The ITO, Ward-5(2), Ahmedabad V. Priyanka Carbon & Chemical Ind. Pvt.Ltd., Ahmedabad

ITA 4547/AHD/2003

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5449 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-07-2010
• Assessment Year: 1995-1996
• Appeal Filed On: 30-12-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: S N SOPARKAR
• Section: 133A; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.4298/AHD/2003 A.Y.: 1995-96 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., 3 RD FLOOR, SHIVALIK BUILDING, PANCHVATI, AHMEDABAD VS THE INCOME TAX OFFICER, WARD-5 (2), C. U. SHAH BUILDING, 2 ND FLOOR, AHMEDABAD PA NO. AABCP 1837 E (APPELLANT) (RESPONDENT) ITA NO.4547/AHD/2003 A.Y.: 1995-96 THE INCOME TAX OFFICER, WARD-5 (2), C. U. SHAH BUILDING, 2 ND FLOOR, AHMEDABAD VS PRIYANKA CARBON & CHEMICAL IND. (P) LTD., 3 RD FLOOR, SHIVALIK BUILDING, PANCHVATI, AHMEDABAD PA NO. AABCP 1837 E (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. SOPARKAR, AR DEPARTMENT BY SHRI K. M. MAHESH, DR O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDAB AD DATED 16-10-2003 FOR ASSESSMENT YEAR 1995-96. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. THE RESPECTIV E GROUNDS OF APPEAL IN THE CROSS APPEALS ARE TAKEN UP TOGETHER FOR THE PUR POSE OF DISPOSAL OF BOTH THE CROSS APPEALS AND THE SAME ARE DECIDED ISS UE WISE AS UNDER. ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 2 ISSUE NO.1 3. THE ASSESSEE ON GROUND NO.1 IN ITS APPEAL, CHAL LENGED THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING REJECTION OF BOOKS OF ACCOUNT UNDER THE PROVISIONS OF SECTION 145 OF THE IT ACT. IT IS CLAI MED THAT DIFFERENCE OF 901 KGS. IN STOCK OF RAW MATERIAL FOUND DURING THE COUR SE OF SURVEY WAS ADMITTED AND PROPERLY ADJUSTED IN THE BOOKS OF ACCO UNT. THEREFORE, REJECTION OF BOOK RESULTS IS UNJUSTIFIED. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN CONFI RMING ADDITION OF RS.4,33,450/- OUT OF RS.17,85,350/- ON ACCOUNT OF L OW PRODUCTION RATIO OF FABRICS FROM HDPE TAPE OF 98.50 % DURING THE ASS ESSMENT YEAR UNDER APPEAL COMPARED TO THE PRODUCTION RATIO OF FABRICS IN THE PRECEDING ASSESSMENT YEAR 1994-95. 4. THE REVENUE HAS RAISED GROUND NO.1 CHALLENGING T HE ORDER OF THE LEARNED CIT(A) IN REDUCING THE RATIO OF PRODUCTION FROM 106.89 % TO 100% THEREBY REDUCING THE ADDITION FROM RS.17,85,35 0/- TO RS.4,33,450/-. SINCE GROUND NO.1 AND 2 OF THE APPEA L OF THE ASSESSEE AND GROUND NO.1 OF THE APPEAL OF THE REVENUE ARE BA SED UPON COMMON FACTS, THEREFORE, SAME ARE DECIDED TOGETHER ON ISSU E NO.1 ABOVE. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING T HE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY WAS ENGAGED IN T HE BUSINESS OF MANUFACTURING AND SELLING OF HDPE BAGS AND WOVEN SA CKS. SURVEY U/S 133A OF THE IT ACT WAS CARRIED OUT AT THE FACTORY P REMISES OF THE ASSESSEE COMPANY AT ODHAV AND SANAND ON 06-01-1995. SUBSEQUE NT TO THE SURVEY, VARIOUS RECORDS, BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS FOUND AND INVENTORISED WERE IMPOUNDED. RETURN OF IN COME IN THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE COMPA NY ON 29-11-1995 DECLARING TOTAL INCOME OF RS.12,49,270/- WHICH WAS PROCESSED U/S 143(1)(A) OF THE IT ACT. ASSESSMENT WAS REOPENED U/ S 148 OF THE IT ACT. THE AO MADE ADDITION OF RS.17,85,350/- ON THIS ISSU E BY REJECTING THE ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 3 BOOK RESULTS OF THE ASSESSEE. ACCORDING TO THE AO R EASONS FOR REJECTION OF THE BOOKS OF ACCOUNTS ARE AS UNDER: (A) THE ASSESSEES YIELD OF FINISHED PRODUCT WAS VA RIED FROM MONTH TO MONTH AND DIFFERS IN THE SEPARATE UNI T. (B) THE PHYSICAL VERIFICATION OF STOCK AS ON 06-01- 1995 I.E. DURING THE SURVEY U/S 133A SHOWED EXCESS OF 901 KGS . GRANULES WAS FOUND PHYSICALLY THAN WHAT WAS RECORDE D IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS SHOWN THI S STOCK THEREAFTER IN THE BOOKS OF ACCOUNTS WHICH IS ALSO MENTIONED IN THE GROUNDS OF APPEAL NO.1. (C) THE ASSESSEE SHOWED DISCREPANCY IN THE WASTAGE IN THE STATEMENT SUBMITTED ON 26-03-2003 AND 17-03- 2003 