TMI Blog1983 (3) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.68 lacs. The ITO during the scrutiny found the following four aspects and he wanted the assessee s explanation: (i) Despatches of Tentex Forte from Dehradun to Bombay on 31st December, 1968 and in the months of January, February and March, 1969, totalled 741 kilos, valued at Rs. 2,81,580. The production in the months of January, February and March, 1969 was to the order of 11,70,270 tablets weighing roughly 343 kilos. The value of these tablets taking the closing stock to have been valued at cost, would come to Rs. 1,93,775 (approximately). The balance of quantity despatched does not appear either in the production or the closing stock. (ii) Despatches of Tentex from Dehradun during the months of Jan., Feb. And March (and on31st December, 1968) were 798 kilos valued at 87,780. The production as per stock registers was 1,87,500 tablets, the approximate cost of production of which would be Rs.7,200. What has happened to the balance of this item despatched? (iii) The quantity of Spemen Forte despatched from Dehradun vide Invoice dated13-3-1969was 285 kilos valued at Rs. 27,075. The production as per stock registers would be of the value of Rs. 4000. The balance does not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal however, registered the appeal and issued usual notice of hearing. When the matter came up for hearing on7th June, 1973an objection was taken on behalf of the assessee that the appeal was not in proper form and was liable to be rejected. Thereupon on14th June, 1973the ITO presented an appeal in Form No. 36 taking the same grounds as were originally mentioned in Form No. 36A. He has also filed the necessary disclosures. A prayer was made by the ITO alongwith the appeal Form No. 36 by his letter dt.14th June, 1973in the following manner: "You are, therefore, requested to substitute Form No. 36 in place of Form No. 36A filed earlier. You are further requested to condone the delay which has been caused due to sheer oversight of the matter and technical error." This letter was addressed to the Assistant Registrar, ITAT,Delhiand it was signed by the ITO, vs. R. Sagar. The subsequent appeal filed by the ITO was also registered and that is the present Appeal No. 1468/Del/1973-74. On receipt of the notice of hearing, the assessee filed cross objection. However, the assessee reiterated its arguments that the appeal filed originally was not maintainable and therefore it should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nganathan and pointed out that there was only a technical mistake in filing Form No. 36A, though there are all the necessary particulars and as such the delay in filing From No. 36A should be condoned. In other words, pleaded for the condonation of the delay in filing the present appeal. He referred to the letter written by the ITO addressed to the Assistant Registrar on14th June, 1973when the present appeal was filed. When this appeal came up for hearing on a number of occasions and the question of limitation was taken up on25th October, 1982, it was mentioned by the Bench that the departmental representative has to file an application for condonation of delay along with an affidavit, if any, by10th November, 1982. We may notice that after the disposal of the writ petition, it was only for the first time on25th October, 1982that the appeal came up for fresh hearing. Earlier the appeal was not in existence technically in view of the order passed by the Tribunal holding that it was infructuous. It had got its life again by virtue of the directions of the Hon ble High Court and in accordance with that direction, the Tribunal passed an order on30th October, 1982restoring the present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground of under production or what he termed as excessive or unusual wastage. The ld. departmental representative very strongly relied on the ITO s order and also highlighted the fact that the assessee did not have manufacturing or production account and that there are no records showing wastage. He particularly emphasised that the wastage in the three months, January to March, was very much excessive and there is no satisfactory explanation. On the other hand Mr. G.C. Sharma, counsel for the assessee contended that though the wastage is not recorded, as it is not possible to record as such, there is no case for doubting the trading results at all. He explained how the raw materials or semi-finished drugs, which go from Dehradun all the way toBombaysometimes gets damaged apart from the rejection of some materials in the process of manufacture due to some defects or the other. He has also stated that since the assessee is manufacturing very high quality of drugs, slightest defect in drugs will result in throwing away the manufactured or semi-manufactured drugs. He has also very much brought to light that the purchases of raw materials are not doubted, the sales are not doubted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made to the court. Technically speaking the letter dt.14th June 1973addressed to the Assistant Registrar cannot be considered to be an application for condonation of delay at all. Even so we have taken it taken it into account. There is no improvement even in the application filed by the IAC on12th November, 1982. He merely refers to the past history and repeats what the ITO stated on14th June, 1973. Further what he stated in paragraph 6 hardly amounts to showing sufficient cause for condonation of delay. It is simply mentioned that it was inadvertence and due to sufficient cause. It is totally vague and ambiguous. It is surprising that even though the Tribunal in its order dt.28th October, 1982mentioned about the affidavit if any to be filed, no responsible officer came forward to file an affidavit explaining the reasons for the delay including the reasons why a defective appeal form was filed originally. To say the least the matter was dealt with most negligently and carelessly. Normally the Tribunal or for that matter any court is very liberal in condoning the delay because of the basic principle that justice should not be sculled down for technical reasons and the matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually goes to packing for being marketed. At all these three stages, there is bound to be wastage. It is more so in the case of the assessee because it uses herbs and other forest materials in the manufacture of medicines. It is also not possible to visualise a particular standard of wastage. The wastage itself may differ from period to period. The only method of finding out the wastage is by an indirect manner i.e., by taking the raw materials and finished product, which is marketed. The difference whatever it is can be treated as wastage. This is the only way of looking into the matter as there is no other record for maintaining wastage. We have already mentioned that it is not possible to maintain such records for wastage occurring at different stages of manufacture. Unfortunately the manner in which the comparison has been made by the ITO is also distorted Mr. Nagarajan emphasised that the assessee never pleaded this part of the case and wanted only to explain the discrepancy. But we do not think that a matter like this should be considered only in the light of the particular explanation given by the assessee. We will have to see also the reasons given by the ITO which impelled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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