9911796707
TMI Blog2012 (11) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... d do not survive for adjudication. The lone surviving ground No.1 of the appeal is reproduced herein below. "1. On the facts and I circumstances of the case as well as law on the subject, the learned Commissioner of Incometax (Appeals) has erred in partly confirming the addition to the extent of Rs.61,44,189/- as against addition of Rs.1,22,88,377/- made by Assessing Officer for alleged unaccounted expenditure u/s 69 C of the I. T. Act." 3. The revenue has raised three grounds in its appeal wherein grounds No.2 and 3 are general in nature and do not survive for adjudication. The lone ground No.1 is reproduced herein below. "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-IV, Surat has erred in restricting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed examination of the facts sustained the addition of 50% of Rs.1,22,88,377/- amounting to Rs.61,44,189/- with the following observations: "I have considered the reasons given by assessing officer and also the submissions of appellant. After carefully going through the facts of the case, it is seen that the assessing officer has made the addition on account of unexplained expenditure mainly on the ground that value of WIP disclosed in books of account is substantially higher that the cost of manufacturing/total expenses recorded in the molding division. As against this, the assessee has contended that the valuation of WIP is made at the market rate and as the profit margin in molding division is very high (71.34% for the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there are significant discrepancies in the value of WIP of incomplete mould. The WIP of incomplete mould for F. Y. 2004-05 was Rs.1,42,33,000/- i.e. 16% of the total manufacturing cost whereas in F. Y. 2005-06 is valued at Rs.2,50,00,000/-. Assessing Officer after considering that there is almost no change in manufacturing expenses and adopted WIP ratio @ 16% and worked out manufacturing cost at Rs.15,62,50,000/- for the year under consideration. During the year the manufacturing cost incurred by assessee is Rs.8,89,49,871/-. 3. In view of the above, vide letter dated 19.12.2008, assessee company was requested to show cause as to why the difference amount of Rs.6,73,00,129/- should not be treated as unexplained expenses u/s. 69C and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee u/s. 69C of the Act. 4. In the course of appellate proceedings, it is submitted that the Assessing Officer has grossly erred in making huge addition running into crores of rupees, without bringing any cogent evidence on record. The assessee is doing business of manufacturing of package drinking water, pet performs, pet bottles, moulds & moulds spares. In the course of assessment proceedings, Assessing Officer observed that in molding division assessee has shown WIP on account of incomplete moulds at Rs.2.50 crores. He asked assessee to give separate data pertaining to molding division which was given by assessee & the same is reproduced at page no.7 of the assessment order. On perusal of the said data it has been obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & it is pertinent to mention here that the rates adopted for making valuation of WIP corresponds to the sales rate of various items which has been sold in the immediately succeeding year after completion of entire manufacturing process. This fact very much establishes the contention of assessee that valuation of WIP has been made at the market rates. 6. Now if the presumption of Assessing Officer is that assessee has invested any amount outside the books of account which co-relates to the items appearing under the head of WIP, in that case it is very much imperative on his part to bring at least some material/evidence on record which indicates that assessee has actually incurred the expenditure towards manufacturing of moulds. This is mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate working for the valuation of work in progress before the Revenue or before us. Further, to justify the assessee's claim that it has valued the work in progress on the basis of market value; the assessee has not submitted any valuation report. Therefore, the decision of the case; Sanjeev Woolen Mills Vs CIT, 279 ITR 434 relied upon by the learned AR is not applicable to its facts of the case. Looking at the complexity of the issue, the learned CIT(A) had sustained addition of Rs.61,44,189/- on an estimate basis. On an overall examination of the facts, we are of the considered view that an addition of Rs.30,00,000/- requires to be sustained to meet the end of justice. Accordingly, we sustain an addition of Rs.30,00,000/- on an estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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