TaxTMI 
TaxTMI 
2016 (8) TMI 453
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..... In this appeal, the revenue has raised the following ground of appeal:- (i) The Ld. CIT(A) erred on facts and circumstances of the case by deleting the addition of Rs. 3,32,75,131/- made by AO on account of unexplained expenditure. (ii) The appellant craves leave to add or alter or abrogate any ground of appeal at the time of hearing." 3. Brief facts of the case are that the assessee is engaged in the business of manufacturing vanaspati ghee. The return was filed on 31-10-2005 declaring total income at Rs. 11,38,536/-. The assessment was completed u/s. 143(3) of the Act determining the total income of Rs. 11,62,290/-. The assessment was reopened by issuing notice u/s. 148 of the Act on the ground that the expenditure to the extent of....
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....il) consumed as per notes on accounts Opening Stock: Raw Materials 1,94,87,114 1,94,87,114 Raw Materials-Goods in Transit 6,77,33,048 6,77,33,048 Chemicals 11,47,449 0 TOTAL (a) 8,83,67,611 8,72,20,162 Add: Purchases Raw Materials 1,78,36,29,836 1,78,36,29,836 Raw Materials-Goods in Transit 3,62,71,868 3,62,71,868 Chemicals 2,17,81,926 0 Hydrogen Gas (Including Freight) 82,80,116 0 Carriage Inward 5,21,41,597 5,05,61,178 Brokerage & Commission on Purchase 16,53,472 16,53,472 Cenvat Credit Reversal on Input 14,290 0 Less : Discount on Purchase on Chemicals 44,994 0 Less : Discount on Purchase on Raw Material 15,84,936 15,84,936 TOTAL (b) 1,90,21,43,175 1,87,05....
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....against, payment of excise duty on finished goods; and, the balance is taken directly to the balance sheet. The treatment of MODVAT is revenue neutral which is also evident from Annexure 1 to the tax audit report wherein the deviation from section 145A is certified as nil. 5. The Ld. CIT-A after considering the submissions of the assessee and CITA gave finding as under: 8. I have perused the assessment order and the material on record. I have also considered the submissions made on behalf of the appellant. I find merit in the argument that the addition made by the AO is arbitrary and without any basis as there is no supporting material or evidence on record. It is an admitted fact that the appellant has debited sum of Rs.l,94,03,13.,928/....
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.... substantiate or support his conclusion that there was excess expenditure of Rs. 5,11,14,650/- towards consumption of raw material which is not reflected in the profit and loss account. The treatment given by the AO in respect of availing of MODVAT credit is also not in order. The addition made by the AO is neither substantiate in law nor on facts. The addition of Rs. 3,32,75,131/- is directed to be deleted. Ground no. 3 is allowed. 6. The Revenue by this appeal before us, submits that the assessee spent a sum of Rs.l,90,91,26,133/- on account of raw material consumed in the profit & loss account, but it was noticed a sum of Rs. 1,85,80,11,483/- was only debited in the profit & loss account towards raw material consumed and found differen....