TaxTMI 
TaxTMI 
2016 (7) TMI 533
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....r dated 16.12.2010 for assessment year 2008-09. The grounds raised by Revenue as per its appeal are as under:- "1) Whether on the fats and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition on account of undisclosed sales of 258 liters injectible without showing proof that it did not form part of the 941 liters that was sold during the year under consideration. 2) Whether on the fats and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition on account of Ad-hoc cost allocable which was made without showing any nexus between the produced item and direct and indirect cost involved. 3) Whether on the fats and in the circumstances of the case, the Ld. CIT(A) is justif....
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....own at nil. Accordingly, the AO opined that the closing stock of the earlier year must have been sold during the current year without showing in assessee's books of account. Accordingly, he treated the sale of earlier year stock as undisclosed sale for an amount of Rs.7,82,186/- (258 ltr. x Rs.3031.73) and added it to the total income of assessee. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition by observing as under:- "4. Regarding ground no. 1 relates to addition of Rs. 7,82,186/- on account of undisclosed sales. The AO relied upon Cost Audit Report for quantitative details and has not considered the sales account of the audited accounts for the year ended 31-03-2008 which reflected the sales of ....
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....bmitted that AO has relied on the cost audit report without pointing out any flaw in the financial audit report where all the details about the injectables were duly recorded. He further relied on the order of Ld. CIT(A). 5. We have heard the rival contentions of both the parties and perused the materials available on record. From the aforesaid discussion, we find that there was some mismatch in the quantitative detail in the product injectables for 258 liters in the cost audit report of the assessee. As a result the AO assumed that 258 liters of injectables have been sold out by the assessee without recording the correspondence sales in its books of account. However, ld. CIT(A) has deleted the addition by holding that AO has relied mere....
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....ty and products. During the course of assessment proceeding, AO observed that there has to be complete disclosure in the cost audit report about the sales of the product and its pertinent cost. But in the instant case, assessee has allocated the cost on ad hoc basis without referring to the relevant necessary details in terms of quantity and products. In the absence of relevant details like name of product, quantities produced, turnover, cost of raw materials, costs of other ingredients, direct wages, salary, indirect cost and other overheads with respect to the all the products produced and sold, the AO found that the cost allocated is not proper and not supported by evidence. Accordingly, the AO has disallowed the total cost allocated for....
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.... Ld. CIT(A). 9. We have heard rival contentions and perused the materials available on record. From the aforesaid discussion, we find that AO has made the addition on the basis of cost audit report where the product-wise detail for sale and manufacturing cost were not specified. However the AO has not pointed out any defect in the financial audit report furnished by assessee. The AO has made the addition merely on the ground of non-disclosure of the cost of the items manufactured and at the same time accepted the sale declared by the assessee. In our considered view, the addition made by AO is based on whimsical ground and therefore we find no reason to interfere in the order of Ld. CIT(A). This ground of Revenue is dismissed. 10. Las....
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....eleted relying upon the ITAT's judgment. Therefore, ground no. 3 is allowed." 12. Both the parties are relied on the orders of Authorities Below as favourable to them. We find that Ld. AR submitted that loan was advanced to the directors out of its own fund which is Rs.5,89,14,826/- as per the audited account for the year ended 31.03.2008. He further submitted that amount was not made by assessee-company in the year under appeal but it was given in the earlier years. The Ld. AR also submitted that in assessee's own case for the AY 2001-02 the Co-ordinate Bench of this Hon'ble Tribunal has decided the issue in favour of assessee on the similar facts and circumstances in ITA No.772/Kol/2005 dated 26.08.2005, wherein the relevant extract is....