J.K. Ranka, J. - (1.) INSTANT income -tax appeal under section 260A of the Income Tax Act, 1961 (for short, Income Tax Act) is directed against the order of the Income -tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, Tribunal) dt. 26 -10 -2007 for the assessment year 1997 -98.
(2.) BRIEF facts, as emerging on the face of record, are that the respondent -assessee is a limited company and submitted a return declaring a loss of Rs. 35,32,320 on 22 -9 -1997. The respondent -assessee is engaged in the production of drugs namely, 6APA, ATH and Ampicilin Anhydrate. During the course of hearing before the assessing officer, the respondent -assessee was required to explain the manufacturing/production activities as also other issues raised by the assessing officer. It is noticed that there was no sale and only some manufacturing/production activity was undertaken by the respondent -assessee. It is also noticed on perusal of the facts that even manufacturing activity came to an end after November, 1996. The assessing officer, on perusal of the records, came to the conclusion that the respondent -assessee has not been able to satisfactorily prove that what happened to the purchases of raw material. It was also noticed that the consumption of the production of Ampicilin Anhydrate vis   -vis the raw material (IPA) purchased/consumed so also Ampicilin and other drugs manufactured by the respondent -assessee was not satisfactorily proved. Accordingly, dissatisfied with the trading results, provisions of section 145 of Income Tax Act were invoked and trading addition of Rs. 12 lacs on estimated basis was made.
(3.) DISSATISFIED with the above addition, the matter was carried in appeal before the Commissioner (Appeals), Alwar before whom a certificate was produced of Versa Project Consultancy & Services with regard to the consumption of IPA in production of ATH and it was opined by the said consultancy services that the loss of consumption is only 0.2 per cent, therefore, it is within the tolerable limit, other arguments were raised and it was submitted that no addition is required to be made. Since the certificate came to be filed before the first appellate authority, the Commissioner (Appeals) sent copy of the same for the comments of the assessing officer under rule 46A of the Rules and after considering the objections, the Commissioner (Appeals) reduced the addition from Rs. 12 lacs to Rs. 4.5 lacs and that was also on estimate basis.;