TaxTMI 
TaxTMI 
2012 (12) TMI 563
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....claim of burning loss had in fact dwelt upon comparable cases and brought out a well reasoned order. 4. The Learned CIT(A) erred in not appreciating the fact that the non-rejection of the assessee's claim in the original return u/s.143(1) would not tantamount to acceptance per-se of the assessee's claim and that such claim should always stand the test of scrutiny in the regular assessment. 5. The Learned CIT(A) erred in not appreciating the fact that instead of maintaining quantitative details as are required under the Central Excise Rules and on the basis of which the burning loss claim should have been made, the assessee chose to claim the loss on the basis of some arbitrary figures. 3. The assessee is a partnership firm engaged in business of manufacturing and supply of iron and steel. A search and seizure action us.132(1) of the Act was conducted by the Department in Agrawal Group of cases of Nashik wherein business and residential premises of partners of M/s.SAL Steel and their relatives & close associates were covered. Consequent upon the search and seizure action conducted by the Department, the Assessing Officer issued notices u/s.153A to the appellant on 05.12.2005. The....
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....lot considering quality and presence of above other elements in each lot. By using ingots the burning loss may range from 3% to 5% for the reason that ingots itself is finished goods. In case of use of MS scrap as raw material, the burning loss range from 10% to 15%. Considering the above explanation, it will not be justified to restrict the disallowance of burning loss to 3% only. It is requested to drop the idea of proposed addition to income and allow the burning loss as claimed in the return of income filed." 5. The Assessing Officer did not accept the explanation given by the assessee and proceeded to estimate the burning loss at 6% of the consumption as against the rates claimed by the assessee as discussed above. The Assessing Officer in A.Y. 2001-02 on burning loss issue held as under: "I have carefully considered the submissions of the assessee in the light of the seized material and the statements recorded during the course of search. The explanation given amounts to a claim made without evidences. The general concepts and guide lines as mentioned by the assessee regarding the process of steel manufacturing business is applicable only where facts and figures of consump....
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....n as 600 kgs. It is humanely impossible to say that these figures are factually correct. They very clearly show that assessee has been arbitrarily entering these figures in the registers. In absence of any realistic data being recorded in the prescribed registers, I have no option but to go for the minimum figure reported by the assessee in the same concern but in subsequent assessment years. No record is found maintained by the assessee at any time so as to project any specific analysis quantity wise and quality wise of the raw material purchased which would show as to the reasons that a particular purchase for a particular period had particular % of impurities contained, which led to burning loss as high as 7.46% claimed during the year under consideration. It is relevant to mention here that there is no evidence in the business lineH of manufacturing of steel products from raw materials/scrap in the past and the present to show that the raw materials obtained have high impurities in terms of yield capacity in the year under consideration as compared to the past or as compared to the similar business carried on any other places. Considering the facts of the case as discussed abo....
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....e 1). In our written submission of appeal, we have stated the different percentage of burning loss as follows: A. I f raw material used is ingot, then the burning loss is in the range of 3% to 5%. B. I f raw material used is M.S.Ship Breaking Plate, then the burning loss is in the range of 8% to 10%. C. I f raw material used is M.S.Old Cut Piece Bar lesser thickness ship plate, then the burning loss is in the range of 10% to 15% even sometimes upto 17%. As per enclosed annexure 1, it is very clear that our major purchases of raw material purchases are covered in the category of material of above Band C clause. Also in the assessment year 2006-07 the assessee had purchased only 3.020 MT of ingot out of total 1628.580 MT which is used for the purpose of pushing raw material. Except for the assessment year 2006-07, assessee had never purchased ingot as raw material. So the percentage of burning loss claimed is correct and it is not required to make any addition on account of burning loss. The Deputy Commissioner of Income Tax had issued show cause notice for the burning loss process on 08- 10-2007. The Deputy Commissioner of Income Tax Central Circle-I and Joint Commissioner of I....
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....laimed was actual and the same should be accepted. On the other hand, the Assessing Officer restricted the burning loss @ 6%. The Assessing Officer rejected the assessee's arguments on the grounds that the assessee did not maintain the proper records and quantitative details regarding production of steel. It was also stated by the Assessing Officer that comparative studies revealed that the burning loss is between 2% - 6%. In fact the burning loss claimed by the assessee was accepted in the original returns and only at the time of assessment u/s.143(3) after the search action that the issue was reconsidered and the additions were made. During search action no direct evidence or material was found out by the search party regarding inflation of burning loss. Though the quantitative records on production of steel were not maintained properly but the same does not automatically leads to the conclusion that there was a claim of excess burning loss. The Assessing Officer was not consistent in his reasoning that percentage of loss in the line of business was @ 2.52% as per the informal study and again mentioned that business loss is 6% in similar line of business in the state of Maharasht....