Income Tax Appellate Tribunal - Ahmedabad
Shree Vignahar Rice Mill, Navsari vs Department Of Income Tax on 24 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "A"
Before SHRI T K SHARMA, JUDICI AL MEMBER
And SHRI A N P AHUJ A, ACCOUNTANT MEMBER
ITA no.2127/Ahd/2009
(Assessment Year:-2006-07)
Deputy Commissioner of M/s Shree Vighnahar Rice
V/s
Income-tax, Navsari Circle, Mill, Near Railway Station,
Navsari At & PO. Rankuwa, Tal.
Chikhli, Tal. Navsari
PAN: AACFV 1105 B
[Appellant] [Respondent]
Appellant by :- Shri Abhijit Kumar N, DR
Respondent by:- Smt. Urvashi Shodhan, AR
Date of Hearing:- 24-08-2011
Date of Pronouncement:- 26 -08-2011
O R D E R
A N Pahuja: This appeal by the Revenue against an order dated 23-03-2009 of the ld. CIT(Appeals), Valsad, for the Assessment Year 2006-07, raises the following grounds:-
"[1] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs.53,88,802/- made on account of understatement of yield for rice.
[2] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred to accept the average yield of rice shown by the assessee even though there the yield of rice of each month was tremendously increased/decreased trend and the assessee failed to justify the same.
[3] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in not exercising powers as provided under rule 46A(3) since the AO was not afforded an opportunity to counter the argument put fourth before him which was never contended during the course of assessment proceedings.
[4] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) eared in deleting the addition made on account of disallowance out of salary and wages, motor power and diesel expenses even though the assessee could not substantiate its claim of expenses with cogent evidence.
2 ITA no.2127/Ahd/2009 [5] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the addition made by the A.O. [6] It is, therefore, prayed to set aside the order passed by the CIT(A) and that of the order passed by the AO be restored.
[7] The appellant craves leave to add, alter or amend any grounds of appeal."
2 Adverting first to ground nos.1 to 3 in the appeal, facts, in brief, as per relevant orders are that return declaring loss of Rs.5,24,536/- filed on 31-12-2006 by the assessee, engaged in milling paddy and producing rice and its bye products, after being processed on 09-01-2007 u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as the "Act"], was selected for scrutiny with the service of a notice u/s 143(2) of the Act on 11-10-2007.During the course of assessment proceedings, the Assessing Officer ['AO' in short] noticed that the assessee reflected yield of rice at 31.59%, broken rice at 33.71% and kushi at 11.35% .The AO was of the opinion that the yield of rice shown by the assessee was very low in comparison to yield shown by the other rice millers in the area. W hile explaining the process of producing rice, the AO pointed out that paddy contains approximately 72% rice, 5% bran and 22% husk and the recovery of rice ranges between 67 to 68%. The normal accepted