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TMI Blog2012 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer also made addition by treating the trade creditors as unexplained. Other additions were also made by the Assessing Officer by disallowing part of expenditure and also on account of deposit made in the bank account. 4. By the impugned order, the ld. CIT(A) deleted the addition made on account of shortage in closing stock, cash credit, godown rent, reprocessing charges, payment made to Shri J. S. Parbhani, un-recorded purchases, car loan, difference in receipt from Maharashtra Beej Nigam, credit allowed by Maharashtra Beej Nigam and additions made on account of receipts from Maha Gujarat Seeds Private Limited. However, the CIT(A) has enhanced the assessment by estimating sales of Rs. 1.05 crores as against disclosed sales of Rs. 1.79 crores and applying gross profit rate of 15 % on the sales as against disclosed gross profit rate of 6.70 %. The CIT(A) also retained part of the disallowance made on account of depreciation on car, misc. expenses, vehicle expenses etc. Both the assessee and Revenue are in appeal before us against the above order of CIT(A). 5. During the course of hearing before us, the ld. Authorized Representative only pressed ground no. 1.2, which pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing stock of soyabean at Rs.5,16,162/- and shortage in closing stock of wheat at Rs.2,93,016/- has arisen on account of two broad reasons. The first reason is that the appellant passed an entry for transfer of soyabean 434.20 qntls., when soyabean was shifted from godown to plant, which was not really required and was wrongly passed in view of the peculiar facts of the case, as the activities of the appellant, as discussed above, were controlled and monitored by the state government agencies and further purchase return of 52.76 qntls. of wheat were wrongly included in soyabean account. The second reason is the AO mis-directed himself, without properly appreciating the facts of the case, and as rightly pointed out by the appellant, wrongly picked up one set of figures from the books of accounts of the appellant and another from the audit report. It has to be observed that normally there would be no reason for variation in the figures as per books of accounts and those which are reflected in audit report. But there can always be difference in such figures on account of basis of presentation as to whether purchase returns and sales returns have been directly reduced from the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses at Rs. 13,636/- for personal user was also not pressed for decision in course of appeal hearing and is accordingly rejected. 12. The major addition of cash credits at Rs. 72,94,537/- shall be taken and decided after adjudication on all the remaining grounds of appeal and accordingly the next ground of appeal is taken for discussion and decision. 13. Now coming to the addition of Rs.2,20,167/-, Rs. 16,270/- as well as Rs.1,157/- made by the AO as agitated in ground no.7 & 8, the relevant discussion by the AO appears on page- 35, 36 of the assessment order in para 13. Such addition came to be made as two copies of invoice bearing same invoice no. and containing separate details and amounts (Annexure D-1, D-2 to assessment order) came to the notice of the A O. The copy 0 f invoice reflecting higher amount was obtained by the AO directly from Mahabeej, Akola whereas the other copy was produced by the appellant and the appellant failed to offer satisfactory explanation before the AO. The appellant in the written submission filed has maintained that the Annexure-D-1 & D-2 annexed with the assessment order were not final bills and they were simply invoices and he has attempted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 69C. However, this fact regarding improper accounting of purchases shall be relevant for coming to the conclusion in the matter of rejection of book results as well applying a proper rate of GP. Both the additions however stand deleted. 15. The addition made by AO for road tax at Rs. 9,652/- has to be necessarily upheld as the same was not found to be accounted and the explanation offered by the appellant that the same was met out of meager house-hold withdrawals amounting to Rs. 24,000/- cannot be at all accepted. Thus, this addition is hereby confirmed. 16. Now coming to the addition of unexplained car loan made by the AO at Rs. 2,70,000/-, it has to be necessarily held that the AO has totally confused and misdirected himself in making such addition. Once he was of the view that this loan was sanctioned to the appellant on 11.04.01, and the vehicle W<1S not actually delivered to the appellant and not put to use by the appellant before 31.03.01, there was a absolutely no case for making such addition with observation that if such a amount was excluded from the balance-sheet, the balance-sheet would not tally. In coming to such observation, he forgot the fact that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs is not found to be at all warranted and is accordingly deleted. 