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2015 (6) TMI 631

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..... as per- records of title company - CIT(A) deleted the addition - Held that:- There is no evidence on record to indicate that the page-l , Annexure A-4 contained the up to date entries of the imprest account of Shri Sanjeev Goyal with the company. There is bound to be difference in the two records if the period to which each relates is different from each other. The addition made by the A.O. is on insufficient material and basis and the discrepancy having been explained the addition is correctly deleted. - Decided in favour of assessee. Stock of spare parts outside books of accounts - CIT(A) deleted the addition - Held that:- Merely on the basis of surmises, it cannot be said that the claim of the appellant regarding quantity of spare parts used on 13/14.9.2000 was incorrect or manipulated. The position appearing from the books of accounts of the assessee itself has to be kept in view while judging the issue. Accordingly, it is held that the finding of the A.O. that spare parts valued at ₹ 15,70,373/- had been sold outside the books is based only on presumption, without any concrete evidence. No evidence has also been found during the search to indicate any suppr .....

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..... s - CIT(A) deleted the addition - Held that:- the appellant was required to furnish quantitative reconciliation of stock at production for the period 114/2000 to 14/9/2000 ( i.e. the date of the search), viz. total stock of WPC and other items as per books as on 311312000 and stock of WPC etc. found at the time of search on 141912000. Such reconciliation was prepared by the appellant and furnished vide replies dated 28/5/2003 and 18/6/2003. The appellant has also filed copies of stock ledger account of the factory at Kosi Kalan, which is a part of the seized record, from which the goods were received and issued to stock at production. This shows that the stock found during the search is reconcilable with reference to the books of accounts and variations if any are very nominal. Accordingly, the claim of the appellant that stock at production is part of finished goods and reflected in the books of accounts is accepted and the addition of Rs. 1,94,12,755/- (reduced to Rs.l,70,81,755/- in the order U/S 154 dt.26/212003) is correctly deleted. - Decided in favour of assessee. Undisclosed income on account of sale of Skimmed Milk Powder outside the books of account - Un .....

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..... enior Counsel for the assessee strongly objected to the adjournment letter and invited our attention to the order sheet entries and submitt4ed that Revenue has been taking adjournments unnecessarily which is causing great harm to the assessee. Our specific attention was invited to entry dated 03.03.2015 and it was submitted that on last occasion also Revenue had sought adjournment and Hon ble ITAT had imposed a token cost of ₹ 1 and, therefore, it was not fair on the part of Bench to allow adjournment again. 2. Ld. D.R. was confronted with these facts. He again prayed for a short adjournment but on going through the earlier hearings as noted in the order sheet, we find that Revenue was continuously seeking adjournments. It is seen that the revenue was given last opportunity vide order sheet entry dated 26.05.2014. Again on 02.03.2015, the adjournment was granted on the written request of Ld. D.R. and again on 03.03.2015 after imposing a token cost on revenue, the adjournment was granted for hearing on 22.05.2015, therefore, request of revenue to seek adjournment again was not justified. In view of above facts and circumstances, the adjournment application o .....

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..... ances of the case the Ld.CIT(A) erred in deleting its addition of ₹ 48, 53,675/- made on account of unexplained investment in stock of work in progress. 3. The ground-wise arguments advanced by Ld. A.R. are noted as under: 4. Ld. D.R. argued upon ground No.1 and submitted that during search, cash of ₹ 1.75 lacs was seized from Shri Ghanshyam Sharma for which no satisfactory explanation was submitted by assessee. He submitted that in answer to question No.2 Shri Ghanshyam Sharma replies that he had come to deliver cash of ₹ 1.75 lacs to Shri R. L. Goel whereas Shri Pradeep GM(F) who is on record could not recognize Mr. Ghanshyam and, therefore, the amount ofR.1.75 lacs remained unexplained. 5. As regards ground No.2, Ld. D.R. submitted that during search proceedings, Annexure A-4 was found which contained a ledger account of Shri Sanjeev Goel in the books of account of assessee for the period 1.7.2000 to 12.09.2000 during the block assessment proceedings, the assessee company was asked to reconcile the above documents with the books of account, which could not be explained satisfactorily and, therefore, the addition was rightly made by .....

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..... n the basis of remand report had allowed relief to the assessee. He submitted that Ld. D.R. could not controvert any of the finding of Ld. CIT(A) and, therefore, the order of Ld. CIT(A) is liable to be upheld. 11. We have heard rival parties and have gone through the material placed on record. We find that the Revenue had taken an additional ground of appeal by which it had taken the ground that there was violation of Rule 46A while admitting additional evidence. We find that the additional ground of appeal stands disposed of by Tribunal (vide interim) order dated 30.01.2009 and Hon ble Tribunal has not accepted the application for acceptance of additional ground of appeal. 12. We find that the A.O. in his remand report dated 12.05.2003 has covered each ground of appeal taken before Ld. CIT(A). In the remand report he has admitted that necessary details has been furnished and has not advanced any comments on the submissions which implies that the A.O. himself had no objection to the submissions and he was satisfied with the submissions of assessee. For the sake of convenience, remand report dated 12.05.2013 is reproduced below: Remand Report in the case .....

