DCIT, Central Circle-13, V. Mohan Proteins Ltd.,

ITSSA 417/DEL/2003

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0810 (ITAT-DELHI)
• Duration Of Justice: 11 year(s) 9 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-05-2015
• Assessment Year: misc
• Appeal Filed On: 10-09-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Document seized; Additional evidence; Block assessment; Documents seized
• Section: 133A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C , NEW DELHI) BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.(SS). NO.417 /DEL/2003 BLOCK PERIOD : 1.4.1999 TO 14.09.2000 DCIT, CC-13, VS. MOHAN PROTEINS LTD., NEW DELHI 78/3, JANPATH, 2 ND FLOOR, NEW DELHI. GIR / PAN: (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RIS GILL, CIT DR RESPONDENT BY : SHRI C S AGGARWAL, ADV SHRI RAVI PRATAP MALL, ADV. DATE OF HEARING : 22.05.2015 DATE OF PRONOUNCEMENT :_ 10.06.2015 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD . CIT(A) DATED 25.06.2003. THE REVENUE HAD SOUGHT ADJOURNME NT IN THIS CASE. HOWEVER LD. SENIOR COUNSEL FOR THE ASSESSEE STRONGL Y OBJECTED TO THE ADJOURNMENT LETTER AND INVITED OUR ATTENTION TO THE ORDER SHEET ENTRIES AND SUBMITT4ED THAT REVENUE HAS BEEN TAKING ADJOURNMENT S UNNECESSARILY WHICH IS CAUSING GREAT HARM TO THE ASSESSEE. OUR SPECIFI C ATTENTION WAS INVITED TO ENTRY DATED 03.03.2015 AND IT WAS SUBMITTED THAT ON LAST OCCASION ALSO REVENUE HAD SOUGHT ADJOURNMENT AND HONBLE ITAT HAD IMPOSED A TOKEN ITA NO.417/DEL/2003 2 COST OF RS.1 AND, THEREFORE, IT WAS NOT FAIR ON THE PART OF BENCH TO ALLOW ADJOURNMENT AGAIN. 2. LD. D.R. WAS CONFRONTED WITH THESE FACTS. HE AG AIN PRAYED FOR A SHORT ADJOURNMENT BUT ON GOING THROUGH THE EARLIER HEARIN GS AS NOTED IN THE ORDER SHEET, WE FIND THAT REVENUE WAS CONTINUOUSLY SEEKIN G ADJOURNMENTS. IT IS SEEN THAT THE REVENUE WAS GIVEN LAST OPPORTUNITY VI DE ORDER SHEET ENTRY DATED 26.05.2014. AGAIN ON 02.03.2015, THE ADJOURNMENT W AS GRANTED ON THE WRITTEN REQUEST OF LD. D.R. AND AGAIN ON 03.03.2015 AFTER IMPOSING A TOKEN COST ON REVENUE, THE ADJOURNMENT WAS GRANTED FOR HE ARING ON 22.05.2015, THEREFORE, REQUEST OF REVENUE TO SEEK ADJOURNMENT A GAIN WAS NOT JUSTIFIED. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, THE ADJOU RNMENT APPLICATION OF REVENUE WAS REJECTED AND LD. D.R. WAS ASKED TO ARGU E THE CASE ON MERITS. THEREFORE, LD. D.R. INVITED OUR ATTENTION TO GROUND S OF APPEAL AND SUBMITTED THAT THE REVENUE HAS TAKEN AS MANY AS 9 GROUNDS OF APPEAL AGAINST VARIOUS DELETIONS MADE BY LD. CIT(A) IN RESPECT OF VARIOUS ADDITIONS MADE BY A.O. FOR THE SAKE OF CONVENIENCE, GROUNDS OF APPEAL TAKE N BY REVENUE ARE REPRODUCED BELOW:- 1.. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,75,000;- MAD E ON ACCOUNT OF CASH SEIZED FROM SHRI GHANSHYAM SHARMA BY IGNORING THE FAD THAT IN. RITE OF SUFFICIENT OPPORTUNITIES TO THE ASSESSEE TO EXPLAIN THE SEIZED CASH THE ASSESSEE FAILED TO EXPLAIN THE NATURE OF C ASH' II) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD, CIT(A) ERRED IN DELETING THE DIFFERENCE OF RS. 1,04 ,250/- IN THE ACCOUNT OF SHRI SANJEEV GOYAL, APPEARING THE BOOKS OF ASSES SEE COMPANY AS FOUND FROM HIS RESIDENCE AND AS PER- RECORDS OF TI LE COMPANY III) 'ON THE FACTS AND CIRCUMSTANCES OF TILE CASE T HE I AI. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 15,70,373/- M ADE ON ACCOUNT OF S<1K: OF SPARES OUTSIDE THE HOOKS OF ACCOUNT .' ITA NO.417/DEL/2003 3 IV) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,42,4 0,3B/- MADE ON ACCOUNT OF UNDISCLOSED INCOME BY TREATING THE STOCK OF SPARES HAVING BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNT' V) 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DE1ET1TLG THE ADDITION OF RS.4,22,717/- MA DE ON ACCOUTN OF UNDISCLOSED INCOME OF SALE OF PACKING MATERIAL OUTS IDE THE BOOKS OF ACCOUNT. VI. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.L,70,81,755/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK OF FINISHED GOODS F OUND IN EXCESS', (VII.) 'ON THE FACT' AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A) ERRED IN DELETING V THE ADDITION OF RS.50,84,400/- MADE ON ACCOUNT OF UNDISCLOSED INCOME ON ACCOUNT OF SALE OF SKIMMED MI LK POWDER OUTSIDE THE BOOKS OF ACCOUNT, ' VIII). 