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TMI Blog2016 (10) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... nted sales, when the turnover as calculated by Excise Department has been shown in separate books of account and they are part of audited books of account and income-tax return furnished. AO has grossly erred in taking the excise limit of ₹ 1.5 crores whereas for the year under appeal excise limit was at ₹ 1 crore. During the course of hearing ld. AR has relied on the judgment of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT ] wherein it has been held that sale proceeds itself cannot be treated as undisclosed income rather the net profit embedded in the sale should be treated as undisclosed income. CIT(A) while adjudicating the appeal of assessee has rightly given effect to the judgment of President Industries (supra) and has taken the net profit of ₹ 2,27,573/- shown by M/s Swastik Polymers in the audited profit and loss account placed as an addition to the income of assessee at the place of addition towards suppressed sales of ₹ 1,13,24,749/- taken by ld. Assessing Officer. We, therefore, find no reason to interfere with the order of ld. CIT(A) - Decided against revenue. - Shri R.P. Tolani, JM, Shri Manish Borad, AM. Appellant by Shri Sumit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other named M/s Swastik Polymer, owned by Shri Bimalkumar Chainroop Dharewa (brother of Shri Ashok Chainroop Dharewa) Karta of HUF. Both were carrying out similar kind of business. The Excise Department treated both the concerns as single concern and clubbed the turnover of Swastik Polymers with the assessee firm. The turnover shown by the assessee firm was of ₹ 87,76,159/-. The ld. Assessing Officer further relied on the show cause notice issued by the Excise Department and the relevant part of the show cause notice reads as under:- In your case, A search action was carried out by the Central Excise Department wherein it was found that for the period 01.04.2006 to 31.03.2007, M/s. Shubham Polymers sold finished products BOPP/plastic bags under the guise of BOPP/BOPP film etc and has suppressed sale. As per details given in the letter during the F.Y. 2006-07, you have cleared that the total quantity of 193497.114Kgs. It was reported that the clearance value of above mentioned goods was ₹ 51,00,908/- over/'excess exemption limit, the exemption limit for SSI was ₹ 1.5 Crore, which indicated that total sale was of ₹ 2,01,00,908/~ during above mentioned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 9. The ld. AR also referred and relied on the judgment of Hon. Gujarat High Court in the case of CIT vs. President Industries (2002) 124 Taxman 654 (Guj) wherein it has been held as under :- 3. Having perused the assessment order made by the Assessing Officer, the order made by the Commissioner (Appeals) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under section 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question, whether entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (C) TOTAL CLEARANCE VALUE (A+B) 15238813.00 (D) MINUS SALE OF (a) Shubham Polymer to Swastik 196908.00 (b) Swastik to Ganesh Silk Mill 73798.00 (E) NET SALE FOR DUTY CALCULATION [C-(a+b)] 14968109.00 (F) MINUS EXEMPTION ₹ 1 crore 10000000.00 (G) TAXABLE ASSESSABLE VALUE 4968109.00 (H) Central Excise duty @ 16.32% 810795.00 12. Further during the course of re-assessment proceedings various details, copies of show cause notice and statements of the owners of both the firms and buyers were considered. There came across a calculation of Central Excise duty evaded for FY 2006-07, 2007-08 2008-09 (upto 2.8.2008) which showed quantity cleared in kg., clearance value in excess of exemption limit and Central Excise duty evaded and the relevant details are summarized below :- Year Quantity Cleared (In Kgs.) Clearance value (Rs.) in excess of exemption limit C. Ex. Duty evaded (Rs.) 2006-07 193497.114 5100908 @ 16.32% ₹ 8,32,468/- 2007-08 352703.58 24553655 @16.48% ₹ 40,46,442/- 2008-09 (up to 2.08.2008) 188844.751 2119461 @14.42% ₹ 3,05,626/- Total 735045.445 31774024 51,84,536 The Assessing Officer took the basis of clearance value of ₹ 51,00,908/- and added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of BOPP bags between the trading firm and the manufacturing unit to keep the clearance value within exemption limit, which is Rs.l crore per unit, with an intent to evade central excise duty. In view of this conclusion, the turnovers of both the concerns were merged and penal excise duty was calculated at ₹ 8,10,795/- on the taxable assessable value of ₹ 49,68,109/- in excess of exemption limit of Rs.l crore. In this process, the total turnover of both the concerns as worked out at Rs.l,52,38,813/-(₹ 87,70/992/- + ₹ 64,67,823/-) was considered as turnover of one entity. However, for the purpose of income tax, while working out the suppressed sales of ₹ 1,13,24,749/- by appellant, AO has taken the clearance value of goods at ₹ 51,00,9087- (193497.114 kg in quantity) which was evaded by appellant. By adding this amount to exemption limit of ₹ 1.5 crores, AO has worked out total turnover at ₹ 2,01,00,908/-. Since, the appellant has already shown turnover of ₹ 87,76,159/- in the return of income therefore the difference of both the amounts, which comes to ₹ 1,13,24,749/-, has been treated by AO as suppressed sales and adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the profit of appellant for the purpose of making addition. While merging this figure of sales, AO has taken the value of gross turnover of M/s, Swastik Polymers but ignored the figures of purchases and other expenses claimed in the profit and loss account. The genuineness of purchases and other expenses claimed by M/s. Swastik Polymers have not been doubted by AO. Excise authorities also have not commented upon or doubted the genuineness of purchases and other expenses of both the entities. They have just merged the turnovers of both the entities considering them one manufacturing unit arid worked out the evasion of excise duty in excess of exemption limit. They had limited purpose of working out the turnover in excess of exemption limit for levy of penal duty. But, for income tax purposes, tax is levied on income not on turnover. Turnover can be termed as income only in the conditions when purchases are bogus or already taken into consideration for computing income. In the case of appellant, at one hand AO has computed the income by including the turnover of his brother's proprietorship concern; on the other hand he has ignored the genuine purchases and other expenses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries (supra) and has taken the net profit of ₹ 2,27,573/- shown by M/s Swastik Polymers in the audited profit and loss account placed at page 24 of the paper book as an addition to the income of assessee at the place of addition towards suppressed sales of ₹ 1,13,24,749/- taken by ld. Assessing Officer. We, therefore, find no reason to interfere with the order of ld. CIT(A). We uphold the same. Accordingly this ground of Revenue is dismissed. 15. Ground nos. 2 3 are of general nature which need no adjudication. 16. Now we take up Revenue s appeal in ITA No.2156/Ahd/2012 for Asst. Year 2008-09. We find that similar issue on identical facts have been dealt by us for Asst. Year 2007-08. Ld. CIT(A) has restricted the addition to ₹ 2,46,433/- by applying net profit of sister concern Swastic Polymer and has deleted the addition of suppressed sales of ₹ 2,54,29,100/- made by ld. Assessing. Following the decision taken by us for Asst. Year 2007-08 in ITA No.2155/Ahd/2012, we uphold the decision of ld. CIT(A) and dismiss the ground of Revenue. 17. Cross Objections for Asst. Years 2007-08 2008-09 by assessee bearing Nos.222 223/Ahd/2012 are not pressed and therefor, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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