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TMI Blog2019 (12) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed on this issue. Undervaluation of closing stock of Varakh and Masala - HELD THAT:- As noticed that assessee has consistently applied FIFO method for valuation of stock in respect of Varakh and Masala and furnished purchase bills on sample basis of various items but the assessing officer has not pointed out how the method of valuation adopted for valuation of stock was wrong. It is clearly elaborated in the finding of the ld. CIT(A) that during the course of assessment proceedings, the assessing officer has not demonstrated how the method of valuation adopted for valuation of stock by the assessee was wrong. Therefore, we do not find any error in the finding of ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed Addition for the manufacturing loss - HELD THAT:- The entire production record was maintained as prescribed by the excise authority which was subject to scrutiny and examination by the excise authorities. During the year under consideration there was increase in the gross profit and net profit of the assessee compared to the other years. We do not find any infirmity in the decision of ld. CIT(A) in restricting the addition of manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996 (12) TMI 6 - SUPREME COURT ]. - ITA No. 1614 /Ahd/2017 And CO No. 50/Ahd/2018 - - - Dated:- 19-11-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri Aseem L. Thakkar, A.R. For the Revenue : Shri Vidhut Trivedi, Sr. D.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This revenue s appeal and cross objection filed by assessee for A.Y. 2012-13, arise from order of the CIT(A)-8, Ahmedabad dated 25-04-2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The revenue has raised following grounds of appeal:- 1) Whether the id. CIT(Appeal) is right in law and on facts in deleting the addition of₹ 4,47,060/- made on account of loss of raw tobacco. 2) Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the addition of ₹ 12,74,187/- made on account of undervaluation of closing stock. 3) Whether the Id. CIT(Appeal) is right in law on facts in restricting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned that tobacco flakes contained various impurities which were required to be removed before processing the same, therefore, the same resulted in weight loss. The assessing officer has not accepted the explanation of the assessee stating that modern machine has improved techniques of SI in packs used by the assessee and disallowed the claim of loss of ₹ 4,47,067/- Ground No. 2 (Deleting the addition of ₹ 12,74,187/- on account of undervaluation of closing stock) 6. The assessing officer has noticed that assessee valued the closing stock at lesser rate than the average purchase rate, therefore, the show cause notice was issued to the assessee to explain why not closing stock should be valued at average purchase rate. The assessee explained that the raw material was valued at cost and finished goods were valued at a cost or net realizable value whichever was less and WIP was valued at estimated cost. It is also explained that assessee has followed these methods consistently and same has been accepted by the department in the scrutiny assessment made u/s. 143(3) of the act. The assessing officer has not agreed with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of raw tobacco was very consistent as the same was 0.2048 % in assessment year 2011-12 and 0.2112 % in F.Y. 2014-15. Considering these facts and circumstances, we do not find any infirmity in the decision of ld. CIT(A), therefore, the appeal of the revenue is dismissed on this issue. 10.1 In respect of addition of ₹ 12,74,187/- for undervaluation of closing stock of Varakh and Masala, it is noticed that assessee has consistently applied FIFO method for valuation of stock in respect of Varakh and Masala and furnished purchase bills on sample basis of various items but the assessing officer has not pointed out how the method of valuation adopted for valuation of stock was wrong. It is clearly elaborated in the finding of the ld. CIT(A) that during the course of assessment proceedings, the assessing officer has not demonstrated how the method of valuation adopted for valuation of stock by the assessee was wrong. Therefore, we do not find any error in the finding of ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed 10.2 The addition of ₹ 2,36,64,474/- for the manufacturing loss was made by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was subject to scrutiny and examination by the excise authorities. During the year under consideration there was increase in the gross profit and net profit of the assessee compared to the other years. Considering the above facts and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in restricting the addition of manufacturing loss to ₹ 4,47,060/-, therefore, this ground of the revenue is also dismissed. The ground of cross objection filed by the assessee is also dismissed as we justify the finding of the ld. CIT(A) that claim of loss of raw tobacco should be the part of the total loss of manufacturing process. 10.3 The last ground of appeal of the revenue against deleting disallowance of ₹ 91,372 on account of damage goods, it is noticed that the claim is just 0.004% of the total turnover which is miniscule looking to the size of the turnover. In this regard, it is noticed that this claim of damaged goods is made by the agents/dealers because of pilferage during transport etc. The assessee has also furnished the credit notes issued to the parties after verification and no cash payment was made against the claim of damaged go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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