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TMI Blog2019 (12) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- In this case the addition was primarily based upon the excess consumption of fuel to the extent of 24638 litters. We observe that the assessee was contract manufacturer of Britannia Industry Ltd. and was operating under the direct control and supervision of Britannia Industry Ltd. and was not allowed to do or manufactured bread for any other outside party. We also note that the excess consumption of fuel was within the standard norms as has been observed by CIT(A) by comparing the actual and standard consumption in the preceding and succeeding year and came to the conclusion that the estimation of unaccounted sale on the basis of excess consumption of fuel is wrong and against the provisions of the Act. We are quite convinced with the conclusion drawn by the Ld. CIT(A) on this issue as the AO has made addition on hypothetical basis not appreciating the facts in correct perspective. Accordingly, we are uphold the order of ld CIT(A) by dismissing the ground raised by the revenue. - ITA No.2492/M/2017 - - - Dated:- 9-12-2019 - Shri Rajesh Kumar, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Shri G.C. Lalka, A.R. For the Revenue : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 3,28,32,575/- by Ld. CIT(A) as made by the AO on account of unproved expenses. 4. The facts in brief are that during the course of assessment proceedings, the AO called for the information under section 133(6) of the Act from some parties with whom the assessee has entered into business transactions. The AO in some cases received replies while in some cases the notices were either not served or not responded. The details of the information gathered by the AO from 7 parties is given on page No.3 of the assessment order which was at variance to the details filed by the assessee and accordingly the assessee was asked to reconcile the said discrepancies with its the books of accounts. In response to the query of the AO the assessee submitted that out of 7 parties submissions from 4 parties have already been submitted on 09.03.2015 by the assessee. In respect of Charcore Petroleum the assessee submitted that the AO may take action against them and as regards Venus Petroleum the assessee submitted before the AO that a copy of the reply received from the said party may be provided so that the entries could be reconciled. Similarly, the account of Britannia Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations were filed in respect of four parties but has objected to it stating that supporting bills, vouchers , quantitative details , identity of persons signing the confirmations is not filed. While the assessee has stated that the confirmations were filed vide letter dated 9.3.2015, it is not clearly stated what else was called for since the notice dated 20.3.2015 does not make it clear as to what was already on record and what else was called for. As regards Charkop Petroleum, the assessee had stated before the assessing officer to take action as deemed fit in case they did not respond to its notice. As additional evidence, the confirmation from Charkop Petroleum has been filed. 5.7. At this stage it is noted that the onus lies on the person who makes the claims. The assessing officer had called for confirmations. If it can be shown that such claims are false, addition can be made. However, addition cannot be made for lack of response from the creditor/purchase party and more so when the goal posts are shifted by calling upon the assessee at the last minute to provide various details from the books of the suppliers over whom the assessee has no control. 5.8. There is mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 and AY 2014-15 as seen from the copies filed before me. In later years, the appellant has switched to gas as fuel instead of oil and fuel. Confirmations have been filed by all the parties. None of these parties are related to the appellant. Payments have been made by cheques. None of the expenses claimed have been proved to be non-genuine. If the parties have not given details such as their bank statements, copy of agreement etc. it does not mean that the expenses claimed are bogus. It is not necessary that there be a formal agreement in all cases. As per the Job Work Agreement between the appellant and BIL, the appellant is required to ensure that highest standard of cleanliness is maintained at the factory at all times. 5.11. In the facts of the case, and for the reasons narrated above, the disallowance made of ₹ 3,28,32,575/- is deleted and ground of appeal no 2 is allowed. 6. The Ld. D.R. contended before the Bench that the said addition of ₹ 3,28,32,575/- was deleted by Ld. CIT(A) without noticing the fact that the said amounts remained unverified during the course of assessment proceedings and came to light only when the AO issued notices under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturing processes. During the year, the assessee disclosed the receipt of conversation charges of ₹ 9,16,00,806/- in the P L account from Britannia Industry Ltd. According to the AO the said amount is not in agreement with the amount shown in 26AS and accordingly information was called for under section 133(6) from Britannia Industry Ltd. besides requiring the assessee to furnish the copy of agreement with the Britannia Industries Ltd. bills, vouchers, quantitative details, finished goods manufactured and raw materials consumed etc. which was replied by the assessee on 27.03.2015 explaining the query raised by the AO. Finally, the AO rejected the books of accounts of the assessee under section 145(3) of the Act on the ground that results as per books of accounts were not reliable as there was excess consumption of fuel of 24638 meters. Finally, the AO estimated unaccounted sales at ₹ 2,02,64,478/- by observing as under and adding the same to the income of the assessee: 5.6. I have considered the facts on record and submissions carefully. It is seen from Para 4.1. of the assessment order that the assessing officer informed the appellant of non-service/no rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of not submitting any plausible explanation on excess consumption of oil in the manufacturing . Besides, the AO noticed several infirmities and anomalies in the books of accounts of the assessee. Similarly, there was short consumption of electric unit to the tune of 77,17 which was also not explained by the assessee. The Ld. D.R. submitted that in view of these facts the result as shown in the books of accounts were unreliable and AO was not in a position to assess the income correctly and therefore rightly rejected the books of accounts and estimated the unaccounted sales of the assessee. The Ld. D.R. therefore prayed that the order of Ld. CIT(A) may be set aside on this issue by allowing the appeal of the Revenue on this ground. 13. The Ld. A.R., on the other hand, relied heavily on the order of AO by submitting that the assessee was only carrying out contract work for Britannia Industry Ltd. under contractual obligation which provided that the entire factory was to be used exclusively for the manufacturing, packaging and storing of products for Britannia Industry Ltd. and production would be as per schedule given by Britannia Industry Ltd. The production processes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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