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2014 (4) TMI 359 - AT - Income TaxSuppressed production of sponge iron – Unaccounted sales – Held that:- Month to month basis quantitative details are tallied with the books of account - consumption iron ore on day to day basis is entered in the Central Excise Records - The assessee has declared yield at 33% on average basis - This is supported by the survey report of Joint Plant Committee. As per their report 2.5 MT of iron ore lump is required for production of 1 MTA of calibrated lump ore and producing 1 MT of sponge iron, 1.4 MT of calibrated lump ore is required - CIT(A) was of the view that once the authorities accepted the quantitative details furnished by the assessee which tallied with the books of account the same cannot be rejected unless there is conclusive evidence to suggest that the assessee made any unaccounted sales. The lower authorities accepted that purchases are supported by bills and also it is in conformity with the Excise records - Sales also tallied with the books of account and purchases and sales are fully vouched and furnished for verification - The assessee has been following the same method of accounting consistently - There is no variation of in accounting of any expenses or receipts - Unless and until the books of account of the assessee are impeached by any authority, it is incumbent upon the authorities to accept the books of account as it reflects true and correct profit of the assessee - There may be deficiency in closing stock - The reason for deficiency in closing stock is that sponge iron used for manufacturing MS Ingots and AO assumed that only MS scrap is used for manufacturing sponge iron and took the percentage based on previous six months consumption - If both MS scrap and sponge iron consumption are taken together no variation will be there in determining production of sponge iron - Thus, there will be no variation in the closing stock. The AO having got verified from the Inspector regarding consumption of sponge iron/ melting scrap, he cannot reject the same as the Inspector's report is in favour of the assessee - the addition made by the AO towards suppressed production of sponge iron cannot be sustained – Decided in favour of Assessee.
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