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TMI Blog2013 (9) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/Mum/2008 - - - Dated:- 7-8-2013 - S/Sh. H.L. Karwaident Rajendra, JJ. For the Petitioner: Shri Bhupendra Shah For the Respondent: Shri Ashutosh Rajhans ORDER PER RAJENDRA, AM Cross appeals have been filed against the order dated 12.10.2007 of the CIT(A)-XXVII, Mumbai. Assessing Officer (AO) has raised the following grounds of appeal: ITA No. 390/Mum/2008 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the amount of Rs. 43,70,435/- in respect of suppressed sale of oil claimed to have been recovered from the ship by the Assessing Officer. 2.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the amount of Rs. 3,04,55,578/- in respect of suppressed sale of various spare items claimed to have been recovered from the ship by the A.O. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in deleting amount of Rs. 15,39,977/- related to wastage and recovery from the ship. 3.1.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting amount of Rs. 1,75,15,601/- in respect of non ferrous meta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,AO found that assessee had purchased three ships for demolition. Out of three ships assessee dismantled two ships completely whereas the third was dismantled partly.AO called for the details of sales of items obtained from the ship as well as the scrap generated from dismantling. After examining the details filed by the assessee-company, he held that many items; which were received by the assessee along with the ships; had not been reflected in the sales in the same quantity/nomenclature. He directed the assessee to explain the discrepancy and issued a show cause notice asking the assessee as to why said items should not be treated as sale out of books of accounts. He further noticed that in working the quantities of closing stock the assessee estimated the wastage but same was not worked out on the basis of each ship dismantled. He held that from the bills of entry it was clear that the assessee had got various items along with the ships and same had not been shown in the books of accounts.AO made addition of Rs. 43.7 lacs in respect of suppression sale of oil recovered from the two ships and of Rs. 3.04 Crores with regard to undisclosed sale of various scrap items. The details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative submitted that the AO had committed mistake while passing the assessment order, that out of 301 MT oil, 224 MT oil was sold by the assessee and information about the sale of the oil was made available to the AO,that balance 76 MT oil was used by the assessee. He referred to page no. 22 to 24 of the paper book. 2.4. We have heard the rival submissions and perused the material before us.We find that while passing the order AO had not considered the details of oil sold, as pointed out by the FAA. Page no.1 of annexure-2 of the assessment order speaks about the item sold by the assessee company. We find that he has mentioned the sale of oil sold (in barrel),but in the narration he has mentioned furniture in place of furnace oil.FAA has verified the sale bills along with the details of purchasers and quantity of oil sold.In these circumstances, we are of the opinion that order of the FAA does not need any interference from our side. Ground No.1 is decided against the AO. 3. Next effective ground of appeal is about deletion of an addition amounting to Rs. 3.04 Crores. During the assessment proceedings, AO had made addition on account of wastage and recovery from ship (Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Govt. of India has also accepted the fact that wastage could be had 15%. In these circumstances, we are of the opinion that without bringing anything concrete on record AO had made the addition. In these circumstances, we have upheld the order of the FAA. Ground no.3 is decided against the AO. 3.2. Next ground of appeal is in respect of addition of suppressed sales of non ferrous metal of 124.743 MT, valued at Rs. 1,75,15,601@of Rs.1.40lacs per MT.As per the AO,the assessee had shown sale of 97.987 MT non ferrous metal whereas as per he should have sold 192.73 MT. Assessee-company preferred an appeal before the FAA. After considering the assessment order along with the annexure-1 and annexure-2, he found that recovery and sale of the non-ferrous metal was about 208 MT(1.3% of the LDT), that according to Government High Power Committee recovery has to be taken between the .5% to 1% of LDT, that Tribunal had taken .8% recovery as normal. Considering the above, he held that recovery and sale in the case under consideration was within the parameter generally accepted in the industry, that there was no material available on the record to show that appellant had diverted any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FAA held that there was no basis for estimating the number of Cranes at 17, that after being used for 20-25 years in salty weather on sea it was not possible to realise/recover substantial amount from sale of the Cranes, that Cranes had to be sold as scrap of Iron and Steel. 3.4.a. Before us, DR and the AR supported the orders of the AO and the FAA respectively. We find that while making the addition AO has estimated the number of cranes of 17 but has not given any basis for such estimation. He has not mentioned any basis for calculating the sale price of the Cranes at Rs. 40 lacs. In these circumstances, upholding the order of the FAA we decide ground no. 3.3 against the AO. 3.5. Next ground of appeal is in respect of addition of Rs. 36 lacs on account of suppressed sale of 9 generators sets at the average value of Rs. 4 lacs each.AO had held that assessee had not shown the sale of generator sets, available in the ship, in its books of accounts. During the appellant proceedings, FAA held that there were eight generators sets in the ships dismantled by the assessee, that it had accounted for all the generators sets as per the description in Annexure-2 of the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. We find that during the year under consideration assessee had dismantle two ships completely and one ship partially. It is known fact that ships are connected by wires for various purposes and a net of wires and cables run through the ships. Assessee has shown sale of 250 Kgs of cables only. In these circumstances if the FAA has estimated the sale at Rs. 1.76 lacs then, in our opinion, he has acted judicially. Upholding his order, Ground no.3.5 filed by the AO and ground no. 3 of the assessee are decided against them. As a result, appeal filed by the AO stands dismissed. ITA No. 7522/Mum/2007 4.First ground of appeal filed by the assessee pertains to addition of Rs. 4 lacs on account of suppressed sales of 4 Anchors weighing at 40 MT @ Rs. 10,000/- per MT. During the assessment proceedings, AO has held that assessee had not shown sale of any of the Anchors even though assessee had received at least one Anchor with each ship and one additional Anchor with the ship namely M.V. Dongola. 4.1. Assessee preferred an appeal before the FAA. After considering the submissions of the assessee, he held that there were three Anchors and they would definite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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