TaxTMI 
TaxTMI 
2016 (9) TMI 438
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....s are concerned, the assessee submitted before the AO that the assessee's labourers are employed to de-husk the coconuts at the purchase point and that the husk is left with the sellers and therefore accounting sales or closing stock of husk does not arise. However, the assessee has not explained as to why the assessee has to employ its own labourers to de-husk the coconuts and thereafter take the coconuts only and let the husk with the sellers. According to the AO, the assessee is purchasing coconuts that have already been de-husked. The AO did not accept the assessee's statement that the de-husking charges are accounted and claimed as expenditure and the husk which is used in various industries including coir industry is left with the sellers. The AO observed that the assessee is running a coir products unit and the husk is the main raw material for that industry. Therefore, the assessee's stand that the husk is left with the sellers was not believable/acceptable especially when the labourers produced by the assessee before the A.O. stated that they are employed to issue husk to the coir industry run by the assessee. In view of the above, the sum of Rs. 13,95,106/- claimed toward....
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....hat whey the assessee leaving husk of coconut with the sellers, the raw material can be used in coir industry run by him even incurring de-husking expenses?" 7. The assessee in its CO in ground No.2 raised objection, as it is aggrieved by the order of CIT(Appeals) sustaining an addition of Rs. 2,79,020 with respect to dehusking charges. 8. We have heard both the parties and perused the material on record. The ld. AR for the assessee reiterated the submissions made before the CIT(Appeals). The assessee had submitted the details of purchase of coconuts after dehusking. It was explained that the dehusked coconuts are beneficial to the assessee in as much as transportation is easier and is more viable cost-wise also. A list of 1173 nos. of vouchers was produced before the AO. It was submitted that the dehusking is done at the purchase point and labourers of the assessee were sent in trucks to do dehusking. The AO has not recorded the statement of labourers produced before him, but simply wrote their names against the signature. The CIT(Appeals) was of the view that there would be some inflation in the expenses claimed by the assessee and made a fair estimate that 20% of dehusking....
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....ut. The CIT(A) therefore restricted the disallowance to 10% of total expenditure. 12. Aggrieved by the order of the CIT(Appeals), both the revenue and the assessee by way of CO are in appeal before us. 13. We have heard the rival submissions and perused the material on record. The ld. AR for the assessee submitted before us that though labourers were produced before the AO, but the AO failed to record their statement. He submitted that sample vouchers were produced before the CIT(Appeals), but the CIT(A) though found them to be in order, he however was of the view that the labourers were illiterates and would have signed the vouchers without knowing the contents. He was of the view that when self-made vouchers are made, there is a temptation to inflate the expenses. In these circumstances, the CIT(A) restricted the disallowance at 10% of total expenditure. 14. We subscribe to the view of the CIT(Appeals) that in the self-made vouchers, the probability of inflation has to be taken into account. The CIT(A) has reasonably restricted the disallowance to the extent of 10% of the total expenditure. Hence, we confirm the order of the CIT(Appeals) and dismiss the respective ground....
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.... mentioned in the voucher was for more than Rs. 20,000/- as the vouchers were prepared for transaction in respect of 3 to 4 farmers. Vouchers and bills were produced before the CIT(A), which had been produced before the AO during assessment proceedings in a booklet form. The CIT(Appeals) observed that the AO has not disputed the genuineness of purchases. The assessee submitted that the GP and NP ratio increased substantially during the year under consideration compared to the previous two years, even though turnover has increased substantially. 17. During appellate proceedings, the assessee has furnished a booklet containing copies of all vouchers for purchase of coconuts. The CIT(Appeals) on examination of the same found that, wherever bill exceeded Rs. 20,000/-, the voucher is made in the name of purchase route not in any individual name on the reverse of the bill, but 3 to 4 transactions are recorded wherein the name of the persons and amount are mentioned which are less than Rs. 20,000/- in each case. These vouchers were submitted to the AO during the assessment proceedings. 18. The CIT(Appeals) held that the assessee is into this business for the past over 30 years. This....