Per B.L. Chhibber, Accountant Member - A short but vital issue involved in this appeal is whether the provisions of section 40A(2)(a) are applicable to the case of a co-operative society.

2. The assessee is a co-operative society engaged in collection and sale of milk by collecting it from the primary milk societies and supplying it to the Government Milk Dairy. For chilling the milk, the assessee-society has to use ice. During the course of assessment proceedings, the Assessing Officer noted that the assessee-society had purchased ice from M/s. Shivratna Ice Factory and M/s. Dhavalsingh Ice Factory, Akluj. These factories are owned by Shri P.S. Mohite-Patil, who is the brother of Chairman Shri Raj Singh M. Patil of the assessee-society. On enquiries made with Ice Factories located at Akluj, the Assessing Officer found that the rate of ice for supply to the dairies was ranging from Rs. 90 to Rs. 110 per M.T. The assessee-society had paid average rate of Rs. 175 per M.T. to the ice factory owned by Shri P.S. Mohite-Patil. Accordingly, the Assessing Officer invoked the provisions of section 40A(2)(a) of the Act and made an addition of Rs. 3,73,535, on account of alleged excess pa