AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 575
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....ssumptions and presumptions, without seeking an expert report on the same. It has been held by Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Vs. CIT reported in [1999] 237 ITR 1 (SC) wherein it has been held that the Assessing Officer is not entitled to make observations on technical matters, for which there is no material on record. Thus, the action of Ld. AO deserves to be held bad in law. 1.2 That, the Ld. CIT(A) has further erred in upholding the application of provisions of section 145(3) of the Act merely by alleging that the primary record of production was not maintained by assessee by completely ignoring the fact that daily production recorded maintained at mines was itself the primary record of production. Therefore, the action of Ld. AO in rejecting the books of account of assessee deserves to be held bad in law. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in sustaining the trading addition of Rs. 70,00,000/- out of the addition of Rs. 75,00,000/-made arbitrarily by Ld. AO being a lump sum / estimated addition without any basis. Thus, the addition of Rs. 70,00,000/- sustained by Ld. CIT(A) de....
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....that the assessee has shown purchase and sale to sister concern namely M/s Hemendra Minerals and Bhanwar Sales Corporation. The transactions with these concerns are required to be verified with the similar transactions of outside parties. Thereafter, in the final findings recorded by the AO at Para 10 of his order, the AO has listed down the purchases made for trading purpose from various parties amounting to Rs. 1,13,06,791/- and held that from the perusal of trading sales, it reveals that gross profit rate in trading of clay varies from 18.57% to 32.85%. It is also seen that the assessee has made purchases from its sister concern M/s Hemendra Minerals at higher rate as compared to other concerns hence the gross profit earned on such transaction is lower. Similarly, when sales are made to sister concern, the gross profit earned is lower. Hence it is not possible to verify the actual gross profit earned by the assessee on the trading of clay & clay powder. The said findings of the AO have been confirmed by the ld CIT(A), however, there is no reasoning which is discernable from the order of the ld CIT(A) on the basis of which he has confirmed the findings of the AO. 5. During ....
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.... the expenses debited in the trading account. In the show cause notice, the Assessing Officer has talked about expenses on account of diesel and oil consumption as not fully verifiable, mining expenses which are higher than the preceding year and not subject to verification, and increase in the transportation and cartage expenses as compared to previous year. However in the final findings so recorded by the Assessing Officer, he has restricted his findings limited to discrepancies in consumption of diesel, and expenses pertaining to transportation and cartage. As per the Assessing Officer, on the basis of test check basis of the vouchers produced by the assessee, it is found that the expenses have been incurred on number of vehicles which are not owned by the assessee. It was further observed that the expenses pertaining to sister concern M/s Hemendra Minerals were also debited in the accounts of the assessee. Further, the assessee has lifted 100 litres of diesel however, the assessee did not maintain day to day consumption of the diesel so lifted. Regarding transportation and cartages expenses, it was noticed by the Assessing Officer that as against claim of Rs. 6,87,269/- in t....
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.... sales bills may be practically not feasible. At the same time, on perusal of records, we also find that there are also gaps and reluctance on part of the assessee in coming forward with appropriate explanation and filing documentation in support thereof. In overall view of the matter, we find that discrepancy so highlighted by the AO in respect of these two expense heads in terms of non-verifiability need to be read along with other discrepancies to arrive at the final conclusion regarding non-reliability of books of accounts which we shall be discussing in the subsequent paragraphs. 11. Now coming to the main issue of suppression of production by the assessee and apparently the main reason for rejection of books of accounts as discernable from the assessment order. 12. In the show cause notice, the Assessing Officer has stated that the production shown by the assessee is to be verified vis-a-vis the facts revealed from the examination of the records produced and examination of the mining mate (the person employed at the site) and other factors. It was found that the firm is running mines at 3 places. In the process of mining, firstly the overburden is removed to reach the c....
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....are contained at paras 7 to 9 of the assessment order wherein effectively, he reiterates his initial findings as per show-cause notice and rebut the submissions of the assessee and finally held as under: "9. In view of the detailed discussion and factual verification supported with the norms of the industry as well as after allowing leverage for all contingencies and further keeping in mind the volume of men and machinery employed by the assessee on the available mine at the time of relevant year i.e, F.Y 2009-10, I have come to the conclusion that the assessee's A/R's submission is without any valid basis and not supported with the primary records as such is not tenable and it is established that the assessee has suppressed production at least to the tune of 29,925.30 MT of clay which is valued at Rs. 66,43,417/-." Against the said findings of the AO, the assessee carried the matter in appeal before the ld. CIT(A) who has since confirmed the said findings and now the assessee is in appeal against the said findings. 13. During the course of hearing, the ld. AR submitted that books of accounts of assessee were subject to audit by qualified chartered accountant and who....
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....ssessee in accordance with provisions of Income Tax Act. Thus, Income Tax Act also does not impose any legal obligation to maintain such and such type of primary record for production. 14. It was further submitted that the appellant could not making any sales from the mines without issuing the ravana, and the bills were made for all the ravana issued by the appellant, which were verified while doing the royalty assessment by the mining department. No difference was pointed out by the Mining Officer in the production declared by the appellant and sales made in the assessment made. In support of such contention, Copy of royalty assessment Order, copy of monthly return for the fraction period, details of production at mines and dispatches from the mines with reconciliation with the production and dispatches as per monthly returns shown by the appellant and assessed by the mining office were furnished before lower authorities, however the same were brushed aside without pointing out any single discrepancy therein. Moreover, ld. AO has also not found any sales without issuing sale bills. 15. It was submitted that in the instant case, production register itself is Primary record, w....
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....ut manner which were not at all required and moreover the basic figure for the same has been taken purely on estimated basis on the very generalized statement of one Shri Raghvendra, the mining mate, whose main responsibility is safety of mine. The ld.CIT (A) has just confirmed the same by merely stating that ld.AO has derived the suppressed production in logical manner, without appreciating that AO has merely done round about and rather reverse working and even for this working ld. AO has taken estimated generalized figure instead of a specific and day-to-day production figure which are maintained by assessee. 18. Without prejudice to above, it was further submitted that estimation of production by considering overburden removal, length and width of the space available for mining depth / height of instant mine, volume and density of clay etc. is purely a technical matter. It would be appreciated that AO is not entitled to make his own estimation upon technical issues as has been held by Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Ltd. reported in 237/ITR 1/ 103 Taxman 395 (SC). Thus, if at all, ld.AO had any reservations in accepting the producti....
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....30 feet. Once, the clay from the first layer is removed, the process of refilling of the pit is started. Overburden is removed with the help of excavators as well through manual labour wherever machines cannot reach. 21. It was further submitted that in order to understand the mining process in detail, during the course of assessment proceedings ld.AO recorded statements of two persons, one Sh. Raghavendra [mining mate of Guda Radhera I mines and another Sh. Rupa Ram (Labour)]. Both these persons were not responsible for quantity of mined clay on day-to-day basis or even otherwise also. In the statements so recorded, various questions were asked about the procedure and mining process, mainly overburden removal, digging of mine etc. Apart from it Shi Raghvendra was asked about quantum of production with machines and without machines, which was not exactly in his domain. Same is evident from the perusal of the statement of Shri Raghvendra. It is seen that at Q. No. 4 he was asked about who are working on mine where he is working and what are their works. He has replied that his work is related to safety of mine and to tell the labour for work for digging (as to where and to wha....
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....stimate basis. However, ld.AO has misconstrued the same as level of operation of FY 2009-10, and thus has made such data as basis of all his subsequent calculations. Further, learned Assessing officer has considered that 8 M.T. productions is done by the manual labour per day per labour by placing heavy reliance on the part statement of Shri Rupa Ram labour recorded on 18.02.2013. After relating the statements of above two persons, ld.AO observed that as Sh. Raghavendra stated that 200 M.T. clay was produced by the manual labour per day and Sh. Roopa Ram mentioned that per day manual production per labour is 8 M.T. Accordingly, 25 labour are required continuously to produce the 200 M.T. clay @ 8 M.T. per day per labour, which was not at all the actual position in the assessment year 2010-11. In period relevant to A.Y. 2010-11 on an average 20 labours were appointed in all and that too not continuously as per actual attendance of labours for excavation of clay by adopting 23 working days (as considered by the learned assessing officer). 25. It was submitted that even for the argument sake, if it is presumed that each labour gives 8 MT production per day uniformly (but not admitti....
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.....T. (168756 - 28670). The appellant had shown the total production of 1,43,099 M.T. There is no suppression of production by the appellant as calculated by the learned assessing officer. On the similar basis, there is no suppressed production in other mines. 26. It was further submitted that calculation of suppressed production is the statement of Shri Raghavendra Singh Mining Mate which were recorded on 18.02.2013 who stated prevailing general working position at the mines. Other than that no evidence for the suppressed production and sale of the same by the appellant was given by the assessing officer. At this juncture, it is submitted that ld. AO in remand report, has commented that "As per standards, the density of the clay is found to be 2400/kg/m3 to 2600/kg/m3, whereas the AO has taken the density at just 1122/kg/m3, thus if the density is taken as per the standards of engineering, the suppressed production would have been much more." In this regard also, it is mentioned that ld. AO has given a generalized observations. Had there been actually increase in production considering density as per standards (as mentioned), ld.AO would have been definitely re computed the same,....
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....in Kg. is to be divided by the unit of electricity consumed. The chart showing the production of clay powder of factories as per unit consumption of electricity is as under: Month Units of Electricity Consumed Production of clay powder in M.T. Working Days Production Per unit consumption of Elec. in Kg Production Per day In M.T. Production Per unit in M.T. April,09 17820 925 25 51.90 37.00 18.50 May,09 16365 658 25 40.21 26.32 13.16 June,09 14520 706 26 48.62 27.15 13.58 July,09 12420 775 27 62.40 28.70 14.35 Aug.,09 16005 1099 24 68.66 45.79 22.90 Sept.,09 21405 1049 25 49.01 41.96 20.98 Oct.,09 18855 960 25 50.91 38.40 19.20 Nov.,09 19202 968 23 50.41 42.08 14.03 Dec.,09 21746 825 27 37.94 30.55 10.18 Jan.,10 21472 750 24 34.93 31.25 10.42 Feb.,10 15641 790 24 50.51 32.91 10.97 Mar.,10 18290 1080 25 59.05 43.20 14.40 In the month of August, normal mesh powder is grinded 1036 M.T. and high Mesh is 63 M.T., hen....
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....2367;र्धारण प्रपत्र in respect of all the three mines alongwith the reconciliation statement reconciling the quantity of production shown in the अधिशुल्क निर्धारण प्रपत्र with the quantity of production shown in the books of appellant. It was however submitted that the appellant could not controvert the finding of the AO that the appellant had failed to produce primary records of the production. The quantity of the production shown in the अधिशुल्क निर्धारण प्रपत्र is also based only on the books of accounts of the appellant. The authority issuing अधिशुल्क निर्धारण प्रपत्र has not made any independent inquiry to find out the actual production of the appellant nor the authority keeps its own indepe....
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.... dig out 0.355 feet of clay per day. Thereafter, basis the dimension of the clay bed so determined by him and estimated working days available with the assessee to carry out mining operations, the Assessing Officer has worked out the production amounting to 168,756/- tones of clay in respect of mine No. 8/96 as against 143,099 tons of clay production as shown by the assessee. Basis the same, he arrived at the finding that the assessee has suppressed production to the tune of 25,657 tons which comes to 17.92% of the production declared. Applying the same proportion in respect of other two mines, the AO worked out the suppressed production in respect of other two mines No. 2/95 and 7/96. Further, the Assessing Officer assumed that the production of SGRS grade clay & C grade clay is in 4.1 ratio and basis the sale value is recorded in the books of accounts, has worked out the suppressed production of Rs. 63,13,099/- during the year. Further, the AO has alleged that the assessee has not produced the primary records like the dispatch receipts to truck drivers for taking the clay so dug out from the mining area to storage area and from there, for dispatch to the customers. 33. P....
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....h assessee's record. It was further submitted that verification of the production done at mines comes under the jurisdiction of Mining Department where officials have more technical knowledge and are more equipped for computing/verifying production shown from mines and whose assessment should be given credence and should be accepted by Income Tax Department unless some contrary positive evidence or material is brought on record which demonstrate suppressed production and ultimate sale thereof. It was further submitted that ld. AO has estimated the quantum of production by applying certain formulas in a clumsy and round about manner which were not at all required and moreover the basic figure for the same has been taken purely on estimated basis on the very generalized statement of one Shri Raghvendra, the mining mate, whose main responsibility was of safety of mine. The ld.CIT (A) has just confirmed the same by merely stating that ld.AO has derived the suppressed production in logical manner, without appreciating that AO has merely done in a roundabout manner and rather reverse working and even for this working, ld. AO has taken estimated generalized figure instead of a specific an....
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....1,22,86,712/-. Even the expenditure incurred for purchase of raw materials became the subject-matter of extensive discussion, without indicating as to how the purchase of raw material can have any impact upon the income of an assessee, that too, of a manufacturing company. In the order of assessment, which runs into 31 closely typed pages, such instances are galore. 16. Obviously, to analyse and understand the approach of the Assessing Officer, the Tribunal discussed the matter at length. The order passed by it runs into 48 pages. At more places than one, it was pointed out that the stock available on ground, cannot be compared or verified with reference to the RG-I register. It was also pointed out that by-products or waste materials, such as slag, was treated by the Assessing Officer as the main product or an income yielding material and the conclusions were arrived at, only on the basis of assumptions. We agree with the findings recorded and view expressed by the Tribunal. 17. An Income Tax Officer cannot carry out the functions of an authority under the Central Excise Act and arrogate to himself the power to determine the quantity of production, or to....
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....s. Further, using the same percentage of suppressed production, he has proceeded ahead and worked out proportionate suppression of production in the other two mines without getting into specific of functioning of such mines which again cannot be accepted. Without getting into the merits of the formula so arrived by the Assessing officer, as we find ourself not competent enough to comment upon, we find that effectively, the AO has tried to determine the quantum of clay which could potentially be extracted from the mines and that's where whole case of the Revenue rest. The question for consideration here is not the potential extraction of clay rather the actual clay which has been extracted from the mines and which has been sold/dispatched during the year under consideration and which has not been disclosed in the return of income and what credible material is available on record in support of such findings. We however find that there is no material on record and no finding recorded by the AO that quantum of clay so determined by him as part of suppressed production has been actually dispatched and sold and more so, when the assessee's activities comes under the jurisdiction of State....
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....¹à¥ˆ तथा कà¥à¤¯à¤¾ काम करते है ? 1. माईनà¥à¤¸ पर शà¥à¤°à¥€ मितà¥à¤¤à¤², माईनिंग इंजिनियर है। 2. शà¥à¤°à¥€ बकà¥à¤¸à¥€à¤¦à¤¾à¤¨ 3. शà¥à¤°à¥€ राघवेनà¥à¤¦à¥à¤° सिंह 4. शà¥à¤°à¥€ मà¥à¤°à¤²à¥€à¤§à¤° - - - फोरमैन के पद पर है माईनिंग मैन मà¥à¤¨à¤¿à¤® – पारियेपर वरà¥à¤¤à¤®à¤¾à¤¨ में 8 लेबर है जिनका मà¥à¤à¥‡ नाम याद नही है। मेरा काम खà¤....
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....duction steps में किया जाता है। ist step 50 pt. चौड़ी होती तथा Average Height हर सà¥à¤Ÿà¥‡à¤ª में 20 Ft. होती है। इस तरह से Overburden हटाते हà¥à¤ Clay bed तक पहà¥à¤‚चते है तब तक 3 Steps बन जाते है । Overburden कही कही 40 Ft. होता है तो कही 60 Ft. होता है। अनà¥à¤®à¥‹à¤¦à¤¨ 60 Ft. पर होता है जहा Overburden कम होता है वहा Clay bed à¤à¥€ कम होता है। 60 Ft. Overburden जहा होता है वहा à....
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....€ लिठजाते है। इसी पà¥à¤°à¤•à¤¾à¤° डमà¥à¤ªà¤° / Tipper à¤à¥€ कमà¥à¤ªà¤¨à¥€ के खà¥à¤¦ के है तथा किराये पर à¤à¥€ लिठजाते है। जब किसी की Excavator मशीन व dumper à¤à¤• साथ लगते है तो Excavatpr ने कितना काम किया, कितने घनà¥à¤Ÿà¥‡ काम किया, यह नही गिना जाता Tipper की Number of Trips गिने जाते है। Per Trip Tipper का रूपये 150 / - चारà¥à¤œ होता है। à¤à....
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....¬à¤¨ 3 टन Overburden आता है। इसी तरह Production के लिठà¤à¥€ à¤à¤• Excavator मशीन व करीबन 3 Tipper काम में आते है। Production मे à¤à¥€ Overburden Removal की तरह ही कारà¥à¤¡ होता है। यहां पर à¤à¥€ कोनों में मैनà¥à¤¯à¥‚अल Labour काम करती है मैनà¥à¤¯à¥‚अल labour Sieving sorting का à¤à¥€ कारà¥à¤¯ करती हैं Production मे करीब 8 से 10 लेबर कारà¥à¤¯ करती है, जà¥à¤¯à¤¾à¤¦à¤¾ समय ले....
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....¿à¤¨ करीबन 700 टन माल निकलता है। मैनà¥à¤¯à¥‚अली 200 टन निकलता है। ऊपर à¤à¥€ मैने 700 टन बताया है उसमे लेबर दà¥à¤µà¤¾à¤°à¤¾ खोदा गया माल à¤à¥€ शामिल है। कà¤à¥€ कà¤à¥€ Excavator नही चलती है केवल लेबर काम करती है। तब 200 टन का Ptoduction होता है। जà¥à¤¯à¤¾à¤¦à¤¾à¤¤à¤° समय Excavator मशीन राधेरा, गà¥à¤¢à¤¼à¤¾ मे रहती है, महिà....