TMI Blog2014 (9) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... he estimate to be made in a particular case is largely a question of fact – the order of the Tribunal is upheld – Decided against revenue. - TAX APPEAL NO. 873 of 2014 With TAX APPEAL NO. 874 of 2014 - - - Dated:- 19-8-2014 - MS. HARSHA DEVANI AND MS SONIA GOKANI, JJ. FOR THE APPELLANT : MR MR BHATT, SR. ADVOCATE with MRS MAUNA M BHATT, ADVOCATE JUDGEMENT Per: Harsha Devani: 1. The appellant revenue in these appeals under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has called in question the common judgement and order dated 10.01.2014 rendered by the Income Tax Appellate Tribunal, A Bench, Ahmedabad in ITA No.788 789/Ahd/2013 in relation to Assessment Years 2005-06 and 2006-07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, whereby an addition of ₹ 74,99,328/- was made, being the gross profit rate worked out by the Assessing Officer on the basis of the information received from DGCEI on suppressed sales of ₹ 1,87,48,326/- for the year under consideration. 4. During the course of investigation by the Central Excise department, various dealers of the assessee admitted that they were purchasing tiles of various grades and sizes of the assessee company and were paying 30% of MRP in cash. This was being done by them because the actual MRP of the products was not mentioned in the Central Excise invoices. Only a part of actual + MRP was being mentioned. With effect from 01.04.2008, the assessee started declaring actual designs and sizes of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invoice price from the dealers on sale of total boxes of 9,37,416). During the course of assessment proceedings, the aforesaid working of suppressed sales at ₹ 20/- per box was accepted by the assessee vide letter dated 23.12.2011. Being aggrieved by the order passed by the Assessing Officer, the assessee went in appeal before the Commissioner (Appeals) objecting to (i) the validity of reassessment proceedings, and (ii) adoption of gross profit rate at 40% of suppressed sales. 6. The Commissioner (Appeals) upheld the reassessment proceedings, but granted relief of ₹ 38,41,531/- and confirmed the addition by adopting net profit at 19.51% of suppressed sales. It was held that the appellant had submitted that he had received c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with the suppressed sales. The stand of the Assessing Officer has not been countered by the assessee before any appellate authority. Moreover, on a perusal of the assessment order as well as the order passed by the Commissioner (Appeals), it is seen that the assessee s gross profit on accounted sales was 28.21% and 20.12% respectively for the assessment years under consideration which supports the Assessing Officer s stand that partial expenses on suppressed sales had already been booked in the assessee s regular books of accounts. Hence, the average gross profit rate reported in the assessee s regular books for the year under consideration works out to 24.17%. Considering the fact that Assessing Officer s finding regarding partial ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit made by the Assessing Officer at 40% was on the higher side. The Appellate Tribunal has, therefore, estimated the gross profits for both the years at 20% as against 40% made by the Assessing Officer. 9. Thus, the Commissioner (Appeals) had computed the gross profit at 19.51% by applying net profit ratio. Since, the books of accounts had been rejected under section 145(3) of the Act, the Appellate Tribunal was justified in holding that the Commissioner (Appeals) could not have applied the net profit rate while computing the gross profits. After rejecting the books of account under section 145(3) of the Act, the Assessing Officer on the basis of the material on record has estimated the gross profit at 40% whereas the Tribunal on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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