TMI Blog2020 (3) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... he law. See Karan Co [ 2001 (7) TMI 48 - DELHI HIGH COUR ] , NIRANJAN AND CO. LIMITED [ 1979 (3) TMI 24 - CALCUTTA HIGH COURT] If such prayer is allowed then in every case, where the assessee is not satisfied with the finding of the Tribunal, the MA will be filed. In our considered view, powers u/s 254(2) are very limited which could only be exercised to rectify any mistake or fact apparent from the record. But, where the Tribunal has applied its mind and comes to a particular conclusion then disturbing such finding would tantamount to review the order. Such exercise would even be contrary the scheme of Act as the order of Tribunal is appealable u/s 260A of the Act before the Hon'ble High Court. In view of these facts, the miscellaneous petition filed by the assessee has no merit. - MA No.47/Ind/2019 (Arising out of assessee’s ITA Nos.587/Ind/2016, And Revenue’s ITA No.792/Ind/2016) - - - Dated:- 16-1-2020 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Appellant : Shri S.N. Agrawal PankajMogra, CAs For the Revenue : ShriR.S.Ambedkar,Sr. DR ORDER PER KUL BHARAT, J.M: This Misc. Applicationis filed by As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the order as passed u/s 143(3) of the Act after making various addition to the income of the assessee even when case of the assessee was selected under CASS. The addition so made requires to be restricted limited to the reasons for selection under CASS. 2. That On the facts and in circumstances of the case, ld. CIT(A) has erred in approving the order as passed by the ITO even when he was not authorized to pass order in the Anant Steel Pvt. Ltd. 9 case of the assessee company. 3. That On the facts and in circumstances of the case, ld. CIT(A) has erred in approving the rejection of books of account even when books of account is duly audited and there was no reason for rejection of the same. 4. That On the facts and in circumstances of the case, ld. CIT(A) has erred in maintaining the addition of ₹ 3,43,50,556/- on account of low gross profit without properly appreciating the facts of the case and submission made before him. REJECTION OF BOOKS OF ACCOUNTS 2.3.1] The Hon ble Bench in Para 11 on Page No. 9 10 of its order dealt with the said issue and held as under: 11.The Assessing Officer held that the assessee had not followed the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onand sale was being made which was later retracted. It is however to benoted that the discrepancies pointed out have not been reconciled by theappellant. The appellant has taken the stand that the documents foundwere fabricated by two employees. It has not been explained under whatcircumstances and on whose direction such fabrication was done andwhy should the employee concerned resort to such fabrication has alsonot been explained. Considering the facts in totality it cannot be said thatthe findings of the excise authorities have been disproved as false or fabricated. It is almost four years since the date on which the search wasconducted by the excise authorities and yet the appellant has not beenable to add any substantial material to establish it's case that thedocuments are fabricated. In the light of the above finding of fact therecan be no two opinions as to the status of the books of accounts. There ison record undisputed evidence to hold that the books of accounts did not reflect the true and correct picture. In view of the above it cannot be heldthat there was no basis for rejecting the books of accounts. AO wastherefore justified in rejecting the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover which the basis of show cause notice of Excise Department has been set aside by the CESTAT, therefore the component is not available now for estimating the profit. We, therefore, direct the AO to adopt a net profit @3.3% on the turnover excluding the turnover as determined by the Excise Authorities. Accordingly, this ground of the appeal of the Revenue is partly allowed. 3.2] The Hon ble Bench relying on its own findings in the case of the assessee company itself for the Assessment Year 2007- 08 maintained the percentage of Net profit at 3.30% in this year also. However,the Hon ble Bench while deciding the said ground did not consider the following facts: 1 The percentage of Net Profit declared in this year was 0.29% 2 The percentage of Net Profit as declared in the case of M/s Shivangi Rolling Mills P Limited was at 0.49% which was duly accepted by the assessing officer himself in the assessment order 3 The hike in the price of raw material with reference to the increase in the price of sale of finished goods 4 In the Assessment Year 2007-08, net profit as declared in the books of accounts was duly accepted but the rate of net profit was estimated and ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply as to justify the rate of Gross Profit as declared in its books of acocunts. However, the assessing officer was not able to controvert the submissions made by the appellant. 3.3.1] The appellant had filed following replies in support of its contentions which are also listed hereunder: S.No Reply dt Para Page No. of compilation 1 25-02-2015 1 100 2 19-03-2015 2 119 to 121 3 27-03-2015 1.6 129 to 131 3.3.2.1] Comparative chart of Gross Profit and Net Profit of the year under consideration and that of last two years is as under: S. No. Asst Year Turnover Gross Profit G.P. Margin Net Profit N.P. Margin 1 2012-13 82,56,87,721 25,98,878 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27,053 22,950 35,865 29,020 32.57 26.45 3.3.2.4] Comaprative chart of cost of Raw Material and MS Ingot as purchased by the appellant for the Assessment Year 2010- 11 and 2012-13 is as under: S. No Description of material 2010-11 2012-13 Change in percentage MS Scrap M S Ingot MS Scrap M S Ingot MS Scrap MSIn got 1 Purchases 28,05,18,076 5,59,63,409 48,63,27,720 5,49,81,711 2 Qty [In M Tons] 24,120 2,420 29,233 1,748 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent rating agencies for securing better rate of interest. [iv] The management of the appellant was taken over by new directors and they were not in a position to bargain from the raw material suppliers and also sold their material at a cheaper rate to sustain their market share. However, probably, management of M/s Jaideep Steel Alloys P Limited was far more experienced and was comparatively having good exposure of the market. 