TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 692
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....ts. The assessing officer received information that the Central Excise and Customs authorities have conducted search in the hands of the assessee and accordingly the AO selected the return of income filed by the assessee for the year under consideration for scrutiny. The assessing officer completed the assessment by making various types of additions. The appeal filed by the assessee challenging the additions was partly allowed by Ld CIT(A). Still aggrieved, the assessee has filed this appeal before us. 4. The first issue relates to the claim of non-receipt of notice u/s 143(2) of the Act. At the time of hearing, the Ld A.R did not press the grounds relating to the said issue and accordingly those grounds are dismissed as not pressed. 5. The second issue relates to the rejection of books of accounts and estimation of gross profit consequent to the same. The AO received information from Central Excise and Customs officials that the assessee has been alleged to have been indulging in manipulation of value of imports, i.e., it has under invoiced the imports and thus paid lower amount of Customs Duty. It was alleged that the difference amount of the purchase price was sent to the supp....
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....gross profit earned by the assessee would depend upon market conditions. He further submitted that the assessee has maintained proper stock register and its books of accounts have also been audited. He further submitted that the Excise department has also conducted audit and they have accepted the purchases and sales reported by the assessee. He further submitted that the AO did not find any other fault with the books of accounts of the assessee. Accordingly he submitted that all the reasons given by the AO to reject the books of accounts fail and hence the rejection of the books was not justified and consequently estimation of Gross profit at 7.07% of sales is also not justified. 7. On the contrary, the Ld D.R submitted that the Central Excise and customs department have found out under invoicing of imports and the said information is sufficient to show that the books of accounts of the assessee are not reliable. 8. In the rejoinder, the Ld A.R submitted that the assessing officer has not disturbed the gross profit ratio declared by the assessee in other years and did not make any addition, even though the allegation of Central Excise and Customs department extends to the preced....
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....t the rejection of books of accounts was not justified. Accordingly, we set aside the order of Ld CIT(A) on this issue. Since we have set aside the orders of tax authorities passed in respect of rejection of books, the consequent estimate of gross profit and addition thereof are also liable to be deleted. Further, the AO has modified only Gross profit and he has accepted the expenses claimed by the assessee, meaning thereby he did not find any defects in the books. Accordingly we direct the AO accept book results. 13. The next issue relates to the addition made u/s 69C of the Act. On the basis of show cause notice issued by the Customs department, the AO worked out the amount of under invoicing at Rs. 59.26 lakhs for the period from 1.4.2006 to 16.5.2006. The AO considered the same as the amount paid by the assessee outside the books of account and accordingly added the same as unexplained expenditure u/s 69C of the Act. The Ld CIT(A) also confirmed the same in principle, but gave relief to the extent of the calculation mistake made by the AO. Accordingly, a sum of Rs. 45,55,338/- came to be confirmed by Ld CIT(A). 14. The Ld A.R submitted that the assessing officer was not justi....
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....n from other persons without oath and hence they could not be relied upon. Further the assessee has not been provided with an opportunity to cross examine them. Accordingly he contended that the addition made u/s 69C of the Act is liable to be deleted. 16. On the contrary, the Ld D.R submitted that the under invoicing of imports has been accepted by the partner of the firm and he did not retract from the same immediately. He further submitted that the assessing officer has made this addition on the basis of enquiries made by the Customs authorities. 17. We have heard the parties on this issue and perused the record. We notice that the assessing officer has fully relied upon the show cause notice issued by the Customs officials to make this addition. The admitted fact is that the assessing officer did not make any independent enquiry to confirm the allegation of under invoicing of invoices. The question of addition u/s 69C of the Act shall arise only if it is shown that the assessee has incurred any expenditure outside the books of account. In the instant case, we notice that the assessing officer has not brought any material on record to show that the assessee has made any paymen....
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....borrowed through overdraft facility. Accordingly the Ld A.R contended that the interest income should be netted off against the interest expenditure and accordingly the deduciton u/s 80IB should be worked out. In support of this proposition, the Ld A.R placed reliance on the following case law:- a. Tata Sponge Iron Ltd Vs. CIT (2007)(292 ITR 175)(Ori) b. ACG Associated Capsultes P Ltd Vs. CIT (2012)(343 ITR 89)(SC) c. CIT Vs. Taj International Jewellers (ITA No.985 of 2010)(Delhi) 22. We heard the parties on this issue. The netting off sought by the assessee could be given, if it is shown that there is nexus between the borrowed funds and loans given/deposits made. Since this factual aspect requires verification, we set aside this issue to the file of the AO for examining the same. Accordingly, the order passed by Ld CIT(A) stands modified. 23. The next issue relates to the rejection of claim for deduction of Customs duty paid by the assessee. The assessee had paid Customs duty of Rs. 65.00 lakhs during the year under consideration, but did not claim the same as deduction. During the course of assessment proceedings, the assessee lodged the claim for deduction of the same u....