A.C.I.T. CIRCLE 7(2), MUMBAI V. SAHYADRI STARCH & INDUSTRIES LTD., MUMBAI

ITA 2262/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3665 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER / I .TA NO.2262/MUM/2012 ( / ASSESSMENT YEAR: 2008-09 THE ACIT - 7(2), M.K. ROAD, MUMBAI-400 020 / VS. M/S. SAHYADRI STARCH & INDUSTRIES LTD., 1 ST FLOOR DHIRAJ CHAMBERS, HAZARIMAL SOMANI MARG, V.T. MUMBAI-400 001 C.O. NO. 80/MUM/2013 / I .TA NO.2262/MUM/2012 ( / ASSESSMENT YEAR: 2008-09 M/S. SAHYADRI STARCH & INDUSTRIES LTD., 1 ST FLOOR DHIRAJ CHAMBERS, HAZARIMAL SOMANI MARG, V.T. MUMBAI-400 001 / VS. THE ACIT - 7(2), M.K. ROAD, MUMBAI-400 020 ./ ./ PAN/GIR NO. AAFCS 8884C ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY: SHRI SUNILKUMAR AGARWAL / ASSESSEE BY: SHRI AJAY R. SINGH / DATE OF HEARING :09.08.2016 ! / DATE OF PRONOUNCEMENT : 12.08.2016 ITA NO.2262/M/2012 2 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL AND THE CROSS OBJECTION FILED BY THE RE VENUE AND THE ASSESSEE ARE AGAINST THE ORDER OF THE LD. CIT(A )-13 DATED 27.1.2012 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GROUND OF THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 73,99,746/- ON ACCOUNT OF ALLEGED UNACCOUNTED SALES OF MAIZE, BRAN GLUTTEN AND HUSK ETC., CLUBBED AS MAIZE BRAN AND OTHERS IGNORING T HE FACT THAT THE QUANTITATIVE DETAILS ARE TAKEN FROM THE AUDITED ACC OUNTS OF THE ASSESSEE COMPANY ITSELF. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER B Y MAKING AN ADDITION OF RS. 73,99,746/- ON THE GROUND THAT THER E IS LOW YIELD OF BY-PRODUCTS, BASED ON THE ASSESSMENT MADE IN ASSESS EES CASE FOR THE ASSESSMENT YEAR 2007-08 WHERE A SIMILAR ADDITION WA S MADE ON ACCOUNT OF UNACCOUNTED SALES OF MAIZE, BRAN GLUTTEN AND HUSK ETC., CLUBBED AS MAIZE BRAN AND OTHERS AT RS. 4,83,41,8 76/-. HE SUBMITS THAT THE ASSESSING OFFICER OBSERVING THAT THE FACTS REMAINS THE SAME IN THIS YEAR ALSO, THE ADDITION ON THIS ACCOUNT IS WARRANTED IN THIS ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2008-09, M ADE TO THE EXTENT OF RS. 73,99,746/- TOWARDS UNACCOUNTED SALES OF MAIZE, BRAN GLUTTEN AND HUSK ETC. THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAD DECIDED S IMILAR ISSUE FOR THE ASSESSMENT YEAR 2007-08 AND DELETED THE ADDITIO N MADE ON ACCOUNT OF UNACCOUNTED SALES OF BY PRODUCTS LIKE MA IZE, BRAN GLUTTEN ITA NO.2262/M/2012 3 AND HUSK ETC., BY ORDER DATED 24.2.2016 IN ITA NOS. 7174 & 6492/M/2011 HOLDING THE ORDER OF THE LD. CIT(A). C OPY OF THE ORDER IS PLACED AT PAGES 1 TO 14 OF THE PAPER BOOK FILED. THEREFORE, HE SUBMITS THAT THE SAID ORDER