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TMI Blog2014 (5) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... arments and it also sells clothes as such, both intra-State and inter-State. 3. At the time of inspection, the Inspecting Officials found the following defects: 1. No manufacturing account in Form XXX or in any other Form for the assessee's own manufacturer of blouse, bra and petty coat; 2. No accounts such as Delivery Challans for inter-Branch transfer of goods from Factory to Branches, Main Office and godown vice versa; 3. No separate stock accounts for the goods held at the godown, Head Office and Branch are maintained; 4. Export sales against Form H were effected but no records to that effect (for Rs.21,913.00 in May, 90) were produced for verification, even though the assessee had claimed exemptions on this in the monthly returns. 4. On verification of the actual stock taken with that of opening stock, purchases and sales, the Inspecting Officials noted stock variation of Rs.1,84,140/-. Based on the results, the Assessing Officer initiated assessment proceedings and worked out the difference of stock as follows: Opening stock of cloth Rs. 2,64,170.00 Add: Purchases from 01.04.90 upto the time of inspection fabric as per statement Rs. 93,80,115.00 Total Rs. 96,44,28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at all. The Assessing Officer, however, rejected the contention of the assessee and arrived at the total turnover at Rs.2,94,16,960/- for making equal addition for probable omission at Rs.46,34,644/- on the stock noticed as per the working furnished. The assessee went on appeal before the First Appellate Authority. 6. On a perusal of the accounts, the First Appellate Authority pointed out that the Inspecting Officials had not correctly adopted the sales figure and had not taken into consideration the sale of cloth upto the time of inspection, though the relative pages were duly signed by the Inspecting Officer. Hence, the stock variation arrived at Rs.1,84,140/- was not correct. Thus, on going through the books of accounts, the First Appellate Authority pointed out to the actual sales at the time of inspection of cloth and readymade garments at Rs.1,06,55,646/- (Rs.31,63,227/- + Rs.74,92,419/-) which was posted subsequently pending the stock purchase and sales and the balance of stock was worked out as under: Cloth Readymade Consumables Opening stock Rs. 2,64,170.00 Rs.36,01,417.00 Rs.2,24,250.00 Purchases Rs.72,52,553.00 Rs. 9,59,954.00 - Rs.75,16,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had not maintained production-cum-stock account. The cloth required for the purpose of stitching of articles alone were taken into account for the purpose of computing the stock of finished goods. The Tribunal viewed that the First Appellate Authority committed an error in viewing that the Officer did not take into consideration the sale of cloth and thus proceeded to apportion the unreconciled purchase turnover towards sale of cloth and sale of readymade goods. Thus, the Tribunal held that the Appellate Authority's view was not based on materials. It viewed that the Assessing Officer's estimate was based on pure facts according to the books of accounts. Thus, the Tribunal upheld the stock variation as stated in the assessment at Rs.46,34,644/- as well as further addition of Rs.46,34,644/- towards probable omission. 11. As regards the disallowance on the claim of second sales and estimate of first sale by the Assessing Officer, the Tribunal pointed out that the assessee had not maintained separate stock account for taxable and non-taxable goods. In the circumstances, the formula adopted by the Assessing Officer was well within the law declared by this Court. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.1990 i.e., the date of inspection, was only Rs.1,06,55,645.99, the inspection noted sales turnover of readymade garments upto 9th September, 1990. He also pointed out that the total purchase of readymade garments as well as cloth upto 08.10.1990 was to the tune of Rs.82,12,236.53. In the circumstances, the contention of the Revenue that the purchase upto the date of inspection of fabric of Rs.93,80,115/- is not borne out by the accounts. Thus, the difference arrived at by the Assessing Officer to a sum of Rs.46,34,644/- was not correct; the total sales made by the assessee in respect of fabric as well as readymade garments was Rs.74,92,419/-. So too the purchase of fabric taken was Rs.93,80,115/-. 15. He further pointed out to the failure to take note of the other materials available on the use in the manufacture of readymade garments. Consequently, he submitted that the Tribunal committed a serious error in ignoring the account entries to uphold the order of assessment. 16. Countering the said statement, learned Standing Counsel appearing for the Revenue defended the assessment order made and in turn, the Tribunal's order upholding the assessment. 17. Heard learned counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the stock of cloth and readymade garments along with the consumables at Rs.1,23,02,344/-, the First Appellate Authority took note of the sales of readymade garments as well as cloth as found in the books of accounts at Rs.1,06,55,646/- and reduced book profit at 20% and arrived at the stock difference at Rs.34,22,639/-. The Inspecting Officials noted the available stock at Rs.32,16,462/-. The First Appellate Authority took the actual stock available at Rs.32,16,462/- and arrived at the stock difference at Rs.2,06,177/-. Adding the proportion at Rs.11,67,609/-, the suppression was arrived at Rs.3,46,290/-. As far as the adoption of the actual stock available taken at Rs.32,16,462/- is concerned, we find from the inspection report submitted that the stock of finished goods found at the time of inspection was Rs.25,36,344/-. On a reading of the details furnished before us, we find difference between Rs.32,16,462/- and Rs.25,36,344/- representing the actual stock of finished goods which is on account of other materials in the form of consumables and that, leaving that out for the purpose of arriving at the actual stock difference, the Appellate Authority should have arrived at a su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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