9911796707
TMI Blog2010 (1) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... an income of only Rs. 4,21,882. On scrutiny of the accounts, it was noticed that assessee was selling cashew kernel produced in its factory to the sister concerns at much below even the cost of production, leave alone profit. In fact the assessee's accounts disclosed that the production cost is Rs. 174 per kg, whereas average price at which cashew kernel sold by the appellant to sister concerns was at the rate of 139 per kg. The difference between the cost of production and sale price realized itself was Rs. 40,73,446.30. The assessee credited this amount in the trading account towards under recovery. In other words, short recovery of cost of production was offered for tax. The Assessing Officer on enquiry found that the purpose was to defr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee with export firms under its control. It is against this order of the Tribunal the assessee has filed this appeal. We have heard senior counsel, Sri. Sarangan appearing for the appellant-assessee and Sri. P.K.R. Menon, senior counsel appearing for the revenue. 2. During initial hearing held on 30-11-2009 we felt that clarification should be sought for from the department as to whether by purchase of cashew kernel from the appellant, sister concerns, which are nothing but related firms of the appellant, have got ineligible claim of exemption under section 80HHC of the Act and, therefore, we directed the department to report about the claim made and allowed at the hands of the sister concerns. We are informed that all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 955] 28 ITR 952 and that of the Supreme Court in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706. 4. After hearing both sides and after going through the orders of the lower authorities, we find that the assessee has made concerted effort to evade payment of tax through sister concerns. When the beneficiaries of the assessee's transactions are sister concerns of the assessee, we have to take it that assessee is the main beneficiary of the illegitimate tax benefits obtained by the sister concerns. The assessee has no explanation as to why cashew kernels produced were sold at far below the market price and even below the cost of production. So much so, the department's argument that the purpose is to inflate tax exemption fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by them under section 80HHC of the Act. So much so CIT (Appeals) directed verification of purchase account of the sister concerns and if they have debited the purchase account with the same amount credited in the trading account by the assessee, the appellate authority directed deletion of the addition made in the assessment. The very fact that the appellant has contested the appellate order of the CIT (Appeals) proves beyond all reasonable doubt that sister concerns got ineligible tax exemption under section 80HHC which is only on account of assessee's manipulation in accounting the sale price at below even the cost of production. We therefore find no merit in the appeal, and in our view, this Court should not encourage tax evasion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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