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TMI Blog2012 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... p;1. That the Ld. CIT(A)-II Ludhiana on facts as well as in law, has erred in reducing the addition made by the Assessing Officer on account of low yield of oil in cotton seed by holding that 192 qtls. Cotton seed oil sold outside his regular books of account maintained by the assessee from 8,68,800/-to Rs. 2,00,000/-. 4. The assessee is in appeal against the addition of Rs. 2 lakhs sustained by the CIT(A) and Revenue is in appeal against the order of CIT(A) in reducing the addition form Rs. 8,68,800/- to Rs. 2,00,000/- 5. Briefly stated, the facts of the case are that the assessee derives income from manufacture and sale of cattle feed, oils, oil cakes etc. From the perusal of the quantitative details filed with the Audit report, the Assessing Officer found that although the quantities of cotton seed, mustard and groundnut crushed during the previous year have been separately shown but the yield of oil and oil cakes have been given in consolidated form at 13.02% and 83.91% respectively. The Generation of gad is given at 1.74% and shortage claimed at 1.34%. The Assessing Officer vide notice dated 3.12.2010 asked the assessee to rework the yield of oil and oil cakes separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical Laboratory, Nabha, which was discarded by the Assessing Officer. The Assessing Officer then discussed about the gross turnover and net profit disclosed by the assessee during the assessment year under consideration and the preceding two years, which are mentioned in para 14 of the assessment order. The Assessing Officer found that over a period of three years the assessee has disclosed to the Department a very negligible income of Rs. 8,71,490/- on total sales of Rs. 18,65,79,772/-. According to the Assessing Officer, books of account maintained by the assessee were not reliable and, therefore, he rejected the books of account u/s 145(3) of the Income-tax Act, 1961 (in short 'the Act') and adopted the yield of oil from cotton seeds at the rate of 11% as against yield of 9.85% declared by the assessee and worked out 192 Quintals of cotton seeds oil sold outside the books of account without recording the sale proceeds and made an addition of Rs. 8,68,800/-. 8. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the CIT(A). The CIT(A) allowed a relief of Rs. 6,68,800/- to the assessee and sustained the addition of Rs. 2 lakhs. 9. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der no circumstances is acceptable. We fully agree with the above observation of the Assessing Officer. Unless the yield of oil obtained on the crushing of three types of oil seeds is separately given, the manufacturing results cannot be appreciated in their proper perspective. 12. It is also observed that the assessee submitted the analysis reports of cotton seed, cotton seed cakes, mustard seeds, mustard cakes from National Analytical Laboratory (NAL), Nabha. In our view, the Assessing Officer has correctly rejected the analysis report and other products from NAL, Nahba, observing as under:- (11) Above all the material for testing is shown as provided by the assessee himself. The yield of oil from cotton seeds is shown at 17.40% and moisture at 11.14%. The yield of oil is within the range as reported by Punjab Agriculture University authorities. Further the yield of oil from mustard seeds is reported at 39.70% and moisture at 5.9%. The test reports are also in respect of the oil contents contained cotton and mustard cakes which have been reported as high as 9.6% and 8.25% respectively. It is something practically impossible to believe that only 50% of the oil is extracted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case, we are of the opinion that the addition of Rs. 3 lakhs in this case will meet the ends of justice. Consequently, we allow ground No. 1 of Revenue's appeal partly and dismiss ground Nos. 1 & 2 of the assessee's appeal. 16. Ground No. 3 of the assessee's appeal reads as under:- 3. That the Ld. CIT(A)-II Ludhiana has also erred in sustaining addition of Rs. 2 lacs out of addition of Rs. 10,71,467/- made by the Assessing Officer on account of so-called low gross profit rate of cattle feed by estimation by rejecting the books of account. 17. Ground No.2 of the Revenue's appeal reads as under:- 2. That the Ld. CIT(A)-II Ludhiana on facts as well as in law, has erred in reducing the addition on account of resale and manufacturing of cattle feed by applying low GP rate from 10,71,467/- to Rs. 2,00,000/- 18. The facts relating to above issue are that during the relevant assessment year under consideration the assessee sold 13055 quintals of self manufactured cattle feed for a total sum of Rs. 75,52,066/- (after reducing resale of 4990 quintals for Rs. 30,24,337/-). The assessee has shown to have sold almost the entire self manufactured feed in cash on varying rates between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es at Rs. 86,23,533/-. At this point of time we are also of the opinion that the addition sustained by the CIT(A) at Rs. 2 lakhs is on lower side. Thus, keeping in view the entire facts and circumstances of the present case, the addition of Rs. 3 lakhs on this count will meet the ends of justice. The Assessing Officer is directed to recompute the income of the assessee accordingly. Ground No. 2 of Revenue's appeal is allowed partly while ground No. 3 of assessee's appeal is dismissed. 20. Ground No. 5 of the assessee's appeal reads as under:- 5. That Ld. CIT(A)-II, has also erred in upholding the addition made by the Assessing Officer disallowing proportionate interest paid to the bank relevant to so called interest free advances made by the appellant, though the disallowance has been restricted to 12% instead of 15% charged by the Assessing Officer. 21. Ground No.3 of the Revenue's appeal is as under:- 3. That the Ld. CIT(A)-II Ludhiana on facts as well as in law, has erred in holding that interest free advance have been made out of unsecured loan without appreciating that the Assessing Officer has clearly established that these have been made out of CC A/c which carries inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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