MAY BE FOLLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACES RELIA NCE ON THE ORDERS OF THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 AND FIND THAT THE CO-ORDINATE BENCH DELETED SIMILAR ADDITION MADE TOWARDS UNACCOU NTED SALES OF MAIZE, BRAN GLUTTEN AND HUSK ETC., OBSERVING AS UND ER: BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN TH E BUSINESS OF MANUFACTURING OF STARCH AND LIQUID GLUCOSE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.10.2007 DECLARING TOTAL INCOME OF RS. 7,13,06,200/-. THE ASSESSMENT WAS COMPLETED O N 7.12.2009 U/S. 143(3) OF THE ACT DETERMINING THE INCOME OF TH E ASSESSEE AT RS. 13,28,15,930/- 3.1. THE AO WHILE COMPLETING THE ASSESSMENT MADE ADDITION OF RS. 4,83,41,876/- TOWARDS UNACCOUNTED SALES OF GLUTTEN, GERM AND HUSK FOR THE ASSESSMENT YEAR 2007 -08. THE AO ALSO ALTERNATIVELY MADE THIS ADDITION PROTECTIVE LY IN THE ASSESSMENT YEAR 2006-07. THE AO NOTICED FROM THE B ALANCE SHEET AND PROFIT & LOSS ACCOUNT FILED BY THE ASSESSEE IN THE PREVIOUS YEAR, THE ASSESSEE PRODUCED 51,818 M.T. OF MAIZE OU T OF 53,068 M.T. OF PRODUCTS AND CURRENT YEAR THERE IS A PRODUC TION OF 58,371 M.T. OF MAIZE OUT OF PRODUCT OF 50,882 M.T. THEREF ORE, HE CONCLUDED THAT TAKING THE SAME RATIO OF THE PREVIOU S YEAR, THE DIFFERENCE IN PRODUCTION FOR THE CURRENT YEAR WAS S HOWED AT 8,897 M.T. THE AO ARRIVED THE QUANTITY OF SHORTAGE IN RESPECT OF GLUTTEN/MAIZE BARN/MIXTURE AT 8756 M.T. OUT OF THE TOTAL DIFFERENCE OF 8897 M.,T AND APPLYING AVERAGE SALE P RICE OF 5,521, THE AO PROPOSED AN ADDITION TO THE EXTENT OF RS. 4, 83,41,876/-. ITA NO.2262/M/2012 4 3.2. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE T HE AO THAT QUANTITY OF PREVIOUS YEAR PRODUCTION OF HUSK C LUBBED WITH GLUTEN WAS GIVEN ON WET BASIS. IN CURRENT YEAR, IT IS ON DRY BASIS. IT WAS FURTHER CONTENDED THAT HUSK WAS SOLD ON WET CONDITION BUT IN QUANTITATIVE TALLY IT IS WORKED OUT ON DRY BASIS EXCEPT FOR A.Y. 2006-07. IT WAS FURTHER CONTENDED THAT WET PRODUCT ION FIGURE FOR HUSK WILL BE 15218 M.T. INSTEAD OF 5326 M.T TAK EN ON DRY BASIS. HOWEVER, THIS WAS NOT ACCEPTED BY THE AO AN D BROUGHT TO TAX RS. 4,83,41,876/- CRORES OBSERVING THAT EITHER THE PRODUCTION IN ASSESSMENT YEAR 2007-08 HAS BEEN SHOWN LESS OR THE CONSUMPTION QUANTITY OF RAW MATERIAL IN A.Y. 2006-0 7 WERE SHORT. 