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TMI Blog2018 (5) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... ts rectification. The assessee failed to rectify or even failed to make out grounds why the same was not done earlier. Discretion of the Assessing Officer under the proviso to subsection( 9) to condone delay is wide enough and could be exercised even without a formal application by the assessee for such purpose. The onus would be on the assessee to atleast lay down sufficient grounds before the Assessing Officer to enable him to exercise such discretion. The record shows that the assessee made no such attempt. The Tribunal committed no error in confirming the view of the revenue authorities. This question is answered against the assessee. Excise duty tantamount to income - Held that:- When the assessee evades payment of excise duty, undoubtedly, the same would be an additional element of profit on the product as compared to the one which has suffered the excise duty. This excise duty component which should have gone to the State exchequer would be an additional margin which may be shared by the purchaser and seller. In a given case, therefore, the assessee's contention that entire addition of excise duty element was not justified, may require closer examination. However, going b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable goods. For the assessment year 1997-1998, the assessee had filed return of income on 28.11.1997 describing it as a provisional return, declaring total loss of ₹ 24.69 crores (rounded off) along with provisional balance sheet and Profit and Loss account. Since the report was not accompanied by audit report, the Assessing Officer issued a notice dated 27.1.2000 calling upon the assessee to state why the incomplete report furnished by the assessee should not be considered as invalid and consequently, why the return filed the assessee should not be treated as invalid return. 3. In response to the show cause notice, the assessee replied on 9.2.2000 stating that the return was filed in the prescribed format and the same cannot be treated as invalid. It was contended that by the time return was filed, accounts of the company were not ready and the company may be required to revise the same. It was contended that consequently revised statement of income was also filed which may be considered while completing the assessment. The Assessing Officer however, did not accept the explanation of the assessee. He was of the opinion that the return was filed by the assessee witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn. Proviso to subsection( 9) of section 139 provides that where the assessee rectifies the defect after the expiry of initial period or the extended period, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. Explanation to subsection( 9) provides that for the purpose of the said subsection, return of income shall be regarded as defective unless all the conditions are fulfilled as contained in clauses (a) to (f). 7. Few things emerge from this provision. Firstly, if the Assessing Officer finds any defect in the return, he would notify the same to the assessee granting him time for removing the defect. If the defect is not removed within such time or extended time, the return would be treated as invalid and as a consequence thereof, it would be a situation where the assessee has not filed any return at all. Under the proviso to subsection( 9), the Assessing Officer has discretion to condone the delay in rectifying the defect, if the same is done before the assessment is made. Explanation to subsection( 9) lists various conditions for a valid return. Clause (bb) thereof reads as under : ( bb) the return i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the assessee. 11. The Assessing Officer after declaring that the return was invalid proceeded to frame best judgment assessment. In the process, he noticed that the assessee had made unrecorded purchases for a total consideration of ₹ 5.01 crores (rounded off) during the year under consideration. He estimated the excise duty of such purchases at ₹ 1.25 crores (rounded off). To the total of two i.e. ₹ 6.26 crores (rounded off), he estimated the assessee's profit at the rate of 10% and added ₹ 62.65 lacs (rounded off) by way of additional income. He also added excise duty of ₹ 1.25 crores which the assessee had evaded to come to total addition of ₹ 1.88 crores. 12. The Tribunal gave partial relief to the assessee by applying 10% profit rate on the basic unrecorded purchases of ₹ 5.01 crores eliminating the excise duty component therefrom. However, the Tribunal did not make any change insofar as the addition of entire excise duty evasion by way of income in the hands of the assessee observing interalia that no cogent material was brought on record by the assessee to prove that it had not recovered excise duty from the parties t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [ B] Whether the appellate tribunal is right in law and facts in deleting addition u.s. 69 of the Act of ₹ 51,02,500/made in respect of initial investment in unaccounted transactions? [ C] Whether the Appellate Tribunal is right in law and on facts in directing the assessing officer to reduce the addition of ₹ 1,44,50,000/by ₹ 87,77,934/being of ₹ 1,77,55,864/on the ground that profit earned on sales consideration would have been routed in the business for making unaccounted purchases and thereby reducing the addition made by the assessing officer in respect of investment in the peak credits, invoking provisions of Sec. 69 of the Act? 16. Question no.1 is part of the assessee's question no.1 above, which we have already examined and upheld the view of the Tribunal. Revenue however, contends that the Tribunal committed an error in deleting the excise duty component from the assessee's general profits. We do not find any merit in this contention. The question is therefore, answered against the Revenue. 17. Second issue pertains to deletion of ₹ 51.02 lacs made by the Assessing Officer under section 139 of the Act. Facts on r ..... 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