Telangana High Court

D. Suresh Babu vs Income Tax Officer, Sangareddy, ... on 4 September, 2023

Bench: P.Sam Koshy, Laxmi Narayana Alishetty

           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

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

Total purchase of buffaloes 15,081

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.

PSK,J & LNA,J ITTA No.632 of 2006

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

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

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".