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2017 (12) TMI 298 - AT - Income TaxSuppression of closing stock - Held that:- It is evident that the Assessing Officer without calling for an explanation from the assessee to reconcile the difference has made the addition alleging suppression of closing stock. However, before the first appellate authority, the assessee has reconciled the difference with supporting evidence which was sent for verification of Assessing Officer. - Decided against revenue Addition on account of inflated purchases - Held that:- As seen, on the basis of a monthly statement filed by the assessee, the Assessing Officer has made the addition alleging purchase suppression. However, before the first appellate authority, the assessee has reconciled the difference and the learned Commissioner (Appeals) after examining the reconciliation statement having found that it is on the basis of the books of account of the assessee has deleted the addition. Further, it is evident on record, the first appellate authority has sent the evidences filed in the paper book for the examination of the Assessing Officer. Therefore, the allegation of the Learned Departmental Representative that the Assessing Officer was not given opportunity to examine additional evidence is unacceptable. It is further to be noted, the Learned Departmental Representative has not been able to controvert the factual finding of the first appellate authority that the reconciliation submitted by the assessee is on the basis of books of account. - Decided against revenue Suppression of production resulting in unaccounted sales - Held that:- Commissioner (Appeals) having examined the documentary evidences brought on record being satisfied with the claim of the assessee has deleted the addition. As far as the contention of the Learned Departmental Representative that learned Commissioner (Appeals) has deleted the addition on the basis of addition evidence is concerned, we are unable to accept the same. As could be seen from the impugned order of the learned Commissioner (Appeals), the documentary evidences furnished by the assessee before the first appellate authority in a paper book were sent to the Assessing Officer for his examination and comments. It also emerges from record that during the remand to the Assessing Officer, the assessee has made ground–wise submissions before the Assessing Officer by referring to the relevant supporting documents. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised. Addition on account of sale of waste biscuits / biscuit powder / broken biscuit - Held that:- As could be seen, other income shown by the assessee is from sale of broken biscuits, and powder biscuits. While burnt biscuits are of no use, broken biscuits are re–usable in manufacturing process and they have been sold at ₹ 26 per kg. Whereas, biscuit powder is not fit for human consumption, hence, sold at ₹ 1.48 per kg. These facts have been demonstrated through documentary evidence including Central Excise registers before the first appellate authority. Notably, the learned Commissioner (Appeals) after verifying the production records, Excise records, has found that the uniform rate cannot be applied to regular biscuit and burnt / broken / power biscuits. It is a fact on record that the evidences produced by the assessee were sent for examination of the Assessing Officer in remand and before the Assessing Officer the assessee has made detailed submissions justifying its claim. Thus, the learned Commissioner (Appeals) having recorded a purely factual finding based on documentary evidence and which could not be controverted by the Department Disallowance of expenditure on foreign travel - Held that:- As could be seen from the facts on record, the specific allegation of the Assessing Officer is, except the board resolution and few fax messages, the assessee has failed to bring on record supporting documentary evidence to demonstrate the purpose of foreign travel undertaken by the directors and executives. As in assessee’s own case for immediately preceding assessment year, i.e., 1995–96, the Tribunal has upheld 50% disallowance of foreign travel expenses in respect of the very same persons. Therefore, respectfully following the aforesaid order of the Tribunal, we restore the disallowance made by the Assessing Officer. This ground is allowed. Unutilised MODVAT credit - Held that:- The issue stands decided in favour of the assessee by the decision of the Hon'ble Supreme Court in CIT v/s Indo Nippon Chemicals Co. Ltd., [2003 (1) TMI 8 - SUPREME Court]. Ad–hoc disallowance made by the Assessing Officer on account of suppressed sale of confectionary - Held that:- Commissioner (Appeals) has recorded a factual finding that most of the discrepancies found by the Assessing Officer are on account of maida which is not a raw material for confectionary. That being the case, there is no justification for even sustaining a part of ad–hoc disallowance made by the Assessing Officer in respect of confectionary. Therefore, we delete the addition sustained by the learned Commissioner (Appeals). Disallowance of deduction claimed on account of spoilt and damaged goods - CIT-A sustained the disallowance @ 5% out of the deduction claimed on account of mouthwash and toothbrush - Held that:- We are of the opinion that assessee’s claim of deduction on account of spoilt and damaged goods insofar as it relates to biscuits and confectionaries is allowable, since, assessee itself manufactures such items. However, as far as mouthwash and toothbrush are concerned, the assessee has not manufactured such products, therefore, the assessee could have returned such damaged goods to the manufacturer and claimed reimbursement. In view of the aforesaid, accepting the reasoning of the first appellate authority we dismiss the grounds raised by the Department as well as by the assessee. Addition made with regard to suppressed production resulting in suppressed sales of biscuits - Held that:- As compared to the yield of Mumbai unit in the preceding assessment years as noted above, the assessee has shown a higher yield for the Mumbai unit in the impugned assessment year. Therefore, on over all consideration of facts and circumstances of the case, we are of the considered opinion that rejection of books of account and addition made on estimate basis alleging suppression of sale is not in accordance with law. Therefore, even a part of addition made by the Assessing Officer cannot be sustained. Accordingly, we delete the addition made by the Assessing Officer fully. Disallowance of deduction claimed under section 80I and 80IA - Held that:- As in assessee’s own case for assessment year 1995–96, we find that the Tribunal has upheld the disallowance of deduction claimed under section 80I and 80IA of the Act. Respectfully following the aforesaid decision of the Tribunal, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised. Disallowance of depreciation on guest house - Held that:- The issue has been decided against the assessee by the Tribunal in the preceding assessment years as well as by the decision of the Hon'ble Supreme Court in Britannia Industries Ltd. v/s CIT(2005 (10) TMI 30 - SUPREME Court). Disallowance of depreciation on certain plant and machinery - Held that:- The machine in question is used for cutting and wrapping confectionary toffees and were delivered at ready to use condition. Thus, it is evident that the machine has no role to play in the production activity. Therefore, when the learned Commissioner (Appeals) has accepted the fact that the machine was purchased and commissioned and formed part of the fixed asset in the relevant financial year, there is no reason to disallow assessee’s claim of depreciation. Moreover, the fact that in the subsequent assessment year, assessee’s claim of depreciation on such machinery has been allowed has not been controverted by the learned Departmental Representative. Therefore, we delete the disallowance made by the Assessing Officer and confirmed by the learned Commissioner (Appeals)
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