4. ON APPEAL, THE LD. CIT(A) ON ANALYZING THE PRODUCTION, THE CONSUMPTION RATIO OF LAST 5 YEARS R EFLECTED IN THE BALANCE SHEET AND ALSO THE YEAR-WISE, CATEGORY-WIS E SALE OF MAIZE BRAN, GLUTTEN, MIXTURE & OTHERS FOR THE ASSES SMENT YEARS 2002-03 TO 2007-08 AFTER REDUCING THE MOISTURE CON TENT IN BRAN IN QUANTITATIVE DETAILS AND ON ANALYZING THE GP RA TIO FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 HELD THAT THERE IS NO BASIS FOR MAKING ADDITION ON THE FACTS OF THE CASE. AGAIN ST THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US . 5. THE LD. DEPARTMENTAL REPRESENTATIVE REFERRING TO PAGE-17 OF THE ASSESSMENT ORDER SUBMITS THAT THE AO HAS CATEGORICALLY STATED THAT ASSESSEES EXPLANATION IS NOT ACCEPTABLE AND THE DISCREPANCY IN QUANTITATIVE DETAILS CANNOT BE ACCEPTED. THE QUANTITATIVE DETAILS IN THE AUDITED ACCOUNTS AR E NOT CORRECT AND THEREFORE THE BOOKS OF ACCOUNT ARE NOT CORRECT AND COMPLETE. HE SUBMITS THAT AO FOUND THAT PURCHASES, CONSUMPTIO N, PRODUCTION AND SALES ARE INTER-RELATED AND BALANCE EACH OTHER AND IF ASSESSEES EXPLANATION IS ACCEPTED, THEN THE ENTIRE AUDIT REPORT OF ASSESSMENT YEAR 2005-06 IS INCORRECT AS QUANTITIES WOULD NOT BALANCE. IT WAS ALSO OBSERVED BY THE AO THAT EVEN OTHERWISE NO SEPARATE QUANTITY OF GLUTTEN IS GIVEN IN ANNUAL REPORT AND MAIZE BRAN/GLUTEN/HUSK ETC., ARE CLUBBED TOGETHER. THEREFORE, HE VEHEMENTLY SUPPORTS THE ORDERS OF THE AO IN HOLDING THAT THERE IS DISCREPANCY IN QUANTITATIVE D ETAILS AND ON UNACCOUNTED SALES IN MAIZE BRAN/GLUTEN/HUSK ETC. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT TH E COMPANY IS INCORPORATED ON 23-7-1980 IS NEARLY THRE E DECADES ITA NO.2262/M/2012 5 OLD AND ENGAGED IN THE BUSINESS OF MANUFACTURE OF S TARCH AND LIQUID GLUCOSE. ITS BASIC RAW MATERIAL IS MAIZE COR N. IT ALSO GENERATES BYE- PRODUCTS MAIZE BRAN, GLUTTON, MIXTUR ES AND OTHERS. TOTAL YIELD OF THE COMPANY INCLUDING MAIN P RODUCTS AND BYE-PRODUCTS IS APPROX BETWEEN 87% TO 89% IN LAST M ANY YEARS. YIELD OF BYE-PRODUCTS ( MAIZE BRAN GLUTTON MIXTURE AND OTHERS )IS BETWEEN 18% TO 20% IN LAST MANY YEARS. THE ASSE SSEE IS SCRUTINIZED ON MANY OCCASIONS IN PAST AND ITS YIELD WAS NOT BEEN DISPUTED BY THE DEPARTMENT. HE SUBMITS THAT DETAILE D CHART OF COMPANIES YIELD ALONGWITH COMPARATIVE CHART OF BY-P RODUCT YIELD FOR LAST 5 YEARS IS ALSO REFERRED ON PAGE 18 OF CIT APPEALS ORDER. 7. THE LD. AR FURTHER SUBMITS THAT THE ASSESSING OF FICER NOTED THE PRODUCTION AND CONSUMPTION QUANTITATIVE F IGURES ON PAGE 30 -31 INTERNAL PAGE NOS. 25 AND 27 OF BALANCE SHEET OF A.Y 2007-08 AND OBSERVED THAT IN A.Y 2007-08 51818.50 M .T OF MAIZE CONSUMED AND TOTAL PRODUCTION WAS 53068.343 W HEREAS IN A.Y 2007-08 58371 M.T OF MAIZE WAS CONSUMED AND PR ODUCTION WAS ONLY 50881.849 M.T. THE A.O FURTHER NOTED THAT MAJOR DIFFERENCE WAS IN PRODUCTION OF BYE-PRODUCTS CATEGO RY' MAIZE BRAN GLUTTON MIXTURE & OTHERS' WHOSE PRODUCTION WAS 17595.238 IN A.Y. 2006-07 BUT ONLY 11359.765 IN A.Y 2007-08. 