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TMI Blog2015 (6) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... ; adjournment but on going through the earlier hearings as noted in the order sheet, we find that Revenue was continuously seeking adjournments. It is seen that the revenue was given last opportunity vide order sheet entry dated 26.05.2014. Again on 02.03.2015, the adjournment was granted on the written request of Ld. D.R. and again on 03.03.2015 after imposing a token cost on revenue, the adjournment was granted for hearing on 22.05.2015, therefore, request of revenue to seek adjournment again was not justified. In view of above facts and circumstances, the adjournment application of revenue was rejected and Ld. D.R. was asked to argue the case on merits. Therefore, Ld. D.R. invited our attention to grounds of appeal and submitted that the Revenue has taken as many as 9 grounds of appeal against various deletions made by Ld. CIT(A) in respect of various additions made by A.O. For the sake of convenience, grounds of appeal taken by Revenue are reproduced below:- "1.. "On the facts and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 1,75,000;- made on account of& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by assessee. He submitted that in answer to question No.2 Shri Ghanshyam Sharma replies that he had come to deliver cash of Rs. 1.75 lacs to Shri R. L. Goel whereas Shri Pradeep GM(F) who is on record could not recognize Mr. Ghanshyam and, therefore, the amount ofR.1.75 lacs remained unexplained. 5. As regards ground No.2, Ld. D.R. submitted that during search proceedings, Annexure A-4 was found which contained a ledger account of Shri Sanjeev Goel in the books of account of assessee for the period 1.7.2000 to 12.09.2000 during the block assessment proceedings, the assessee company was asked to reconcile the above documents with the books of account, which could not be explained satisfactorily and, therefore, the addition was rightly made by A.O. 6. Coming to ground No.3, the Ld. D.R. submitted that during search and seizure operation, the search team had found a difference of Rs. 15,70,373/- in the amount of payer as per books of account of the assessee and as per final inventory of stores and spares and the difference was not explained. 7. Ld. D.R. in this respect invited ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. 11. We have heard rival parties and have gone through the material placed on record. We find that the Revenue had taken an additional ground of appeal by which it had taken the ground that there was violation of Rule 46A while admitting additional evidence. We find that the additional ground of appeal stands disposed of by Tribunal (vide interim) order dated 30.01.2009 and Hon'ble Tribunal has not accepted the application for acceptance of additional ground of appeal. 12. We find that the A.O. in his remand report dated 12.05.2003 has covered each ground of appeal taken before Ld. CIT(A). In the remand report he has admitted that necessary details has been furnished and has not advanced any comments on the submissions which implies that the A.O. himself had no objection to the submissions and he was satisfied with the submissions of assessee. For the sake of convenience, remand report dated 12.05.2013 is reproduced below: "Remand Report in the case of M/s Mahaan Proteins Limited for the Block period from 01.04.1990 to 14.09.2000 - Appeal No. 20312002-03 - reg. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has now submitted that page 1 of Annexure A-4 contained entries upto 06.09.2000 only whereas I Annexure A-57 contained entries upto 13.09.2000. Ground No.3: The assessee has contested the addition of Rs. 35,000/- as unexplained investment in color TV. This addition was made in the hands of MPL as the delivery challan and receipt are in the name of MPL C/o Sh. Sanjeev Goel The assessee has now made submission that the said transaction stands explained in the hands of block assessment of Sh. Sanjeev Goyal and filed copy of case flow statement of Sh. Sanjecv Goyal along with copy of assessment order for the block period. Ground No.4: The assessee has objected to the addition of Rs. 54,000/- as unexplained expenditure. The addition was made as the assessee could not prove that this amount was paid out of receipt of Rs. 56,900/- declared as undisclosed income in the block return. Ground No. 5(a) : The assessee contested the addition of Rs. 15,70,373/- on account of value of stock of spares being treated as sale outside books of account. During search operation at the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in fumigation chamber and petty packing material valued at Rs. 15,3811- lying at packing room was not inventorized at the time of search. This explanation of the assessee was not accepted. Ground No. (d) : No comments. Ground No.6: The assessee has objected to the addition of Rs. 32,440/- on account of 'Quantity in production store'. The addition was made as physically the quantity of Ghee was found less than the quantity as per stock record and the assessee failed to explain this discrepancy. The assessee has now submitted that normally on request Ghee is issued to the villagers, who supply milk to the assessee and the account is settled later on from the payment to be made to these villagers. Documentary evidence to this effect has now also been filed. Ground No.7: The assessee has contested the addition of Rs. 1,94,12,755/- (reduced to Rs. 1,70,81,7555/- U/S 154) on account of difference in stock physically found on