TMI Blog2014 (4) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of evidence on record gives no rise to the substantial question of law - The exercise is primarily in the nature of appreciation of evidence and would be based on questions of facts – the contentions of the revenue cannot be accepted – Decided against Revenue. - Tax Appeal No. 301 of 2014, Tax Appeal No. 302 of 2014, Tax Appeal No. 304 of 2014 - - - Dated:- 7-4-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mrs. Mauna M. Bhatt, Advocate For the Respondent : Mr. SN Divetia, Advocate ORDER (Per : Honourable Mr. Justice Akil Kureshi) 1. These appeals concern assessment years 2007-08 and 2008-09 involving the same assessee. Each assessment year has given rise to two appeals since against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs.88.47 lakhs to the income of the assessee. The assessee carried the matter before CIT(Appeals), who while accepting the rejection of the book results limited the additions by applying 35% GP ratio on the extra consumption to be taken at 20% of the turnover. He held and observed as under: 5.2 I have considered the rival submissions. Since the rejection of books of account has been upheld by me, the logical result would be to estimate the income of some reasonable and proper basis as held in case of Nathuram Munnalal Seth vs. CIT[25 ITR 216] [Nag.]. When admittedly, the consumption has not been correctly recorded in the books maintained by the appellant, there could be addition in respect of profit realizable from sales out of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the assessee has disclosed the GP rate of 35.10% for this year and had disclosed GP at 38.51% in the immediately preceding year. The plea of the learned DR that the entire expenses on purchase of raw-material have already been debited in the books of accounts, and hence 100% of the unaccounted sales should be added as income of the assessee, is unsustainable. The CIT(A) has recorded a finding that the estimate of income has to be rightly rational as well as based on material on record, and that the entire sales or processing charges cannot be treated as income chargeable to tax, unless there is any material to come to such conclusion. He has cited decisions in the case of President Industries, 258 ITR 654 (Guj) and CIT vs. Guru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases which were also unaccounted. 6. CIT(Appeals) as well as the Tribunal, however, limited such additions. In particular, CIT(Appeals)reduced the excess sales to 20% of the turnover and, thereafter applied GP rate of 35% taking average of the three years of GP rate of the assessee. In the process CIT(Appeals) relied on the decision of this Court in case of Commissioner of Income-tax vs. President Industries reported in [2002] 258 ITR 654 and in case of Commissioner of Income-tax vs. Gurubachhan Singh J. Juneja reported in [2008]302 ITR 63 (Guj). 7. In our opinion, such exercise undertaken by CIT(Appeals) and the Tribunal on the basis of evidence on record gives no rise to the substantial question of law. This exercise is primarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed excess consumption of raw material and unaccounted sale of finished product. It is not as if the excess consumption of raw material would automatically result into matching value of excess sale of the finished product. Unaccounted consumption of raw material would be used for manufacturing raw material which process would require, depending on the nature of the product, deployment of man power and machinery, consumption of electricity and even other ingredients. Essentially, on the basis of estimation of excess consumption of raw material the possible profit of the assessee would have to be worked out for making actual additions. In this background, we must view the observations of CIT(Appeals), who while adopting the excess consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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