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TMI Blog2012 (12) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... to the remand report. 4. The Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 13,00,000/- being amount written off in respect of discarded stock. 5. The learned Commissioner of Income Tax (Appeals) erred in not appreciating the opinion report of the Chartered Engineer appointed by the appellant regarding the non-realisability of the stock 6. The Commissioner of Income Tax (Appeals) erred in not appreciating the facts and confirming the disallowance of depreciation to the extent of Rs. 1,79,376/-. 7. The learned Commissioner of Income Tax (Appeals) erred in not considering the additional ground of appeal being failure to allow setoff of brought forward losses of earlier years amounting to aggregate Rs. 40,12,263/-(Business Loss Rs. 20,2l,906/- and Unabsorbed Depreciation Rs. 20,82,106/-). 2. Grounds No. 1, 2 and 3 are basically against the sustaining the addition of Rs. 11,81,900/- being the difference between the sales as per books and sales as per stock statements submitted to bank, held as suppressed sales. 3. The facts of the case are that the assessee is in manufacturing of cables, PVC insulated wires and from two units, located at Nashik and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grievance before the CIT(A). 6. Before the CIT(A), the assessee placed its written submissions, wherein it placed the copy of Excise return in ER 1, which states that Rs. 11,83,300/- pertains to sale of capital goods and Rs. 1,400/- is the sale of finished goods. The CIT(A) called for the remand report from the AO, who submitted the same, relevant portion is extracted in the CIT(A)'s order. The AO in this reports submitted as under: ".......Now, before your good self the assessee has filed two documentary evidences i.e. Form E.R.1 which is monthly return of excisable goods and is actually a self assessment memorandum submitted to the Excise Range Officer which is merely acknowledged on filing and sale invoice of machinery. In respect of the excise Form it is to be noted that it is not a case where the statement is actually examined before being acknowledged by the excise authorities. It is a self declaration filed in the range office and the assessee can not make a case that the statement made before the excise department is more correct than what is submitted to the Bank. The contention made by the assessee that more weight has to be given to the excise record than the bank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts case. It was for the appellant to produce all documentary primary evidence before the assessing officer. This has not been done and therefore fresh evidence filed now cannot be accepted as I find there existed no reason by which the appellant was prevented in producing the same before the assessing officer. It is also seen the appellant has not produced the stock register required to show that stock as opening balance of July plus the production minus sales tally with opening balance in the month of August. Besides, all audited accounts are subjected to verification by Income Tax Authorities and it was well within the jurisdiction of the AC to ask the appellant to confirm credits; claimed. The appellant has failed to do so to the satisfaction of the AO. Under the circumstances, I find that the applicant's contention that a clerical error has resulted in the discrepancy noticed by the assessing officer cannot be accepted. It is also to be kept in mind' that any statement that is submitted before the authority cannot be done by a clerk or a junior person and would need the approval of the seniors of the appellant company. Therefore bank statement submitted cannot be taken to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine the issue involved in grounds No. 1, 2 and 3 afresh, after giving fair and adequate opportunity to the assessee. Grounds No. 1, 2 and 3 are, therefore, allowed for statistical purposes. 14. Grounds No 4 and 5, pertain to addition of Rs. 13,00,000/- on account of disallowance of amount written off in respect of discarded stocks. 15. The assessee in its account had shown unserviceable and unusable finished stock at its Nashik unit at Rs. 13,00,000/-. The AO, in the assessment proceedings enquired from the assessee vide letter dated 10-12-2008 to substantiate on : (1) Description, Dt. Of production, quantity and value wise details of material discarded, (2) Basis of rejection of material and mode of disposal and (3) The material discarded (insulated wire and cables) has scrap value. If your claim is accepted for sake of argument, then why scrap value is not offered for taxation. 16. In reply, the assessee vide its letter dated 19-12-2008, submitted as under: ".... there were many old items damaged by rain as well as items which were very' old and damaged conditions. These being absolute stocks the same could not have been sold even as scrap the details are attach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material placed in the APB. The fact that the units were being wound up is not in dispute by the revenue authorities. Besides this, the revenue authorities have not challenged the veracity of the report of the CE. The only objection that the revenue authorities have raised is that the assessee has not substantiated the method of disposal of the discarded materials or if they are not disposed off, where have they been kept. Keeping this in mind, the Bench asked the D.R. as to what efforts were made by the revenue authorities to ascertain the factum of "discarding" of the materials, as the assessee has never used the term "disposal". The assessee had claimed that the materials had been discarded keeping in view the above facts. Circumstantially, we are inclined to agree with the submissions made by the A.R. and are inclined to allow the write off of Rs. 13,00,000/- on account of discarded material by giving benefit to the assessee that the goods have been "discarded" five years back, the same can never be traced or even found at the present moment. Even in the books the assessee has treated the same as discarded and therefore written them off. 22. We, therefore, set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation as per law to the "assessee". Ground No. 6 is, thus, allowed for statistical purposes. 29. Ground No. 7 is against the non consideration of additional ground of appeal taken before the CIT(A) on account of claim for allowance of set off of brought forward losses of Rs. 20,21,906/- and brought forward depreciation at Rs. 20,82,106/-, aggregating to Rs. 40,12,263/-. 30. The A.R. pointed out that vide letter dated 14-12-2010, the assessee had filed additional ground of appeal. This ground, though filed well in advance has not been adjudicated. He, therefore, prayed that this issue has to go back to the file of the revenue authorities. 31. The DR has not objected to the prayer. 32. Having gone through the letter dated 14-12-2010 and the additional ground, we feel, that the issue should have been allowed by the AO at the outset, but since he has not done so, we direct the AO, to allow the set off of brought forward losses as per law, and re compute the income/loss of the assessee, accordingly, for the year under consideration. This ground is allowed for statistical purposes. 33. On the independent findings in all the grounds, the appeal filed by the assessee is treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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