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TMI Blog2014 (4) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... e question pertains to appropriate additions to be made in the income of the assessee after rejection of book results. We may notice that in Tax Appeal No.301 of 2014 Revenue has suggested following questions:- "[A] Whether the Appellate Tribunal has substantially erred in restricting the extra consumption of raw materials at 15% as against 40% worked out by the assessing officer even after upholding rejection of book results for unreconciled discrepancies in consumption?" [B] Whether the Appellate Tribunal has substantially erred in upholding the order of the CIT(A) in directing to adopt GP at 35% of the sales out of extra consumption as against the income @ 40% of book sales of Rs.2,21,18,899/- adopted by the assessing officer?" 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh J. Juneja [302 ITR 63] [Guj.] and recently following the said decisions in case of M/s.Aradhana Textile Mills [ITA No.968/Ahd/200 dated 13.5.2011] it was held that the entire sales or processing charges would not be the income of the assessee but only net profit would be subjected to tax. Respectfully following the aforesaid decisions, the addition has to be restricted to the profit element in the sales worked out in respect of excessive consumption taken at 20%. It is noticed from the gross profit chart given at page 9 of the paper book that the appellant had disclosed G.P. at 33.28% in the immediately preceding year and G.P. at 38.51% in the year under appeal. It has shown G.P. at 35.10% in the succeeding year i.e. A.Y.2008-09. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in agreement with the decision of the CIT(A) in estimating the profit element out of extra consumption, and not adding the entire sales as well as extraconsumption as income in the hands of the assessee. We also find that there is no direct evidence of any unaccounted sales made outside the books of Accounts. However, the addition is partly upheld on account of estimating on the basis of preponderance of probabilities, in the facts of the case of the assessee. Accordingly, the order of the CIT(A) in estimate the profit element at 36% of such extra consumption is fair and reasonable, is upheld and the grounds of the appeal of the assessee are dismissed." 4. Hence, the Revenue has filed two appeals for the each assessment year 2007-08. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renuously urged that having accepted that there was a degree of unaccounted consumption of raw materials, entire excess consumption should be added to the income since it was not shown that there was any unaccounted expenditure relatable to the production of the final goods. 8. This argument has two difficulties. Firstly, the assessing officer himself, as noted above, has recorded in the assessment order that there has been unaccounted purchases which needs to be considered against the unaccounted sales. Even in the decision of this Court in case of Commissioner of Income-tax vs. President Industries(supra) the Court was conscious of this angle when it observed as under:- "Therefore unless there is a finding to the effect that investment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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