TMI Blog2015 (8) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cash sales have been utilized for making the labour payment and therefore the cash generated out of the sale of scrap can be accepted as utilized for making the payment of ₹ 9,77,200/- and therefore no separate addition is called for. We, accordingly direct the AO to delete the addition of ₹ 9,77,200/- which is treated as unexplained expenditure u/s. 69C - Decided in favour of assessee. Addition on account of sale of fents, bhangars and chindies - Held that:- If the statement made by the Managing Director at the time of survey is considered in the light of the business activities of the assessee, it can be safely concluded that the assessee has been making sales outside the books in respect of the scrap generated during the course of its business activities. Therefore, the income offered by the assessee in its revised return of income can be accepted as having included in the cash sales generated out of the scrap. Therefore, in our considered opinion and understanding of the facts of the case in hand, the addition of ₹ 29,09,456/- is unjustified as the same is already offered in the revised return of income by the assessee. We, therefore, set aside the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D in his statement accepted the fact of payment in cash to labourers amounting to ₹ 50,61,046/-. Accordingly, the original return filed on 31.10.2004 was revised on 29.3.2006 declaring income at ₹ 3,32,42,350/- which included the income of ₹ 50,61,040/-. 3.3. During the course of the scrutiny assessment proceedings, the impounded materials relating to and relevant to the year under consideration were analyzed. Queries were raised accordingly. One of such query related to a blue colour note book containing 4 pages marked as Annexure-A/10 in which there was a mention of 9,09,289.17 meters. The assessee was asked to explain why it should not be presumed that stock has been sold outside the books and profits on such sales should not be estimated. The assessee explained that the said rough book is maintained by the person at the factory to find the whereabouts of the stock lying at various places. It was further explained that in the said book, the concerned person has tried to tally the stock and since he could not complete all the details of the inventories, he has not completed the said register to arrive at actual physical stock. Accordingly, it was submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of 687898.99 and at the most the shortage should be considered at 221390.18 mtrs. The Ld. Counsel further stated that the profit rate of 20% adopted by the AO is against the facts of the case. Drawing our attention to the comparative chart of profit shown in previous 5 years, the Ld. Counsel stated that the profit never were more that 17% and the average profit comes to 14.90. The Ld. Counsel reiterated the claim that there is no adverse finding by the Excise Department and there is no evidence on record to show that there were sales outside the books. The entire additions have been made merely relying on the notings in a rough book therefore the addition should be deleted. 6. We have given a thoughtful consideration to the orders of the authorities below and we have carefully gone through the documentary evidences brought on record before us. No doubt, the entries as exhibited at page-138 and 139 of the paper book appears to be entries on a rough book but at the same time these entries cannot be brushed aside lightly because every entry is found to be recorded in the regular books of account. Moreover, the transactions with the parties mentioned in the sheet have also been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who proceeded by making an addition of ₹ 29,09,456/-. 9. The assessee carried the matter before the Ld. CIT(A). The assessee reiterated its claim that the alleged cash sales is part of the income surrendered in the revised return of income. The Ld. CIT(A) did not accept the claim of the assessee. On the contrary, the Ld. CIT(A) was of the firm belief that the assessee must have sold scrap amounting to ₹ 80 lakhs whereas the AO has confined his estimation on the basis of seized material at ₹ 29,09,456/- only. The Ld. CIT(A) further observed that instead of making addition of ₹ 80 lakhs, the AO has made an addition of ₹ 29,09,456/- thereby allowing substantial rebate to the assessee therefore the AO was fully justified in making the addition of ₹ 29,09,456/-. 10. Aggrieved by this, the assessee is before us. 11. The Ld. Counsel for the assessee once again stated that the return revised by the assessee included this alleged sale of scrap and therefore the same amount cannot be added twice. 12. The Ld. DR strongly supported the findings of the Revenue authorities. 13. We have carefully perused the relevant material evidence brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the AO to delete the addition of ₹ 9,77,200/- which is treated as unexplained expenditure u/s. 69C of the Act. This grievance of the assessee is also allowed. 15. The next grievance relates to the claim of deduction u/s. 80HHC of the Act in respect of draw back credit attributable to the customs duty. At the very outset, the Ld. Counsel for the assessee stated that this issue is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon ble Gujarat High Count in the case of Avani Exports and Others 348 ITR 391 wherein the Hon ble High Court has held that the operation of the said section could be given effect from the date of amendment and not in respect of earlier assessment years of the assessees whose export turnover is above ₹ 10 crores. In other words, the retrospective amendment should not be detrimental to any of the assessees. This decision has been followed by the Hon ble High Court of Bombay in 257 CTR 67. Respectfully following the decision of the Hon ble High Courts (supra), we set aside the findings of the Ld. CIT(A) and direct the AO to allow the claim of deduction u/s. 80HHC of the Act. This grievance of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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