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 5.1 THE AO IN VIEW OF THE ABOVE FACTS AND THE FACTS MENTIONED IN PARA 4 OF THE ASSESSMENT ORDER REJECTED THE BOOKS OF ACC OUNT OF THE ASSESSEE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO HAS NOT APPRECIATED THE FACTS OF THE CASE IN REJECTING THE BOOK RESULTS. IT WAS SUBMITTED THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNTS BY FOLLOWING ACCOUNTING STANDARD AS PRESCRIBED AND WER E AUDITED AND TAX REPORT IS ALSO FILED. IT WAS SUBMITTED THAT DIFFERE NCE OF 901 KGS. OF THE STOCK WAS TRIVIAL AT 0.128% WHEN COMPARED TO THE TO TAL CONSUMPTION TO THE TUNE OF 704379 KGS OF THE ASSESSEE COMPANY. HE NCE, NO EFFORT WAS MADE TO RECONCILE THE SAME AT THE TIME OF SURVEY. I T WAS SUBMITTED THAT IT WAS LATER ON ADJUSTED IN THE BOOKS OF ACCOUNT AT TH E END OF THE YEAR ON 31-03-1995. IT WAS, THEREFORE, SUBMITTED THAT SINCE IT WAS A TRIVIAL ERROR, THEREFORE, BOOKS OF ACCOUNT SHOULD NOT HAVE BEEN RE JECTED U/S 145 OF THE IT ACT. THE LEARNED CIT(A) NOTED THAT THIS ISSUE RE LATES TO TWO ADDITIONS MADE BY THE AO AND THEREFORE, IT WOULD BE TAKEN CAR E OF AT THE SAME TIME. THE ASSESSEE FURTHER CHALLENGED THE ADDITION OF RS.17,85,350/- ON ACCOUNT OF SALE OF SUPPRESSED PRODUCTION BEFORE LEA RNED CIT(A). THIS ISSUE HAS BEEN DEALT WITH BY THE AO AT PARA 8 OF TH E ASSESSMENT ORDER. IT ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 4 IS STATED BY THE AO IN THE SAID PARA THAT SIMILARLY THE ASSESSEE HAS CONTENDED THAT THE RATIO OF PRODUCTION TAKEN AT 106 .89% IS QUITE ARBITRARY AND NOT CORRECT. THE ASSESSEE COMPANY REL IED UPON ITS OWN PRODUCTION FIGURES. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEES INPUT OF HDPE TAPE WAS 6,31,983 KGS. AND THE PRODUC TION DERIVED THERE FROM WAS 6,39,837 KGS. THIS DERIVED PRODUCTION IN T ERMS OF PERCENTAGE WORKED OUT AT 101.24%. ON THE SAME PATTERN, THE RAT IO OF PRODUCTION WAS DERIVED AT 106.89% IN THE IMMEDIATELY PRECEDING YEA R. FOR THE DETAILED REASONS MENTIONED IN THE BODY OF THE ASSESSMENT ORD ER FOR ASSESSMENT YEAR 1994-95 DATED 28-03-2002, THERE WAS NO OTHER R EASON FOR DEVIATING THE PRODUCTION RATIO ESTABLISHED BY THE DEPARTMENT AT 106.89%. THEREFORE, ON THE BASIS OF SAME PATTERN, THE AO ADO PTED THE PRODUCTION RATIO FROM HDPE TAPE TO HDPE FABRICS AND WORKED OUT UNDER PRODUCTION AT 35707 KGS. (106.89% - 101.24%% = 5.65% - AND LES S PRODUCTION WORKED OUT ON INPUT OF 6,31,983 KGS X 5.65%). THE A O HAS WORKED OUT SUPPRESSION OF PRODUCTION AT 35,707 KGS. WHICH ACCO RDING TO HIM WAS NOT REFLECTED IN STOCK. ACCORDINGLY, BY TAKING AVER AGE SALE PRICE AT THE RATE OF RS.50/- PER KG., THE SUPPRESSION OF SALES W AS WORKED OUT BY THE AO AT RS.17,85,350/- (35,707 KGS. X RS.50/- PER KG. ) AND ADDED THE SAME TO THE TOTAL INCOME DECLARED BY THE ASSESSEE. 6. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CI(A) AND THE ASSESSEE FILED WRITTEN SUBMISSIONS AND THE DETAILS. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT WHILE MAK ING THE HUGE ADDITION, THE AO HAS NOT APPRECIATED THE FACTS OF T HE CASE. IT WAS FURTHER SUBMITTED THAT THE AO WORKED OUT THE RATIO OF PRODU CTION FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1994-95 A T 106.89% AND ALSO FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1 995-96 AT 101.24% FROM THE DETAILS OF PRODUCTION AVAILABLE IN THE NOT ES ON ACCOUNTS TO THE BALANCE SHEETS AND THEN APPLIED THE REDUCTION IN TH E RATIO OF PRODUCTION OF 5.65% TO THE INPUT OF HDPE TAPE AND ARRIVED AT T HE ALLEGED SUPPRESSED ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 5 PRODUCTION OF 35,707 KGS. AND THE AO ARBITRARILY A SSUMED THAT THE SALE OF ALLEGED SUPPRESSED PRODUCTION AGGREGATING TO RS. 17,85,350/- WHICH RESULTED INTO THE IMPUGNED ADDITION OF RS.17,85,350 /- . IT WAS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE REITERATED T HE FACTS ON 17-03- 2003 EXPLAINED VIDE ITS LETTER DATED 26-02-2003. IN SUPPORT OF THE CONTENTION OF THE ASSESSEE THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF SAID LETTER ALONG WITH THE CHART SHOWING THE INP UT OF HDPE TAPE, PRODUCTION OF HDPE FABRICS