The ITO, Ward-2(2), Surat V. Smt. Meenaben H.Patel, Surat

ITA 3671/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5796 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Assessee Lawyers: SAPNESH SHETH
• Section: 143(3); 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGARWAL, ACCOUNTANT MEMBER ITA NO. 3671 /AHD/ 2008 ASSESSMENT YEAR 2005-2006 DATE OF HEARING:17.6.10 DRAFTED:17.6.10 THE INCOME-TAX OFFICER, WARD-2(2), SURAT. V/S . SMT. MEENABEN H. PATEL 20, SHIV SHAMBHU INDL. ESTATE U.M. ROAD, SURAT. PAN NO: AGNPP 8008 L (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI. SAPNESH SHETH, AR REVENUE BY:- SHRI GAURAV BATHAM, DR O R D E R PER MAHAVIR SINGH, J.M. THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF CIT(A)-II, SURAT IN APPEAL NO. CAS/II/99/2007-08 VIDE ORDER DATED 26-08 -2008. THE ASSESSMENT WAS FRAMED BY THE ITO-OSD-II, RANGE-2, SURAT UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDER DATED 28-09-2007 FOR THE ASSESSMENT YEAR 2005-2006. 2. THE INTERCONNECTED ISSUES RAISED BY THE REVENUE BY WAY OF THE FOLLOWING TWO EFFECTIVE GROUNDS ARE AGAINST THE ORDER OF CIT(A) I N ACCEPTING THE BOOK RESULTS AND THEREBY DELETING THE ADDITION ON ACCOUNT OF SUPPRES SED PRODUCTION:- [1] ON THE FACT AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A)-II, SURAT HAS ERRED IN HOLDING THAT THERE WA S NO BASIS FOR THE AO TO REJECT THE BOOK RESULTS. [2] ON THE FACT AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A)-II, SURAT HAS ERRED IN DELETING THE ADDITION RS.17,89,854/- MADE BY THE AO ON ACCOUNT OF SUPPRESSED PRODUCTION. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF GREY CLOTH IN THE NAME AND STYLE OF M/S. OHM ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 2 ENTERPRISES. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DISCLOSED LOWER GP AT THE RATE OF 5.37% AS AGAINST THE GP RATE OF 6.62 AND 10.72 IN THE IMMEDIATE PRECEDIN G YEARS. THE ASSESSING OFFICER ALSO NOTED FROM THE DETAILS AND ANALYZED THE CONSUM PTION OF YARN, PRODUCTION OF GREY CLOTHS VIS--VIS CONSUMPTION OF ELECTRICITY UNITS. ACCORDINGLY, HE MADE MONTH WISE ANALYSIS AND OBSERVED THAT THERE IS HUGE VARIATION IN GP RATIO, PRODUCTION RATIO AND THE UNITS OF ELECTRICITY CONSUMPTION. ACCORDINGLY, THE ASSESSING OFFICER NOTED THAT THE BOOK RESULTS OF THE ASSESSEE ARE NOT RELIABLE A S THE ASSESSEE HAS NOT MAINTAINED ANY STOCK REGISTER, CONSUMPTION REGISTER AND PRODUC TION REGISTER AND ACCORDINGLY REJECTED THE BOOK RESULTS UNDER SECTION 145(3) OF T HE ACT. THE ASSESSING OFFICER ON THE BASIS OF PRODUCTION RATIO OF THE FIRST FOUR MON THS OF THE YEAR, WORKED OUT THE PRODUCTION