8. THE LD. AR SUBMITS THAT THE A.O THEREAFTER APPLI ED THE RATIO OF A.Y. 2006-07(PRODUCTION OF BYE-PRODUCT 17595.238M.T V/S CONSUMPTION OF RAW MATERIAL 50881. 849 M.T) IN A.Y 2007-08 AND CONCLUDED THAT PRODUCTION OF CAT EGORY MAIZE BRAN, GLUTTON, MIXTURE AND OTHERS WAS SHORT BY 8756 M.T IN A.Y 2007-08 AND APPLIED THE AVERAGE SALES RATE OF CATEG ORY OF BYE- PRODUCT MAIZE, BRAN, GLUTTON, MIXTURE AND OTHERS TH AT IS @ 5521/- AND MADE ADDITION OF RS.48341876/-. 9. THE LD. AR SUBMITS THAT THE ASSESSEE HAD EXPLAIN ED THAT AVERAGE RATE OF RS 5521/- IS WRONGLY APPLIED A S THE ALLEGED DIFFERENCE IS ONLY IN MAIZE BRAN AND NOT IN OTHER P RODUCTS. THIS CONTENTION WAS THOUGH NOT ACCEPTED IN RELEVANT YEAR , THE AO IN AY:2008-09 HAS ACCEPTED THE SAME PG 151 -159 PAPER BOOK. 10. THE LD. AR SUBMITS THAT WHILE MAKING ADDITION T HE ASSESSING OFFICER TOTALLY IGNORED ASSESSES EXPLANAT ION THAT IN THE CATEGORY OF BYPRODUCT-' MAIZE BRAN, GLUTTON, MIXTUR E AND OTHERS' PRODUCTION OF BRAN WAS PRESENTED IN WET FORM FOR A. Y 2006-07 ITA NO.2262/M/2012 6 WHEREAS NORMALLY IN EARLIER YEARS AND SUBSEQUENT YE ARS IT IS PRESENTED IN DRY FORM. HENCE PRODUCTION OF BYE-PROD UCTS ( MAIZE BRAN, GLUTTON, MIXTURE AND OTHERS) OF A.Y 2007-08 I S NOT COMPARABLE WITH THAT OF A.Y 2006-07. IT CAN BE COMP ARED ONLY IF MAIZE BRAN IS CONVERTED IN DRY FORM WHICH IS NORMAL LY AFTER REDUCTION OF APPROX 65% MOISTURE CONTENT FROM WET F ORM. ASSESSEE HAD SUBMITTED ITS EXPLANATION VIDE LETTER DT 30/10/2009 BEFORE AO ALONGWITH COMPARATIVE ANALYSIS OF PRODUCT ION /YIELD WITH COMPANY IN SIMILAR BUSINESS. (PG 50 -52 OF PAP ER BOOK). THE ASSESSEE HAD EXPLAINED THAT COMPLETE DETAIL OF PROD UCTION AND CONSUMPTION OF MATERIAL IS AVAILABLE. 11. THE LD. AR SUBMITS THAT BEFORE THE LD. CLT(A) THE ASSESSEE FILED ITS EXPLANATION ALONGWITH CHARTS SHO WING GP, YIELD RATIO, LABORATORY CERTIFICATE, ETC (PG 36 -49 PAPER BOOK). THE LD CIT (A) AFTER APPRECIATING THE EXPLANATION OF THE A SSESSEE DELETED THE ALLEGED ADDITION. 12. THE LD. COUNSEL FOR THE ASSESSEE WHILE SUPPORTI NG THE ORDERS OF THE CIT(APPEALS) SUBMITS THE FOLLOWING: 1) LOGIC OF ASSESSING OFFICER OF COMPARING QUANTIT ATIVE DETAILS CONSISTING PRODUCTION OF BRAN IN DRY FORM W ITH QUANTITATIVE DETAILS OF BRAN IN WET FORM IS NOT JUS TIFIABLE AND THE SAME WILL GIVE ABSURD RESULT WHICH WAS ALSO NOTED I N CIT APPEALS ORDER AS UNDER: A) IF ADDITIONAL PRODUCTION OF 8756 M.T IS ACCEPTED THAN YIELD RATIO OF A.Y 2006-07 WILL BE 102.42 ( MORE TH AN R.M CONSUMED) AS