New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (5) TMI 120 - GUJARAT HIGH COURT

2015 (5) TMI 120 - GUJARAT HIGH COURT - [2015] 377 ITR 324 (Guj) - Suppression of production by showing excess scrap - ITAT deleted the addition - Held that:- When the Assessing Officer did not reject the books of accounts and / or did not point out any defects in the books of accounts regularly maintained by the assessee and when considering the fact that the Excise Department also fully verified and checked the records for the raw materials and the finished goods, the learned Tribunal has righ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that notice under Section 143(2) of the Act was issued beyond the period of limitation i.e. beyond the period of 12 months - Held that:- It is required to be noted that the return was filed by the assessee on 31/12/1999 and notice under Section 143(2) of the Act was served upon the assessee on 25/08/2001. Under the circumstances, when notice under Section 143(2) of the Act was issued beyond the period of one year considering the decision of the Hon’ble Supreme Court in the case of Assistant Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X


Disallowance of interest expenses claimed under Section 36(1)(iii) - ITAT allowed claim - Held that:- Tribunal has observed that the assessee was having interest free funds available with it. Also that the advances were given by the assessee to various parties to the extent of ₹ 2,62,48,341/- during the Financial Year 1996-97. Even the assessee was having interest free funds to the extent of ₹ 3,93,65,572/- as on 31/03/2002. It is required to be noted that in the earlier preced .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rger business benefits accruing to the assessee and the connectivity between the assessee and the recipient, the learned CIT(A) has held that commission of ₹ 1 per kg would be reasonable and balance 0.5 per kg is considered as excessive withing the meaning of Section 40A(2)(b) of the Act.No substantial question of law arises so far as deleting the addition under Section 40A(2)(b) of the Act to the extent of 2/3rd of ₹ 10,78,930/- is concerned. - Decided in favour of assessee. - TAX A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e parties but with respect to different Assessment Years, all these Tax Appeals are heard together, decided and disposed of by this common judgment and order. [2.0] Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 18/05/2007 passed by the learned Income Tax Appellate Tribunal, Ahmedabad Bench B in ITA No.3760/Ahd/2002 for the Assessment Year 1999-2000, the revenue has preferred Tax Appeal No.961/2008 requesting to consider the following substantial questions o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not issued within the prescribed limitation period, the assessment order passed under Section 143(3) was void ab initio? (C) Whether the Appellate Tribunal is right in law and on facts in deleting the entire disallowance made in respect of telephone expenses on account of personal use of the telephone by the Director of the assessee? [2.1] Tax Appeal No.917/2008 has been preferred by the revenue challenging the impugned judgment and order passed by the learned Tribunal in ITA No.3492/Ahd/2003 f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

referred by the revenue challenging the impugned judgment and order passed by the learned Tribunal in ITA No.3620/Ahd/2004 for the Assessment Year 2001-02 to consider the following substantial question of law; Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of suppression of production by showing excess scrap, when in the statement recorded under Section 132(4) the Director of the assessee accepted that scrap generation was being entered into .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bunal is right in law and on facts in cancelling the penalty of ₹ 20,87,776/- levied by the Assessing Officer under Section 271(1)(c) of the Act, as confirmed by the CIT(A)? [2.4] Tax Appeal No.963/2008 has been preferred by the revenue challenging the impugned judgment and order passed by the learned Tribunal in ITA No.1318/Ahd/2006 for the Assessment Year 2002-03 to consider the following substantial question of law; Whether the Appellate Tribunal is right in law and on facts in deleting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has been preferred by the revenue challenging the impugned judgment and order passed by the learned Tribunal in ITA No.1111/Ahd/2007 for the Assessment Year 2003-04 to consider the following substantial question of law; Whether the Appellate Tribunal is right in law and on facts in upholding the order of the CIT(A) wherein he has deleted 2/3rd of the addition of ₹ 10,78,930/- made by the Assessing Officer under Section 40(A)(2)(b), being excessive commission payment to M/s. Maitri Metals .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

