TMI Blog1989 (11) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... 2560.5 M.T. of salt due to heavy rains. The auditors had further reported that the stock of finished goods was physically verified by the management and the discrepancy noticed on verification between the actual cost and stock record were not significant except what is given in the above referred note at Sl. No. 6. It has been further mentioned that the auditors have not independently verified the dissolving loss but the aforesaid remarks are based on the information given by the Directors of the company. The ITO has further observed that no such loss was noticed in respect of other industrial salt namely, Magnesium Chloride and Magnesium Sulphate manufactured by the assessee. He also observed that the closing stock has not been properly valued and the basis of valuing the closing stock has not been explained properly. The ITO also stated that the assessee did not furnish copy of claim made by them before the salt authorities in respect of which the assessee had received a sum of Rs. 5,125 as exgratia relief for damages to salt works in June-July, 1980. On the basis of aforesaid reasons the ITO made a lump sum addition of Rs. 2,50,000. The learned Departmental Representative pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be supported by a duly sworn affidavit. In r. 11 it has been provided that the appellant shall not be allowed to urge or be heard in support of any ground not set forth in the memorandum of appeal except by the leave of the Tribunal. He further contended that the ITO was fully aware that the production of salt is subject to levy of cess and such returns are part of records of the government department and its correctness could have been verified by the ITO any time, even after receiving the order of the CIT(A). He invited our attention towards the order passed by CIT(A) in which he has specifically mentioned that the assessee has submitted monthly statements showing the details of sale manufactured, opening stock and sales, etc., to the salt authorities. The ITO did not raise any objection before the CIT(A). Coming to merits of his case, the learned counsel for the assessee submitted that assessee is carrying on the business of manufacturing of salt and such manufacturing activities are carried on at Kandla sea shore. As a result of heavy rains, loss occurs almost every year as salt washes away during such heavy rains. During the year under consideration the percentage of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel also invited our attention towards the explanation gratia relief amounting to Rs. 5125 received by the assessee and contended that this has nothing to do with the loss of stocks due to heavy rains during the year under consideration but the same relates to damages to salt works in the month of June-July, 1980, as is evident from letter dated 30th March, 1981 issued by the Deputy Salt Commissioner, Ahmedabad. He submitted that the aforesaid amount of damages amounting to Rs. 5125 has no relevant bearing on the question relating to loss of stock of salt on account of heavy rains. The learned counsel for the assessee contended that whenever the loss suffered by the assessee was more they have declared more and whenever it was less they have declared less percentage of such production loss. The declared amount has always been accepted in the past assessment years vide order under s. 143(3). In view of these facts the learned counsel contended that the aforesaid addition of Rs. 2,50,000 was rightly deleted by the learned CIT(A). 2.2. We have carefully considered the rival submissions made by the learned representatives of both sides. It is apparent from the various assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,584,500 MT Loss as per monthly return of October, 1981 on account of artificial washing, inferior quality and due to heavy rains 4,976 MT 12,560,500 MT The reality of the loss of salt to the extent of 12,560.5 MT is thus fully corroborated by the aforesaid monthly returns submitted by the assessee to the salt department. The contention of the learned Departmental Representative that no reliance should be placed on these monthly returns as these were not submitted to the ITO, cannot be accepted at this stage. The CIT(A) had specifically observed in the order passed by him that the assessee has filed the statement of total production of salt, sales opening stock, etc. Regularly to the salt authorities and he has placed reliance on this fact in the aforesaid order. No ground has been submitted by the ITO in the memo of appeal challenging that the CIT(A) should not have entertained this evidence. In the absence of any such specific ground, such a plea taken by the learned D.R. at this stage cannot be allowed. Moreover these monthly returns submitted by the assessee to the salt department form part of the record of a government department and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of commission in the said year 1974 was 1.50 per ton. He submitted that the rates ever since 1974 continued to be the same although in the normal course the sales should have been increased over a period of so many years. The assessee also contended that the agreement dated 14th Nov 1974 specifies the services required to be rendered by the selling agents and the agents have also made a deposit of Rs. 1,25,000 with the assessee as security deposit. The said agreement was renewed vide letter dated 8th Nov., 1980 and this fact of renewal is evident from the order passed by the ITO also. He supported the order passed by the CIT(A). 3.2. We have considered the submissions made by the learned representatives of both sides and have also gone through the relevant orders and documents to which our attention was drawn. The assessee-company has been paying commission to the above named agent at the rate of Rs. 1.50 per ton since 1974 in accordance with the above referred agreement dated 14th Nov., 1974 and never before any such disallowance was made out of commission payments made to the aforesaid agents. Since the assessee has paid commission during the year under consideration on ..... 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