TaxTMI 
TaxTMI 
2010 (2) TMI 755
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.... after making the addition on account of suppressed production of Rs.64,53,524/-. 2.2 During the course of assessment proceedings, the AO noticed that there were some discrepancies in the Central Excise Registers representing variation in the percentage of output in each category of raw material used. The details of variation of percentage in each category have been enclosed as Annexure with the assessment order pointing out the wide variation in the percentage of wastage reflected on the processing of each category of raw material used by the assessee. The AO has discussed the issue in detail as to why the reply given by the assessee during the assessment proceedings was not acceptable to him in para 12 of his order. The AO has als....
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....ation in the percentage of scrap shown in various items of raw material. It was seen that in respect to circle cutting, scrap/wastage has been shown at 20% to 27%; in the case of deep drawing/pressing, it has been shown at 2% to 3%; in the case of trimming and slot cutting it has been shown at 3% to 8% and in respect of polishing and buffing it has been shown at 1% to 3%. 2.5 The AO further noted that in the case of circle cutting to utensil making patta to handle making, flat bar to patta, tube/pipe to handle and rods to handle making they are different percentage of scrap/wastage have been shown. 2.6 The AO noticed that all the previous assessment orders are based on the block assessment orders. In all the earlier assessme....
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....rd to the Annexure attached, it was pointed out that variations in wastage percentage were filed with respect to each raw material and not with respect to each activity or each different item made from those raw materials. It was explained that in the Annexure to the assessment order, the AO only made categories of raw materials i.e. patta, tubes, rods etc., But he did not mention or make categories of items such as utensils, circles, handles etc. made from each of those raw materials. 3.2 It was further submitted that there are different categories of items produced by the assessee and in different categories, there are different percentage of scrap/wastage and thus, different percentage of scrap and wastage are similar to the scra....
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....rom these materials; therefore, the CIT(A) drew the conclusion that the AO has not compared like with like. It is noticed by the CIT(A) that the ld AR has been able to demonstrate that there are errors in the computation of percentages in the assessment order/annexure. It was further noted that the ld AR has demonstrated that if the wastages in respect of each finished products produced from the same raw material are compared with the earlier years, the same are comparable and no wide variations are noticed. The explanation on behalf of the assessee was that each entry contained in the annexure to the assessment order to demonstrate that none of the percentages of wastage are excessive or beyond the acceptable range. The percentages of wast....
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....crap is generated that has to be shown in the return of excise and the same has been shown and the Excise Department has accepted the wastage/scrap shown by the assessee. Whatever the scrap has been shown in the books of account, the same quantity has been allowed. There was no material with the AO to reject the books of accounts. Therefore, it was further explained that the AO committed a mistake in not comparing the production and wastage of each items separately. Making handle, the rate of percentage is different; making tube the rate of percentage is different and making flat bar, the rate of percentage is also different. Similar difference was shown in the earlier year. The AO has not compared each rate of percentage of each item but h....