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2015 (9) TMI 1340 - ITAT AHMEDABAD

2015 (9) TMI 1340 - ITAT AHMEDABAD - TMI - Addition on account of suppression of profit - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has noted that no defect or the differences in the product, process, raw materials, end users etc. have been pointed by Revenue and the A.O has proceeded to calculate the income of the 2 units on a wrong assumption. He has further noted that the addition has been made on a hypothetical formula by the A.O. CIT(A) while deleting the .....

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ted:- 25-6-2015 - SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARAT, J.M. Appellant by : Shri B.L. Yadav, Sr. D.R. Respondent by : Ms. Urvashi Shodhan, A.R. ORDER PER SHRI ANIL CHATURVEDI,A.M. 1. This appeal filed by the Revenue is against the order of CIT(A)-XIV, Ahmedabad dated 29.11.2010 for A.Y. 2007-08. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a partnership firm stated to be engaged in the business of manufacturing of chemicals. Assessee fi .....

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d has raised the following effective ground:- 1. The Ld. Commissioner of Income tax (A) has erred in law and on facts in deleting the addition of ₹ 1,27,93,522/- made on account of suppression of profit. 4. During the course of assessment proceedings, A.O noticed that Assessee had two units, of which one was a normal business unit and the other was 100% EOU whose income was claimed as exempt u/s. 10B of the Act. He also noticed that the gross profit of unit no. 1 was shown at 10.66% while .....

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profit of exempt unit. The difference of the goods produced was worked out by him at 27,855 Kg and after considering the average sales price of ₹ 459.29 Kg of goods sold by unit 2, determined the sales at ₹ 1,27,93,522/-, which was added to the sale of unit 1 and reduced from sales of unit 2. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the Assessee deleted the addition by holding as under:- 3.1. I have conside .....

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by the appellant in the form of a chart from which the vast difference between two businesses in terms of product, process, raw materials, end users, yield, etc is very apparent. These vital differences in the two units have been ignored by the Id A.O . Without finding any defect or controverting the above differences, the approach of the Id AO in presuming the consumption and production of two totally different units needs only to be rejected and held to be against sanction-of the law. It hardl .....

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lculate the income of different units on a wrong assumption from the factual details submitted by the appellant. The relevant and abundant evidences in the form of regularly maintained books of account, technical aspects and other relevant records including excise registers, which are statutorily maintained by the appellant are all brushed aside while ignoring the result shown by the appellant and the said addition appears to have been made solely to deprive the appellant of the legitimate claim .....

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fects in the maintenance of accounts which will not enable the AO to work out the income of the assessee. The relevant observations of the Hon'ble Tribunal which have been reproduced in the submissions at para 8 are very significant. The Hon'ble Tribunal has held that section 145 cannot be invoked for carrying out business imprudently or when business results shown are not very good. The Tribunal has held that rejection of books cannot be done without pointing out the defects in accounts .....

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rbitrary addition made by the Id AO without any rational or factual basis cannot be approved. On the facts of the case and the detailed consideration of the issue and appellant's submissions, I am of the opinion that the action of the AO in making the aforesaid addition cannot be approved. I am in agreement with the submissions of Id AR that the addition is made on a hypothetical formula and hence deserves to be deleted. I fully accept the submissions made by the appellant in para 4 to 8 of .....

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ery clearly held that the taxing authority must act in a fair and not a partisan manner. The apex Court has observed that it is impossible to subscribe to the view that unless the taxing authorities exercise power in a manner most, beneficial to the revenue and consequently most adverse to the assessee they should be deemed to have exercised it in a proper and judicious manner. On consideration of the facts of the case and the detailed consideration of the issue as well as the appellant's su .....

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