NOTED ON PAGE NO. 18 OF CIT APPEALS OR DER. B) NORMAL YIELD FROM A.Y 2003-04 TO 2007-08 IS BETW EEN 87% TO 89% HENCE YIELD OF 102.42 IS NOT JUSTIFIED. C) IF ADDITION IS SUSTAIN YIELD OF CATEGORY MAIZE B RAN MIXTURE AND OTHERS WILL BE 33.96% AGAINST NORMAL YI ELD BETWEEN 17% TO 19% IN OTHER YEARS AS NOTED ON PAGE 18 OF CIT APPEALS ORDER. D) PRODUCTION OF BRAN WILL GIVE YIELD OF 23.92% AGA INST NORMAL YIELD OF 7 TO 9% IN OTHER YEARS AS ALSO NOTE D IN CIT APPEALS ORDER ON PAGE NO. 19. ITA NO.2262/M/2012 7 2) THE ASSESSES CONTENTION THAT BRAN WAS REFLECTED IN WET FORM IN FINANCIAL OF AY 2006-07 IS FURTHER SUPPORTE D BY THE SALES RATE CHART ON PAGE 21 OF CIT APPEALS ORDER: A) ON PAGE 21 OF CLT APPEALS ORDER IT CAN BE NOTED THAT SALES RATE OF MAIZE BRAN, GLUTTON, MIXTURE & OTHERS ' FOR A.Y 2006-07 IS RS.2778 PER M.T WHEREAS IN OTHER YEARS F ROM A.Y 2002-03 TO A.Y 2007-08 IT IS BETWEEN RS.5220 TO 5521 PER M.T WHICH ITSELF EXPLANATORY THAT IN F.Y MAIZE WAS IN WET FORM AND HENCE RATE WAS ON THE LOWER SIDE. B) ON PAGE 21 IT WAS FURTHER NOTED THAT SALE RATE O F BRAN FROM A. Y 2002-03 TO A. Y 2007-08 IS BETWEEN RS.169 8 TO 2175 PER M.T WHEREAS ONLY IN A.Y 2006-07 IT COMES T O RS. 681.819 WHICH IS NOT JUSTIFIED. OUR CONTENTION THAT BRAN CONTAINS 65% MOISTURE CONTENT GETS FURTHER SUPPORT FROM RATE OF 681.819 WHICH COMES FOR WET BRAN AND IF THI S RATE IS CONVERTED IN TO DRY FORM ( 681.819/35100) WHICH COM ES TO RS.1948 PER M.T AND HENCE COMPARABLE WITH OTHER YEA RS. 3) ADDITION MADE BY ASSESSING OFFICER OF RS. 4,83,4 1,876/- IS FURTHER NOT JUSTIFIED AS THE SAME WILL GIVE ABSU RD GROSS PROFIT RATIO FOR F.Y 2006-07 OF 26.50% AGAINST THE NORMAL GROSS PROFIT RATIO BETWEEN 19% TO 20% AS NOTED ON P AGE 22 OF CLT APPEALS ORDER. 4) MAIZE BRAN IS SOLD ON WET BASIS IN THE MARKET WH ICH IS CORROBORATED BY BILLS/SALES REGISTER. EVEN PRODUCTI ON OF MAIZE BRAN IS RECORDED ON WET BASIS. ONLY FOR BALANCE SHE ET MAIZE BRAN IS CONVERTED IN TO DRY FORM BY REDUCING THE MOISTUR E CONTENT ( BY REDUCING MAIZE BRAN (WET) BY 65% OF MOISTURE CONTEN T) AS ALSO NOTED ON PAGE 21 OF CIT APPEALS ORDER. THIS CONVERS ION DOES NOT HAVE ANY FINANCIAL IMPACT ON BALANCE SHEET OR PROFI T AND LOSS ACCOUNT. 5) COMPARATIVE INSTANCE OF SUKHJIT STARCH AND CHEMICALS LTD. ENCLOSED IN PAPER BOOK BALANCE SHEET NOTES RELEVANT PAGE OF LISTED COMPANY SUKHJIT STARCH & IN DUSTRIES LTD WHICH SHOWS OVERALL YIELD OF APPROX 80%. THIS AGAIN SUPPORTS ASSESSEE AFTER ADDING OF PRODUCTION OF 8756 M.T BY A.O WILL GIVE ABSURD YIELD OF 102%. ITA NO.2262/M/2012 8 6) IF IN A.Y 2006-07 BRAN WET QUANTITATIVE PRODUCTI ON IS CONVERTED IN TO DRY FORM YIELD BETWEEN A.Y 2006-07 AND 2007-08 WILL BE COMPARABLE AND WILL BE AROUND 87%. RELEVANT CHART IS ENCLOSED HEREWITH. 