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TMI Blog2010 (1) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... , J:- 1. Appellant-assessee is engaged in manufacture/processing of cashew kernel and sale of the same exclusively to its sister concerns which are fully engaged in exports. While scrutinizing income-tax return of the appellant filed for the assessment year 2004-05, the Assessing Officer noticed that in spite of huge turnover the assessee had, assessee returned an income of only Rs. 4,21,882. On scrutiny of the accounts, it was noticed that assessee was selling cashew kernel produced in its factory to the sister concerns at much below even the cost of production, leave alone profit. In fact the assessee's accounts disclosed that the production cost is Rs. 174 per kg, whereas average price at which cashew kernel sold by the appellant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is not perpetuated by the sister concerns by claiming ineligible tax exemption on exports, then there was no need for a further addition in appellant's assessment. However, the assessee challenged the order in appeal before the Tribunal which found that the appellate order is sustainable inasmuch as its purpose was only to set right a tax evasion scheme practised by the assessee with export firms under its control. It is against this order of the Tribunal the assessee has filed this appeal. We have heard senior counsel, Sri. Sarangan appearing for the appellant-assessee and Sri. P.K.R. Menon, senior counsel appearing for the revenue. 2. During initial hearing held on 30-11-2009 we felt that clarification should be sought for from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention raised by the revenue is that the issue raised is purely a question of fact, that is about the quantum of addition to be sustained in a proved case of concerted tax evasion scheme practised by the appellant with his sister concerns. Senior counsel has relied on the decision of the Madras High Court in Sri Ramalinga Choodambikai Mills Ltd. v. CIT [1955] 28 ITR 952 and that of the Supreme Court in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706. 4. After hearing both sides and after going through the orders of the lower authorities, we find that the assessee has made concerted effort to evade payment of tax through sister concerns. When the beneficiaries of the assessee's transactions are sister concerns of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... differential amount between the cost of production and sale price realized admitted that sales at the value stated are not genuine sales. Since the appellant is admittedly a partner of the sister concerns, he should have seen that corresponding debit was made in the purchase account of the export firms so that ineligible benefit of tax exemption is not claimed by them under section 80HHC of the Act. So much so CIT (Appeals) directed verification of purchase account of the sister concerns and if they have debited the purchase account with the same amount credited in the trading account by the assessee, the appellate authority directed deletion of the addition made in the assessment. The very fact that the appellant has contested the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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