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TMI Blog2024 (9) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the mineral assessment reports prepared by the Department of mines and geology showed quantum of output dispatched from Karimnagar unit of 5739.893 cu.m. As against this, the quantum sales admitted was only 3024 cu.m which included an inter unit transfer of 503.57 cu.m to TADA, thus there was a difference of 2715.893 cu.m - AO rejected the arguments of the assessee that the variations had arisen between the dispatches and the actual quantity invoiced - HELD THAT:- FAA proceeded to accept the contention of the assessee that the difference between the output qua payment of seignorage fees and the actual sales was natural and customary in this line of business and deleted the additions made. Whereas there can be no dispute regarding the fact that there is a strong likelihood of qualitative difference between the quantity mined and the quantity actually sold. It is also an undisputed fact of the case that the government collects its royalty or what is known as seignorage fees on gross measurement of excavated blocks. Quantify the ratio of damaged or unsaleable portion vis- -vis high quality and saleable portion of the granite - The report is silent about percentage ratios a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. ITA-30/CIT(A)-1/11-12 dated 30.05.2019 of the Learned Commissioner of Income Tax [herein after CIT(A) for the assessment year 2009-10. Through the aforesaid appeal the assessee has challenged the order under ITA No. ITA-30/CIT(A)-1/11-12 dated 30.05.2019 passed by CIT(A), Chennai. 2.0 It is seen from records that there is delay of 05 days in filing of this appeal. The assessee has submitted that it did not have timely access to the records, receivable from department, as result of which the impugned delay had occurred which was purely unintentional and accidental. Evidences brought on record allude that there is sufficient force in the assessee s arguments. The delay in filing the appeal is therefore condoned and the appeal is being adjudicated as under. 3.0 Ground of Appeal number 1 is general in nature and hence does not requires any adjudication. 4.0 Grounds of appeal number 2-6 are centering around the twin disturbances made by Ld. AO on the valuation of closing stock and its deletion by the Ld. First Appellate Authority. 5.0 The first issue engrained in ground of appeal numbers 2-6 is regarding an addition of Rs. 2,51,93,262/- on account of under valuation of stock. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OB rate in INR in the case of TAN brown blocks varied from 9178 to 14463. In the case of other colour blocks pertaining to Tada, the FOB rate was around 47000. As regards the domestic sales, the granite blocks of Karim Nagar were valued at rates which ranged from Rs. 8500/- to Rs. 12,500/-. In the case of Tada and other colour blocks, the rate of domestic sales ranged from Rs. 20,000/- to Rs. 50,000/ - . Thus, it is apparent that there is a significant difference in the values of the Karim Nagar blocks as compared with those of Tada. The appellant also furnished copies of the invoices and shipping bills pertaining to TAN brown rough granite blocks and the other blocks such as new imperial red granites which were shipped to countries such as USA. Taking into account the facts, circumstances and the evidences furnished by the appellant, I find that there is considerable force in their submissions that the value of the granites mined at Karim Nagar are distinct as compared with those procured and used for production of slabs at Tada. Hence, the appellant's claim is found to be tenable. The disallowance made on account of under valuation of closing stock to the extent of Rs. 2,51,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a difference of 2715.893 cu.m. The Ld. AO rejected the arguments of the assessee that the variations had arisen between the dispatches and the actual quantity invoiced. The assessee explained that as per government rules seignorage fees was paid on the entire blocks dispatched but the sales was only of good quality saleable block forming part of the said block. The Ld. AO rejected the argument that it was customary in this line of business that there existed a difference between the quantities appearing in the mineral assessment orders vis- -vis financials admitted by the assessee s. Rejecting the arguments, the Ld. AO made addition of Rs. 9,51,32,300/- by multiplying 2715.893 cu.m with Rs. 35028. 8.0 We have heard the rival submissions in the light of material placed on records. The Ld. AO would like to make us believe that the explanation given by the assessee was unacceptable by citing deficiencies noted in para 15.3 at page-3 of his order. The argument of the variation being customary in this line of business has been negated by the Ld. AO on the premise that the same was not included by the assessee in the mandatory Tax Audit Report filed u/s 44AB. The Ld. DR fiercely oppos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f variation in output was in order. In their subsequent reply, the appellant stated that the quantitative particulars had been clearly submitted in their Tax Audit report. A copy of the same was also furnished. The sale figures clearly mention that the quantity dispatched (Karim Nagar mines) is 3024 CBM and not 5739,893 CBM. Taking into account the explanations and the evidences furnished by the appellant, I am inclined to accept the contentions of the appellant that there were substantial reasons for the difference between the variation of output which is basically on account of the difference between the gross measurement of the granite blocks on which seigniorage fees were paid and the net measurement for which deductions were made by the buyer. Royalty/seigniorage fees is paid by the appellant on the gross measurement i.e on the granite blocks which were extracted from the mines whereas the blocks are sold on the net measurement as marked by the buyer. For instance, in Invoice No.3 dated 13/4/2018, the sale is for net measurement of granite block 280x150x150=6300 CBM whereas the corresponding transit form issued by the Department of Mines and Geology is on gross measurement 334 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee side can be adversely viewed. To the extent the grounds of appeal raised by the Appellate Revenue on this issue are partly allowed. 13.0 Ground of Appeal number 7 is regarding the violation of principle of natural justice in as much as non-rendering of opportunity of being heard. The appellant revenue would like to make us believe that the Ld. First Appellate Authority has entertained, admitted and considered evidences put forth by the assessee and given relief therefrom without rendering the Ld. AO an opportunity of examining the same. Thus simply put the appellant Revenue has alleged that the Ld. CIT (Appeal) has violated provisions of Rule 46 A qua admission of additional evidence during appellate proceedings. 14.0 It is therefore imperative at this stage to examine legal stipulation governing rule 46A. 46A. Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals). (1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made by the assessee before the Ld. First Appellate Authority for admission of any additional evidence under rule 46 A. Further, second para on page 10 of CIT appeal order shows that the authority had called for a remand report from the Ld. AO which was submitted. It has unequivocally recorded by the Ld. First Appellate Authority that ..It was concluded that the appellate company had not produced any substantial new evidences in support of their claims indicating clearly that the AO considered evidences produced before the CIT appeal and confirmed their submission during his assessment proceedings. The impugned narrative from the AO clearly establishes that he was afforded an opportunity of considering the details etc filed by the assessee, though strictly not falling in category of additional evidence, by the Ld. First appellate authority which was duly availed. This finding of the Ld. CIT appeal has neither been controverted by the appellant Revenue by way of a ground of appeal nor has the revenue put forth any evidence in support thereof. Consequently, the ground of appeal raised by the appellant revenue is not supported by evidence on records. Accordingly, the ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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