2012 (3) TMI 426 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of audited books of account u/s 145(3).
2. Addition on account of low yield of rice.
3. Addition on account of yield of rice bran.
4. Addition on account of sale of husk.
5. Addition on account of value of closing stock of bardana.
6. Adhoc disallowance of expenses.

Summary:

1. Rejection of Audited Books of Account u/s 145(3):
The assessee contended that the CIT(A) erred in upholding the action of the Assessing Officer (AO) u/s 145(3) of the Act. The AO identified specific defects in the books of account, such as underreporting yield of rice, transferring Rice Superfine to FCI from own stock, underreporting paddy milling, underreporting sales of husk, and undervaluing the closing stock of bardana. The CIT(A) upheld the AO's action, noting discrepancies in the appellant's records and submissions. The Tribunal found no ground to interfere with the CIT(A)'s findings and dismissed the assessee's appeal on this ground.

2. Addition on Account of Low Yield of Rice:
The AO made an addition of Rs. 6,05,766/- on account of unaccounted sales due to low yield of rice. The CIT(A) observed that the appellant's method of including broken and nakku rice in the yield calculation was incorrect. The AO's yield calculation of 65.19% was upheld, and the addition was confirmed. The Tribunal found no merit in the assessee's appeal and dismissed it.

3. Addition on Account of Yield of Rice Bran:
The AO rejected the appellant's submission regarding the transfer of rice superfine to meet the 67% yield requirement for government paddy milling, treating it as unaccounted sales. The CIT(A) found no merit in the appellant's submission and upheld the AO's action. The Tribunal upheld the CIT(A)'s findings and dismissed the assessee's appeal.

4. Addition on Account of Sale of Husk:
The AO made an addition of Rs. 6,41,282/- due to discrepancies in the yield of husk. The CIT(A) reduced the addition to Rs. 2,54,688/-, considering the industry norm and the absence of specific details from the appellant. The Tribunal upheld the CIT(A)'s findings and dismissed the assessee's appeal.

5. Addition on Account of Value of Closing Stock of Bardana:
The AO added Rs. 84,477/- based on the value of the closing stock of bardana. The CIT(A) reduced the addition to Rs. 56,318/-, rejecting the appellant's contention that only old bardana was kept in the closing stock. The Tribunal upheld the CIT(A)'s findings and dismissed the assessee's appeal.

6. Adhoc Disallowance of Expenses:
The AO made an adhoc disallowance of Rs. 59,420/- (20% of certain expenses) for personal use. The CIT(A) upheld the disallowance in principle but reduced the quantum to 10% of the expenses. The Tribunal upheld the CIT(A)'s findings and dismissed the assessee's appeal.

Revenue's Appeal:
The Tribunal dismissed the Revenue's appeal, as the issues raised were already addressed in the assessee's appeal, and the findings of the CIT(A) were upheld.

Conclusion:
Both the appeals of the assessee and the Revenue were dismissed. The order was pronounced in the Open Court on March 19, 2012.