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TMI Blog2013 (8) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... ready reference, the same are reproduced below:- "3. The Assessing Officer has observed in para 5 of the assessment order (wrong heading was put as 'excess stock found' instead of 'shortage of stock*), that during the course of search, inventory of stock was taken by the search team and shortage of finished goods was found at the time of search as under:- Premises Stock as per books - Stock as per physical inventory Difference Item In quantity (in kgs) Value (Rs.) In quantity Value (Rs.) In quantity Value (Rs.) Factory - premises at Ajit Pulp &* Paper Ltd Finished goods- - 701818 10791630 438821 6749066 -262997 4042564 3.1 In response to the show cause notice, the assessee submitted letter dated 30th October, 2009 in which it was claimed that copies of inventory of stock of unfinished rolls on floor in the form of jumbo roll or parent roll were not given on the date of search or during the assessment proceedings. So it was also claimed that, search party did not take the stock of unfinished roll on floor or jumbo roll or parent roll on< machine production, and therefore, the quantity and valuation as per their book records and those inventorised did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually there at the time of stock taken during the search. The employees were well conversant with the gradation and classification of different stock and the rates. The Assessing Officer concluded that assessee has no explanation for shortage of finished goods of 2,62,997 kgs valued at Rs. 40,42,564 and this shortage of stock represents unaccounted sales made by the assessee. Since assessee has booked all the expenses related to sales, total sale value of this stock has been treated as unaccounted income in the hands of company and made addition of Rs. 40,42,564 after multiplying the shortage of quantity by average rate per Kg." 4. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has deleted the entire addition made by the A.O. and now, the revenue is in appeal before us. 5. Ld. D.R. supported the assessment order. He submitted that although ground No.1 raised by the revenue is only in respect of contravention of the provisions of Rule 46A of the I. T. Rules but as per ground No.2 of the revenue, the revenue is disputing the order of Ld. CIT(A) on merit also, as per which he deleted the disallowance/addition made by the A.O. He also submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the process of the assessee. * Assessee's process is a continuous process whereby the machine production/parent rolls/jumbo rolls/unfinished rolls are cut to smaller sizes reels as per the specific requirement of the customers. The physical stock of inventory was taken on 16th July, 2009 whereas the Excise stock as per RG-1 register as on 16th July, 2009 was taken on 31st July when PO was operated. Therefore the stock as per RG-1 register was written upto Reel No.31307. In other words, stock which was lying on the shop floor and not considered by the search party while taking physical inventory was already included in RG-1 register. Stock of "Unfinished/jumbo rolls" which got manufactured on 14/07/09 & 15/07/09 and duly entered in RG-1 register as stock of those 2 days was totally ignored by the search team while taking the physical stock. Details of such goods produced on 14/07/09 & 15/07/09 (which formed part of unfinished rolls on the date of search) and recorded in RG-1 register are as under:- Date of Production Reel Nos. ProductionRegister (Pgs. ofP/B) Quantity (Kgs.) RG-1 Register (Pgs. ofP/B) 14/07/09 30581 to 30944 115 to 127 49553 25640 21855 35790 13283 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under no obligation to file any paper before the Tribunal although the assessee has filed a detailed paper book containing 177 pages and, therefore, even if some paper is not available in the paper book, no adverse inference could be drawn against the assessee. 9. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Regarding ground No.1 of the revenue, we find force in the submission of the Ld. A.R. that no new document has been considered by Ld. CIT(A) for deciding this appeal and hence, there is no violation of Rule 46A of the I T Rules because, we find that the decision of Ld. CIT(A) is by considering the letter dated 29.10.2009 which was submitted by the assessee before the A.O. also and was reproduced by the A.O. on pages 3-5 of the assessment order. Hence, ground No.1 of the revenue is rejected. 10. Now, we proceed to decide the appeal of the revenue on merit i.e. ground No.2. As per the order of Ld. CIT(A) as per which he deleted the addition made by the A.O. in respect of short stock found by the search party of finished goods in the course of search. But before adjudicating this issue, we would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any evidence before the Tribunal even in support of his own contention. This is true that no party is supposed to bring evidence on record which is against him but at the same time if a party is not bringing on record the evidence which is claimed to be in support of his contention, then it has to be accepted that such evidence in fact is not supporting his contention and the decision of Ld. CIT(A) is by way of wrong appreciation of such facts or material and that is why the respondent is not bringing such evidence on record before the Tribunal paricularly, when the order of Ld. CIT(A) is contradictory with regard to the evidence stated to be the basis of his order and also when no proper basis is indicated by Ld. CIT(A) in support of his decision. Admittedly, there is no control of the assessee on the way, Ld. CIT(A) is writing his order but it is also true that the evidences brought on record by the assessee before the Ld. CIT(A) are very much available with the assessee and the same can be brought on record before the tribunal and even if proper basis is not given by Ld. CIT(A) in support of his decision or where the basis indicated by Ld. CIT(A) in his order is in contradic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision which is contradictory to the material indicated by Ld. CIT(A) cannot be upheld particularly in the absence of such material having been brought on record by the respondent assessee to support the order of Ld. CIT(A) because even if the contradiction in his order is created by Ld. CIT(A) but it is not existing in fact then also, the tribunal has no option but to reverse the order of Ld. CIT(A) for this reason that his order is in contradiction to the material indicated by him being the basis of his decision and the relevant material is not made available before the Tribunal to examine as to whether the basis is true or not and whether contradiction