Assessee showed higher wastage of 13.04% on consumption of ...

High Court Rules in Favor of Assessee: No Evidence of Tax Evasion in Yarn and Copper Wire Consumption Case.

November 28, 2024

Case Laws Income Tax HC

Assessee showed higher wastage of 13.04% on consumption of worsted yarn compared to 8.66% in previous year. AO made addition for excessive shortage and scrap value of discarded cables. Held: Trading account and stock found satisfactory by tax authorities. Wastage percentage varied from 13.64% to 16.43% in earlier years, decreased to 8.66% for 3 months in 1982-83, but remained consistent at 13.04% in 1983-84. No objection raised by Excise Authorities on stock maintained. AO accepted trading account, no dispute on quantity of cotton consumed. AO cannot make addition without reasoning and fresh computation when accounts accepted u/s 145(1). Addition on account of excessive shortage not sustainable. Addition of profit u/s 41(2) on sale of copper wire: AO made addition based on assumptions and presumptions despite assessee's explanations and no evidence of tax evasion found during factory visit. HC held Tribunal erred in assessing additions made by AO. Reference answered in favor of assessee against revenue.

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Assessee showed higher wastage of 13.04% on consumption of ...

High Court Rules in Favor of Assessee: No Evidence of Tax Evasion in Yarn and Copper Wire Consumption Case.

November 28, 2024

Case Laws Income Tax HC

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