TaxTMI 
TaxTMI 
2015 (8) TMI 1084
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..../- The assessee is further aggrieved by not allowing the claim for deduction u/s. 80HHC of the Act. 3. Briefly stated the facts of the case are that the assessee is engaged in the business of processing printing of clothes, manufacturing of madeups and trading of clothes. The original return of income was filed on 31.10.2004 declaring total income at Rs. 2,95,17,060/-. 3.1. A survey operation u/s. 133A of the Act was carried out at the business premises on 5.1.2006. During the course of the survey, various incriminating documents were found evidencing unaccounted cash sales of fents and ash etc. Documents containing evidence of cash payments towards labour charges not recorded in the books of account were also found. 3.2. Statements wer....
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....ingly, it was submitted that the said rough book was not complete and there was no shortage of 9,09,289.17 metres. The AO did not accept the claim of the assessee holding that it is hard to believe that the assessee has not been able to ascertain the identity of the person who has maintained the stock register. The AO further did not accept the claim of the assessee that the said register has no relevance. On the contrary, the AO was of the firm belief that the stock register has been maintained scientifically and systematically. 3.4. The AO further observed that the difference between the quantity recorded in the impounded register and the stock as per the regular book is very small and insignificant and therefore entries in the said regi....
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.... It was pointed out that if this is considered and read with the entries on page- 139, the shortage of 909289.17 has to be adjusted with the transfer of goods of 687898.99 and at the most the shortage should be considered at 221390.18 mtrs. The Ld. Counsel further stated that the profit rate of 20% adopted by the AO is against the facts of the case. Drawing our attention to the comparative chart of profit shown in previous 5 years, the Ld. Counsel stated that the profit never were more that 17% and the average profit comes to 14.90. The Ld. Counsel reiterated the claim that there is no adverse finding by the Excise Department and there is no evidence on record to show that there were sales outside the books. The entire additions have been m....
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.... is partly allowed. 7. The second addition relates to Rs. 9,79,200/- as unexplained expenditure u/s. 69C of the Act. 8. Before considering this ground let us first consider the third ground which relates to the addition of Rs. 29,09,456/- on account of alleged sale of fents, bhangars and chindies. 8.1. During the course of the scrutiny assessment proceedings, referring to the entries in Annexure-A-18 relating to cash generated upon sale of fents and coal ash, the assessee was asked to explain why Rs. 29,09,456/- should not be added on account of cash sale not recorded in the books of account. In response to this query, the assessee claimed that the amount of Rs. 50,61,040/- offered to tax in the revised return includes this alleged sale ....
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....efore the same amount cannot be added twice. 12. The Ld. DR strongly supported the findings of the Revenue authorities. 13. We have carefully perused the relevant material evidence brought on record. Question No. 32 put to the Managing Director during the course of recording his statement which is at page-7 of the paper book is relevant because the Managing Director was specifically asked to explain the cash sales of bhangar, chindies and ash which are not recorded in the regular books of account to which the assessee made a specific reply which read as under: "We have been making cash sale of bhangar, chindies and ash which are bye-products of the manufacturing activities of Valiant Glass Works Pvt. Ltd. (assessee), the same has never b....
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.... wherein the Managing Director has specifically said that the cash sales have been utilized for making the labour payment and therefore the cash generated out of the sale of scrap can be accepted as utilized for making the payment of Rs. 9,77,200/- and therefore no separate addition is called for. We, accordingly direct the AO to delete the addition of Rs. 9,77,200/- which is treated as unexplained expenditure u/s. 69C of the Act. This grievance of the assessee is also allowed. 15. The next grievance relates to the claim of deduction u/s. 80HHC of the Act in respect of draw back credit attributable to the customs duty. At the very outset, the Ld. Counsel for the assessee stated that this issue is squarely covered in favour of the assessee ....