'ON THE FACTO AND IN THE CIRCUMSTANCES OF T HE LD.GTI(A) ERRED IN DELETING THE ADDITION OF RS.37,05,240/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE STOCK OF SKIMMED MILK POWDER. IX. 'ON THE FADS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD.CIT(A) ERRED IN DELETING ITS ADDITION OF RS.48, 53,675/- M ADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK OF WORK IN PROGRESS . ' 3. THE GROUND-WISE ARGUMENTS ADVANCED BY LD. A.R. A RE NOTED AS UNDER: 4. LD. D.R. ARGUED UPON GROUND NO.1 AND SUBMITTED T HAT DURING SEARCH, CASH OF RS.1.75 LACS WAS SEIZED FROM SHRI GHANSHYAM SHARMA FOR WHICH NO SATISFACTORY EXPLANATION WAS SUBMITTED BY ASSESSEE. HE SUBMITTED THAT IN ANSWER TO QUESTION NO.2 SHRI GHANSHYAM SHARMA REPLI ES THAT HE HAD COME TO DELIVER CASH OF RS.1.75 LACS TO SHRI R. L. GOEL WHEREAS SHRI PRADEEP GM(F) WHO IS ON RECORD COULD NOT RECOGNIZE MR. GHA NSHYAM AND, THEREFORE, THE AMOUNT OFR.1.75 LACS REMAINED UNEXPL AINED. 5. AS REGARDS GROUND NO.2, LD. D.R. SUBMITTED THAT DURING SEARCH PROCEEDINGS, ANNEXURE A-4 WAS FOUND WHICH CONTAINED A LEDGER ACCOUNT OF ITA NO.417/DEL/2003 4 SHRI SANJEEV GOEL IN THE BOOKS OF ACCOUNT OF ASSESS EE FOR THE PERIOD 1.7.2000 TO 12.09.2000 DURING THE BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY WAS ASKED TO RECONCILE THE ABOVE D OCUMENTS WITH THE BOOKS OF ACCOUNT, WHICH COULD NOT BE EXPLAINED SATI SFACTORILY AND, THEREFORE, THE ADDITION WAS RIGHTLY MADE BY A.O. 6. COMING TO GROUND NO.3, THE LD. D.R. SUBMITTED TH AT DURING SEARCH AND SEIZURE OPERATION, THE SEARCH TEAM HAD FOUND A DIFFERENCE OF RS.15,70,373/- IN THE AMOUNT OF PAYER AS PER BOOKS OF ACCOUNT OF THE ASSESSEE AND AS PER FINAL INVENTORY OF STORES AND S PARES AND THE DIFFERENCE WAS NOT EXPLAINED. 7. LD. D.R. IN THIS RESPECT INVITED OUR ATTENTION T O PARA 8(3) OF ASSESSMENT ORDER AND SUBMITTED THAT THE STOCK PHYSI CALLY FOUND WAS LESS AS COMPARED TO THAT REFLECTED IN THE BOOKS OF ACCOUNT AND THEREFORE, THE DIFFERENCE OF AMOUNT WAS DEEMED TO HAVE BEEN SOLD O UT OF BOOKS AND, THEREFORE, THE A.O. HAD RIGHTLY MADE THE ADDITION. 8. REGARDING GROUND NO.4, LD. D.R. INVITED OUR ATTE NTION TO PARA 8(V) OF THE ASSESSMENT ORDER AND SUBMITTED THAT HIS ADDITIO N WAS ALSO MADE AS THERE WAS DIFFERENCE BETWEEN PHYSICAL STOCK AND STOCK AS PER BOOKS OF ACCOUNTS AND, THEREFORE, THE A.O. HAS RIGHTLY HELD THE DIFFE RENCE OF STOCK AS SALES MADE OUTSIDE BOOKS OF ACCOUNT. SIMILAR ARGUMENTS WERE A DVANCED IN RESPECT OF GROUND NO.5 WHEREIN THE A.O. HAD MADE ADDITION ON A CCOUNT OF SALES OUTSIDE BOOKS OF ACCOUNT OF PACKING MATERIAL. 9. AS REGARDS GROUND NO.6, LD. D.R. SUBMITTED THAT THERE WAS DIFFERENCE IN PHYSICAL STOCK OF FINISHED GOODS WITH THE COMPUT ER GENERATED LIST OF FINISHED GOODS AND A.O. HAD NOTICED THE DIFFERENCE IN VARIOUS ITEMS AS NOTED IN ASSESSMENT ORDER AT PAGE 14 WHICH THE ASSESSEE W AS NOT ABLE TO EXPLAIN. ITA NO.417/DEL/2003 5 THEREFORE, THE A.O. HAD RIGHTLY MADE THE ADDITION. SIMILAR ARGUMENTS WERE ADVANCED IN RESPECT OF GROUND NO.7, 8 & 9. LD. D.R . HEAVILY RELIED UPON THE ORDER OF A.O. AND SUBMITTED THAT LD. CIT(A) HAS NOT CONSIDERED THE FACTS AS NOTED IN THE ASSESSMENT ORDER. 10. LD. A.R. ON THE OTHER HAND INVITED OUR ATTENTIO N TO REMAND REPORT DATED 12.05.2003 PLACED IN PAPER BOOK PAGE 42-45 AN D SUBMITTED THAT DURING PROCEEDINGS BEFORE LD. CIT(A), DETAILED SUBMISSION S IN RESPECT OF EACH AND EVERY ITEM OF RAW MATERIAL, FINISHED GOODS, PACKING MATERIAL ETC. WAS FURNISHED AND ALSO EXPLANATIONS WERE SUBMITTED FOR OTHER ADDITIONS. LD. CIT(A) HADFORWARDED THE SUBMISSIONS OF ASSESSEE TO A.O. FOR HIS REMAND REPORT AND THE A.O. IN HIS REMAND REPORT, HAS NOT P OINTED OUT ANY DISCREPANCY AND RATHER HAS ACCEPTED THAT THE NECESS ARY RECONCILIATION HAS BEEN FILED BY ASSESSEE AND, THEREFORE, LD. CIT(A), AFTER EXAMINING AND EVALUATING SUBMISSIONS AND ON THE BASIS OF REMAND R EPORT HAD ALLOWED RELIEF TO THE ASSESSEE. HE SUBMITTED THAT LD. D.R. COULD N OT CONTROVERT ANY OF THE FINDING OF LD. CIT(A) AND, THEREFORE, THE ORDER OF LD. CIT(A) IS LIABLE TO BE UPHELD. 11. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE REVENUE HAD TAKEN AN A DDITIONAL GROUND OF APPEAL BY WHICH IT HAD TAKEN THE GROUND THAT THERE WAS VIOLATION OF RULE 46A WHILE ADMITTING ADDITIONAL EVIDENCE. WE FIND THAT T HE ADDITIONAL GROUND OF APPEAL STANDS DISPOSED OF BY TRIBUNAL (VIDE INTERIM ) ORDER DATED 30.01.2009 AND HONBLE TRIBUNAL HAS NOT ACCEPTED THE APPLICATI ON FOR ACCEPTANCE OF ADDITIONAL GROUND OF APPEAL. 12. WE FIND THAT THE A.O. IN HIS REMAND REPORT DATE D 12.05.2003 HAS COVERED EACH GROUND OF APPEAL TAKEN BEFORE LD. CIT( A). IN THE REMAND ITA NO.417/DEL/2003 6 REPORT HE HAS ADMITTED THAT NECESSARY DETAILS HAS B EEN FURNISHED AND HAS NOT ADVANCED ANY COMMENTS ON THE SUBMISSIONS WHICH IMPL IES THAT THE A.O. HIMSELF HAD NO OBJECTION TO THE SUBMISSIONS AND HE WAS SATISFIED WITH THE SUBMISSIONS OF ASSESSEE. FOR THE SAKE OF CONVENIEN CE, REMAND REPORT DATED 12.05.2013 IS REPRODUCED BELOW: REMAND REPORT IN THE CASE OF M/S MAHAAN PROTEINS LIMITED FOR THE BLOCK PERIOD FROM 01.04.1990 TO 14.09.2000 - APPEAL NO. 20312002-03 - REG. SIR, KINDLY REFER TO YOUR OFFICE LETTER REGARDING REMAND REPORT IN THE ABOVE CAPTIONED CASE. PARAWISE COMMENTS ON THE WRITTEN SUBMISSIONS MADE B Y THE ASSESSEE COMPANY BEFORE YOUR GOOD SELF ARE AS UNDER: GROUND NO.1: A SUM OF RS. 1,75,000/- WAS SEIZED ON 14.09.2000 FROM SH. GHANSHYAM SHARMA OF M/S CONTINENTAL MILKOSE IND IA LTD., WHO CAME TO THE OFFICE OF M/S MAHAAN PROTEINS LTD. (MPL ) WHILE SEARCH ACTION WAS GOING ON. AS THE ASSESSEE FAILED TO PROV E THAT THIS AMOUNT WAS ADVANCE MONEY AGAINST ORDER OF 5 MT OF LACTOSE PLACED BY CONTINENTAL MILKOSE INDIA LTD., THE SAID AMOUNT WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF SA LES OUTSIDE BOOKS OF ACCOUNT. 'IN THEIR STATEMENTS RECORDED DURING SU RVEY OPERATIONS U/S 133A OF THE I.TAX ACT, 1961 ON 14.09.2000 AT THE PR EMISES OF CONTINENTAL MILKOSE INDIA LTD., SH. DEEPAK AGGARWAL . EXE. DIRECTOR AND SH. ANUPAM SAXENA, DY. MANAGER (PROCUREMENT) AD MITTED THAT THIS MONEY WAS SENT TO MPL AS ADVANCE AGAINST ORDER FOR SUPPLY OF 5 MT OF LACTOSE. BUT SH. PRADEEP NARANG, GENERAL MANA GER (FINANCE) O: MP~ COULD NOT RECOGNIZE SH. GHANSHYAM SHARMA ,OF CONTINENTAL MILKOSE INDIA LTD. DURING, SEARCH OPERATION. ACCORD INGLY A SUM OF RS. 1,7 5,000/- WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE HAS NOW FURNISHED AN AFFIDAVIT FROM SH. RO SHAN LAL GOYAL, GENERA! MANAGER (MARKETING) STATING THEREIN THAT OR DER FOR SUPPLY OF 5 MT OF LACTOSE WAS PLACED BY SH. ANUPAM SAXENA OF CONTINENTAL ITA NO.417/DEL/2003 7 MILKOSE INDIA LTD. ON 13.09.2000 ON TELEPHONE AND S H. GHANSHYARN SHARMA HAS BROUGHT RS. 1,75.000/- AS ADVANCE FOR TH IS ORDER. GROUND NO.2: ASSESSEE HAS CONTESTED ADDITION OF RS. 1,04,250/- AS UNDISCLOSED INCOME. PERUSAL OF SEIZED DOCUMENTS MAR KED AS PAGE 1 OF ANNEXURE A-4 (OF PANCHNAMA DRAWN AT THE RESIDENCE O F SH. SANJEEV GOYAL AND LEDGER ACCOUNT OF SH. SANJEEV GOYAL APPEA RING IN ANNEXURE A-57 (PRINT OUT OF ANNEXURE A-27 SEIZED FR OM FACTORY PREMISES OF MPL AT KOSI) SHOWED THAT A SUM OF RS. 1 LAC AND RS. 4,250/- WAS PAID TO SH. SANJEEV GOYAL. BUT THIS PAY MENT IS NOT REFLECTED IN THE ABOVE REFERRED ANNEXURE .A-4. AS T HE ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY, RS. 1,04,250/- WAS ADD ED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE HAS NOW SUBMIT TED THAT PAGE 1 OF ANNEXURE A-4 CONTAINED ENTRIES UPTO 06.09.2000 ONL Y WHEREAS I ANNEXURE A-57 CONTAINED ENTRIES UPTO 13.09.2000. GROUND NO.3: THE ASSESSEE HAS CONTESTED THE ADDITIO N OF RS. 35,000/- AS UNEXPLAINED INVESTMENT IN COLOR TV. THIS ADDITIO N WAS MADE IN THE HANDS OF MPL AS THE DELIVERY CHALLAN AND RECEIPT AR E IN THE NAME OF MPL C/O SH. SANJEEV GOEL THE ASSESSEE HAS NOW MADE SUBMISSION THAT THE SAID TRANSACTION STANDS EXPLAINED IN THE H ANDS OF BLOCK ASSESSMENT OF SH. SANJEEV GOYAL AND FILED COPY OF C ASE FLOW STATEMENT OF SH. SANJECV GOYAL ALONG WITH COPY OF ASSESSMENT ORDER FOR THE BLOCK PERIOD. GROUND NO.4: THE ASSESSEE HAS OBJECTED TO THE ADDIT ION OF RS. 54,000/- AS UNEXPLAINED EXPENDITURE. THE ADDITION W AS MADE AS THE ASSESSEE COULD NOT PROVE THAT THIS AMOUNT WAS PAID OUT OF RECEIPT OF RS. 56,900/- DECLARED AS UNDISCLOSED INCOME IN THE