7) THE ASSESSING OFFICER HIMSELF WAS NOT SURE ABOUT THE ADDITIONS MADE WHICH WERE ON SURMISES & PREMISES AN D HENCE TO PROTECT THE ORDER ALSO MADE PROTECTIVE ASSESSMENT F OR A.Y 2006- 07.I.E APPEAL BEARING NO 7174/M/2011. IN VIEW OF THE ABOVE THE ID CIT(A) RIGHTLY DELETED THE ADDITION MADE BY AO MERELY ON SURMISES. 13. HEARD BOTH SIDES, PERUSED THE ORDERS OF THE LOW ER AUTHORITIES. THE ADDITION WAS MADE BY THE AO TOWA RDS UNACCOUNTED SALE OF MAIZE BRAN/GLUTTON/HUSK FOR THE REASON THAT THE QUANTITATIVE DETAILS FURNISHED IN THE BALA NCE SHEET COULD NOT BE TALLIED AND THEREFORE HE PRESUMED THAT THER E IS UNACCOUNTED SALE IN RESPECT OF MAIZE BRAN/GLUTTON/ HUSK. THE EXPLANATIONS OF THE ASSESSEE THAT QUANTITY OF PRODU CTION OF HUSK CLUBBED WITH GLUTTEN IN THE PREVIOUS YEAR WAS REFLE CTED ON WET BASIS IN THE ACCOUNTS AND IN THE CURRENT YEAR THE S AME WAS REFLECTED ON DRY BASIS IS REJECTED BY THE AO AND N O REASON FOR SUCH REJECTION HAS BEEN GIVEN BY THE AO. THE AO NEI THER EXAMINED THE GP RATIO ADOPTED BY THE ASSESSEE FOR L AST SEVERAL YEARS NOR THE PRODUCTION, CONSUMPTION RATIO REFLECT ED AS PER BALANCE SHEET OF VARIOUS YEARS WAS EXAMINED. NO EX ERCISE HAS BEEN DONE BY THE AO TO POINT OUT WHETHER THERE IS R EALLY AN UNACCOUNTED SALE IN RESPECT OF MAIZE BRAN/GLUTTON. THIS ASPECT OF THE MATTER HAS BEEN ELABORATELY CONSIDERED BY TH E LD. CIT(A) WITH REFERENCE TO THE AVERMENTS OF THE AO AND THE S UBMISSIONS OF THE ASSESSEE AND THE EVIDENCE PLACED ON RECORD AND HELD THAT ON THE FACTS AND CIRCUMSTANCES, THE ADDITION CANNOT BE SUSTAINED, THERE IS NO BASIS FOR SUCH ADDITION. WHILE COMING TO SUCH CONCLUSION, THE LD. CIT(A) OBSERVED AS UNDER: A) THE AFORESAID CHART CLEARLY SHOW THAT THE RATIO OF PRODUCTION OF 'MAIZE, GLUTON, BRAN, MIXTURE AND OTH ERS' VIS-A-VIS MAIZE CONSUMPTION ON AN AVERAGE VARIES BETWEEN 17.5 % TO 19.47%. ITA NO.2262/M/2012 9 IT IS ONLY IN F.Y ENDING 31.3.06 THAT THE RATIO O F 'MAIZE GLUTION, BRAN, MIXTURE AND OTHERS' VIS A VIS THE MA IZE CONSUMPTION COMES TO 33.96%. SIMILARLY, THE PRODUCTION OF GLUTON (INDIVIDUALLY ) VIS-A- VIS MAIZE CONSUMPTION IN THE LAST FIVE YEARS VARIES FROM 9.32 % TO 10.55%. SIMILARLY, THE PRODUCTION OF BRAN VIS-A-VIS MAIZE CONSUMPTION VARIES FROM 7.31% TO 9.18%. IT IS ONLY IN F.Y ENDING 31.3.06 THAT THE RATIO OF BRAN VIS-A-VIS MAI ZE CONSUMPTION HAS BEEN SHOWN AT 23.92%. PERUSAL OF THE AFORESAID FACTS CLEARLY REVEALS TH AT THERE HAS BEEN INORDINATE INCREASE IN THE RATIO OF 'MAIZE GLUTTEN, BRAN, MIXTURE AND OTHERS' VS-A-VS MAIZE CONSUMPTION ONLY IN THE F.Y ENDING 31.3.06 IE. AT 33.96% VIS-A-VIS I N THE LAST FIVE YEARS WHERE THE RATIO VARIES FROM 17.5% TO 19. 