TMI Blog1991 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... to briefly. The assessee is a registered firm carrying on business of manufacturing groundnut oil from groundnut seeds. On 8th Sept., 1982 there was a survey operation under s. 133A, which inter alia, revealed 5 quintals of Shenga, 58 kgs. of oild cake and 6,435 kgs of groundnut seeds (shengdana). There was no difference in the groundnut oil. The difference in shenga and oil cake is marginal but the difference in shengdana was very much material. In the assessment, the ITO made the addition in respect of the discrepancy found. It was confirmed in appeal by the fist appellate authority. No second appeal has been filed by the assessee on the ground that the tax effect was small. 3. Pursuant to the assessment, the ITO levied penalty on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of alleged excess stock of groundnut seeds, nor it has filed incorrect particulars of income. Consequently, he cancelled the penalty imposed by the ITO. 5. At the time of hearing, the learned departmental representative has very vehemently argued the case and taken us through the facts of the case. In the return filed by the assessee, the excess stock found was not disclosed by the assessee. The statement of a partner was taken on 8th Sept., 1982 and the list of stock found was also duly signed by him and the ITO on the same date. In the quantum appeal, the AAC has stated that physical stock was taken while in the penalty proceedings, the CIT(A) had not gone into this aspect but he took other aspect. He has also not given an opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities that the stock register has been maintained in respect of shengdana and if so what is the stock shown therein on 8th Sept., 1982 when survey was conducted. In the quantum order of the AAC the stock position of shengdana on 8th Sept., 1982 was taken at Nil with the result the entire shengdana found, i.e., 6,345 kgs was treated as excess stock which was assessed as unexplained stock. On the other hand, in para 8 of the penalty order, the ITO admits that the assessee had not maintained stock register for shengdana. Before the AAC Shri A.M. Agarwal, Chartered Accountant and authorised representative of the assessee pleaded that there was no stock maintained in respect of shengdana and the stock of shenga found represented shengdana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble quantity of whole groundnut required for obtaining shengdana seeds found at the time of survey. If this was done, it was argued that there was no irregularity or discrepancy in the stock vide para 7 of the order of the CIT(A). 8. The ITO proceeded to conclude that there was excess stock of shengdana on the basis of statement given by a partner especially the answer to question No. 3. The said question and answer reads as under: Q.3: What is the amount of stock of groundnut (shenga), oil cake? A. The stock of shenga is approximate 725 quintals that of stock of oil is about 604 kgs and that of oil cake of about 3,542 kgs and that of shengdana approximately about 6,400 kgs." The perusal of the above shows the factual position of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the assessee it has been stated by the assessee that the stock of shenga of 725 quintals as per stock register on 8th Sept., 1982 consist of 640 quintals of groundnuts and 85 quintals of groundnut required for required for obtaining 6,435 kgs of shengdana on the basis of yield of 70% after decortication. The assessee also pointed out therein that during the period from 1st Sept., 1982 to 8th Sept., 1982 the assessee cursed 121 quintals of groundnut and realised 37 quintals of oil which was shown at 30.5% which was acceptable since the yield of oil was fair and acceptable. The closing stock of groundnut and also seeds was also in order. 9. In this connection, it is necessary to refer the written submissions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conciliation given above by the assessee, the assessee also had furnished overall quantitative tally of shenga, purchases upto 8th Sept., 1982 and arrived at the quantity of shengdana of 2,882 quintals utilised for production taking the yield at 75 per cent of shenga. The possible yield of oil and oil cake out of the aforesaid quantity of groundnut seeds was adopted with the actual production of oil and oil cake as per the stock register which shows the difference 83 quintals out of which 64 quintals of seeds were found at the item of survey leaving the balance of 19 quintals as due to loss of manufacture, dryage, etc. The assessee also furnished month wise purchases of groundnut in quintals, production of oil in quintals and production of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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