BLOCK RETURN. GROUND NO. 5(A) : THE ASSESSEE CONTESTED THE ADDITI ON OF RS.15,70,373/- ON ACCOUNT OF VALUE OF STOCK OF SPAR ES BEING TREATED AS SALE OUTSIDE BOOKS OF ACCOUNT. DURING SEARCH OPERAT ION AT THE FACTORY PREMISES AT KOSI, VALUE OF STOCK OF SPARES PHYSICAL LY FOUND AND INVENTORIED WAS RS. 98,80,700/- AND VALUE OF THIS S TOCK AS PER COMPUTERIZED LIST (LIST III) WAS RS. L , 14,51 ,073 /-. THE EXPLANATION FORWARDED BY THE ASSESSEE THAT THE DIFFERENCE MAY B E DUE TO THE REASON THAT SPARES THAT ARE ISSUED AFTER 6 P.M. CAN BE ENT ERED ONLY ON THE NEXT MORNING. ASSESSEE ALSO FAILED TO PRODUCE THE DOCUME NTARY EVIDENCE ITA NO.417/DEL/2003 8 DURING ASSESSMENT PROCEEDINGS. ASSESSEE HAS NOW FIL ED COPIES OF REQUISITION SLIPS EVIDENCING THE ISSUE OF SPARES. GROUND NO. 5(B): THE ASSESSEE HAS ALSO CONTESTED TH E ADDITION OF RS.1,42,40,373/- ON ACCOUNT OF DIFFERENCE IN THE VA LUE OF STOCK ITEMS TAKEN AND THE STOCK OF SPARES PHYSICALLY FOUND. ASS ESSEE HAS SUBMITTED THAT THERE ARE ABOUT 2800 ITEMS OF STOCK OF SPARES AT A GIVEN TIME BUT SEARCH PARTY LISTED ONLY 288 ITEMS AND EVEN SOME OF THESE ITEMS WERE TAKEN/COUNTED AS A LOT BUT THE ASSESSEE'S EXPLANATI ON WAS NOT ACCEPTED AS THOUGH THE5~PARTY PREPARED THE INVENTORY, BUT TH E' REPRESENTATIVES OF THE ASSESSEE ASSISTED THEM. SH. JITEDER KUMAR YA DAV, ASSTT. STORES OFFICER OF MPL WHO SIGNED THE INVENTORY WOULD BE AW ARE OF THE VALUE OF VARIOUS STORES ITEMS. THE ASSESSEE HAS NOW FILED AFFIDAVIT OFSH. D.S. NEGI, DY. MANAGER (STORES) STATING THAT SH. PANKAJ KUMAR SAINI, WHO HAS ASSISTED THE SEARCH PARTY IN PREPARATION OF THE INVENTORY OF SPARES, JOB WAS PRIMARILY TO HANDLE STORE ITEMS. THE ASSESS EE HAS ALSO NOW RELIED ON THE COMPARATIVE CHART OF STOCK TAKING REP ORT AS ON 31.03.1998, 31.03.19J99 AND 31.03.2000, WHICH WAS S EIZED AS ANNEXURE A-I7 TO A-19 OF MPL AT KOSI. THESE CHARTS SHOW THAT ABOUT 3000 ITEMS OF STOCK OF SPARES WERE AVAILABLE AT THE END OF EACH PERIOD REFERRED ABOVE. THE ASSESSEE HAS NOW FILED ITEM W ISE QUANTITATIVE RECONCILIATION OF INDIVIDUAL STOCK ITEMS FOR THE PE RIOD 01.04.2000 TO 31.03.2001. THE BALANCE SHEET OF THE ASSESSEE COMPA NY REFLECTS CLOSING STOCK OF INVENTORY OF SPARES ETC. AT THE EN D OF EACH YEAR. GROUND NO. (C) : THE ASSESSEE HAS ALSO CONTESTED TH E ADDITION OF RS.4,22,717/- ON ACCOUNT OF PACKING MATERIAL. ASSES SEE HAS SUBMITTED THAT OLD/SCRAP MATERIAL AMOUNTING TO RS. 2,06,805/- ; PACKING MATERIAL VALUED AT RS. 2,00,531/- LYING IN FUMIGATION CHAMBE R AND PETTY PACKING MATERIAL VALUED AT RS. 15,3811- LYING AT PA CKING ROOM WAS NOT INVENTORIZED AT THE TIME OF SEARCH. THIS EXPLAN ATION OF THE ASSESSEE WAS NOT ACCEPTED. GROUND NO. (D) : NO COMMENTS. GROUND NO.6: THE ASSESSEE HAS OBJECTED TO THE ADDIT ION OF RS. 32,440/- ON ACCOUNT OF 'QUANTITY IN PRODUCTION STOR E'. THE ADDITION WAS MADE AS PHYSICALLY THE QUANTITY OF GHEE WAS FOU ND LESS THAN THE QUANTITY AS PER STOCK RECORD AND THE ASSESSEE FAILE D TO EXPLAIN THIS DISCREPANCY. THE ASSESSEE HAS NOW SUBMITTED THAT NO RMALLY ON REQUEST ITA NO.417/DEL/2003 9 GHEE IS ISSUED TO THE VILLAGERS, WHO SUPPLY MILK TO THE ASSESSEE AND THE ACCOUNT IS SETTLED LATER ON FROM THE PAYMENT TO BE MADE TO THESE VILLAGERS. DOCUMENTARY EVIDENCE TO THIS EFFECT HAS NOW ALSO BEEN FILED. GROUND NO.7: THE ASSESSEE HAS CONTESTED THE ADDITIO N OF RS. 1,94,12,755/- (REDUCED TO RS. 1,70,81,7555/- U/S 15 4) ON ACCOUNT OF DIFFERENCE IN STOCK PHYSICALLY FOUND ON THE DATE OF SEARCH AND AS PER STOCK REGISTER OF THE ASSESSEE. ASSESSEE'S CONTENTI ON, THAT THIS IS DUE TO THE RETURN OF DEFECTIVE GOODS FROM CUSTOMERS AND/OR RETURN FROM STORE RECORD, WAS NOT ACCEPTED AS SOME OF THE ITEMS RETUR NED WERE AS EARLY AS IN THE MONTH OF FEBRUARY, 1998. THE ASSESSEE HAS NOW FILED EVIDENCE REGARDING GOODS RETURNED. THE ASSESSEE HAS ALSO SUBMITTED THAT THE STOCK IN P RODUCTION WAS RETURNED FINISHED GOODS WHICH REQUIRE SOME FURTHER PROCESSING. STOCK POSITION AS ON 31.03.2000 WAS ALREADY FILED DURING ASSESSMENT PROCEEDINGS. STOCK POSITION FOR THE PERIOD ENDING 3 1.03.1999 AND 31.03.2001 HAS NOW BEEN FILED WHICH CONTAINS SEPARA TE HEADS FOR FINISHED GOODS AND STOCK IN PRODUCTION AND THAT STO CK AT PRODUCTION IS