TaxTMI 
TaxTMI 
2010 (10) TMI 1101
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....03 and found some evidence with regard to evasion of Excise Duty. This evidence showed that the assessee- company had suppressed the production and consequent sales of steel rods of bars and thus avoiding Excise Duty by under-invoicing sales. The assessee, in response to Central Excise proceedings approached to the Settlement Commission of the Excise Department and as per the order of the Commission dated 31.8.2006, the assessee agreed to pay additional excise duty, in addition to already paid for the goods manufactured and cleared as per books, to the tune of Rs. 6.27 crores for the period relevant to assessment years 2002-03 to 2004-05. On the basis of the findings of the Central Excise Department, the Assessing Officer worked out the suppression of sales after reopening the already completed assessment orders u/s 143(3) of the Act for assessment years 2002-03 to 2004-05 by issuance of notice u/s 148 on the basis of the fact finding made by the Central Excise Department. Consequently, the Assessing Officer worked out the suppression of sales at Rs. 1,06,82,296/-, Rs. 1,13,80,000/- and Rs. 1,35,40,000/- and added to the gross profit declared in the above assessment years respectiv....
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....ppeals) failed to appreciate the fact that the assessee company accepted before the Central Excise Settlement Commission that it resorted to unaccounted clearance of goods and under invoicing of goods and byproducts and evaded payment of excise duty. It accepted liability of additional excise duty (in addition 10 excise duty paid for goods manufactured and cleared as per books) to the tune of Rs. 6.27 crores as under: A.Y 2002-03 Rs.4,52,57,936/- for unaccounted production/under invoiced Sales/unaccounted sale of by-products A.Y 2003-04 Rs. 1,56,79,450/- -do- A.Y 2004-05 Rs.18,51,087/- -do- The excise duty is chargeable @ 16% of the assessable value. Consequently, the value of unaccounted goods cleared, the assessable value of goods cleared, gross profit on the assessable value of unaccounted goods cleared [calculated at the rate of 15% as worked out by CIT(Appeals)] are as under: Asst. Year in which Assessable Additional excise duty paid @ 16% of the assessable Value (1) Assessable Value of Unaccounted goods cleared (without C.E.Duty) (2) Value of unaccounted goods cleared (I + 2) (3) Gr....
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.... Oil Industries P. Ltd., (2007) 290 ITR 702 (Guj) in which the Court upheld disallowance made u/s 40A(3) for cash purchases in unaccounted business of the assessee. The ratio of the Hynoup Food decision is applicable to the present case and not that of Mohammed Dhurabudeen. 6. The ClT(Appeals) erred in deleting the additions made u/s 69 of the Act amounting to Rs. 57,98,507/-, Rs. 54,61,996/- and Rs. 14,20,000/- for the A.Ys. 2002-03, 2003-04 and 2004-05 respectively by holding that no unaccounted investment had been found. He failed to appreciate the undisputed admitted fact which emerged from the search made by Central Excise authorities that the assessee had made unaccounted production of steel rods and bars and for this unaccounted production made unaccounted purchases. It is these unaccounted purchases which ought to have been confirmed as unaccounted investment. The Assessing Officer treated 10% to 13% of the unaccounted turnover as unexplained investment. In Column 32(c) of the Form No.3CD filed with the return, assessee Company declared the ratio of Stock in trade to turnover as 12.51 %, 7.84%, and 7.69% for the A.Ys. 2002-03, 2003-04 and 2004-05 respectively. The ....
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....pressed sales which are based on estimated input and output method. The ratio between the quantum of raw material and the end- product including the by-products is called percentage yield, which the Excise Department has arrived at 92% from scraps to billets and 95% from billets to rods and bars. Based on this estimation, the Excise Department has estimated the suppression of bars and rods and by- products. The Income-tax Department invited the attention of the assessee towards the findings given by the Central excise Department and sought explanation thereof. The assessee replied to the query raised by the Assessing Officer and the reply given in assessment year 2002-03, which is the base year, is as under: "The above assessment years for which notices and sec.147 have been issued, I wish to bring to your kind notice the following: Sri D.K.Audikesavulu took over the concern in 1991. As he was engaged in various business activities he could not devote full attention to this Company. With the result the Company was incurring losses year after year and became BIFR Company. With the view to come out of the BIFR besides increasing the Share capital of the Company he e....
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....e of scrap to the tune of 10373 MT. Out of the 28.25 crores of unaccounted sales, the assessee has brought back 15.44 crores of aqua receipts in the assessment year in question and Rs. 4,34,83,908 as on account of bogus sale of scrap and accounted in Assessment year 2003-04. It has again stated that in the original computation it has disallowed 20% of the purchases for non existing aquaculture business and now everyone knows that no such business exists the disallowance made in the original computation needs to be reversed. It was again contended that there is no need for the company to conceal income as it is a BIFR company and have huge accumulated losses over the years and in fact more income has been shown than reality in order to come out of the status of a sick industry and there fore requested that case need to be seen sympathetically as there is no intention of evasion of tax for the reasons mentioned above." 5. It was further stated that with a view to bring the company out of BIFR, the assessee has been showing more income than what it really had and that all the sale proceeds of steel which were not invoiced or sold out of the books are brought in as either income fro....
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....alculation of the ratio. The actual GP ratio is about 14% (6881.90-5925.41=956.4 956.49/6881. 90* 100=13.8) . 8. The Central Excise Department has rejected the books of accounts of the assessee and calculated the actual sales based on the material gathered during inspection and mainly on the basis of consumption of Power and Furnace Oil and there fore the method adopted for estimation of sales is scientific and as per sales are concerned I believe that there is no an iota of doubt that sales determined by the Excise Department lack any practicality. Therefore I take the same sales for making this assessment. 9. I doubt the purchases and the assessee has made an unaccounted purchases of billets and made un accounted and fictitious sales of scrap etc. The quantity and value of purchases shown by the assessee are not correct and therefore, book result is not correct. Therefore the GP shown by the assessee is also is not genuine and difficult to believe that it is the real profit. 10. I reject both the unaccounted sales statement given by the assessee stating that the net concealment of income of Rs. 29,67,316/- and excess income of Rs.(-) 40,20,893/- as per ....
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....oceedings before the Central Excise Department, where, according to the ld.DR, the assessee admitted suppression of sales outside the books, which, according to various decisions [as narrated in Ground No.2 of the appeal] have a binding effect although it may not be taken as conclusive proof but it carries great weight. 7. We have gone through all these decisions which are clearly mentioned in ground No.2 of the appeals. All these decisions are distinguishable on facts as well as on law because all these decisions give a ratio that any 'settlement' made voluntarily by the assessee would form the basis of assessment. But all these decisions ostensibly were rendered in the context of income-tax proceedings and not in any other proceedings carried against the assessee and above all, all the decisions lay down unquestionable principle that such 'settlements' are rebuttable. The Assessing Officer has not considered the facts and the law in its correct perspective but has rather come to a conclusive finding on rebuttable evidence that the receipts shown from non- existing aqua business as far from controversy and it lacks creditble evidence and hence, he has rejected the books of acco....