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TMI Blog2016 (9) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... year, the assessee filed the return of income declaring income of Rs. 60,300. The scrutiny assessment u/s.143(3) r.w.s.144A was completed on 28/3/2013 by computing a total income of Rs. 81,84,540 after disallowances of an amount of Rs. 13,95,106/- out of dehusking charges, Rs. 3,09,429/- out of Hamali, Loading & unloading charges and Rs. 63,79,700/- u/s.40A(3) of the Act. 3. As far as dehusking charges are concerned, the assessee submitted before the AO that the assessee's labourers are employed to de-husk the coconuts at the purchase point and that the husk is left with the sellers and therefore accounting sales or closing stock of husk does not arise. However, the assessee has not explained as to why the assessee has to employ its own l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted the fact of having travel in the trucks to the place of farmers for the he-husking. f. The AO instead of recording there statements simply took their signature against their names. g. The AO came to the conclusion that the expenses were not genuine on the basis of the presumption and assumptions." 5. The CIT(Appeals) observed that the assessee has brought out detailed facts that it has purchased coconuts after being de-husked to facilitate transportation to carry more coconuts. He noted that the A.O. made the addition on presumption that de-husked items bring better revenue which will be used in various industries including coir industry. But the assessee has explained how purchase of de-husked coconuts are beneficial, cost wis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted the details of purchase of coconuts after dehusking. It was explained that the dehusked coconuts are beneficial to the assessee in as much as transportation is easier and is more viable cost-wise also. A list of 1173 nos. of vouchers was produced before the AO. It was submitted that the dehusking is done at the purchase point and labourers of the assessee were sent in trucks to do dehusking. The AO has not recorded the statement of labourers produced before him, but simply wrote their names against the signature. The CIT(Appeals) was of the view that there would be some inflation in the expenses claimed by the assessee and made a fair estimate that 20% of dehusking charges to be excessive and therefore upheld the addition to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Rs. 3,09,429/- being 25% of the expenses. 10. On appeal before the CIT(Appeals), the assessee also produced copy of vouchers for Hamali Charges and loading & unloading charges. The assessee submitted that even though labourers for Hamali, Loading and Unloading charges were produced before the A.O., he failed to record the statement from them. 11. The CIT(Appeals) noted that the sample vouchers produced before him were in order, however, he observed that the vouchers are self made ones and in most of the vouchers, full name is not written and only address is written. He further observed that from the style of signatures, the labourers are illiterates and came to the conclusion that the labourers signed the vouchers without knowing the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards purchase of coconuts are made by cash and the payment in 239 cash bills/vouchers exceeds Rs. 20,000/- totalling to Rs. 63,79,700/-. The assessee's contention was that wherever bills exceed Rs. 20,000/-, the name of the route is mentioned and on the reverse of the bill a list of sellers and amounts paid to them are noted. The AO was of the opinion that the assessee does not purchase coconuts directly from farmers and that the nuts are brought to the assessee by a trader or agent. Moreover, the 18 farmers produced before the A.O. have filed a copy of RTCs. On verification of the same, it was seen that only in six RTCs the crop grown is shown as coconut and all the RTCs show that the land held are dry lands and various other crops includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transaction in respect of 3 to 4 farmers. Vouchers and bills were produced before the CIT(A), which had been produced before the AO during assessment proceedings in a booklet form. The CIT(Appeals) observed that the AO has not disputed the genuineness of purchases. The assessee submitted that the GP and NP ratio increased substantially during the year under consideration compared to the previous two years, even though turnover has increased substantially. 17. During appellate proceedings, the assessee has furnished a booklet containing copies of all vouchers for purchase of coconuts. The CIT(Appeals) on examination of the same found that, wherever bill exceeded Rs. 20,000/-, the voucher is made in the name of purchase route not in any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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