FOR THE WHOLE YEAR AT 10,17,816.11 METER S, WHICH MEANT THAT THERE WAS SUPPRESSION OF PRODUCTION OF GREY CLOTH TO THE EXTE NT OF 2,24,056.86 METERS, THE ASSESSEE HAVING DISCLOSED THE PRODUCTION OF GREY OF 7,93,759.25 METERS. ON THE BASIS OF THE CONSUMPTION RATIO OF ELECTRICITY FOR T HE MONTH OF APRIL, THE ASSESSING OFFICER WORKED OUT THE PRODUCTION FOR THE WHOLE EAR AT 9,47,254.96 METERS. SIMILARLY, ON THE BASIS OF THE RATIO OF THE INPUT OF TAKAS ON BEAMS FOR THE MONTH OF APRIL, THE AO WORKED OUT THE TOTAL PRODUCTION AT 8,99,262 METERS. HOWEVER, THE AO CONFINED HIMSELF FINALLY TO THE WORKING OF THE PRODUCTION ON THE BASIS OF THE CONSUMPTION OF YARN AT 10,17,816.11 METERS WHICH MEANT THAT THERE WAS A SUPPRESSED PRODUCTION OF 2,24,056.86 METERS. HOWEVER, AT THE SAME TIME, HE GAVE 10% ALLOWANCE FOR CERTAIN UNFORESEEN FACTORS AND VARIABLES SUCH AS THE QUALIT Y OF YARN, ATMOSPHERIC CHANGES, RESPONSE OF THE MACHINES, FLUCTUATIONS IN ELECTRICI TY, SUDDEN INTERRUPTION, LABOUR PROBLEMS, ETC. THE 10% ALLOWANCE HOWEVER, WAS GIVEN BY HIM TO THE SUPPRESSED PRODUCTION OF THE REMAINING EIGHT MONTHS OF THE YEA R I.E. AUGUST-2004 TO MARCH- 2005. HE THUS WORKED OUT THE SUPPRESSED PRODUCTION FOR THE SAID MONTHS AT 1,45,634.95 METERS. ADOPTING THE AVERAGE SALE VALU E OF GREY CLOTH AT RS.12.29 PER METER, THE AO WORKED OUT THE VALUE OF SUPPRESSED SA LES AT RS.17,89,854 WHICH HE ADDED TO THE ASSESSEES TOTAL INCOME. AGGRIEVED, T HE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ACCEPTED THE BOOK RESULTS BY GIVING FOLLOWING FINDINGS IN PARAS 6 TO 6.3 OF HIS APPELLATE ORDER:- ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 3 6. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. FIRSTLY, I FIND THAT THE LENGTHY EXERCISE UNDERTAKEN BY THE AO TO REJECT THE BOOK RESULTS AND TO MAKE THE ADDITION WAS TRIGGERED BY THE FALL IN THE GP RA TIO OVER THE YEARS (PARA-3 OF THE ASSESSMENT ORDER). THIS WAS INSPITE OF THE FAC T THAT HE HAD NEVER ASKED THE ASSESSEE TO EXPLAIN THE FALL IN THE GP RATIO, A ND CHOSE TO VENTURE ON HIS OWN TO REJECT THE BOOK RESULTS AND MAKE THE ADDITIO N. THE VOLUMINOUS DETAILS AND LENGTHY ARGUMENTS CAN BE REDUCED TO ONLY THREE ISSUES ON THE BASIS OF WHICH HE CAME TO TAKE THE VIEW THAT THE BOOKS RESUL TS DESERVED TO BE REJECTED. THE FIRST ISSUE WAS THAT THE RATIO OF CO NSUMPTION OF YARN TO THE PRODUCTION OF GREY DURING THE FIRST FOUR MONTHS OF THE YEAR WAS MUCH HIGHER THAN THE REMAINING EIGHT MONTHS. THE SECOND ISSUE WAS THAT THE RATIO OF PRODUCTION TO THE CONSUMPTION PER UNIT OF ELECTRICI TY WAS HIGHER IN THE MONTH OF APRIL AND MUCH LOWER IN THE REMAINING MONTHS. SIMI LARLY, THE RATIO OF INPUT OF TAKAS ON BEAMS WAS HIGHER IN THE MONTH OF APRIL. O N THE BASIS OF EACH OF THE THREE RATIOS, THE AO WORKED OUT WHAT THE PRODUCTION SHOULD HAVE ACTUALLY BEEN AND PICKED-UP THE HIGHEST FIGURE OF 10,17,816. 