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The DCIT, Cir. 4 Ahmedabad. Versus Heavy Metal and Tubes Ltd.

2016 (7) TMI 822 - ITAT AHMEDABAD

Suppression of sales - CIT(A) deleted the addition - Held that:- A perusal of the assessment order, we find that the AO failed to bring any evidence on record which can suggest suppression of sales made by the assessee. The assessee was showing an income of more than ₹ 7 crores in its return. It could not file confirmation from two scrap purchases having value roughly of ₹ 40 lakhs only. The ld.AO has calculated this aspect in such manner suggesting that the assessee has sold finishe .....

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on the above finding, we do not find any reason to interfere with the order of the ld.CIT(A) on this issue - Decided against revenue - Disallowance made by the AO under section 14A - CIT(A) has reduced the disallowance - Held that:- The order of the ld.CIT(A) need not to be interfered with for two reasons, viz. (i) Hon’ble Gujarat High Court in the case of CIT Vs. CIT V/s Corretech Engineering (P) Ltd, [2014 (3) TMI 856 - GUJARAT HIGH COURT ] has held that if no exempt income is there during .....

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nst revenue - ITA.No.622/Ahd/2011 With CO No.96/Ahd/2011 - Dated:- 11-7-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Revenue : Shri Jamesh Kurian, Sr.DR For The Assessee : Shri Dhiren Shah, AR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The Revenue is in appeal before us against the order of the ld.CIT(A)-VIII, Ahmedabad dated 16.12.2010 passed for the Asstt.Year 2007-08. 2. On receipt of notice in Revenue s appeal, the assessee has filed CO bearing .....

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ng of the CO and proceed to decide the appeal as well as CO on merit. 4. In the first ground of appeal, the Revenue has pleaded that the CIT(A) has erred in deleing the addition of ₹ 60,22,234/-. 5. Brief facts of the case are that the assessee has filed its return of income on 27.10.2007 declaring total income at ₹ 7,26,66,963/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 28.7.2008 which was duly served upon the assess .....

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formed an opinion that the assessee must have sold finished goods to them instead of scrap, and therefore, he calculated the suppressed sale of ₹ 60,22,234/-. 6. On appeal, the ld.CIT(A) has deleted the addition by observing as under: 4. I have carefully considered the findings of the A.O as well as submissions of the appellant. The appellant company filed its Return of Income on 27/10/2007 for the A.Y. 2007-08 declaring total income of ₹ 7,26,66,963/-. The return was processed u/s. .....

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g two parties out of total 21 parties. 1. M/s.Tube Man - Scrap sales ₹ 820320 for 35770 of Stainless/Carbon Steel Tubes. 2. M/s.Tube Inc Corporation - Scrap sales ₹ 608788 for 18440 Kgs of Stainless/Carbon Steel Tubes. Further, summons u/s.131 were issued by A.O to some of the Scrap Sale Parties. In response to the summons, the parties appeared before A.O and furnished the details called for. However, no one appeared on behalf of M/s.Deepak Steel at Chattral, Dist. Gandhi Nagar. The .....

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scrap generated and sold by the appellant is subject to Excise Duty and Sales Tax and all the records pertaining to quantity of generation, sales and stock of scrap is maintained by the appellant on day-to-day basis. The appellant also submitted the copy of daily records maintained by it for production, consumption, stock etc. relating to raw materials, finished goods, and scrap on sample basis before the A.O vide letter dated 24/12/2009. That apart the details of manufacturing process, monthwi .....

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Certificate in respect of Manufacturing process and generation of scrap from M/s. Germanisher Llyod. M/s. Geremanisher Llyod is a reputed internationally recognized Certification Agency of Pipes and Tubes Industry. They personally visited the plant of appellant company on 23/2/2009 and after due verification of the different process have issued the certificate regarding burning losses and scrap generation in manufacturing process of the appellant company. The copy of said certificate was submitt .....

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4.4 On the basis of facts discussed above, I am of the considered opinion that the A.O has made the addition merely on a presumption that confirmation of two parties are not received and one party did not appear against summons issued were not sold scrap but those were sold finished goods. The said presumption of the A.O is based on conjecture and surmises and without any supporting evidence. The A.O himself has considered the books of account as true and correct and has not rejected the books o .....

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rmation were sold finished goods rather than scrap. The A.O has not brought on record any cogent material evidence in support of the arbitrary addition made by him. 4.5 In view of the detailed discussion held above, the addition made by the A.O on account of suppression of sales of ₹ 60,22,234/- is not justified and therefore, A.O is directed to delete the same. As such, the appellant gets relief of ₹ 60,22,234/-. 7. With the assistance of the ld.representatives, we have gone through .....

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AO to that effect. We failed to understand on what basis the AO has drawn this inference. On the other hand, the ld.CIT(A) has observed that quantitative Excise record was maintained by the assessee, and they were subject to the audit by the Excise Department. Its product is excisable. It is not the case that the assessee has avoided excise duty or some evidence was found, exhibiting the avoidance of excise duty. Therefore, after taking into consideration the above finding, we do not find any r .....

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hat during this year, it has not earned any tax free income, and therefore, no disallowance should be made. This plea of the assessee was rejected, and the AO has estimated the expenditure for disallowance at ₹ 3,06,204/-. This amount has been calculated on the strength of Rule 8D. 10. On appeal, the ld.CIT(A) has reduced the disallowance to ₹ 2,78,700/-. The ld.CIT(A) also made computation on the basis of Rule 8D. According to the ld.CIT(A), there is an error in working of the disal .....

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