9911796707
TMI Blog2022 (8) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (part of MMPOreport)/audited annual accounts. Therefore, the same is attributable to the contract work for Mother Dairies Ltd. The Bench is of considered opinion that assessment order under the Act has to be passed on cogent evidence and sound reasoning which is on the basis of verifiable events. The reasons may be subjective, however the reasons inducing the said belief must always be objective. The objective reasons should lead to the formation of the subjective belief that, income is liable for assessment. In the case in hand the Ld. AO has relied his belief that ideally the quantum of FAT / SNF received from Mother Dairy should tally with the FAT SNF sent back on completion of processing work. However, he failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income of Rs. Nil. The case was selected for scrutiny and the assessee was asked to submit detailed submission on FAT SNF under the provisions of Milk and Milk Products order (MMPO), 1992. 2.1 The Ld. AO was of opinion that the assessee has shown gain in terms of FAT SNF of 115.49 MT 116.13 MT respectively and there should ideally be no gain of FAT SNF in the milk produced product manufactured/sold. Also, the assessee has not submitted the copy of agreement between Mother Dairy the assessee for the relevant year. The argument that Mother Dairy has allowed milk processing losses is not substantiated by documentary evidences. The allowability of losses in terms of SNF FAT is thus not proved. Also, it is not clear how the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Price Rs/kg Of SNF VLC MCC 26.52 212.20 141.46 Other Agencies 27.39 252.88 128.92 Thus, the value of excess/gain of FAT SNF in the trading account on the basis of purchase price mentioned above is determined as under: FAT : 115490 x 252.88 = Rs.2,92,05,111/- SNF : 164130 x 128.92 = Rs.2,11,59,640/ Total value unexplained purchases related to gain of FAT SNF = Rs.5,03,64,751/-. This amount is added to the total income of the assessee. Since, the assessee has filed inaccurate particulars of income and has concealed particulars of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that Ld CIT(A) has fallen in error in deleting the unexplained purchases discovered by Ld. AO by extensive discussion of matter. Ld. AR however, relied the findings of Ld CIT(A), submitting that the evidence has been appreciated in correct prespective. 6. At the outset it is pertinent to mention that admittedly assessee has earned FAT SNF gain which has already been offered for tax. Ld. AO has found a case of unexplained purchase. In this context Ld. CIT(A) has rightly observed and reasoned that then disallowance can be made by Ld. AO only in a case where claim for deduction for the purchases is also made. In the present case, no deduction qua purchase has been claimed so the Ld. AO erred in making addition for the so called all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very about 4.34% of the total milk shown in the trading account. Thus, Ld AO doubted that the entire gain is owing to contract manufacturing. 9. However, what is established before Ld. CIT(A) is that the gain on account of reduction in process loss due to modern facilities is used for manufacturing of Ghee/Butter/SMP/DW/Other products, which is part parcel of closing stock factored in trading account (part of MMPOreport)/audited annual accounts. Therefore, the same is attributable to the contract work for Mother Dairies Ltd. 10. The assessee company established before the Ld. CIT(A) that there was typographical mistake in reporting of quantification of milk procured for contract manufacturing which was actually 159433 M.T (1594.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same need to be appreciated without much emphasis on evidence of every thing being incorporated in agreements. In present case, even the assumptions on which, the Ld. AO proceeded, in absence of evidence, have been factually corrected by Ld. CIT(A) on basis of additional evidence and no interference in the same is called for. The grounds no 1 and 2 raised by the revenue have no substance. The same are determined against the Revenue. 12. As with regard to substantive ground no 3 Ld Sr DR was unable to cite any proposition of law then relied by Ld CIT(A), in its impugned order, to distinguish. So the same is also decided against the Revenue. 13. The appeal of Revenue is dismissed. Order pronounced in the open court on 22nd July, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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