11 METERS (PARA-8.2). I AM OF THE VIEW THAT SUCH RATIOS COULD NOT BE ADOPTE D AS CRITERIA FOR DETERMINING THE ACTUAL PRODUCTION. THE AO HIMSELF OBSERVED IN THE SAME PARAGRAPH THAT THERE COULD BE SEVERAL UNFORESEEN AN D UNKNOWN VARIABLES SUCH AS THE QUALITY OF YARN, ATMOSPHERIC CHANGES, Q UALITY OF MACHINES, ELECTRICITY FLUCTUATIONS, SUDDEN INTERRUPTIONS AND LABOUR PROBLEMS ETC. UNFORTUNATELY, HE GAVE ONLY 10% ALLOWANCE FOR SUCH VARIABLES. THE POINT TO NOTICE IS THAT, THE MONTH-WISE DIFFERENCES WERE WOR KED OUT ON THE BASIS OF AVERAGES AND, AVERAGES ACCORDING TO ME ARE NOT ALWA YS CORRECT INDICATORS. FOR EXAMPLE IF WE TAKE NOTE OF THE CHART SHOWING CO NSUMPTION OF ELECTRICITY (PAGE-3) THE HIGHEST AVERAGES ACCORDING TO ME ARE N OT ALWAYS CORRECT INDICATORS. FOR EXAMPLE IF WE TAKE NOTE OF THE CHA RT SHOWING CONSUMPTION OF ELECTRICITY (PAGE-3) THE HIGHEST AVERAGE PRODUCTION PER UNIT CONSUMPTION WAS 4.22 METERS IN THE MONTH OF APRIL, THE ACTUAL PRODU CTION BEING 41,390 METERS. IN THE NEXT MONTH, THE PRODUCTION WAS 48,213.25 MET ERS WHILE THE MONTH AFTER, IT WAS 73,683 METERS. IN BOTH THE SUBSEQUENT MONTH S, THE ELECTRICITY CONSUMPTION HAD ALSO INCREASED, AND YET BECAUSE OF THE HIGHER PRODUCTION, THE AVERAGES CAME DOWN TO 3.98 METERS AND 4.06 METE RS RESPECTIVELY, AS COMPARED TO 4.22 METERS IN THE FIRST MONTH. THEREF ORE, MONTHLY AVERAGES ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 4 CANNOT BE USED TO TAKE A VIEW THAT THE MONTHS IN WH ICH THE AVERAGES WERE LOWER WERE THE MONTHS IN WHICH PRODUCTION WAS SUPPR ESSED. THE AO ALSO FAILED TO TAKE INTO CONSIDERATION THE SIMPLE FACT T HAT WHAT IS PRODUCED IN A PARTICULAR MONTH CANNOT BE ENTIRELY SOLD IN THE SAM E MONTH. MUCH OF IT WOULD BE SOLD IN THE NEXT MONTH, AND THE PRICE WOULD BE D ETERMINED BY THE MARKET CONDITIONS PREVAILING IN THE SUBSEQUENT MONTH. THE REFORE, THE CONSUMPTION OF RAW-MATERIAL, THE PRODUCTION AND THE SALES CANNOT B E CORRECTLY CORRELATED AND COMPUTED EACH MONTH, SINCE THERE WOULD ALWAYS BE OV ERFLOWS AND EACH MONTH WOULD NECESSARILY HAVE A CLOSING STOCK. 