2017 (2) TMI 918

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....nd grievance relates to the addition of Rs. 5,68,610/- being made on account of alleged peak of unaccounted investment made in purchases. 4. The assessee is engaged in the business of manufacturing of yarn, trading of yarn and grey cloth and high sea sales in the name of M/s. Tejus 5. A search operation was conducted by Department of Revenue Intelligence (DRI), Surat at the business premises of the assessee. Taking a leaf out of the proceedings of the DRI and the subsequent report of the DRI, the A.O. issued show cause notice to the assessee to explain the invoices and the notings on the back side of the invoices as alleged by the DRI. Assessee filed a detailed reply explaining each and every invoice and the notings on the said invoices. 6. It was explained that the variation in the purchase price of yarn is on account of difference in quality of yarn purchased. It was explained that 60 Denier yarn is costlier than 80 Denier yarn. It was pointed out that the comparable case of M/s. Reva Export is in fact not comparable because the invoice does not mention anywhere the quality of the yarn. It was further pointed out that the invoice issued by M/s. S. K. Fibers, Indonesia wa....

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..... Reva Export who declared the value of Yarn before the customs authority is USD 1.95 per kg. But it is not known what quality of yarn has been imported by M/s. Reva Export @ USD 1.92 per kg. Further, the price difference in one bill of competitor cannot be a bench mark and applied to the entire quantity of the appellant. 14. We find that the lower authorities have referred to two invoices bearing similar numbers dated 22.11.2006 issued by S.K. Fibres, Indonesia. A perusal of the sale contract entered into with M/s. S.K. Fibres, Indonesia shows that it was for purchases of 80/48 SDAA grade yarn @ USD 1.40 per kg and for which the assessee had opened a bank LC on 30.10.2006 @ USD 1.40 per kg. The sale contract is exhibited at pages 25 of the paper book and at page 26 of the paper book S.K. Fibres, Indonesia has clarified that inadvertently they have mentioned the rate as USD 1.92 per kg. in stead of agreed rate of USD 1.40 per kg. It is also clarified by S.K. Fibers, Indonesia they have immediately sent another commercial invoice bearing same number, date, quality and quantity and only the rate therein has been rectified. We have also perused the LC of Bank of America exhibited a....

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....although an AO, while making an assessment, does not strictly act as a the proceedings before the AO are, in general, in the nature of quasi-judicial though for specific purpose, the same are deemed judicial proceedings as provided in section 136. An AO, being a quasi-judicial authority, has, while framing assessment, to discharge his duty / function judicially and in that process the AO has to apply his own mind independently to the facts of the case, ascertained by him and then to draw his own conclusion / decision on the finding of any authority under any other Act / law, and thus adopt the finding / conclusion of that authority. The decision to be drawn by the AO has to be his own and independent one. AO cannot base his decision on the finding /conclusions of Customs Collector drawn in the, order of Customs Co/lector under the Customs Act ......" 20. It would be further relevant to refer to another decision of the Co-ordinate Bench in the case of Kirtilal Kalidas & Co. 1999 64 TTJ (Mad) 77. The relevant observations read as under:- "....The inquiries by the AO for making the assessment of income are quasijudicial proceedings and the act of framing ....

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....addition of Rs. 5,00,000/- on account of estimation of oil gain. 25. Briefly stated the facts of the case are that on the basis of a report of the ADIT(Investigation)-III,Surat and on the basis of information with regard to Banking Cash Transaction Tax (BCTT) in the case of M/s. Sai Corporation and M/s. Sai Enterprises who were operating as Shroffs, the A.O. came to know that the proprietor of the aforementioned two firms Shri Kulwant Singh Yadav in his statement recorded u/s. 131 of the Act had apparently stated that as a practice he noted the names of the beneficiaries on the reverse of the cheques and also issued a slip of acknowledgement. He delivered the cash on production of the acknowledgement slip. The A.O. found that one of the beneficiaries of the cheques discounted by Shri Kulwant Singh Yadav was the assessee. 26. On perusal of the bank accounts of M/s. Sai Corporation and M/s. Sai Enterprises revealed that substantial transactions were done with bank Account No. CA2024 with Sarvodaya Bank Ltd., Surat which was held by M/s. Raj Impex. On further verification, the A.O. found that most of the credit entries were from the prop. concern M/s. Tejus. The ADIT made furthe....

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....n drawn so far as the sales made by the assessee is concerned. We also find that the entire purchases made by the assessee from M/s. Raj Impex have been accounted by Raj Impex and have paid the taxes accordingly. Considering the facts in totality well appreciated by the First Appellate Authority, we do not find any error or infirmity in the findings of the First Appellate Authority. Ground No. 1 is accordingly dismissed. 33. The second grievance relates to the deletion of the addition of Rs. 5,00,000/- 34. During the course of the scrutiny assessment proceedings, the A.O. found that the assessee has shown yield of 7,59,905.90 kgs of crimped yarn on the consumption of the same quantity of POY. The A.O. further found that in F.Y. 2004-05, the assessee has shown oil gain of 1.63%. Taking a leaf out of the findings of the A.O. estimated the oil gain t Rs. 5,00,000/- and made the impugned addition. 35. Before the ld. CIT(A), it was brought to the notice of the ld. CIT(A) that the impugned additions made in 2004-05 were deleted by the First Appellate Authority and the revenue has not preferred any further appeal. 36. It was further explained that during the year under conside....