AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 1085
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.... following grounds :- "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in directing the A.O. to restrict the estimated production of bricks to 35,00,000 against 44,49,600/- estimated by the A.O." 2.1 The facts leading to the above appeals are that the assessee is a partnership firm engaged in the business of manufacturing and sale of Bricks. The assessee-firm started its business from 27/04/2007, the date on which it came into existence and this year was its second year of business. For A.Y. 2009-10 the assessee-firm filed its Return of Income (ROI) on 18/03/2010 declaring total income of Rs. 23,083/-. In fact the total turnover of the year is Rs. 31.77 lakhs. The assessee has paid interest plus remuneration to partners of Rs. 1,62,689/- and has shown net profit rate of 5.13%. But the A.O. has made assessment u/s 144 r.w.s. 145(3) of the Act vide order dated 28.11.2011 on a total income of Rs. 50,06,400/-. The A.O. has made addition mainly on the grounds of suppression of production of bricks and tiles. The assessee has shown a production of 27.80 lakhs of bricks whereas the A.O. has estimated the production at 40.04 lakhs of bricks and 4.45 ....
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....ection 142(1) is issued by the AO then it shall not be necessary to give such opportunity of hearing. Thus ground no. 3 is decided in favour of revenue. The ground no. 4 to 12 is related with the estimation of production of bricks and estimation of sale price of bricks & tiles. As regards to these grounds from the perusal of detail on the record it is seen that AO has made the addition in the routine and perfunctory manner. The letter from the mining department only confirms the payment of royalty & it does not mention anything about the production of bricks done by the appellant. On the contrary it specifically states that as per new policy dated 10.6.1994 only royalty per block is fixed due to which there is no necessity to verify the production achieved by the license holder. Further AO fails to bring on record any other corroborative material to justify the estimation of excess production made by him, in the absence of such material the estimate would only be based on conjecture and surmises. Further payment of Royalty and Purchase of mitti (clay) itself cannot determine the quantum of production, the same. How much capacity was actually utilized by the appellant shoul....
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....n capital & remuneration. Hon'ble Jodhpur Tribunal in various decision has held that for estimation of profit the past history of the case is the best guiding factor, accordingly looking to the totality of the facts and circumstances of the case and considering the material collected by the AO during the Assessment proceedings and the submission/replies filed by the appellant, it was reasonable if production should near to license sanctioned by the mining department. Therefore, I estimate total production of bricks 35,00,000 for the year under consideration. In this trade, it is fact that the sale price of bricks fluctuated number of times in different season. One side the appellant has produced the sale bill of minimum rate to prove the average sale whereas on the other side the AO took sale bill of maximum rate for this purpose. To cover up all the possible leakage it is fair and reasonable to apply GP rate 22 % on total bricks of 35,00,000. The balance addition is deleted. The ground no. 13 of appeal is against non deduction of remuneration and interest to partners from the estimated profit. There is no discussion on the assessment order. ....
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....he information regarding purchase of clay etc and payment of royalty etc. are not such evidence which can be relied on to estimate the production in the given facts and the circumstances of the case. After rejection of books of account the A.O. should have applied the rate declared and accepted in regular assessment in the immediate past year. The assessee had disclosed n.p. rate of 5.82% in the A.Y. 2007-08. At page 5 of assessee's paper book the details of comparable results are given which are as under :- Turn over Gross Profit Financial Year 2008-09 7499916 15.50% 2007-08 5885716 15.30% Accordingly, we accept the sales / turnover disclosed by the assessee and direct that n.p. rate of 5.82% has to be applied to the declared sales subject to interest and remuneration to the partners as already allowed by the ld. CIT(A). In this way we partly allow assessee's appeal but cannot allow the appeal of the revenue. B ITA No. 242/Jodh/2013 (A.Y. 2009-10) This appeal has been filed by the assessee for A.Y. 2009-10 against the order of ld. CIT(A), Bikaner, dated 22/02/2013. 4. Following grounds have been raised in this ap....
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....ured form 5 73 3 trollies at 1,14,66,000 and held to be unrecorded production of bricks. The Id. AO gave details of income computed on page 5-6 of assessment order, according to which total no. of bricks manufactured was worked out at 1,65,56,000/- (1,14,66,000+50,90,000).Thereafter profit was worked out as follows :- No. of Bricks sale rate sale cost profit Grade-I Bricks 9391920 2142 20117492 12002873 8114619 Grade-II & 1.535% Bricks 5478620 1500 8217930 7001676 1216254 Residuary 5% 782660 700 547862 1000239 -452377 Profit 8878496 After making deduction of Rs. 9,98,388/- representing expenses debited in P & L account. The Id. AO worked out net income at Rs. 78,80,108/- and completed the assessment on this income against returned income of Rs. 1,49,185/-. It is this addition in total income which is disputed in this appeal before me. Sh. R.N. Jangid, Advocate appearing on behalf of the appellant has presented a detailed history of the case, nature of business and irrelevant facts discussed by the Id.AO leading to the impugned addition. I....
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.... AO has thus violated principles of natural justice and on this basis alone the addition made was sought to be deleted. The Id. Counsel has further pointed out that the Id. AO omitted to consider the fact that sum of Rs. 8,60,000/- debited in trading account under the head "Mitti" represents cost of Mitti purchased from Trolly owners as well as expenditure incurred on excavation of Mitti from assessee's own land for which he has obtained license. Such expenses included labour payments for excavation, removal of over harden and transportation thereof, shifting of excavated sand to the site of Thapai. Nonconsideration of these facts which were necessary for framing a fair and judicious assessment has led to high pitched assessment apparently looking to be unjust and unfair. The addition was thus sought to be deleted. Lastly, the id. counsel of the assessee has pointed out that (i) no purchase of any item outside books was detected, (ii) no sale of even a single bricks outside books was detected (iii) No coal was consumed during the year as the coal purchased was in stock, (vi) expenditure on water and Guna (material used for burning Bhatta) is fairly reasonable ....