TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 803
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....ed goods was shown at 96.66% as against 97.76% shown in the preceding assessment year and 97.84% prior to the preceding assessment year. The GP is shown at 2.52% as against 4.12% shown in the preceding assessment year. The burning loss was shown at 3.34% which is much higher than that shown at 2.24% in the preceding assessment year and before that at 2.16% only. The assessee did not give particulars of quality of raw material purchased during the year and also in the preceding assessment year to establish his contention. The assessee has filed a chart furnishing consumption of electricity units with reference to production, which also shows fluctuation and the consumption power is found to be as low as 63 /MT to as high as 69 units / MT, The Assessing Officer observed that in the month of April 2008 , 1650.282 MT was put to production and per MT electricity consumption was shown at 68 units and the furnace oil consumption was shown at 5 Ltrs. per MT. In the month of December'2008 against finished products of 3521.367 / MT, the power consumption was 69 units per NT. The furnace oil consumption during the re levant period was 53 Ltrs. Per MT and that considering the past consiste....
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....nce or material about the suppression of production or sale. The assessing Officer has made some observation about the fluctuation of electric consumption and furnace oil consumption as under: Month Power consumption Oil Furnace consumption April April 2008 68 Units 55 litres December, 2008 69 units 53 litres March 2009 63 units 52 litres It was further submitted that the so called fluctuatio n is normal and within reasonable limit and there is nothing abnormal about it. The power consumption in assessment year 2007-08 has varied between 102 to 191 while in assessment year 2008-09 the same has varied betw een 70 to 103 units. The furnace oil consumption in assessment year 200708 has varied between 97 to 113 Litres per ton while in assessment yea r 2008-09 the same has varied between 45 to 50 litres per ton product ion as compared to earlier years the variation is not that much fluctuatin g. 6. The Id CIT(A) after considering the submission of the assessee deleted the addition by observing as under: " I have carefully gone through the assessment order, and submissions of the appellant. It is a matter on record that the appellant has maintained quantitative records of....
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....ubstantive evidences. 1 find that, the A.O 'has not pointed out any discrepancy in the books of a/cs, bills/vouchers, nor did the A.O opine that the books of accounts were incomplete. It is settled principle of law that no addition can be made on the ground of lower GP rate, until and unless, the books of accounts have been rejected by the A.O. by invoking the provisions of Section 145. after giving the appellant a reasonable opportunity of being heard. Further, it is equally settled legal position that the books of accounts cannot be rejected merely on the ground of low OP rate. Rather, the A.O has to bring on record specific defect in the books of accounts of the appellant as a result of which reasonable profits cannot be deduced. I find that the decision of the Hon'ble Kerala High Court in the case of St. Teresa's Oil Mill Vs. State of Kerala (1970) 76 1TR 365 (Ker) is providing strength to the case of the appellant in which 'it has been held that strong and sufficient reasons must be given to indicate that they are unrelia ble-mere disparity in consumption of electricity in certain month s cannot be the reason for rejection of accounts-such variation can be due ....
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....ditions/disallowances. 11. In a case where the transactions of the appellant have been accounted, documented and supported by the material evidences for deriving logical conclusions, without proving falsity of the same, adhoc additions/disallowances should not be made by the AO in a routine manner merely on presumption, probabilities, suspicion and surmises since the same action of the AO degenerates the spirit for which the quality assessments were emphasized by the Board, (Mukesh R Marolia v. Add!. CIT [2006] 6 SOT 247 Mumbai). 12. If general/casual/routine observations of the AO are to be considered as material evidence for the purpose of framing an assessment, the AO shall have blanket and arbitrary powers to dispose of the scrutiny assessments according to his whims and fancies which is not the spirit of the circulars issued by the Board on scrutiny assessment. An assessment cannot be made arbitrarily and in order that an assessment can be sustained, it must have nexus to the material on record. (CIT v. Mahesh Chand [1983] 199 ITR247, 249 (All.). 13. It is the settled position that, though the AO has very wide powers and is not fettered by technical rules of evidence ....
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....cept for the. absence of stock register- deletion of addition was upheld by the High Court In Ashok Refractories Pvt Ltd. Vs. CIT (2005) 148 Taxman 635 (Cal.) it was held that the rejection of the books of account only in the absence of stock register having regard to the availability of the other materials from-which the income could be d educed; was contrary to the proviso to section 145 unless there was a finding or opinion either that the records were incorrect and incomplete or that the method of accounting applied was such that the income could not be deduced from the accounts so maintained by the appellant. The ground that the item wise stock register was not maintained, and, therefore, the accounts were-sought to be rejected, was absolutely perverse and could not be sustained in the absence of any opinion expressed or any finding arrived at to the effect that the accounts maintained were incorrect or that the method of accounting plied was such that the income could not be deduced. In the absence any such finding, the account books could not be rejected merely on the ground that item wise stock was not maintained in the stock register. Thus, the rejection of account books w....
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.... than that shown in the preceding assessment year and that the assessee did not give any particulars of quality of raw material purchased during the year and also in the preceding assessment year. It was explained by the assessee that yield depends on various factors and it cannot be constant, The assessee has maintained quantitative records of raw material consumed and finished product produced. The books of account were subject to tax audit which was produced before the Assessing Officer. The assessee has explained the reasons for variation in pe rcentage of burning loss and consumption pattern. The observation o f the CIT(A) that there is no finding by the Assessing Officer that the acco unts were not correct and complete or income could not be deduced from the accounts maintained by the assessee was not controverted by the I d DR. In view of above, we do not find any reason to interfere with t he order of the CIT(A), which is hereby confirmed and ground of appeal of reve nue is dismissed. 9. Ground No.2 of appeal relates to deletion of addition of Rs. 50,62,705/-made by the Assessing Office on account of commission paid on purchase. 10. The Assessing Officer found that the as....
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....has furnished the bills for the first time before the CIT(A) and not produced before the Assessing Officer. 13. We, after considering the submission of Id D.R. and materials available on record, find that the copies of bills which were furnished before the CIT(A), were not furnished before the Assessing Officer to take a view that the commission payment was actually paid to them. As regards to the findings of the Assessing Officer that most of the parties were relatives to the assessee, the CIT(A) was of the view that the Assessing Officer has not properly enquired into the matter to prove that commission payment made to the parties, ultimately flown to the assessee. Looking into the facts and circumstances of the case, we set aside the order of the CIT(A) and restore the matter back to the file of the Assessing Officer to re-adjudicate the payment of commission after conducting a thorough enquiry into the matter. The assessee is directed to produce all bills and documents to substantiate its claim before the Assessing Officer, who will decide the matter after affording proper opportunity of being heard to the assessee. This ground of appeal of the revenue is allowed for statistic....
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....me, the Assessing Officer found that the sale rate was worked out excluding excise duty, VAT, cess, etc, therefore, the valuation is against the provisions of section 145A of the Act. After analyzing the valuation of closing stock at the cost or market price, purchase value of raw materials and closing stock of other consumables, the Assessing Officer worked out the under valuation of finished goods, raw material and furnace oil at Rs. 27,05,756/- and added the same to the income of the assessee. 21. On appeal, the CIT(A) deleted the addition by observing as under: " I have carefully gone through the assessment order and submission of the appellant. I am of the considered opinion that liability to pay excise duty arises immediately after production of goods and not on sale of goods. Only for administrative purposes, the payment of excise duty is made subject to removal of goods. Thus, there is no merit in the argument of the appellant as regards incurrence of liability towards excise duty. Therefore, it was obligatory on the part of the appellant to include excise duty while valuing closing stock of finished goods. However, at the same time, the appellant was entitled to claim d....