the absence of any material to support the said contention and also that in fact, there was issue of cow vigilante during the year 2000-01 which is subject matter of the present appeal.
15. For all the aforesaid reasons, we are of the firm view that the question of law framed by the Court, while admitting PSK,J & LNA,J ITTA No.632 of 2006 8 the appeal, deserves to be decided in the negative. Thus, the appeal deserves to be and is accordingly dismissed, confirming the order of the Tribunal. No order as to costs.
Pending miscellaneous applications, if any, shall stand closed.
__________________________________ P.SAM JOSHY,J __________________________________ LAXMI NARAYANA ALISHETTY,J Date: 04.09.2023 ktm PSK,J & LNA,J ITTA No.632 of 2006 9 HONOURABLE SRI JUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL NO.632 OF 2006 Date: 04.09.2023 ktm