6.1 COMING TO MORE SPECIFIC ISSUES, I FIND THAT THE AO DID NOT CLARIFY HOW THE ARRIVED AT THE FIGURE OF THE PRODUCTION OF GREY AT RS.179 PER METER AGAINST THE CONSUMPTION OF YARN AT RS.100 (PARA 5.2) DURING THE FIRST FOUR MONTHS OF THE YEAR, AND THE PRODUCTION OF GREY CLOTH AT RS.11 5 AS AGAINST THE CONSUMPTION OF YARN OF RS.100 IN THE REMAINING MOTH S. IT ALSO APPEARS THAT THE AO ISSUED LETTERS U/S. 133(6) OF THE IT ACT TO VARIOUS SALE PARTIES ON THE BASIS OF THE DETAILS FURNISHED BY THE ASSESSEE IN C OURSE OF THE ASSESSMENT PROCEEDINGS ITSELF. THIS HAD BEEN POINTED OUT IF T HE ASSESSING OFFICER AND IT WAS ALSO CLAIMED THAT ALL SUCH PARTIES HAD CONFIRME D THE TRANSACTIONS AS CLAIMED BY THE ASSESSEE. FOR THE REASONS BEST KNOW N TO THE AO, THIS FACT WAS UNFORTUNATELY NOT BROUGHT ON RECORD, AND IT CLE ARLY SHOWED THE AO'S INTENTION FROM THE VERY BEGINNING, OF MAKING SOME A DDITION ON SOME GROUND OR THE OTHER. 6.2 A MAJOR GROUND TAKEN BY THE AO WAS THE NON-MAIN TENANCE OF QUANTITATIVE DETAILS IN THE FORM OF STOCK REGISTER, ELECTRICITY CONSUMPTION REGISTER AND PRODUCTION REGISTER. IF THAT WAS THE CASE, THEN, HOW COULD HE PREPARE THE CHARTS AT PAGES 2,3,4 & 5 OF THE ASSESS MENT ORDER? THE CHARTS SHOW THAT EVEN THOUGH THE ASSESSEE MAY NOT HAVE MAI NTAINED RECORDS IN THE FORM OF REGISTERS YET, SHE HAD MAINTAINED COMPLETE RECORDS, WHICH ACCORDING TO HER, WAS AS PER THE MARKET PRACTICE. AND, IT WA S ON THE BASIS OF SUCH RECORDS THAT THE AO WAS ABLE TO CONDUCT THE VERIFIC ATIONS AND ANALYSIS. THEREFORE, NO ADVERSE INFERENCE COULD BE DRAWN WITH REGARD TO THE NON- MAINTENANCE OF QUANTITATIVE RECORDS. 6.3 TAKING INTO CONSIDERATION THE FACTS AND CIRCUMS TANCES OF THE CASE AS LAID OUT AND DISCUSSED INCOME CONSIDERABLE DETAIL I N THE AFORESAID ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 5 PARAGRAPHS, IT IS HELD THAT THERE WAS SIMPLY NO BAS IS FOR THE AO TO REJECT THE ASSESSEES BOOK RESULTS. CONSEQUENTLY, NO ADDITION COULD BE MADE ON ACCOUNT OF SUPPRESSED PRODUCTION. AS A RESULT, THE ADDITION OF THE SUM OF RS.17,89,854 WILL STAND DELETED. 5. BEFORE US, THE LEARNED SR. DR ARGUED ON BEHALF O F THE REVENUE THAT THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOK RES ULTS AS THE ASSESSEE IS UNABLE TO SUBSTANTIATE GP RATIO AS THERE WAS A SUBSTANTIAL FA LL IN COMPARISON TO EARLIER YEARS. HE STATED THAT THERE IS HUGE VARIATION IN THE CONSU MPTION OF YARN, PRODUCTION OF GREY CLOTH AND CONSUMPTION OF ELECTRICITY. HE ALSO STAT ED THAT THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER, CONSUMPTION REGISTER AND PRODUCTION REGISTER AND IN VIEW OF THIS DEFECT THE ASSESSING OFFICER HAS RIGHTLY ES TIMATED THE SUPPRESSED PRODUCTION AFTER REJECTING THE BOOK RESULTS. ACCORDING TO HIM , THE ASSESSING OFFICER HAS GIVEN SUBSTANTIAL REASONS IN THE ASSESSMENT ORDER FOR EST IMATING THE SUPPRESSION OF PRODUCTION AND THE ASSESSEE IS UNABLE TO EXPLAIN TH E SUPPRESSION. ACCORDINGLY, HE RELIED ON THE ASSESSMENT ORDER. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE AS SESSEE RELIED ON THE ORDER OF CIT(A) AND STATED THAT THERE IS NO DEFECT IN THE BO OKS OF ACCOUNTS AND THE COMPLETE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE ASSESSIN G OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER MADE HUGE ADDITION BY REJECTING BOOK RESULTS MERELY ON THE BASIS OF GENER AL OBSERVATIONS & WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS A ND THE ASSESSEE FURNISHED DETAILS VIDE LETTER DATED 07.12.2006 STATING COMPARATIVE FI GURES OF G.P. RATIO OF CURRENT YEAR AND LAST TWO YEARS, DETAILS OF THE PURCHASES EXCEED ING RS.1,00,000/-, MONTH-WISE DETAILS OF SALES AND PURCHASE IN TERMS OF QUANTITY AND VALUE, DETAILS OF THE CREDITORS AND DEBTORS OUTSTANDING RS.50,000/- AND ABOVE FOR M ORE THAN SIX MONTHS, COPIES OF THE BANK A/C WITH RECONCILIATION DETAILS OF THE TRA NSACTIONS WITH THE PERSONS SPECIFIED U/S. 40A(2)(B) AND DETAILS OF THE TRANSACTIONS WITH THE PERSONS SPECIFIED U/S. 40A(2)(B) AND DETAILS OF THE OPINING AND CLOSING ST OCK. WE FURTHER FIND THAT THE ASSESSEE EXPLAINED THE FALL IN G.P AND FURNISHED DE TAILS OF THE MONTH-WISE PRODUCTION AND MONTH-WISE DETAILS OF THE EXPENSES A ND ALSO FILED DETAILS OF BASIS OF ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 6 VALUATION OF CLOSING STOCK ALONG WITH COPIES OF THE BILLS AND LIST OF ALL DEBTORS ALONG WITH NAME AND ADDRESSES. WE FURTHER FIND THAT THE A SSESSEE FILED CONFIRMATIONS OF PARTIES WITH WHOM ASSESSEE WAS HAVING TRANSACTIONS AND THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING MADE INQ UIRIES WITH THE THIRD PARTIES WITH WHOM ASSESSEE WAS HAVING TRANSACTIONS AND TRAN SACTIONS OF ASSESSEE WITH ALL THESE PARTIES HAVE BEEN TALLIED AND NO DISCREPANCIE S WHATSOEVER WERE FOUND BY THE ASSESSING OFFICER. WE FURTHER FIND THAT THE ASSESSE E PRODUCED ALL THE BOOKS OF ACCOUNTS WITH SUPPORTING DOCUMENTS AND ASSESSING OF FICER DID NOT FIND ANY DEFECT OR OMISSIONS IN BOOKS OF ACCOUNTS AND SUPPORTING VOUCH ERS OR THE DOCUMENTS AND ALSO EXPLAINED THE FALL IN G.P. RATIO COMPARED TO LAST Y EAR WHICH WAS OWING TO OCTROI EXPENSES BEING MORE COMPARED TO LAST YEAR. WE FURTH ER FIND THAT THE ASSESSING OFFICER CALCULATED THE AVERAGE MONTH-WISE GROSS PRO FIT RATIO IN THE TABULAR FORM AND STATED THAT THIS GROSS PROFIT WAS AS SHOWN BY THE A SSESSEE, BUT THIS TABLE WAS NEVER FURNISHED BY ASSESSEE TO ASSESSING OFFICER. WE FIN D THAT THE ASSESSING OFFICER HAS HIMSELF CALCULATED THE MONTH-WISE GROSS PROFIT RATI O AS PER HIS OWN UNDERSTANDING OF ACCOUNTANCY AND IN THIS TABLE HE HAS TAKEN TOTAL GR OSS PROFIT AT RS.7,51,014/- BUT ACTUALLY THE TOTAL