9911796707
TMI Blog2018 (12) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The assessee has filed his return of income on 31.8.2012 declaring total income at Rs. 11,02,430/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served upon the assessee. During the assessment proceedings it was noticed by the AO that the assessee has declared low net profit at 1.64% in this year as against 1.77% in the immediately proceedings year. The ld.AO therefore sought production details in comparison to raw material consumed by the assessee. The assessee did not furnish the details in spite of reminder, therefore, based on the figures of material consumed in the financial year 2010-11, AO proceeded to determine consumption of material and production of food products for the year under consideration. Accordingly, by comparing the figures of F.Y.2010-11, the AO has noticed substantial variation in production and consumption. Based on the submissions of the assessee dated 3.3.2015, the ld.AO noticed that closing stock of finished goods of jelly was shown at 8364 kgs. as against 17,819 kgs. showed in the audit report. Therefore, the ld.AO has assumed that the assessee has suppressed production details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied with this order of the ld.CIT(A), Revenue is now before the Tribunal by way of in the present appeal. 5. Before us, in the statement of facts interalia pleaded that assessee failed to submit month-wise quantitative details of production. Valuation of opening and closing stock was made without any supporting evidences. The ld.AO has rejected books results and taking the comparison of suppressed quantity of products, the AO made addition of Rs. 1,47,96,500/- . There was substantial variation in consumption of raw-material and finished products. There was also variation in figures of production and consumption mentioned in audit report, and submitted by the assessee during the assessment proceedings. It was pleaded that the ld.CIT(A) has accepted the fact that the assessee has not maintained any record for issue of raw material for different types of products and their consumption cannot be worked out separately. The ld.CIT(A) has admitted additional evidences without stating any circumstances as mentioned in the Rule 46A(1) of the I.T.Rules. The ld.CIT(A) has not appreciated facts brought in the remand reports and has simply relied on the data provided by the assessee. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of finished goods are not correct. As regards consumption of papaiya, it cannot be denied that quality and yield would definitely differ, therefore, due weightage to quality and stage of production has to be considered while estimating the quantity of production. The same is the position with regard to sugar. The assessee produces different kinds of food products. Quantity of sugar consumption for preparation of these food products varies product to product and depends upon recipe for the same. There cannot be a standardizations or uniformity of sugar consumption in these nature of products, and therefore method adopted by the AO to club all the products together and standarise consumption of sugar at a particular quantity is not correct method. The ld.CIT(A) has dealt with both the aspects viz. consumption of papaiya and sugar for different products manufactured by the assessee and arrived at a just conclusion that the approach of the AO in estimating the production was not correct. The relevant findings of the ld.CIT(A) on these aspects are note-worthy, which reads as under: "8. First, I would examine the maintenance of books of accounts and the issue of rejection of book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame date from Gulabbhai at Rs. 3.00 / kg. Whereas, Green Papaiya was purchased in he same week at Rs. 7.00 and Rs. 8.00 per kgs. Definitely , raw material , quality and yield would vastly differ. To club them together would mean counting donkeys with elephants. Unless due weightage is given for each quality and stage , the comparison would be of no avail. 8.4 Now, coming to the comparison of sugar consumption with total product made by the assessing officer. 1 agree with the appellant that when recipe of different products is different, sugar consumption cannot be clubbed together to compare total consumption with total production together. Definitely, consumption of sugar for each kg of tutty fruity to be used for bakery, or retail use, 1 kg, of sharbat or 1 kg of jam has to be different. The appellant tried to explain production of different product with sugar, consumption for two years. I agree with the appellant that the assessing officer "s method of clubbing all the products together is totally unjustified, I do observe that though the assessee has given estimated sugar consumption for each product ( Annexure -1), and tried to justify it by different level of sugar consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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