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TMI Blog2022 (12) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... ls are almost similar or common except variation of additions / amounts on account of unaccounted job work receipt, therefore all the appeals / cross-appeals were clubbed, heard together and are decided by consolidated order to avoid conflicting decisions. For appreciation of facts, facts in assessment year 2011-12 in appeal and cross-appeal of assessee as well as Revenue are treated as "lead". The assessee in its appeal has raised the following grounds of appeals:- IT(SS)A No. 71/SRT/2021 "1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of Assessing Officer by sustaining the addition of Rs. 42,45,773/- out of total addition of Rs. 3,00,87,381/- by estimation of profit at the ratee of 5% of alleged unaccounted job receipts. 2. It is therefore prayed that addition made by assessing officer and confirmed by CIT(A) may please be deleted or the matter may please be set aside to the file of CIT(A)." 3. Whereas the Revenue in its cross-appeal in IT(SS)A No. 77/SRT/2021 has raised the following grounds of appeal: IT(SS)A No. 77/SRT/2021 "1. On the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in passing an order under Sec. 154 of the Act without considering the fact that there was no apparent mistake in original appellate dated 26.07.2021 passed by him. 7. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat maybe set aside and that of the AO may be restored to the above extent." 4. Perusal of records shows that the appeal of the assessee is filed after seven days of period of limitation for filing appeal before Tribunal. The Ld. AR for the assessee submits that in fact there was no delay in filing appeal as per decision of Hon'ble Apex Court in Suo Motu Writ Petition (C) No. 3 of 2020, wherein the time limit for filing various appeals under general law as well as under special law were extended till 28.02.2022 and further 90 days' grace period was allowed with effect from 01.03.2022. Thus, all the file appeals filed by assessee are within the extended period as prescribed by Hon'ble Apex Court. 5. On the other hand, Ld. CIT-DR for the Revenue has not objected against such plea taken by Ld. AR for the assessee for condonation of delay in assessees appeals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done for the parties, if there was re-process work carried out by these parties, how the assessee can claim such job work reflected in the data recovered from the computer back-up. The Assessing Officer identified certain example of some parties as recorded in para-4 to 4.5 of the assessment order. The Assessing Officer held that assessee claimed reprocessing is an internal process and data maintained in the "purchi software" is only for organization. The Assessing Officer held that how can re-processing was done after one month of despatch finished goods. Therefore, such action shows that claim of re-processing is not genuine. The Assessing Officer rejected the books of account of assessee and after comparing the average gross profit ratio of group concern for the assessment years 2009-10 to 2015-16 worked out average gross profit of 9.06% as recorded in para-4.6.2 of assessment order. On the basis of his working of gross profit, estimated profit on such unaccounted job work receipt @ 20% of Rs. 15.04 crores and made addition of Rs. 3.00 Crore. 7. Aggrieved by the addition made in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see about reprocessing work from whom enquiries were made, but no one had stated that they have given any reprocessing work to the assessee. All these details were analysed by the Assessing Officer and proved beyond doubt that the assessee was indulged in activities of doing job work receipt which remained unaccounted. Thus, the contention that no unaccounted job work receipt was done by assessee was not accepted and the corresponding submission of assessee was rejected. 9. However, the ld. CIT(A) on the alternative contention of addition for considering gross profit of assessee for last and preceding years as well as electricity consumption and other expenditure was considered. The ld. CIT(A) on considering such alternative pleas was of the view that the Assessing Officer was not correct in making addition by taking gross profit and these direct expenditures. The contention of assessee was that only profit element should be taxed and not the addition @ 20% of job works of the whole receipt. The assessee claimed that 20% is too high and is not real. The assessee submitted average gross profit and net profit for six assessment years which was at 3.77% and the contention of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover their act of evasion of tax by leading unaccounted job work. During the course of search action, it was clearly established that the assessee has created out unaccounted job work outside assessees book. From the data retrieved from the computer that assessee received job work receipt of Rs. 15.04 crores, was found, which were not accounted in the books of assessee for the year under consideration. The Assessing Officer after considering the entire material, past history of gross profit of assessee company and its all group cases has reasonably estimated gross profit of 20% on rational and judicial manner in a detailed discussion. The Ld. CIT(A) restricted such addition to the extent of 5% in his order dated 26.07.2021. However, Ld. CIT(A) rectified his order by filing application of assessee and granted set off of credit of Rs. 31 lakhs and thereby reduced substantial addition to the extent of Rs. 15,04,36,907/-. The Ld. CIT-DR for the revenue prayed to reverse the order of Ld. CIT(A) dated 26.07.2021 as well as rectification order dated. 5.08.2021. 12. On the other hand, Ld. AR for the assessee submits that Assessing Officer made addition @ 20% of alleged supressed job wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut in the group cases of Sumeet Industries Limited Surat on 19.02.2015 being a part of same group, the assessee was also covered. We find that on similar set of fact, and on similar evidence, the Assessing Officer made addition in case of Sitaram Prints Private Limited (supra) in assessees group case, covered in same search action, on similar unaccounted job work the assessing officer made addition @ 20% on similar unaccounted job work receipt. On appeal before Ld. CIT(A), who restricted the addition to the extent of 5% of similar unaccounted job work receipt. The combination of this bench in the case of Sitaram Prints Private Limited (supra) has passed the following order: "9. We have considered the rival submissions of both the parties and have gone through the orders of the authorities below carefully. We have also deliberated on various case laws referred and relied by the ld. CIT(A) in his order. We find that the Assessing Officer made addition of 20% on unaccounted job work charges by taking a view that the assessee has not shown actual job work done for the parties. If there was no processing work were carried out for these parties, how such work is reflected in the data r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure was of the view that the Assessing Officer was not correct in making addition by taking gross profit and these direct expenditure. The contention of assessee was that only profit element should be taxed and not the addition @ 20% of job works of the whole receipt. The assessee claimed that 20% is too high and is not real. The assessee submitted gross profit and net profit for six assessment years which was at 1.82% and the contention of assessee that it should not be more than average net profit of 1.82%. The ld. CIT(A) after considering the submission of assessee and by following the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs President Industries and CIT Vs Samir Synthetics Mill (supra) and after compiling the turnover, net profit and gross profit ratio from A.Y. 2010-11 to 2015-16 held that the average net profit in all the years is 1.82%. The ld.CIT(A), accordingly restricted the addition of suppressed job work to the extent of 5% to the total turnover of Rs. 2.589 crores. 12. We independently examined the contention of both the parties and find that the Assessing Officer has given very detailed reasoning while making addition of 20% of unaccou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 31 lakh declared by assessee while filing return of income. The Ld. CIT-DR for the Revenue submits that Ld. CIT(A) erred in granting set off / credit of income declared by assessee in response to notice under section 153A of the Act. The Ld. CIT-DR for the Revenue submits that no such ground raised by assessee at the time of filing appeal before First Appellate Authority. The Ld. CIT(A) exceeded his jurisdiction while rectifying the order under section 154 of the Act. 20. On the other hand, Ld. AR for the assessee submits that assessee has specifically in para-29 of its written submission clearly stated that while filing its return of income, in response to notice under section 153A, assessee made voluntary disclosure in its return of income, on the basis of estimated profit as net undisclosed business income and hence eligible for credit / telescoping of such income, which ought to have been given by Assessing Officer and such facts were brought to the notice of Ld. CIT(A) by filing return of income. The Ld. CIT(A) after perusal of record and considering the plea taken raised by assessee in its written submission and find that contention of assessee was factually correct ..... 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