2012 (9) TMI 233

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....1/- which is made on arbitrary basis, unjustified and against law. 2. Appellant craves to add, file, modify and other ground before or at the time of hearing of appeal. 2. The brief facts of the case are that assessee is engaged in the business of manufacture and export of ready made garments. Return of income declaring income at Rs.67,10,156/- was filed on 30.10.2007. The case was selected for scrutiny and necessary notices were issued u/s 143(2) of the Income Tax Act, 1961. During assessment proceedings, the Assessing Officer noted that assessee had shown scrap sales worth Rs.94,125/- only. The assessee was asked to explain the low sale of scrap reflected by it against which the assessee replied as under:- "While manufacturing....

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.... and the material used by us. iii) That the estimate made by Assessing Officer is nothing but an estimate only. While the assessee's figure of scrap sale shown at Rs.94,125/- is based upon the actual scrap sale and not on estimate. iv) That small scrap and cuttings are generated by way of wastage in the manufacturing process and is normally destroyed by us to maintain secrecy about quality & design. 5. The Ld CIT(A) after considering the submissions of the assessee did not accept the contention of assessee and upheld the addition made by Assessing Officer. The relevant portion of Ld CIT(A)'s order is reproduced below:- "I have carefully considered the assessment order and the submissions made by the Ld AR. The Ld AR has relied o....

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....acts, the case of the appellant is clearly distinguishable from that of sister concern. The Assessing Officer has relied upon the decision of M/s Krishna Kumar Aggarwal v. ACIT wherein it has been held that estimation of scrap in this kind of trade can reasonably and is justified keeping in view that the appellant is not maintaining any record of wastage or percentage yield in manufacturing activity." 6. Aggrieved the assessee filed appeal before this Tribunal. 7. At the outset, The Ld AR argued that Assessing Officer had made the addition @ 0.2% of turnover following the guidelines of Hon'ble Tribunal in the case of Krishna Kumar Aggarwal in I.T.A. No. 1187 & 3992/2006 and no specific defect in the books of accounts was observed b....