TaxTMI 
TaxTMI 
2025 (8) TMI 1580
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....ech Sales Corporation has made sale of micro SD cards to various parties entirely in cash. 4. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) has not considered the statement of Shri. Rohit Bhandariis taken on oath by the ITO 33(3)(2) Mumbai.Shri. Rohit Bhandari failed to provide any details of the quantity of micro cards sold, to whom the same are sold and rate of each card. 5. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in getting the facts that manipulation of cash sales by creating a front entity M/s. Hi Tech Sales Corporation to suppress the profit element." 2. Fact in brief is that return of income declaring total loss of Rs. 89,55,786/- was filed on 08.11.2014. The case was subject to scrutiny assessment under Section 143(3) of the Act. The assessment u/s 143(3) of the Act was completed on 30.12.2016 at total income of Rs. 12,97,69,480/-. The assessee is in the business of manufacturing micro SD memory cards, Printed Circuit Boards and CFL lights. During the course of assessment the Assessing Officer noticed that assessee has made major sale of micro SD cards to the following....
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....nalysis of material available on record, the following facts emerges: "1. The AO in the Assessment order vide Para 5 has stated that Shri Rohit Bhandari is proprietor of Hi Tech Sales Corporation and is assessed with ITO, Ward 33(3)(2), Mumbai. That information is received from such ITO vide letter dated 29.12.2016, that Hi Tech Sales Corporation has made sale of Micro SD Memory cards for Rs. 122,00,79,741/- to various parties entirely in cash. 2. Statement of Shri Rohit Bhandari was recorded on oath by ITO, Ward 33(3)(2), Mumbai and it was revealed during statement that Hi Tech Sales Corporation is the only front entity of the appellant. However, on perusal of the assessment order of Shri Rohit Bhandari, as uploaded during appellate proceedings, wherein vide Para.12 of such order, the entire statement of Shri Rohit Bhandari recorded as on 20.12.2016 and 22.12.2016 are reproduced in verbatim and it is observed that at no place, the ITO, Ward 33(3)(2), Mumbai has asked any question related to Mr.Rohit Bhandari, being front entity of the appellant and there is no such admission, as shown to have been made by Mr.Rohit Bhandari, that he is front entity of the appellan....
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....er card to Hi Tech Sales Corporation whereas appellant has sold 2,11,000 cards to Samay Time Syndicate at Rs. 200/- per card. This factor and basis of comparison was considered during appellate proceedings. First of all, the facts as are available on record clearly and unequivocally shows that in the case of prices applicable to Hi Tech Sales Corporation, average price of total quantity sold throughout the year was adopted. On the other hand, there was one time sale in the month of January, 2014 to Samay Time Syndicate of 2,11,000 cards at average price of Rs 200/- per card. Therefore, as a natural corollary, the basis of comparison ought to have been the sale price of such cards in the month of January, 2014. Undisputedly, in January, 2014, the sale price of cards to Samay Times Syndicate was Rs. 200/- per card and at the same 'ime, the appellant has sold such cards to Hi Tech Sales Corporation at a price ranging between Rs. 200/- to Rs. 210/- and average comes to Rs. 204/- per card. Therefore, the appellant's contention of charging market price prevailing at relevant point of time is correct. The AO has not adopted a scientific basis in comparing the sale price on average....
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....ect that Hi Tech Sales Corporation was a front entity remains unsubstantiated or unproven. Basis of comparison of sale prices, as discussed above, are unscientific and having different parameters. Therefore, assumption of suppression of sale and thereby addition of Rs. 13,83,36,069/- is not correct or maintainable, and therefore, directed to be deleted. Accordingly, grounds no.1,2(a),2(b) and additional grounds no.1, 2 are Allowed." 5. During the course of appellate proceedings the ld. DR relied upon the order of the assessing officer. On the other hand, the ld. AR submitted that the Hi Tech Sales Corporation was the regular buyer, whereas sale to Samay Time Syndicate was made in small quantity in the month of January, 2014. He further submitted that sale volume at large scale made to the regular buyer M/s. Hi Tech Sales Corporation is not comparable with small quantity of sale made to the other buyer Samay Time Syndicate only in the month of January. The ld. Counsel supported the order of the ld. CIT(A). 6. Heard both the sides and perused the material on record. Without reiterating the facts as elaborately discussed above the assessee has made major part of sale of memory c....