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TMI Blog2014 (12) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... produced to show that ₹ 45,06,566/- mentioned in the WIP was value of actual sales of moulds and not the cost of moulds which was transferred from WIP – Decided against revenue. The assessee stated that the moulds of ₹ 4,14,403/- was defective and had no realizable value - the CIT(A) has held that the auditor of the assessee has denied to have received any information about moulds having Nil value - the CIT(A) opined that there is no plausible reason to value the moulds at Nil and the quantity of these moulds were not accounted for in the books of account - there is no plausible reasons for valuing these moulds at Nil - Since these moulds are also not accounted for in stock it stands to reason that these moulds have been sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave accepted the explanation given by the assessee about the technical aspect that the moulds were duly written off as they did not have any realizable value. It be so held now and addition retained be deleted. 2.1 In the Revenue s Appeal, only Ground No.1 reads as under: 1. The Ld. CIT(A)-VIII, Ahmedabad, has erred in law and on facts in restricting the addition of ₹ 20,97,008/- made by the AO levied by to R.4,14,403/- on account of unaccounted sales without properly appreciating facts of the case and the material brought on record by the Assessing Officer. 3. The Assessing Officer made the addition by observing as under: 4.3 As per the profit and loss account the total sale declared by the assessee company is ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails with bills, voucher, etc. were produced. Without pointing out any specific defect in accounts maintained no such huge addition can be made. 5. The CIT(A) held as under: 7.3(iii) As far as addition on account of sales of moulds is concerned, it is seen that the AO has taken the sales to be ₹ 45,06,506/- on the basis of the statement which shows issue from 1-4-2005 to 31-3-2006 as at ₹ 45,06,566/-. The AO has held that the entire issue to constitute sales. The AR explained that the issue of ₹ 45,06,566/- consisted of moulds worth ₹ 30,00,000/- which were transferred from work in progress to finished products but were not sold rather these moulds were used for home production and capitalized later This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that in the books of accounts no stocks were shown as having nil value nor any WIP was shown having nil value. 7.3(vi) It is also seen that Shri Bandish Soparkar, AR of the appellant stated that he did not want to cross examine Shri Ashit N.Shah. It is also noticed that no work whatsoever was carried out during the year on any of these moulds. All these moulds were valued at ₹ 4,14,403/-. When there was no further work done on these moulds during the year, it is not understood as to how the value of these moulds became nil. 7.3(vii) The then Director, Shri Sajjan Lal Jain was authorized by the appellant to give statement on behalf of the appellant by the director Devenag J.Gadoya. He was asked to state whether the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to selvedge these items and were not usable and hence had no value. Q.11 Please explain the comments that the issue column shows the cost of moulds sold on page 203 of the paper book? A. It shows cost incurred manufacturing/rectification/rework on the items. Q.I 2 Please explain what happens to the rejected moulds? A. We rework and try to correct them, Q.I 3. In the statement given before ITO, Ward-4(l), Ahmedabad in the detail of moulds furnished at Al.No. 4, please explain why there was no mention of moulds discarded as having Nil value. Please state whether their numbers were taken into account in the calculation in the letter dated 11-7-2008. A. Discarded moulds are yet not finished moulds. Q.I 4 Please explain h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. It is worthwhile to note that the job cards for these moulds are alleged to be lost in fire. 7.3(x) In view of the above, it is clear that the appellant has not accounted for these moulds in the books of accounts. There is no plausible reasons for valuing these moulds at Nil. Since these moulds are also not accounted for in stock it stands to reason that these moulds have been sold outside books of accounts. In view of the above, the addition made by the AO on account of unaccounted sales is reduced from ₹ 20,97,008/- to ₹ 4,14,403/-. 8. Appeal is partly allowed. 6. The Departmental Representative relied on the order of the Assessing Officer, whereas the Authorized Representative of the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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