the date of search and as per stock register of the assessee. Assessee's contention, that this is due to the return of defective goods from custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The addition was made as no stock register was maintained for the materials used for work in progress. However, inventory of contents of various tanks that were in use in production process was drawn and valued at Rs. 48,53,675/- on approximate basis. Assessee has submitted that milk purchased on 12.09.2000 and 13.09.2000 was 4.85 lac litres worth Rs. 46.07 lac, 33060 kg. Of SMP worth Rs. 18.50 Lacs and 10400 kg. of Melted Butter worth Rs. 11 Lacs was in the production process. To substantiate this, the assessee has now filed requisition sI1ps for SMP and Melted Butter. Ground No. 13: This ground is of general nature and no comments are offered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Asstt. Commissioner of Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,75,000/- is deleted." Ground No.2: "7. I have considered the facts and circumstances relating to the addition made by the A.O. The appellant's contention that the entries on page-l of Annexure A-4 represented the position up to 6/9/2000 whereas the imprest payment of Rs.l,00,000/- was made on 8/9/2000 and imprest payment of Rs. 4250/- was made on 12/9/2000, i.e., subsequently, as per Annexure A-57 seized from the assessee's factory at Kosi Kalan, is reasonable and satisfactory. There is no evidence on record to indicate that the page-l , Annexure A-4 contained the up to date entries of the imprest account of Shri Sanjeev Goyal with the company. There is bound to be difference in the two records if the period to which each relates is different from each other. The addition made by the A.O. is on insufficient material and basis and the discrepancy having been explained the addition of Rs.l,04,250/- is deleted." Ground No.3: "13. I have carefully perused the facts discussed in the assessment order and the submissions and documents furnished by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;parts could not be incorporated into the inventory. It is also noted that the rates listed in the inventory are approximate and appear in round figures. This shows that the rates and value adopted in the inventory cannot be relied upon, particularly when the assessee has maintained detailed record of spare parts in list- III and the rate of items is verifiable from the purchase documents. The arguments given by the A.O. for making the addition are general in nature and no specific discrepancies in explanation have been pointed out. There is also no incriminating evidence found during the search regarding sale of spare parts outside the books of account. The appellant is also correct in pointing out that the spare parts used in the production process would not be of any value to outside parties as these have specific enduse. The spare parts are specific to the production process and are not generally capable of being sold as such in the market. Considering these facts of the case, I am of the opinion that the addition of Rs.l,42,40,373/- has not been made on any proper or strong basis, and&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; the copies of audited accounts for earlier years that the goods, viz. stock at production were very much a part of closing stock entered in the books of accounts at the end of the year. In fact the value of stock at production has been worked out at a higher amount than the value considered in the assessment order. During the course of appellate proceedings, the appellant was required to furnish quantitative reconciliation of stock at production for the period 114/2000 to 14/9/2000 ( i.e. the date of the search), viz. total stock of WPC and other items as per books as on 311312000 and stock of WPC etc. found at the time of search on 141912000. Such reconciliation was prepared by the appellant and furnished vide replies dated 28/5/2003 and 18/6/2003. The appellant has also filed copies of stock ledger account of the factory at Kosi Kalan, which is a part of the seized record, from which the goods were received and issued to stock at production. This shows that the stock found during the search is reconcilable with reference to the books of accounts and variations if any are very nominal. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and addition of Rs. 37,05,240/- as unexplained investment in SMP is deleted." Ground No.9: "31. I have considered the facts of the case. It is noted that the log sheets prepared during the production process do not contain quantitative data of production, and hence cannot be said to indicate measurement of work in process The argument taken in the assessment is therefore not valid. The second reason given by the AO. for making the addition namely that the transfer of 33 tons of SMP to production process was not established by the appellant has also been discussed in relation to grounds of appeal No.10 & 11 above. It has been held that there is no material to doubt the availability of skimmed milk powder as per the books of accounts and the stock ledger. Hence, the reasons given by the AO. for treating the work in progress of Rs. 48,53,675/- as unexplained are not satisfactory. On the other hand, the appellant has furnished details of quantities of raw material issued for the production process on 12thl13th September, 2000. The work in progress has necessarily to be estimated,&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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