9911796707
TMI Blog2017 (3) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... he Id. CIT (Appeals) be quashed as invalid and void ab-initio. 2) The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the disallowance of claim of discount to the tune of Rs. 13,32,885/- on the ground of alleged transfer of profits to associate concerns. 3) It is, therefore, prayed that the above disallowance of discount to the tune of Rs. 13,32,885/- may please be deleted and the returned income may please be accepted as the correct Total Income of the appellant. 4) The Grounds of Appeal as described above are independent and each Ground of Appeal is taken up which shall not be construed as being prejudicial to the other Ground or Grounds of Appeal. 5) The Appellant prays for granting such other relief as may be deemed just and proper by your Honours considering the factual and legal aspects of the case of the appellant. 6) The Appellant craves leave to add, amend, alter, modify, substitute, delete, change or vary all or any of the Ground or Grounds of Appeal. 2. Briefly stated facts as culled out from the records are that this is the second round of litigation. Assessee being a partnership firm is engaged in the business of Laser Saw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on record, what was (he rate of discount per carat which was allowed by the assessee lo its sister concerns during the aforesaid period. In our considered opinion, no meaningful interpretation of the above rates can be drawn without the corresponding amount of discount allowed by the assessee is considered together. The Learned Commissioner of Income-Tax (Appeals) has not brought on record the total quantity of job work done by the assessee during the period under consideration and to consider thereafter the net rate per carat realized by the assessee from the sister concerns during the said period and how the same compared to the market rate prevailing at that period. As observed above, the assessee has rendered services to others also of about Rs-19,61,758/-. Thus, the Learned Assessing Officer could have easily examined that what was the rate at which services were rendered by the assessee to the other parties at the material time and whether those rates were more than the net rate realized by the assessee from the said two sister concerns. On the other hand, the assessee could have also produce the bills of the other parties to show that the net rates realized from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble I.T.A.T. 16. Thus, from the above discussion, it is evident that the assessee has furnished inaccurate particulars income by debiting unreasonable and nonallowable discount. Hence, the ensuing income has been concealed and underreported by this furnishing of inaccurate particulars regarding the So-called discount. Therefore, satisfied on account of these reasons as above, penalty proceedings u/s. 271(1)(c) is being initiated for furnishing of inaccurate particulars leading to concealment of income. Disallowance on account of Rejection of Discount Claim: ? 32.60,820/-". 5. Aggrieved, assessee went in appeal before ld. Commissioner of Income Tax(A) and partly succeeded as impugned disallowance was restricted to Rs. 13,32,885/- by elaborately discussing the facts in the light of directions given by the Tribunal by observing as follows :- 7. I have gone through the facts of the case and the order of the Hon'ble ITAT, its observations and directions. It is seen from the reassessment order that the A.O. while observing that rates charged to sister .concerns was lower than the rates charged to outside parties and hence concluding that profits had been transferred to sist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 65/- only. No reason for such downward revision in rates for the period September and December and January to March have been provided especially when his dispute with associate concerns, as claimed by the appellant himself, was ultimately settled for Rs. 80/- per carat in December, 2000. Therefore, further reduction in prices was not justified, especially when rates charged to the outsiders was definitely higher for the period September to December and varied during January to March. All the points raised by the appellant that quantum processed was larger for associates, there was fixed continuous supply, etc. get addressed, if the reasonable rates for associates is considered at the fixed rate of Rs. 80/- for the full year considering that this was the rate agreed to between the appellant and associate concerns. The total diamonds processed for the associates is 217024 carats and the realization at Rs. 80/- should have been Rs. 1,73,61,920/- as against Rs. 1,60,29,035/- shown by the appellant. The addition is therefore retained to the extent of Rs. 13,32,885/-. The appellant get relief of Rs. 19,27,935/-. The appeal is partly allowed. 6. Aggrieved, assessee is now in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng assessment u/s 143(3) r.w.s. 254 of the Act again confirmed the similar disallowance of unreasonable flawed discount at Rs. 32,60,820/- done during the first round of assessment proceedings u/s 143(3) of the Act. Thereafter when the assessee came in appeal before ld. Commissioner of Income Tax(A) giving rise to part success to assessee as ld. Commissioner of Income Tax(A) sustained the addition of Rs. 13,32,885/- by holding the rate of job charges at Rs. 80/- to be a reasonable rate to be charged to associate/sister concerns. We find that ld. Commissioner of Income Tax(A) adopted the rate of Rs. 80/- per carat by taking a view that assessee in the first three months raised bills at Rs. 100/- and Rs. 85/- per carat and thereafter gave a discount of 20% resulting in the net rate of Rs. 80/- and Rs. 68/-. Ld. Commissioner of Income Tax(A) was not convinced with the rate of Rs. 65/- charged by the assessee in the last three months of the Financial Year even when the sister concerns have already agreed for the net rate of Rs. 80/- and therefore, ld. Commissioner of Income Tax(A) applied the rate of Rs. 80 per carat and sustained the addition of Rs. 13,32,885/-. 10. We observe that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties and these bills are covering all the three periods and the same is reproduced below :- Sr. No. Period Date of the bill Name of the outside party Copy of the relevant bill enclosed at Page no. Job work rate charged per carat Job work rate charged to sister concerns 1 April to August 2000 01-05-2000 M/s. Precise Gems 24 75.74 80 2 April to August 2000 01-06-2000 M/s. Babutal Chunilal Shah 25 67.74 80 3 April to August 2000 01-06-2000 M/s. Precise Gems 26 77.92 80 4 April to August 2000 01-07-2000 M/s. Everest Gems Pvt. Ltd. 27 71.36 . "80 5 April to August 2000 01-07-2000 M/s. Precise Gems 28 79.51 80 6 September to December 2000 01-09-2000 M/s. Aashay Manufacturing Co. 29 78.18 68 7 January to March 2001 31-03-2001 M/s. Shashvat Exports 30 54.65 65 8 January to March 2001 31-03-2001 Babulal Chunilal Shah 31 64.37 65 In the above chart showing 8 instances of bills raised to outside parties and if we take out the average of the total job work charges to the 8 parties it comes to Rs. 71.18 per carat and (569.54/8). 12. From the perusal of the average rates calculated from the above two charts wherein one re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
