Income Tax Appellate Tribunal - Ahmedabad
Industrial Carbons Pvt.Ltd., Bharuch vs Department Of Income Tax
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IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before S/Shri Mahavir Singh, JM and D.C.Agrawal, AM
ITA No.1974/Ahd/2010 along with
C.O. Bo.201/Ahd/2010
Asst. Year :1998-99
Dy. CIT, Bharuch Vs. Industrial Carbons (P) Ltd., 8,
Circle, Bharuch. Rachna Park Society, Bharuch.
(Appellant) (Respondent)
..
Appellant by :- Shri A. K. Tiwari, DR
Respondent by:- Shri Anil R. Shah, AR
ORDER
Per D.C. Agrawal, Accountant Member.
The appeal has been filed by the Revenue and the C.O. has been filed by the Assessee.
The Revenue has raised the following grounds in its appeal :-
1(i) On the facts and in the circumstances of the case and in law, the ld.
CIT(A) erred in deleting the addition of Rs.22,04,631/- on account of low yield.
1(ii) The CIT(A) failed to appreciate that the assessee did not produce the stock register substantiating the production of high-grade products and also there is no existence of day-to-day tally. The assessee's contention that higher production of high grade products and almost negligible production of lower grade products resulted into big fall in the percentage yield as compared to earlier years was therefore, no verifiable and was not acceptable.ITA No.1974/Ahd/2010 along with CO No.201/Ahd/2010
Asst. Year 1998-99 In the Cross Objection the assessee has raised the following grounds :-
(1) Your respondent submits that the ld. CIT(A) VI, Baroda have passed detailed and speaking order deleting addition of Rs.22,04,631/- added by AO while giving effect to the order of Hon. Income-tax Appellate Tribunal and therefore no interference to his order is called for and that the appeal filed by the department be dismissed.
(2) Without prejudice to above your respondent submits that the order of Income-tax Officer in the second round giving effect to the order of Hon. Tribunal is not correct and has not followed clear cut directions of the Hon. Tribunal and had passed order without application of mind and considering the facts and details of the case submitted before him.
(3)(a) Your Respondent submits that he is maintaining regular and proper books of accounts duly audited and subjected to Sales-
tax Act etc. Excise Duty Act and the AO has not found any lacuna or mistake or any defect in the books of accounts and the alleged sale of Rs.22,04,631/- outside books is not supported by any evidence or facts of the case and therefore also the said addition be deleted.
(b) The order of ld. CIT(A) is based on facts of the case, various details before him and case law relied and the addition made by the AO which was merely on presumption guess work, without giving a show cause notice has been rightly deleted by the ld. CIT(A).
2. The only issue involved is the addition on account of low yield of carbon. The facts of the case are that assessee is a Private Ltd. Company dealing in the manufacturing of activated carbon. The basic raw material of the assessee is wood charcoal and saw dust which is being heated in Rotary Kiln and steam is injected to convent charcoal into Activated Carbon. During the year under consideration the assessee is producing different grades of activated carbons such as ICP-15, ICP-20 & ICP-10. The product makes has been varying in different years. Above three types of activated carbons are called high grade carbons. There are other 2 ITA No.1974/Ahd/2010 along with CO No.201/Ahd/2010 Asst. Year 1998-99 activated carbons produced which are called low grade carbons. The assessee has two units called AC-I and AC-II. The percentage of yield from these units is shown by the assessee as under :-
Unit/Asst. Year 95-96 96-97 98-99 AC-I 34.09 33.83 33.79 AC-II 37.10 34.88 24.17
The AO examined the books of account and found that assessee failed to produce the stock register and no day to day is maintained by the assessee. In earlier Asst. Year also books were rejected. Accordingly this year also the AO rejected the books and proceeded to estimate the yield and accordingly the profits. In the two units AO worked out excess production by applying a yield rate of 35% in Unit -1 and in Unit-II 37% as under :-
I. Yield at the rate of 35% on total consumption of 8,25,922 kgs. raw material of 23,59,776 kgs.
Less: Yield shown by the assessee 7,97,288 kgs.
Net difference 28,634 kgs.
II. Yield at the rate of 37% on total consumption of 1,92,639 kgs.
raw material of 5,20,645 kgs.
Less: Yield shown by the assessee 1,25,832 kgs.
Net difference 66,807 kgs.
This resulted into alleged under production of 95,441 kgs. of activated carbons (i.e. 28,634 kgs from Unit -I and 66,807 kgs from Unit-II). This production was treated as outside the books. By applying the sale rate of Rs. 33 per kg. the AO worked out the net sale of Rs.31,49,553/- and proposed addition to this extent in the total income.
3. The ld. CIT(A) pointed out that production of higher grade of carbons is 98% in the current year whereas it was 65% in the Asst. Year 3 ITA No.1974/Ahd/2010 along with CO No.201/Ahd/2010 Asst. Year 1998-99 1995-96. Yield of lower activated carbons is higher whereas it is lower in place of higher grade of product. The ld. CIT(A) in nut shell accepted the arguments of the assessee and held that AO has not pointed out any single mistake before rejecting the books. He accordingly deleted the addition.
4. We have heard the parties and carefully perused the material on record. Since the assessee has not produced quantitative details with day to day consumption of raw material and production of activated carbons rejection of books is upheld. So far as claim of the assessee that this year assessee has produced 98% of higher grade of activated carbon compared to Asst. Year 1995-96 where lower quantities of activated carbons to the extent of 60%, was produced and it has resulted in lower yield of final product this year is accepted. Therefore there is no case for making any trading addition. Accordingly appeal filed by the Revenue is dismissed.
5. The Cross Objection is only in support of the order of ld. CIT(A) and is accordingly rejected.
6. In the result, both the appeal filed by the Revenue and the C.O. filed by the assessee are dismissed.
Order was pronounced in open Court on 15/10/10.
Sd/- Sd/-
(Mahavir Singh) (D.C. Agrawal)
Judicial Member Accountant Member
Ahmedabad,
Dated : 15/10/10.
Mahata/-
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ITA No.1974/Ahd/2010 along with
CO No.201/Ahd/2010
Asst. Year 1998-99
Copy of the Order forwarded to:-
1. The Assessee.
2. The Revenue.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
1.Date of dictation 1/10/2010.
2.Date on which the typed draft is placed before the Dictating 11/10/2010 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S.............
4.Date on which the fair order is placed before the Dictating Member for pronouncement..............
5.Date on which the fair order comes back to the Sr.P.S./P.S...............
6.Date on which the file goes to the Bench Clerk...........
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................
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