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TMI Blog2014 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... to be tested on factual matrix – then, there is nothing in the order of CIT(A) which could be assailed on the fact based situation or on any principle of law - order of the Tribunal rather is not based on any sound parameters and runs contrary to the entries in the stock register and other books of accounts, veracity of which entries is not questioned by the revenue even a little – decided in favour of Assessee. - ITA No.194 of 1999 - - - Dated:- 21-2-2014 - Rajive Bhalla And Dr. Bharat Bhushan Parsoon,JJ. For the Appellant : Shri Akshay Bhan, Advocate For the Respondent : Shri Vivek Sethi, Advocate ORDER Dr. Bharat Bhushan Parsoon , J. The challenge in this appeal filed under Section 260-A of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these are neither happily worded nor are terse and telling. In fact, the real controversy is as to whether without rejection of books and accounts, the results arrived at by the assessee based on his books can be ignored? It is in this light that the entire dispute is being discussed. Finalizing assessment for the assessment year 1990-91, a sum of Rs.1,22,547/- was added in the income of the assessee, a manufacturer of pins and steel bars, interalia on account of excessive wastage shown by the assessee. It was vide order dated 9.10.1991 (Annexure P-1) of the Assessing Officer. Additions made on many other counts being not relevant, are not being discussed. In appeal preferred by the assessee, this addition made by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wastage has been quantified on the basis of actual production and actual wastage taken into account on day to day basis. Plea of the revenue on the other hand is that the Tribunal having found large scale variation as compared to the previous years in output of wastage, had taken the average figure of 2%, rejecting the claim of the assessee of wastage at 2.7%. It may be noticed that in the manufacture of pins and steel bars, MS rounds are converted into bright bars by application of the prescribed manufacturing process. These bars thereafter are cut into pieces according to the size required of the bars by the assessee. In this process, some wastage and scrap emerges as a natural process and this scrap is sold by the assessee at mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Figures of wastage declared by the assessee in terms of its stock register and other books of accounts right from the assessment year 1985-86 till the assessment year in question, are reproduced as below:- Assessment year Percentage of waste (Shown and accepted) 1985-86 1.91% 1986-87 2.5% 1987-88 2% 1988-89 4.4% 1989-90 1.5% 1990-91 2.7% The Assessing Officer has very conveniently bye-passed the figure of wastage at 4.4% for the assessment year 1988-89 merely men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years. Observations of the Tribunal in the impugned order (Annexure P-3), in its relevant portion are as under:- On going through the order of the A.O., we find that in the assessment years 1985-86 to 1990-91, the assessee has been showing the percentage of wastage at 1.9%, 2.3%, 2%, 4.4%, 1.5% and 2.7% respectively. Of course, the assessee is maintaining stock register and production record and the A.O. has not been able to detect any defect in the register but the fact remains that the assessee is manufacturing pins and steel bars and in this very business,, he has shown the percentage of wastage at 1.5%in the preceding year but in the year under consideration, he has shown the wastage at 2.7%. ... xxxx xxx xxxx xxxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, claim of wastage of 2.7% was reasonable especially when it was supported by complete stock registers and no defects of any type were pointed out in the books of accounts or the stock registers. It was contended that even if the average of previous 3 years is adopted it would work out to almost the same as claimed. Therefore, the addition made on this account is warranted and needs to be deleted. 2.2 After careful consideration of the rival submissions and of the past history of the case, in my opinion, the claim of wastage of 2.7% could not be termed excessive when wastage to the extent of 4.4% had been allowed in the assessment year 1988-89. Moreover the trading results are being supported by complete stock register and no defects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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