TaxTMI 
TaxTMI 
2017 (10) TMI 1501
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.... scrap sales. 2. Whether in the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 11049086/- on account of concealed sale of scrap without appreciating the fact that the assessee could not give any evidence regarding non return of the scrap by the vendors doing job work it and it is mot unlikely that the assessee will allow vendors to keep scrap with them, on which its paying excise duty itself." 4. This court while admitting the ITA No.110/2015 on 18.05.2016, framed following substantial questions of law:- " (I) Whether in the facts and circumstances of the case, the ITAT was justified in law and has not acted perversely in confirming the order of CIT(A) deleting additions of Rs. 1,35,56,787/- on account of concealed sale of scrap despite of the fact that the assessee failed to submit any evidence regarding non-return of such scrap by the vendors/subvendors engaged in job work? (ii) Whether in the fact and circumstances of the case, the Tribunal and CIT(A) were justified in law and has not acted perversely in deleting the addition of Rs. 2,33,96,017/- made by AO on account of concealed sales without appreciating the fa....
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....se Act we have to calculate the excise duty on such kind of the wastage/scrap on the basis of standard parameters and also to pay the excise department. This type of excise duty is payable by the manufacturers of his pocket. The submissions of the assessee have been considered but not found tenable reasons as under:-- i) The assessee have paid the job work amounting to Rs. 3,55,96,219/- to M/s. Nobel Industries, which is the entity covered U/s. 40A(2)(b) and it is pertinent to note that the firm is closely related to the partner of the firm. For argument if it may be presumed that the scrap will be remained with the vendors then it is clear that the firm has transferred his profit to the relative of the partners of the firm and it is not admissible. ii) the assessee has not produced any persons or any evidence which shows that the vendor have declared the income for sale of the said scrap. Moreover, on examination of the assessment record of the M/s. Nobel Industries, he has not received any receipt of account of the sale of the scrap which was generated from the job work of M/s. Pushp Enterprises. iii) It is unreasonable and not admissible when the assessee himself dec....
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....nsferred to the said concern. However there is no material brought on record by the AO to substantiate his claim. Even during the remand proceedings, M/s Noble Industries has categorically stated that it had not returned any scrap to the assessee firm. Further 80% of the job work was sub-contracted and no scrap was ever returned by the sub-vendors to M/s Noble Industries. The appellant on the contrary had worked out percentage of wastage on the basis of engineering standards and parameters for payment of excise duty. However no amount was either realized or recovered on sale of wastage or scrap. 3.3 As per the earlier provisions, the Cenvat Credit attributable to the inputs contained in such waste and scrap which had not been received from job workers, was allowed to the assessee. Rule 57F provided that the materials cleared to the job workers was to be received back to the factory within 180 days and in case the processed inputs were not received back within 180 days, the manufacturer was liable to pay the amount equivalent to the Cenvat Credit. However after 01.04.2000, there was no provision under the Cenvat Credit Rules which provided that waste and scrap generated during th....
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....he Income-tax Act took into accounts two points of time at which the liablity to tax was attracted viz., the accrual of income or its receipts, yet the substance of the matter was the income and if the income did not result at all, there could not be a tax. It was also held that where the income could be said not to have resulted at all, there was obviously neither accrual nor receipt of income. In the said case before the Hon'ble Supreme Court, the reduction in commission was a part of the agreement entered into by the assessee to secure a long time managing agency arrangement for the two companies which it had floated and since the said agreement entered into within the relevant previous year had replaced the earlier agreements and had altered the rate resulting in reduction of commission income, it was held by the Hon'ble Apex Court that the amount of commission income to the extent of such reduction could not be said to be accrued to the assessee. In the present case, there is no evidence that the vendors or sub vendors had returned the scrap to the appellant and same was sold by the appellant outside the books of account. In the case of State Bank of Tranvancore Vs CIT(158 ITR....
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....he sales declared in include the increased value of invoiced through supplementary invoice value and rates had already been considered as genuine by the purchaser i.e. SKF India Ltd. Hence the submissions of the assessee were rejected. This observation of the AO was wrong because the assessee had included the rate difference bill in his ER-1 submitted to the Excise Department and paid excise duty on the same which were subsequently no reverted. The assessee also submitted complete evidences in this regard in the form of debit notes/rejection/short receipt advices. So there was no reason to reject the claim of the assessee without any ground. In view of above facts, it was prayed to delete the impugned addition of Rs. 2,33,96,017/- made by the AO. 4.1 I have duly considered the submissions of the appellant. As per excise return ER-1, the assessee had reduced the sales return/rate difference/short receipts and other debit notes which were adjusted against the sales from the total turnover. The assessee filed reconciliation statement for the same but the AO brushed aside the same allegedly on the ground that the amount of rate difference could not be deducted from the sales declare....