2016 (6) TMI 173

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....rovision of Section 145(3) of the Act and accordingly rejected the assessee's books of accounts and after considering the various statements of stock as on different dates and also taking into account the financial statements of the assessee company, adopted the G.P. ratio at 60% as against 23.42%' declared by the assessee company. The AO observed that the assessee company has not maintained day-to-day consumption month-wise consumption record of machine-wise production and similarly day-to-day record of other consumables and other expenses claimed and also the assessee could not even produce the Manufacturing Register. The AO also observed certain discrepancies in the figures as appearing in the statements furnished by the assessee to the Saraswat Co-operative Bank Limited from which the assessee company has availed overdraft facility, in contrast to the figures appearing in the audited financial statements of the assessee company. Based on these observations, the AO came to the conclusion that the assessee company has wrongly declared the gross profit @ 23.42% and he arrived at gross profit @ 60%. After applying the provisions of section 145(3) the AO estimated gross prof....

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.... declared GP of AYs 2006-07, 2007-08, 2008-09 and 2009-10 are between 23 to 24%, (b) various factors taken into account while finalizing assessment of AY 2009-10 wherein GP of 26% has been assessed as against declared GP of 24.31 %, and (c) noting that the claim of discount of factor of 15-17% is not substantiated. As regards factor (c) the appellant has already explained that discount given by it to its dealers is entered into its books of account and given effect to in the succeeding year. Thus this cannot be a ground for estimating a higher GP rate. In respect of the basis of GP of various AYs, the appellant has shown that declared GP of AY 2008-09 was 24.31 % as against declared GP of 24.13% in AY 2009-10 and 24.17% in AY 2007-08. The main ground for estimating GP at 26% is that this was the rate estimated and assessed in AY 2009-10 after considering various factors. In appeal for AY 2009-10, (Order dated 15/03/2013 in Appeal No. CIT(A)-16/ ACIT-8(1 )(OSD)/ IT-265/ 2011-12), it has been held that: The AO's order, the contentions of the appellant, and materials on record have been considered. Some of the objections/discrepancies pointed out by the then CIT(....

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.... succeeding year. The GP ratios of cases furnished by the appellant were rejected on the basis that the results pertained to an earlier year, however the AO has not provided comparable cases on the basis of which the GP rate has been finally assessed. The items being excisable, audit by the Excise Department in the earlier year without finding the books faulty, would lend greater weight to the appellant's claim that it books of account are in order and represent a true picture. The GP rate having been assessed on the basis of surmises and conjectures, without even a finding that books of account are incomplete cannot be held to be justified. The addition made by the AO on account of the GP rate is thus deleted. In view of the foregoing reasons as also the finding given in appeal order for AY 2009-10, the addition made by the AO on account of GP rate as estimated by the AO is deleted." 4. With regard to addition made u/s.69, the CIT(A) observed as under:- "As regard, addition u/s 69 on account of unaccounted purchases and suppressed stock, the AO has not been able to establish by means of any evidence, or any single bill etc., that there were in fact unaccou....

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....sh by means of any evidence that there were in fact unaccounted purchases or suppressed stock. We found that the AO has made addition merely on the presumption that since GP rate of 60% has been estimated by him, there must have been unaccounted purchases. We found that even during the remand proceedings, the AO has verified assessee's version and accepted the same with regard to no unaccounted purchases. The CIT(A) has given due reasoning for deleting the addition. The finding recorded by CIT(A) has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made u/s.69 of the I.T.Act. 9. In the result, appeal of the revenue for both assessment year 2008-09 & 2009-2010 are dismissed. ITA No.4711/Mum/2013(AY : 2008-2009) 10. This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2008-09, wherein the assessee is aggrieved by the action of the CIT(A). Confirming the action of learned Assessing Officer (A.O.) of curtailing the deduction of Rs. 23.63 cr. claimed by the appellant under Section 54G of the Income Tax Act and allowing deduction only to the extent of Rs. 15,26,23,58....

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....ments is tabulated as under: Period Land & Building & Plant & Mach. Computers Vehicles Total Sept,06 to Sept,07 2,73,85,545/- 15,26,825/- 61,34,218/- 3,50,46,588/- Oct,07 to Mar,08 6,12,12,486/- 15,58,459/- 0 6,27,70,945/- April,08 to Sept,09 5,08,00,290/- 97,03,516/- 0 6,05,03,806/- Oct, 09 to Sept 10 8,34,04,626/- 0 0 8,34,04,626/- Total Rs. 22,28,02,947/- 1,27,88,800/- 61,34,218/- 24,17,25,965/-   Accordingly, an amount of Rs. 24,17,25,965/- has been claimed as a deduction (to the extent of 23.63 crores) under section 54G of the Act. For claiming the same, it had deposited Rs. 9 crores in the "Capital Account Scheme". The amount was to be utilised after the due date of filing of the return. Further, an amount of Rs. 50 lacs has been claimed as a deduction under section 54EC of the Act by way of investment in REC bonds. 12. With regard to claim u/s.54EC, the LTCG on sale of the land is of Rs. 22.18 crores (Rs.23 crores - indexed cost Rs. 82 lacs). Thus, the same is duly qualified for reinvestment under section 54G and 54EC. The STCG is covered under the concept of "block of assets....