TMI Blog2014 (1) TMI 1800X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of milk - G.P. addition - Held that:- No sale of milk as evidenced by way of filing bills. The AO / CIT (A) have categorically stated that the assessee failed to submit the details in support of the sale of milk to the tune of 12,15,244/-. Thus, the said assessee‟s failure clubbed with the statements of the employees given on oath became relevant. The arguments relating to the retraction of the said statements by the employees are not sustainable considering the fact that the retraction was done in undated letters without giving sustainable reasons for such retraction. Therefore, in principle, the allegation of the Revenue on utilization of milk for making of the milk products by the assessee is sustainable. Accordingly, the sustenance of addition by the CIT (A) does not call for any interference. The allegation that the additions are made without any help of incriminating material is not sustainable considering the fact that there are multiple statements of the employees together with circumstantial evidences of no supporting registers showing the consumption details of milk constitutes incriminating information pertaining to the business affairs of the assessee in gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, the interest charges u/s 234A, 234B and 234C of the Act are invalid and bad in law. 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of manufacturing and sale of pane and trading in milk and other products. Assessee filed the return of income u/s 139(1) of the Act and the assessment was completed originally u/s 143(3) of the Act. There was a search / survey action on 8.5.2007 on the residential as well as the business premises of the directors / related persons of the assessee (M/s. Punjab Sindh Paneer Group of companies). AO issued notice u/s 153A of the Act on 7.9.2009. In response, assessee filed the return of income declaring the total income of ₹ 5,68,030/-, which was subsequently revised downwards in view of certain mistakes in the return of income. During the assessment proceedings, assessee produced the books of accounts with an exception of production related records. The Gross Profit (GP) of the business shown by the assessee in this year is 20.45% as against the last year‟s GP of 20.58%. The only issue that arose during the search action relates to the reasonability of qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the survey and search action was conducted simultaneously on the same day and also considering the fact that the warrant bears the name of the assessee‟s premises, he upheld the validity of the assessment u/s 153A of the Act. The assessee did not raise the legal issue relating to the invoking of the provisions of section 145(3) of the Act with regard to the rejection of books of accounts. Before the CIT (A), assessee made written submissions mentioning that the assessee purchased 8,03,980 liters of milk of which 2,35,680 liters were sold directly and the balance of 5,68,300 liters were used for dairy / milk products. Assessee, though not maintained production register, has maintained some loose sheets in support of the said claims of the assessee. The trading of milk was a continuous business activity over the years, which was not disturbed by the Revenue in the past. Trading of milk is normally done in the wee hours of the day and no milk will not be found, when the search / survey parties visit the premises after 10 am. These are the perishable goods and the assessee cannot be accused of the non-trading of the milk. CIT (A) considered the above submissions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A of the Act and invoking the provisions of section 145(3) of the Act and also part confirmation of the additions amounting to ₹ 12,16,244/-, the assessee is in appeal before the Tribunal for the assessment year 2006-2007. 7. During the proceedings before us, at the outset, Ld Counsel for the assessee brought our attention to the letter with a request for admitting the additional evidences which contains the audit reports furnished to the Sales Tax Authorities under VAT provisions. After hearing the Revenue‟s objections, Ld Counsel for the assessee did not press the said request. Accordingly, we reject the request of the assessee for admittance of the additional evidences. Further, referring to the grounds, Ld Counsel mentioned that the ground no.1 relates to the validity of the assessment u/s 153A of the Act. In this regard, Ld Counsel brought our attention to the copy of the warrant and mentioned that the warrant is not in the name of the assessee. Further, he mentioned that the warrant is not shown to the responsible Directors of the assessee while executing the search action on the premises of the assessee. He argued that the acknowledgement of the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledger till the cash books, account books and other books are required to be maintained. 12. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. Admittedly, this is the case where the books pertaining to the production, issuance, consumption are not maintained by the assessee. Therefore, the finding of the CIT (A) on this issue is fair and does not call for any interference. Accordingly, ground no.3 is dismissed. 13. Ground no.4 relates to merits of addition of ₹ 12,15,244/- confirmed by the CIT (A) as per the estimations discussed above. We have already extracted the finding of the AO as well as the CIT (A) in the preceding paragraphs of this order. So far as, we have not only upheld the validity of the search assessment but also confirmed the act of rejection of books of accounts. Once the books of accounts are rejected under the provisions of section 145(3) of the Act, best judgment assessment becomes a follow up activity of the AO. In this case, AO has made certain errors while making additions which are subsequently corrected by the CIT (A), determining the GP at 23.23%. 14. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has failed to submit the receipt before the AO, therefore, the AO has rightly disallowed the claim of ₹ 28,500/-. Hence, the ground of appeal is dismissed. 16. During the proceedings before us, Ld Counsel reiterated the submissions made before the lower authorities. 17. On the other hand, Ld DR relied on the orders of the AO and the CIT (A). 18. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On perusal of the order of the CIT (A) in general, para 3.3 in particular, we are of the opinion that the onus is on the assessee to substantiate the claim of deduction u/s 80G before the AO. Even before the CIT (A), the assessee could not furnish the details in support of his claim. Therefore, in our view, there is no infirmity in the order of the CIT (A) and it does not call for any interference. Accordingly, ground no.5 raised by the assessee is dismissed. 19. Ground no.6 relates to the interest charged u/s 234A, 234B and 234C of the Act. Considering the consequential nature of this ground to the above adjudicated grounds, ground no.6 is dismissed as consequential. 20. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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