TMI Blog2016 (5) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... hases - Held that:- Admittedly, the assessee has not furnished all the addresses of the persons from whom the purchases were made. The assessee, however, clarified before the Assessing Officer that the purchases were made from Government regulated market committee. The fact that the turmeric was purchased through regulated markets is not in dispute. When the regulated market committee was monitoring the transactions and purchases of turmeric, this Tribunal is of the considered opinion that the Assessing Officer could have very well examined the actual purchases made by the assessee and the details of the agriculturists. Inspite of the fact that the assessee has disclosed the details of the purchases of turmeric and the fact that the Agricultural Committee is monitoring the transactions of the assessee, the Assessing Officer has not taken any steps to examine the genuineness of the transactions. In those circumstances, disallowing the claim of the assessee as non-genuine is not justified. Therefore, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. Allowance of publicity expenses - Held that:- It is not in dispute that the assessee is manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the total turnover was 19,75,167.60 Kgs as against 37,90,500 Kgs estimated by the Assessing Officer. Therefore, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(Appeals) and accordingly the same is confirmed. Addition of unaccounted purchases - Held that:- As rightly submitted by the Ld. counsel for the assessee, the enhanced addition of purchase was deleted by the CIT(Appeals), which was confirmed by this Tribunal in the earlier part of this order. Once the enhanced purchase was deleted, the enhanced estimation on sales would also automatically get deleted. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. Furthermore, when the Assessing Officer estimated the turnover, it is obligatory on his part to reduce the turnover declared by the assessee. On one hand the Assessing Officer estimated the turnover and on the other hand, the turnover declared by the assessee was not reduced. This inflated the turnover of the assessee arbitrarily. Therefore, the CIT(Appeals) has rightly found that the turnover declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance by adopting peak credit comes to only ₹ 1,29,716/-. Therefore, the CIT(Appeals) has rightly restricted the same to ₹ 1,29,716/-. 5. We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer found that there was deficit cash balance of ₹ 10,52,899.96. The Assessing Officer further found that the negative cash balance in the books of account is a result of introduction of unaccounted money in the books of account. The CIT(Appeals) by considering the peak of deficit cash balance restricted the addition to ₹ 1,29,716/- instead of ₹ 10,52,899.96. The CIT(Appeals) has also found that introduction of unaccounted cash in the books of account or the negative cash balance have no impact on the profit of the business. No doubt, the profit of the business is calculated on the sales, purchases and other expenses incurred during the year under consideration. The question arises for consideration is whether the assessee has introduced any unaccounted money for purchases? If the assessee introduced unaccounted cash for purchases or the sales were not recorded in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the respective suppliers of the product and the creditors, the Assessing Officer has rightly made the addition. 8. On the contrary, Shri S. Sridhar, the Ld.counsel for the assessee, submitted that all the purchases were made by Government regulated markets at Salem and Erode. The bills which are in possession of the Revenue disclosed the same. Since the entire purchases and transactions had to be made only through Agricultural Market Committee, the Assessing Officer cannot claim that the purchases were outside the books of account. According to the Ld. counsel, the purchases made by the assessee can be verified through Agricultural Market Committee. Since such an exercise was not made by the Assessing Officer, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. 9. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee has not furnished all the addresses of the persons from whom the purchases were made. The assessee, however, clarified before the Assessing Officer that the purchases were made from Government regulated market committee. The fact that the turmeric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the expenditure by the assessee is only for increasing the turnover of the assessee and not for the benefit of anybody else. Merely because incidentally it would benefit Aachi group of concern that cannot be a reason for disallowing the claim of the assessee. 13. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee is manufacturing and selling turmeric powder in the brand name of Aachi. Aachi group is marketing the turmeric powder manufactured by the assessee in their own brand name along with other products manufactured by them. The claim of the assessee is that advertisement made by the assessee to promote the brand name Aachi would directly benefit the assessee in increasing the turnover. This Tribunal is of the considered opinion that when the assessee is manufacturing turmeric powder and marketing the same in the brand name of Aachi through Aachi group, promoting the brand name Aachi in the market would increase the market share of the assessee. This would directly increase the turnover in the market. Consequently, the profit of the assessee would go up. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 09.12.2012 confirmed that there was an error in the probable sales calculated in the assessment order. In fact, the total quantity of the sales is 1,25,500 Kgs. However, the Assessing Officer added one more 0 and treated the same as 12,55,000 Kgs. This was accepted by the Assessing Officer in the remand report dated 09.12.2012. Therefore, the calculation of the Assessing Officer was inflated by 11,29,500 Kgs which need to be reduced. The Ld.counsel further submitted that there are two types of packing materials. Certain packing materials were used to pack turmeric powder like sachets, etc. Therefore, other packing material is called primary packing material. The Assessing Officer confused himself between the two types of packing materials used by the assessee. The assessee explained before the Assessing Officer that all the purchases of packing material were made from M/s Pondy Plastic Industries and M/s Micro Polypack. Without understanding the basic difference between the secondary packing material and primary packing material, the Assessing Officer committed mistake in estimating the probable sales. Therefore, the CIT(Appeals), after analysing all the material facts, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y considering the quantity of packing material, the CIT(Appeals) came to a conclusion that some of the packing material consumed during the year under consideration should not be considered for the purpose of calculating the quantity of sales made during the year. Some of the packing material consumed during the year was actually used for turmeric powder manufactured and packed and was lying in the closing stock. The volume of such closing stock as on 31.03.2009 was 1,15,345 Kgs. The opening stock as on 01.04.2008 was 6,856 Kgs. Therefore, the net closing stock of 1,08,489 Kgs should also be considered as the resultant of the packing material consumed during the year under consideration. Therefore, the Assessing Officer s calculation of 37,90,500 Kgs actually represents the finished product manufactured by the assessee during the financial year 2008-09. To arrive at the probable sales effected during the year, the net increase in the closing stock is to be reduced from the goods manufactured during the year. In view of the above, this Tribunal is of the considered opinion that in the absence of any material on record that the assessee has inflated the purchases or sales, the estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out considering the explanation of the assessee, estimated the unaccounted sales at ₹ 14,91,94,080/- without reducing the sales declared by the assessee in the return of income. Since the enhanced purchase was deleted by the CIT(Appeals), he found that the enhanced sales also would automatically become deleted. Therefore, according to the Ld. counsel, the CIT(Appeals) has rightly deleted the addition. 20. We have considered the rival submissions on either side and perused the relevant material available on record. As rightly submitted by the Ld. counsel for the assessee, the enhanced addition of purchase was deleted by the CIT(Appeals), which was confirmed by this Tribunal in the earlier part of this order. Once the enhanced purchase was deleted, the enhanced estimation on sales would also automatically get deleted. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. Furthermore, when the Assessing Officer estimated the turnover, it is obligatory on his part to reduce the turnover declared by the assessee. On one hand the Assessing Officer estimated the turnover and on the other hand, the turnover declared by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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