TMI Blog1997 (2) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of Rs. 4.91 per kg. to Manvanturs Trading Investment P. Ltd., another sister-concern of the assessee-company. During the course of assessment proceedings a detailed explanation was furnished before the AO and it was explained that the detergent powder purchased from M/s Gum Products was of export quality and in proof thereof, the sales bills from the said concern viz., M/s Gum Products were filed along with the written submissions dt. 29th Feb., 1992. The xerox copies of the said bills were at pages 291 upto 302 of the paper book filed before the AO and the same are reproduced at pages 48 to 71 of the paper book filed before the CIT(A). It was also contended that ultimately these goods were exported to Russia and the assessee enjoyed export benefits to the tune of Rs. 21,62,033 and special excise duty set off of Rs. 87,662 and the details of the same were filed before the AO. A letter dt. 28th Feb., 1992, from M/s Gum Products was also filed before the AO in which the said concern had categorically stated that the goods sold to the assessee-company were of export quality and in the said letter the said party worked out the bare cost of the said detergent powder at Rs. 9.59 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any evidence on record to show that in the month of March, 1989 detergent powder was purchased at the rate of Rs. 11.29 per kg. from other parties. The evidence on which the appellant has heavily relied is a letter dt. 28th Feb., 1992 of M/s Gum Products India Ltd. in which, it is stated that the bare cost of export quality detergent powder is 9.59 paise as against this the goods sold to the appellant company at 9.54 paise per kg. because the bags were returnable. In my opinion, much reliance cannot be placed on this evidence because this is a letter from an interested party who happens to be a sister-concern and hence, this letter cannot be much more than a self-serving evidence of no creditable value. On the other hand, from the facts of the case, it is obvious that goods purchased at the rate of 11.29 per kg. was sold to outside party at the rate of Rs. 9 per kg. and at Rs. 4.91 per kg. to still another associated concern M/s Manvantar Trading Co. Pvt. Ltd. In the normal course of trading, no prudent business men would purchase the goods at a higher rate and sell them at a lower rate until and unless there is shortage of demand in the market. In the present case, it is seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the accounting year and in support of this he relied upon the year-wise break-up of purchase of local/inferior quality of detergent powder and export quality of detergent powder placed at page 80 of the paper book. These details were also before the AO and the CIT(A). He further relied upon the Annexure A giving the list of sales of loose detergent powder to M/s Manvantar Trading Investment P. Ltd. by the assessee-company placed at page 81 of the paper book which formed annexure A to the submissions to the CIT(A) the learned counsel for the assessee submitted that the conclusion arrived by the AO and the CIT(A) was factually incorrect because the authorities below did not appreciate in correct perspective the evidence in this regard filed before them. In support of his contentions, he relied upon the judgment of the Gujarat High Court in the case of Marghabhai Kishabhai K. Patel Co. vs. CIT 1976 CTR (Guj) 262 : (1977) 108 ITR 54 (Guj); Circular No. 6(P), dt. 6th July, 1968, issued by the CBDT; the decision of the Delhi Bench of the Tribunal in the case of Shriram Pistons Rings Ltd. vs. IAC (1991) 39 TTJ (Del) 132; the decision of the Tribunal in the case of Heera T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn had categorically stated that the goods sold to the assessee were of export quality and in the said letter the seller party worked out the bare cost of the said detergent powder at Rs. 9.59 per kg. as against the goods sold to the assessee at the rate of Rs. 9.54 per kg. since the bags were returnable by the assessee. In our view, there is no ground for rejecting this vital evidence in the absence of any evidence to the contrary. We also note that the authorities below have also conveniently ignored the fact that M/s Gum Products had sold the same quality of detergent powder weighing 1000 MT for export to Russia through M/s Chemicals D-Universe at the rate of 9.54 per kg. and at the cost there is a small difference of 21 paise per kg. but that is more than off-set by the export benefits which the assessee derived, i.e., excise duty set off of Rs. 21,62,033 and special excise duty set off of Rs. 87,662 as per details placed at page 121 of the paper book. 7.1 In Marghabhai K. Patel Co. the Hon'ble High Court of Gujarat, relying on the decisions reported in Shri Ramalinga Choodambikai Mills Ltd. vs. CIT (1956) 28 ITR 952 (Mad), CIT vs. Keshavlal Chandulal (1966) 59 ITR 120 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition observing as under: "15. I have carefully considered the facts of the case and submission of the learned counsel of the appellant. As in the case of M/s Gum Products India discussed above, here also appellant has not brought any material on record to prove that the sales at the same time was made at the same rate to other parties. The appellant company has also brought nothing on record to show that there was increase in the cost price of goods in the month of Feb., 1989 as compared to Aug., 1988. On the other hand, the AO has relied on the sale price of the appellant itself to other parties. As the appellant could not explain satisfactorily as to why less amount has been charged for the sale of detergent powder to Manvantar Trading Inv. Co., a sister-concern as compared to others to whom same goods have been sold at 7.61 per kg. I am of the considered opinion that the AO was fully justified in invoking provisions of s. 40A(2)(b). The addition of Rs. 10,73,612 made by her is confirmed hereby." 8.2 Shri K.H. Shah, the learned counsel for the assessee, submitted that the authorities below have gone wrong by following the facts relating to the purchases made from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is that the CIT(A) is not justified in confirming the disallowance in respect of Rama Kirana Stores. During the course of assessment proceedings the AO noted a sum of Rs. 1 lac standing in the name of Rama Kirana Stores and interest of Rs. 16,000 thereon. According to the AO the assessee failed to produce the depositor or furnish the confirmation letter and accordingly she treated the sum of Rs. 1,16,000 as assessee's income from undisclosed sources. 9.1 The assessee appealed to the CIT(A) and submitted before him that the assessment on this point may be set aside in the interest of natural justice because the assessee could not contact the depositor. It was further submitted that it was a trade creditor and if an opportunity is given, necessary evidence can be furnished. The CIT(A) did not agree to the contentions made before him and confirmed the addition of Rs. 1,16,000 observing as under: "18. I have carefully considered the facts of the case and submissions of the learned counsel of the appellant. I do not see any reason to set aside the assessment on this ground because I have found that an adequate opportunity has been allowed by the AO to produce the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreseen for such liability of interest. In this connection, he drew our attention to the provisions of various sections relating to the advance tax, i.e., ss. 207 to 219 of the Act. He, therefore, submitted that since the assessee had filed a return of loss it was not expected to deposit any advance tax. 12. Shri V.K. Mathur, the learned Departmental Representative submitted that though the assessee had filed return declaring loss ultimately it resulted into the substantial income of Rs. 27,78,980 and accordingly the assessee was liable to pay advance tax. He further submitted that the provision of s. 234B are not applicable. 13. We have considered the rival submissions and perused the facts on record. Sec. 207, as substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1988 lays down that tax shall be payable in advance during any financial year, i.e., 1st April to 31st March in accordance with provisions under s. 208 upto 219, in respect of the total income of the assessee which would be chargeable to tax (not charged to tax) for the assessment year immediately following that financial year, such income on which advance tax is payable is to be called the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