47%. ALL THE AFORESAID FACTS CLEARLY REVEAL THAT THE FIGURE OF PRODUCTION OF 'MAIZE GLUTTON, BRAN, MIXTURE AND OTH ERS' AT 17595.238 MT FOR THE FINANCIAL YEAR ENDING 31.3.06 INCLUDES BRAN ON WET BASIS. OTHERWISE THERE WAS NO REASON FOR IN-ORDINATE INCREASE IN THE RATIO OF PRODUCTION OF 'MAIZE GLUTTON, BRAN, MIXTURE AND OTHERS AT 33.96% OF TOTAL MAIZE CONSUMPTION VIS-A-VIS IN THE LAST FIVE YEARS VARYING FROM 17.47% TO 19.47% ON AN AVERAGE. IT ONLY IMPLIES THE 'MAIZE GLUTION, BRAN , MIXTUR E & OTHERS' PRODUCTION AT 17,595.238 MT SHOWN IN THE BA LANCE SHEET IN A.Y.06-07 IS ON WET BASIS (I.E CONSISTS OF MAIZE BRAN ON WET BASIS) B) THIS FACT IS ALSO CORROBORATED BY THE YEAR WISE CATEGORY WISE SALES OF 'MAIZE BRAN, GLUTTON, MIXTURE AND OTH ERS' WHICH IS REPRODUCED AS UNDER: MAIZE BRAN IS SOLD ON WET BASIS IN THE MARKET WHICH IS CORROBORATED BY THE BILLS/SALES REGISTER. EVEN T HE PRODUCTION OF MAIZE BRAN IS ALSO RECORDED ON WET BASIS. ONLY FOR THE BALANCE SHEET MAIZE BRAN IS CONVERTED INTO DRY FORM BY REDUCING THE MOISTURE CONTENT. (BY REDUCING THE MAIZE BRAN (WET) BY 65% OF MOISTURE CONTENT) ITA NO.2262/M/2012 10 THE OVERALL RATE OF 'MAIZE BRAN, GLUTON & MIXTURE & OTHERS' YEAR WISE IS AS UNDER: 01 - 02 02 - 03 03 - 04 04 - 05 05 - 06 06 - 07 5220 5387 5362 5400 2778 5521 IT IS ONLY IN F.Y.05-06 THAT THE RATE IS INORDINATE LY LOW @ RS.2778/ -MT VS-A-VS AVERAGE AROUND PLUS RS.5000/- MT IN OTHER YEARS. THE RATE OF MAIZE BRAN FOR THE LAST FIVE FINANCIAL YEARS AS PER THE BOOKS/ BALANCE SHEET IS AS UNDER: 01- 02 02-03 03-04 04-05 05-06 06-07 MAIZE BRAN (DRY) 1749.65 1698.868 1778.02 1681.05 681.819 2173.48 THE AFORESAID CHART CLEARLY SHOWS THAT THE SALE RAT E OF MAIZE BRAN IS INORDINATELY LOW @ OF 681.819 MT IN 0 5-06 VIS-A-VIS IN OTHER YEARS. ALL THE AFORESAID FACTS CLEARLY IMPLY THAT THE 'MAI ZE BRAN GLUTION,MIXTURE & OTHERS' PRODUCTION AT 17,595.238 MT SHOWN IN THE BALANCE SHEET IN A.Y.06-07 IS ON WET BASIS (I.E. CONSISTS OF MAIZE BRAN ON WET BASIS) C) YEAR WISE-G.P RATIO 2004-05 2005-06 2006-07 2007-08 SALES 445,122,178.00 487,546,596.73 663,382,749.03 707,683,331.00 INCREASE/(DECRE ASE) IN STOCK 981,711.63 (944,167.61) 4,505,665.37 4,239,835.00 TOTAL A 446,103,889.63 486,602,429.12 667,888,414.4 0 711,923,166.00 RAW MATERIALS 259,467,944.00 294,552,067.90 409,108,606.00 430,910,915.00 STORES 7,066,004.00 5,526,864.12 7,330,244.97 9,557,427.00 