2012 (2) TMI 237 - AT - Income Tax

Best Judgment - Yield of paddy reflected at 63% AO adopted at 65% - Held That - Additional evidences in support of yield and trading results were filed as revenue could not confront the same. - Decided in favour of assessee. Cash Credits - Unsecured Loan - Balance confirmed by Ram Prasad Rawat - Held That - No infirmity in CIT(A) order. Appeal of revenue rejected.

Summary

Issues:
1. Addition on account of low yield of rice production
2. Addition of unsecured loans under section 68 of the Income Tax Act, 1961
3. Admission of additional evidence under Rule 46A

Analysis:
1. Addition on account of low yield of rice production:
The Appellate Tribunal considered the Revenue's appeal against the CIT(A)'s order regarding the addition of Rs. 4,24,164 made by the Assessing Officer due to alleged low yield of rice production by the assessee. The CIT(A) had deleted this addition based on the additional documentary evidence submitted by the assessee. The Tribunal noted that the average yield of rice in the vicinity was around 62.9%, which was comparable to the assessee's yield of 62.94%. The Tribunal found that the assessee had properly maintained and audited books of account, and hence upheld the CIT(A)'s decision to delete the addition.

2. Addition of unsecured loans under section 68 of the Income Tax Act, 1961:
The second issue pertained to the addition of Rs. 5,30,000 made by the Assessing Officer on account of unsecured loans under section 68 of the Income Tax Act, 1961. The CIT(A) had deleted this addition after considering the explanation provided by the assessee. The Tribunal observed that the amount represented a trade credit for the supply of paddy, and proper confirmation with the permanent account number was filed. The Tribunal agreed with the CIT(A) that the creditworthiness of the creditor was established, and the genuineness of the transaction was proven, satisfying the requirements under section 68. Consequently, the Tribunal upheld the CIT(A)'s decision to delete this addition.

3. Admission of additional evidence under Rule 46A:
The third issue revolved around the admission of additional evidence under Rule 46A. The assessee had faced challenges in complying with notices due to disputes among partners, leading to non-compliance during the assessment proceedings. The CIT(A) admitted the additional evidence under Rule 46A, citing valid reasons related to partner disputes and closure of business. The Tribunal affirmed the CIT(A)'s decision, stating that the assessee was prevented by sufficient cause from filing the evidence before the Assessing Officer. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to delete the additions on both issues related to low yield of rice production and unsecured loans, while also supporting the admission of additional evidence under Rule 46A due to valid reasons provided by the assessee. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order in its entirety.