TMI Blog1998 (2) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CIT(A) which will justify the application of s. 145(1) of the IT Act. The learned counsel has also submitted that the appellant is maintaining proper records of sale and purchase and stock register is maintained as prescribed by the District Food Supplies Department of Punjab Government. 3. The learned Departmental Representative relied on the order passed by the authorities below. 4. The AO has listed all defects at p. 3 of his order and these defects are as follows: "(i) On 24th Dec., 1988, 800 quintals of IR. 8 paddy has been milled and 536 Qtls. of rice is obtained. It is not possible for a shelter of 1-1/2 tone capacity per hour to do so much milling in one day. (ii) Again on 1st Feb., 1989, it is seen that 864 quintals of paddy is milled and 617.75 quintals rice is obtained giving yield of 71.49 per cent. The yield is abnormally high. Also the production shown is much higher looking to the capacity of the machine. (iii) In PR. 106 paddy milling it is seen that in the milling register that on all the dates in October, November, December, 1988 and March, 1989 and April, 1989 daily yield of rice obtained is precisely shown at 65 per cent without variation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or production account but should also be in a position to furnish a tally of raw material and stores issued with that of matching entries regarding production of finished goods as well as other bye-products. In Punjab Trading Co. low yield shown as compared to other cases, is one of the relevant situation for invoking proviso to s. 145(1) of the IT Act. The Hon'ble Orissa High Court in the case of Orissa Fisheries Development Corpn. Ltd. vs. CIT (1978) 111 ITR 923 (Ori) has held that where there is no record or faulty and defective maintenance of stock record regarding details of wastage, shortage, shrinkage and other defects, the AO will be justified in invoking s. 145(1) of the IT Act. 8. The yield becomes also relevant for arriving at correct profit because one has to accept whether there is possibility of creating the sale outside the books of accounts by tampering with the yield of finished goods out of manufacturing process from raw material. One may maintain stock register in most perfect manner but at the same time it is easy to tamper with the yield from raw material used in the manufacturing process. Of course, there has to be a scientific base for arriving at more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the normal rate of yield in this line. Valuing the rate of rice Rs. 350 per quintal he made an addition of Rs. 2,14,980 reflecting the sale from unexplained yield. Aggrieved against the order of the AO the appellant filed appeal before the CIT(A). The CIT(A) has given finding which is as follows: "I have given due consideration to the arguments of the learned counsel and I find that AO while applying the yield rate had not taken into consideration the driage at 2 per cent, the net yield of PR-106 works out to 65.66 per cent and that of IR-8 to 67.62 per cent. These yield rates have been applied in the case of other millers of Bhatinda Range. The plea of the learned counsel that driage may be allowed at 3 per cent is not acceptable since no record of moisture and shortage due to driage has been kept in the stock register. In respect of IR-8 the assessee milled 3,864 Qtls. of paddy and since he has himself shown the yield of 68 per cent no addition is called for. Regarding PR-106, the AO has mentioned that assessee has milled 28,821 Qtls. of paddy whereas it was argued at the appeal stage that actual paddy milled was only 27,621 Qtls. as against purchase of 28,821 Qtls. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... —proviso. In para 2.3 of the impugned order, he observes that yield of rice in respect of PR 106 varies between 60 per cent to 66.66 per cent. In nut-shell both the learned lower authorities have applied estimates. In view of the estimate of the learned lower authorities and additionally in the absence of serious infirmity in the books of accounts of the assessee, we will hold that yield in respect of PR 106 shall be adopted at 65.5 per cent. The additional shall be worked out on the above basis. The net result in that assessee's appeal stand allowed partly in the above terms while the Revenue fails in its appeal." 11. It is quite clear that factual position was not before the Tribunal and therefore, present case is quite distinguishable as compared to the case cited by the learned counsel. The learned counsel has also relied on the decision of the Tribunal for the asst. yr. 1986-87 in the case of ITO vs. M/s Mahavir Rice General Mills, Phagwara. In the said appeal, in para 2 of the order, Tribunal has observed that in respect of paddy belonging to Market Federation yield of PR-106 is shown at 67 per cent. However, the Tribunal has relied on the Department's action in acceptin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being done by the FCI. There is no evidence whatsoever is on the record to support the argument that the appellant that they purchased either inferior paddy or there was more moistured paddy as compared to the moisture available in the paddy purchased by the FCI. We, therefore, decline to interfere in the order of the CIT(A). 14. The third ground of appeal relates to low yield in rice-bran. The learned counsel of the appellant has not pressed ground No. 3. The same is accordingly dismissed. 15. The fourth ground of appeal relates to upholding the addition of Rs. 14,100 on account of alleged unexplained cash credit by the CIT(A). The AO has observed that the appellant introduced cash credit in the name of Shri Vijay Kumar, Accountant, amounting to Rs. 14,100. He has observed that Shri Vijay Kumar was engaged at a salary of Rs. 1,500 p.m. thus drawing salary of Rs. 18,000 per annum. He has observed that the creditor has not withdrawn any amount from his salary account for the period 1st April, 1988 to 4th Jan., 1989 as stated in the recorded statement of Shri Vijay Kumar. He disbelieved the creditworthiness of Shri Vijay Kumar and made an addition accordingly, as income from ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
