TMI Blog2005 (6) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... he presumption/assumption as the assessee failed to explain a peculiar type of query of AO regarding consumption. It has also been noticed that the AO did not find any material or evidence that the assessee had made sale out of the books of account. It is settled position of law that on the basis of conjectures, surmises and pure guesswork the addition is not sustainable. On the contrary we find that the assessee has maintained regular books of account and net gain or shortage in process shown by the assessee in other years has been accepted by the Department as evident from the chart, reproduced. Thus, we are of the considered view that the AO is not justified in making impugned additions. We accordingly delete the addition made on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment. The assessee was asked to give bifurcation of these details more particularly separate details of packing loss, samples to lab and internal guest. During the course of assessment proceedings, it was noticed that such details were available in the production record which is maintained by the production department. Accordingly, the assessee was asked to bifurcate the aforesaid three categories. From the perusal of the details so furnished by the assessee, it is noticed that in the case of ghee, the assessee has shown shortage of 5,579.3 kgs. apart from samples to lab of 71 kgs. and internal consumption for guest of 84.5 kgs. The assessee has not given any valid explanation for such high quantity of loss. It was explained by the Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny of the details during the course of assessment proceeding, it was noticed by the undersigned that in the outgoing side, three items are noticeable which are as follows: 1. Guest 2. Internal consumption 3. Shortage I have considered the contention of the assessee. It may be mentioned that the assessee has been handling milk with modern equipment. In view of these facts there should not be any changes of shortage of milk at the stage of chilling, pasteurizing or any other process. However, there may be some losses of milk by way of spilling at the time of manual handling only. It is an admitted fact that in most of the process, the milk is passing through pipes, etc. and manual handling is very limited. The manual handling may be at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net process gain or shortage/process loss in litres. -------------------------------------------------- Finan Asst. Net Shortage/ Total percen Assess cial yr. Process process milk tage ment year gain loss receipt made u/s -------------------------------------------------- 1996 1997 16,98, -- 16,62,49, 1.02 143(3) -97 -98 761,00 202.00 (gain) -------------------------------------------------- 1997 1998 -- 6,97, 19,18,97, 0.36 143(3) -98 -99 594.60 526.60 (loss) -------------------------------------------------- 1998 1999 -- 4,26, 18,28,07, 0.23 143(1) -99 -2000 332.40 133.50 (loss) -------------------------------------------------- 1999 2000 -- 1.67, 18,08,92, 0.09 143(1) -2000 -01 516.90 762.40 (loss) --------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me chargeable under the head "Profits and gains of business or profession" or "Income from other sources" has to be computed in accordance with the method of accounting regularly employed by the assessee unless, in the opinion of the ITO, the income, profits and gains cannot properly be deduced therefrom or the ITO is not satisfied about the correctness or completeness of the accounts of the assessee. Under the proviso to sub-s. (1) of S. 145 in any case where the accounts are correct and complete to the satisfaction of the ITO but the method employed is such that, in the opinion of the ITO, the income cannot properly be deduced therefrom, then the computation has to be made upon such basis and in such manner as the ITO may determine. Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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