recovery of rice bran varied between 7 to 8% and the balance 25% paddy husk, was utilized by sugar mills and distilleries as a fuel. The actual quantity and sale price of the husk was not properly disclosed and generally the sale price declared by the rice millers was much lower. Since yield reflected by the assessee was low, the AO asked the assessee vide questionnaire dated 20/10/2008 and show cause notice dated 24/11/2008 to furnish the item-wise quantitative details of raw materials, finished goods and bye products along with shortage and yield. In response, the assessee furnished details, revealing average yield of Rice @ 31.59%, Broken Rice @ 33.71% and Kushi @11.35%. Overall yield 3 ITA no.2127/Ahd/2009 of main product and bye products viz. Rice, Vatla (Broken Rice), and Kushi was shown @ 76.64%. W hile referring to following month wise working of yield of rice and bye products furnished by the assessee Mo n th Pr od uc ti o n Ric e Br ok en r ic e K us h i S hor t Mo n th m ill i n g ( po n i a / v at l a) ag e l y yi e l d Q t y- % Q t y. % Q t y. % % % A pr il ' 98 8 .1 0 32 0 .5 0 32 . 44 31 9 .0 0 32 . 28 10 4 .4 0 10 . 57 0. 1 0 75 . 29 05 Ma y -- -- -- -- -- -- - _ J un e -- -- -- -- -- -- -- -- --
July -- -- -- -- -- -- -- -- --
A ug . -- -- -- " -- -- -- -- --
S ep . 48 5 .1 0 33 0 ,0 0 68 . 03 19 . 00 3. 9 2 26 . 75 5. 5 1 5. 1 7 77 . 46
O c t. 11 4 73 . 02 38 0 6. 2 5 33 . 18 34 4 7. 9 5 30 . 05 13 6 9. 1 0 11 . 93 75 . 16
No v . 10 4 98 . 97 26 5 1. 5 0 25 . 25 32 1 9. 7 5 30 . 67 11 2 4. 2 0 10 . 71 0. 0 2 66 . 63
Dec , 11 0 38 . 14 32 0 6. 5 0 29 . 05 46 2 5. 0 0 41 . 90 13 7 9. 3 0 12 . 50 0. 0 4 83 . 45
J an ' 10 2 52 . 63 30 9 1. 5 0 30 . 15 32 4 3. 0 0 31 . 63 11 5 6. 1 0 11 . 28 0. 3 0 73 . 06
06
Fe b. 10 6 76 . 15 32 7 5. 0 0 30 . 68 36 9 8. 0 0 34 . 64 11 0 9. 4 0 10 . 39 75 . 71
Ma r c h 70 4 14 . 73 30 3 7. 5 0 43 . 30 24 7 1, 0 0 35 . 23 81 5 .8 5 11 . 63 4. 0 1 90 . 16
62 4 26 . 84 19 7 18 . 75 31 . 59 21 0 42 . 70 33 . 71 70 8 5. 1 0 11 . 35 0. 5 5 76 . 64
the AO observed that in the month of September, the yield of rice was at 68.03% and broken rice at 3.92% while in the immediate succeeding month, the yield of rice and broken rice was shown 33.18% and 30.05% respectively and in the last month of the year, the yields of both products was shown 43.30% and 35.23% respectively and combined yield @ 78.53%. W hile referring to 4 ITA no.2127/Ahd/2009 following details of yield shown by the assessee vis-a-vis other millers Name of Name main product and Percentag assessee by byproduct e of yield shown Rice Broken Combi Kuski Rice ned (Ponia yield of Vatla) Rice & Broken Rice Yield shown by 31.59 33.71 65.30 11.35 76.64% the assessee Yield shown by the other rice miller Nilaben P. 57.57 12.01 69.58 6.18 75.76% Gandhi Prop, of Siddhnath Traders (Chikhli) Jindal Rice Mill 52.66 15.03 67.69 12.49 80.18% Agrawal Agro 52.93 13.79 67.72 10.87 77.60% Food Products Advance Rice 51.03 17.13 68.16 8.97 72.19% Mill Shree Navsari 54.54 12.57 67.11 8.44 75.55 Khedut Sahakari Society Ltd.