3.7] The assessing officer simply rejected the comparative chart of M/s Shivangi Rolling Mills Private Limited by stating that the said company is a sister/associated concern of the appellant. The said approach of the assessing officer was highly objectionable more so when the other assessing officer while passing the assessment order in the case of M/s Shivangi Rolling Mills Private Limited had accepted the book results as declared by that company. 3.8] That initially M/s Anant Steels P Limited and M/s Shivangi Rolling Mills P Limited were incorporated by Late Shri Mohan Kumar Bansal and his brother Dr Rajendra K Bansal. That after the death of Late Shri Mohan Kumar Bansal on 18-08-2009, shares of both the companies in the group were tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess comparable. Hence, the assessing officer grossly erred in relying on the book results of M/s Jaideep Ispat Alloys P Limited instead of M/s Shivangi Rolling Mills P Limited. 3.9.3] That M/s Jaideep Ispat Alloys P Limited is belonging to M/s Moira Steels P Limited and M/s Rathi Iron Steel P Limited. The said group holds majority of the production under its control and is having monopoly in the steel market. Hence, there is no rationale for comparing the results of the appellant with M/s Jaideep Ispat Alloys P Limited. 3.10] It is pertinent to also highlight that book result in the case of M/s Shivangi Rolling Mills P Limited was duly accepted by the assessing officer as declared by that company. 3.11.1]That on Page No. 28 of the assessment order, the assessing officer prepared two different trading accounts i.e. trading account for the period from 01-04-2011 to 05-01-2012 and from 06-01-2012 to 31-03-2012 and observed that the appellant had declared huge G.P. after search. It is needless to say that Excise Department is concerned with the sales and not with the G.P. rate. The turnover of the appellant during the period from 06-01-2012 to 31-03-2012 was of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he figuresof the period from 06-01-2012 to 31-03-2012. 3.11.6] That various other expenses which related to the period till 05-01-2012 but debited in the books of accounts after 06-01- 2012 on receipt of the bills remained to be considered in first period. 3.11.7.1] That on the basis of revised valuation, the percentage of G.P. rate for these two periodsis calculated as under: [i] Trading Account for the period from 01-04-2011 to 05- 01-2012: Opening Stock 10,93,68,796 By Sales 63,96,04,197 Purchases 46,86,09,143 By Closing Stock 10,60,03,126 Direct Expenses 15,68,27,221 Power Exp [24-12 to 05-01] 55,26,744 Gross Profit 52,75,419 74,56,07,323 74,56,07,323 Percentage of Gross Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of G.P.was substitued and therefore addition made on account of low G.P. rate was not proper. 3.12.1] That in the year under consideration, the gross profit rate as declared by the appellant and by M/s Shivangi Rolling Mills P Limited was as under: S.No Description Anant Steels P Ltd Shivangi Rolling Mills P Ltd 1 Turnover 82,56,87,721 63,59,81,407 2 Gross Profit 25,98,878 -1,09,75,674 3 % of rate of Gross Profit 0.31% [-] 0.0173% 3.12.2] That in view of the above, it is clear that the G.P.rate in the case of appellant was at 0.31% but in fact it was negative in case of M/s Shivangi Rolling Mills P Limited. Hence, there was no justification for adopting the rate of Gross Profit of 5% as declared in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion inasmuch as the total sale cannot be regarded as the profit of the appellant. The net profit rate has to be adopted and once a net profit rate is adopted, it cannot be said that there is perversity of approach. Whether the rate is low or high, it would depend upon the facts of each case. In the present case net profit rate of five per cent, has been applied. We do not think it appropriate that the same requires to be enhanced. We are also inclined to think that it is high. In any case, it cannot be said that there has been perversity of approach. 3.13.3] That in the present case in hand, the appellant had negative income from its manufacturing activities and profit was derived from other income. Hence, following the decision of the Hon ble Jurisdictional High Court, no addition is to be made even on account of net profit theory. 3.14.1]That in the assessment order, the assessing officer heavily relied on the show cause notice as issued by the Hon ble Commissioner of Central Excise. It is needless to say that show cause notice as issued by the Hon ble Commissioner was prima facie an observation of the officer and was issued to the appellant to furnish its comments on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 As considered by the AO 4.96% 4.58% 5% -0.0173% 4.2 As reduced by the Ld CIT(A) 3% 3% 4.3 As maintained by the Hon ble ITAT 3.3% 3.3% 3.4.2] The percentage of Gross profit in the case of the assessee company was 3.40% in the Assessment Year 2007-08 and the same was restricted to 3.30% in case of unaccounted turnover in that year but book result as declared by the assessee companywas neither disturbed by the assessing officer nor by any of the appellate authority. 3.5] That in view of the above discussion, percentage of Gross profit of 0.31% and Net profit of 0.29% as declared by the assessee company in the year under consideration requires to be accepted in light of the decision of the Hon ble ITAT in the case of the appellant itself for the Assessment Year 2007-08. The direction of the Hon ble Bench so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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