1. Suppressed oil production. 2. Introduction of oil cake. 3. Bogus purchases and related expenses. 4. Low oil recovery from rapeseeds. 5. Applicability of section 40A(3). 6. Peak amount of unexplained investment.
Summary:
1. Suppressed Oil Production: The Assessing Officer (AO) made an addition of Rs. 1,89,982 for low oil recovery from rapeseeds purchased outside Gujarat State (OGS). The CIT(A) deleted this addition, and this deletion was upheld by the Tribunal, agreeing with the CIT(A)'s findings.
2. Introduction of Oil Cake: The AO made an addition of Rs. 3,19,618 towards the introduction of oil cake. The CIT(A) reduced the aggregate addition of Rs. 40,54,707 (including Rs. 37,35,089 for low oil recovery from rapeseeds within Gujarat State (WGS)) to Rs. 30 lakhs. The Tribunal upheld this reduction, finding the CIT(A)'s decision reasonable.
3. Bogus Purchases and Related Expenses: The AO disallowed Rs. 70,03,826 for bogus purchases, Rs. 17,99,788 for credit balances, and Rs. 5,02,752 for bogus freight expenses. The CIT(A) confirmed these disallowances. The Tribunal agreed with the CIT(A) that the transactions with 33 suppliers were non-genuine and upheld the disallowance of Rs. 93,06,366. However, the Tribunal allowed a deduction of 25% of the purchase price, resulting in a disallowance of Rs. 22 lakhs for inflated purchase prices and confirmed the disallowance of Rs. 5,02,752 for freight.
4. Low Oil Recovery from Rapeseeds: The AO made an addition of Rs. 37,35,089 for low oil recovery from WGS rapeseeds. The CIT(A) reduced this to Rs. 30 lakhs, which the Tribunal upheld, considering the overall yield and comparison with other cases.
5. Applicability of Section 40A(3): The Tribunal held that section 40A(3) was not applicable to the fictitious transactions, as the payments were shown as made by crossed cheques. Even if applicable, the transactions would be covered by exceptions under Rule 6DD(j).
6. Peak Amount of Unexplained Investment: The AO added Rs. 17,99,788.75 for unexplained investment in oil cakes. The Tribunal found this amount to be the peak balance in the accounts of the bogus suppliers and held that the disallowance of Rs. 27 lakhs adequately covered this unexplained investment, thus no separate addition was necessary.
Conclusion: The Tribunal partly allowed the assessee's appeal by reducing the disallowance to Rs. 27,02,752 and dismissed the Revenue's appeal, confirming the CIT(A)'s decisions on various grounds.
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