TaxTMI 
TaxTMI 
2012 (9) TMI 60
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....appellant disputes the addition on account of Freight Charges of Rs. 91,316/- u/s 40(a) (ia) of Income Tax Act, 1961. 3. That without prejudice to the above ground of appeal the appellant disputes the disallowance of Labour Expenses of Rs. 1,00,000/- on estimation basis and the addition thereof ." 4. That without prejudice to the above ground of appeal the appellant disputes the addition on account of Low Household expenses." 2. The first ground is of general nature and does not require separate adjudication. 3. In Ground No. 2, during assessment proceedings, AO noticed that assessee has claimed freight expenses, out of which a sum of Rs. 91,316/- was in respect of truck No. HR- 08-7008 on which no TDS was deducted and therefore,....
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.... during the assessment year 2007-08. If we deduct al l the amount received due to Govt. milling and also reduce the expenditure made for the Govt. milling, we find that the GP ratio during the relevant assessment year is much higher. During the year no Govt. milling was done." 8. The AO was not satisfied with the above reply because method adopted by assessee was not correct, because gross profit for the last year of self-milling @ 0.03% does not appear to be reasonable. He, also noted that husk has been valued at estimated value. Further, it was found that opening stock of the super fine rice was valued at Rs.1349.95 per quintal, whereas the average purchase rate was Rs.1154.69 per quintal and average sale price was Rs.1122.60 per quintal....
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....hat price of bardana was included in the turnover of the last year but not of the year under consideration. Taking in consideration the entirety of facts, the addition made by the AO is restricted to Rs.1 lakh which would meet the end of just ice." 10. Before us, ld. counsel for the assessee reiterated the submissions made before lower authorities. She further submitted that addition has been made on adhoc basis, which is not sustainable in law. On the other hand, ld.DR strongly supported the order of AO and CIT(A) and submitted that specific figures have been pointed out by the AO. 11. After considering rival submissions, we find that over valuation of closing stock cannot be a reason for making addition to the trading results bec....