43(2) of the Act was served on the assessee on 25/08/2001 and subsequently a detailed notice under Section 142(1) of the Act was issued and served upon the assessee on 02/01/2002. During the previous year, the assessee-Company was subjected to search under Section 132 of the Act on 09/09/1998. During the search action, various evidences regarding mis-reporting of scrap generation were found. The said issue was dealt with by the Assessing Officer in the block assessment. In the said order, after .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oduction and how quantity wise details of the scrap generated are entered into the RG1 register. The attention of the assessee was also drawn upon the statement of Shri Navneet Mittal recorded under Section 132(4) on 09/09/1998 where he accepted that the scrap generated was being entered into the RG1 register on an estimate basis and, therefore, the assessee was called upon to show cause as to how the scrap be not restricted to 15% and the sale value of the scrap in excess of this percentage be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; 3,10,000/- on account of personal use of telephone by the Directors. [4.2] Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer making the addition of ₹ 18,77,727/- on scarp generation at the rate of 15% as well as disallowing the expenses of ₹ 3,10,000/- on account of personal use of telephone by the Directors, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) partly allowed the said appeal by restricting the disallowance of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s beyond the period of limitation i.e. beyond the period of 12 months from the end of the month in which the return was filed under Section 139 of the Act. [4.4] By the impugned judgment and order, the learned Tribunal has allowed the appeal preferred by the assessee and has deleted the addition of ₹ 18,77,727/- made by the Assessing Officer on scrap generation at the rate of 15% for all the three Assessment Years. The learned Tribunal also held that the assessment order passed under Secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n scrap generation at the rate of 15%, the revenue has preferred Tax Appeal No.961/2008 to consider the aforesaid substantial questions of law. [4.6] It is required to be noted that for the Assessment Years 2000-01 and 2001-02 similar additions were made by the Assessing Officer on scrap generation at the rate of 15% and the same came to be confirmed by the learned CIT(A). However, for the reasons stated in ITA No.3760/Ahd/2002 for the Assessment Year 1999-2000, the learned Tribunal has also del .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

earned Tribunal by the impugned judgment and order has allowed the appeal preferred by the assessee and has deleted the penalty imposed under Section 271(1)(c) of the Act. [4.8] It appears that for the Assessment Year 2002-03 and 2003-04 the assessee claimed deduction of interest expenses under Section 36(1)(iii) of the Act. However, the Assessing Officer disallowed the sum of ₹ 5,41,415/- and on appeal before the learned CIT(A) confirmed the disallowance of interest of ₹ 2,22,415/-, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lowed the appeal. The aforesaid has given rise to Tax Appeal No.963/2008 for the Assessment Year 2002-03 and Tax Appeal No.964/2008 for the Assessment Year 2003-04. [4.9] Now Tax Appeal No.965/2008 remains, which is arising out of the impugned judgment and order passed by the learned Tribunal in ITA No.1111/Ahd/2007 for the Assessment Year 2003-04 by which the learned Tribunal has deleted the addition under Section 40A(2)(b) of the Act made by the Assessing Officer. [5.0] We have heard Ms. Mauna .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cannot be the basis for making addition in the regular assessment. In the block assessment the additions are made on the basis of material found during the course of search and which relates to the undisclosed income. The regular assessment is entirely different from the block assessment. We are therefore of the view that the finding given or estimate made in the block assessment is not at all relevant evidence for making addition in the regular assessment. In the absence of any material or evi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has clearly stated as under:- With reference to your letter it is brought to your kind attention that as per the investigations carried out by the Department no clearance of aluminium sheet / foils in the guise of aluminium foil / sheet scrap has been noticed and it appears that the subject case does not lead to any case of evasion of central excise duty by Gujarat Foils Ltd., Chhatral. 14. The A.O., we noted, has rejected this letter merely by observing that no details of inquiries conducted b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f Shri Navneet Mittal recorded under Section 132(4) while on the other hand, the AO is rejecting the evidence which has been procured by the assessee from the Central Excise Department which also relates to the same period. We have already given a finding that the generation of scrap as mentioned in the statement recorded under Section 132(4) are not in accordance with the scrap generation shown in the books of account. The AO cannot be permitted to rely on the statement recorded under Section 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and collecting correct excise duty. Thus, we are of the view that the addition has been made without any evidence or material in the possession of the AO and the addition so made can not be sustained. We have also noted that the assessee is regularly maintaining the books of account on mercantile system of accounting. The books were duly audited Tax Audit under Section 44AB has been carried out. The assessee has duly produced the books of account which were verified by the AO. The Excise Depart .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.O. Rather the gross profit ratio has increased during the year though the sales have increased by 83% as compared to Assessment Year 1998-99. The AO has not rejected the books of account. In our opinion, without rejecting the books of account no trading addition can be made. [5.1] Considering the aforesaid facts and circumstances and more particularly when the Assessing Officer did not reject the books of accounts and / or did not point out any defects in the books of accounts regularly maintai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

001-02 on scrap generation at the rate of 15%. Under the circumstances, question no.(A) in Tax Appeal No.961/2008 and the sole question in Tax Appeal Nos.916/2008 & 917/2008 are held against the revenue and in favour of the assessee. [6.1] Now so far as question No.(B) in Tax Appeal No.961/2008 by which the learned Tribunal has held the assessment order under Section 143(3) as void ab initio by observing that notice under Section 143(2) of the Act was issued beyond the period of limitation i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ome Tax and Anr. Vs. Hotel Blue Moon reported in [2010] 321 ITR 362 (SC), question no.(B) in Tax Appeal No.961/2008 is held against the revenue and in favour of the assessee. [6.2] Now so far as question no.(C) in Tax Appeal No.961/2008 i.e. with respect to disallowance of telephone expenses on account of personal use of the telephone by the Director is concerned, it is required to be noted that the Assessing Officer disallowed the expenses of ₹ 3,10,000/-, which was restricted by the lear .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onsidering the impugned judgment and order passed by the learned Tribunal, the learned Tribunal has observed that since the addition made by the Assessing Officer of the scrap generation at the rate of 15% has been deleted, the learned Tribunal has rightly observed and held that there is no question of imposition of penalty arising. Considering the above, Tax Appeal No.962/2008 stands dismissed as it cannot be said that the learned Tribunal has committed any error in deleting the penalty under S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

,48,341/- during the Financial Year 1996-97. The learned Tribunal has also found that even the assessee was having interest free funds to the extent of ₹ 3,93,65,572/- as on 31/03/2002. It is required to be noted that in the earlier preceding year no disallowance was made out of the interest claimed by the assessee. Considering the aforesaid facts and circumstances of the case, the learned Tribunal has rightly deleted the disallowance on interest expenses. We are in complete agreement with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s concerned, it is required to be noted that the Assessing Officer found that commission of sales at the rate of 1.50 per kg had been made to M/s. Maitri Metals Pvt. Ltd and it is covered under Section 40A(2)(b) of the Act. The assessee made the commission to the said party at ₹ 1.50 per kg and, therefore, the Assessing Officer disallowed the entire commission of ₹ 10,78,930/- under Section 40A(2)(b) of the Act as being unreasonable and for extra commercial considerations. However, o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g 2/3rd of ₹ 10,78,930/- and the assessee also preferred appeal before the learned Tribunal against the order passed by the learned CIT(A) sustaining the addition of 1/3rd of ₹ 10,78,930/-. By the impugned judgment and order, the learned Tribunal has dismissed the appeal preferred by the assessee on the aforesaid issue and consequently the learned Tribunal dismissed the appeal preferred by the revenue i.e. ITA No.1111/Ahd/1007 confirming the order passed by the learned CIT(A) deletin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

crease in commission was 3 times but there was no commensurate increase in profit. No doubt, as per the agreement between the consignor (appellant) and the consignee, over all business benefits have to be taken into account, though however, the increase in commission payment to an interested party in the light of Section 40A(2)(b) will have to be examined with reference to the benefit derived by the appellant. I have also considered the appellate order for the preceding year wherein the commissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version