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Income Tax Appellate Tribunal, DELHI BENCHES “G”, DELHI
Before: Shri N.K. Saini & Shri Joginder Singh,
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue as well as the assessee is in cross appeal against the impugned order 02/11/2012 of the Ld. First Appellate Authority, Muzaffarnagar for Assessment Year 2009-10. First, we shall take up the appeal of the Revenue (ITA No.377/Del./2013), wherein, the ground raised pertains to deleting the addition of Rs.96,83,000/- made on account of low yield of baggassee by the Ld. AO.
During hearing, the crux of argument advanced by Ld. DR, Shri Kaushlendra Tiwari, is identical to the ground raised by contending that there is huge variation in the yield and the assessee has not adduced any justified reasoning for such a low yield during the time. On the other hand, the ld. counsel for the assessee, Shri K. Shampat, defended the impugned order by inviting our attention to the factual finding recorded by Ld. CIT(A).
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, business of manufacture and sale of writing & newsprint paper. During assessment proceedings, the assessee was asked to produce the details of production of various years.
As per the assessee, the necessary details were furnished by the assessee. The Ld. AO observed that the percentage of yield is less, whereas, the raw material consumed with respect to baggassee is the same but admitted that there is a variation in different assessment year. He worked out the disallowance to 34.13% against 30% shown by the assessee.
In the absence of satisfaction of the AO, the difference in production was worked out Rs.96,83,000/- and added to the income of the assessee. On appeal, the ld. CIT(A) considered the factual matrix and granted relief to the assessee, which is under challenge before this Tribunal.
If the observation made in the assessment order, conclusion drawn in the impugned order and the material facts available on record are kept in juxtaposition and analyzed, we find that while making the addition, the Ld. AO was not satisfied with the details of production and the raw the assessment order itself and also by the Ld. CIT(A). The total production for AY 2005-06 is 25001 and for AY 2006- 07, it is 32272. For AY 2007-08, the production is 36719 and for AY 2008-09, it is 35888. The assessee provided the details of consumption of major raw material for the aforesaid production and the details of which has been summarized in assessment order itself. The variation in the production has been accepted by the Ld. AO also which depends upon various factors. The main reason of addition by the AO is that the production chart furnished by the assessee is that there was a variation and thus he adopted the average yield of last three years. Undisputedly, the assessee produced all the details of purchases/sales, which were verifiable from the record. The stock register (Form IV) for raw material receipt and consumption and another register (RG-1) for production and dispatch of finish goods were maintained by the assessee, in which no major defect was pointed out by the AO. During remand report also, it has been mentioned by the AO that the fresh recovery chart could not be considered at the appellate stage as the assessee This claim of the AO as well as the reply of the assessee has been duly considered by the Ld. CIT(A) and admittedly the books of accounts has not been rejected to the justify the estimation of yield by the Ld. AO. In the remand report the AO has not pointed out any defect in the details and evidences furnished by the assessee. Admittedly, as mentioned earlier, the production/yield depends upon many factors like quality of raw material, weather conditions, etc, therefore, in the absence of defect in the books of accounts, we also find no justification to make the addition. Thus, on this count, we affirm the stand of the Ld. CIT(A), resultantly, the appeal of the Revenue is dismissed.
So far as, the appeal of the assessee (ITA No.1385/Del/2013) is concerned, the assessee is aggrieved with the sustenance of disallowance of Rs.75,000/- out of profit & loss account expenses under the head ‘administrative and selling expenses. The ld. counsel for the assessee contended that it may be reduced substantially, whereas, the ld. DR defended the order of the Ld. CIT(A). perused the material available on record. We find that the Ld. CIT(A) sustained the part addition as on verification of the accounts. It was found that some of the expenses were found unverifiable for want of complete bills and vouchers. The Ld. CIT(A) considered the factual matrix along with section 37(1) of the Act and noted that the Ld. AO made lump sum addition of Rs.1,50,000/-. We note that there were certain self made vouchers and some were duly authenticated, therefore, we don’t find infirmity in granting part relief to the extent of Rs.75,000/-, by the Ld. CIT(A), resultantly, the appeal of the assessee is also dismissed.
Finally, the appeal of the Revenue as well as of the assessee is dismissed.
This order was pronounced in the open court in the presence of the ld. representatives from both sides at the conclusion of the hearing on 08/11/2017.