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2016 (11) TMI 802 - RAJASTHAN HIGH COURT

2016 (11) TMI 802 - RAJASTHAN HIGH COURT - TMI - Rejection of books of accounts - Held that:- We are of the opinion that the books of accounts ought not have been rejected by the Assessing Officer. We are in complete agreement with the view taken by the CIT (Appeals) and the books of accounts have been rejected on the ground of variation of production and he has not found any irregularity in the books of accounts by way of remittance of any amount or any expenses or any material which has been f .....

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Kasliwal with Dr. P.C. Jain for the appellant Ms. Parinitoo Jain for the respondent ORDER By The Court 1. By way of these appeals, the assessee has challenged the judgment and order passed by the Tribunal whereby the Tribunal has partly allowed the appeal preferred by the assessee as well as the appeal preferred by the Department. 2. This Court while admitting the appeals of each year, has framed the following question of law: Substantial question of law for assessment year 1991-92: Whether the .....

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tion of the Assessing Authority in making trading additions merely by presuming percentages of waste, shortages and yield without rejecting the Appellant's Books of Accounts and whether the finding of Tribunal is perverse? Substantial question of law for assessment year 1993-94: Whether the ITAT was justified in law in having upheld the action of the Assessing Authority in having drawn an adverse inference about shortages/wastages inspite of the fact that the Books of Accounts have been main .....

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l established practices of the Appellant accepted by the Department for last so many years and whether the finding of Tribunal is perverse? Substantial question of law for assessment year 1995-96: Whether in any continuing process industry each day's consumption of raw material should be shown in the Accounts Books and failure of the same would justify the invocation of 145(1) I.T. Act so as to increase the Gross Profit from 5.75% to 6% especially when the Accounts Books were not found incor .....

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e year 1991-92 to 1996-97, books of accounts are accepted and for the first time during these five years, the books of accounts are rejected under Section 145(2) of the Income Tax Act. 3.1 He has taken us to the order of the Assessing Officer where the Assessing officer while observing against the assessee, has observed that there is difference of production of 0.14%, for the previous year it was 36.07% whereas on the current year it was 35.94%. Therefore, there was difference of 0.14%. It is st .....

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was round low than that of last year. The assessee was asked to give reasons for the low yield. The assessee was stated that the yield depends on the quality of mustard seed crushed. Day to day stock register is maintained for mustard seed, crushed and oil & cake produced and sold. Whatever, yield was received has been shown in the books of accounts and stock register. 3.2. He has also taken us to the record of CIT (Appeals), para 2.2 which reads as under: The counsel for the appellant has .....

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ut of books of account. The A.O. was not justified in making addition merely on the ground the rate of yield declared by the appellant is alightly in comparison to the rate of yield of last year. Since the A.O. has not brought maintained by the appellant is defective, his action of invoking the provision u/s 145(2) for making the addition deserves to be cancelled and the addition made may be deleted. 3.3. The observations made by the CIT (Appeals) in para 2.3 reads as under: I have considered th .....

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ention of the counsel that the rate of yield depends upon the quality of mustard seeds is acceptable and the ITO has not made out a case that the mustard seed used by the appellant is a better quality. However, the rate of yield shown by the appellant appears to be slightly on lower side. For this purpose, lumpsum addition is required to be sustained. It will be reasonable if an addition of ₹ 40,000/- is sustained, to cover-up the possible leakages and order accordingly. The appellant will .....

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e effect that actual yield obtained by the assessee has not been disclosed in its books of account. In other words, it was observed by the coordinate Bench that addition cannot be made merely on the basis of suspicion and no addition can be made without establishing suppression of production. But the said case was related to the search and seizure where certain discrepancies in stocks were noticed. On physical verification, the mustard oil was found short. But in the instant case, there is no ca .....

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taken us to record and contended that from the assessment year 1988-89 to 2000-01, the gross profit rate varied from 7.09% to the maximum of 9.80% and if the average is taken from minimum 4.82% to maximum 9.80%, it will come to 7.5% around and net profit which has been shown are as under: Shree Hari Industries (Hari Oil Mills) Bharatpur Comparative Statement of Gross Profit & Net Profit for last 13 Years S.N. Assessment Year Sales Gross Profit G.P. Rate Net Profit Before taxation, interest .....

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