the AO showcaused the assessee as to why yield of main product and byproducts (Rice & Broken Rice) should not be adopted on the basis of yield reflected by other rice millers in the area. However, the assessee did not respond to the showcause notice. Accordingly, 5 ITA no.2127/Ahd/2009 while referring to decision in Sumati Dayal Vs. CIT ,214 ITR 801 (SC), the AO concluded as under:
"[3.13] Keeping in mind that the assessee failed to prove the correctness of its production result of main product with supporting documentary evidence, it is held that the assessee has suppressed yield of rice which fetches higher income. It is further held that the yield of Broken Rice (Ponia/vatla) was inflated to compensate the understatement of yield of rice. As such, the yield of rice as shown by the assessee is not accepted despite the fact that the over all yield shown by the assessee is reasonable. Since the assessee failed to furnish comparative result of yield of similar case, the yield of rice and broken rice (ponia/vatla) is estimated on the basis of the yield declared by the other rice miller as mentioned in para no.6. In the case of Smt. Nilaben P. Gandhi Prop, of Siddhnath Traders, Chikhli, the yield of rice was shown @ 57.57%, broken rice 12.01, kuski at 6.18 and overall yield was at 75.76% even though the year as considered was the first year of her business. In the case of Agrawal Agro Food Products, the yield of rice was shown at 52.93%, broken rice at 13.79%, kuski at 10.87% and overall yield at 77.60%. Similar is the position in other two cases leaving minor deficit. After considering all the sounding circumstances and facts, the yield as shown by Agrawal Agro Food Products was adopted in the case of assessee and understatement of yield of Rice worked out hereunder:
Sr. No. Item of products Yield shown Yield Under by Agrawal shown by statement of Agro Food the yield Products assessee 1 Rice 52.93 31.59 (-) 21.34% 2 Broken Rice 13.79 33.71 (+) 19.92% (Ponia/Vatla) 3 Kushki 10.87 11.35 (+) 0.48% [3.14] Understatement of yield
(i) Rice by (-) 21.34% It is observed from the foregone paras that the assessee has understated the yield of rice by 21/34% in comparison to yield shown by the other rice miller of this locality, quantified in weight at 13323.78 quintals, valued at Rs.1,73,20,914/- (a), 13.00/- per kg. (average sale price). The assessee did not offer any explanation in this regard with cogent evidence.
6 ITA no.2127/Ahd/2009
(ii) Broken Rice/Ponia/Vatla) by (+) 19.92% It is general practice in this line of business that the manipulation of the yield is exercised by inflating the yield of byproducts and compensating the same by suppressing the main products which fetches the higher rates with intention to reduce the profits. In this instant case, the assessee has inflated the yield of Broken Rice (Ponia/Vatia) by 19.92% quantified in weight at 12434.04 quintals, valued at Rs.1,18,12,388/- @ 9.50/- per kg. (average sale price). It leads to believe that the excess yield shown in Broken Rice (Ponia/Vtla) is compensated in understatement of yield of rice. The understatement in yield of rice is worked out based on the yield shown by the other rice miller, which includes the inflation of yield in Broken Rice (ponia/vatla). Since the assessee has compensated the yield of rice by inflating yield of Broken Rice (ponia/vatla), the value of broken rice as worked out above is set off against the value of understatement of yield of rice as worked out above.
(iii) Kushki inflated by (+) 0.48% Similarly, the assessee has inflated the yield of Kushki by 0.48% quantified in weight at 299.31 quintals, valued at Rs.1,19,724/- @ 4/- per kg. (average sales price). Since the assessee has compensated the yield of rice by inflating yield of kuski, the value of kuski as worked out above is set off against the value of understatement of yield of rice as worked out above.
[3.15] As discussed above that the manipulation of the yield is exercised by inflating the yield of by-products and compensating the same by suppressing the main products which fetches the higher rates with intention to reduce the profits, the value of inflated yield of Broken Rice and kuski are set off against the value of suppressed yield of rice. The remaining value of suppressed yield of rice worked out to Rs.53,88,802/- [17320914 - 11812388 - 119724]. Since the assessee has already accounted for all the expenses in its books of account, the entire value of suppressed yield of rice of Rs.53,88,802/- is added to the total income of the assessee."
3. On appeal, the learned CIT(A) deleted the addition in the following terms:-
"5.3 I have considered the assessment order as well as the detailed submission of the AR. it is seen from the assessment order that the AO stated that he had issued a show cause notice dated 22-12-2008 and in response to that the-appellant had not responded. The appellant stated that the said notice was received on 29-12-2008 and he had submitted a reply to the said notice. The relevant Para 4 of the said notice related to 7 ITA no.2127/Ahd/2009 the addition under this ground is reproduced hereinbelow from the copy of the said notice filed by the appellant.