REGULARLY VALUED FOR THE PURPOSE OF VALUING TOTAL S TOCK AS REFLECTED IN THE BALANCE SHEET. GROUND NO.8: THE ASSESSEE HAS CONTESTED THE ADDITIO N OF RS. 99,223/- (REDUCED TO RS. 49,993/- U/S 154) ON ACCOUNT OF SAL E OF PACKING MATERIAL OUTSIDE BOOKS OF ACCOUNT.. THIS ADDITION W AS MADE AS THERE WAS DIFFERENCE OF MATERIAL PHYSICALLY FOUND DURING SEARCH AND AS PER STOCK RECORD OF THE ASSESSEE. ASSESSEE HAS NOW FURN ISHED COPIES OF STOCK REQUISITION SLIPS WITH THE SUBMISSION THAT TH E MATERIAL ISSUED ON THE INTERVENING NIGHT OF 13.09.2000 AND 14.09.2000 COULD HAVE BEEN ENTERED ONLY NEXT DAY I.E. 14.09.2000. GROUND NO.9: THE ASSESSEE HAS CONTESTED THE ADDITIO N OF RS. 29,410/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PACKING MAT ERIAL (PLASTIC FILM). THIS ADDITION WAS MADE AS THE ASSESSEE COULD NOT FURNISH DOCUMENTARY EVIDENCE TO HIS SUBMISSION THAT WEIGHT PER BOX HAS BEEN TAKEN AT 20 KG. PER BOX, WHEREAS IT VARIES 15 KG. T O 22 KG. PER BOX. GROUND NO. 10 & 11 : THE ASSESSEE HAS ALSO CONTESTE D THE ADDITION OF RS. 50,84,400/- ON ACCOUNT OF SALE OF RAW MATERIAL (SMP) OUTSIDE BOOKS OF ACCOUNT AND RS. 37,05,240/- BEING UNEXPLAI NED INVESTMENT ITA NO.417/DEL/2003 10 DUE TO EXCESS STOCK. ASSESSEE'S EXPLANATION THAT SO ME OF THE RAW MATERIAL WAS TRANSFERRED TO PRODUCTION PROCESS AND THE STOCK OF RAW MATERIAL IS TAKEN BY WEIGHT AND NOT BY THE SIZE OF PACKING, WAS NOT ACCEPTED. THE ASSESSEE HAS NOW FURNISHED COPIES OF REQUISITION SLIPS FOR THE ISSUE OF RAW MATERIAL. GROUND NO. 12 : THE ASSESSEE HAS CONTESTED ADDITION OF RS. 48,53,675/- ON ACCOUNT OF STOCK OF WORK IN PROGRESS FOUND AT THE TIME OF SEARCH OPERATION. THE ADDITION WAS MADE AS NO ST OCK REGISTER WAS MAINTAINED FOR THE MATERIALS USED FOR WORK IN PROGR ESS. HOWEVER, INVENTORY OF CONTENTS OF VARIOUS TANKS THAT WERE IN USE IN PRODUCTION PROCESS WAS DRAWN AND VALUED AT RS. 48,53,675/- ON APPROXIMATE BASIS. ASSESSEE HAS SUBMITTED THAT MILK PURCHASED O N 12.09.2000 AND 13.09.2000 WAS 4.85 LAC LITRES WORTH RS. 46.07 LAC, 33060 KG. OF SMP WORTH RS. 18.50 LACS AND 10400 KG. OF MELTED BUTTER WORTH RS. 11 LACS WAS IN THE PRODUCTION PROCESS. TO SUBSTANTIATE THIS, THE ASSESSEE HAS NOW FILED REQUISITION SI1PS FOR SMP AND MELTED BUTTER. GROUND O. 13: THIS GROUND IS OF GENERAL NATURE AND NO COMMENTS ARE OFFERED. YOURS FAITHFULLY, (P.K. SINGH), ASSTT. COMMISSIONER OF I. TAX CENTRAL CIRCLE - 13, NEW DELHI 12. KEEPING IN VIEW THE ABOVE REMAND REPORT, LD. CI T(A) HAS DELETED THE ADDITIONS BY HOLDING AS UNDER: GROUND NO.1 : 5. I HAVE CONSIDERED THE FACTS OF T HE CASE. THERE IS NO DISPUTE THAT SHRI DEEPAK AGGARWAL, DIRECTOR OF MIS CONTINENTAL MILKOSE INDIA LTD HAD ACCEPTED THE FACT OF HAVING S ENT THE CASH OF RS.1,75,000/ - TO THE ASSESSEE COMPANY THROUGH SHRI GHANSHYAM SHARMA. T E SOURCE OF THE AMOUNT OF RS.1,75,000/- H AS ALSO BEEN EXPLAINED BY STATEMENT OF SHRI DEEPAK AGGARWAL REC ORDED THE COURSE OF SURVEY. AS SUCH THE OWNERSHIP OF THE CASH RECOVE RED FROM SHRI GHANSHYAM SHARMA WAS CLEARLY NOT THAT OF THE APPELL ANT COMPANY. ITA NO.417/DEL/2003 11 THE A.O. HAS ADDED THE AMOUNT ON THE GROUND THAT TH E AMOUNT IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. AS EXPLAINED BY THE APPELLANT, THE AMOUNT IS NOT REFLECTED IN ITS BOOKS AS THE MONEY WAS NOT RECEIVED BY THE COMPANY AND THE PROPOSED SALE N EVER TOOK PLACE. IN THESE CIRCUMSTANCES OF THE CASE, THE EXPLANATION FURNISHED BY THE APPELLANT IS REASONABLE. AS SUCH THE ADDITION OF RS .1,75,000/- IS DELETED. GROUND NO.2: 7. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES RELATING TO THE ADDITION MADE BY THE A.O. THE APPELLANT'S CONTENTIO N THAT THE ENTRIES ON PAGE-L OF ANNEXURE A-4 REPRESENTED THE POSITION UP TO 6/9/2000 WHEREAS THE IMPREST PAYMENT OF RS.L,00,000/- WAS MA DE ON 8/9/2000 AND IMPREST PAYMENT OF RS.4250/- WAS MADE ON 12/9/2 000, I.E., SUBSEQUENTLY, AS PER ANNEXURE A-57 SEIZED FROM THE ASSESSEE'S FACTORY AT KOSI KALAN, IS REASONABLE AND SATISFACTORY. THE RE IS NO EVIDENCE ON RECORD TO INDICATE THAT THE PAGE-L , ANNEXURE A-4 C ONTAINED THE UP TO DATE ENTRIES OF THE IMPREST ACCOUNT OF SHRI SANJEEV GOYAL WITH THE COMPANY. THERE IS BOUND TO BE DIFFERENCE IN THE TWO RECORDS