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M/s. Valiant Glass Works Pvt. Ltd Versus The ITO, 4 (3) (3) , Mumbai

2015 (8) TMI 1084 - ITAT MUMBAI

Addition on account of sale outside books at ₹ 20,91,360/- Held that:- Find force in the contention of assessee that exhibit-138 and 139 have to be read together and the entries in exhibit 138 has to be considered while considering the entries in exhibit-139. That being so, set off of 687898.99 mtrs has to be given in 909289.17 mtrs., resulting into shortage of 221390.18, at the most this has to be considered as sold outside the books. Further, a perusal of the comparative chart show that .....

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entioned the answer to question No. 34 wherein the Managing Director has specifically said that 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 .....

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uded 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 findings of the Ld. CIT(A) and direct the AO to delete the addition - Decided in favour of assessee.

Disallowance of claim for deduction u/s. 80HHC - Held that:- Since we have deleted the a .....

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8 - Dated:- 19-8-2015 - SHRI VIJAY PAL RAO AND SHRI N.K. BILLAIYA, JJ. For The Appellant : Shri Aarti Vissanji For The Respondent : Shri Randhir Kumar Gupta ORDER PER N.K. BILLAIYA, AM: This appeal by the assessee is preferred against the order of the Ld. CIT(A)-XIV, Mumbai dt. 20.12 .2007 pertaining to Assessment year 2004-05. 2. The assessee is aggrieved by - (1) The addition on account of sale outside books at ₹ 20,91,360/-. (2) Addition u/s. 69C at ₹ 9,79,200/- (3) Addition on ac .....

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ut at the business premises on 5.1.2006. During the course of the survey, various incriminating documents were found evidencing unaccounted cash sales of fents and ash etc. Documents containing evidence of cash payments towards labour charges not recorded in the books of account were also found. 3.2. Statements were also recorded during the course of the survey in which Shri Dilip Pacheriwala, the Managing Director of the assessee company admitted that the sale of fents/bhangar was not recorded .....

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unded 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 pers .....

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at it is hard to believe that the assessee has not been able to ascertain the identity of the person who has maintained the stock register. The AO further did not accept the claim of the assessee that the said register has no relevance. On the contrary, the AO was of the firm belief that the stock register has been maintained scientifically and systematically. 3.4. The AO further observed that the difference between the quantity recorded in the impounded register and the stock as per the regular .....

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ming that the markings on the impugned register are not reliable. It was further pointed out that the goods are excisable goods and no discrepancies have been found by the Excise Department therefore, there is no question of sales outside the books. It was pointed out to the Ld. CIT(A) that the stock mentioned in the rough book was not the correct stock and infact the stock declared by the assessee in its books is higher than what has been noted in the said register. The submissions made by the .....

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try on page-138 which related to the transfer of goods to V-27 being 687898.99 metres. It was pointed out that if this is considered and read with the entries on page- 139, the shortage of 909289.17 has to be adjusted with the transfer of goods 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 .....

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ties 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 confirmed by the respective parties. However, we find force in .....

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to be on the higher side. In our considered opinion and upon the understanding of the fact, we hold that shortage of 221390.18 at the most can be considered as sold outside the books. The AO is directed to recompute the profit on sale of this stock @ 14.90%. To this extent, the findings of the Ld. CIT(A) are modified and ground No 1 is partly allowed. 7. The second addition relates to ₹ 9,79,200/- as unexplained expenditure u/s. 69C of the Act. 8. Before considering this ground let us fir .....

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the amount of ₹ 50,61,040/- offered to tax in the revised return includes this alleged sale of chindies and scraps. The assessee also gave month-wise break-up of sales which read as under: December 2003 - ₹ 11,36,680/- January, 2004 - ₹ 12,11,441/- February. 2004 - ₹ 12,36,315/- March, 2004 - ₹ 14,76,610/- ₹ 50,61,040/- 8.2. The assessee further claimed that this cash sale should be considered as utilized for making payments to labourers and others. The claim .....

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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 .....

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ed to explain the cash sales of bhangar, chindies and ash which are not recorded in the regular books of account to which the assessee made a specific reply which read as under: We have been making cash sale of bhangar, chindies and ash which are bye-products of the manufacturing activities of Valiant Glass Works Pvt. Ltd. (assessee), the same has never been accounted for in the regular books of account in any of the years since the beginning of the production/manufacturing activities till today .....

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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 findings of the Ld. CIT(A) and direct the AO to dele .....

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he 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 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 .....

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