"........ You were asked to furnish comparative details of yield of main product and byproducts (item wise rice, vatla / Kanki, Menda kuski, kuski, kusko etc.) for the last three years. However you have furnished the details of yield for the year under consideration only. Verification of yield as shown, it is noticed that the yield of rice was shown at 31.59% only. The yield of rice was shown by you is too low in comparison to other rice miller of this area. Please explain as to why yield of main product and by products in your case should not be adopted on the basis of other mills of similar locality....."
It is seen from the notice that the AO has simply mentioned that the yield of the appellant was too low in comparison to other rice millers of this area but he has not mentioned any thing about the relevant data as well as yield of the other rice millers. Also the said notice does not indicate any intention of the AO to suggest that the appellant had not maintained correct and complete books of accounts and the method of accounting was such that it was not possible to deduce the correct amount of profit. It is also seen from the assessment order that the appellant had produced all the books of accounts alongwith other details including quantitative information and the AO himself has admitted that the books of accounts produced were examined on test check basis. However, the AO has not pointed out any defect in the books of accounts and has not invoked the provisions of Section 145 of the Act to justify his action for estimation of yield. Section 145 would be attracted only to a case where either the accounts are not correct or complete to the satisfaction of the AO or the method of accounting employed is such that in the opinion of the AO, the income of the assessee could not be properly deduced from such accounts maintained by the assessee. It is seen from the entire assessment order that the AO had not found any sales outside the books of accounts or had not found any instance where the head rice was sold as broken rice and he had also not given any clear finding to suggest that the accounts were not correctly and completely maintained. The presumption of the AO that by showing low yield of rice, the appellant might have sold the same as broken rice to reduce the profit is totally unsupported by any material or evidence and more particularly totally irrelevant when he himself stated that the appellant had produced books of accounts and other details which were verified by him on test check basis. It is seen that the AO acted hypothetically and presumed on his own that the appellant might have reduced profit by showing low yield of rice and selling the same as broken rice without advancing a single instance of such sale by the appellant. I also found force in the arguments of the AR that the AO has not given any data or information of other millers with whom the appellant's case was compared with. I also found force in the arguments of the AR that the main reason for low yield of the appellant was the fact that he was a manufacturer of graded rice whereas the other manufacturers as quoted by the AO were not manufacturers of graded 8 ITA no.2127/Ahd/2009 rice. The AO has not examined this crucial aspect and very casually compared the yield of all other cases with that of the appellant. It is seen from the assessment order as well as the submission that the appellant had furnished complete quantitative details and had maintained complete books of accounts and quantitative records and the books of accounts were also examined U/s. 44AB of the Act. It is also seen that the appellant had shown the yield consistently at the same level and the gross profit margin was also more or less comparable with the performance of earlier years. It is also seen that the appellant had shown two different qualities of broken rice and the high quality broken rice called Poniya was sold in a range of Rs.800/- to Rs.925/- where as the low quality of broken rice called Vatla was sold between Rs.600/- to Rs.740/- during the year under appeal. Such type of classification of different by products and other relevant information of sale value of high quality of graded rice in cases of other millers is glaringly missing in the assessment order. This clearly shows that the AO made the comparison very casually, without verifying different factors affecting the yield of different millers which suggests that the yield has been estimated by the AO on surmises and conjectures and it is not based on any material or any cogent evidence on record. It is also true that rice milling is an agro based industry and there are so many factors affecting the yield right from purchase of raw material till the final production. The standard adopted by the AO by comparing the case of the appellant with the cases of other millers without looking into the detailed production process of each of these millers, without considering their locations, customers, quality of paddy and other outputs etc. is arbitrary. It is seen in the case of the appellant that their accounts were audited u/s. 44AB of the Act, they had maintained quantitative records of purchase, sales and production, their yield ratio of last five years was favorably comparable and almost at the same level and the AO has not pointed out any defects in the accounts and other records maintained by the assessee and therefore, the ratio of Hon'ble Amritsar Bench of IT AT in the case of Shankar Rice Co. (Supra) is applicable to the facts of the appellant. Considering all these facts, submission of the appellant and various case laws cited by the appellant I find that the action of the AO to estimate the yield without pointing out any defects in the books of accounts, without analyzing the facts of different comparable cases with that of the appellant as well as without advancing any cogent evidence from materials on record, is totally unjustifiable and therefore, I direct the AO to delete the addition of Rs.53,88,802/- on account of understated yield of rice. In the result this ground No. 2 stands allowed."