IF THE PERIOD TO WHICH EACH RELATES IS DIFFERENT FROM EACH OTHER. THE ADDITION MADE BY THE A.O. IS ON INSUFFICIENT MATERIAL AND BA SIS AND THE DISCREPANCY HAVING BEEN EXPLAINED THE ADDITION OF R S.L,04,250/- IS DELETED. GROUND NO.3: 13. I HAVE CAREFULLY PERUSED THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND THE SUBMISSIONS AND DOCUMENTS FURNISHED B Y THE APPELLANT. FROM THE DETAILS GIVEN IN THE PRECEDING PARAGRAPHS, IT HAS BEEN NOTED ITA NO.417/DEL/2003 12 THAT THE APPELLANT HAS RECONCILED THE ALLEGED SHORT AGE/EXCESS IN THE STOCK OF SPARE PARTS WHICH HAS BEEN NARRATED AT PAG E-L0 OF THE ASSESSMENT ORDER. IN VIEW OF THE DETAILED EXPLANATI ON FURNISHED BY THE ASSESSEE, IT IS CLEAR THAT IN RESPECT OF AFORESAID ITEMS MENTIONED IN THE ASSESSMENT ORDER, THERE CANNOT BE ANY QUESTION OF A NY DISCREPANCY IN STOCK. THE APPELLANT'S CONTENTION THAT THE QUANTITY AND VALUE OF SPARE PARTS ISSUED ON 13.9.2000/14.9.2000 FOR USE IN THE PRODUCTION PROCESS WAS REASONABLE AND IN LINE WITH THE AVERAGE DAILY C ONSUMPTION OF SPARE PARTS THROUGHOUT THE YEAR HAS ALSO FORCE. HEN CE, MERELY ON THE BASIS OF SURMISES, IT CANNOT BE SAID THAT THE CLAIM OF THE APPELLANT REGARDING QUANTITY OF SPARE PARTS USED ON 13/14.9.2 000 WAS INCORRECT OR MANIPULATED. THE POSITION APPEARING FROM THE BOO KS OF ACCOUNTS OF THE ASSESSEE ITSELF HAS TO BE KEPT IN VIEW WHILE JU DGING THE ISSUE. ACCORDINGLY, IT IS HELD THAT THE FINDING OF THE A.O . THAT SPARE PARTS VALUED AT RS.15,70,373/- HAD BEEN SOLD OUTSIDE THE BOOKS IS BASED ONLY ON PRESUMPTION, WITHOUT ANY CONCRETE EVIDENCE. I AL SO FIND JUSTIFICATION IN THE APPELLANTS CONTENTION THAT TH E SPARE PARTS COULD NOT HAVE BEEN SOLD AS SUCH, AS THEY WOULD BE OF LIT TLE VALUE TO OUTSIDERS APART FROM THE COMPETITORS. NO EVIDENCE H AS ALSO BEEN FOUND DURING THE SEARCH TO INDICATE ANY SUPPRESSION OF SA LES, SPECIFICALLY OF SPARE PARTS. THE ACTUAL RATE OF INDIVIDUAL ITEMS OF SPARE PARTS IS SUPPORTED BY THE BOOKS OF ACCOUNTS AND VOUCHERS KEP T BY THE APPELLANT. IN THESE CIRCUMSTANCES, THE ADDITION OF RS.15,70,373/- IS UNJUSTIFIED AND THE SAME IS DELETED. GROUND NO.4: ITA NO.417/DEL/2003 13 15. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES , RELATING TO THE ADDITION MADE IN THE ASSESSMENT. I HAVE ALSO PERUSE D THE INVENTORY PREPARED AT THE TIME OF SEARCH. THE APPELLANT'S CON TENTION THAT APPROXIMATELY 2800 ITEMS WERE AVAILABLE IN STOCK AS PER' LIST-III, WHICH FORMS PART OF SEIZED RECORD CANNOT BE CONSIDE RED AS INCORRECT. HOWEVER, IN THE INVENTORY PREPARED DURING THE SEARC H, THE ITEMS OF SPARES LISTED ARE 288 ONLY. THIS SHOWS THAT THE ENT IRE QUANTITY OF SPARE 'PARTS COULD NOT BE INCORPORATED INTO THE INVENTORY . IT IS ALSO NOTED THAT THE RATES LISTED IN THE INVENTORY ARE APPROXIMATE A ND APPEAR IN ROUND FIGURES. THIS SHOWS THAT THE RATES AND VALUE ADOPTE D IN THE INVENTORY CANNOT BE RELIED UPON, PARTICULARLY WHEN THE ASSESS EE HAS MAINTAINED DETAILED RECORD OF SPARE PARTS IN LIST- III AND THE RATE OF ITEMS IS VERIFIABLE FROM THE PURCHASE DOCUMENTS. THE ARGUMEN TS GIVEN BY THE A.O. FOR MAKING THE ADDITION ARE GENERAL IN NATURE AND NO SPECIFIC DISCREPANCIES IN EXPLANATION HAVE BEEN POINTED OUT. THERE IS ALSO NO INCRIMINATING EVIDENCE FOUND DURING THE SEARCH REGA RDING SALE OF SPARE PARTS OUTSIDE THE BOOKS OF ACCOUNT. THE APPELLANT I S ALSO CORRECT IN POINTING OUT THAT THE SPARE PARTS USED IN THE PRODU CTION PROCESS WOULD NOT BE OF ANY VALUE TO OUTSIDE PARTIES AS THESE HAV E SPECIFIC ENDUSE. THE SPARE PARTS ARE SPECIFIC TO THE PRODUCTION PROC ESS AND ARE NOT GENERALLY CAPABLE OF BEING SOLD AS SUCH IN THE MARK ET. CONSIDERING THESE FACTS OF THE CASE, I AM OF THE OPINION THAT T HE ADDITION OF RS.L,42,40,373/- HAS NOT BEEN MADE ON ANY PROPER OR STRONG BASIS, AND THE EXPLANATION OF THE APPELLANT HAS NOT BEEN CONTR OVERTED. ACCORDINGLY, THE AFORESAID ADDITION OF RS.1,42,40,3 73/- IS DELETED. GROUND NO.5: ITA NO.417/DEL/2003 14 17. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES RELATING TO THE ADDITION MADE. THE SUBMISSIONS OF THE APPELLANT IN RELATION TO THE STOCK LYING IN THE FUMIGATION CHAMBER HAVE BEEN CON SIDERED AND IT IS NOTED THAT THERE IS NO MENTION IN THE SEARCH INVENT ORY OF ANY MATERIAL LYING IN THE FUMIGATION CHAMBER. THE CONTENTION OF THE ASSESSEE REGARDING STOCK OF RS.2,06,865/- HAVING NOT BEEN CO NSIDERED BEING OLD/SCRAP MATERIAL CANNOT ALSO BE DISCARD THE CONTE NTIONS REGARDING PACKING MATERIAL LYING IN THE PACKING ROOM ARE ALSO REASONABLE. I HAVE ALSO CONSIDERED THE SUBMISSION OF THE APPELLANT THA T THERE IS NO QUESTION OF ANY SALE OF EVEN REJECTED PACKING MATER IAL, AS THE SAME CONTAINS THE NAME OF THE ASSESSEE PREPRINTED ON THE M. IN THESE CIRCUMSTANCES THE PRESUMPTION OF SALE OF PACKING MA TERIAL OUTSIDE THE BOOKS OF ACCOUNT IS NOT JUSTIFIED AND THE ADDITION MADE IS DELETED. GROUND 6: I HAVE NOTED THE FACTS AND CIRCUMSTANCES OF THE CA SE. THE APPELLANT HAS FURNISHED DOCUMENTARY EVIDENCE TO SHOW THAT THE QUALITY OF VARIOUS PRODUCT MANUFACTURED BY IT WAS NOT ALWAYS U P TO THE MARK, AND GOODS WERE RETURNED FROM TIME TO TIME BY THE AP PELLANTS CUSTOMERS. COPIES OF REJECTION LETTERS ISSUED BY T HE APPELLANTS CUSTOMERS HAVE BEEN FILED IN SUPPORT OF THE CONTENT IONS. IT IS ALSO CLEAR FROM THE BALANCE SHEETS OF THE APPELLANT COMP ANY FOR THE YEARS ENDED 31.03.99, 31.03.2000 & 31/312001 THAT THE CLO SING STOCK OF GOODS STOCK AT PRODUCTION WAS BEING REGULARLY SHOWN AS PART OF THE TOTAL CLOSING STOCK OF FINISHED GOODS IN THESE VARI OUS YEARS. THUS, FINISHED GOODS TERMED AS STOCK AT PRODUCTION BY THE ASSESSEE HAVE BEEN SHOWN IN THE YEARS PRIOR TO THE SEARCH AS PART OF THE CLOSING STOCK ITA NO.417/DEL/2003 15 IN THE BALANCE SHEET, EVEN THOUGH DAY TO DAY RECORD IS NOT KEPT AS PER LIST II. THE STOCK AT PRODUCTION WAS RECKONED SEPAR ATELY FROM THE FINISHED GOODS AT FACTORY AND DEPOTS ETC. WHICH ARE ENUMERATED IN LIST- II AS PER STOCK RECORDS MAINTAINED IN THE COMPUTER BY THE APPELLANT. BUT IT IS CLEAR FROM THE PAST RECORD OF THE APPELLA NT COMPANY ITSELF AND THE COPIES OF AUDITED ACCOUNTS FOR EARLIER YEARS TH AT THE GOODS, VIZ. STOCK AT PRODUCTION WERE VERY MUCH A PART OF CLOSIN G STOCK ENTERED IN THE BOOKS OF ACCOUNTS AT THE END OF THE YEAR. IN FA CT THE VALUE OF STOCK AT PRODUCTION HAS BEEN WORKED OUT AT A HIGHER AMOUN T THAN THE VALUE CONSIDERED IN THE ASSESSMENT ORDER. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT WAS REQUIRED TO FURNISH QUANTITATIVE RECONCILIATION OF STOCK AT PRODUCTION FOR THE PERIOD 114/2000 TO 14/9/2000 ( I.E. THE DATE OF THE SEARCH), VIZ. TOTAL STOCK OF WPC AND OTHER ITEMS AS PER BOOKS AS ON 311 312000 AND STOCK OF WPC ETC. FOUND AT THE TIME OF SEARCH ON 14 1912000. SUCH RECONCILIATION WAS PREPARED BY THE APPELLANT AND FU RNISHED VIDE REPLIES DATED 28/5/2003 AND 18/6/2003. THE APPELLAN T HAS ALSO FILED COPIES OF STOCK LEDGER ACCOUNT OF THE FACTORY AT KO SI KALAN, WHICH IS A PART OF THE SEIZED RECORD, FROM WHICH THE GOODS WER E RECEIVED AND ISSUED TO STOCK AT PRODUCTION. THIS SHOWS THAT THE STOCK FOUND DURING THE SEARCH IS RECONCILABLE WITH REFERENCE TO THE BO OKS OF ACCOUNTS AND VARIATIONS IF ANY ARE VERY NOMINAL. ACCORDINGLY, TH E CLAIM OF THE APPELLANT THAT STOCK AT PRODUCTION IS PART OF FINIS HED GOODS AND REFLECTED IN THE BOOKS OF ACCOUNTS IS ACCEPTED AND THE ADDITION OF RS. 1,94,12,755/- (REDUCED TO RS.L,70,81,755/- IN THE O RDER U/S 154 DT.26/212003) IS DELETED. ITA NO.417/DEL/2003 16 GROUND NO.7 & 8: 29. I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT'S CONTENTION THAT THE QUANTITY OF SKIMMED MILK POWDER IS RECORDED IN THE STOCK LEDGER BY WEIGHT IN KGS AND NOT BY THE SI ZE OF THE PACKING IS FOUND TO BE CORRECT. COPY OF THE STOCK LEDGER ACCOU NT FURNISHED BY THE APPELLANT AT PAGES 787 TO 797 OF THE PAPER BOOK HAV E BEEN PERUSED IN THIS REGARD. FROM THE STOCK LEDGER ACCOUNT, IT IS N OTED THAT THE APPELLANT COMPANY IS REGULARLY RECORDING THE QUANTI TY OF SMP ONLY IN TERMS OF WEIGHT IN KGS AND NOT IN TERMS OF NUMBER O F BAGS. ACCORDINGLY, THE EXERCISE MADE BY THE ASSESSING OFF ICER TO WORK OUT ALLEGED SHORTAGE OF SKIMMED MILK POWDER NOT JUSTIFI ED. THE REASONS FOR MENTIONING THE QUALITY IN TERMS OF KGS IN THE S TOCK LEDGER HAVE ALSO BEEN EXPLAINED BY THE APPELLANT IN ITS WRITTEN SUBMISSIONS, WHICH HAVE BEEN REPRODUCED ABOVE. IT IS ALSO NOTED THAT T HE RECORDING IN THE STOCK LEDGER DOES NOT MENTION THE SUPPLIER'S NAME. FURTHER, IT IS ALSO CLEAR FROM THE RECORD THAT DURING THE COURSE OF SEA RCH NO EVIDENCE IS FOUND TO INDICATE SALE OF SMP, WHICH IS A RAW MATER IAL USED IN THE PRODUCTION PROCESS OF THE APPELLANT. SIMILARLY, THERE IS NO JUSTIFICATION FOR TREATING A SUM OF RS.37,05,240/- AS UNDISCLOSED INVESTMENT IN STOCK OF SMP, AS PER G ROUND NO.