2013 (5) TMI 1076

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....tal income of Rs. 3,82,980/-. During the course of assessment proceedings, the assessee was requested to produce the books of account, bills and vouchers in support of the expenditure claimed, bank account statements, invoices for purchase of fruits etc. The AR of the assessee submitted part of information but had not produced the books of a/c, bills and vouchers for the expenditure claimed and lease agreements entered into by the assessee in support of agricultural income. While completing the assessment, the AO had opined that since the assessee had not submitted the books of account, the AO had rejected the book results u/s 145(3) of the IT Act and had estimated the income @ 8% on the net profit on total sales of fruits of Rs. 2,83,15,05....

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....ll the goods with lower margins. Some times, due to crop failure, we have to loose the advances given to the farmers, which cause lot of hardship to the assessee. The above things were brought to the notice of the Assessing Officer during the course of assessment proceedings, but however, the AO has not taken into consideration the arguments put forth by us and has estimated the income @ 8%, which is highly unjustified and unreasonable. We submit that the AO has not given any credence / weight age to the Documentary evidence. The assessee has to correlate the mode of transport and the transporter fixes the rates at the eleventh hour and based on the availability / demand, they Charge higher rates. The activity being predominantly labour ....

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.... amounts which are paid to various intermediaries. 6. The CIT (A) held that there is a merit in the submissions of the assessee and that ends of justice would be achieved if 50% of such receipts are treated as expenses and directed the AO accordingly. 7. The next issue to be considered was with respect to the percentage of margin taken by the A.O. at 8%. The CIT (A) observed that it is a fact that there are risks in procuring, storing, marketing and advancing money to farmers. Further, there is glut in the market at times and taking into consideration the perishable nature of fruits and vegetables. The CIT (A) also opined that proper vouchers cannot be maintained where the cash payment is the norm rather than an exception. 8. The CIT (A)....

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....cknow) ™ (Tribunal) 121]. 3) The learned CIT(A) allowed 50% of receipts of commission of Rs. 5,64,8001- towards expenses i.e., Rs. 2,82,400j-. The assessee had not bifurcated purchases/sales of fruits in the trading account i.e., purchases / sales attributable to trading business and purchases/ sales attributable to commission business and corresponding gross profit in respect of each business. Allowance of 50% towards expenditure by CIT (A) both for trading and also commission business is irrational, since the expenditure for commission business would be minimal, such as telephone expenses only. 4) The learned CIT(A) allowed 50% of the receipts of Rs. 65,280/- towards expenses i.e., Rs. 32,6401-. It may be seen from the P&L a/c....