4. The Revenue is now in appeal before us against the aforesaid findings of the learned CIT(A). The learned DR supported the findings of the AO while the learned AR on behalf of the assessee supported the impugned order and relied upon the decision dated 31-10-2008 of the ITAT Ahmedabad Bench-A in the cases of ITO vs. 9 ITA no.2127/Ahd/2009 M/s Kailash Powa Mill, Navsari, and others in ITA no.1960 to1971, 1976to1989 & 2006-2008/Ahd/2008.
5. W e have heard both the parties and gone through the facts of the case as also the aforesaid decision. As is apparent from the facts narrated in the impugned orders, the AO nowhere recorded any finding that the books of account maintained by the assessee were incorrect, rendering it impossible to deduce the profit and despite that he proceeded to estimate the yield, invoking the principles of best judgment. The ld. CIT(A),on the other hand, observed that the main reason for low yield of the appellant was the fact that he was a manufacturer of graded rice whereas the other manufacturers as quoted by the AO were not manufacturers of graded rice. The AO made the comparison very casually, without verifying different factors affecting the yield of different millers and is not based on any material or any cogent evidence on record. The standard adopted by the AO by comparing the case of the appellant with the cases of other millers without looking into the detailed production process of each of these millers, without considering their locations, customers, quality of paddy and other outputs etc. is arbitrary, the ld. CIT(A) added. Accordingly, the ld. CIT(A) concluded that the action of the AO to estimate the yield without pointing out any defects in the books of accounts, without analyzing the facts of different comparable cases with that of the assessee, is totally unjustifiable and therefore, deleted the addition. The Revenue have not placed before us any material, controverting these findings of facts recorded by the ld. CIT(A). Even in response to a specific query by the Bench, the ld. DR did not point out any material ,which was admitted by the ld. CIT(A) by way of additional evidence nor pointed out any defects in the books, noticed by the AO. In the absence of any material defects in the books of accounts, audited results could not be rejected. Hon'ble Gauhati High Court in Aluminium Industries (P) Ltd. v. CIT (I.T.R. No. 12 of 1990) observed that a lower rate of gross profit declared by the assessee as compared to the previous year, would not in itself be sufficient to justify any addition. The mere fact that the percentage of loss or gross profit is high or low in a particular year does not necessarily lead to inference that there has been suppression. Low profit or lower yield is neither a circumstance or material to justify addition of 10 ITA no.2127/Ahd/2009 profits. The ratio of the judgments in Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC); Raghubir Mandal Harihar Mandal v. State of Bihar [1957] 8 STC 770 (SC); State of Kerala v. C. Velukutty [1966] 60 ITR 239 (SC); State of Orissa v. Maharaja Shri B.P. Singh Deo [1970] 76 ITR 690 (SC); Brij Bhusan Lal Parduman Kumar v. CIT [1978] 115 ITR 524 (SC); Chouthmal Agarwalla v. CIT [1962] 46 ITR 262 (Assam); R.V.S. and Sons Dairy Farm v. CIT [2002] 257 ITR 764 (Mad); International Forest Co. v. CIT [1975] 101 ITR 721 (J & K) ; M. Durai Raj v. CIT [1972] 83 ITR 484 (Ker); Ramchandra Ramnivas v. State of Orissa [1970] 25 STC 501 (Orissa); Action Electricals v. Deputy CIT [2002] 258 ITR 188 (Delhi) and Kamal Kumar Saharia v. CIT [1995] 216 ITR 217 (Gauhati) indicate that the AO is not fettered by any technical rules of evidence and pleadings, and he is entitled to act on material which are not acceptable in evidence in a court of law, but while making the assessment under the principles of best judgment, the Income-tax Officer is not entitled to make a pure guess without reference to any evidence or material. There must be something more than a mere suspicion to support the assessment. Low profit in a particular year in itself cannot be a ground for invoking the powers of best judgment assessment without support of any material on record.
5.1 In the case of M/s Kailash Powa Mill, Navsari, and others(supra), while adjudicating a similar issue, a co-ordinate Bench relied on decisions in Pandit Bros. v. CIT(1954) 26 ITR 159 (P & H) Shankar Rice Co. vs. ITO,72 ITD 139(ASR)(SB) in concluding that rejection of book results without pointing out any defects in books of accounts, could not be sustained.
5.2 The Hon'ble Gujarat High Court in the case of CIT Vs. Amitbhai Gunwantbhai, 129 ITR 573 held that if there was no challenge to the transactions represented in the books then it is not open to Revenue to contend that what is shown by the entries is not the real state of affairs. Secondly, even if for some reason, the books are rejected it is not open to the AO to make any addition on estimate basis or on pure guess work. Since the Revenue have not referred us to any material contrary to the aforesaid findings of the ld. CIT(A), we are opinion 11 ITA no.2127/Ahd/2009 that the AO was not justified in rejecting the book results and add an estimated amount . Hon'ble J & K High Court in the case of International Forest Co. v. CIT [1975] 101 ITR 721 held that in the case of a forest coupe, mere low yield of out- turn compared to earlier years was not sufficient to make an addition. If there was no challenge to the transactions represented in the books, then it is not open to revenue to contend that what is shown by the entries is not the real state of affairs. In the light of aforesaid observations of the Hon'ble jurisdictional High Court, considering the facts and circumstances in the instant case, we do not find any infirmity in the findings of the learned CIT(A) and accordingly, ground nos 1 to 3 in the appeal of the Revenue are rejected.
6. Ground no.4 in the appeal relates to disallowance out of salary and wages, motor power and diesel expenses etc.. On verification of trading account and referring to following comparison of expenses AY 2004-05 AY 2005-06 Salary & W ages 416885 451000 Motor Power 341480 278318 Transportation charges 1064746 2201239 Labour charges 525037 1496465 Diesel expenses 896193 988589 Factory expenses 28376 75880 Ship Transportation charges 24500 47293 Generator Repairing & 25917 37746 Maintenance expenses Total 5576530 the AO observed that the above expenses increased disproportionately even though turnover as well as purchases declined considerably vis-à-vis results of the preceding year. Accordingly, the assessee was showcaused as to why disproportionate expenses should not be disallowed. However, the assessee did not respond to the show cause notice nor submitted any supporting documentary evidence to substantiate its claim of above expenses. Accordingly, while referring to decisions in Laxmi Ratan Cotton Mills Co. Ltd. Vs. CIT 73 ITR 634 (SC) ;CIT Vs. 12 ITA no.2127/Ahd/2009 Swadeshi Cotton Mills Co. Ltd 63 ITR 57, 60 (SC), CIT v Chandravilas Hotel, 164 ITR 102 (Guj.);CIT v Shahibaug Entrepreneurs (P.) Ltd., 215 ITR 810; CIT Vs. Industrial Development Corporation of Orissa Ltd. 249 ITR 401 (Ors.) and CIT Vs. Udaipur Mineral Development Syndicate P. Ltd.,269 ITR 263 (Raj) , the AO disallowed 10% of the aggregate expenses of Rs.5576530/- ,resulting in addition of Rs.5,57,653/-.