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..... e assessee has now submitted that page 1 of Annexure A-4 contained entries upto 06.09.2000 only whereas I Annexure A-57 contained entries upto 13.09.2000. Ground No.3: The assessee has contested the addition of ₹ 35,000/- as unexplained investment in color TV. This addition was made in the hands of MPL as the delivery challan and receipt are in the name of MPL C/o Sh. Sanjeev Goel The assessee has now made submission that the said transaction stands explained in the hands of block assessment of Sh. Sanjeev Goyal and filed copy of case flow statement of Sh. Sanjecv Goyal along with copy of assessment order for the block period. Ground No.4: The assessee has objected to the addition of Rs. 54,000/- as unexplained expenditure. The addition was made as the assessee could not prove that this amount was paid out of receipt of ₹ 56,900/- declared as undisclosed income in the block return. Ground No. 5(a) : The assessee contested the addition of ₹ 15,70,373/- on account of value of stock of spares being treated as sale outside books of account. During search operation at the factory premises at KOSI, value of stock of spares physically .....

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..... Ground No. (d) : No comments. Ground No.6: The assessee has objected to the addition of Rs. 32,440/- on account of 'Quantity in production store'. The addition was made as physically the quantity of Ghee was found less than the quantity as per stock record and the assessee failed to explain this discrepancy. The assessee has now submitted that normally on request Ghee is issued to the villagers, who supply milk to the assessee and the account is settled later on from the payment to be made to these villagers. Documentary evidence to this effect has now also been filed. Ground No.7: The assessee has contested the addition of Rs. 1,94,12,755/- (reduced to ₹ 1,70,81,7555/- U/S 154) on account of difference in stock physically found on the date of search and as per stock register of the assessee. Assessee's contention, that this is due to the return of defective goods from customers and/or return from store record, was not accepted as some of the items returned were as early as in the month of February, 1998. The assessee has now filed evidence regarding goods returned. The assessee has also submitted that the stock in producti .....

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..... SMP worth ₹ 18.50 Lacs and 10400 kg. of Melted Butter worth ₹ 11 Lacs was in the production process. To substantiate this, the assessee has now filed requisition sI1ps for SMP and Melted Butter. Ground No. 13: This ground is of general nature and no comments are offered. Yoursfaithfully , (P.K.SINGH), Asstt. Commissioner of Tax .....

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..... d by the appellant. From the details given in the preceding paragraphs, it has been noted that the appellant has reconciled the alleged shortage/excess in the stock of spare parts which has been narrated at page-l0 of the assessment order. In view of the detailed explanation furnished by the assessee, it is clear that in respect of aforesaid items mentioned in the assessment order, there cannot be any question of any discrepancy in stock. The appellant's contention that the quantity and value of spare parts issued on 13.9.2000/14.9.2000 for use in the production process was reasonable and in line with the average daily consumption of spare parts throughout the year has also force. Hence, merely on the basis of surmises, it cannot be said that the claim of the appellant regarding quantity of spare parts used on 13/14.9.2000 was incorrect or manipulated. The position appearing from the books of accounts of the assessee itself has to be kept in view while judging the issue. Accordingly, it is held that the finding of the A.O. that spare parts valued at ₹ 15,70,373/- had been sold outside the books is based only on presumption, without any concrete evidence. .....

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..... addition made. The submissions of the appellant in relation to the stock lying in the fumigation chamber have been considered and it is noted that there is no mention in the search inventory of any material lying in the fumigation chamber. The contention of the assessee regarding stock of ₹ 2,06,865/- having not been considered being old/scrap material cannot also be discard The contentions regarding packing material lying in the packing room are also reasonable. I have also considered the submission of the appellant that there is no question of any sale of even rejected packing material, as the same contains the name of the assessee preprinted on them. In these circumstances the presumption of sale of packing material outside the books of account is not justified and the addition made is deleted. Ground 6: I have noted the facts and circumstances of the case. The appellant has furnished documentary evidence to show that the quality of various product manufactured by it was not always up to the mark, and goods were returned from time to time by the appellant s customers. Copies of rejection letters issued by the appellant s customers have been fi .....

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..... t by the size of the packing is found to be correct. Copy of the stock ledger account furnished by the appellant at pages 787 to 797 of the paper book have been perused in this regard. From the stock ledger account, it is noted that the appellant company is regularly recording the quantity of SMP only in terms of weight in kgs and not in terms of number of bags. Accordingly, the exercise made by the Assessing Officer to work out alleged shortage of skimmed milk powder not justified. The reasons for mentioning the quality in terms of kgs in the stock ledger have also been explained by the appellant in its written submissions, which have been reproduced above. It is also noted that the recording in the stock ledger does not mention the supplier's name. Further, it is also clear from the record that during the course of search no evidence is found to indicate sale of SMP, which is a raw material used in the production process of the appellant. Similarly, there is no justification for treating a sum of ₹ 37,05,240/- as undisclosed investment in stock of SMP, as per ground No.-ll. As discussed above, the appellant company is keeping a record of the SMP in .....

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