HARI INDUSTRIES Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS appeal has been admitted on the following questions of law : "(i) Whether the Hon'ble Tribunal was justified in coming to the conclusion that book result of the assessee are liable to be rejected in spite of the fact that the respondent Department has not taken any ground in appeal before the Hon'ble Tribunal that the learned CIT(A) was not justified in arriving at the conclusion that no case is made out for rejection of account under s. 145(2) ? (ii) Whether the Hon'ble Tribunal was legally justified in arriving at the conclusion that the yield shown by the assessee is definitely low in spite of the supervision and inspection by two Government Departments, i.e., Forest Department and Industries Department by whom the periodical checks were being conducted and certified to be as such as shown by the assessee ? (iii) Whether the assessee was right in using the high yield stumps during the earlier period of the contract and the stumps which contained low oil at the later time because of his business interest and the learned Tribunal was not right in arriving at the conclusion that there is low yield because different period showed different yield ? (iv) Whether the learned Tribunal was legally correct in partly disallowing the expenses with respect to foreign tour though the same had generated the business in foreign -

(2.) BRIEFLY stated the facts of the case are that the assessee M/s Hari Industries which is a partnership firm is engaged in the business of production and sale of cedar wood oil. For the asst. yr. 1993 -94, the assessee filed its return declaring an income of Rs. 7,49, 760. The case of the assessee was taken up for the scrutiny. The AO found that there were discrepancies in the books of account maintained by the assessee and proceeded to assess the income on the best judgment assignment (sic -assessment). The AO made addition of Rs. 2,84,832 on account of sale of cedar wood oil on the basis of the consumption of the packing material, i.e., drums used. Another amount of Rs. 14,02,080 was added to the income of the assessee on the ground that the drums which had been purchased had not been shown in the account and the assessee must have used these drums for selling the oil.

(3.) ADDITION of Rs. 13,22,292 was made on the basis that the assessee in the year in question had shown a percentage yield of 1.6 per cent. There was an abnormal fall in the yield since in the previous year percentage oil yield from the cedar wood was more than 4.6 per cent. The AO held that the yield percentage could not have been less than 4 per cent and thereby made addition of Rs. 13,22,292. Some other addition on account of foreign travel expenses was also made.