-LL. AS DISCUSSED ABOVE, THE APPELLANT COMPANY IS KEEPING A RECORD OF THE SMP IN ITS STOCK LEDGER IN TERMS OF QUANTITY IN KGS , AND NOT IN TERMS OF NUMBER OF BAGS. HENCE ANY COMPARISON OF THE QUANTIT Y OF SMP FOUND IN TERMS OF BAGS OF SPECIFIC DESCRIPTION WITH THE Q UANTITY RECORDED IN THE STOCK LEDGER, WHICH IS IN TERMS OF WEIGHT IN KG S, IS NOT FEASIBLE. THE STOCK OF SMP HAS TO BE CONSIDERED ONLY AS PER W EIGHT IN KGS, AND ITA NO.417/DEL/2003 17 THE REASONS FOR DIFFERENCES IN QUANTITY IN BAGS (DU E TO REPACKING IN COURSE OF TIME) HAVE BEEN EXPLAINED BY THE APPELLA NT. ACCORDINGLY, THE ADDITION OF RS.50,84,400/- ON ACCO UNT OF ALLEGED SALES OF SMP OUTSIDE THE BOOKS OF ACCOUNT AND ADDIT ION OF RS.37,05,240/- AS UNEXPLAINED INVESTMENT IN SMP IS DELETED. GROUND NO.9: 31. I HAVE CONSIDERED THE FACTS OF THE CASE. IT I S NOTED THAT THE LOG SHEETS PREPARED DURING THE PRODUCTION PROCESS DO NO T CONTAIN QUANTITATIVE DATA OF PRODUCTION, AND HENCE CANNOT B E SAID TO INDICATE MEASUREMENT OF WORK IN PROCESS THE ARGUMENT TAKEN I N THE ASSESSMENT IS THEREFORE NOT VALID. THE SECOND REASO N GIVEN BY THE AO. FOR MAKING THE ADDITION NAMELY THAT THE TRANSFER OF 33 TONS OF SMP TO PRODUCTION PROCESS WAS NOT ESTABLISHED BY THE APPEL LANT HAS ALSO BEEN DISCUSSED IN RELATION TO GROUNDS OF APPEAL NO.10 & 11 ABOVE. IT HAS BEEN HELD THAT THERE IS NO MATERIAL TO DOUBT THE AV AILABILITY OF SKIMMED MILK POWDER AS PER THE BOOKS OF ACCOUNTS AN D THE STOCK LEDGER. HENCE, THE REASONS GIVEN BY THE AO. FOR TRE ATING THE WORK IN PROGRESS OF RS.48,53,675/- AS UNEXPLAINED ARE NOT S ATISFACTORY. ON THE OTHER HAND, THE APPELLANT HAS FURNISHED DETAILS OF QUANTITIES OF RAW MATERIAL ISSUED FOR THE PRODUCTION PROCESS ON 12THL 13TH SEPTEMBER, 2000. THE WORK IN PROGRESS HAS NECESSARILY TO BE ES TIMATED, CONSIDERING THE NATURE OF PRODUCTION CARRIED ON BY THE APPELLANT COMPANY. THE ESTIMATE SO MADE IN THE ASSESSMENT IS IN LINE WITH THE QUANTITY AND VALUE OF WORK IN PROGRESS SHOWN BY THE ASSESSEE EARLIER FOR THE YEAR ENDED 31/3/2000 IN THE BALANCE SHEET A T RS.53,07,490/-. ITA NO.417/DEL/2003 18 FURTHER NO MATERIAL OR EVIDENCE HAS BEEN FOUND DURI NG THE SEARCH TO INDICATE EXCESS INVESTMENT IN .WORK IN PROCESS. IN THESE CIRCUMSTANCES OF THE CASE, THERE IS NO MATERIAL ON RECORD TO ARRI VE AT THE CONCLUSION THAT THE APPELLANT COMPANY MAY HAVE MADE THE ENTIRE INVESTMENT OR ANY PART OF INVESTMENT IN THE STOCK OF WORK IN PROC ESS OUTSIDE THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE ADDITION OF RS. 48,53,675/- IS DELETED. 13. FROM THE ORDER OF LD. CIT(A), WE FIND THAT LD. CIT(A) AFTER EXAMINATION OF THE DETAILED SUBMISSIONS OF ASSESSEE AND AFTER GOING THROUGH THE REMAND REPORT , HAS PASSED DETAILED AND EXHAUST IVE ORDER WHEREIN HE HAS RECORDED HIS DETAILED FINDINGS. A.O. DURING REMAND PROCEEDINGS HAS NOT QUESTIONED ANY OF THE SUBMISSIONS MADE BY ASSESSEE AND IN FACT BY NOT PASSING ANY ADVERSE COMMENTS, HE HAS ACCEPTED THE E XPLANATIONS OF ASSESSEE AND, THEREFORE, IN THE ABSENCE OF OBJECTIONS FROM A .O., LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. MOREOVER, NONE OF T HE FINDINGS RECORDED BY LD. CIT(A) HAS BEEN CONTROVERTED BY LD. D.R. IN VI EW OF ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A), THEREFORE, APPEAL FILED BY REVENUE IS DISMISSED. 14. IN VIEW OF ABOVE, APPEAL FILED BY REVENUE IS DI SMISSED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2015. SD./- SD./- ( G. C. GUPTA) (T.S. KAPOO R) VICE PRESIDENT ACCOUNTANT MEMBER DATE:10 TH JUNE, 2015 SP ITA NO.417/DEL/2003 19 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1,2/6,8,9 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 10/6/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 10/6 SR. PS/PS 7 FILE SENT TO BENCH CLERK 10/6 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER