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Issues involved: Appeal by Revenue u/s 260-A of Income Tax Act against ITAT order regarding additions made by Assessing Officer on unaccounted purchases of castor seeds and gross profit on unaccounted sale.
Addition of unaccounted purchases: The Assessing Officer made additions for unaccounted purchases of castor seeds and gross profit on unaccounted sales. CIT(A) set aside the additions, accepting the explanation that production was dependent on various factors, including electricity consumption variations due to moisture content in fresh castor seeds. The Tribunal dismissed the appeal, noting that the Assessing Officer made presumptive additions without finding defects in the books of account or invoking section 145(3) for book rejection. The Tribunal held that if books were prepared based on bills and vouchers without unrecorded raw material purchases or production, there was no basis for presumptive additions. The Tribunal's findings were based on relevant material, concluding that variations in electricity consumption did not justify the additions, which were made on presumption. As the Tribunal's findings were factual, the appeal did not raise any substantial question of law, leading to the dismissal of the appeal. Gross profit on unaccounted sale: The Assessing Officer also made an addition for gross profit on unaccounted sales. The CIT(A) and Tribunal both overturned this addition, emphasizing that the Assessing Officer did not find any defects in the books of account or invoke section 145(3) for book rejection. The Tribunal held that without discrepancies in production consumption and based on detailed manufacturing activity, there was no basis for the presumptive addition. The Tribunal's decision was based on the totality of circumstances and case laws, affirming that the CIT(A) correctly reversed the Assessing Officer's findings. The Tribunal's conclusion was factual, and as such, the appeal did not present any substantial question of law, resulting in the dismissal of the appeal.
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