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2015 (10) TMI 471 - ITAT KOLKATA

2015 (10) TMI 471 - ITAT KOLKATA - TMI - Disallowance of shortage of 4349.35 kg. claimed by the assessee in the process of making hosiery goods out of grey cloth - Held that:- The assessee has taken the stock at the end of the year and as duly supported for shortage of claim with the tax audit report dated 22.09.2009. The assessee has al so submitted the detail s of quantity of grey cloth received, quantity of processing as well as the shortage arising in the process. Copies of bills from variou .....

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cloth for making hosiery items. This fact has neither been taken care by the Assessing Officer and nor by the ld. CIT(Appeals) in their orders. Therefore, we delete the addition made by the lower authorities and allow the claim of the assessee. - Decided in favour of assessee. - I.T.A. No. 2092/KOL/ 2013 - Dated:- 6-8-2015 - Shri Mahavir Singh, J. For The Assessee : Shri Deepak Chaturvedi, Advocate For The Department : Shri R.P. Nag, JCIT, ORDER This appeal has been filed by the assessee against .....

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0 read with order of rectification under section 154 dated 17.02.2012 filed appeal before the ld. CIT(Appeals)-XXX, Kolkata. That the ld. CIT(Appeals) adjudicated the matter vide order dated 31.08.2012, and the copy of order was not directly served to him, i.e. the assessee, rather i t was handed over to the brother-in-law of the assessee while the assessee was under t reatment. The assessee was bed ridden due to Ischemic Heart disease problem and since 07.12.2012 was bed-ridden and was under th .....

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which clearly prove that the assessee was under-going regular t reatment for Ischemic Heart disease during the period 07.12.2012 to 02.07.2013. This being a reasonable cause and beyond the control, of the assessee, I condone the delay in filing the appeal. The assessee s appeal is admitted. 4. The only ground raised by the assessee is for sustaining the addition of ₹ 8,81,679/- towards shortage of 4349.35 Kgs. on account of dying and bleaching of semi-finished hosiery cloth also terms as .....

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.02.2012 modified the assessment and brought down from ₹ 34,80,073/- to ₹ 8,81,679/-. This mistake arises due to technical mistake in calculation made by the Assessing Officer in the assessment order. Thereafter the assessee preferred appeal before the ld. CIT(Appeals) for the addition of ₹ 8,81,679/- on account of disallowance of shortage of stock by the Assessing Officer of 4349.35 Kg. 6. During the assessment proceedings before the Assessing Officer, the assessee submitted t .....

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educed, which thereby incurred shortage of raw material. The assessee further submitted that incurring of such loss is quite normal and further cash book, ledger, journal, sale bill book, purchase bills and expenses bills duly produced along with books of account for being examination by the tax auditor and the stock bill showing opening, purchase, consumption, closing stock and shortage has been duly certified by the tax auditor in his tax audit report. However, the Assessing Officer did not ac .....

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h the assessment years, the features were identical and common and as such loss appears not normal as suggested by the assessee s past records it self and accordingly disallowed. Thereafter assessee preferred appeal before the ld. CIT(Appeal s). 7. The assessee gave the following submissions before the ld. CIT(Appeals):- Factually it is unjustified in the facts and circumstances of the case as such nature of readymade garment s business; it is not possible to manufacture 100% of cloth garments o .....

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efore the ld. AO vide letter dated 15.12.2011, a copy of the same appended herewith. In the aforesaid circumstances your honour may kindly reconsider the addition of ₹ 8,81,679/- which is excessive and out of proportion in the facts and circumstances of the case . 8. The ld. CIT(Appeals), however, did not accept the submissions of the assessee by giving the following findings which reads as follows:- However, coming to the AO s contention that even this addition is not justified, it is see .....

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by the appellant have been considered but it is not been able to justify as to why there was no such shortage in the earlier year, when the nature of business of the appellant remained the same. In view of the above facts and circumstances, the appellant s submissions in respect of the disallowance cannot be accepted and the disallowance of ₹ 8,81,679/- rectified by order u/s 154 dated 17.02.2012 towards shortage of 4349.35 kgs of closing stock is held to be justified and the same is confi .....

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ut 5-10% is normal for wastage of cloth. I would like to refer to the Article on Influence of wet processing of properties of single Jersey Knitted Fabrics dated 04.03.2013, which says that the results of dimensional stability analysis of RTS fabric s after repeated washing show that mercerized RTS fabrics has higher length wise shrinkage compared to scoured RTS fabric s. The dyeing behaviour of RTS fabric show that fabric dyed with mercerized RFD fabric has greater colour st rength compared to .....

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cotton fibres consists of approximately 10% by weight non-cellulosic substances such as lipids, waxes, organic acids, protein substances, and other unidentified compounds. In order to remove these non-cellulosic material s or impurities from the fabric/fibres, scouring is normally carried out wi th st rong alkali at high temperature for a certain specified time. Total amount of impurities to be removed is less than 10% (about 5% to 10%) of the total weight. 11. Similar types of Article with tech .....

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