2014 (5) TMI 702

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....ssessment year 2007-08, claiming following substantial questions of law (Annexure 'A' at Page 79 of the paper book):- "1. Whether the books of account could be rejected merely on the premises that separate record of Government paddy and own paddy was not maintained that too in the absence of any specific defect in the books of account? 2. Whether the addition on account of low yield of rice is sustainable without having any comparable stance and by disapproving the results of the appellant in earlier years? 3. Whether the authorities misdirected in making addition on account of paddy milled outside books of account by taking the yield of bye product as benchmark to calculate the yield of main product, and without appreciating tha....

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.... dismissed the appeal. Hence the present appeal by the assessee. 3. Learned counsel for the appellant-assessee submitted that the decline of growth profit rate by itself cannot be a ground for rejection of books of account. Reliance was placed on judgment in M.Durai Raj v. Commissioner of Income Tax, (1972) 83 ITR 484 (Ker.) in support of the submission. Learned counsel further relied upon judgments in International Forest Co. v. Commissioner of Income Tax, (1975) 101 ITR 721 (J&K), CIT v. Bharat Rice Mills, (2001) 250 ITR 584 (P&H), CIT v. R.K.Rice Mills, (2009) 319 ITR 173 (P&H), Jhandu Mal Tara Chand Rice Mills v. Commissioner of Income Tax, (1969) 73 ITR 192 (P&H) and CIT v. Bindals Apparels, (2011) 332 ITR 410 to submit that the findi....

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....r consideration, the assessee has milled almost equal paddy in comparison to previous year, sales have increased by 29% but manufacturing expenses have increased by 45.93%. the increase in the figures of sales is partly due to opening stock at Rs. 92,94,527/- for which no manufacturing expenses have been incurred as there is no paddy in the opening stock. Had there been no sales out of opening stock, the increase in sales would have been even lower. It shows that either the assessee has inflated the expenses or depressed the sales. Further, the assessee's contention that he had to pay Rs.8,92,106/- to farmers as 'bonus' is not convincing at all as it is a part of purchase price, the assessee has paid it and passed it on to the ....