9911796707
TMI Blog2001 (6) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... and milling done in terms of quintals and it resulted in suppression in the milling shown by the assessee. The AO formed an opinion that there was wide variation in the units consumed per quintal of paddy milled from month to month indicate that quantity of milling shown in the books of accounts month-wise, does not reflect the true state of affairs of the assessee's business. The AO, therefore, invoked the provision of s. 145 of the IT Act, 1961, and rejected the assessee's books of accounts and made addition on account of suppressed income from milling and the capital employed to earn the income of suppressed milling. 3. Before the CIT(A) it was contended by the learned authorised representative for the assessee that the assessee has ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption of electrical energy and milling done in terms of quintals, without bringing on record any other supporting circumstances corroborating the assertion of the AO that lead to suppression in the milling shown by the assessee. Such inconsistency in electric consumption vis-a-vis milling, could be due to various other reasons beyond the assessee's control. Nowhere the AO has observed that any sales were found which were not recorded in the books of accounts which admittedly was maintained by the assessee. There was also no whisper that the assessee was indulging in unaccounted sales. No defect in stock register was pointed out by the AO. Therefore estimating the suppressed milling only on the basis of variations in electric consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable if important entries and transactions are omitted therefrom or if proper particulars and vouchers/bills, etc. are not forthcoming or if they do not include entries relating to particular class of business. The assessee- should invariably be given reasonable opportunity for offering satisfactory explanations regarding defects in the accounts and on his failure to satisfactorily explain the defects, the Department would be justified in rejecting the accounts. In the instant case no such defect was brought on record by the AO except the disparity in consumption of electric power. The Hon'ble Kerala High Court in the case of St. Teresa's Oil Mills vs. State of Kerala (1970) 76 ITR 365 (Ker), held that the mere fact that there was dispari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the consumption of electricity itself is affected by various factors. 7. In the instant case the data relied upon by the assessing authority, which is made the basis of rejection of books of accounts and thereby estimating the suppression of own milling, smacks of arbitrariness, therefore, deserves to be quashed. The observation of the AO that suppressed quantity of 2,046 quintals was purchased by the assessee outside his books of accounts, milled and sold during the year, was without bringing any instance on record to the effect that a particular purchase and/or sale vouchers/bill, found by him but not recorded in books of accounts. 8. The Privy Council had occasion to consider the exact import of the expression "to the best of his ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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