TaxTMI 
TaxTMI 
2016 (5) TMI 1176
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....rs through which the assessee claimed transportation of rock phosphate, etc., fake and non-genuine. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in deleting the addition of Rs. 35,09,310 receivable by way of subsidy (concession) by the assessee, ignoring the facts of the case and the observations and the findings of the Assessing Officer given in the assessment order. 3. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in directing the Assessing Officer to estimate the income of the assessee-company by computing its net profit, taking the net profit rate of 10 per cent. and applying it on its total turnover of Rs. 1,07,66,250 instead of 7.2 per cent. declared by the assessee-company, without giving any specific justification for adopting net profit rate of 10 per cent., especially when the learned Commissioner of Income-tax (Appeals) has held that the Assessing Officer was justified in rejecting the books of account of the assessee- company under section 145(3) of the Income-tax Act, 1961. 4. That the Commissioner of Income-tax (Appeals) has erred in law and on facts in holding t....
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....ompany being properly explained and verifiable with reference to the audited books of account and other relevant records, thus these should have been accepted." 4. Brief facts relating to the case are that the assessee is engaged in the manufacturing of fertilisers. For the impugned assessment year, return showing a loss of Rs. 4,50,610 was filed by the assessee. Thereafter, assessment in this case was made under section 143(3) by the Assessing Officer making an addition of fertiliser subsidy received amounting to Rs. 35,23,500 on the ground that the assessee was not found to have been engaged in the manufacturing of fertilisers which was based on the findings of the survey in the case of M/s. Sarraf Phosphate (P.) Ltd., Talbehat Lalitpur, M/s. Raj Minerals and Chemicals, Talbehat Lalitpur, and M/s. Hilltop Rocks (P.) Ltd., Tikamgarh (M. P.). As per the assessment order, the Assessing Officer conducted enquiries and also held that the books of account were not produced for verification and the purchases and sales shown by the assessee and the expenses claimed there against were not verifiable. Therefore, the subsidy received as a result of purported manufacturing was liable to b....
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....cation of purchases, it could not be possible to verify the correctness of books of account being maintained by the appellant-company. Therefore, I find that the Assessing Officer is justified in rejecting the books of account of the appellant-company as per the provisions of section 145(3) but the production and sale shown by the appellant-company cannot be rejected, as the same have been recorded in the record maintained with two Government agencies, i.e., the Trade tax Department and the Central Excise Department. Even the supply of raw material has been accepted by the Meerut court. In the absence of any evidence to show that the supply of raw material to the appellant-company was false, I do not find the report of the Income-tax Officer, Lalitpur, justified, made just on the basis of his finding about three vehicles as discussed by him in his report, disbelieving the record of the Trade Tax Department in which all Form No. 31 showing supply of raw material have been entered. Therefore, I do not agree with the report of the Income-tax Officer, Lalitpur and further, relying on the order of the Meerut court as well as looking to the fact that the production of fertilisers has tak....
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....dified accordingly. On the other hand, the learned counsel of the assessee relied upon the findings of the learned Commissioner of Income-tax (Appeals) but further argued that the learned Commissioner of Income-tax (Appeals) ought not to have rejected the books of account as there was no basis for him to estimate the net profit at 10 per cent. 6. Having heard the rival submissions, we find that the learned Commissioner of Income-tax (Appeals) has passed a well-reasoned order based on the findings returned by the Assessing Officer in his remand report and we do not find any infirmity in the same. The learned Commissioner of Income-tax (Appeals) has recorded the findings that the assessee was engaged in manufacturing and sale of fertilisers and such findings have been made based on the remand reports and the orders of the trade tax authorities and the Central Excise authorities and the Directorate of Agriculture, U. P. Government. The learned Commissioner of Income-tax (Appeals) has also based his findings on the order of the Meerut court in an first information report filed against the assessee for showing fictitious production of fertilisers which was upheld by the High Court. W....