9911796707
TMI Blog2012 (11) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... ne by CIT(A) requires to be sustained to meet the end of justice - partly in favour of assessee. - ITA No.1189 AND 1934/Ahd/2010 - - - Dated:- 5-10-2012 - SHRI G.C. GUPTA, AND SHRI A. MOHAN ALANKAMONY, JJ. Assessee by Shri Rasesh Shah, AR Respondent by Shri M. Mathivanan, Sr. DR O R D E R PER A. MOHAN ALANKAMONY: These appeals are filed by the assessee and by the revenue aggrieved by the order of the learned CIT-(A) U/s. 250 r.w.s 143(3) of the Act., in appeal No. CASIV/ III/224/08-09 for the assessment year 2006-07 dated 10-02-2010. 2. The assessee 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 surviving ground No.1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear comparing to the previous year, the manufacturing cost could be estimated to Rs.15,62,50,000/-. However, the same was declared by the assessee as Rs.8,89,49,871/-. After detailed analysis on the issue, the learned AO worked out a figure of Rs.1,22,88,377/- being unexplained expenditure incurred by the assessee for which source of income was not disclosed and accordingly addition was made u/s 69C of the Act since the proviso clearly stipulates that such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. The assessee carried the matter before the learned CIT(A). The learned CIT(A) after detailed examination of the facts sustained the addition of 50% of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g WIP when there is not much difference in the manufacturing cost for the two years is also required to be given due consideration. Hence, considering the totality of facts of the case, it would be quite reasonable if addition is sustained to the extent of 50% of Rs.1,22,88,377/- which will take care of the element of unaccounted expenditure also the possible overvaluation of closing WIP on account of its alleged valuation at market price. Thus, addition is sustained to the extent of Rs.61,44,189/- the balance amount is deleted. 6. The assessee has made the following written submissions before us: 2. During the course of assessment proceedings assessing officer observed that there are significant discrepancies in the value of WIP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07. The working of cost of manufacturing WIP is shown at para no.6.10 of the assessment order [Page no.8]. As per this working the cost of manufacturing comes to 100.85% of WIP for A. Y. 2005-06. Taking into account this ratio assessing officer worked out manufacturing cost for A. Y. 2006-07 at Rs.2,52,12,500/- being 100.85% on WIP of Rs.2,50,00,000/-. Therefore assessing officer treated the differential amount of Rs.1,22,88,377/- (2,52,12,500 1,29,24,123) as unexplained expenditure and as per his findings given at para no.6.12 of the assessment order [Page no.9] added the sum of Rs.1,22,88,377/- to the total income of the assessee treating unaccounted expense as deemed income of the assessee u/s. 69C of the Act. 4. In the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit ratio of molding division in the immediately preceding year was 79.36% the same for the year under consideration is 71.34%. This is a clear indication of the fact that profit margin in case of molding division is very high. As assessee has done valuation of WIP at market rate, no presumption can be drawn relating to any unaccounted unexplained expenditure being incurred by assessee purely on the ground that total cost of molding division is lower than the closing stock of WIP. 5. It is worthwhile to mention here that in the course of assessment proceedings, assessee also filed detailed chart showing rates adopted for valuation of different items comprising the WIP stock it is pertinent to mention here that the rates adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eyes of law. Instead of appreciating the fact that assessee has shown higher profit in molding division, the Assessing Officer has come down very heavily on assessee by making huge addition on the basis of presumption. Hence, the addition made by Assessing Officer being very much arbitrary highly illogical is prayed to be deleted. 7. The learned AR argued in support of the written submission submitted by the assessee and on the other hand, the learned DR relied upon the orders of the revenue. 8. We have heard the rival submissions and carefully perused the material on record. Even though, the learned AR has reasoned out in various ways, he has not produced the actual and accurate working for the valuation of work in progress ..... X X X X Extracts X X X X X X X X Extracts X X X X
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