2014 (3) TMI 857 - HC - Income Tax

Surplus wastage 1/3rd addition made by the AO Consumption of Tendu patta Held that - The Tribunal was of the view that the turnover gross profit and gross profit rate declared by the assessee were better than the earlier years - the items in which the assessee is dealing are subject to the Excise and no discrepancy had been noted in the excise record maintained by the assessee by the concened authorities - assessee maintained the proper books of account and the same method of accounting was followed which the assessee followed consistently in the earlier years the CIT(A) sustained the addition to the extent of 1/3rd on the basis that similar type of additions were sustained in the earlier year but he ignored this fact that the addition sustained by him in the earlier years were deleted by the Tribunal The Tribunal after considering all the relevant facts including the details of the consumption register of Tendu Patta recorded a finding that the addition was unsustainable - 1/3rd addition which was maintained by the CIT (A) was also set aside by the Tribunal thus, the order of the Tribunal is upheld no question of law arises for consideration - Decided against Revenue.

Summary

Issues:
1. Appeal against the judgment and order of the Tribunal regarding surplus wastage.
2. Discrepancy in the Assessing Officer's findings on wastage and consumption.
3. Sustained addition by CIT (A) and subsequent appeal by the assessee.
4. Comparison with earlier years and consistency in accounting methods.
5. Tribunal's findings on the unsustainability of the addition.

Analysis:
1. The appeal was filed against the Tribunal's judgment on surplus wastage, where the Assessing Officer concluded that the assessee sold outside the books of account, leading to an addition in the appeal. The CIT (A) sustained 1/3rd of the addition on an estimated basis, which was further appealed by the assessee and allowed by the Tribunal.

2. The Assessing Officer's findings on wastage and consumption were contradictory as the turnover, gross profit, and gross profit rate declared by the assessee were better than previous years. The consumption per 1000 Biri of Kg. was lower, indicating no excessive wastage. The Tribunal noted the inconsistencies in the Assessing Officer's stand and the proper maintenance of books of account by the assessee.

3. The CIT (A) sustained the addition based on similar additions in earlier years, ignoring that those additions were deleted by the Tribunal. The Tribunal, after considering the consumption register of 'Tendu Patta,' found the addition unsustainable, as in the previous order where the 1/3rd addition was set aside.

4. The assessee highlighted the consistency in consumption of Tendu Patta for the assessment year 2002-03, where a similar appeal by the department was dismissed by the Division Bench. The Tribunal's findings were based on the relevant facts and figures on record, leading to the dismissal of the appeal.

5. The Tribunal's detailed analysis of the facts and figures, along with the comparison with earlier decisions, led to the conclusion that no substantial questions of law arose in the appeal, resulting in the dismissal of the appeal against the judgment and order of the Tribunal.