TaxTMI 
TaxTMI 
2003 (6) TMI 13
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.... in finding that tax was avoided without ascertaining whether there is any revenue loss on account of non-inclusion of the income in question in the assessee's assessment and its inclusion in the assessment of the sister concerns?" The learned advocate, Shri J.P. Shah, has appeared for the applicant-assessee, whereas senior standing counsel, Shri M.R. Bhatt, has appeared for the respondent-Revenue. The facts giving rise to the reference, in a nutshell, are as under: The assessee is a partnership firm manufacturing chemicals. The assessee mainly manufactures sodium bisulphate and sodium sulphate. For the relevant assessment year total sales was Rs. 18,37,045. Out of the said sales, sale to the tune of Rs. 14,57,661, i.e., almost 79 ....
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....erns not connected with any other trading activity. The Assessing Officer found that huge amount of profit had been diverted by the assessee to the sister concerns by having the aforestated modus operandi. Upon perusal of the record, the Assessing Officer found the following important details. ------------------------------------------------------------------------------------------- Name of the Sale price charged Sale price Difference of Percentage sister y the assessee realised by amount earned profit d....
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....p; 43,605 9.39 Industries Harisiddh 3,84,125 4,40,360 56,235 14.63 Chemical Industries ------------------------------------------------------------------------------------------- Total 14,57,661 18,35,441 3,77,780&nb....
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....been entered into only with an intention to see that the tax payable by the assessee is avoided. Upon coming to the aforesaid conclusion, the Assessing Officer added the amount of profit made by the sister concerns from the aforesaid transactions to the profit of the assessee. Thus, a sum of Rs. 3,37,780 was added in the profit of the assessee. Being aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) was of the view that the transactions which had taken place between the assessee and its sister concerns, were genuine and, therefore, deleted the addition made by the Assessing Officer. Being aggrieved by the order passed by the ....
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....re, submitted by him that without considering the fact that the amount of tax has already been paid by the sister concerns, the Tribunal ought not to have come to a conclusion that there was avoidance of tax. According to him, if one looks at the overall picture by considering the total amount of tax, which has been paid by the assessee as well as the sister concerns, in fact, there is no avoidance of tax and there is no loss caused to the Revenue. It has been, therefore, submitted by him that without ascertaining the fact whether the Revenue had suffered any loss, the Tribunal should not have come to a conclusion that payment of tax had been avoided by the assessee. On the other hand, senior standing counsel, Shri M.R. Bhatt, has submit....
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....e findings on the ground of perversity. Moreover, it is not in dispute that the goods were sold by the assessee to its sister concerns at a very low price and at times, even at a price lower than the cost of production. It is also not in dispute that the goods, which were sold by the assessee to its sister concerns, were immediately sold to third parties at a substantially higher rate and in the same lot and delivery of the goods was given by the assessee directly to the third parties without sending the goods to the sister concerns. The said facts, which have been ascertained by the Assessing Officer and confirmed by the Tribunal, have become final. Looking to the said facts, the Tribunal has come to a conclusion that the payment of tax ha....