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TMI Blog2012 (3) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 145(3) of the Income Tax Act, 1961. 5. The assessee vide ground No.2 of the appeal contended that CIT(A) erred in upholding the action of the Assessing Officer u/s 145(3) of the Act. 6. We have carefully perused the facts of the case, relevant records and have heard rival submissions in this case. The assessee contended that books of account were audited and the Assessing Officer failed to pin point the specific defects in the books of account, hence the books of account can not be rejected. Similarly, Ld. DR contended that rejection of books of account is justified in view of the defects pointed out by the Assessing Officer in para 3 of the assessment order dated 18.11.2009 for the assessment year 2007-08. The Assessing Officer pointed out the following defects:- 3 a) The assessee has underreported yield of rice @ 65.19% as against 67% given to FCI - para 4 b) The assessee has transferred Rice Superfine to FCI at 289.28 qtls from own stock - para 4 c) The assessee has underreported paddy milling - para 6 d) The assessee has underreported sales of husk according to prevalent yield percentage - para 7\ e) The assessee has undervalued the closing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii.ii) of her order, which is reproduced herewith:- ii.ii) I have carefully considered the submission made by the appellant and the facts of the case, it is observed that the appellant has worked out the yield of rice after taking into account broken and nakku rice while the AO has not taken the same into account due to which the difference in yield as calculated by the Assessing Officer and as calculated by the appellant has arisen. The contention of the appellant that nakku rice obtained is to be included in yield is not correct. It is evident from the every fact the appellant himself with regard to the addition on account of rice transferred to CMR account has stated that the same can be taken as exchange of rice with broken and nakku rice. Therefore, the yield of rice as given to Govt. and as accepted consist of rice excluding nakku and broken rice. Therefore, the appellant's contention that the yield shown by the appellant is 66.59% is not correct. The yield worked out by the AO at 65.19% is correct. Now coming to the reason of the difference in the yield as delivered to FCI and as reflected in the books of account, the appellant has no plausible reason as, as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of rice does not come to 67% as stated above, hence the assessee had transferred CMR 286.25 qtls to supply the stipulated yield of rice 67% to Govt. agencies. The Assessing Officer, however, rejected the appellant's submission stating that the same is unsupported by facts. It was observed that the appellant received ₹ 3,37,254/- as milling charges from FCI against which the proportionate manufacturing expenses comes to ₹ 11,74,608/- which as per the AO is unbelievable. Further the appellant's contention that it transferred 289.25 quintals of rice to compensate the shortfall to Govt. supply is alll the more not acceptable. Therefore, the AO treated the same as unaccounted sales and added back an amount ₹ 3,03,828/- applying a rate of ₹ 1050.40 per quintal. 15. Before the CIT(A), the assessee stated that he delivered own rice so as to meet the 67% yield requirement of the government. The assessee in returned got the broken rice produced out of government milling of paddy equivalent to 224.35 quintals, driage allowance of ₹ 87,500/- equivalent to 159.84 qunitals of paddy. Therefore, as per the assessee, the transfer is genuine and it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst ₹ 150/- applied by the Assessing Officer. 19. In the course of assessment proceedings, the Assessing Officer noted that the assessee had shown shortage of 6058.25 quintals which worked out to 12.64% which was construed by the Assessing Officer as on the higher side. The Assessing Officer also observed that quantitative details of the husk sold was provided by the assessee. The Assessing Officer afforded an opportunity to the assessee to explain this discrepancy in the yield of husk. The assessee failed to submit any credible and cogent evidence before the Assessing Officer and hence on the basis of comparative chart of percentage of yield of rice and its bye products, the Assessing Officer made the addition of ₹ 6,41,282/-. The Ld. CIT(A) after considering the submissions made before him by the assessee upheld the findings of the Ld. Assessing Officer which are reproduced here-in-under:- vii) I have carefully considered the submission made by the appellant and the facts of the case. There is no dispute on the fact that the appellant has not given quantitative details of the husk generated and sold nor has he given the rate at which the same has been sold. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old bardana has been kept in the closing stock. Therefore, the appellant's contention in this regard is rejected. It is held that the closing stock of bardana consisted of both new and old bardana, the average rate adopted by the AO in this regard is however reduced to ₹ 1l/- per bag as against ₹ 12/- per beg. The addition made on this account is accordingly reduced to ₹ 56,318/-. 23. Having regard to the factual matrix of the case, findings of the Assessing Officer and the CIT(A) vis-a-vis submissions made by the parties, we do not see any merit in the ground of appeal and we upheld the order of CIT(A) in this regard. The ground of appeal raised by the assessee is dismissed. 24. Ground No.7 of the appeal reads as under:- 7. a) That the Ld. CIT(A) is not justified in upholding the order of Assessing Officer by estimating the adhoc disallowance @ 10% as against 20% as adopted by the Assessing Officer, which is against the actual facts and figures submitted by appellant / assessee and is an adhoc disallowance without specifically pointing out any expenditure for alleged personal user. b) That without prejudice to above, the appellant disputes the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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