MANUFACTURING 77 ,635,670.00 77 ,868,697.40 97,226,054.49 98,792,455.00 ITA NO.2262/M/2012 11 EXPENSES EMPLOYEES EXPENSES (ONLY OF WORKERS) 17,279,867.00 12,361,633.00 27,215,899.00 30,831,269.05 TOTAL B 361,449,485.00 390,309,262.42 540,880,804.46 570,092,066.05 GRAND TOTAL (A- B) 84,654,404.63 96,293,166.70 127,007,609.94 141,831,099.95 SALES 445,122,178.00 487,546,596.73 663,382,749.03 707,683,331.00 G.P.% 19.02% 19.75% 19. 15% 20.04% G.P % CONSIDERING ASSUMED SALES BY A.O 26.50% PERUSAL OF THE G.P CHART WOULD ALSO REVEAL THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE DURING THE YEAR IS 19. 15% WHICH IS QUITE COMPARATIVE WITH OTHER YEARS AS AFORESAID. HO WEVER, IF THE ADDITIONAL SALES OF RS.4,83,41,876/- WORKED OUT BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED PRODUCTION AND CONSE QUENTIAL SALE THEREFORE IS TAKEN - G.P WOULD BE 26.50% VIS-A-VIS THE AVERAGE GROSS PROFIT OF 19% IN OTHER YEARS WHICH IS AGAINST THE ESTABLISHED FACTS OF THE APPELLANT'S CASE. ACCORDINGLY, THE A.O'S ASSESSMENT THAT PRODUCTION O F ' MAIZE GLUTTON, , BRAN, MIXTURE AND OTHERS' SHOULD BE 34% IS NOT BORNE THE FACTS OF THE CASE.THE SAID DISCRE PANCY HAS OCCURRED BECAUSE IN THE F.Y ENDING 31.3.06, THE FIG URES OF ' MAIZE GLUTION, BRAN , MIXTURE AND OTHERS' CONSISTS OF MAIZE BRAN TAKEN IN WET FORM VIS-A-VIS THE FIGURES OF 'MAIZE GLUTION, BRAN, MIXTURE AND OTHERS' REPORTED IN BALANCE SHEET IN OTHER F.YS ON DRY BASIS. ADDITION OF RS. 4,83,41,876/- NOT BORNE OUT BY THE FACTS OF THE CASE. THE ADDITION IS THEREFORE DELETED. 14. NONE OF THE ABOVE FINDINGS OF THE LD. CIT(A) HA VE BEEN REBUTTED BY EVIDENCES BY THE REVENUE. IN THE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE LD. CIT(A ) IN DELETING THE ADDITION MADE TOWARDS UNACCOUNTED SALE S. ITA NO.2262/M/2012 12 6. AS THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWI NG THE ORDER OF THE CO-ORDINATE BENCH FOR ASSESSMENT YEAR 207-08, WE U PHOLD THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED SALE IN RESPECT OF BY-PRODUCTS. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 8. COMING TO THE CROSS OBJECTION, THE LD. COUNSEL F OR THE ASSESSEE SUBMITS THAT ASSESSEE IS NOT PRESSING THE CROSS OBJ ECTION AND THEREFORE THE SAME BE DISMISSED AS NOT PRESSED. TH E LD. COUNSEL FOR THE ASSESSEE ALSO ENDORSED THAT THE C.O. IS NOT PRE SSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2016. SD/- SD/- (RAMIT KOCHAR) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 12 TH AUGUST, 2016 . % . ./ RJ , SR. PS ITA NO.2262/M/2012 13 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI