TaxTMI 
TaxTMI 
1983 (7) TMI 111
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade an addition of Rs.36,800 on account of excessive shortage. On appeal, the CIT(A) considered this issue in para 3 (b). She concurred with the ITO that wastage of 5% was reasonable in the activity of the assessee, and, therefore addition of Rs. 36,800 relating to second period was confirmed. Before us, Shri Dani, ld. representative for the assessee, drew our attention to a comparative chart on page 27, as included in the compilation. From this chart, it is clear that in the case of the assessee itself shortage was taken at 8% in the asst. yrs. 1977-78, 1975-76 and 1974-75 and at 7% in the asst. yr. 1976-77. The argument of Shri Dani is that as compared to the earlier years, the assessee claimed lesser shortage in the year under appeal. Then, he drew our attention to page 31 of the paper book, which is a letter addressed from Iron & Steel Controller to M/s Ludhiana Steel Rolling Mills, Miller Ganj, Ludhiana. In this letter, the authority certified the wastage in Billets and several other items, which are being manufactured by the assessee. The wastage so certified ranges between 10 to 20%. On the basis of these materials, Shri Dani argues that the CIT(A) was not right in restricti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(i) H.I. Ingots excess as per ITO 1.450 tonnes ignored being marginal. . (ii) Iron Scrap excess as discussed above 62191 tonnes value @ Rs.675 41,980 (iii) Flats excess 42 tonnes @ 1625 per ton 68,250 (iv) Bars 16 tonnes @ 1625 per ton 26,000 (v) Semi finished 10.110 tonnes @ 1270 per ton 12,840 . 1,49,070 6. Thus, in her opinion, the excess stock of the value of Rs. 1,49,070 was there. The addition of Rs. 2,31,965 was, therefore, reduced to Rs. 1,49,070 and relief of Rs. 82,895 was given. It is against this relief, the revenue has come up in appeal. The principal plea of the assessee before the CIT(A) was that there was no excess stock and, in alternative, the assessee pleaded that if any excess stock was found, then the value of such excess closing stock found in the first period be taken to be the opening stock of the second period. The CIT(A) accepted this plea of the assessee. The revenue has challenged this finding of CIT(A) also. 7. The most important question for consideration before us is whether there was any excess stock with the assessee as on 12th November, 1976, when survey was conducted by a team of officers of the department. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otal . 8. On page 2, the description of the bars is as follows: Bars Square and Round 3 Tons Axils 1 Tons Bars 4.50 Tons Angles 26+60 1.50 Tons Bars 4.50 Tons Bars 1.00 Tons Bars 20.00 Tons Bars 1.00 Tons Bars 12.00 Tons Bars 7.00 Tons . 55.00 Tons 9. The description of the finished goods as per page 3 is as follows: Sleeper . 28 Tons 32, 000 Kg. Flats 12x5 sq. 425x20 7 '' 8,500 Kg. Flats 12 1/2x4 8 '' 8,000 Kg. Flats 12 1/2x4 1.50 . . Flats 12 1/2x4 sq. 6.50 . . Flats 12 1/2x5 sq. 8.00 . . Flats 12 1/2x3 sq. 8.50 . . Flats 12 1/2x6 mm 8.00 . . Flats 18x4 sq. 0.60 . . Flats 5x4 sq. 24.00 . . Flats . 10.00 . . Flats . 2.50 . . Flats . 7.00 . . Flats . 11.00 . . Flats . 13.00 . . Flats . 6.00 . . Flats . 4.00 . . Flats . 3.00 . . Flats . 12.00 . . Flats . 20.00 . . . . 193.6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ck was purely estimated and no actual weighment was done. The ITO has given an impression in his order that the entire stock was distributable in several homogenous lots having the same shape, size and weight and, therefore, by taking actual weight of one piece of a lot, the whole lot could be weighed by multiplying the weight by the number of the pieces. But, the factual position is different. From the inventories it is clear that the entire stock could not form several lots of similar nature and, therefore, it was not possible to arrive at correct weighment by weighing actually one of the pieces in a lot. If there were lots of same description, then by actually weighing one piece of such a lot, correct weight of the entire lot could have been done. The inventories show that the stock was of heterogeneous character and that could not be kept in similar 4 lots bearing the same shape, size and weight. On these facts, we hold that the contention of the assessee is correct. The weight recorded by the Income-tax personnel's in the inventories is not correct and no reliance can be placed thereon. That being so, we do not agree that the finding regarding the excess weight was rightly arr....