TMI Blog2010 (12) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... e gone through the said petition and found that there is a sufficient and reasonable cause for the delay and therefore we condone the delay and admit the appeal for disposal. 2. Brief facts of the case are that the assessee company is engaged in the business of manufacturing of resins. A search and seizure operation was conducted at the residence of Directors of the assessee company along with a survey action under section 133A in the premises of the company itself on 23-12-1999. During the course of these proceedings, it came to light that the premises of the assessee company were subject to a search action by the Central Excise Department on 2.7.97. During the course of this search, Central Excise Department found out evidences of remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 158BD of the Act. In the impugned assessment orders, the assessing officer has brought out the entire history of the facts of the assessee s case and considered that these are sufficient facts to prove that the assessee company had accepted the differences in the stock position and the sales outside books of accounts as determined by the Central Excise Authorities. The assessing officer brought to tax only those discrepancies which were already pointed out by the Central Excise Department in their show cause notice and adjudication order dated 28-1-1999. The assessing officer passed his order under section 158BD read with section 143(3) on a total undisclosed income of ₹ 47,52,170 towards clandestine removal of goods for the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- 1. The order of the CIT (A) is against the facts of the case and the provisions of law in so far as it relate to confirming the addition of ₹ 4,38,951 and to the extent it is prejudicial to the appellant. 2. The learned CIT (A) erred in sustaining the addition of ₹ 4,38,951. 3. The learned CIT(A) as well as the assessing authority have failed to consider the material placed before them that the alleged transactions of sale outside the books can at best only be taken at ₹ 2,39,822 for financial year 1996-97 and ₹ 5,77,328 for financial year 1997-98. 4. The learned CIT (A) ought to have not relied upon the Central Excise Order in toto which was patently, arbitrary, irrational biased and unjustified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges 74 and 68 of the paper book filed by the assessee and submitted that to the extent, assessee tallied the stock with the books of accounts, there should not be any unaccounted sales and hence, the profit should be calculated only on ₹ 8,17,150/-. The lower authorities not relied upon the Central Excise Order in toto which was patently, arbitrary, irrational biased and unjustified. The department is unjustified in holding that as the assessee has gone into Karvivad, as the allegations were acceptable to the assessee. It is submitted that there was no investment in the stock outside the books of account and hence the two additions made by the assessing officer separately for shortage of material as well as excess of stock material sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nducted the raid on 2-7- 1997. During the course of search the Central Excise department found the discrepancies in the stock and clandestine removal of stock. The discrepancies, omissions and commissions committed by the assessee company was to the tune of ₹ 50,65,547 which was found during the course of search by the Central Excise department. These discrepancies were not brought to the notice of the Income-tax Department by the assessee company. The assessee company has filed an application for Karvivad scheme before the Central Excise Department and settled the issue by paying the Central Excise duty as per the provisions of the Karvivad scheme. The action of the assessee company clearly shows that it has accepted the differences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmetical errors also. Hence the statement containing shortages/excess stock can not be relied upon. We find merit in the arguments of the learned counsel for the assessee that for the purpose of calculating the investment in stock out side books of accounts, the value of excess of finished goods over raw materials should be taken into account and the same has to be telescoped against the undisclosed income determined for the block period. We are also in agreement with the findings of the CIT [A] that the assessee company could not be considered to have earned profit equal to the entire undisclosed sale proceeds. The CIT [A] is justified in considering a profit of 11% on unaccounted sales as undisclosed income of the assessee company for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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