2020 (2) TMI 571

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.... under consideration, the assessee has filed return of income on 14.10.2013 declaring total income at Rs. 6,92,850/-, which was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Income Tax Act, 1961 was issued and served upon the assessee. In the assessment proceedings, assessee has shown total turnover of Rs. 13,80,89,351/- and GP shown at Rs. 19,12,854/-. The net profit shown by the assessee was of Rs. 6,47,583/- including other income of Rs. 9,65,002/-. From the details of sales and purchase as also stock registered submitted by the assessee during the assessment proceeding, it was noticed by the AO that assessee has purchased milk power from Gujarat Cooperative Milk Marketing Federation, Anand. On the basis of stock register, a summary of stock position, purchaser, seller, purchase price, sale price and date wise was prepared in a tabular form and noticed in page no.4 of the assessment order. Assessee was maintaining stock register on the basis of FIFO method. The ld.AO further noticed from the stock register that the items at Sr.No.3, 8, 12 & 13, the assessee has ....

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.... which rate assessee had sold the same product to other parties instead of Rs. 135/- per kg. of milk powder, and a margin of Rs. 40.60/- per kg. was added to the total income of the assessee, which he worked out at Rs. 21,93,618/- (54030 kg. x 40.60/-) as concealed sale, and added to the total income of the assessee. Assessee has challenged this action of the AO before the first Appellate Authority, but did not get any relief. Hence, assessee is before the Tribunal. 6. Before me, the ld.counsel for the assessee reiterated submissions as were made before the ld.Revenue authorities. He further submitted that assessee is bound to honour its business commitment to sell the products to the said M/s.Jay Durga Bhandar at lesser rate, when it anticipated price fluctuation. He submitted that Revenue should not interfere in the business decisions of the assessee, and it is for businessman to determine at which price it has to sell its products to its customers. The ld.counsel for the assessee relied upon various decisions of Hon'ble High Courts, viz. CI T Vs. Keshavlal Chandulal, 59 ITR 120 (Guj), CIT Vs. Calcutta Discount Co. Ltd., 91 ITR 8 (SC), A. Khadar Basha Vs. ACIT, 58 taxmanncom 3....

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.... per kg resulting into loss. The A.O has not accepted the argument of the appellant and has also went down to verify Form-C and acknowledgment receipts of commercial tax department. The A.O has not accepted the isolated loss making transactions with M/s. Jai Durga Bhandar and has proceeded to add the difference of Rs. 21,93,618/- .to the income of the appellant on account of under invoicing of the sale transaction. During the appellate proceedings also the appellant relied upon the argument of 'commitment to sale' to M/s. Jai Durga Bhandar at a price of Rs. 135 per kg. However, it has not given any reason why the said commitment was made to sale at a loss. The appellant has .relied upon the judgment of Bangalore Tribunal in the case of DCIT vs Sphoorti Machine Tools 30 Taxman.com 413 (Banglore Trib.). It is seen from the said case law that in that case the assessee was supplying the products to the sister concern at a price of lesser than the price at which the same product was sold to third parties. The Tribunal has held that sale of the assessee to its sister concern at a lesser price would not be the sufficient ground to reject the books of accounts. In the case under co....

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....refore, the Revenue authorities are rightly held that books of accounts did not reflect true picture, and accordingly rejected under section 145 of the Act. As stated above, there is no evidence or explanation as to why it has sold the items less than the purchase price by making loss of Rs. 38.40 per kg which resulted in under invoicing sale by Rs. 20,74,752/-. Even before me also, the assessee is unable to substantiate its claim with any evidence or valid explanation. Therefore, I do not find any defect in the finding of ld.CIT(A), which I confirm, and these two grounds of appeal of the assessee are rejected. 9. In ground no.4(i) to 4(iv) of the appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming disallowance of interest of Rs. 5,58,821/- out of total bank interest of Rs. 15,23,823/-. 10. With the assistance of the ld.representatives, we have gone through the record carefully. As it emerges out from the record, the ld.AO noticed that the assessee has paid bank interest of Rs. 15,23,823/- at the rate of 10.72% on an outstanding of Rs. 1,42,12,414/- taken from the bank. It was further noticed by the AO that the assessee has made loan advances o....