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TMI Blog2016 (1) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... hase in assessee’s hands. Be that as it may, since assessee’s books of accounts are maintained and audited and most of the additions are made on the basis of books of accounts other than this estimation of income, we are of the opinion that Revenue has not made out proper case for rejection of books of accounts and estimating the income at 1%. Even the Revenue in Ground No. 4 accepts that percentage of estimation of income defers from year to year depending on the circumstances of the case. This also indicates that assessee’s business profits or losses also fluctuate on year to year basis. There is no need to reject the Books of Accounts which are maintained and on which defects are not pointed out so as to reject them. In view of this, we uphold the order of CIT(A) - Decided against revenue - I.T.A. No. 1054/HYD/2014 - - - Dated:- 16-10-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Shri Rama Krishna, Bandi, DR For The Assessee : Shri Kishore Kumar Kabra, AR ORDER PER B. RAMAKOTAIAH, A.M. : This is Revenue s appeal against the order of the Commissioner of IncomeTax (Appeals)-IV, Hyderabad dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same day. Though the appellant claimed that this was done as it needed cash on that day, it was found that all such sales were credit sales, leading to the conclusion that the appellant had deliberately suppressed the sale price to arrive at a loss. e. The appellant had made purchases of Rs.l,61,58,226 from its sister concern, M/s. Bilasraika Sponge Iron India Pvt Ltd. for which it was unable to produce the transportation bills for delivery of goods to it. The Assessing Officer concluded that these were paper bills without delivery of material to inflate the purchases in its books. f. The serial numbers on some of the purchase bills/tax invoices were not printed but were handwritten which was not allowed for excisable goods. One of these suppliers, Rayalseema Koganti Steels Pvt. Ltd had effected sales to the assessee from 10.40 AM to 2.50 PfVl vide bill Nos.170 to 178 and had traded only with the appellant and no other party during this time. The Assessing Officer also noted that there was no proof of transportation of material to the premises of the appellant leading to the conclusion that the party had issued accommodative purchase bills without actual delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rao Vs. State of Karnataka [49 STC 275 (Karn)]; v. CST Vs. Devi Saran Lal Prem Chandra Tax LR 3235 (All); vi. Luxco Electronics Vs. CST [48 STC 540 (All)]; vii. Satya Narain Rastogi Vs. CST Tax LR (NOC) 224 (All); viii. Hukum Chand Mahendra Kumar Vs. CST [29 STC 394 (All)]; ix. Vrajlal Manilal Co. Vs. CIT [92 ITR 287 (MP)]; x. P. Venkanna Vs. CIT [72 ITR 328, 330 (Mys)]; xi. Steelsworth Ltd., Vs. CIT [69 ITR 366 (Assam)]; and xii. Gopinath Naik Vs. CIT [4 ITR 1, 23 (All)] 4. Assessee has contested the estimation of income before the Ld. CIT(A) and submitted various issues countering the observations of the Ld. CIT(A) which are again summarized by the CIT(A) in para 5.5 as under: a. The GP ratios adopted by the Assessing Officer for the preceding years was incorrectly computed and the correct computation was as follows: Gross receipts as per AYs. 2006-07 2005-06 2003-04 Gross receipts 499033223 206237468 203062088 Gross Profit 7737433 11752966 107350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urly basis and in any case, no part of the sales had been made to any relative parties. The mere fact that the sales had been made at a lower rate does not lead to a conclusion of suppression of sales since these were business decisions. i. Though the appellant had failed to produce transport bills/proof of delivery of purchases of ₹ 1,61,58,226 from M/s. Bilasraikas Sponge Iron India Pvt. Ltd, the purchases had been recorded in the stock registers after delivery at the factory premises and had availed Cenvat credit in respect of the excise duty paid on the purchase price. The stock / excise registers were verified by the Assessing Officer during the assessment proceedings. The goods were sold by , the supplier on FOR basis and therefore no transport costs were incurred by the appellant. j. The Assessing Officer had observed that some of the purchase bills did not contain printed invoice serial numbers and that these numbers were handwritten. There was no requirement under the Excise Act that sale invoices should contained printed serial numbers. All the purchases had been entered in the stock/excise registers, excise duty had been paid on them and the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There was no requirement in law for maintenance of separate trading account and manufacturing account. q. All purchases and sales were recorded in the excise register which was subject to audit and on which excise was paid and Cenvat credit claimed. The observation of the Assessing Officer that the appellant had suppressed sales and inflated expense was based on surmises and presumptions. r.The shortage of 20% in the raw material 'vis-a-vis the consumption was comparable to the shortage of 21% in AY 2005-06. s. The appellant had voluntarily credited the sum of ₹ 2,30,00,000 to its P L A/c and there was no reason to say that it was undisclosed income u/s 68. t. The case laws cited by the Assessing Officer were distinguishable on facts . 5. After considering the submissions, Ld. CIT(A) did not approve the rejection of books of accounts and estimation of income by stating as under: 5.8 I have considered the facts on record and the submissions of the AR. The AR has pointed out that the net profit of the appellant was not 0.72% as presumed by the Assessing Officer for the AY 2005-06 but was actually much less at 0.51% (and 0.44% for AY. 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded only with the appellant cannot be held against the appellant, particularly when the entire purchases were duly recorded in the stock and excise registers. 5.12 The appellant had failed no doubt to produce the transportation bills. The AR has claimed that the purchases were FOB and hence there was no transportation cost. In the absence of the books of account, it is not possible to establish this claim. However, what is of relevance is whether the purchase from Bilasraikas Sponge Iron India Ltd was a genuine purchase. The fact that the purchase was entered in the excise and in stock registers indicates that they were. 5.13 The Assessing Officer has referred to a solitary instance of an entry being made in the ledger account of Lakhani Steel Corporation at a later date. The AR has explained that the omission was noticed while reconciling the accounts and the entry made thereafter. I find this explanation acceptable. 5.14 With regard to the transfer of cash to the Tijory account and back, the Assessinq Officer has accepted that the sum of ₹ 2,25,00,000 was transferred to the Tijory account on 20.04.2005 itself from the cash book. In effect, the appellant sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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