ETC. FOR ASSESSMENT YEAR S 1994-95 AND 1995- 96 AS WORKED OUT BY THE ASSESSEE COMPANY ON THE BAS IS OF EXCISE RECORD AND AS SHOWN BY THE AO IN THE ASSESSMENT ORDER IS A S UNDER: AS PER ASSESING OFFICER A. Y. 1994-95 (F. Y. 1993- 94) DETAILS SOURCE REMARKS THE PRODUCTION OF HDPE TAPE 7,90,705 KGS. TAX AUDIT REPORT ANNEXURE VIII(I). ALSO SEE EXCISE RECORD SUB PAGE 17 ENTIRE APE PRODUCTION FOR THE YEAR HAS BEEN TREATED AS CONSUMPTION, IGNORING OPENING CLOSING STOCKS OF APE THE PRODUCTION OF HDPE FABRICS 8,45,185 KGS. TAX AUDIT REPORT ANNEXURE VIII(II). ALSO SEE EXCISE RECORD SUB PAGE 17 THIS FIGURE INCLUDES (I)FABRIC PRODUCTION (II) LAMINATION GRANUALS (III) JOB WORK FABRIC PRODUCTION (IV) FABRIC PURCHASE (V) JOBWORK LINER RATIO 106.89% ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 6 AS PER APPELLANT COMPANY A. Y. 1994-95 (F. Y. 1993 -94) DETAILS SOURCE REMARKS INPUT OF HDPE TAPE ODHAV 101982 KGS SANAND 677252 KGS 779234 KGS EXCISE RECORD SUB.PAGE 13-16 EXCISE RECORD SUB.PAGE 15-16 EXCISE RECORD SUB.PAGE 14-16 THIS FIGURE IS OF TAPE ISSUED FOR FABRIC PRODUCTION AFTER ADDING OPENING SOCK AND REDUCING CLOSING STOCK OF TAPE PRODUCTION OF HDPR FABRIC ODHAV 101982 KGS. SANAND 677252 KGS . 779234 KGS RATIO 100% EXCISE RECORD SUB.PAGE 13-16 EXCISE RECORD SUB.PAGE 15-16 EXCISE RECORD SUB.PAGE 14-16 THIS FIGURE INCLUDES ONLY FABRIC PRODUCING BY THE APPELLANT COMPANY OUT OF ITS OWN RAW MATERIAL AS PER ASSESING OFFICER A. Y. 1995-96 (F. Y. 199-9 5) DETAILS SOURCE REMARKS THE PRODUCTION OF HDPE TAPE 6,31,983 KGS. TAX AUDIT REPORT ANNEXURE VIII(I). ALSO SEE EXCISE RECORD SUB PAGE 21 ENTIRE APE PRODUCTION FOR THE YEAR HAS BEEN TREATED AS CONSUMPTION, IGNORING OPENING CLOSING STOCKS OF TAPE THE PRODUCTION OF HDPE FABRICS 6,39,837 KGS. TAX AUDIT REPORT ANNEXURE VIII(II). ALSO SEE EXCISE RECORD SUB PAGE 21 THIS FIGURE INCLUDES (I)FABRIC PRODUCTION (II) JOB WORK PRODUCTION (III) LAMINATION GRANUALS (IV)HMMF JOB PRODUCTION RATIO 101.24% AS PER APPELLANT COMPANY A. Y. 1995-96 (F. Y. 1994 -95) DETAILS SOURCE REMARKS INPUT OF HDPE TAPE ODHAV 87311 KGS SANAND 487911 KGS 575222 KGS EXCISE RECORD SUB.PAGE 18-19 EXCISE RECORD SUB.PAGE 19-20 EXCISE RECORD SUB.PAGE 19-22 THIS FIGURE IS OF TAPE ISSUED FOR FABRIC PRODUCTION AFTER ADDING OPENING SOCK AND REDUCING CLOSING STOCK OF TAPE PRODUCTION OF HDPR FABRIC ODHAV 85147 KGS. SANAND 481405 KGS . 566552 KGS EXCISE RECORD SUB.PAGE 18-22 EXCISE RECORD SUB.PAGE 20-22 EXCISE RECORD SUB.PAGE 21-22 THIS FIGURE INCLUDES ONLY FABRIC PRODUCTION BY THE APPELLANT COMPANY OUT OF ITS OWN RAW MATERIAL RATIO 98.50% ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 7 IT WAS FURTHER SUBMITTED THAT REMARK COLUMN OF THE CHART SHOWS HOW THE AO ARRIVED AT THE RATIO OF PRODUCTION AT 106.89% AN D 101.24% FOR ASSESSMENT YEARS 1994-95 AND 1995-96 WHILE WORKING OUT THE INPUT QUANTITY OF HDPE TAPE WITHOUT ADDING THE OPENING ST OCK OF TAPE AND ALSO WITHOUT REDUCING THE CLOSING STOCK OF THE HDPE TAPE , THOUGH IT WAS SPECIFICALLY BROUGHT TO HIS NOTICE DURING THE COURS E OF ASSESSMENT PROCEEDINGS WHICH RESULTED IN INFLATED INPUT QUAN TITY OF HDPE TAPE. SIMILARLY, WHILE TAKING QUANTITY OF FABRIC PRODUCTI ON, THE AO DID NOT RESTRICT HIMSELF TO ONLY FABRIC PRODUCTION WHICH IS EVIDENT FROM THE REMARK COLUMN OF THE SAID CHART THEREBY RESULTING I N INFLATED PRODUCTION QUANTITY OF FABRIC AND THE ERRONEOUS ADOPTION OF IN PUT AND OUTPUT QUANTITY BY THE AO GAVE AN ABSURD RESULT OF 106.89% AND 101.24% PRODUCTION RATIO. THE LEARNED COUNSEL FOR THE ASSES SEE VEHEMENTLY ARGUED THAT OPTIMUM LEVEL OF THE MOST EFFICIENT PLA NT WOULD FETCH 100% FABRIC FROM TAPE AND UNDER NO CIRCUMSTANCE IT COULD BE MORE THAN 100%. IT WAS FURTHER SUBMITTED THAT THE CHART PREPARED BY THE ASSESSEE ON THE BASIS OF EXCISE RECORD CLEARLY SHOWS THAT THE TAPE TO FABRIC CONVERSION WAS 100% DURING THE ASSESSMENT YEAR 1994-95 AND 98. 