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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 ..... 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 accounted for in the books of account maintained by the assessee. During the assessment year 1981-82, the assessee had sold waste residue for Rs. 4,52,874 and the same was duly recorded in the books maintained by the assessee. On August 27, 1981, the assessee filed its return of income for the assessment year 1981-82. In the profit and loss account, the assessee had disclosed miscellaneous income of Rs. 6,21,240 which included waste residue sold at Rs. 4,52,874. During the course of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 the sale of 109.035 M.T. of copper oxide) work out to be Rs. 27,29,690. The assessee has shown such sales to the tune of Rs. 4,23,690 only. Thus, there is a prima facie concealment of net income on account of unaccounted sales of copper oxide to the tune of Rs. 23,05,900. On the basis of these facts, I have reason to believe that this income to the tune of Rs. 23,05,900 has escaped assessment for the assessment year 1981-82. Hence, it is necessary to re-open the assessment for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 1991-92 is wholly unjustified. Relying upon the decisions of this court in the cases of Hindustan Lever Ltd. v. R.B. Wadkar, Asst. CIT (No. 2) [2004] 268 ITR 339, Caprihans India Ltd. v. Tarun Seem, Deputy CIT [2004] 266 ITR 566 (Bom), Grindwell Norton Ltd. v. Jagdish Prasad Jangid, Asst. CIT [2004] 267 ITR 673 (Bom), German Remedies Ltd. v. Deputy CIT [2006] 285 ITR 26 (Bom), IPCA Laboratories Ltd. v. Gajanand Meena, Deputy CIT (No. 2) [2001] 251 ITR 416 (Bom), and also the decision of the apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 accepted. In these circumstances, when the income-tax authorities year after year have investigated into the sales of waste residue effected by the assessee and have accepted the sale price recorded by the assessee, in the absence of any material on record to the contrary, it could not inferred that the assessee has failed to disclose fully and truly all material facts. In the present case, the only reason recorded for reopening the assessment is that M/s. Omega Rolling Mills Ltd. have shown a higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income received on sale of waste residue was more than what has been declared, it cannot be said that the assessee has failed to disclose fully and truly all material facts. In the present case, the reopening of the assessment is based on the presumption that the assessee might have recovered higher amount than what was declared by the assessee and there is no material on record to suggest that the assessee had received higher amount which has escaped assessment. In these circumstances, it cannot be said th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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