TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 570
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....ords. For the sake of clarity submissions made in the applications are reproduced as under: "1] The Hon'ble ITAT vide its order dated28-03-2019 decided the appeals as filed against the order of the Ld CIT [A]-1, Indore dated 31-03-2016. 2.1] The Revenue had taken the following grounds in the present appealwhich are summarized as under: "1. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in restricting the addition made on account of estimated GP. 2. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition of Rs. 7,97,54, 165/ - and Rs. 3,41,55,992/~ made on account of alleged excise duty and VAT Tax collected but not paid in Government account. 3. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in ignoring the facts of the case that the addition made on account of alleged excise duty and VAT Tax were based on incriminating invoices seized during the excise search and the same was not included in the turnover. 4. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition of Rs. 5, 00, 00, 000/ - made on account ....
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....ilable on record, we find the ld. CIT(A) was justified in approving the action of the Assessing Officer. Thus, this ground of the appeal of the assessee is dismissed." 2.3.2] The Hon'ble Bench while deciding the said issue stated that the Ld Counsel of the assessee company relied upon the order of the LdCIT(A). However, this remark is factually not correct since the assessee company challenged the action of the LdCIT(A) in confirming the rejection of books of accounts. 2.3.3] The assessee company challenged all the additions made/issues raised in the assessment order before the Ld CIT (A). The LdCIT(A) after examining the submission of the appellant approved the rejection of books of accounts merely on the basis of finding of the show cause notice as issued by the Excise Department. The Ld.CIT(A) in Para 6.1 on inner Page No. 67 & 68 of his order observed as under: "6.1 On perusal of the material on record it is seen that it is an admittedfact that the DGCEI conducted a search on the premises of the appellanton 05-01-2012. As detailed in the assessment order the documentsfound revealed that the appellant had indulged in unaccountedproduction and sale of 32976.375 MT of TMT ba....
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.... of accounts of the assessee company. 2.4] That all other reasons as listed by the assessing officer were general in nature and duly addressed by the assessee company in the SYNOPSIS as filed before the Hon'ble Bench. The Hon'ble Bench was therefore not justified in approving the action of the Ld CIT (A) more so when very basis of rejection of the books of accounts by the LdCIT(A) did not exist.That in view of the above, Hon'ble Bench is hereby requested to recall its order and decide the said ground in respect of rejection of books of accounts afresh. ESTIMATION OF INCOME - Ground No. 1 of the Departmental appeal and Ground No. 4 of the appeal as filed by the assessee company 3.1] The Hon'ble Bench in Para 5 on inner Page No. 5 & 6 of its order decided the Ground No. 1 of the Departmental appeal and Ground No. 4 of the appeal as filed by the assessee company. The said para of the order of the Hon'ble Bench is reproduced as under for your ready reference: "5.We have considered the rival submission and perused the material available on record. Ld. CIT(A) after considering the submissions and relying upon earlier order of the Tribunal applied net profit @ 2.3%. We find that....
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....ed as under: "3.1.1] The appellant in this ground of appeal has challenged the estimation of gross profit at 5% by the assessing officer and as reduced to 2% by the Ld CIT[A]. 3.1.2] The assessing officer while making addition to the total income of the appellant considered the turnover as shown by the appellantof Rs. 82,56,84,821/- and turnover as estimated by the Excise Department of Rs. 77,41,64,850/- thereby approximately totaling it to Rs. 160,00,00,000/- and thereafter applied the rate of Gross profit of 5%. The calculationis summarized in tabular form as under: S.No Particulars Amount [in Rs] 1 Total turnover as shown by the appellant 82,56,84,721 2 Additional turnover as estimated by the Excise Department 77,41,64,850 Total Turnover 159,89,52,571 Total turnover as estimated by the assessing officer 160,00,00,000 Gross Profit applying the rate of 5% 8,00,00,000 Less Gross Profit as shown by the appellant 25,98,878 Net addition made to the total income of the appellant 7,74,01,122 3.2] The appellant during the course of assessment proeedings had filed detailed reply as to justify the rate of Gross Profit as....
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.... 3 Rate Per Ton 11,630 23,126 16,636 31,452 43.04% 36.00% 3.4] That on comparison of the above figures, it prima facie seems that price of raw material as consumed by the appellant increased by 43.04% in the year under consideration as compared to Assessment Year 2010-11. Similarly, the price of MS Ingot also increased by 36% in the year under consideration as compared to Assessment Year 2010-11. However, sales price of steel bar during this period increased by 32.57% and realisation of MS Ingot increased by 26.45% only. The appellant was not able to shift the entire increase in the cost of purchase of raw material to its customers in the form of sales and it was for this reason that the rate of Gross Profit and Net Profit reduced in this year. 3.5] The appellant had incurred huge losses in its steel business and the same was set-off and shown as profits due to income as earned by the appellant from its derivatives/commoditites busiess. Hence, effectively there was loss in the steel business of the appellant. 3.6] The assessing officer therefore grossly erred in estimating the rate ....
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.... of working of both these companies wasmore or less similar to M/s Jaideep Ispat & Alloys P Limited. Names of directors of both these companies is as under: S.No Name of Directors Anant Steels P Limited Shivangi Rolling Mills P Limited 1 [i] Smt Neera Bansal [ii] Shri Mayank Bansal [i] Shri Pankaj Bansal [ii] Shri Divanshu Bansal 3.9.1] The nature of busienss of the appellant and M/s Shivangi Rolling Mills P Limited was some how similar to that of M/s Jaideep Ispat & Alloys P Limited. Comaprative chart of total turnover and bank loans as taken by these companie is as under: S.No Particulars Anant Steels P Limited Shivangi Rolling Mills P Limited Jaideep Ispat & Alloys P Limited 1 Total Turnover 82,56,87,721 63,59,81,407 334,36,94,445 2.1 Long Term Borrowings 2,35,29,092 2,02,95,856 44,12,80,146 2.2 Short Term Borrowings 5,80,73,541 4,03,19,611 21,16,34,446 Total Borrowings 8,16,02,633 6,06,15,467 65,29,14,592 3.9.2] That in view of the above, it is clear that the turnover of the appellant was of Rs. 82 crores only whereas total turnover of M/s Jaideep Ispat & Alloys P Limited was of Rs. 334 Crores. Moreover, the....
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....as taken on the basis of trial balance as on 06-01-2012 at Rs. 7,87,63,230/- which was not correct since the said valuation was not done properly in the mid of the year. The appellant also expressed its difficulties in preparing two trading accounts in a very short period i.e. in one day's time while filing its reply against the show cause notice as issued. 3.11.3] Quantity details of stock of raw material, finished goods, work in progress and stores & spares from 01-04-2011 to 05- 01-2012 and from 06-01-2012 to 31-03-2012 had also been filed before the assessing officer along with copy of stay petition since the assessing officer did not seek any comments from the appellant on higher rate of Gross Profit during the post-search period. 3.11.4] The amount of purchases as considered by the assessing officer during the first period was of Rs. 46,96,09,143/-. However, the correct amount of purchases was of Rs. 46,86,09,143/- only. Hence, the said amount requires to be modified in the assessment order. 3.11.5] That in the Trial Balance, the amount of direct expenses included the Power expenses only till 24-12-2011. The amount of Power expenses for the period fom 24-12-2011 to 05-0....
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....n. The valuation as considered on 05-01-2012 in this letter was also on the basis of rates as considered at the time of finalisation as on 31.03.2012 and stock of raw material of scrap on FIFO basis. Thus, observation of the assesisng officer that the appellant incurred losses till 05- 01-2012 and thereafter showed huge profits was factually not correct. 3.11.8] That in view of the above, the tentative rate of Gross profit as calculated was of 0.82% and [-] 1.78% only and not as calculated on Page No. 28 of the assessment order. Hence, on the basis of wrong observation, the rate of G.P.was substitued and therefore addition made on account of low G.P. rate was not proper. 3.12.1] That in the year under consideration, the gross profit rate as declared by the appellant and by M/s Shivangi Rolling Mills P Limited was as under: S.No Description Anant Steels P Ltd Shivangi Rolling Mills P Ltd 1 Turnover 82,56,87,721 63,59,81,407 2 Gross Profit 25,98,878 -1,09,75,674 3 % of rate of Gross Profit 0.31% [-] 0.0173% 3.12.2] That in view of the above, it is clear that the G.P.rate in the case of a....
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.... Court in the case of CIT Vs Bal Chand Ajit Kumar as reported in 263 ITR 0610 has held that [refer para 6 of the order]: "6. We are in respectful agreement with the aforesaid opinion inasmuch as the total sale cannot be regarded as the profit of the appellant. The net profit rate has to be adopted and once a net profit rate is adopted, it cannot be said that there is perversity of approach. Whether the rate is low or high, it would depend upon the facts of each case. In the present case net profit rate of five per cent, has been applied. We do not think it appropriate that the same requires to be enhanced. We are also inclined to think that it is high. In any case, it cannot be said that there has been perversity of approach." 3.13.3] That in the present case in hand, the appellant had negative income from its manufacturing activities and profit was derived from other income. Hence, following the decision of the Hon'ble Jurisdictional High Court, no addition is to be made even on account of net profit theory. 3.14.1]That in the assessment order, the assessing officer heavily relied on the show cause notice as issued by the Hon'ble Commissioner of Central Excise. It is needles....
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....% in case of unaccounted turnover in that year but book result as declared by the assessee companywas neither disturbed by the assessing officer nor by any of the appellate authority. 3.5] That in view of the above discussion, percentage of Gross profit of 0.31% and Net profit of 0.29% as declared by the assessee company in the year under consideration requires to be accepted in light of the decision of the Hon'ble ITAT in the case of the appellant itself for the Assessment Year 2007-08. The direction of the Hon'ble Bench so as to adopt the net profit rate of 3.30% in this year on the amount of turnover as disclosed in the books of accounts on the basis of order as passed in the case of the assessee company itself for the Assessment Year 2007-08 is a mistake apparent from records and therefore Hon'ble Bench is hereby requested to recall its order and decide this ground of appeal afresh." 5. Ld. Sr. DR opposed the above submission and submitted that the Tribunal had recorded a finding of fact and reached to the particular conclusion, therefore, now at this stage, the order of the Tribunal should not be reviewed as the Tribunal while deciding the original appeal had already cons....