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TMI Blog2022 (6) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... fy such an allegation. We have also gone through the annual production and find that the production on the day of search has not been taken into account owing to the search operation conducted at the premises. The amount and the quantum of sugar are in tune with average daily production. In view of the entirety of the facts narrated above, we hold that no addition is called for on account of difference in the stock of sugar. Difference in Stock of Molasses from the books - The product in question is molasses which was found to be in excess at the aforesaid 4 units of the assessee- company is a highly volatile chemical which changes its shape, weight, and texture when in different temperature. When heated, while production would tend to show more quantity and would become more fluid, however, when kept cool, would compress into a thick jelly like substance. It is to be noted that while taking the stock in April, the weather was hot and the product under production and there is strong possibility of chemical reaction resulting in foaming in the molasses, which cannot be ruled out. The said fact of the discrepancy arising due to chemical reaction was even confirmed by the Chief Engine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pur dated 20 .02.2017. 2. Following grounds have been raised by the assessee: 1 That on facts and in law the AO was wrong in addition of Rs. 30,966/- on a/ c of Press Mud, the Ld. CIT ( A) upheld the same by confirming the said addition and did not considered daily manufacturing report filed by the appellant. It is prayed that the addition of Rs. 30,966/- may please be deleted as correct facts have not been considered by A.O. 2. That on facts and in law the AO was wrong in addition of Rs. 2,65,46,540/- on a/ c of Sugar ( being difference between books of account and physical verification in various units), the ld. CIT ( A) upheld the same by confirming the said addition and did not considered daily manufacturing report filed by the appellant. The Ld. CIT ( A) did not consider the merits of the arguments filed by the appellant. It is prthat the addition of Rs. 2,65,46,540/- may please be deleted considering the material on record and facts of the case. 3. That on facts and in law the AO was wrong in addition of Rs. 9,79,336/- on a/ c of Molasses ( being difference between books of account and physical verification in various units), the Ld. CIT ( A) upheld the same by confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee explained that there was no actual difference in stock and clarified that production on 07 .04 .2010 could not be entered in the books, as the books were seized by the search team, which is also evident from the copies of the Panchnama and other records. Pg. 13 49 is the Copy of Panchnamas for Libberheri Barkatpur, whereby it can be seen that the stock register ( RG- 1) was seized on 07 .04 .2010 and that stock of sugar was calculated on 08 .04.2010, thereby, proving the inevitable discrepancy. PB 101 -109 Is the copy of the reply dated 01.03 .2013, whereby the assessee submitted detailed explanation, reconciliation of stock along with supporting evidences with respect to position of stock of sugar and molasses. Libberheri Unit: PB 110 is the copy of the Daily Manufacturing Report ( DMR) of Libberheri Unit for 07 .04.2010 showing production of 6000 Qtls. of Sugar, which could not be entered into the daily stock register because it was seized. PB 111 -113 is the copy of the Stock Register (RG-1 ) for Libberheri Unit for Season( s) 2009 - 10, 2008 -09-2007-08 Barkatpur Unit: PB 128 Is the copy of the Daily Manufacturing Report ( DMR) of Barkatpur Unit showing production of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ijnore Khaikeri, Muzaffarngar Shermau As per Books 175,172 2,12,440 45,049 34,189 As per Physical Verification 1,75,711 2,14,444 45,58 6 34,300 Alleged Difference 538 ( 0 31 %) 2004 ( 0 94 %) 53 6 ( 1 1 %) 110(0.32 %) 13. Molasses stored in a tank, is measured by taking a dip and a slight deviation is scientifically possible while taking the dip, due to bubbling/ foaming effect on account of the Chemical Reaction. The product in question is molasses which was found to be in excess at the aforesaid 4 units of the assessee- company is a highly volatile chemical which changes its shape, weight, and texture when in different temperature. When heated, while production would tend to show more quantity and would become more fluid, however, when kept cool, would compress into a thick jelly like substance. It is to be noted that while taking the stock in April, the weather was hot and the product under production and there is strong possibility of chemical reaction resulting in foaming in the molasses, which cannot be ruled out. The said fact of the discrepancy arising due to chemical reaction was even confirmed by the Chief Engineer at the time of search itself ( PB 84) which could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to Rs. 5,45,648/-, whereas, physical cash found aggregated to Rs. 4,51,320/- and a Deficit of Rs. 94,328/- was added to the income of the assessee. The reconciliation statement is as under: Cash as per books Rs. 5,45,648 /- Less:- Payment Vouchers pending to be entered in the books ( fact verified by the search team) ( PB 139, 140 - 147 ) - Rs. 94,912 /- Add: Cash received on 06 04 2010 from sale of press mud, which was pending to be entered into the books + Rs. 584 /- Physical Cash Found Rs. 4,51,320 /- Noida: 19. Cash as per books amounted to Rs. 2,89,700/- and physical cash aggregating to Rs. 4,89,000/- was found. The difference of Rs. 1,99,700/- was added to the income. The reconciliation statement is as under: Cash as per books 2,89,700 Add:- C ash received from Libberheri Roorkee Unit on 06 04 2010 but voucher was pending for entry I n books ( PB 1 27 ) + 2,00,000 L ess:- Payment Vouchers pending to be entered in the books ( 110 + 90 ) ( PB 15 5, 156 ) - 300 Physical Cash 4,89,400 /- 20. We have perused the reconciliation statements along with the details in the paper book. All these amounts are pertaining to expenses and transactions entered a day before the search which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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