TMI Blog2005 (12) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-company is carrying on the business of manufacture and sale of cotton yarn from raw-cotton. The assessee filed audited accounts along with the audit report as required under section 44AB of the Income-tax Act. The quantity details as required in Form 3CD required to be filed along with the audit report were also filed. The Assessing Officer observed that there was shortage to the tune of 6.98 per cent in the yield from cotton issued for manufacture of yarn. The assessee was asked to explain the shortage. The assessee filed detailed reply. The Assessing Officer rejecting the contention of the assessee and comparing the results of two other spinning unit, viz., Jayalakshmi Textile Mills, Chitradurga and Malaprabha Co-operative Spin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition arising due to shortage of production of soft waste. The assessee is in further appeal before us. 2.3 Learned counsel for the assessee Shri Shankar submitted that the Assessing Officer has not pointed out any defects in the books of account. The case of Jayalakshmi Textile Mills was never furnished to the assessee. Only objections were sought for. The assessee furnished his own reason as to why the case of Jayalakshmi Textile Mills is not comparable. It was specifically submitted that when the yield of yarn is higher as compared to the case of Jayalakshmi Textile Mills, the shortage of production of waste cotton is not a proper criteria to reject the book results. The only reason given to reject the book results is that day-to-day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer as well as by Learned CIT(A) are required to be deleted. 2.4 Learned Departmental Representative Shri K.N. Shyamsunder strongly supported the orders of authorities below. He submitted that the day-to-day stock register was not maintained has been accepted even by the assessee.In the absence of the stock register, it is not possible to verify the yield and, accordingly, provisions of section 145 were rightly invoked. 3. We have carefully considered rival submissions and relevant facts of the case. We have also perused the paper book filed. We agree with the contention of learned counsel for assessee that merely because day-to-day stock register is not maintained, provisions of section 145 can be invoked. Similar view has been adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system or not is not mentioned. Instead of asking the assessee to produce such evidence the duty is on the officer relying upon the comparable cases to bring to the notice of the assessee that even the comparable case is similar to that of the assessee. It is not true that all the units will have the same set of productivity or yield. If that be the case, the result of two units in same industry will never vary. However, it is an accepted fact world over that one unit will make huge profit while another will incur loss. The profitability to a great extent depend upon the establishment of unit for certain number of years, the acceptability of quality of such products, brand image, production capacity, the marketability, technology used and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduced therefrom. Thus, the first proviso to section 145(1) is not attracted and, hence, no addition due to low yield of waste cotton production is called for. On the basis of above reasoning, the addition made by the Assessing Officer while giving effect to the order of Learned CIT(A) is also required to be deleted. This issue is, accordingly, decided in favour of the assessee. 4. The next ground of appeal relates to disallowance of sum of ₹ 50,000 due to consumption of stores and spare parts. 4.1 The Assessing Officer noted that the consumption of stores and spare parts at ₹ 4,75,053 is considerably higher compared to sum of ₹ 2,23,674 for immediate preceding year. The assessee submitted that due to lot of overhau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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