TMI Blog2005 (6) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... dition merely on the presumption/assumption as the assessee failed to explain a peculiar type of query of AO regarding consumption. It has also been noticed that the AO did not find any material or evidence that the assessee had made sale out of the books of account. It is settled position of law that on the basis of conjectures, surmises and pure guesswork the addition is not sustainable. On the contrary we find that the assessee has maintained regular books of account and net gain or shortage in process shown by the assessee in other years has been accepted by the Department as evident from the chart, reproduced. Thus, we are of the considered view that the AO is not justified in making impugned additions. We accordingly delete the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common head packing loss/samples to lab/internal guest . These details were maintained by the accounts department. The assessee was asked to give bifurcation of these details more particularly separate details of packing loss, samples to lab and internal guest. During the course of assessment proceedings, it was noticed that such details were available in the production record which is maintained by the production department. Accordingly, the assessee was asked to bifurcate the aforesaid three categories. From the perusal of the details so furnished by the assessee, it is noticed that in the case of ghee, the assessee has shown shortage of 5,579.3 kgs. apart from samples to lab of 71 kgs. and internal consumption for guest of 84.5 kgs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts of milk are mentioned. Similarly, on the despatch side, details of outgoing are mentioned. On scrutiny of the details during the course of assessment proceeding, it was noticed by the undersigned that in the outgoing side, three items are noticeable which are as follows: 1. Guest 2. Internal consumption 3. Shortage I have considered the contention of the assessee. It may be mentioned that the assessee has been handling milk with modern equipment. In view of these facts there should not be any changes of shortage of milk at the stage of chilling, pasteurizing or any other process. However, there may be some losses of milk by way of spilling at the time of manual handling only. It is an admitted fact that in most of the process, the mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f net gain/shortage/process loss in litres which is reproduced as below: Statement showing the yearwise net process gain or shortage/process loss in litres. Financial year Financial yr Asst. Process gain Net process loss Shortage/milk receipt Total Percentage Assessment Percentage Assessment made u/s 1996-1997 1997-98 16,98,761.00 -- 16,62,49,202.00 1.02 (gain) 143(3) 1997-1998 1998-99 -- 6,97,594.60 19,18,97,526.60 0.36 (Loss) 143(3) 1998-1999 1999-2000 -- 4,26,332.40 18,28,07,133.50 0.23 (loss) 143 (1) 1999-2000 2000-01 -- 1,67,516.90 18,08,92,762.40 0.09 (loss) 143(1) 2000-2001 2001-02 4,39,848.00 -- 21,03,38,292.30 0.21 (gain) 143(1) 2001-2002 2002-03 5,20,607.80 -- 20,39,34,070.50 0.26 (gain) 143(1) 2002-2003 2003-04 7,69,472.70 -- 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Under the proviso to sub-s. (1) of S. 145 in any case where the accounts are correct and complete to the satisfaction of the ITO but the method employed is such that, in the opinion of the ITO, the income cannot properly be deduced therefrom, then the computation has to be made upon such basis and in such manner as the ITO may determine. Sec. 145 is mandatory and the Revenue is bound by the assessee's choice of a method regularly employed unless by that method the true income, profits and gains cannot be arrived at. [Addl. CIT vs. Chandravilas Hotel (1986) 57 CTR (Guj) 191 : (1987) 165 ITR 300 (Guj)]. We find that the AO has not pointed out any specific defects in the books of account maintained by the assessee whereas, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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