TMI Blog2015 (6) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... of justice, matter should be restored to CIT(A) with direction to decide the same as per fact and law in light of final outcome in the Excise proceeding as discussed above. Finding force in the contention of assessee, we set aside the order of CIT(A) and restore the matter to him with direction to decide the same as per fact and law including final outcome in Excise case, which was initiated at the strength on investigation by DGCEI, Ahmadabad and has bearing on the issue of additions in income tax proceeding as discussed above. Since we are restoring the matter to CIT(A) with preliminary issue as discussed above, so, we are refraining to comment on merit of issue at hand. - Decided in favour of revnue and assessee for statistical purpose - ITA. Nos. 1277 to 1280/Ahd/2012, I.T.A. Nos. 1287 to 1290/Ahd/2012, I.T.A. Nos. 2568 & 2569/Ahd/2012, I.T.A. Nos. 2611 & 2612/Ahd/2012, I.T.A. Nos. 2611 & 2612/Ahd/2012, I.T.A. Nos. 130 & 131/Ahd/2013 - - - Dated:- 23-1-2015 - SHRI SHAILENDRA KUMAR YADAV AND SHRI N. S. SAINI, JJ. For the Appellant : Shri Dinesh Singh, Sr. DR For the Respondent : Shri Tushar P. Hemani, AR ORDER PER BENCH All these eight set of cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has earned no such net profit. 5. Alternatively and without prejudice, the rate of net profits is highly exaggerated and excessive. 6. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s 234A/B/C of the Act. 8. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in initiating penalty u/s 271(l)(c) of the Act. 3. Assessing Officer in reassessment order u/s. 147 noted that unaccounted portion of sale price which was collected by Company in cash from various dealers/distributors as mentioned in the assessment order and admitted by Director as well company has not shown full amount of sales in regular books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d justifiable to follow the department's line of action as adopted in the case of Asian Group of cases during the course of their block assessment proceedings before Investigation wing, ADlT(lnv), Ahmedabad). ii. In view of the statement made by the Director of the company before the DGCEI and the categorical findings arrived at in the above discussion, it is clear that the books of the assessee are not reliable, do not show the correct profits of business and hence are rejected u/s 145. While in respect of the turnover shown in the books, the profit shown in the books is retained there being no evidence of fictitious expenditure shown in the books, the profit in respect of the unaccounted receipts of the assessee need to be rationally estimated so as to arrive at the total profits of the business of the assessee. The DGCEI has made very relevant observation in para No.29.3 page 177 of the show cause notice issued to the assessee. After the detailed enquiry and examination of the various agencies involved in ceramic tiles industries, they have come to the conclusion that assessee established a syndicate with the network of dedicated transporters and dealers to camouflage par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n claimed in the normal books of accounts. Since there is no firm basis for arriving at a proper ascertainment of such GP in light of the fact that the assessee is unable to furnish details of all unaccounted expenses incurred by it, although evidence of such expenses has been noted by the DGCEI in their report, a rationale estimate is made in relation to the GP to be adopted in respect of the unaccounted receipts of the assessee. Considering the totality of the facts, GP rate of 40% seems reasonable in this case and accordingly the same is applied on unaccounted cash received ₹ 2,01,44,670/- and ₹ 80,57,868/- is taxed as unaccounted income earned on account of suppression of MRP. iii. The assessment is being framed taking into consideration the assessment made in the case of Asian Granito India Ltd on 31/12/2009 for the block assessment period by the Central Range-2, Ahmedabad in which the same facts were considered. In that case also, assessee was indulging in suppression of MRP and facts were provided regarding this suppression by DGCEI along with Santro Tiles Ltd., the assessee. However, in view of the fact that not all manufacturing expenses have been incurred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of alleged excise duty but also complete expenses/costs with reference to the purchase of raw material and other incidental manufacturing expenses have been correspondingly shown at a lesser amount. This only goes to show that it is not a case where the entire expenses have been recorded in the books of accounts and the alleged suppression of sales is not accounted for thereby resulting in the entire alleged suppression of receipts as income. Part of the alleged suppression of receipts have been used for the purpose of making cash payments for the various expenses associated with the manufacturing activities. However, since some of the expenses relatable to the unaccounted receipts are accounted in regular books and some are not, the GP to be adopted for the purpose of computing profits on the unaccounted receipts needs to be suitably adjusted. Therefore, GP only on unaccounted cash received at the rate of 22.40% totaling ₹ 45,12,406/- cannot be taxed in the hands of the assessee as concealed income. It is a case where majority of raw material and other manufacturing expenses accounting for 60-65% of manufacturing cost and are recorded in books. The GP rate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of view by the ADIT(Inv)-II(2), Ahmedabad and total concealment to the tune of ₹ 43,88,57,612/- was worked out on the basis of Annexures D-1, D-1, D-3 and D-4 to the report by the DGCEI, Ahmedabad in four assessment years. Statement recorded by DGCEI, Ahmedabad, dated 06.09.2008 Shri Prakashbhai Dahyabhai Patel, Director of M/s. Santro Tiles Limited has stated that due to market compulsion and general trade practice, they had been suppressing MRP and paying less central Excise Duty. He further stated that they have revised their MRPs of all the grades of ceramics floor tiles with effect from 24.02.2008 and onwards. From the above facts as mentioned in show cause notice issue by DGCEI dated 04.07.2009 which has been duly served upon assessee, it was found clear in the Excise proceeding that Santro Tiles Limited was suppressing MRP continues from 01.06.2004 to 31.03.2008 spreading over four financial years i.e. 2004-05 to 2007-08. Under these circumstances, it was found in this case as well that by not declaring such amount of unaccounted sale price which was collected by company in cash from various dealers/distributors admitted by the Director as well company has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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