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2018 (5) TMI 436 - HC - Income TaxAddition u/s 69C - Cost of production of per quintal of rice - difference in cost of production as unaccounted in terms of Section 69 (C) - Held that:- The finding of the Tribunal in this case appears to be primarily based on human probabilities, inferences from surrounding circumstances what are the human probabilities or surrounding circumstances has not been spelt out. Further, the Tribunal accepts that there is no direct evidence, hence it has to go by inferences. We cannot accept such reasoning. Taxing statute does not proceed on vagueness, ambiguity or on human probabilities. Inference from surrounding circumstances will lead to arbitrariness in the assessment. This is nothing but conjectures and surmises. Such a reasoning is untenable in law. The very same A.O. has accepted the per quintal rate of expenditure for the assessee for the assessment year 2002-2003, 2004-2005 and 2005-2006. There cannot be any departure from this method, unless there is a new and substantial material to the contrary. Radhasoami Satsang’s case to be followed [1991 (11) TMI 2 - SUPREME Court] There is no relevant material to justify the findings of the A.O. only for the present assessment year. The authority has accepted the per quintal rate of cost of production in respect of other assessment years as indicated above. Therefore, the demand and the assessment order in terms of Section 69(C) is not justified. It is an arbitrary determination based on irrelevant parameter and, therefore, on this issue we find that the Tribunal has proceeded on a wrong premise - Decided in favour of assessee. Packing material addition - cost of packing material with regard to the assessee Unit as well as two other Units i.e., M/S New Kashmir Rice Mills and M/s Kashmir Rice and Oil Mills differs - Held that:- Appellant’s claim is not supported by inventory details of the assessee-Unit to substantiate the plea that some of the bags were left out from paddy purchases and, therefore, the cost of packing material has come down - In the absence of material and a clear explanation from the assessee there cannot be two opinions that the cost of packing material should differ from one Unit and the other Unit, more so when it is dealing with the same kind of packing material for the same good i.e., rice. Assessing Officer was justified in his demand under Section 69 (C) in respect of packing material which has been rightly confirmed by the appellate authority and by the Tribunal. - Decided against assessee.
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