TMI Blog2016 (10) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account and income-tax return furnished. AO has grossly erred in taking the excise limit of ₹ 1.5 crores whereas for the year under appeal excise limit was at ₹ 1 crore. During the course of hearing ld. AR has relied on the judgment of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT ] wherein it has been held that sale proceeds itself cannot be treated as undisclosed income rather the net profit embedded in the sale should be treated as undisclosed income. CIT(A) while adjudicating the appeal of assessee has rightly given effect to the judgment of President Industries (supra) and has taken the net profit of ₹ 2,27,573/- shown by M/s Swastik Polymers in the audited profit and loss account placed as an addition to the income of assessee at the place of addition towards suppressed sales of ₹ 1,13,24,749/- taken by ld. Assessing Officer. We, therefore, find no reason to interfere with the order of ld. CIT(A) - Decided against revenue. - ITA No.2155 & 2156/Ahd/2012 Along with CO Nos.222 & 223/Ahd/2012 - - - Dated:- 17-10-2016 - Shri R.P. Tolani, JM, Shri Manish Borad, AM. Appellant by Shri Sumit Kumar Verma, Sr.DR Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee) and the other named M/s Swastik Polymer, owned by Shri Bimalkumar Chainroop Dharewa (brother of Shri Ashok Chainroop Dharewa) Karta of HUF. Both were carrying out similar kind of business. The Excise Department treated both the concerns as single concern and clubbed the turnover of Swastik Polymers with the assessee firm. The turnover shown by the assessee firm was of ₹ 87,76,159/-. The ld. Assessing Officer further relied on the show cause notice issued by the Excise Department and the relevant part of the show cause notice reads as under:- In your case, A search action was carried out by the Central Excise Department wherein it was found that for the period 01.04.2006 to 31.03.2007, M/s. Shubham Polymers sold finished products BOPP/plastic bags under the guise of BOPP/BOPP film etc and has suppressed sale. As per details given in the letter during the F.Y. 2006-07, you have cleared that the total quantity of 193497.114Kgs. It was reported that the clearance value of above mentioned goods was ₹ 51,00,908/- over/'excess exemption limit, the exemption limit for SSI was ₹ 1.5 Crore, which indicated that total sale was of ₹ 2,01,00,908/~ durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted or suppressed sales in the same. 9. The ld. AR also referred and relied on the judgment of Hon. Gujarat High Court in the case of CIT vs. President Industries (2002) 124 Taxman 654 (Guj) wherein it has been held as under :- 3. Having perused the assessment order made by the Assessing Officer, the order made by the Commissioner (Appeals) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under section 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question, whether entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) SALE OF SHUBHAM POLYMER 8770992.00 (B) SALE OF SWASTIK POLYMER 6467823.00 (C) TOTAL CLEARANCE VALUE (A+B) 15238813.00 (D) MINUS SALE OF (a) Shubham Polymer to Swastik 196908.00 (b) Swastik to Ganesh Silk Mill 73798.00 (E) NET SALE FOR DUTY CALCULATION [C-(a+b)] 14968109.00 (F) MINUS EXEMPTION ₹ 1 crore 10000000.00 (G) TAXABLE ASSESSABLE VALUE 4968109.00 (H) Central Excise duty @ 16.32% 810795.00 12. Further during the course of re-assessment proceedings various details, copies of show cause notice and statements of the owners of both the firms and buyers were considered. There came across a calculation of Central Excise duty evaded for FY 2006-07, 2007-08 2008-09 (upto 2.8.2008) which showed quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 196908.00 (b) Swastik to Ganesh Silk Mill 73798.00 (E) Net Sale for Duty Calculation [C-(a+b)] 14968109.00 (F) Minus Exemption Rs.l crore 10000000,00 (G) Taxable Assessable Value 4968109.00 (H) Central Excise Duty @ 16.32% 810795.00 4,1 In the show cause notice, all the relevant facts are discussed by Addl. Commissioner, Central Excise and Customs, Surat-1 for working out . the evasion of excise duty. It has been mentioned that the statements of buyers of BOPP films have been recorded and they have confirmed to have purchased the BOPP bags from both the proprietary concerns and this fact is subsequently affirmed by Shri Bimal Dharewa by agreeing with the statements of Shri Ashok Dharewa, the appellant. However, as per Income Tax records, appellant's brother who is proprietor of M/s. Swastik Polymers is engaged in trading activities only, not the manufacturing of BOPP bags. But, the observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty. In the assessment proceedings, AO also has taken the same figures as worked out by Excise Department for estimating the turnover of appellant. But in the calculation of turnover, AO has ignored many crucial facts. First of all, AO has calculated the total turnover by taking the exemption limit of excise duty at ₹ 1.5 crores whereas in the show cause letter itself the Addl. Commissioner, Custom and Excise has mentioned the exemption limit at Rs.l crore, AO has calculated the turnover of appellant by increasing the amount of Rs.l.50 crores on clearance value of ₹ 51,00,908/- worked out by Excise Department when the exemption limit is ₹ 1.00 crore. Thus, he has wrongly increased the turnover by ₹ 50 lakhs. In such situation, to ascertain the correct figure of exemption limit of a unit, AO is directed to make inquiry from Central Excise and Custom Department and recalculate the figure of turnover if the variation in exemption limit is found. Further, while computing the income of appellant, AO has taken the figures of turnover as worked out by Excise authorities who, in turn have taken the turnovers of both the entities and merged together considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above in para 11 12 and the observations made by ld. CIT(A), we observe that Excise Department has mainly clubbed the gross turnover of two concerns M/s Subham Polymers and M/s Swastik Polymers and have taken the clearance value of ₹ 1,52,38,813/- as against total turnover of ₹ 1,52,43,382/- (turnover of Subham Polymers ₹ 87,76,159/- + turnover of Swastik Polymers ₹ 64,67,823/-) as shown in their respective audited financial statements. There cannot be a case against the assessee of suppressed sales or unaccounted sales, when the turnover as calculated by Excise Department has been shown in separate books of account and they are part of audited books of account and income-tax return furnished. Further we also observe that ld. Assessing Officer has grossly erred in taking the excise limit of ₹ 1.5 crores whereas for the year under appeal excise limit was at ₹ 1 crore. Further during the course of hearing ld. AR has relied on the judgment of Hon. Gujarat High Court in the case of CIT vs. President Industries (supra) wherein it has been held that sale proceeds itself cannot be treated as undisclosed income rather the net profit embedded ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