20. The AO has discussed this issue relating to addition of Rs.8,56,000/- for difference between the receipts from Mahabeej, on page-39 to 41 of the assessment order. The AO on consideration of written submission filed by the appellant in his counter comments as per para-15 has conceded that the explanation of the appellant regarding two cheques dtd.15.04.00 and 24.04.00 aggregating Rs.7.00 lakhs were found to be correct and therefore to this extent the difference was explained. The AO, however, has noted that the balance difference of Rs. 1,56,000/- remained to be explained. The appellant in his rejoinder has rightly pointed out that the AO has not been able to make it clear as to which specific entries such an addition related. The AO's case as per assessment order is primarily based on the difference in accounting of payments by the appellant vis-a-vis the payment details furnished by Mahabeej. It is not the case of the AO in making this addition, that the appellant has suppressed any sale proceeds or proceeds of job work vis-it-vis the details furnished by Mahabeej. Once that be so, even for argument sake, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be free to consider appropriate action in accordance with the law for considering such unexplained payment in the appropriate AY after making necessary verification and enquiries at his end. 22. Coming to the further addition of Rs.62,284/-, the AO has made this addition on the basis of copy of account received from Mahabeej, he found that the appellant has not accounted for the credits allowed to him per entry dtd. 09.03.01 and 31.03.01 aggregating in all Rs.62,284/-. The appellant's contention remains that such addition has been made on presumptions without allowing any opportunity. The AO in his comments has maintained that copy of such account was given to the appellant on 26.02.04, but no satisfactory reconciliation has been submitted and since the appellant was following Mercantile System of accounting, such amounts were also required to be reflected in the books of the accounts or suitable reconciliation or explanation should have been given by the appellant. The AO's comments on the issue has definite merits, but one important aspect appear to be over-looked that these entries related to the fag end of the FY and accordingly possibilities of necessary entries pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has filed equally detailed written submission running from page-ll of his written submission to page-30 of written submission besides voluminous documents. The AO as well appellant has again given detailed comments and counter comments on the issue. 25. One fact which very clearly emerges, as held above in para-e, which is all the more applicable to such addition, is that the appellant did not get proper time and opportunity to explain his case and on such facts as rightly emphasized by the appellant, the decision of Hon'ble MP High Court in Raja Ginning Udyog(supra) is clearly applicable. 26. On very careful analysis of the entire evidence on record in this respect, it has to be necessarily held that the appellant has prima-facie discharged his onus of establishing the identity of such agriculturists from whom such purchases were made as in such process the Govt. Agency in the matter of certification of seeds were involved. So also, genuineness of such transaction is also prima-facie established on account of involvement of government agency in the process of certification. Finally similar position prevails in the matter of credit-worthiness of such transactions as such ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no authentic documents except self-made vouchers prepared by the appellant. In course of appeal hearing as well in writing, it was admitted that over and above the mandi rate for the consumable grains, the appellant used to pay a sizable amount by way of bonus because of long period involved in certification of seeds and payment of purchase price. It has also been held above that the books of accounts and other records maintained by the appellant are not found to be fully trust-worthy and reliable. Hence, provision of sec.145 are very clearly attracted to the facts of the case. In considered view, a substantial part of purchase price paid to the farmers which was admittedly over and above the regular market price and such grains/seeds is not amenable to verification. 31. The appellant has shown gross sale proceeds at Rs.l,73,26,50l/-, besides job work income of Rs.6,41,757/- which comes to Rs.l,79,68,258/- on which a GP has been disclosed at Rs.12,03,881/-. The AO has no where given a finding that the sale proceeds were unaccounted for or the sale price was under stated except to the extent Rs.2,38,094/- (2,20,167 + 16,270 + 1,157) as discussed in para-5.6 and Rs.62,284/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of assessment, the Assessing Officer has also disbelieved trade credit of Rs. 72.94 lakhs. After calling for a remand report, the CIT(A) observed that the assessee has primarily discharged his onus of establishing the identity of such agriculturists from whom such purchases were made, as in such process, the Government agency in the matter of certification of seeds was involved. The ld. CIT(A) also found that genuineness of transaction was also established on account of involvement of Government Agencies in the process of certification. The creditworthiness of transaction was also found to be satisfactorily explained as the agriculturists had adequate land holdings as per CIT(A). The findings so recorded by the ld.CIT(A) has not been controverted by brining any positive material on record, we, accordingly, do not find any infirmity in such deletion of trade credits. 37. We also found that sale proceeds of the assessee was Rs. 1.73 crores and job work receipt was Rs. 6.41 crores, total of both comes to Rs. 1.79 corers on which assessee has disclosed gross profit of Rs. 12,03,881/-, which gives rise to gross profit of 6.69 %. Since the substantial payment was made for purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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