is true or not. 12. Now, we examine the basis of the decision of Ld. CIT(A). This is also being examined as to whether the basis of his decision is in line with the material indicated by him for taking his decision. We find that the decision of Ld. CIT(A) in the present case is contained in para 7 of his order and for the sake of ready reference, the same is reproduced below: "7. I have considered the basis of addition made by the Assessing Officer and also the submission of the appellant along with copies of inventories and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat stock as per RG-1 register as on 15th July, 2009.enter.ed upto Reel No. 31307 was compared with the physical stock of finished goods as on 16th July, 2009 upto finished goods bearing Excise Reel No. 30635. The dispatch on 16th July, 2009 i.e. 19,337 Kg was also to be considered to arrive at opening balance as per RG-1 Register. There is no evidence found during the search or during the assessment proceedings of any specific defects or instances of finding of any unaccounted sales, suppressed receipts or unaccounted or inflated purchases. So, it cannot be said that the shortage of stock was due to sales outside books. The finished goods bearing Excise Reel No. 30581 to 30944 entered in production on 14* July, 2009 and on 15th July, 2009 in RG-1 Register, was sold in subsequent period after collecting excise duty on the same. So, it cannot be said that the finished goods were sold outside Books. The shortage of finished goods occurred only on account of non- inclusion of unfinished Jumbo Rolls/Parent Rolls lying on the floor which were subsequently trimmed and cut into smaller rolls and entered in RG-1 Register against production of 14th July, 2009 and 15th July, 2009. If the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch party on 16.07.2009. Thereafter he is saying that stock as per excise record, RG-1 register also on 16.07.2009 was taken on 31.07.2009 at the time of operating the prohibitory order and thereafter, he is saying that in the physical stock inventory of stock of finished goods, up to reel no.306350 was included whereas production of finished goods as per RG-1 register as on 15.07.2009 has been entered into excise records up to reel no.31307. Thereafter he is saying that in the RG-1 register, production as on 14.07.2009 was entered being reel no.30581 to 30944 i.e. 132838 Kg and production as on 15.07.2009 being reel No.30945-31307 i.e. 130034 Kg. has been entered but these reels were not included in the physical stock inventory prepared on 16.07.2009. Thereafter, he is supporting this finding on this basis that RG-1 register was not under prohibitory order placed on 16.07.2009 and this was seized on 31.07.2009. Thereafter, he is giving the basis of his decision that the shortage of finished goods occurred only on account of non inclusion of unfinished jumbo reel/parent reel lying on the floor which was subsequently cut into small reels and entered into RG-1 register against produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee that there is any other godown or warehouse to keep stock of excisable finished goods in respect of which, no inventory was taken. In the reconciliation statement as reproduced by the A.O. on page 4 of the assessment order and by Ld. CIT(A) on page 10 of his order, it is seen that this reconciliation is made by the assessee by excluding the production on 14.07.2009 and 15.07.2009 being 132838 kg and 130034 kg respectively from the stock as per RG-1 register as on 16.07.2009. We fail to understand the basis of such exclusion form opening stock of finished goods as on 16.07.2009 because the production on 14.07.2009 and 15.07.2009 is included in the RG-1 register and the same must be available with the assessee on the date of search i.e. 16.07.2009 in the form of finished goods and the same cannot be explained by availability of unfinished goods on the date of search. The assessee has also reduced 19337 Kg. on account of dispatch on 16.07.2009 but this is not clear as to whether such dispatch on 16.07.2009 is after the inventory taken by search party on 16.07.2009 or before taking the inventory by the search party on that date. This exclusion on account of such dispatch on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther details of such physical inventory carried by the search party and no defect was pointed out by the Ld. A.R. in such inventory taken by the search party. In fact, these pages were not even referred by the Ld. A.R. in the course of argument before us. On page 152-162 are the copies of invoices, delivery challans with regard to despatch on 16.07.2009 and we find that on page 153 is an invoice where time of removal is shown as 15.20. Similarly, page 155 is another invoice where time of removal is shown as 15.40. On page 157 is another invoice having time of removal 16.40 and the removal time on page 159 is also 16.40. On page 161, removal time is 17.30. There is no evidence brought on record by Ld. A.R. to show that physical inventory taken by search party was after this time of removal i.e. 17.30 as per page 161 of the paper book. Hence, this argument is also without any basis that the removal on 16.07.2009 by way of despatch is before taking the stock inventory of finished goods by the search party and therefore, this depsatch should be considered as physical stock existing on 16.07.2009. Even if this is a claim of the assessee that inventory was taken by the search party afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the same cannot be sold outside the books as presumed by the A.O. In this regard, we would like to observe that the assessee is under self removal scheme of excise department and is not under the scheme where a person of excise department remains present at the factory or warehouse to monitor the movement of excisable goods. Hence, this explanation of the assessee is not reliable or acceptable because putting the same reel number on a subsequent lot of production and selling the same as per books without including the same in the production quantity as per RG-1 register, cannot be ruled out. Moreover, it is also seen that the assessee's consumption of raw material and production of finished goods quantity are not correlated. Such quantitative details are available on page 176 of the paper book in the form of Annexure 10 to the Tax Audit Report for the current year. As per the same, the consumption of Indian Waste Paper is shown at 8011473 Kg and consumption of imported waste paper had been shown at 38959350 Kg and consumption of colour and chemical had been shown at 380014 Kg. totaling 50770837 Kg. and the production of finished goods had been shown at only 4407146 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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