GROSS PROFIT OF THE YEAR WAS RS. 5,15,302/-, SO HE HAS NOT CONSIDERED THE INDIRECT EXPENSES OF RS.2,35,712/- IN THE CALCU LATION OF THE MONTH-WISE GROSS PROFIT AND MOREOVER, HE HAS NOT CONSIDERED THE OPEN ING AND CLOSING STOCK OF VALUE OF GREY CLOTH ON HAND AT BEGINNING AND ENDING OF THIS MONTH. WE FIND FROM THE FACTS THAT THE MONTH WISE COMPUTATION OF G.P IS BASICALLY INCORRECT AS MARKET VALUE OF PRODUCTION OF VARIOUS MONTHS IS COMPUTED ON THE BAS IS OF SELLING PRICE OF CLOTH FOR VARIOUS MONTHS & IN MAKING SUCH A COMPUTATION AND T HE ASSESSING OFFICER HAS TOTALLY DISCOUNTED THE FACT THAT ENTIRE PRODUCTION OF A PARTICULAR MONTH IS NEVER SOLD IN SAME MONTH. WE FURTHER FIND THAT THE CLOSING STOCK DEFINITELY REMAINS AT THE END OF THE MONTH & THE SAME IS SOLD IN SUBSEQUENT MONTH AT MARKET RATE AND AS SUCH AVERAGE SELLING PRICE COMPUTED FOR VARIOUS MONTHS R EPRESENT SELLING PRICE OF GREY CLOTH WHICH IS PRODUCED IN EARLIER MONTHS ALSO. AS SUCH CALCULATION OF MONTH WISE G.P.% MADE BY ASSESSING OFFICER BY COMPARING AVERAG E COST PRICE OF PRODUCTION OF VARIOUS MONTHS WITH MARKET VALUE OF PRODUCTION COMP UTED ON THE BASIS OF AVERAGE SELLING PRICE IS ABSOLUTELY INCORRECT AND NO LOGICA L INFERENCE CAN BE DRAWN ON THE BASIS OF SAID COMPUTATION. THE CONCLUSION DRAWN B Y ASSESSING OFFICER THAT ASSESSEE HAS SOLD UNACCOUNTED PRODUCTION IN MARKET BUT RECEIPTS ARE NOT SHOWN IN BOOKS IS ABSOLUTELY BASELESS & THERE IS NOT EVEN AN IOTA OF EVIDENCE WHICH INDICATES ITA NO.3671/AHD/08 ITO, WARD-2(2), SURAT V.SMT. MEENABEN H PATEL PAGE 7 THAT ASSESSEE HAS SOLD ANY CLOTH OUTSIDE THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS MADE CALCULATION OF SUPPRESSED PRODUCTI ON IN PARA 8 OF THE ORDER. HOWEVER, AS BOOKS OF ACCOUNTS CANNOT BE REJECTED U/ S 145 OF THE ACT, ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION BY ESTI MATING PRODUCTION. THE ASSESSING OFFICER HAS MADE ESTIMATION OF PRODUCTION FOR THE L AST 8 MONTHS OF FINANCIAL YEAR ON THE BASIS OF PRODUCTION RATIO FOR THE FIRST FOUR MO NTHS AFTER ALLOWING ADJUSTMENT OF 10% ON ACCOUNT OF VARIOUS FACTORS & THEREBY ARRIVED AT THE FIGURE OF UNACCOUNTED PRODUCTION OF 145634.95 METERS. IN VIEW OF THE ABO VE FACTS AND CIRCUMSTANCES, WE CONFIRM THE ORDER OF CIT(A) IN ACCEPTING THE BOOK R ESULTS AND DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRES SION OF PRODUCTION. THE INTERCONNECTED ISSUES OF THE REVENUES APPEAL ARE D ISMISSED. 8. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 25/06/2010 SD/- SD/- (D.C. AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED:25/06/2010 ANKIT* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD