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TMI Blog2012 (8) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred while confirming the Order of the Assessing officer wherein the A.O. is not justified in making the addition of Rs.15,15,492/- on the charge of under invoicing which has been made on the basis of Annexure-D of show cause notice issued by the Commissioner of Customs & Central Excise III, Hyderabad for the accounting year relevant to the assessment year under consideration. 3. The Hon'ble Commissioner of Income Tax, Appeals-I has directed to the Assessing officer for verification and revision of the unaccounted sales with reference to the revised duty and turnover on the basis of Annexure-E and Annexure -E1 of show cause notice issued by the Commissioner of Customs & Central Excise III, Hyderabad. 4. As on date, which is pending, and we are in appeal subject to whatever additions/disallowances which may be made in the Order after verification of the same. 5. We, hereby, not agreed for disallowances made in that respect." But for the amount involved in ground No.2 above, the grounds raised by the assessee in the appeals for the assessment years 2003-04 and 2004- 05 are also identical to those extracted above. 3. Briefly stated, relevant facts of the case are that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission deleted the same for all the years under consideration, stating that the assessing officer merely relied on the oral evidence and there is nothing to prove the allegation with any corroborative evidence. Thus, the addition of Rs.1,73,24,732 out of the total addition of Rs.2,77,99,210 involving assessment years 2001-02 to 2004-05 stood deleted, leaving the addition of Rs.1,04,74,478 attributable to additions based on Annexure D to the show cause notice. Thus, the CIT(A) accepted the contentions of the assessee that unless there is direct corroborative evidence to support the contents of Annexures, there is no basis for making the addition to the turnover. In the process, the CIT(A) merely relied on the order of the Settlement Commission. 8. The next claim relates to addition of Rs.1,04,74,478 attributable to Annexure D-1, The CIT(A) confirmed the admitted additional liability of Rs.14,15,920 for all the assessment years under consideration against the alleged addition of Rs.1,04,74,478 relying on the admission of the assessee, before the Settlement Commission, which has been finally accepted by the Settlement Commission. The assessee objected to the sustaining of the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission, the addition made by the AO for the A.Y. 2001-02 to 20040-05 in so far as Annexure D-1 is concerned does not stand. Thus, the amount added by the AO of Rs.40,78,428/-, Rs.48,76,650/-, Rs.17,03,205/- and Rs.66,66,454/- for the assessment years 2001-02 to 2004-05 based on Annexure D-1 is directed to be deleted. 03.5 As regards the addition based on Annexure D is concerned, the duty admitted by the appellant was Rs.11,55,595/- which was finally computed at Rs.14,15,020/-. The appellant in the written submission has submitted that the amount above was accepted by the assessee company and the additional liability of Rs.14,15,020/- has been accepted and paid by the company. Accordingly, in my view, the addition made by the AO for under invoicing based on Annexure D is not improper. The question arises whether the entire differential amount needs to be brought to tax. It is the appellant's contention that the entire amount should not be brought to tax and only the profit element thereof should be taxed. I do not agree with the contention of the appellant. It is to be borne in mind that the amount indicated by the AO is only under invoicing i.e. the real sale value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty relating to unaccounted sales has undergone revision by the Excise Department and has been accepted by the appellant more or less with a slight variation, the turnover as was originally determined in Annexure E, the revised unaccounted sales, needs to be verified with reference to the revised duty. The Assessing officer is directed to factually verify the same at the time of giving effect of his order and modify the turnover after obtaining the basis of calculation of revised duty. Same exercise is also to be done by the AO in respect of the turnover as per Anensxdur5e E-1 since the initial demand raised by the Commissioner of Central Excise has undergone change as noted in the order of the Settlement Commission. In so far as adopting of rate of profit is concerned the AO has adopted the rate as disclosed by the appellant for its accounted (disclosed ) turnover. To that extent I do not find any infirmity in the same. This effective ground of appeal is partly allowed subject to factual verification by the AO and direction made as above." 11. Aggrieved by the above direction and the additions sustained by the CIT(A), assessee filed appeals before us with the grounds extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above propositions, duly furnishing copies thereof in the paper-book before us. (a) Ahmedabad Bench decision of the Tribunal in the case of Rajhans Builders V/s. DCIT(ITA No.3172-3288 /Ahd/ 2009) dated 4th June, 2010 (b) Ahmedabad Bench decision of the Tribunal in the case of Jai Pulse Mills V/s. ITO(ITA Nos.1317-1319/Ahd/2004 dated May 7, 2010. (c) Cochin Bench decision of the Tribunal in the case of P.M.Abdul Razak V/s. ITO (63 ITD 398) (d) Ahmedabad Bench decision of the Tribunal in the case of DCIT V/s. associated Petroleum Corporation (44 SOT 45) 13. On the other hand, the learned Departmental Representative for the Revenue relied on the order of the Settlement Commission as well as the impugned orders of the lower authorities. 14. We heard both the sides. Limited issue on the issues of under-invoicing that is required to be sorted out relates to finding out the suppression of additional turnover if any, indulged by the assessee, which led to the impugned additions. It is a fact that there is no direct evidence on record to demonstrate either a case of under-invoicing. Whatever are the additions made by the assessing officer, are based on the Annexures to the show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer, for fresh examination of the matter and for making any addition that may be warranted on account of under-invoicing if any indulged in by the assessing officer, in accordance with law and after giving reasonable opportunity of hearing to the assessee. 17. In the result, these three appeals of the assessee are partly allowed for statistical purposes. ITA No.1438/Hyd/2010 : Assessment year 2005-06 18. Now, we shall take up the appeal for assessment year 2005-06. 19. Effective grounds of the assessee in this appeal read as follows- "1. The Order of the Hon'ble Commissioner of Income- tax(Appeals) I is erroneous in law and contrary to facts on both facts and in law. 2. The Hon'ble Commissioner of Income-tax(Appeals) has erred while confirming the Order of the Assessing officer wherein the Assessing officer has estimated the gross Profit @ 25% on total turnover which is not correct and not justified. 3. The Hon'ble Commissioner of Income-tax(Appeals) I has erred while confirming the Order of the Assessing officer wherein the A.O. is not justified in comparing the trading results of the appellant with that of Madhucon Granites Ltd., which unit deals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out any defects in the books maintained by the assessee. In the circumstances, we agree with the learned counsel for the assessee that it is not permissible for the assessing officer to resort to estimation of the income of the assessee in terms of S.145(3) Act, without rejecting the books of account maintained by the assessee, a decision that follows the discovery of incompleteness, inaccuracy, etc. in the said books. It also appears that the material seized at the time of search proceedings in the case of the assessee, has no bearing or relevance to the determination of the income of the assessee for the year under appeal. There is no scope for estimated additions in matters of search assessment s made under S.153A of the Act. In the circumstances, we find no justification for the impugned addition made by the assessing officer by resorting to estimation. We accordingly set aside the orders of the lower authorities on this issue, and delete the impugned addition made by the assessing officer and confirmed by the CIT(A). Consequently, grounds of the assessee in this appeal are allowed. 25. In the result, this appeal of the assessee is allowed. 26. To sum up, while first three ..... X X X X Extracts X X X X X X X X Extracts X X X X
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