Income Tax Appellate Tribunal - Jaipur
Deputy Commissioner Of Income Tax vs K. C. Jhanwar. on 12 June, 1995
Equivalent citations: (1995)53TTJ(JP)157
ORDER
M. A. A. KHAN, J.M. :
This is an appeal from CIT(A)'s order dt. 18th January, 1990, deleting an addition of Rs. 4,69,896 made by the Assessing Officer (AO) on account of excessive shortage in cloth.
2. Heard the parties.
3. The assessee purchases yarn and gets gray cloth prepared through M/s Rajasthan Processors (I) Ltd. At the assessment proceedings, the AO noted that the assessee had claimed shrinkage at 5.25% as against shrinkage of 3.91% in last year. On being asked to explain the increase in shrinkage percentage this year, it was explained that the variation in percentage depends on several factors including the quality of the fabrics, dyeing of the fabric and manufacturing cloth from the yarn. The AO did not feel satisfied with the explanation offered by the assessee and worked out the difference in the percentage of shrinkage at Rs. 4,69,896 and added the same to the total income of the assessee. But in appeal, the learned CIT(A) for the reasons recorded in his order, deleted the addition. Hence this appeal by the Revenue.
4. The learned Departmental Representative no doubt urged that there was great variance between the percentage of shrinkage this year as compared to that in earlier year and, therefore, some addition was justified in the facts and circumstances of the case.
5. We are of the opinion that the learned CIT(A) has given very cogent reasons for deleting the addition made. Apart from that, the learned counsel for the assessee has advanced very learned arguments, with which we feel completely satisfied.
6. The learned counsel for the assessee is very right in his contention that the provisions of s. 145 cannot be made applicable until and unless the AO brings a case within the purview of either s. 145(1) or 145(2). In the present case the AO has pointed out no defects either in the accounts maintained by the assessee or in the system of accounting adopted by him in the regular course of his business so as to attract the provisions of s. 145(1) or (2). That being the factual position, no trading addition to the results declared could have been made in the present case. This view stands supported by Siddheswari Cotton Mills P. Ltd. vs. CIT (1979) 117 ITR 953 (Cal) and R. B. Bansilal Abirchand Spg. & Wvg. Mills vs. CIT (1970) 75 ITR 260 (Bom) (relied upon by the learned counsel for the assessee).
7. Shri Gargieya has further very rightly pointed out that at every stage of processing of cloth from yarn, the assessee has maintained the required registers. That fact has also been endorsed by the learned CIT(A). No defects have been pointed out by the AO in such record. The learned CIT(A) has further pointed out that the shrinkage did not exceed 4.9% in this year and the AO had wrongly taken that at 5.25%. Taking into account all the facts and circumstances of the case, we are of the opinion that the learned CIT(A) has deleted the addition in question for very sound and cogent reasons. There is thus no force in this appeal.
8. The appeal is dismissed.