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2023 (10) TMI 1190 - ITAT DELHIAdditions were made on the ground that Inflated purchase made by showing sale of scrap machinery without corresponding sales or inventory - as per DR CIT(A) committed error in deleting the addition without their being any documentary evidence of sale of scrap machinery or auction documents as claimed at the time of assessment proceedings and relying on the assessment order and sought for reversal of orders - HELD THAT:- CIT(A) after verifying the material on record observed that scrap machinery lying Noida Unit of the assessee was transferred to Kirti Nagar Unit, during the period 07/05/2010 to 09/11/2010 and in the books of Noida Unit, the said machinery has been excluded from the schedule of assets and was included as purchases in the Kirti Nagar Unit. During the year itself the machinery has been sold to one M/s Sh. Mahalaxmi Plywood Industries which has been corroborated with the sale invoices furnished in the paper books before the CIT(A).CIT(A) has also found that the ledger of scrap machinery account for the month of March 2011 which in the format of MM-DD-YYYY, wrongly interpreted as ‘03/05/2011’ instead of ‘05/03/2011’. Considering the fact that sale proceedings are duly accounted for in the books of account and fixed deposits have been made out of the sale proceeding, the finding of the A.O. that the sales are made in the next financial year has been rightly negated by the CIT(A). No error or infirmity in the order of the CIT(A) in deleting the addition, accordingly, we dismiss the Ground No. 1 of the Revenue. Suppression of sales - Addition being margin sales out of books on the basis of consumption of electricity and powder consumed during the year in the manufacturing process - A.O. observed that no raw material (Powder) was issued in the month of February and March 2011, whereas consumption of electrical unit is shown in the respective month and no production of cabinets was shown - CIT(A) deleted the addition - HELD THAT:- As per the record, the assessee had production 4083 unit of cabinets for which no material could have been issued as the materials/powder was supplied by the customer for manufacture of cabinet on job work. The assessee had also furnished detailed reconciliation statement wherein the difference in terms of unit of electricity consumed as recorded by the A.O. was duly reconciled. CIT(A) also found that the main reason for variance is that in the preceding year there was large order of 14 inch TV Cabinets, whereas the production carried out during the relevant year was of 29 inch cabinets. Since 29 inch cabinets were manufactured on larger machines, the electricity consumption is on the higher side. It is also noticed that the report of the Excise Audit for the year does not indicate any material discrepancy in the goods manufactured or any instance of sales outside the books. It is well settled law that the Assessing Officer solely on the basis of variance in power/electricity, additions cannot be made on the allegation of unrecorded sales - No error or infirmity in the order of the CIT(A) in deleting the addition. Revenue appeal dismissed.
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