TaxTMI 
TaxTMI 
TaxTMI 
2010 (2) TMI 1173
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....yment of Excide duty. As per the show-cause notice issued by the Excise Department, the assessee had cleared excisable goods without payment of excise duty between July-2002 and December-2002, the same was worked out 58,01,795 meters of cloth. The Assessing Officer estimated the value of such removal of goods to be ₹ 12,76,39,490/-. This amount was added as unexplained investment in purchase of goods. The Assessing Officer also noted the fall in Gross Profit rate and made an addition of ₹ 81,77,779/-. However, since the amount of ₹ 12,76,39,490/- was added as an investment, the addition on account of fall in Gross Profit was not separately made but was telescoped against the value of alleged illegal removal of cloth. The Learned CIT(Appeals) held that Gross Profit rate applied by the Assessing Officer is incorrect and reduced the addition on account of low Gross Profit to ₹ 14,11,700/-. The Learned CIT(Appeals) also held that the unexplained investment for alleged illegal removal of goods should be made only for the month of July-2002 as rest is only recirculation of the same amount. The Learned CIT(Appeals) held that in July-2002 - 11,00,623 meters of cloth....
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....ther during survey by I.T. Department or during search by Excise Department it was never found that the assessee is processing the goods on own account. Therefore, since there is no purchase of grey fabrics, no addition can be made as unexplained investment in purchase of goods. As per the finding of Commissioner of Central Excise & Customs, Surat what is held is that only 58,01,795 meters of cloth was removed without payment of Excise duty and based on this finding, when the questions were put to the assessee, the assessee has made a disclosure of ₹ 50 lacs. Therefore, no further addition is sustainable. The ld. counsel for the assessee also submitted that the entire sale price cannot be added as income. Only Gross Profit contained therein can be added. For this proposition, reliance was placed on following decisions:- Sr. No(s) In the case of … Reported in… 1. CIT vs. President Industries 258 ITR 654 (Guj):: 158 CTR 372 (Guj.) 2. CIT vs. S.M.Omer 201 ITR 608 (Guj.) 107 CTR 272 (Cal.) 5.1. The ld. counsel for the assessee also submitted that since the Excise duty has been paid, in terms of section 43-B of the I.T. Act, 1961, the same are allowable ded....
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....profit of such processing can be brought to tax. The Learned CIT(Appeals) has found in page No.6 of his order that the average rate of job charges per meter are ₹ 7/- and the total profit on such removal works out to ₹ 77,20,857/- by applying the Gross Profit as earned in immediately preceding financial year. This facts and figures are not disputed by either parties. We, therefore, sustain the addition of ₹ 77,20,857/-. However, since the assessee has already disclosed the income to the extent of ₹ 50 lacs by way of application of such income, further addition of ₹ 27,20,857/- only can be sustained. We, therefore, sustain the addition of ₹ 27,20,857/- as against ₹ 1,97,66,427/- sustained by the Learned CIT(Appeals). 8.1. We also hold that for removal of such goods without recording the same in the books, the assessee was made to pay Excise duty. It is submitted that the assessee has paid the excise duty. Subject to verification of payment of such duty, the same is to be allowed as deduction in view of section 43B of the I.T. Act, 1961. The assessee is to produce necessary evidence in this regard and the Assessing Officer on being satisfied....
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....payment of Excise duty, the books of account are to be rejected but on account of estimate of Gross Profit in respect of recorded turnover was rightly estimated at 25% by the Learned CIT(Appeals) and addition of ₹ 14,11,700/- is to be sustained. 13. Ground No.3 of Revenue's appeal is against restriction in the addition of ₹ 15 lacs on account of unexplained cash credit. 14. The Assessing Officer observed that the assessee has received share application money of ₹ 15 lacs from seven different persons. The notices issues u/s.133(6) were returned unserved. The assessee was asked to produce the parties for verification. The assessee filed confirmation of these parties but could not produce the parties personally. The Assessing Officer, therefore, has treated the amount as unexplained cash credit. 15. The Learned CIT(Appeals) held that since the assessee has filed confirmation of all the parties with share application forms indicating the P.A.Number also and also their balance-sheet, the addition cannot be made in the hands of the company. The Learned CIT(Appeals) placed reliance on the decision of Hon'ble Delhi High Court in the case of Stellar Investment Ltd. ....