TMI Blog2017 (8) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer and the Assessing Officer has not pointed out any specific defects in the purchases, sales, opening stock and closing stock of the assessee and the Assessing Officer has not brought on record any cogent material to prove that the assessee has sold the under-production out of the books of account. The objection of the learned Departmental representative that the learned Commissioner of Income-tax (Appeals) has not relied upon the CGCRI report, Calcutta, the learned authorised representative has pointed out that in the same report it has been mentioned that the said organisation is not involved production practice and they are not sure to what extent their opinion will be useful for the purpose of the assessee and in such circumstances and facts of the case, the report of CGCRI, Calcutta alone cannot be the basis for rejection of the books of account and making an estimation of wastage - Decided in favour of assessee. - D. B. Income Tax Appeal Nos. 117 of 2008, 65 of 2009, 44 and 56 of 2010, 83 of 2011, 63 and 65 of 2014 and 124, 135 and 198 of 2016 - - - Dated:- 25-5-2017 - K. S. Jhaveri And Dr. Virendra Kumar Mathur, JJ. For the Appellant : R. B. Mathur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 44 of 2010 (1) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has acted illegally and perversely and has not grossly erred in overruling the decision of the Assessing Officer regarding rejection of books of accounts invoking provisions of section 145(3) of the Act. ? (4) D. B. Income-tax Appeal No. 56 of 2010 (1) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has acted illegally and perversely and has not grossly erred in overruling the decision of the Assessing Officer regarding rejection of books of account invoking provisions of section 145(3) of the Act ? (5) D. B. Income-tax Appeal No. 83 of 2011 (1) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has acted illegally and perversely in deleting the additions under section 69C on account of difference in the closing stock of finished goods and work-in-progress as well as deleting the additions on account of non-genuine expenditure ? (2) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has acted illegally and perversely and has grossly erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Commissioner of Income-tax (Appeals) deleting the trading addition despite of the fact that during the survey proceeding and assessment proceedings many inconsistencies were noticed ? (3) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) have not acted illegally and perversely in deleting the additions made by the Assessing Officer on account of restriction of wastage which was done after examining the complete process of production ? (4) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) have not acted illegally and perversely in not considering that the estimation of wastage made by the Assessing Officer was on the basis of report of CGRI which is an independent agency having expertise in the related field ? (5) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has erred in deleting addition of ₹ 24,72,851 made for depositing the employee's contribution to PF A ESI beyond the prescribed time limit provided in the respective Acts, when the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded plaster of paris consumed 346.365 M. T. in the inputs. Plaster of paris is not ingredient of our product. This is being used as consumable for mould purposes and as such it should not be included for calculating input/output ratio. (b) The output/input ratio for the year under assessment comes to 67.31 per cent. whereas this was 68.34 per cent. in the financial year 1998-99 and 66.19 per cent. in the financial year 1999-2000. We are enclosing a comparative chart for this purpose. There is no major difference in these ratios. (c) The output is the actual and most reasonable. Here we would like to mention that the output ratio will depend on number of factors depending on the quality of the goods produced, quality of furnaces and machines used, temperature required, tolerable fluctuations. As well as the quality of raw material used and the ingredient used. (d) We agree that in our sister concern M/s. Bharat Potteries Ltd., their yield comes to 73.14 per cent. and in our case it is only 67.31 per cent. The basic reason of difference are as under : (i) We are manufacturing bone china crockery at large and the manufacturing of stoneware crockery is less. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Although the % loss/rejection varies due to change in the climate as well as involvement of new worker. The details of waste generation areas, stage and cause of waste and range of waste is furnished below : Name of Unit : Ceramic Industries Address of Unit : Road No.-6, VKI Area, Jaipur (Rajasthan) Phone No.2330889, 5404709, Fax No. 2331306 Rejection loss analysis : Sl. No. Waste/loss/rejection Generation area Stage and cause of loss/wastage Range of loss/waste (%) Total loss/rejection (%) 1. Raw Materials/Chemicals Storage China Clay Bone Ash Feldspar Quartz Frit Colours Liquid Gold Others Spillage and scattering of material during transportation. 1-2 1-2 Intermixing of raw material in the storage 1-2 2. Preparation of body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Drying 1-2 Water finishing 2-3 Transportation during different process of fabrication 2-3 5. Biscuit firing Loading of the ware of kiln car 1-2 2-3 Unloading of the ware from kiln car 1-2 Cracks due to defects 3-4 Breakage due to miss handling during transportation. 3-4 6. Reaction loss Firing loss due to molecular water, carbon, carbonates, phosphorous, un-burnt fat material, etc. 9-10 9-10 7. Glaze application Spillage during slip density adjustment. 0.5-1 0.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the factory without recording the same in the excise registers which are regularly and continuously verified by the Excise Department and are under their control. The Assessing Officer has not pointed out any defect in the purchases, sales, opening stock and closing stock and as explained before the Assessing Officer and the learned Commissioner of Income-tax (Appeals) that M/s. Bharat Potteries Ltd., i.e., a sister concern is manufacturing more of maximum stoneware crockery and the assessee is manufacturing more of bone china crockery and the difference in yield and the wastage and the gross profit had been explained vide our letter dated March 26, 2004 before the Assessing Officer and similarly the output/input ratio has also been explained before the Assessing Officer through the same letter and the Assessing Officer has not commented upon the same and has not found out any defect in our explanation. The assessee has also filed before the Assessing Officer the following documents/publications to support the wastage declared by the assessee is reasonable and according to the standard practice adopted in the country as under : 1. C.G.C.R.I., Khurja (PB No. 13 to 1) 2. Publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved production practice and they are not sure to what extent their opinion will be useful for the purpose of the assessee and in such circumstances and facts of the case, the report of CGCRI, Calcutta alone cannot be the basis for rejection of the books of account and making an estimation of wastage and the learned Commissioner of Income-tax (Appeals) was not justified in ignoring other material which was placed before him as mentioned hereinbefore. Therefore, the learned Commissioner of Income-tax (Appeals) was not justified in sustaining the applicability of section 145(3) of the Act and addition of ₹ 11,15,087. Thus ground No. 1 of the assessee is allowed and the solitary ground of the Revenue is dismissed. 8. In our considered opinion the argument which has been canvassed by Mr. Mathur that the stone average loss as 29.4 should not be 30.1 as per Khurja is also 23.1. 9. Taking into consideration that the bones china crockery of the delicate nature, the report of Khurja for the specific industry has been accepted by the Tribunal, no error is committed in doing so. 10. Both the issues are answered in favour of the assessee and against the Department. 10.1 It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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