TMI Blog2019 (8) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... nce except mentioning that the few Distilleries of U.P. Region also generates the wastage and they are selling at ₹ 1.22 per kg. cannot be a benchmark of unorganized sector. The Assessing authority though made the specific observations but could not support with any logical and documentary evidence. Therefore, addition of the AO is without any cogent evidence and cannot be sustained. Therefore, we set aside the order of the ld. CIT(A) and Direct the AO to delete the addition and allow the grounds of appeal of assessee Shortage of stock of empty bottles account - addition of alleged distribution of unaccounted surplus computed on the basis of shortage of stock of empty bottles of Radico brand found at the premises of the bottler - HELD THAT:- The contention of the ld. AR that the issue of shortages, has to be explained by the M/s N.V. Distilleries Breweries Ltd., with whom the assessee has tie up. Further there is no evidence to trace that the shortages has to be taxed in the hands of the assessee. We considering the facts and the findings of the ld. CIT(A) find the explanations of the assessee are not satisfactory though the ld. AR has referred and relied on obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee against the orders of CIT(A), where the issues are common and identical and hence for the sake of convenience they are clubbed and are heard together and common consolidated order is passed. Whereas the grounds of appeal in para 1 to 1.3 are for the Assessment year 2008-09 Assessment year 2009- 10, Assessment year 2010-11 and whereas in Assessment year 2011-12 assessee has raised the grounds similar to earlier years para 1 to 1.3 and also other grounds of appeal 2 to 2.2. Therefore, for the sake of convenience, we shall take up the assessee appeal ITA No. 4356/Del/2015, for assessment year 2009-10 and facts Narrated. The assessee has raised the following grounds of appeal:- 1. That the Commissioner of Income-tax (A) erred on facts and in law in confirming the notional addition of ₹ 36,29,637/- made by the Assessing Officer on account of alleged suppression of income from sale of wastage. 1.1. That the Commissioner of Income-tax (A) erred on facts and in law in confirming the aforesaid addition, without appreciating that the assessing officer had failed to bring on record any evidence to prove that the appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he wastage whereas the Assessing Officer based on the submissions and the material on record observed that the assessee has sold the wastage generated in the form of organic manure 40329300 kg from 1.4.2008 to 31.3.2009 and disclosed in the books of accounts @ 0.73 per kg with the income of ₹ 2,92,62,271/-. Whereas the assessee in the return of income filed under section 153A of the Income Tax Act has disclosed additional amount of ₹ 1,61,31,720/- towards wastage sale and the value mentioned at ₹ 1.13 per kg against earlier 0.73 per kg. The AO observed that there is a difference in rate as per the books and the rate conducted for computation of income and Filing of return of income under section 153A of the Act. 4. The AO further made observations on the search proceedings by the DDIT(Investigation) and found that the assessee was not disclosing the full and true sale of value of waste generated during the production of IMFL and was being sold outside the books of accounts. The AO on the information of few Distilleries of U.P. Region considered the market value of wastage and also the calculations made by the assessee @ 1.13 per kg whereas AO foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. Sole matrix of the disputed issue envisaged by the ld. AR that the rate adopted by the Assessing Officer at 1.22 per kg is without any basis. The ld. AR referred to the paper book at pages 323, 324 where the generation of waste process has been explained. Whereas the AO treated the waste generated as cattle fodder and has adopted the static rate considering the prevailing rate of wastage generated in the organic manure on identical products in the relevant period and whereas the assessee s main production plant is situated at Rampur, U.P. and AO based on the enquiries adopted the rate of 1.22 per kg. The ld. AR further submitted that the assessee in order to buy piece with the department has increased the rate of wastage to 1.13 per kg and to avoid litigation whereas the AO has adopted 1.22 per kg without any evidence and there is no clarity in respect of the nature of the wastage produced. The ld. AR referred to the page 292 of paper book in respect of the value of wastage sale. The contention of the ld. AR that the cattle fodder is sold at the factory premises and the assessee is not incurring any other expenditure and supported with submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has raised grounds of appeal no. 1 to 1.3 which are similar and identical as discussed in the above paragraphs, the same decision shall apply and allow the grounds of appeal of the assessee as decided in paragraph no. 9. The assessee has raised other the grounds of appeal No. 2 to 2.2 which are as under:- 2. That in facts and circumstances of the case, the Ld. CIT(A) grossly erred in upholding the addition of ₹ 56,21,468/- made by the AO on account of alleged distribution of unaccounted surplus computed on the basis of shortage of stock of empty bottles of Radico brand found at the premises of the bottler namely M/s N.V. Distilleries Breweries Ltd. 2.1 That the CIT(A) erred on facts and in law in holding that the bottles found short had been sold outside the books of accounts and the profit on the same have been shared between the bottling plant and the appellant, without bringing on record any evidence to support the same. 2.2 That the CIT(A) erred on facts and in law in observing that the appellant had entire control over the business of M/s N.V. Distilleries Breweries Ltd., in terms of the Bottling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 509340 38.62 Contessa Rum 212389 78324559 5703444 16.85 12. And finally made an addition based on the shortage as under:- Brand Items Distributable surplus per bottle (Rs.) Ratio of bottles calculated No. Of bottles Rate (Rs.) of distributable surplus per bottle Amount (Rs.) 8P.M. 6.00 9.76% (6*100/61.47) 18640 6.00 1.11,840 Magic Moment Vodka 38.62 62.82%(38.62*100/61.47 119847 38.62 46,28,491 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bottling cannot proceed. Further agreement was entered which is not disputed by the Revenue but the fact remained that the assessee could not explain the shortage of stock though referred to the permissions of bottling agreement. Whereas the Ld. AR contention that the difference has to be explained by the M/s N.V. Distilleries Breweries Ltd., to the Revenue but the facts remain that the assessee has business tie up with this company various brands of products, manufactured and bottled by M/s N.V. Distilleries Breweries Ltd., in the Bottling plant. The assessee has accepted that net distributable surplus after deducting the expenses and bottle charges as per agreement entered by with M/s N.V. Distilleries Breweries Ltd., dated 12.04.2004 and the distributable surplus shall be appropriated. We find there are inter related transactions which the Revenue has rightly made observations and the assessee could not overruled the finding of the Revenue with proper explanations or evidences. Accordingly considering the facts and circumstances and observations, we are of the substantive opinion that the ld. CIT(A) has considered the submissions, agreement and ratio o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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