2020 (3) TMI 570 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decisions on Income Additions, Rejects Application for Order Recall

M/s Anant Steels Pvt. Ltd. Versus ITO-1 (4) Indore

M/s Anant Steels Pvt. Ltd. Versus ITO-1 (4) Indore - TMI Issues Involved:1. Recalling of the Tribunal's order dated 28.03.2019.2. Alleged errors in the CIT(A)'s decision on various additions.3. Rejection of books of accounts.4. Estimation of income.Detailed Analysis:1. Recalling of the Tribunal's Order Dated 28.03.2019:The assessee filed a Miscellaneous Application seeking the recall of the Tribunal's order dated 28.03.2019, arguing that there was an apparent mistake on the record. The Tribunal, however, found that the assessee was essentially seeking a review of the order, which is not permissible under the law. The Tribunal emphasized that powers under Section 254(2) of the Income Tax Act are limited to rectifying apparent mistakes and cannot be used to revisit decisions already made.2. Alleged Errors in the CIT(A)'s Decision on Various Additions:The Revenue raised several grounds against the CIT(A)’s decision, including:- Restricting the addition made on account of estimated GP.- Deleting additions related to excise duty and VAT tax collected but not paid.- Ignoring incriminating invoices seized during an excise search.- Deleting an addition made on account of unexplained investment.- Ignoring the need for unaccounted working capital to run an unaccounted business.The Tribunal reviewed these grounds and found that the CIT(A) had justified reasons for its decisions, particularly in light of the excise department's findings and subsequent CESTAT order quashing the show cause notice.3. Rejection of Books of Accounts:The Tribunal upheld the rejection of the books of accounts, agreeing with the CIT(A) that the discrepancies pointed out by the excise authorities were not reconciled by the assessee. The CIT(A) had noted that unaccounted production and sales were admitted by one of the directors, and the discrepancies were not disproved as false or fabricated. Despite the show cause notice being quashed by the CESTAT, the Tribunal found that the rejection of the books was justified based on the material on record.4. Estimation of Income:The Tribunal addressed the estimation of income, where the CIT(A) had applied a net profit rate of 2.3% on the entire turnover, excluding the turnover determined by the excise authorities. The Tribunal directed the AO to adopt a net profit rate of 3.3% on the turnover, excluding the excise-determined turnover. The Tribunal noted that the facts and circumstances of the assessment year 2007-08 were different from the current year and that the profit rate for the earlier year could not be mechanically applied to the current year.The Tribunal dismissed the assessee's contention that the percentage of GP should be based on the previous year’s findings and emphasized that the facts for the current year were different. The Tribunal also rejected the assessee's argument that the estimation should be based on net profit rather than gross profit, citing several judicial precedents.Conclusion:The Tribunal dismissed the Miscellaneous Application filed by the assessee, stating that the powers under Section 254(2) are limited to rectifying apparent mistakes and cannot be used to review the order. The Tribunal found no merit in the assessee's application and upheld the original order.Order Pronounced:The order was pronounced in the open court on 16.1.2020.