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TMI Blog2016 (10) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs. 1,13,24,749/- made by the A.O. and in directing the A.O. to add the net profit of Rs. 2,27,573/- of Swastik Polymers, without appreciating the fact that the assessee has suppressed sale details by showing decreased turnover. [2] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. [3] It is, therefore, prayed that the order of the CIT (A) may be set-side and that of Assessing Officer may be restored to the above extent. 3. Briefly stated facts of the case are that assessee is an HUF running a proprietary concern namely M/s Subham Polymers engaged in the business of manufacturing and trading packing material. Return of income for Asst. Year 2007-08 was filed on 21.08.2007 declaring taxable income at Rs. 90,416/-. The same was processed u/s 143(1) of the Act. Thereafter on the basis of information from Central Excise and Customs, Surat, mentioning that assessee has suppressed sales by Rs. 1,13,24,749/-, Assessing Officer issued notice u/s 148 of the Act on 19.05.2009 after recording reasons. Accordingly, assessment proceedings u/s 143(3) r.w.s. 147 of the Act were initiated and carried out. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les to Rs. 2,27,573/- by observing that there was no suppressed or unaccounted sales rather sales of other proprietary concern owned by brother of Karta of HUF was clubbed with that of the assessee and at the most addition should be sustained only to the extent of Rs. 2,27,573/- shown by proprietary concern of Shri Bimalkumar Chainroop Dharewa. 6. Aggrieved, Revenue is now in appeal before the Tribunal. 7. Ld. DR supported the order of Assessing Officer. 8. Ld. AR submitted that the sole reason mentioned by learned A.O. in the assessment order for making this huge addition is that the Central Excise Department in consequence of Search conducted by them on 20-08-2008 and further investigation carried out by them found that the appellant suppressed the sales of Rs. 1,13,24,749/-. It is on this sole basis that the learned A.O. has made such a huge addition in the name of suppressed sales. It is the humble submission of your appellant that this basis of learned A.O. is factually incorrect. There has been no case of excise department that the appellant has suppressed any sales. There has been no case of the excise department that the appellant had done any unaccounted sales. The only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 of the Act on the basis of information received from Central Excise and Customs, Surat and assessment proceedings u/s 143(3) r.w.s. 147 of the Act were carried out. As per information of Central Excise Department, during the course of search at Abhishek Market, Ring Road, Surat, it was found that the same premises was used as office of M/s Subham Polymers proprietary concern of Shri Ashokkumar C. Dharewa, HUF(assessee) as well as M/s Swastik Polymers being trading firm owned by Shri Bimalkumar C. Dharewa who is brother of Ashokkumar C. Dharewa, Karta of HUF. Central Excise Department was of the view that assessee and the sister concern i.e. Subham Polymers and Swastik Polymers which are being run from the same office premises has bifurcated the turnover in order to keep the total turnover below the minimum exemption limit of Rs. 1 crores leading to evasion of excise duty. Accordingly, Central Excise Department clubbed the turnover of both the concerns and calculated the excise duty payable at Rs. 8,10,795/- for Asst. Year 2007-08 (F.Y.2006-07) by calculating in following manner :- 18. The clearance value of the unit and M/s. Swastik and the Central Excise duly payable by the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess premises of appellant and his brother's proprietary concern and tax evasion worked out by them in those cases. After the search action, Show Cause Notice was issued by Excise Department on 25.11.2010 and evasion of excise duty was worked out as under: FOR THE YEAR 2006-07 (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing unit which has been divided into two entities with the intention of evading excise duty and keeping the turnover below Rs.l crore, which is exemption limit for levy of excise 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 Rs. 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 Rs. 51,00,908/- worked out by Excise Department when the exemption limit is Rs. 1.00 crore. Thus, he has wrongly increased the turnover by Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the gross turnover, of Swastik Polymers to be added to the incpfne of appellant. 4.3 This ground is Partly Allowed. 14. From perusal of the details as 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 Rs. 1,52,38,813/- as against total turnover of Rs. 1,52,43,382/- (turnover of Subham Polymers Rs. 87,76,159/- + turnover of Swastik Polymers Rs. 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 Rs. 1.5 crores whereas for the year under appeal excise limit was at Rs. 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 Industri ..... 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