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2016 (6) TMI 173 - ITAT MUMBAI

2016 (6) TMI 173 - ITAT MUMBAI - TMI - Addition made u/s.69 - unaccounted purchases and suppressed stock - Held that:- We do not find any merit in the addition so made by the AO on account of unaccounted purchases and suppressed stock in so far as the AO has not been able to establish by means of any evidence that there were in fact unaccounted purchases or suppressed stock. We found that the AO has made addition merely on the presumption that since GP rate of 60% has been estimated by him, ther .....

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- Held that:- For claiming exemption u/s.54G, the assessee is entitled to make investment within a period of one year before or three years after the transfer of capital asset. Both these are exclusive. Assessee can invest part of the amount within a period of one year before sale of original assets and the balance part may be invested within a period of 3 years after the sale/transfer of asset. Accordingly, we direct the AO to give benefit of Section 54G by verifying the investment so made by .....

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23&4324/Mum/2013, ITA No. 4711/Mum/2013 - Dated:- 27-5-2016 - Shri R. C. Sharma, AM And Shri Sandeep Gosain, JM For the Revenue : Manjunatha Swamy For the Assessee : Shri Vijay Mehta ORDER Per R. C. Sharma ( A. M ) These are the cross appeals filed by the revenue and assessee against the order of CIT(A)-Mumbai, for the assessment year 2008-2009, in the matter of order passed u/s.143(3) of the I.T.Act. 2. Rival contentions have been heard and record perused. The facts in brief are that the assess .....

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rejected the assessee's books of accounts and after considering the various statements of stock as on different dates and also taking into account the financial statements of the assessee company, adopted the G.P. ratio at 60% as against 23.42%' declared by the assessee company. The AO observed that the assessee company has not maintained day-to-day consumption month-wise consumption record of machine-wise production and similarly day-to-day record of other consumables and other expense .....

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eclared the gross profit @ 23.42% and he arrived at gross profit @ 60%. After applying the provisions of section 145(3) the AO estimated gross profit rate of 60% over the disclosed sales and service charges and job work as against 95% worked out by him for the period 1st April, to 30th November and 65% as worked out by him in trading of packing materials. The AO made an addition of ₹ 15,24,83,871/ - by estimating the gross profit margin at the rate of 60%. The AO held that the assessee has .....

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lso. The AO also stated that as discussed in the assessment order there is unaccounted purchases / or suppressed stock of previous years which has been used by the assessee towards manufacturing account and in manufacturing account, G.P. of 60% has been applied and in this way, applying the same G.P. towards sales shown at ₹ 39,49,83,367/ -, the G.P. comes to ₹ 23,69,90,020/- as against ₹ 37,35,26,651/worked out and in this way, there will be an addition of ₹ 13,65,36,631 .....

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valves and also of packing material is not a representative picture of the totality of the appellant's operations, and the fact that the main item of manufacture being hydraulic presses and tube benders on which GP margin varies from item to item and is not uniform, the AO in his remand report, has conceded that the GP ratio worked out by the then AO in the assessment order is not borne out from the records examined and is not maintainable. However the AO has suggested that a GP rate of 26 .....

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account and given effect to in the succeeding year. Thus this cannot be a ground for estimating a higher GP rate. In respect of the basis of GP of various AYs, the appellant has shown that declared GP of AY 2008-09 was 24.31 % as against declared GP of 24.13% in AY 2009-10 and 24.17% in AY 2007-08. The main ground for estimating GP at 26% is that this was the rate estimated and assessed in AY 2009-10 after considering various factors. In appeal for AY 2009-10, (Order dated 15/03/2013 in Appeal N .....

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fact that stock statements given to bank in AY 2008-09 did not match with the stock statement in the final accounts of the appellant, which fact has been clarified in remand proceedings and the AO has now accepted the appellant's version as correct. The AO has also not found fault with the sales turnover, nor stated that the accounts of the appellant are incomplete. The AO has also not pointed out any discrepancy in the purchases made or the opening and closing stock either. There was an au .....

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is that GP rate of 31 % on one item (on the basis of details called for/furnished by the appellant) viz., of hydraulic press (one of the major items manufactured), and basing her estimate on the average GP rate of earlier years at around 24% in effect holding that GP rate should be somewhere between 31% and 24% and thus arrived at a figure of 26%. However this figure is arrived at notwithstanding the lacunae pointed out in the beginning part of this paragraph, and without pointing out the percen .....

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rate on the basis of GP rate of one machine only. The one item on which the GP rate is based is also found to be ordered and sold in the succeeding year. The GP ratios of cases furnished by the appellant were rejected on the basis that the results pertained to an earlier year, however the AO has not provided comparable cases on the basis of which the GP rate has been finally assessed. The items being excisable, audit by the Excise Department in the earlier year without finding the books faulty, .....

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te as estimated by the AO is deleted. 4. With regard to addition made u/s.69, the CIT(A) observed as under:- As regard, addition u/s 69 on account of unaccounted purchases and suppressed stock, the AO has not been able to establish by means of any evidence, or any single bill etc., that there were in fact unaccounted purchases or suppressed stock. The AO has made addition merely on the presumption that since GP rate (of 60%) as estimated by him is so high, and taking into account the stock state .....

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rmises is not justified. The addition u/s 69 of the Act is accordingly deleted. 5. Against the above order of CIT(A), revenue is in further appeal before us. 6. We have considered rival contentions and carefully gone through the orders of authorities below and found from the record that the AO has rejected books of account by invoking provisions of Section 145(3) on the plea that stock statement filed with the bank was different from the stock reflected in the books of account and that assessee .....

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after giving detailed finding at page 12-17 of his appellate order modified the GP rate to 24.31%. The detailed finding recorded by CIT(A) has not been controverted by department by bringing any positive material on record. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition on account of GP after considering rate at 24.31%. 7. On the similar reasoning ground raised by the revenue in the assessment year 2009-2010 is also dismissed. 8. With regard to additio .....

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edings, the AO has verified assessee s version and accepted the same with regard to no unaccounted purchases. The CIT(A) has given due reasoning for deleting the addition. The finding recorded by CIT(A) has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made u/s.69 of the I.T.Act. 9. In the result, appeal of the revenue for both assessment year 2008-09 & 2009-2010 are dismissed. ITA No.4711/Mum/2013(AY : 2008-2009) .....

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rial undertaking in an urban area consequent to shifting of the undertaking and utilised fully for setting up an industrial undertaking in non urban area by way of purchase of new machinery, land and building within a period of one year before or 3 years after the date on which the transfer of assets of the urban undertaking took place. As per our considered view both the lower authorities have erred in coming to the conclusion that time period of one year before or three years after the transfe .....

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e either can claim investment for the period from 25/09/2006 to 24/09/2007 or from 25/09/2007 to 24/09/2010 and not both. The second condition is that the assessee should deposit the balance amount in capital gain account before furnishing return of income u/s. 139(1) of the Act. As per the details furnished by the assessee, there is a deposit of ₹ 9.00 crores under the capital gain scheme on 29/09/2008, i.e. before the filling of return of income u / s. 139(1) as per copy of bank pass boo .....

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and building amounting to ₹ 24,86,30,844/was directly credited to capital reserves account being a capital profit. The assessee claimed a deduction against the aforesaid long term capital gains under section 54G by way of transfer of/ investments in the assets to Chakan, Pune. The details of such transfer of investments is tabulated as under: Period Land & Building & Plant & Mach. Computers Vehicles Total Sept,06 to Sept,07 2,73,85,545/- 15,26,825/- 61,34,218/- 3,50,46,588/- O .....

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