TaxTMI 
TaxTMI 
2022 (8) TMI 898
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....ome Tax Act, 1961 passed by Ward- 27(1), New Delhi (hereinafter referred to as the Assessing Officer 'AO'). 2. The assessee was engaged in the business of manufacturing and sales and contract manufacturing of Dairy products and had filed return of income of Rs. Nil. The case was selected for scrutiny and the assessee was asked to submit detailed submission on FAT & SNF under the provisions of Milk and Milk Products order (MMPO), 1992. 2.1 The Ld. AO was of opinion that the assessee has shown gain in terms of FAT & SNF of 115.49 MT & 116.13 MT respectively and there should ideally be no gain of FAT & SNF in the milk produced & product manufactured/sold. Also, the assessee has not submitted the copy of agreement between Mother Dairy & the a....
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....ed as per MMPO, the rates per kg of milk procurement in terms of FAT & SNF have been mentioned as under: Source of Procurement Price Rs/Kg of milk Price Rs/kg of Fat Price Rs/kg Of SNF VLC&MCC 26.52 212.20 141.46 Other Agencies 27.39 252.88 128.92 Thus, the value of excess/gain of FAT & SNF in the trading account on the basis of purchase price mentioned above is determined as under: FAT : 115490 x 252.88 = Rs.2,92,05,111/- SNF : 164130 x 128.92 = Rs.2,11,59,640/ Total value unexplained purchases related to gain of FAT & SNF = Rs.5,03,64,751/-. This amount is added to the total income of the assessee. Since, the assessee has filed inaccurate particulars of income and has concealed particulars of income,....
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.... fallen in error in deleting the unexplained purchases discovered by Ld. AO by extensive discussion of matter. Ld. AR however, relied the findings of Ld CIT(A), submitting that the evidence has been appreciated in correct prespective. 6. At the outset it is pertinent to mention that admittedly assessee has earned FAT & SNF gain which has already been offered for tax. Ld. AO has found a case of unexplained purchase. In this context Ld. CIT(A) has rightly observed and reasoned that then disallowance can be made by Ld. AO only in a case where claim for deduction for the purchases is also made. In the present case, no deduction qua purchase has been claimed so the Ld. AO erred in making addition for the so called alleged unexplained purchases.....
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....l milk shown in the trading account. Thus, Ld AO doubted that the entire gain is owing to contract manufacturing. 9. However, what is established before Ld. CIT(A) is that the gain on account of reduction in process loss due to modern facilities is used for manufacturing of Ghee/Butter/SMP/DW/Other products, which is part & parcel of closing stock factored in trading account (part of MMPOreport)/audited annual accounts. Therefore, the same is attributable to the contract work for Mother Dairies Ltd. 10. The assessee company established before the Ld. CIT(A) that there was typographical mistake in reporting of quantification of milk procured for contract manufacturing which was actually 159433 M.T (1594.33 lacs litres) instead of 1594.33 M....