TaxTMI 
TaxTMI 
2014 (3) TMI 111
X X X X Extracts X X X X
X X X X Extracts X X X X
....0-91. The appellant-assessee has sought consideration of this Court on the following substantial questions of law:- (i) Whether in the facts and circumstances of the case, the orders Annexures P-1 and P-3 are legally sustainable? (ii) Whether in the facts and circumstances of the case, the confirmation of the additions made on account of excess wastage even though, no discrepancy or defect was present in the Books of Accounts of the assessee-appellant, is legally sustainable? (iii) Whether in the facts and circumstances of the case, the confirmation of the addition made on account of excessive wastage with there being no material and cogent evidence on record and the same being based on presumptions and conjectures, is legally s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r-alia against this order of deletion, the Department went in appeal before the Income Tax Appellate Tribunal. However, no appeal was preferred by the assessee regarding upholding of certain other additions which had been ordered against it, by CIT (Appeals). Upholding the order of the Assessing Officer to some extent regarding addition to the income of the assessee qua excessive wastage, the Appellate Tribunal allowed wastage @ 2% instead of wastage @ 2.7% claimed by the assessee. Claim of the assessee is that when wastage had been arrived at in conformity with the entries in the stock register and the books of accounts, there was no parameter with the Tribunal to quantify wastage @ 2% instead of 2.7% claimed by the assessee on the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd business operations, have neither been doubted in their correctness nor have been questioned much less rejected under Section 145 of the Act. Once the books of accounts have not been doubted in their correctness and much less are rejected, there is absolutely no explanation coming forth from the revenue as to why the Assessing Officer as also the appellate authorities including the Tribunal went on to substitute their own judgment for the actual figures of wastage emerging from stock register and from the books of accounts of the assessee? Merely because last year, i.e. assessment year 1989-90, such wastage was calculated by the assessee @ 1.5% whereas in the year under consideration, i.e., assessment year 1990-91, it is 2.7%, would n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcentage of wastage was being accepted as used to be declared by the assessee including the highest percentage of wastage @ 4.4% declared in the assessment year 1988-89. When the books of accounts including stock register etc. have neither been rejected nor are doubted, accounts could not be bye passed merely on the whims and fancies of the authorities. Almost the same view was taken in Madnani Construction Corporation P. Ltd. v. Commissioner of Income Tax, (2008) 296 ITR 45 (Gauhati) and Pyarelal Mittal v. Assistant Commissioner of Income Tax, (2007) 291 ITR 214 (Gauhati). When even slightest doubt has not been expressed with regard to genuineness of the entries in the stock register as also in other books of accounts of the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....denly shows the variation from 1989-90 to 1990-91 at 1.2% and claiming the wastage at 2.7% which to our mind, on account of our above discussion, is certainly high because the assessee has not rendered any plausible explanation for the same. 15. Looking into the past history of the case, and also in view of our detailed analysis, it would be fair and reasonable to adopt the reasonable percentage of the assessee at 2% against 2.7% claimed by the assessee. 16. The order of the CIT(A) is set aside and the order of the A.O. gets modified with the directions to the A.O. to work out the addition after taking into consideration the reasonable percentage of variation at 2% . With these observations, this ground of appeal No.2 is partly allowe....