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TMI Blog2016 (3) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... de order dated 20.04.2012 granted substantial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following effective ground:- 1. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 1,93,29,886/- made on account of inflation of purchases of raw material and Rs. 76,35,041/- made u/s. 69 of the Act. 4. During the course of assessment proceedings, A.O noticed that in earlier years, addition was made on account of difference in the actual consumption of raw material and the standard consumption prescribed under Exim Input Output Norms (Duty Exemption Schemes) 2002 to 2007. On perusing the details of variation between actual consumption and the standard consumption for the year that was furnished by the Assessee, A.O noticed that as in earlier years, and as per the details, there was short consumption of Rs. 75,35,041/- on account of raw materials and there was also excess consumption of raw material of Rs. 1,93,29,886/-. A.O noted that similar additions were made from A.Y. 02-03 to A.Y. 07-08. He also noted that for A.Y 02-03, apart from confirming the additions, ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition by holding as under:- 4. Next issue in Revenue's appeal is with regards to addition of Rs. 2,52,05,652/- made on account of deficit/excess consumption of raw materials. This amount include addition of Rs. 73,43,999/- on account of inflation of purchase of raw material and addition of Rs. 1,77,61,653/- on account of unexplained investment in purchase of raw materials. As both the grounds relate to common issue, the same were considered together. Assessing Officer observed that assesse was engaged in the manufacture of bulk drugs and that in assessment of A.Y. 2004-05 addition was made on account of difference in actual consumption of raw material and standard consumption prescribed under Exim Input and Output Norms. Assessing Officer asked to furnish details of variation between actual consumption and the standard consumption. As per the details given in Annexure-II to the assessment order, Assessing Officer noticed that there was short consumption of raw material of Rs.l,77,61,653/- and excess consumption of raw materials of Rs. 74,43,999/-. Assessing Officer referred to assessment order of A.Y. 2002- 03 and the statement of Sri R.S. Sharma, the then General Manager (Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttom of sales bills. If there would have been any variation in the consumption of raw material he would have mentioned the same before the AO. Even otherwise for the formulation of medicine the standard input output ratio will have to be adhered to. He has not mentioned in any of the reply to the question that there was any variation between the standard input and output ratio in the consumption of the raw materials. Therefore, his statement who controls the production certifies that the consumption of raw material has been in accordance with the standard input output ratio. The appellant's submission that the consumption depends on various factors like efficiency of the plant and process involved is only an afterthought because the production manager who is the in-charge of production has nowhere mentioned that there is even slight variation in consumption from the standard input output ratio. The appellant has also not proved with any other evidence that the consumption has been different because of factors mentioned by it. Therefore, the consumption of raw material will have to be compared vis a vis the standard input output ratio and there is no justification of giving marg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which is liable to be made is Rs. 1,95,62,054/-. After considering the addition of Rs. 89,10,074/-, the income which is to be further enhanced is Rs. 1,06,51,333/-. Therefore, the AO is directed to enhance the income by Rs. 1,06,51,980/- Accordingly this ground is dismissed with direction to enhance the income by Rs. 1,06,51,980/-." The learned counsel of the assessee referred the Tribunal's decision, wherein the Tribunal in the case of M/s Gujarat Woolen Felt Mills (supra) has held vide para 5 as under: "5 We have heard the parties and considered the rival submissions. It is true that no records have been maintained by the assessee after carding stage that by itself is not a ground for making addition and treating the production at the carding stage as final. The difference of 11,506 kg is due to wastage in the production approximately 13% of the production and looking to the standard fixed by the Handbook of the Procedures, the percentage of wastage cannot be said to be excessive. In these circumstances, particularly in the absence of any specific material to show that the assesses has made a false claim of wastage, which in any case is within the parameters laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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