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TMI Blog2018 (10) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... d and sold during the assessment year 2012-13 in the earlier years, then same should be there in the assessment year 2012-13 also. He has elaborately discussed and explained meticulously based on seized material how estimate of scrap sale can be made where no material is found. Such an action of CIT(A) is justified, because it is matter of record that in all the years assessee has been generated unaccounted cash from the scrap sales outside books, then based on same ratio such unaccounted cash has to be treated as unexplained. Thus, we do not find any infirmity in the order of the Ld. CIT (A) and the same is affirmed. Disallowance u/s 14A - sufficiency of own funds - Held that:- In wake of availability of such huge surplus fund, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/- out of total addition of ₹ 48,04,151/- made by the AO on account of sale of scrap out of books. 3. Since the tax effect on the amount disputed by the revenue is less than ₹ 20 lacs, therefore, in view of recent Circular of CBDT No. 3/2018 dated 11th July, 2018, whereby the monetary limit of tax effect for not filing appeals before the Tribunal has been revised to ₹ 20,00,000/-, the appeal of the Revenue is not maintainable. It is not the case of the Revenue that the present appeal comes within the sweep of exclusion clauses as given in para No. 10 11 of the said Circular. Thus, without going into merits of the case, we dismiss the appeal filed by the Revenue, being not maintainable as the said circular is appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers Pvt. Ltd. He further observed that at the residential premises of Shri Subhash Sathe certain documents were found and seized which pertained to scrap sales. He thus concluded that there was a sale of scrap outside the books and from the statements given by these persons it is quite clear that there was a generation of cash through scrap which amounted to ₹ 7 to 8 lacs approximately per year. Assessee was required to provide the details regarding ratio of disclosed scrap sales and total disclosed sales and noted that from the %age to scrap sale to total sale was between 0.10% to 0.16%. Since as per the seized documents, scrap sale was ₹ 7,98,636/- which was for the period of five months from April, 2011 to August 2011, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d loss account and there were two types of scraps, namely manufacturing scrap and non manufacturing scrap: Manufacturing Scrap generated out of Injection moulding process i.e. manufacturing process adopted by assessee. Such as, Plastic lumps, scrap burada, scrap plastic others, etc. Non-Manufacturing scrap other scraps generated not directly related to manufacturing process. Such as drums, used oil, PU Foam, wooden pallets, broken bins, paint tins, corrugated boxes, etc. 8.1. He further submitted percentage of normal industrial standard of scrap was 1.5% to 2.5% and assessee has booked scrap sales to total sales at 0.11%. AO has applied multiplying factors of 2.12 times from the books of scrap sales even after the date of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccounted scrap sale to accounted sale for a period of five months in the following manner:- Accordingly, as per the AO, the ratio of unaccounted scrap sale to accounted scrap sale for the 5 month period = Rs.7,98,636 =2.12 ₹ 3,77,328 As per the appellant, the ratio for the same period should be = ₹ 7,98,636 = 1.33 ₹ 6,02,235 10.1 Ld. CIT(A) after calling for the entire details, ledger account and scrap sale of both Gurgaon Unit and Manesar Unit found that invoices number as appearing in the seized documents corresponds with the scrap sale bills issued from the Manesar unit. It was also held by him that the figure given by the assessee about ratio is not correct and since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) and the same is affirmed. 11. In so far as the disallowance u/s 14A of ₹ 5,11,464/- is concerned, the brief facts are that assessee has earned dividend income of ₹ 57,14,126/- against which no disallowance was offered by the assessee. In response to the show cause notice by the AO the assessee could not substantiate its claim as to why no expenditure can be attributed for earning of the exempt income. Ld. AO has computed the disallowance u/s 14A after applying rule 8D at ₹ 5,11,464/- which has been confirmed by the Ld. CIT(A). 12. Before us Ld. Counsel submitted that the investments have been made by the assessee from its reserves surplus, share capital and had not utilised any borrowed funds, therefore, no inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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