TaxTMI 
TaxTMI 
2010 (5) TMI 526
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....and the validity of the assessment. Ld. Counsel for the assessee, Shri A.C. Shah fairly stated that he has instructions from the assessee not to press first common issue and accordingly he has not argued anything on this issue. As the assessee has clearly admitted that he is not interested in prosecuting this issue, accordingly, the same is dismissed as not pressed. 3. As regards the issue of merits, in these 4 appeals of the assessee and three appeals of the Revenue, is as regards to only addition made by the Assessing Officer on account of wastage on the basis of 5% disallowed by the Assessing Officer. In first 4 appeals of the assessee, the assessee has also challenged the enhancement made by the CIT(A) on ad hoc basis and by taking the deficit in the yield at 9.1% to 9.5% in these assessment years. The facts are being exactly identical in all the years, hence, we will take the facts from the assessment year in which survey was conducted i.e. assessment year 2002-03 and decided the issue raised on merits by the assessee as well as Revenue, which is common in all the 7 appeals. The assessee is engaged in the business of crushing of mug and creating bi-product called "mug dal".....
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....ddition by observing in para-6 of his appellate order as under:- "6. As per the production register maintained by the assessee, the mung consumption for the whole yea is shown at 73207.68 quintals. The production of mung dal is shown at 66141.37 quintals, kuma & chuni at 5411.10 quintals and wastage on account of stone/dust at 1655.21 quintals. Therefore, the yield ratio in respect of main products and bi-product is 90.35%: 3.39%. The loss on account of stone/dust comes to 2.26% as per the assessee. This can be clearly explained from the following chart:- ' Raw material consumed 73207.68 quintals (i.e. whole mung) Production:- Mung dal produced 66141.37 qts. - (90.35%) Bi-products (saleable) 5411.10 qts. - (7.39%) Stone/dust (wastage) 1655.21 qts. - (2.26%) 73207.68 qts. - (100%) 73207.68 quintals 7. In view of para-5 above, the correct working of yield ratio is as under:- Consumption of Mung as per stock record 73207.68 quintals Less: Weight of Bardon (i.e. 1 Kg. bag per 100 kg) 73.21 Qts. Less: Shortage in weight 957.65 qts. 1030.86 quintals (The assessee has deducted Rs.20,55,474 from the purchase bills and declared it in the P & L a/c. The to....
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....e time of making the payment to the concerned parties. No truck-wise/lotwise record is maintained and the weight of the wastage produced is not recorded for every transaction but a lump sum entry is after a period of time." 4. The CIT(A) deleted the addition by observing in para-4.3 of his appellate order as under:- "4.3 I have carefully considered the submissions made by the ld. A.R and I have also gone through the assessment order. It is to be noticed that at the time of survey the basic operation itself was carried out by the survey partly which reflected an yield of 91.54% in respect of 'dal' and the bi-products were at the rate of 8.46%. It is difficult to understand the method only adopted by the AO because while working the actual yield he has worked out consumption of 'mung' after deducting shortage in weight and thus net amount used for consumption was taken. However, while working out the excess shortage, he has taken the gross amount shown as consumption. He has not cared to deduct the shortage in weight and weight of 'bardan' while working out the actual addition. Thus the entire basis adopted by the AO is incorrect. In the order, the AO has himself pointed ....
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....ment years. However, I do not agree with the ld. Counsel that the quality difference credited in the various assessment years would have any impact on the standard wastage to be fixed for the appellant firm. The quality difference amount cannot be quantified in terms of weight and therefore, no estimate can be made on this basis. I also find that such quality difference additions do not lead to a conclusion that the quality of mug purchased by the appellant firm was poorer in the assessment years under consideration as compared to the other assessment years. Similarly, I find that the wastage on account of stone/dust does not show any uniform pattern but various from 2.68% to 3.40% for the four assessment years. Therefore, no inference can be drawn on the basis of the above facts that the wastage in the manufacturing process would definitely be higher in the assessment years under consideration. 3.6 In view of the above discussion and keeping in view the facts of the appellant company had purchased new machinery and employed technical person from A.Y. 99-2000, I hold that process wastage allowable to the appellant firm is 9.5% for all the four assessment years under consideratio....
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....n market and sale proceed has already been credited by the assessee in the books of account. According to the assessee, the actual waste in the form of dust & stone comes to 2.10% and not 8.46% as pointed out by the Assessing Officer on the basis of sample processing done by the Survey Party. We from the arguments of the Ld. counsel that the sale proceeds of kurma is at 5615 qtl. and the assessee has credited the sale proceed at Rs.31,39,954/- in its books of account , therefore the kurma cannot be taken as waste or process loss. The waste is only stone and dust found from 'mung'. The kuma can be considered for the purposes of taking yield and in that case the entire process has to be considered and including kurma, the process loss will be considered at 10%. The assessee has produced the complete books of account before the Assessing Officer including bills and vouchers audited by the Chartered Accountant. The assessee has also maintained the stock register and after going the assessment orders in these seven assessment years, we find that there is no whisper about the defects in the books of accounts. Even the AO has not invoked the provisions of Sec.145A of the Act and has not r....
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....see as to whether he has been regularly employing a method of accounting or whether his income, profits or gains can properly be deduced from his method of accounting if he has been regularly employing a method of accounting or whether the accounts are correct and complete. In the absence of these findings, the Assessing Officer cannot make assessment by invoking the provisions of Sec. 145(1) or 145(2) of the Act . 8. Another facet of arguments made by the Ld. counsel for the assessee is that this issue is covered by the decision of Co-ordinate Bench on similar facts, wherein the assessee was carrying on same line of business and the facts coming out of the same survey, wherein the Tribunal in the case of M/s. Jay Industries (supra) has deleted the addition confirming the results declared by the assessee on wastage as well as on percentage of yield, by giving following findings in para-8:- "8. We have heard the learned representatives of both the parties at length. Shri M.C. Pandit, learned DR relied on the order of the AO. On the other hand Shri A. C. Shah, learned Counsel for the assessee vehemently argued that the CIT(A) has passed a well reasoned order after appreciating ....