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2016 (9) TMI 261 - AT - Income TaxAdditions towards inflation of purchases - A.O. was of the opinion that the assessee has inflated purchases by recording higher value in the books of accounts - Held that:- We find force in the arguments of the assessee for the reason that though there is a difference between value recorded in the books of accounts and provisional invoices, the assessee has explained the differences with final invoices which is matching with the amount recorded in the books of accounts. It is also an admitted fact that the assessee has made the payment for the amount recorded in the books of accounts by way of account payee cheques or electronic transfers. The assessee also issued ‘C’ form for the value shown in the books of accounts. Therefore, we are of the view that the A.O. was not correct in holding that there is a difference in value recorded in the books of accounts when compared to the invoices. The CIT(A) after considering the relevant records directed the A.O. to delete the additions made towards inflation of purchases. We do not see any error or infirmity in the order passed by the Ld. CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue. Addition towards low yield of rice bran oil - A.O. made additions on the sole ground that there is a difference in percentage of yield of rice bran oil - Held that:- No merits in the findings of the A.O. for the reason that before estimation of suppressed turnover, the A.O. has not pointed out any irregularities or mistakes in the books of accounts. The assessee has maintained proper manufacturing and stock registers which was produced before the A.O., however, the A.O. neither pointed out any mistakes in the books of accounts nor noticed any suppression of turnover. The A.O. without going into the quantity of 3 varieties of rice bran purchased for the current year compared the average yield of rice bran oil which is not correct. We further noticed that during the year under consideration, the assessee has purchased 3 varieties of rice bran which is containing different percentage of rice bran oil content. We further observed that purchase of rough rice bran has been doubled when compared to the last financial year because of which there is a reduction in yield of rice bran oil. But, the other final products of rice bran oil extraction is increased because of low yield of rice bran oil. Therefore, the A.O. was not correct in holding that the assessee has suppressed sales turnover by manipulating yield of rice bran oil and rice bran extraction. The CIT(A) after considering the relevant information rightly deleted the additions made by the A.O. There is no error or infirmity in the order passed by the Ld. CIT(A). Hence, we inclined to uphold the order of CIT(A) and reject the ground raised by the revenue. Aaddition towards unexplained credits u/s 68 - AO made additions solely on the ground that the trade creditors are not confirmed the transactions - Held that:- No additions can be made u/s 68 of the Act, towards trade creditors when genuineness of the purchases are not doubted. In the present case on hand, the A.O. has not doubted the genuineness of the purchases. The A.O. made additions toward trade creditors for the simple reason that the creditors have not confirmed the transactions with the assessee. Therefore, we are of the view that the A.O. was not correct in making additions towards trade creditor’s u/s 68 of the Act for non furnishing confirmation of balances by the creditors. The CIT(A) after considering relevant details filed by the assessee rightly deleted the additions. We do not see any reason to interfere with the order based by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue.
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