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TMI Blog2006 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M/s. Devidayal Rolling Mills-petitioner No. 1 herein. This petition was admitted on August 12, 1992 and further proceedings pursuant to the impugned notice dated March 26, 1992 were stayed. The facts relevant for the present petition are that: M/s.Devidayal Rolling Mills-the first petitioner herein (hereinafter referred to as "the assessee") was engaged in the business of converting copper wire bars into copper rods or coils. The process of converting copper wire bars into copper rods or coils is known as "hot rolling process" and involves heating of bars in a furnace to a very high temperature and thereafter feeding the red hot bars through various rolling and stretching processes, whereby the width and diameter of the bars gets reduced to the required dimensions. It is an admitted fact that the process of converting copper wire bars into copper rods or coils, involves loss of copper metal in the form of copper oxide etc. which are all collected as waste residue. Though the metal can be recovered from such waste residue, the assessee instead of resorting to such process, has been selling the waste residue from time to time and the amounts so realised have been accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he processed material) is recoverable in the form of copper oxide (waste residue) which is saleable in the market. The rate of this copper oxide is dependent on the market rate of copper bars and the demand in the market. M/s. Omega Rolling Mills Ltd. has sold copper oxide in the accounting periods 1989-90 and 1990-91 at the rates varying from Rs. 60 to Rs. 72 per kg. dependent upon the market price of pure copper. The rate of copper oxide is in general 25 per cent, less than the rate of copper. The average rate of copper for the accounting period relevant for the assessment year 1981-82 was Rs. 33.38 per kg. (M.M.T.C. rates). Our assessee had claimed total burning loss of 121.15 M.T. for the assessment year 1981-82. Since 90 per cent, of this burning loss is recoverable the assessee had prima facie, recovered 109.035 M.T. (90 per cent, of 121.15 M.T.) of copper oxide. Since the average rate of copper was Rs. 33.38 per kg. at that time, the rate of copper oxide (which is normally 25 per cent, less than the market price of copper) works out to be Rs. 25.03 per kg. (75 per cent, of Rs. 33.38). The total prima facie sale proceeds of copper oxide for the assessment year 1981-82 (on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the assessment year 1991-92 M/s. Omega Rolling Mills Limited had recovered a higher percentage of waste residue cannot be a ground to reopen the assessment of the assessee for the assessment year 1981-82, because, firstly the business carried on by M/s. Omega Rolling Mills Limited is not comparable with the business of the assessee and secondly the price of waste residue sold in the assessment year 1991-92 cannot be applied for the sales effected in the assessment year 1981-82. He submitted that in the case of the assessee, the income-tax authorities year after year had investigated into the recovery of waste residue and sale thereof and on verification had accepted the sale receipts accounted by the assessee from time to time. He submitted that in a subsequent assessment year, the Assessing Officer in fact had made additions on the basis of the sale price recorded by M/s. Omega Rolling Mills Limited but the same was not approved by the Income-tax Appellate Tribunal. Accordingly, Mr. Jhaveri submitted that the reopening of the assessment for the assessment year 1981-82 based on the sale price of waste residue recorded by M/s. Omega Rolling Mills Limited in the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l facts relevant for the purposes of the assessment. In the present rase during the assessment proceedings for the assessment year 1981-82, the Assessing Officer did call for full particulars relating to recovery of waste residue as well as the sales thereof. It is only after being fully satisfied, the Assessing Officer accepted the sale price recorded by the assessee in its books of account and passed the assessment order under section 143(3) of the Income-tax Act. In the reasons recorded for reopening the assessment it is neither alleged that the sale receipts recorded by the assessee in its books of account were incorrect or false, nor any material is adduced to show that the amounts actually received by the assessee on sale of waste residue was higher than what was recorded in the books maintained by the assessee. It is pertinent to note that-even during the assessment proceedings for the assessment year 1977-78 and the assessment year 1978-79 the assessing authority had called for full particulars relating to the recovery of waste residue and sales thereof and after detailed discussion, the burning loss/waste residue as well as the sales thereof declared by the assessee were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than the amount offered by the assessee, the concluded assessment for the assessment year 1981-82 could not be reopened in the year 1992 on the ground that the market price of waste residue in the assessment year 1981-82 was higher than the price at which the assessee had sold the goods. The decision of the apex court in the case of Phool Chand [1993] 203 ITR 456 has no application to the facts of the present case. In that case there was a confessional statement made by the managing director of the assessee subsequent to the assessment. In the present case, there is no material on record to suggest that the price declared to have been received by the assessee was incorrect, incomplete or false. The entire case of the Revenue is based on the presumption that in view of the higher sale price of waste residue shown by M/s. Omega Rolling Mills Ltd., in the assessment year 1991-92, the sale price in the assessment year 1981-82 must have been higher than the price claimed to have been sold by the assessee and, therefore, there is failure on the part of the assessee to disclose fully and truly all material facts. Unless there is direct or circumstantial evidence to show that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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