TaxTMI 
TaxTMI 
2016 (2) TMI 1154
X X X X Extracts X X X X
X X X X Extracts X X X X
....bility of suppression of sales and there was ample scope in suppression of sales turnover." The invocation of S. 145 (3) and estimation of gross profit percentage on imaginary and presumptive grounds was bad in law and without jurisdiction. 2) On the facts and circumstances of the case and in law and having accepted the contention of the assessee that inter-branch transfers from Pune to Delhi were already loaded by average gross profit of 5.03 % then Ld. C.1.T. (A) ought to have deleted the entire addition made on account of estimation of G.P. of Rs. 20,31,232/- thereby sustaining the addition of Rs. 13,70,844/- which amounts to taxation of same income twice. The addition sustained of Rs. 13,70,844/- be quashed. 3) On the facts and circumstances of the case and in law the authorities below were under bounden duty to follow the ratio disidendi of the Hon'ble Supreme Court judgment in CIT vs. Woodward Governer India (P.) Ltd. (2009) 179 Taxman 326 (SC) that" in cases falling under S. 145 (3), the method of accounting undertaken by the assessee continuously is supreme". Despite this verdict the invocation of S. 145 (3) was bad in law and without jurisdiction. 4) On the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessing Officer observed that no quality/type-wise details were maintained but only single trading account was maintained in the name of 'Ghevda Trading A/c'. In this regard, it was the case of the assessee before Assessing Officer that quality/type-wise quantitative details of the commodity trader is not practicable since suppliers/sellers of the Ghevada simply mentioned commodity as 'Ghevda' in their bills without narrating the quality. The assessee further contented that this is also general practice followed by the traders in India. The assessee further made out a case before the Assessing Officer that the G.P. percentage are affected by various factors like market conditions, rising turnover, storage period of the grains, etc. which never remains constant. The assessee submitted that all the sales effected through Delhi centre are by way of credit sales and that complete details of opening closing stock, purchases and closing stock had been maintained. However, in the absence of qualitative details maintained by the assessee, the Assessing Officer was of the view that there is ample scope of suppression of sales turnover even without compromising the quantity of item traded. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t force prevailing in Delhi Market are considerably difference as compared to Satara market. 8. The assessee further submitted before the CIT(A) that about 1/3 of the total purchases in Delhi centre is made from Satara centre. The assessee transfers the purchases from Satara to Delhi after loading the margins of gross profit upto certain level at the basis purchase price at Satara centre. In the result, the G.P. of Satara centre goes up for the supply whereas Delhi centre has to bear the load of G.P. included in the basic purchase price of Satara centre. This has contributed to some mismatch in G.P.. The dispatches from Delhi to Satara centre are nearly 30% of the total turnover with supply quantity of 7,20,997 kgs. The CIT(A) however was not fully impressed with the version of the assessee and considered the reasons stated by the assessee to be too vague to justify the huge variation of the G.P. in the case of Delhi centre as compared to Satara centre. However, he provided partial relief to the assessee on account of G.P. factored in respect of supply of nearly 30% of the turnover made by the Satara centre to Delhi centre which worked out to Rs. 6,60,388/- by him. However, he s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....understand the rationale of the action of Assessing Officer. The suppliers of Ghevda at Delhi centre to the extent of 70% are very different set of parties. It is common knowledge that demand and consumption of Ghevda in Northern Region including Delhi is materially different from that of Western Region where Satara centre is located. The gross profit of two centres governed by different circumstances cannot be possibly similar. The G.P. at one centre which is more beneficial being adopted for another centre without any underlying material militates against logic. The action of the Assessing Officer is classic case of reaching the conclusion based on assumption, presumptions and conjectures. The Revenue has also not impugned the assertion made by the assessee that the other traders in India also maintains quantitative records without segregating the same for variety/quality. Alongside, it is also not in dispute that the suppliers of Ghevda to the assessee as well as the sellers/commission agents preparing the sales bills do not mention about variety of 'Ghevda'. As a corollary, it is not practicable to deduce variety/quality-wise quantitative details. In the circumstances, we fail ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessing Officer is justified in disallowing interest expenses in view of provisions of section 40(a)(ia) of the Act. 13.4 Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 13.5 The limited issue that arises for our consideration is whether the Assessing Officer is justified in resorting to section 40(a)(ia) of the Act in respect of expenditure towards interest charges attributable to Nagri/ Gramin Sahakari Patsansthas. We observe that as per amendment made by Finance Act, 2012, w.e.f. 01.04.2013 the assessee ought not to be treated as assessee in default when the payee has otherwise discharged its obligation towards tax liability on its corresponding income as per the provisions of the Act. 13.6 We find that the Co-ordinate Bench of the Tribunal on the identical point has decided the issue in favour of the assessee in the case of M/s S. & S. Wire Products vs. ITO in ITA No.779/PN/2015 relating to assessment year 2010-11, order dated 15.01.2016. In the aforesaid decision, it has been held that second proviso to section 40(a)(ia) is clarificatory and therefore retrospective in operation and as a consequence, once the payee has discharged in tax obli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in a similar circum stance. The Ld. Representative submitted that the matter be restored back to the file of the Assessing Officer in the light of the order of the Tribunal dated 06,01.2014 (supra). The aforesaid plea of the respondent-assessee has not been seriously opposed by the Ld. Departmental Representative appearing for the Revenue. 5. Following the aforesaid precedent, we therefore deem it fit and proper to restore the matter back to the file of the Assessing Officer who shall consider the plea of the assessee based on the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act w.e.f. 01.04.2013 in the light of the directions of the Tribunal contained in its order dated 06.01.2014 (supra). Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard before passing an order afresh on this aspect as per law." 14. This issue raised in the present appeal is squarely covered by the order of Tribunal (supra). Following the parity of reasoning, we deem it fit and proper to restore the matter back to the file of Assessing Officer, who shall consider the plea of the assessee based on the provisions of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deleted. 2) On the facts and circumstances of the case and in law and in view of the fact that the books of account regularly maintained duly audited were rejected u/s 145(3) and estimating the GP% resulting into addition of Rs. 13,20,097/- though deleted by Ld. CIT(A), the fact remains that the books were rejected and therefore, other addition is not permissible. It be held accordingly. 3) On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified. The levy of interest be quashed. 4) The appellant craves/leave to add, amend or alter any of the above grounds of appeal." 22. In the course of hearing before us, the Ld. Authorized Representative for the assessee expressed that he is not pressing Ground No.2 of the assessee's appeal. Therefore, Ground No.2 of the assessee's appeal is treated as dismissed. 23. Ground Nos.3 and 4 are general in nature and requires its no adjudication. 24. This leaves us with Ground No.1 of the appeal of the assessee. The relevant facts concerning the issue are that the assessee made certain interest payments to various co-operative societies on loan taken from them as under :- ....