7. On appeal, the learned CIT(A) reduced the disallowance to 10% of Rs.38,58,623/- in the following terms:-
"7.3 I have considered the assessment order as well the submission of the AR. It is seen that the variation in salary and wages expenses was a normal variation where the amount has increased from Rs.4,16,885/- to Rs.4,51,000/- which is less than 10% which can be attributable to normal increment in salary of employees. It is also true that the amount of motor power expenses has in fact reduced from Rs.3,41,480/- to Rs.2,78,318/-. Also the variation in diesel expenses is about 10% from Rs.8,96,193/- to Rs.9,88,589/- and I find some force in the argument of the AR that the price of petroleum products had increased in earlier years. Therefore, I find some justification in variation of expenses under these three heads. However, apart from these three heads, the fluctuation found under other heads are disproportionately high and it is seen from the assessment order as well as the submission of the AR that the appellant has failed to provide proper justification in respect of variation under these heads of expenses with supporting evidences. Such manifold rise without justifiable evidences cannot be accepted and therefore, I agree with the action of the AO to disallow some part of such expenses. I am therefore of the opinion that the disallowance at 10% out of under mentioned heads of expenses would be justifiable.
Particulars Rs.
Transportation Charges 2201239
Labour Charges 1496465 I
Factory Expenses 75880
13 ITA no.2127/Ahd/2009
Ship Transportation Charges 47293
Generator Repairing & 37746
Maintenance expenses
Total 3858623
I therefore direct the AO to make addition of Rs.3,85,862/- being 10% of Rs.38,58,623/- as against the addition of Rs.5,57,653/- made by the AO. Thus this ground of appeal is partly allowed."
8. The Revenue is now in appeal before us against the aforesaid findings of the learned CIT(A). The learned DR supported the findings of the AO while the learned AR on behalf of the assessee supported the conclusion of the ld. CIT(A)
9. W e have heard both the parties and gone through the facts of the case. The ld. CIT(A) reduced to the disallowance to 10% of a portion of the expenses while holding that variation in salary and wages expenses was due to normal increment in salary of employees and the motor power expenses in fact reduced from Rs.3,41,480/- to Rs.2,78,318/-. The diesel expenses increased by about 10% from Rs.8,96,193/- to Rs.9,88,589/- due to increase in the price of petroleum products .Accordingly, the ld. CIT(A) deleted the disallowance of expenses under these three heads. Since the AO made an estimated disallowance of 20% of the expenses while the ld. CIT(A) reduced the estimate to 10% of expenses except under aforesaid three heads and the ld. DR did not place any material before us so as to enable us to take a different view in the matter, we do not find any infirmity in the approach of the ld. CIT(Appeals), restricting the disallowance to 10% of the aforesaid expenses. In view thereof, ground no.4 in the appeal is dismissed.
14 ITA no.2127/Ahd/2009
10. Ground nos.5 and 6 being mere prayer nor any submissions having been made on these grounds, do not require any separate adjudication while no additional ground having been raised before us in terms of residuary ground no. 7 in the appeal, all these grounds are, therefore, dismissed.
11 In the result, appeal is dismissed.
Order pronounced in the court today on 26-08-2011 Sd/- Sd/-
(T K SHARMA) (A N P AHUJA) JUDICI AL MEMBER ACCOUNTANT MEMBER Dated : 26-08-2011 Copy of the order forwarded to:
1. M/s Shree Vighnahar Rice Mill, Near Railway Station, At & PO. Rankuwa, Tal. Chikhli, Tal. Navsari
2. Deputy Commissioner of Income-tax, Navsari Circle, Navsari
3. CIT concerned
4. CIT(A), Valsad
5. DR, ITAT, Ahmedabad Bench-A, Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABAD