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That the assessee undertakes custom-milling for M/s. Orissa State Civil Supplies Corporation Ltd. (OSCSC Ltd.) besides he also was the agent of MARKFED, NAFED, NCMSL, PACS and FCI.

That for the purpose of custom milling the assessee has entered in to an agreement with the Orissa State Civil Supplies Corporation Ltd(OSCSC Ltd. /Orissa State Co-operative Marketing Federation Ltd. (MARKFED) Orissa; In terms of such agreement the principal such as MARKFED, Orissa shall purchase paddy directly from the farmers and the assessee custom miller will transport the same from the market yard on payment of charge within the limit prescribed; that after milling, rice of specified quality as per the out turn ratio fixed is delivered. Thus it is clearly evident that whatever the stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED. And that the ownership of such stocks are of the principal. The assessee is only a Custom Milling Agent. A statement has been recorded U/s. 133 A of the Income Tax Act from Shri Deepak Sharma in course of survey proceedings in the mill premises on 21.08.2013 & 22.08.2013. The survey party puts the question. Relevant question for present purposes are quoted as follows -

31. That it is further submitted that the assessee undertakes only custom-milling for M/s. Orissa State Civil Supplies Corporation Ltd. (OSCSC Ltd.) besides he was also the agent ofMARKFED, NAFED, NCMSL, PACS and FCI. For the purpose of custom milling the assessee has entered in to agreement with the Orissa State Civil Supplies Corporation Ltd (OSCSC Ltd. /Orissa State Co-operative Marketing Federation Ltd.(MARKFED) Orissa. In terms of such agreement the principal such as MARKFED, Orissa shall purchase paddy directly from the farmers and the assessee Custom miller will transport the same from the market yard on payment of charges within the limit prescribed and after milling, rice of specified quality as per the out-turn ratio fixed by them is delivered. It is necessary to slate here that the stock of paddy kept in the mill premises was under lock and key of the officials of the Principals as well as the assessee and milling of paddy takes place only after releasing of stock of paddy by the said officials for the purpose of milling. The officers of the Principlals give periodical certificate on the verification report - "It is certified that there is no mis-appropriation/diversion by the miller and paddy/rice available has been stored safely". For ready reference a sample copy of such certificate is enclosed herewith at PB Page No. 109 and 110 . As already stated, the assessee is required to deliver the rice to them and the assessee is debarred/prohibited from selling rice to others. The assessee is entitled to only milling charges. In this process, whatever stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED and that the ownership of such stocks are of the principals. The assessee is only a Custom Milling Agent. Because the paddy as well as rice solely belongs to the Principals, the assessee does not maintain any purchase/sale register but maintains only stock registers to be verified by the Principals from time to time. This has been so explained by the assessee while answering to Question No. 6Q as under :

That the assessee undertakes custom-milling for M/s. Orissa State Civil Supplies Corporation Ltd.(OSCSC Ltd.) besides he also was the agent of MARKFED, NAFED, NCMSL, PACS and FCI.

 That for the purpose of custom milling the assessee has entered in to an agreement with the Orissa State Civil Supplies Corporation Ltd(OSCSC Ltd. /Orissa State Co-operative Marketing Federation Ltd.(MARKFED) Orissa; In terms of such agreement the principal such as MARKFED, Orissa shall purchase paddy directly from the farmers and the assessee IT(SS)A No.138/CTK/2018 custom miller will transport the same from the market yard on payment of charge within the limit prescribed; that after milling, rice of specified quality as per the out turn ratio fixed is delivered.

31. That it is further submitted that the assessee undertakes only custom-milling for M/s. Orissa State Civil Supplies Corporation Ltd.(OSCSC Ltd.) besides he was also the agent of MARKFED, NAFED, NCMSL, PACS and FCI. For the purpose of custom milling the assessee has entered in to agreement with the Orissa State Civil Supplies Corporation Ltd (OSCSC Ltd. /Orissa State Co-operative Marketing Federation Ltd.(MARKFED) Orissa. In terms of such agreement the principal such as MARKFED, Orissa shall purchase paddy directly from the farmers and the assessee custom miller will transport the same from the market yard on payment of charges within the limit prescribed and after milling, rice of specified quality as per the out-turn ratio fixed by them is delivered. It is necessary to state here that the stock of IT(SS)A No.138/CTK/2018 paddy kept in the mill premises was under lock and key of the officials of the Principals as well as the assessee and milling of paddy takes place only after releasing of stock of paddy by the said officials for the purpose of milling. The officers of the Principlals give periodical certificate on the verification report - "It is certified that there is no mis-appropriation/diversion by the miller and paddy/rice available has been stored safely". For ready reference a sample copy of such certificate is enclosed herewith at PB Page No. 109 and 110 . As already stated, the assessee is required to deliver the rice to them and the assessee is debarred/prohibited from selling rice to others. The assessee is entitled to only milling charges. In this process, whatever stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED and that the ownership of such stocks are of the principals. The assessee is only a Custom Milling Agent. Because the paddy as well as rice solely belongs to the Principals, the assessee does not maintain any purchase/sale register but maintains only stock registers to be verified by the Principals from time to time. This has been so explained by the assessee while answering to Question No.6Q as under :