50% DURING THE ASSESSMENT YEAR 1995-96 AND THE AO RELIED ON THE PR ODUCTION FIGURES GIVEN IN THE NOTE ON ACCOUNTS APPENDED TO THE BALAN CE SHEET BY THE ASSESSEE AND COMPLETELY IGNORED THE EXCISE RECORDS PRODUCED BEFORE HIM. IT WAS ALSO SUBMITTED THAT ANNEXURE A AND B SUBMITT ED WITH THE LETTER DATED 26-2-2003 HAS BEEN DULY VERIFIED BY THE AO WI TH EXCISE RECORD CLEARLY PROVES THAT THE PRODUCTION RATIO FOR ASSESS MENT YEAR 1994-95 IS 100% AND FOR ASSESSMENT YEAR 1995-96 IS 98.50% COPY OF WHICH WAS ALSO SUBMITTED BEFORE THE LEARNED CIT(A). THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY ON 06-01-2995 NOT A SINGLE EVIDENCE WAS FOUND TO SUPPORT THE ALLEGATION OF THE AO THAT THE ASSESSEE COMPANY IS MANUFACTURING AND SELLING THE G OODS WITHOUT RECORDING THE SAME IN THE BOOKS OF ACCOUNT AND THE AO HAS FAILED TO ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 8 UNDERSTAND THAT THE OPTIMUM LEVEL IN WEIGHT ON CONV ERSION FROM TAPE TO FABRIC CAN NEVER EXCEED 100% AND THUS, THE BASIC TH EORY ADOPTED BY THE AO FOR MAKING SUCH A HUGE ADDITION IS BASELESS AND UNJUSTIFIED AND HENCE THE SAME SHOULD BE DELETED. 7. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE MATERIAL ON RECORD CONFIRMED THE ADDITION TO TH E EXTENT OF RS.4,33,450/-. HIS FINDINGS IN PARA 6.2 ARE REPRODU CED AS UNDER: 6.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE A. R. OF THE APPELLANT CAREFULLY . I HAVE ALSO GONE THROUGH THE DETAILS FILED BEFORE ME BY THE A. R. OF THE APPELLANT AND THE OBSERVATION OF THE ASSESSING OFFI CER FOR MAKING ADDITION IN THE ASSESSMENT ORDER. IT IS SEEN THAT WHILE ARRIVING THE PRODUCTION RATIO AT 106.89% FOR A. Y. 94-95 AND 101.124% FOR A. Y. 1995-96, THE ASSESSING OFFICER H AS NOT CAREFULLY GONE THROUGH THE EXCISE RECORDS, TAX AUDI T REPORT AND BALANCE-SHEET OF THE APPELLANT COMPANY AND HAS IGNO RED THE FIGURES OF OPENING AND CLOSING STOCK. IT IS FURTHER SEEN THAT THE SAID RATIO, ON THE BASIS OF EXCISE RECORD AND BOOKS OF ACCOUNT, WAS AT 100% FOR A. Y. 1994-95 AND 98.5% FOR A. Y. 1 995-96 AS GIVEN ABOVE (AT PAGE NO.14). THE SHORTAGE IN PRO CESSING THE PRODUCTION FOR THE YEAR UNDER CONSIDERATION IS OF 1 .5%. THUS, THE ASSESSING OFFICER ERRED IN WORKING OUT PRODUCTI ON RATIO. HOWEVER, IT CAN NOT BE SAID THAT HE WAS UNJUSTIFIED IN MAKING ADDITION ON THIS COUNT. DURING THE COURSE OF SURVEY PROCEEDINGS U/S. 133A, DISCREPANCY IN STOCK OF 901 KGS. WAS FOUND WHICH THE ASSESSEE COULD NOT RECONCILE AND MA DE A DISCLOSURE OF THE SAME. FURTHER, THERE IS A SHORTAG E OF PRODUCTION RESULT BY 1.5% FOR WHICH THE APPELLANT C OMPANY HAS NO ACCEPTABLE EXPLANATION. DURING THE COURSE OF APPELLATE PROCEEDINGS THE A. R. OF THE APPELLANT COMPANY WAS GIVEN ENOUGH OPPORTUNITIES TO EXPLAIN THE SHORTFALL IN PR ODUCTION AS COMPARED TO ITS OWN RECORD FOR THE IMMEDIATELY PREC EDING ASSESSMENT YEAR WHICH WAS 100%. THE APPELLANTS MAI N ARGUMENT WAS THAT THE A. O. WAS NOT JUSTIFIED IN TA KING YIELD OF 106% AS IT CAN NOT BE BEYOND 100%. IN MY VIEW TH E ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE AP PELLANTS BOOK RESULTS AS THE PRODUCTION SHOWN BY THE APPELLA NT COMPANY WAS TOO LOW EVEN AS COMPARED TO ITS OWN RES ULTS FOR IMMEDIATELY PRECEDING ASSESSMENT YEAR. HOWEVER, THE ASSESSING OFFICER HAS ERRED IN TAKING THE YIELD OF 106%. SINCE ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 9 THE APPELLANT COMPANY HAS SHOWN A PRODUCTION RATIO OF 100% IN THE IMMEDIATELY PRECEDING YEAR IT WILL BE REASON ABLE IF THE PRODUCTION RATIO IS TAKEN AT 100% FOR THE YEAR UNDE R CONSIDERATION ALSO IN PLACE OF 98.5% AS SHOWN BY TH E APPELLANT. THE INPUT OF HDPE TAPE IS SHOWN BY THE APPELLANT AT 5,75,222 KG, AND PRODUCTION OF HDPE FABRIC IS SH OWN AT 5,66,553 KGS. THUS, THERE IS UNEXPLAINED DIFFERENCE OF 8,669 KGS. IF VALUED AT THE RATE OF RS.50/- PER KG. IT WO RKS OUT TO RS.4,33,450/-. THUS, IN VIEW OF THE ABOVE DISCUSSIO N, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED TO THE EXTENT OF RS.4,33,450/-. 8. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T EXCESS STOCK OF 901 KGS GRANULES WAS FOUND DURING THE COURSE OF SU RVEY WHICH IS VERY TRIVIAL AT 0.128% WHEN COMPARED TO THE TOTAL CONSUM PTION OF 7,04,379 KGS. HE HAS SUBMITTED THAT THE EXCESS STOCK WAS ADJ USTED IN THE BOOKS OF ACCOUNT AT THE END OF THE YEAR. HE HAS SUBMITTED TH AT ON SUCH A MATTER THE BOOKS OF ACCOUNT SHOULD NOT HAVE BEEN REJECTED BY THE AUTHORITIES BELOW. AS REGARDS MERITS, THE LEARNED COUNSEL FOR T HE ASSESSEE APART FROM RELYING UPON EARLIER ARGUMENTS RAISED BEFORE T HE AUTHORITIES BELOW REFERRED TO PB-3 WHICH IS REPLY FILED BEFORE THE AU THORITIES BELOW GIVING DETAILS OF RATIO OF THE PRODUCTION AND ARE SUPPORTE D BY THE PROPER DATA OF THE STATEMENT OF PRODUCTION AND CONSUMPTION AND STA TEMENT OF INPUT OF THE TAPE AND PRODUCTION OF HDPE FABRICS. HE HAS SUB MITTED THAT THE DATA GIVEN BY THE ASSESSEE BEFORE THE LEARNED CIT(A) IS CORRECT AND BASED UPON THE MATERIAL ON RECORD AND ARE BASED UPON THE EXCIS E RECORDS IN WHICH NO DEFECT HAS BEEN POINTED OUT. HE HAS SUBMITTED TH AT THE DATA PRODUCED BEFORE THE LEARNED CIT(A) IS SUPPORTED BY THE DETAI LS OF STATEMENT FILED AT PB-6 TO 15. HE HAS ALSO REFERRED TO PB-18 WHICH IS DETAILS OF MONTHLY SALES AND WASTAGE. PB-28 TO 30 IS THE EXCISE RECORD S AND PB -40 IS THE DETAILS FILED BEFORE THE AO TO EXPLAIN THE DISCREPA NCIES IN THE EXCESS STOCK. HE HAS ALSO REFERRED TO QUANTITATIVE DETAILS FILED BEFORE THE AUTHORITIES BELOW TO SHOW THAT THERE IS NO DISCREPA NCY IN THE ACCOUNTS OF ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 10 THE ASSESSEE AS REGARDS RATIO OF PRODUCTION. HE HAS SUBMITTED THAT THE AO HAS ARBITRARILY TAKEN INCORRECT FIGURES FOR THE PURPOSE OF MAKING THE ADDITION. HE HAS SUBMITTED THAT NO FURTHER EVIDENCE WAS FOUND TO SUPPORT THE FINDINGS OF THE AO. HE HAS, THEREFORE, SUBMITTED THAT THE ENTIRE ADDITION ON THE MATTER IN ISSUE SHOULD HAVE BEEN DELETED BY THE LEARNED CIT(A). 9. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT EXCESS STOCK WAS FOUND DURING TH E COURSE OF SURVEY WHICH WAS ADMITTED BY THE ASSESSEE. THEREFORE, BOOK RESULTS OF THE ASSESSEE ARE NOT RELIABLE AND HAVE BEEN RIGHTLY REJ ECTED BY THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT SINCE THE BOOK RESULTS HAVE BEEN REJECTED, THEREFORE, ADDITION IS REQUIRED TO BE MADE. THE LEA RNED DR ON MERITS SUBMITTED THAT SINCE THE ASSESSEE COULD NOT RECONCI LE THE RATIO OF PRODUCTION AS COMPARED TO EARLIER YEARS, THEREFORE, THE AO WAS JUSTIFIED IN HOLDING IT TO BE A CASE OF SUPPRESSION OF SALES AND WAS JUSTIFIED IN MAKING THE ADDITION WHICH HAVE BEEN WRONGLY DELETED BY THE LEARNED CIT(A). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT DURING PHYSICA L VERIFICATION OF STOCK ON 6-01-1995 DURING THE COURSE OF SURVEY EXCESS STOCK OF 901 KGS OF GRANULES WAS FOUND AS COMPARED TO THE BOOKS OF ACCO UNT OF THE ASSESSEE. THE ASSESSEE ADMITTED THE DISCREPANCY IN THE STOCK FOUND EXCESS DURING THE COURSE OF SURVEY AND HAS MADE ADDITION AND ADJU STED THE SAME IN THE AUDITED ACCOUNT FOR THE YEAR ENDED 31-03-1995. THE AO FURTHER NOTED THAT ASSESSEES YIELD OF FINISHED PRODUCTS WA S VARIED FROM MONTH TO MONTH AND DIFFERS IN SEPARATE UNIT. THE DISCREPANCY IN WASTAGE WAS ALSO NOTED BY THE AO. THE AO, THEREFORE, ON THE ABOVE RE ASONS REJECTED THE BOOK RESULTS OF THE ASSESSEE WHICH HAVE BEEN CONFIR MED BY THE LEARNED CIT(A) ALSO. THE HONBLE DELHI HIGH COURT IN THE CA SE OF ACTION ELECTRICALS ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 11 258 ITR 188 HELD THAT WHEN AMOUNT DISCOVERED DURING SEARCH AND SURRENDER MADE. REJECTION OF ACCOUNTS IS PROPER. ES TIMATED ASSESSMENT ON PREVIOUS YEAR BASIS IS JUSTIFIED. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BIMAL KUMAR AMI T KUMAR 288 ITR 278 HELD THAT WHEN CASH CREDITS ARE SURRENDERED, ABSENCE OF STOC K REGISTER IS ALSO THERE. REJECTION OF BOOK RESULTS I S JUSTIFIED. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF T HE ABOVE DECISIONS AND THE FACT THAT THE ASSESSEE ACCEPTED THE EXCESS STOC K DURING THE COURSE OF SURVEY WOULD SHOW THAT THE AUTHORITIES BELOW WERE J USTIFIED IN REJECTING THE BOOK RESULTS OF THE ASSESSEE U/S 145 OF THE IT ACT. 11. NOW, COMING TO THE ADDITION ON MERIT OF RS.17,8 5,350/- MADE BY THE AO ON ACCOUNT OF SUPPRESSION OF SALES, WE ARE O F THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE SUBSTA NTIAL ADDITION ON THE ISSUE. THE AO HAS WORKED OUT THE RATIO OF THE PRODU CTION FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1994-95 AT 106 .89% AND ALSO FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. ASSESSMENT YE AR 1995-96 AT 101.24% FROM THE DETAILS OF PRODUCTION AVAILABLE IN THE NOTES OF ACCOUNTS TO THE BALANCE SHEET. THE AO APPLIED THE REDUCTION IN THE RATIO OF 5.65% (106.89% - 101.24%) AND ARRIVED AT THE SUPPRESSION OF PRODUCTION. THE ASSESSEE HAS HOWEVER, FILED COMPLETE DETAILS AND CH ARTS OF INPUT OF HDPE TAPES AND HDPE FABRICS ETC. FOR BOTH THE ASSESSMENT YEARS AS WORKED OUT BY THE ASSESSEE ON THE BASIS OF EXCISE RECORD WHICH HAVE BEEN INCORPORATED IN THE APPELLATE ORDER. THE PRODUCTION CHART AND CONSUMPTION SHOWN BY THE ASSESSEE BEFORE THE AUTHOR ITIES BELOW ARE SUPPORTED BY THE STATEMENTS FILED AT PAGES 6 TO 15 OF THE PAPER BOOK. THE STATEMENTS FILED IN THE PAPER BOOK ARE SUPPORTED BY THE MATERIALS FILED WITH THE PAPER BOOK WHICH CONTAIN THE EXCISE RECORD ALSO. THE STATEMENTS FILED ON RECORD WOULD SHOW THAT RATIO OF PRODUCTION IN ASSESSMENT YEAR 1994-95 WAS 100% AND IN THE ASSESSMENT YEAR UNDER A PPEAL I.E. 1995- 96 THE RATIO OF PRODUCTION WAS 98.50%. THE FIGURES NOTED BY THE LEARNED ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 12 CIT(A) ARE THUS SUPPORTED BY THE MATERIALS AVAILABL E ON RECORD. MOREOVER, THE PRODUCTION/YIELD RATIO CANNOT BE MORE THAN 100% AS AGAINST THE AO NOTED AT 106.89% AND 101.24%. THE DATA OF THE ASSES SEE ARE BASED UPON EXCISE RECORD IN WHICH ALSO NO DEFECT HAS BEEN POIN TED OUT BY THE AO. THE AO ON PRESUMPTION OF WRONG FIGURES TREATED THAT THERE IS A SUPPRESSION OF SALES. HOWEVER, IT IS A FACT THAT NO EVIDENCE WAS FOUND DURING THE COURSE OF SURVEY ABOUT MANUFACTURING OR SELLING OF THE GOODS OUTSIDE BOOKS OF ACCOUNT. NO EVIDENCE OF SUPPRESSIO N OF SALES WAS ALSO FOUND DURING THE COURSE OF SURVEY. NO OTHER SPECIFI C DEFECT HAS ALSO BEEN POINTED OUT IN THE MAINTENANCE OF THE BOOKS OF ACCO UNT BY THE ASSESSEE. THEREFORE, RATIO OF PRODUCTION SHOWN BY THE ASSESSE E HAS BEEN RIGHTLY AND CORRECTLY APPRECIATED BY THE LEARNED CIT(A) FOR THE PURPOSE OF DELETING SUBSTANTIAL ADDITION. FURTHER, THERE IS SH ORTAGE OF PRODUCTION RATIO RESULT BY 1.50% FOR WHICH NO EXPLANATION WAS GIVEN BEFORE THE LEARNED CIT(A). BUT IT IS ALSO A FACT THAT IN EACH AND EVERY YEAR THERE MAY NOT BE EXACTLY SAME YIELD OF PRODUCTION OBTAINED BY THE ASSESSEE. THEREFORE, PART ADDITION SHALL HAVE TO BE MAINTAINE D IN THE MATTER PARTICULARLY WHEN BOOK RESULTS HAVE BEEN REJECTED B ECAUSE OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. CONSIDERIN G THE FACTS AND CIRCUMSTANCES NOTED ABOVE AND SMALL EXCESS STOCK FO UND, WE ARE OF THE VIEW THAT IN ORDER TO MEET THE ENDS OF JUSTICE, IT WOULD BE REASONABLE AND PROPER TO RESTRICT THE ADDITION IN ALL TO THE EXTEN T OF RS.2,50,000/- AS AGAINST CONFIRMED BY THE LEARNED CIT(A) AT RS.4,33, 450/-. WE ACCORDINGLY, DIRECT THE AO TO MAKE ADDITION ON THIS ISSUE IN A SUM OF RS.2,50,000/- IN ALL. 11.1 IN THIS VIEW OF THE MATTER, THE ORDER OF THE L EARNED CIT(A) IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE IS CONF IRMED. HOWEVER, THE IMPUGNED ORDER IS MODIFIED TO THE ABOVE EXTENT BY R ESTRICTING THE ADDITION TO RS.2,50,000/-. AS A RESULT, GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. HOWEVER, GROUND NO.2 OF THE APPEAL OF THE ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 13 ASSESSEE IS PARTLY ALLOWED. THE DEPARTMENTAL APPEAL ON GROUND NO.1 IS DISMISSED. ISSUE NO.2 12. ON ISSUE NO.2, THE REVENUE HAS CHALLENGED THE D ELETION OF ADDITION OF RS.1,50,234/- ON ACCOUNT OF DISCREPANCY IN CONSU MPTION OF RAW MATERIAL MADE ON THE BASIS OF INFORMATION AVAILABLE IN THE AUDIT REPORT. THE AO MADE THE ADDITION OF RS.1,50,234/- ON ACCOUN T OF DISCREPANCY IN CONSUMPTION OF RAW MATERIAL OF 2188 KGS. THIS ISSUE HAS BEEN DEALT WITH BY THE AO AT PARA 7 OF THE ASSESSMENT ORDER. 13. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED T HAT THE ASSESSEE HAS SHOWN CONSUMPTION OF RAW MATERIALS OF 7,04,379 KGS, WHEREAS AS PER AUDIT REPORT IT WAS AT 7,01,569 KGS. AND HE PRESUM ED THAT THERE WAS CLEAR CUT DISCREPANCY IN CONSUMPTION OF RAW MATERIA L OF 2811 KGS. THE ASSESSEE STATED THAT THE SAME STOCK WAS USED FOR LA MINATION AND CLOSING STOCK OF 49,751 KGS WAS ARRIVED AT AFTER REDUCING C ONSUMPTION OF 7,04,379 KGS OF GRANULES. IT HAS BEEN STATED BY THE AO THAT ACCORDING TO THE ASSESSEE IT LEAVES NO ROOM FOR ANY KIND OF ALLE GATION THAT THE ASSESSEE COMPANY HAD SOLD THE GOODS MANUFACTURED FROM 2811 K GS GRANULES WITHOUT RECORDING THE SAME IN THE BOOKS OF ACCOUNT. ACCORDING TO THE AO THE ASSESSEE COULD NOT PROVE THAT 2811 KGS OF GRANU LES WERE IN FACT CONSUMED FOR LAMINATION AND HENCE, THE AO MADE THE ADDITION OF RS.1,50,234/-. 14. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND THE ASSESSEE FILED WRITTEN SUBMISSIONS AND DETAILS. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE FACTS VIDE ITS REPLY DA TED 26-2-2003, DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THAT THE A O HAS COMPARED THE QUANTITATIVE FIGURE OF RAW MATERIAL CONSUMPTION AS GIVEN IN THE BALANCE SHEET WITH THAT GIVEN IN THE TAX AUDIT REPORT. THE AO NOTED THAT RESPECTIVE CONSUMPTION OF RAW MATERIAL CONSUMPTION WERE 7,04,379 KGS ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 14 AND 7.01,566 KGS. AND ON THAT BASIS THE AO ARRIVED AT THE DIFFERENCE OF 2811 KGS. (7,04,379 7,01,568). THE AO THEN, WORKE D OUT THE POSSIBLE PRODUCTION FROM THE DIFFERENTIAL QUANTITY AT 3004.6 8 KGS (2811 KGS X 106.89%) AND ASSUMING SALE PRICE OF RS.50/- PER KG. THE AO ARRIVED AT THE TOTAL SALE VALUE OF SUCH QUANTITY AT RS.1,50,23 4/- (3004.68 KGS X RS.50/- PER KG.) AND MADE ADDITION OF RS.1,50,234/- BEING UNRECORDED SALE OF GOODS MANUFACTURED FROM 2811 KGS. OF RAW MA TERIALS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E COMPANY BROUGHT OUT IN ITS SUBMISSION BEFORE THE AO DATED 26-2-2003 THAT THE DIFFERENCE OF 2811 KGS WORKED OUT BY THE AO WAS ARTIFICIAL. TH E SUBMISSION IS REPRODUCED AS UNDER: I. DIFFERENCE OF 2811 KG. THE NOTES TO THE AUDITED ACCOUNTS FOR THE PREVIOUS YEAR RELEVANT TO A. Y. 1995-96 SHOWS CONSUMPTION OF RAW MATERIAL (GR ANUALS) AS UNDER: HDPE GRANUALS 704.379 MT. WHEREAS THE DETAILS GIVEN IN ANNEXURE VIII TO FORM 3 CD SHOW THE CONSUMPTION IN THE FOLLOWING MANNER: OP. STOCK KGS. PURCHASE KGS. TOTAL KGS. GIVEN FOR PRODUCTION KGS. CLOSING STOCK KGS. YIELD OF HDPE TAPE KGS. % YIELD WASTAGE KGS. 71745 682385 754130 701568 49751 631983 90.08 69585 ADD: USED FOR LAMINATION 2811 704379 FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE ASSESSE E COMPANY HAS USED 704379 KGS OF GRANUALS (O.E. 704.379 MT.). THU S, YOUR ASSUMPTION THAT PRODUCING OUT OF 2811 KGS. OF GRAUN ALS HAVE BEEN SOLD OUTSIDE THE BOOKS IS FAR FROM REALITY. THE CLO SING STOCK OF 49751 KGS. HAS BEEN ARRIVED AT AFTER REDUCING CONSU MPTION OF ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 15 704379 KGS. OF GRANUALS. THIS FACT LEAVES NO ROOM F OR ANY KIND OF ALLEGATION THAT THE ASSESSEE COMPANY SOLD THE GOODS MANUFACTURED FROM 2811 KS. OF GRANUALS WITHOUT RECORDING THE SAM E IN THE BOOKS OF ACCOUNTS. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT THE AO HAS THOROUGHLY VERIFIED THE EXCISE RECORD ON 27-2-2003, 10-3-2003, 11-3- 2003 AND 12-3-2003. IN SUPPORT OF THE ASSESSEES CL AIM THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THE EXCISE RECOR DS BEFORE THE LEARNED CIT(A) ALONG WITH COPY OF ANNEXURE IV MAINTAINED UN DER THE EXCISE RULE 57 F (2) WHICH WAS PRODUCED BEFORE THE AO WHICH S HOWS ISSUE OF 2811 KGS GRANULES FOR LAMINATION PURPOSE AND HENCE, BASI C ASSUMPTION OF THE AO FOR ADDITION OF RS.1,50,234/- IS THUS ERRONEOUS. IT WAS FURTHER SUBMITTED THAT TOTAL QUANTITY CONSUMED GIVEN IN THE BALANCE SHEET AT 704379 KGS HAS BEEN SEGREGATED INTO TWO PARTS IN TH E TAX AUDIT REPORT UNDER THE COLUMN GIVEN FOR PRODUCTION WHICH AGAIN AGGREGATES TO 704379 KGS. 15. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD DELETED THE AD DITION. HIS FINDINGS IN PARA 5.2 OF THE IMPUGNED ORDER ARE REPRODUCED AS UN DER: 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE A. R. OF THE APPELLANT CAREFULLY . I HAVE ALSO GONE THROUGH THE DETAILS FILED BEFORE ME BY THE A. R. AND THE OBSERVATIONS OF THE ASSESSING OFFICER FOR THE SAID ADDITION, IN THE ASSESSMENT ORDER. THERE IS SUFFICIENT FORCE IN THE CONTENTION PUT FORTH BY THE A. R. OF THE APPELLANT. IT IS SEEN THAT ACTUALLY THERE IS NO DIFFERENCE BETWEEN TAX AU DIT REPORT AND BALANCE SHEET. THE TOTAL QUANTITY CONSUMED GIVE N IN THE BALANCE SHEET IS AT 7,04,379 KGS. WHICH HAS BEEN SE GREGATED INTO TWO PARTS IN THE TAX AUDIT REPORT UNDER THE CO LUMN GIVEN FOR PRODUCTION ON THE SAME FIGURE. APART FROM 7,01 ,568 KGS. CONSUMED FOR PRODUCTION OF HDPE TAPE, THE APPELLANT COMPANY CONSUMED 2811 KGS. FOR LAMINATION. ON SCRUT INY OF THE BALANCE SHEET AND THE TAX AUDIT REPORT, I FIND NO ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 16 DISCREPANCY BETWEEN THE FIGURES. SO FAR AS A.O.S A RGUMENTS THAT THE ASSESSEE COMPANY HAD NOT ADDUCED ANY EVIDE NCE REGARDING USE OF RAW MATERIAL FOR LAMINATION, I FIN D VERY MUCH THERE IN THE EXCISE RECORDS SUBMITTED BEFORE THE A. O. WHICH HAVE NOT BEEN DOUBTED BY THE A. O. HAVING CONSIDERE D THE FACTS OF THE CASE THERE IS NO JUSTIFICATION FOR ADD ITION MADE BY THE ASSESSING OFFICER. THE ADDITION MADE BY THE A. O. OF RS.1, 50,234/- IS, THEREFORE DELETED. 16. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARN ED CIT(A) IN DELETING THE ADDITION. ON THE OTHER HAND, THE LEARNED COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT THE DISCREPANCY ALLEGED TO BE CLAIME D BY THE AO HAS BEEN EXPLAINED WHICH ON VERIFICATION HAS BEEN RIGHTLY AC CEPTED BY THE LEARNED CIT(A). HE HAS SUBMITTED THAT THERE IS NO DIFFERENC E BETWEEN TAX AUDIT REPORT AND THE BALANCE SHEET. THEREFORE, THE LEARNE D CIT(A) RIGHTLY DELETED THE ADDITION. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE AO ON THE BASIS OF AUDIT REPORT AND ACT UAL CONSUMPTION SHOWN BY THE ASSESSEE NOTED THAT THERE IS A DISCREP ANCY IN CONSUMPTION OF RAW MATERIAL. THE ASSESSEE FILED COMPLETE DETAIL S BEFORE THE AUTHORITIES BELOW AND EXPLAINED THAT THE AO HAS COMPARED THE QU ANTITATIVE FIGURES OF THE RAW MATERIALS AND CONSUMPTION AS GIVEN IN TH E BALANCE SHEET AND IN THE TAX AUDIT REPORT. THE ASSESSEE EXPLAINED BEF ORE THE LEARNED CIT(A) THAT THE DIFFERENCE WORKED OUT BY THE AO WAS ONLY A RTIFICIAL BECAUSE THE DIFFERENCE WAS ACTUALLY EXPLAINED. IT WAS SUBMITTED THAT VERIFICATION OF THE RECORD WOULD SHOW THAT THERE IS NO DIFFERENCE A ND SUCH ADDITION IS CLEARLY UNJUSTIFIED. THE LEARNED CIT(A) ON PROPER A PPRECIATION OF THE MATERIAL AND EXPLANATION FILED ON RECORD NOTED THAT ACTUALLY THERE IS NO DIFFERENCE BETWEEN THE TAX AUDIT REPORT AND THE BAL ANCE SHEET. THE TOTAL QUANTITY CONSUMPTION GIVEN IN THE BALANCE SHEET AT 704379 KGS. WHICH HAVE BEEN SEGREGATED INTO TWO PARTS IN THE AUDIT RE PORT UNDER THE COLUMN ITA NO.4298 AND 4547/AHD/2003 PRIYANKA CARBON & CHEMICAL IND. (P) LTD., AHMEDABAD 17 GIVEN FOR PRODUCTION OF THE SAME FIGURE. THE LEAR NED CIT(A) ON SCRUTINY OF THE BALANCE SHEET AND THE TAX AUDIT REPORT NOTED THAT THERE IS NO DISCREPANCY IN THE FIGURES. THE LEARNED CIT(A) ON P ROPER APPRECIATION OF THE FACTS AND MATERIAL ALSO NOTED THAT THE ASSESSEE FILED EXCISE RECORD AT THE ASSESSMENT STAGE WHICH HAS NOT BEEN DOUBTED AND THEREFORE, THERE IS NO JUSTIFICATION TO MAKE THE ADDITION ON ACCOUNT OF DIFFERENCE IN THE FIGURES. THE LEARNED DR HAS NOT POINTED OUT ANY INF IRMITY IN THE ORDER OF THE LEARNED CIT(A). WE FIND FROM THE MATERIAL ON RE CORD THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATE RIAL RIGHTLY CAME TO THE CONCLUSION THAT IN FACT THERE IS NO DIFFERENCE BETWEEN THE AUDIT REPORT AND THE BALANCE SHEET. THE DISCREPANCY POINTED OUT BY THE AO HAS BEEN RECONCILED BY THE ASSESSEE. THEREFORE, ADDITION HAS BEEN RIGHTLY DELETED BY THE LEARNED CIT(A). THERE IS NO MERIT IN THIS GR OUND OF APPEAL OF THE REVENUE. ISSUE NO.2 IS, THEREFORE, DECIDED AGAINST THE REVENUE. 18. NO OTHER POINT IS ARGUED OR PRESSED. 19. AS A RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED ON 30-07-2010 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 30-07-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMED ABAD