Vrundavan Ceramics Pvt. Ltd., V. The Deputy Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITA 141/RJT/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56668 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R N PRASAD D R I TA RJT A Y
• Assessee Lawyers: J C RANPURAC A
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT. BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO. 141/RJT/2011. (ASSESSMENT YEAR 2007-08.) VRUNDAVAN CERAMICS PVT. LTD., VS. THE D.C.I. T., 8-A, NATIONAL HIGHWAY, CENT RAL CIRCLE-1, TAL. WANKANER, DIST. RAJKOT. RAJKOT. (APPELLANT) (RESPONDENT) I.T.A. NO. 166/RJT/2011. (ASSESSMENT YEAR 2007-08.) THE A.C.I.T., VS. VRUNDAVAN CERAMICS PVT. LTD., CENTRAL CIRCLE-1, 8-A, NATIONAL HIGHWAY, RAJKOT. AT POST DHUVA, DIST. RAJKOT. (APPELLANT) (RESPONDENT) I.T.A. NO. 142/RJT/2011. (ASSESSMENT YEAR 2007-08.) GOKUL CERAMICS PVT. LTD., VS. THE D .C.I.T., 8-A, NATIONAL HIGHWAY, CENT RAL CIRCLE-1, TAL. WANKANER, DIST. RAJKOT. RAJKOT. (APPELLANT) (RESPONDENT) I.T.A. NO. 167/RJT/2011. (ASSESSMENT YEAR 2007-08.) THE A.C.I.T., VS. M/S. GOKUL CERAMICS PVT. LTD., CENTRAL CIRCLE-1, 8-A, NATIONAL HIGHWAY, RAJKOT. AT POST DHUVA, DIST. RAJKOT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J. C. RANPURA,C.A. DEPARTMENT BY : SHRI R. N. PRASAD, D.R. I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 2 DATE OF HEARING : 19-07-2011. DATE OF PRONOUNCEMENT : 09-09-2011. O R D E R PER AL GEHLOT, AM: THESE CROSS APPEALS ARE AGAINST THE ORDER OF C.I.T.(A)-IV, AHMEDABAD BOTH DATED 15-02-2011 FOR A SSESSMENT YEAR 2007-08. 2. THE LD. A.R. SUBMITTED THAT IN BOTH THE SET OF C ROSS APPEALS, THE GROUND RAISED ARE BASED ON IDENTICAL SET OF FACTS. THEREFORE, FACTS OF VRUNDAVAN CERAMICS PVT. LTD. CAN BE TAKEN INTO CONS IDERATION FOR DECIDING THESE APPEALS. 3. THE COMMON GROUND RAISED IN CROSS APPEALS IS IN RESPECT OF ADDITION MADE ON ACCOUNT OF SUPPRESSED PROFIT. THE ASSESSEE HAS ALSO RAISED A GROUND IN RESPECT OF REJECTION OF BOO KS OF ACCOUNTS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CERAMIC TILES OF V ARIOUS SIZES AND MEASUREMENTS. THE EVASION WING OF THE CENTRAL EXCI SE DEPARTMENT HAD CONDUCTED A SEARCH IN CASE OF ASSESSEE. DURING THE SEARCH, CENTRAL EXCISE DEPARTMENT HAD FOUND THAT THE ASSESS EE WAS SUPPRESSING THE MAXIMUM RETAIL PRICE ON WHICH SALE OF TILES HAS BEEN ACTUALLY MADE AND MAXIMUM RETAIL PRICE AS DISCLOSED IN THE BOOKS. A SHOW CAUSE LETTER ISSUED BY THE EVASION WIND OF CEN TRAL EXCISE DEPARTMENT WAS FORWARDED TO THE INCOME-TAX DEPARTME NT ON 22-12- 2009. ON THE BASIS OF SAID SHOW CAUSE NOTICE OF TH E EVASION WING OF I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 3 THE CENTRAL EXCISE DEPARTMENT, THE AO ISSUED SHOW C AUSE NOTICE DATED 24-12-2009 WHICH HAS BEEN REPRODUCED BY THE A O AT PAGE 2 TO 6 OF HIS ORDER. IN THE SHOW CAUSE NOTICE, THE DET AIL OF SUPPRESSED PROFIT ITEMWISE WAS GIVEN. IN THE SHOW CAUSE NOTIC E, THE ADDITION OF RS.21,52,03,905/- WAS ON ACCOUNT OF SUPPRESSED SALE /TURNOVER FOR THE PERIOD FROM 01-04-2006 TO 28-02-2007 AND FROM 0 1-03-2007 TO 31-03-2007 ON PRO-RATA BASIS. THE AO ESTIMATED SUP PRESSED PROFIT APPLYING 25% RATE OF PROFIT ON THE SUPPRESSION OF S ALE PROCEEDS RS.21,52,03,905/- OF WHICH CALCULATION COMES TO RS. 5,38,00,976/-. THE AO MADE ADDITION OF THAT AMOUNT. 5. THE CIT(A) HELD THAT THE AO WAS JUSTIFIED IN RE JECTING THE BOOKS OF ACCOUNTS AS THE ASSESSEE INDULGED IN SUPPRESSING SALES. THE CASH RECEIPTS FROM THE DEALERS THROUGH VARIOUS MODE S AND CASH PAYMENTS MADE FOR UNRECORDED EXPENSES THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF PROPER ACCOUNTIN G OF SUCH CASH RECEIPTS AND PAYMENTS. THE ASSESSEE FURNISHED VARI OUS DETAILS AND SUBMISSIONS WHICH WERE FORWARDED BY CIT(A) TO AO F OR HIS COMMENTS. THE CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSION AND AFTER CONSIDERING AOS REMAND REPORT, ACCEPTED ASSE SSEES CONTENTION THAT AO HAD ACCEPTED THE POSITION OF SUP PRESSION OF SALE AS ALSO SUPPRESSION OF EXPENSES ON PRODUCTION, TRAN SPORTATION AND OTHER UNRECORDED ADMINISTRATIVE EXPENSES OUT OF THE CASH RECEIVED FROM SUPPRESSED SALES BUT HE DID NOT GIVE THE CREDI T OF ALL THESE ISSUES WHILE ESTIMATING THE PROFIT RATE OF 25% ON T HE SUPPRESSED SALES. THE CIT(A) HAS ALSO ACCEPTED THE ASSESSEES CONTENTION THAT I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 4 THE AO DID NOT BROUGHT ON RECORD ANY COMPARABLE CAS ES SHOWING SUCH HUGE PROFIT IN LINE OF THIS BUSINESS. THE CI T(A) AFTER CONSIDERING THE VARIOUS DECISIONS AND POSITION OF C OMPARABLE CASES HELD THAT THE AO HAD NOT FURNISHED ANY ADVERSE COMM ENTS IN HIS REMAND REPORT REGARDING COMPARABLE CASES. THE RELE VANT OBSERVATIONS OF CIT(A) ARE AS UNDER:- 4.10 I ALSO AGREE WITH THE CONTENTION OF THE LD C OUNSEL THAT THE FACTS IN THE CASE OF VIJAY PROTIENTS LTD. VS. ACIT 58 ITD 428 (AHD.) AND SANJAY OIL CAKE INDUSTRIES VS. CIT 3 16 ITR 274 (GUJ.) RELIED UPON BY THE ASSESSING OFFICER ARE ENT IRELY DIFFERENT AND THE RATIO LAID DOWN IN THOSE CASES WOULD NOT BE APPLICABLE IN TOTO. ON EXAMINATION, BOTH THE ABOVE DECISIONS, RELIED UPON BY THE ASSESSING OFFICER IN ESTIMATING THE NET PROF IT ON THE SUPPRESSED SALES WERE FOUND RELATING TO THE INFLATI ON OF PURCHASES. IN THE CASE OF SANJAY OIL CAKE INDUSTRI ES VS. CIT 316 ITR 274(GUJ.), THE HONBLE GUJARAT HIGH COURT H AS HELD THAT SOME OF THE OSTENSIBLE SUPPLIERS WHO HAD ISSUED BIL LS TO THE ASSESSEE NOT BEING TRACEABLE AND THERE BEING NO TRA CE OF THE IDENTITY OF THE PERSONS WHO HAD WITHDRAWN THE PAYME NTS BY BEARER CHEQUES FROM THE BANK ACCOUNTS OF THE SAID P ARTIES. THE CONCURRENT FINDING OF THE CIT(A) AND THE TRIBUN AL THAT SUCH SELLERS WERE NOT GENUINE AND THAT THE GOODS WERE RE CEIVED FROM SOME OTHER PARTIES WAS JUSTIFIED AND THEREFORE, 25 PER CENT OF THE PAYMENTS MADE TO SUCH PARTIES WAS RIGHTLY DISAL LOWED ON ACCOUNT OF POSSIBLE INFLATION OF PURCHASE PRICE. M ORE OR LESS, SIMILAR WERE THE FACTS OF THE CASE OF VIJAY PROTIEN S LTD. VS. ACIT 58 ITD 428 (AHD.) DECIDED BY THE HONBLE AHMED ABAD TRIBUNAL AND ALSO RELIED UPON BY THE ASSESSING OFFI CER. HOWEVER, THE FACTS OF THE CASE OF THE ASSESSEE ARE ENTIRELY DIFFERENT. THE MODUS OPERANDI ADOPTED BY THE APPELL ANT COMPANY HAD BEEN ELABORATELY DISCUSSED IN PARA-2.1 OF THE SHOW CAUSE NOTICE DATED 25.09.2008 OF THE CENTRAL E XCISE DEPARTMENT AND FURTHER REPRODUCED IN PARA-3 OF THE REPORT OF THE ASSESSING OFFICER RECEIVED ON 29.10.2010. THE APPE LLANT WAS SUPPRESSING THE SALES BY SHOWING LESSER MRP IN THE SALES INVOICES THAN THE ACTUAL MRP. THE DIFFERENTIAL VAL UE WAS I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 5 COLLECTED IN CASH FROM THE BUYERS AND SUCH CASH AMO UNTS WERE NOT ACCOUNTED FOR IN THEIR STATUTORY RECORDS. THE RECIPIENT DEALERS AND DISTRIBUTORS WERE ALSO NOT SHOWING ON R ECORDS, THE ACTUAL EXPENSES INCURRED BY THEM TOWARDS LOCAL TRAN SPORTATION, TRANSIT INSURANCE, LOADING AND UNLOADING EXPENSES, ACTUAL MARGIN OF PROFIT ETC. THESE EXPENSES WERE ALSO MET ED OUT BY THEM IN CASH FROM THE SUPPRESSED SALES. WHILE PART OF THE CASH AMOUNTS COLLECTED BY THE DEALERS AND DISTRIBUTORS I N THE AFORESAID MANNER WAS SPENT BY THEM TOWARDS MEETING THE UNDECLARED EXPENSES A MENTIONED ABOVE, THE REMAININ G CASH AMOUNTS WERE TRANSFERRED BY THEM TO THE MANUFACTURE RS. IN ORDER TO TRANSFER SUCH CASH AMOUNTS FROM DEALERS TO MANUFACTURERS, DIFFERENT METHODS WERE ADOPTED BY TH EM. IN ORDER TO KEEP THE MANUFACTURING COST WITHIN THE RAN GE OF ARTIFICIAL VALUE, DECLARED IN THE CENTRAL EXCISE IN VOICES, THE MANUFACTURERS WERE ALSO PROCURING A NUMBER OF RAW M ATERIALS EITHER ON CASH PAYMENTS OR BY NOT SHOWING THE ACTUA L VALUE IN THE BOOKS OF ACCOUNTS. CASH AMOUNTS RECEIVED BY TH E SHROFFS IN THE AFORESAID MANNER WERE SOMETIMES HANDED OVER TO SUCH SUPPLIERS OF RAW MATERIALS ALSO AT THE BEHEST OF TH E MANUFACTURERS. THUS, THIS IS A SIMPLE CASE OF SUPP RESSION OF SALES. THE SUPPRESSED SALES WERE SHARED BY THE DEA LERS AND DISTRIBUTORS, THE RAW MATERIAL SUPPLIERS AND BY THE APPELLANT COMPANY AS PER THERE ROLES IN THE SUPPRESSION OF SA LES. THE CASH RECEIPTS, AFTER SETTING OFF CERTAIN UNACCOUNTE D EXPENSES, WERE BEING POCKETED BY THE APPELLANT COMPANY FROM T HE SUPPRESSED SALES. THUS, THE APPELLANT COMPANY WAS ENGAGED IN SUPPRESSING THE ACTUAL BUSINESS INCOME BY SUPPRE SSING THE SALES. THERE WERE NO INSTANCES OF FICTITIOUS SALE BILLS, RECEIPTS OF SALE CONSIDERATION BY BEARER CHEQUES AND INVOLVE MENT OF NAME LENDERS AS IN THE CASES RELIED UON BY THE ASSE SSING OFFICER IN THE CASE OF VIJAY PROTIENS LTD. VS. ACIT 58 ITD 428(AHD.) AND SANJAY OIL CASE INDUSTRIES VS. CIT 31 6 ITR 274(GUJ.) CANNOT BE APPLIED TO ASCERTAIN THE PROFIT EARNED BY THE APPELLANT COMPANY FROM THE SUPPRESSED SALES. 4.11 THE CENTRAL EXCISE DEPARTMENT HAD ESTIMATED T HE QUANTUM OF SUPPRESSED SALES BUT DID NOT ASCERTAINED THE PORTION OF SUPPRESSED SALES POCKETED BY THE DEALERS AND I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 6 DISTRIBUTORS FOR MEETING OUT THEIR UNACCOUNTED EXPE NSES. LIKEWISE, THE QUANTUM OF CASH PORTION WENT TO THE R AW MATERIAL SUPPLIERS WAS ALSO NOT ASCERTAINED OR ASCERTAINABLE . THE CENTRAL EXCISE DEPARTMENT IS CONCERNED ONLY WITH EV ASION OF CENTRAL EXCISE DUTY FOR ASCERTAINING SUCH EVASION, THE QUANTUM OF SUPPRESSED SALES IS SUFFICIENT ENOUGH. THE UNDI SCLOSED PROFIT ON THE SUPPRESSED SALES CAN BE ASCERTAINED O R ESTIMATED BY THE INCOME-TAX DEPARTMENT WHO IS REQUIRED TO TAX UNDISCLOSED INCOME EARNED BY WAY OF SUPPRESSION OF SALES. THERE IS NO CASE OF SUPPRESSION OF THE QUANTITY OF TILES MANUFACTURES AND SOLD. THE CASE OF THE APPELLANT I S LIKE THAT IT HAD ACTUALLY, DECLARED THE MRP FOR COMPUTING EXCISE DUTY AT RS.100/- PER BOX OF TILES AS AGAINST ACTUAL MRP OF RS.150/-. THE CENTRAL EXCISE DUTY IS PAYABLE AFTER ABATEMENT OF 45%. THUS, THE EXCISE DUTY WAS PAID ON AN AMOUNT OF RS.5 5.00 (RS.100.00 RS.45.00) AS AGAINST PAYABLE ON RS.82. 50 (RS.150.00 RS.67.50). THE SALES INVOICES WERE IS SUED FOR RS.55/- EXCLUDING EXCISE DUTY AND OTHER TAXES. THE SALES INVOICES WERE REQUIRED TO BE ISSUED FOR RS.55/- EXC LUDING EXCISE DUTY AND OTHER TAXES. THE SALES INVOICES WERE REQU IRED TO BE ISSUED FOR RS.82.50. THUS, THERE WAS THE SUPPRESSI ON OF SALE OF RS.27.50. THIS AMOUNT WAS SHARED BY THE DEALERS AN D DISTRIBUTORS, RAW MATERIAL SUPPLIERS AND BY THE APP ELLANT COMPANY. THE ABOVE EXAMPLE CLARIFIES THAT A CERTAI N PORTION OF THE SUPPRESSED SALE WAS CAME IN ITS POCKET. THIS P ORTION WAS ESTIMATED BY THE ASSESSING OFFICER AT 25% OF THE SU PPRESSED SALES WITHOUT BRINGING ANY MATERIAL ON RECORD OR WI THOUT CONSIDERING ANY COMPARABLE CASES DEALING IN SIMILAR LINE OF BUSINESS. FROM THE SHOW CAUSE NOTICE OF THE CENTRA L EXCISE DEPARTMENT, IT WAS GATHERED THAT A FEW OF THE MANUF ACTURING UNITS WERE SELECTED FOR SEARCH AMONGST ABOUT 400 SU CH TILE MANUFACTURING UNITS. THUS, THERE WERE NUMBER OF COM PARABLE CASES WHERE ASSESSMENTS WERE COMPLETED U/S. 143(3) OF THE ACT BUT THE ASSESSING OFFICER HAD NOT TRIED TO COLL ECT SUCH ASSESSMENT ORDERS FOR THE REASONS BEST KNOWN TO HIM . 4.12 THERE IS NO ANY HARD AND FAST RULE FOR ASCERT AINING THE PROFIT FROM SUPPRESSED SALES. IT DEPENDS ON TH E FACTS AND CIRCUMSTANCES OF EACH CASE. THE ASSESSING OFFICER HAD NOT I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 7 CONSIDERED ANY COMPARABLE CASE EITHER IN THE ASSESS MENT ORDER OR IN THE REMAND REPORT. THE ASSESSING OFFIC ER WAS REQUESTED VIDE THIS OFFICE LETTER DATED 05.01.2011 TO ARRANGE COPIES OF CERTAIN ASSESSMENT ORDERS DECIDED BY THE ASSESSING OFFICERS HAVING JURISDICTION OF MORBI AREA WHERE MO RE THAN 400 MANUFACTURING UNITS OF TILES ARE WORKING AND ENGAGE D IN THE SIMILAR LINE OF BUSINESS. HOWEVER, NO SUCH COPIES OF REQUIRED ASSESSMENT ORDERS WERE ARRANGED BY THE ASSESSING OF FICER WHEN THE CASE WAS DISCUSSED WITH HIM ON 12.01.2011 AT RAJKOT. THE LD. COUNSEL HAD RELIED ON TWO OF THE C ASES HAVING SIMILAR BUSINESS OF MANUFACTURING AND SALE OF TIES. THE ASSESSMENTS IN THOSE TWO CASES FOR THE A.Y. 2007-08 WERE COMPLETED U/S.143(3) OF THE ACT BY THE ASSTT. COMMI SSIONER OF INCOME-TAX, CIRCLE-1, RAJKOT AND TRADING RESULTS HA D BEEN ACCEPTED IN BOTH THE CASES AS DECLARED. COPIES OF THEIR AUDITED ACCOUNTS AND ASSESSMENT ORDERS WERE CALLED FOR AND PLACED ON RECORD. THE COMPARATIVE DATE ARE AVAILABLE IN THE TABLE GIVEN IN CLAUSE (E) OF MAIN WRITTEN SUBMISSION OF THE LD. CO UNSEL AS REPRODUCED IN PARA-4.1 ABOVE. THE ASSESSING OFFICE R HAD NOT FURNISHED ANY ADVERSE COMMENTS IN HIS REMAND REPORT ON THE SUBMISSION IN CLAUSE (E) OF THE LD. COUNSEL RELATIN G TO THE COMPARABLE CASES EXCEPT STATING THAT THE CONTENTION IS ONLY A SUPPORTING JUSTIFICATION, WITHOUT ADDRESSING THE CO RE ALLEGATION. 6. THE CIT(A) HAS ALSO EXAMINED THE ISSUE FROM POIN T OF VIEW OF FAIR AND REASONABLE ESTIMATION IN SUCH CASES BY DIS CUSSING VARIOUS JUDGMENTS OF SUPREME COURT AND OTHER HIGH COURT AT PAGE 26 TO 28 OF CIT(A)S ORDER. THE CIT(A) WAS OF THE VIEW THAT IN SUCH CASES WHILE ESTIMATING FAIR AND REASONABLE PROFIT, THE CO MPARABLE CASE SHOULD ALSO BE CONSIDERED. THE CIT(A) HAS ALSO CON SIDERED THE ASSESSEES CONTENTION THAT THE ASSESSEE HAS DECLARE D SOME OF THE PORTION OF THE PROFIT OF SUPPRESSED TURNOVER IN REG ULAR BOOKS OF ACCOUNT. THE ASSESSEES IN SUPPORT OF THEIR CONTENT ION FURNISHED DATA OF COMPARABLE CASES WHERE CENTRAL EXCISE DEPARTMENT DO NOT FIND I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 8 ANY SUPPRESSION. THE CIT(A) WHILE EXAMINING THE AS SESSEE REPRODUCED THE FOLLOWING TABLE AT PAGE-29 OF HIS OR DER WHICH WAS FILED BY THE ASSESSEE BEFORE THE CIT(A):- S.NO. PARTICULARS VRUNDAVAN CERAMICS PVT. LTD. GOKUL CERAMICS PVT. LTD. RAMCO CERAMICS PVT. LTD. FERRO GLAZED TILES PVT. LTD. 1. NET SALES 298316856 196809729 229302683 139616396 2. PRODUCTION COST 232408426 154130503 207310178 126862632 3. GROSS PROFIT 65908430 42679226 21992505 12753764 4. GROSS PROFIT RATIO 22.09 21.68 9.59 9.13 5. PRODUCTION COST% 77.91 78.32 90.41 90.87 6. OTHER EXPENSES 26521029 21660813 5064045 7656117 7. NET PROFIT BEFORE DEPRECIATION 39387401 21018413 16928460 5097647 8. NET PROFIT RATIO BEFORE DEPRECIATION. 13.20 10.68 7.38 3.65 9. DEPRECIATION 19923640 16155412 8539070 3155590 10. NET PROFIT AFTER DEPRECIATION 19463761 4863001 8389390 1942057 11. NET PROFIT RATIO AFTER DEPRECIATION 6.52 2.47 3.66 1.3 9 7. THE CIT(A) HELD THAT THE ASSESSEE HAS DECLARED H IRE GROSS PROFITS FROM THE DECLARED SALES AS COMPARED TO OTHE RS THAT SHOWS THAT CERTAIN PORTION OF PROFIT FROM SUPPRESSION HAS BEEN DECLARED IN AUDITED ACCOUNT BY SHOWING LESSER COST OF PRODUCTIO N. THE RELEVANT OBSERVATION OF CIT(A) IN THIS REGARD ARE AS UNDER:- REFERENCE MAY BE MADE TO PARA-4.16 AND PARA-19 OF THE SHOW CAUSE NOTICE OF THE CENTRAL EXCISE DEPARTMENT. THI S SHOWS THAT THE APPELLANT WAS DECLARING HIGHER GROSS PROFITS FR OM THE DECLARED SALES AS COMPARED TO OTHERS. IT IS LIKELY THAT CERTAIN PORTION OF PROFIT FROM SUPPRESSED SALES HAD BEEN DE CLARED IN I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 9 THE AUDITED ACCOUNTS BY SHOWING LESSER COST OF PROD UCTION. FOR EXAMPLE, IF THE APPELLANT COMPANY AND ITS SISTER CO NCERN M/S. GOKUL CERAMICS PVT. LTD. WOULD HAVE DISCLOSED THE G ROSS PROFIT OF 10 PER CENT ON THE TOTAL SALES INCLUDING SUPPRES SED SALES AS IN THE CASE OF COMPARABLE CASES, THE GROSS PROFIT W OULD BE LESS THAN DISCLOSED ONLY FROM THE DECLARED SALES. THE E XTRA GROSS PROFIT WAS CERTAINLY FROM THE SUPPRESSED SALES GONE TO THE TAXABLE INCOME. 8. HOWEVER, THE CIT(A) HELD THAT IT WILL BE FAIR AN D REASONABLE IF THE NET PROFIT OF RATE 13.20% IS APPLIED TO THE SU PPRESSION OF SALES. THE CIT(A) HAS ALSO HELD THAT THE LD. COUNSEL OF TH E ASSESSEE AGREED TO APPLY NET PROFIT RATE AS PER BOOKS OF ACC OUNTS. THE CIT(A) ACCORDINGLY, CONFIRMED ADDITION TO THE EXTENT OF RS .284,06,915/- AND BALANCE AMOUNT DELETED. THE CIT(A) HAS ALSO HELD T HAT THE SUPPRESSED SALES BE SUBJECT TO RECTIFICATION IF THE SAME ARE INCREASED OR DECREASED BY THE CENTRAL EXCISE DEPARTMENT. THE RELEVANT OBSERVATION MADE BY THE CIT(A) IN HIS FINDINGS ARE AS UNDER:- 4.21 IN VIEW OF THE DETAILED DISCUSSION IN PARA-4 .4 TO PARA-4.20 ABOVE, IT IS HELD THAT THE SUPPRESSED SAL ES WILL BE SUBJECT TO RECTIFICATION IF THE SAME ARE INCREASED OR DECREASED BY THE CENTRAL EXCISE DEPARTMENT AND NET PROFIT RAT E OF 13.20 PER CENT IS TO BE APPLIED ON THE SUPPRESSED SALES O F RS.21,52,03,905/-. ON THIS BASIS, THE UNDISCLOSED PROFIT ON THE SUPPRESSED SALES WILL WORK OUT TO RS.2,84,06,915/-. THEREFORE, THE ADDITION OF RS.2,84,06,915/- IS HEREBY CONFIRME D AND REST OF THE ADDITION IS DELETED. THE SECOND PART OF THE TH IRD GROUND OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. 9. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF ADDITION BY THE CIT(A) AND THE ASSESSEE IS IN APPEAL AGAINST THE OR DER OF THE CIT(A) WHERE ADDITION IS SUSTAINED AND REJECTING THE BOOKS OF ACCOUNTS. I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 10 10. THE LD. A.R. SUBMITTED THAT THE AO WITHOUT POIN TING OUT THE DEFECTS IN THE BOOKS OF ACCOUNTS REGULARLY MAINTAIN ED BY THE ASSESSEE ESTIMATED PROFIT ON ALLEGED SUPPRESSION. T HE LD. A.R. SUBMITTED THAT IT IS SETTLED PRINCIPLE OF LAW THAT MERE NON-RECEIPT OF INFORMATION FROM SUCH DEPARTMENT AND SHOW CAUSE NOT ICE ISSUED BY IT DOES NOT CONSTITUTE VALID REASONS FOR DISTURBING BO OK RESULTS IN ABSENCE OF ANYTHING TO SHOW THAT AO HAS INDEPENDENT LY APPLIED HIS MIND TO ARRIVE AT A CONCLUSION THAT THE ASSESSEE SU PPRESSED SALES AND EXPENDITURE. THE LD. A.R. SUBMITTED THAT THE B OOKS OF ACCOUNT ARE SUBJECT TO AUDIT U/S.44AB OF THE ACT AND THE AU DITOR DID NOT POINT OUT ANY DISCREPANCY OR QUALIFY HIS REPORT ON SUCH A UDITED BOOKS OF ACCOUNT NOR COULD THE AO FOUND ANY DEFECTS THEREIN. AS REGARDS THE ADDITION SUSTAINED BY CIT(A), THE LD. A.R. SUBMITTE D THAT THE BOOKS OF ACCOUNT ARE SUBJECT TO COMPANIES ACT AND ALSO AS PE R SECTION 44AB OF THE I.T. ACT. NEITHER THE AO NOR THE AUDITOR HA S POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT. THE AO WITHOUT EX AMINING THE COMPLETE FACTS SIMPLY RELIED UPON A SHOW CAUSE NOTI CE ISSUED BY CED ESTIMATED THE PROFIT. THE LD. A.R. SUBMITTED T HAT PROCEEDINGS UNDER THE CENTRAL EXCISE RULES AND UNDER THE I.T. A CT ARE DIFFERENT. UNDER THE INCOME-TAX ACT, THE CONCEPT OF REAL INCOM E IS APPLICABLE. THE LD. A.R. FURTHER SUBMITTED THAT THE ASSESSEE HA S SHOWN BETTER G.P. AND NET PROFIT IN COMPARISON TO COMPARABLE CAS E. THE LD. A.R. RELIED UPON THE ORDER OF CIT(A) EXCEPT TO THE FACT THAT THE CIT(A) HAS NOT APPRECIATED ONE OF THE CRUCIAL FACT THAT THE AS SESSEE HAS DECLARED A PART OF THE SUPPRESSED PROFIT IN A REGULAR BOOKS OF ACCOUNT. THE LD. A.R. HEAVILY RELIED UPON THE COMPARABLE CASE IN CAS E OF ASSESSEE I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 11 AND GOKUL CERAMICS PVT. LTD. AND RAMCO CERAMICS PVT . LTD. WHEREIN NET PROFIT BEFORE DEPRECIATION SHOWN BY ASSESSEE IS 13.20% AND IN CASE OF GOKUL CERAMICS PVT. LTD. IT WAS 10.68% WHER EAS IN COMPARABLE CASES IN RAMCO CERAMICS PVT. LTD. 7.38% AND 3.65% IN CASE OF FERROR GLAZED TILES PVT. LTD. THE LD. A.R. FURTHER SUBMITTED THAT IN CASE OF FERROR GLAZED TILES PVT. LTD. AND RAMCO CERAMICS PVT. LTD., THERE WAS NO SUPPRESSED SALE AS PER THE CENTRAL EXCISE DEPARTMENT. THE CENTRAL EXCISE DEPARTMENT HAS ACCE PTED THEIR TURNOVER. THE LD. A.R. SUBMITTED THAT ON CONSIDERA TION OF COMPARABLE CASE AND FACT THAT THE ASSESSEE WAS DECLARING SOME PORTION OF THE SUPPRESSION PROFIT IN A REGULAR BOOKS OF ACCOUNT. SO, WHILE ESTIMATING THE SUPPRESSION PROFIT, A CREDIT IN THIS REGARD IS REQUIRED. AS REGARDS FACTS RECORDED BY THE CIT(A) THAT THE ASSESSEE AGRE ED FOR NET PROFIT RATE, THE NET PROFIT RATE MEANS NET PROFIT RATE OF COMPARABLE CASES. 11. THE LD. D.R. ON THE OTHER HAND, SUBMITTED THAT THIS IS AN ADMITTED FACT THAT THERE IS A SUPPRESSION OF TURNOV ER. THEREFORE, THAT ITSELF IS SUFFICIENT REASON FOR REJECTION OF BOOKS OF ACCOUNT. THE LD. D.R. SUBMITTED THAT THE AO HAS RIGHTLY APPLIED 25% RATE OF PROFIT ON SUPPRESSED PROFIT. THE AO WHILE APPLYING 25% RATE OF PROFIT RELIED UPON A JUDGMENT OF THE GUJARAT HIGH COURT IN THE CA SE OF SANJAY OIL CAKE INDUSTRIES VS. CIT 316 ITR 274(GUJ.). THE LD. D.R. SUBMITTED THAT 25% RATE OF PROFIT APPLIED BY THE AO IS SUPPOR TED BY THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT. THEREFO RE, THE CIT(A) WAS NOT CORRECT IN REDUCING THE PROFIT FROM 25% TO 13.2 0%. I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 12 12. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES, RECORD PERUSED. AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT, THE ADMITTED FACTS ARE THAT THERE IS SUPPRESSION OF TUR NOVER. WE FIND THAT THIS SOLE REASON IS SUFFICIENT FOR REJECTION OF BOO KS OF ACCOUNT. WE FIND THAT THE AO AND CIT(A) ARE BOTH CORRECT IN REJ ECTING BOOKS OF ACCOUNT. 13. AN ANOTHER DISPUTED FACT IS IN RESPECT OF TURNO VER. HOWEVER, BOTH THE PARTIES AGREED WITH THE FINDING OF THE CIT (A) THAT THE SUPPRESSED SALE WILL BE SUBJECT TO RECTIFICATION IF THE SAME ARE INCREASED OR DECREASED BY THE CENTRAL EXCISE DEPART MENT. 14. NOW THE QUESTION REMAINS TO BE EXAMINED AT THIS STAGE IS IN RESPECT OF ESTIMATION OF PROFIT FROM SUPPRESSED TUR NOVER. THE AO ESTIMATED THE SUPPRESSED PROFIT APPLYING 25% RATE O F PROFIT WHICH HAS NOT BEEN ACCEPTED BY THE CIT(A) ON THE GROUND THAT THE AO ESTIMATED 25% OF PROFIT WITHOUT ANY BASIS AND WITHOUT BRINGIN G ANY MATERIAL ON RECORD OR WITHOUT CONSIDERING ANY COMPARABLE CASE D EALING IN SIMILAR LINE OF BUSINESS. THE CIT(A) ALSO NOTED FROM THE S HOW CAUSE NOTICE OF THE CENTRAL EXCISE DEPARTMENT THAT A FEW OF MANU FACTURING UNITS WERE SELECTED FOR SEARCH AMONGST ABOUT 400 SUCH TIL E MANUFACTURING UNITS. THUS, THERE WERE NUMBER OF COMPARABLE CASES WHERE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT BUT AO HAD NOT COLLECTED SUCH ASSESSMENT ORDER AND PUT THE RELEVAN T MATERIAL ON RECORD. THE CIT(A) AFTER DISCUSSION ON VARIOUS JUD GMENTS CIT VS. LAXMINARAIN BADRIDAS 5 ITR 170(PC), THE STATE OF KE RALA VS. C. I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 13 VELUKUTTY 60 ITR 239(SC), BRIJ BHUSHAN LAL PARDUMAN KUMAR VS. CIT 115 ITR 524 (SC), KACHWALA GEMS VS. JT. CIT 158 TAX MAN 71 (SC) AND OTHERS AS DISCUSSED AT PAGE-27 AND 28 OF CIT(A) S ORDER. THE RELEVANT CONCLUSION OF THE CIT(A) IS REPRODUCED AS BELOW:- '4.14 I HAVE GONE THROUGH THE ABOVE REFERRED DECIS IONS OF THE HONBLE SUPREME COURT AND THE HIGH COURTS. THE LAW LAID DOWN IN THE AFORESAID DECISIONS SPEAKS ABOUT THE FA IR AND REASONABLE ESTIMATE. GUESS WORK SHOULD BE BASED ON CERTAIN MATERIAL AND SUCH MATERIAL SHOULD HAVE NEXUS WITH T HE ESTIMATE. THE COMPARABLE CASES SHOULD ALSO BE CONS IDERED. HOWEVER, THE HONBLE DELHI HIGH COURT IN A RECENT D ECISION (DECISION DATED 24.12.2010) IN THE CASE OF CIT VS. AERO CLUB 50 DTR (DELHI) 185 HAD HELD THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY COMPARABLE CASE WHEREIN THE N ET PROFIT DECLARED BY A TAXPAYER IN THE SIMILAR BUSINESS WAS HIGHER THAN THE ONE DECLARED BY THE ASSESSEE. THE MARGINS OF A TAXPAYER AS DECLARED BY HIM, COULD BE VARIED AND DISTURBED O NLY IF THE PROFIT MARGINS IN THE CASE OF OTHER ASSESSEE ENGAGE D IN SIMILAR BUSINESS ARE HIGHER. THE AO IN HIS REMAND REPORT W AS ALSO UNABLE TO COMMENT ON THE COMPARABLE CASES OF B. LTD . AND A.T. RELIED UPON BY THE ASSESSEE. IN THE CIRCUMSTA NCES, THE TRIBUNAL RIGHTLY HELD THAT THE NET PROFIT AS DECLAR ED BY THE ASSESSEE WAS NOT REQUIRED TO BE DISTURBED. IT IS T HUS EVIDENT THAT RESULTS OF OWN CASE AND THE COMPARABLE CASES H AVE A VITAL ROLE IN ESTIMATING THE PROFIT BY APPLYING A REASONA BLE RATE OF PROFIT. 15. FROM THE ABOVE DISCUSSION BY THE CIT(A), WE FIN D THAT THE CIT(A) HAS RIGHTLY REJECTED THE AOS ACTION IN ESTI MATING SUPPRESSED PROFIT BY APPLYING PROFIT RATE OF 25%. AS REGARDS THE JUDGMENT OF JURISDICTIONAL HIGH COURT ON WHICH THE AO RELIED UP ON IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. CIT 316 ITR 274, IT IS TO STATE THAT THE JUDGMENT IS DISTINGUISHABLE ON FACTS. IN THE SAID JUDGMENT, THE PURCHASE PRICE REFLECTED IN BOOKS OF ACCOUNT DID NO T MATCH WITH THE I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 14 PURCHASE PRICE AS STATED TO BE PAID TO OTHER PERSON S, WHEREAS IN THE CASE UNDER CONSIDERATION, THE ASSESSEE FURNISHED CO MPARABLE CASES AND THE CIT(A) EXAMINED THOSE COMPARABLE CASES. TH E APPLICABILITY OF THE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COU RT DEPENDS UPON THE FACTS OF THE CASE. THE FACTS OF THAT CASE ARE NOT SIMILAR TO THE FACTS OF THE CASE UNDER CONSIDERATION. UNDER THE C IRCUMSTANCES, WE AGREE WITH THE VIEW OF THE CIT(A) THAT FOR ESTIMATI ON OF FAIR AND REASONABLE PROFIT COMPARABLE CASES HAVE A VITAL ROL E. THEREFORE, SAME ARE REQUIRED TO BE CONSIDERED. THE CIT(A) ACC ORDINGLY CONSIDERED THE COMPARABLE CASE FROM PAGE-28 TO 32 A ND IN PARA NO.4.15 TO 4.19 OF CIT(A) ORDER BUT THE CIT(A) DID NOT ACCEPT THE RESULTS OF COMPARABLE CASES MERELY ON THE GROUND TH AT THE ASSESSEE HAS DECLARED HIGHER PROFIT IN THE BOOKS OF ACCOUNT IN COMPARISON TO THE PROFIT DECLARED BY THE COMPARATIVE CASES. THE MAIN THRUST OF THE ARGUMENTS OF THE ASSESSEE BEFORE US ARE THAT THE CI T(A) HAS ACCEPTED IN PRINCIPLE WITH THE ASSESSEES CONTENTIO N THAT THE ASSESSEE HAS DECLARED HIGHER PROFIT IN THE BOOKS OF ACCOUNT WHICH INCLUDES PART OF THE SUPPRESSED PROFIT. THE ASSESS EE HAS DEMONSTRATED AND WHICH HAS ALSO BEEN ESTABLISHED BY THE FACTS THAT THE ASSESSEE HAS DECLARED HIGHER RATE OF PROFIT IN THE BOOKS OF ACCOUNT IN COMPARISON TO THE COMPARABLE CASES. THE CONTENTION OF THE ASSESSEE THAT THE SET OFF OF THIS HIGHER PROFIT WHICH INCLUDES SUPPRESSED PROFIT SHOULD BE ALLOWED IN ESTIMATING T HE PROFIT ON SUPPRESSED TURNOVER. WE FIND FORCE IN THIS CONTENT ION OF THE ASSESSEE. THE COMPARATIVE POSITION IS EXPLAINED BY THE CIT(A) IN THE FORM OF TABLE AT PAGE-30 AND 31. THE SAME IS REPRO DUCED AS BELOW:- I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 15 S.NO. PARTICULARS VRUNDAVAN CERAMICS PVT. LTD. GOKUL CERAMICS PVT. LTD. RAMCO CERAMICS LTD. FERRO GLAZED TILES PVT. LTD. 1. NET SALES 298316856 196809729 229302683 `1396163 96 2. SUPPRESSED SALES 215203905 80077050 - - 3. TOTAL SALES 513520761 276886779 229302683 139616 396 4. GROSS PROFIT DECLARED 65908430 42679226 21992505 12753764 5. GROSS PROFIT RATIO 10% 10% 10% 9,59 9.13 6. GROSS PROFIT ESTIMATED 51352076 27688677 21992505 12753764 7. OTHER EXPENSES 26521029 21660813 5064045 7656117 8. PROBABLE NET PROFIT. 24830947 602864 16928460 5097647 9. DECLARED NET PROFIT BEFORE DEPRECIATION 39387401 21018413 16928460 5097647 10. NET PROFIT RATIO BEFORE DEPRECIATION 13.20 10.68 7.38 3.65 PROFIT @ 8% OF SALES 41081660 22150942 - - 11. ESTIMATED NET PROFIT ON SALES AT DECLARED RATES 67784740 29571508 16928460 5097647 12 DECLARED NET PROFIT BEFORE DEPRECIATION 39387401 21018413 16928460 5097647 SUPPRESSED NET PROFIT FF DECLARED 8% 1694259 1132529 - - 13. SUPPRESSED NET PROFIT ON DECLARED RATE. 28397340 8553095 - - 16. FOR THE PURPOSE OF FAIR AND REASONABLE ESTIMATI ON OF PROFIT ON SUPPRESSED TURNOVER, IF WE CONSIDER THE ABOVE WORKI NG OF THE CIT(A), WE FIND THAT THE TOTAL TURNOVER INCLUDING SUPPRESSE D TURNOVER AND TURNOVER SHOWN IN BOOKS OF ACCOUNT IN CASE OF VRUND AVAN CERAMICS I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 16 PVT. LTD. WAS RS.51,35,20,761/- AND IN CASE OF GOKU L CERAMICS PVT. LTD. RS.27,68,86,779/-. IN COMPARABLE CASES OF RAM CO CERAMICS LTD. AND FERRO GLAZED TILES PVT. LTD., THE G.P. DEC LARED IN THESE CASES IS 9.59% AND 9.13% AND NET PROFIT RATE BEFORE DEPRECIATION ARE 7.38% AND 3.65 RESPECTIVELY. 17. FROM THE ABOVE DISCUSSION, ONE OF THE ADMITTED FACT OF THE CASE IS THAT THE ASSESSEE HAS DECLARED SOME OF PART OF P ROFIT ON SUPPRESSED SALE IN REGULAR BOOKS OF ACCOUNT. THAT IS THE REASON THAT G.P. AND N.P. ARE HIGHER IN BOTH CASE IN COMPARISON TO G.P. & N.P. OF COMPARABLE CASES. THE CIT(A) ACCEPTED THIS FACT AN D ALSO CALCULATED QUANTUM OF PROFIT IN THIS REGARDS IN THE TABLE WHIC H IS GIVEN AT PAGE-30 AND 31 OF CIT(A)S ORDER IN CASE OF VRUNDAVAN CERAM ICS (P)LTD. THE CIT(A) DID NOT ACCEPT THE RESULT OF COMPARABLE CASE ON THE GROUND THAT THE ASSESSEE HAS DECLARED HIGHER PROFIT IN COM PARISON TO COMPARABLE CASES. ON ACCOUNT OF FAIR AND REASONABL E ESTIMATION OF PROFIT, THE CIT(A) OUGHT TO HAVE ALLOW SET OFF THE PROFITS WHICH WERE DECLARED BY ASSESSEE IN BOOKS OF ACCOUNT WHILE MAKI NG ESTIMATION OF THE PROFIT. FROM THE TABLE GIVEN BY THE CIT(A) AT PAGE-30 AND 31 OF HIS ORDER ON APPLICATION OF 10%(G.P. ROUNDED FOR CA LCULATION PURPOSES) AS DECLARED IN COMPARABLE CASES. WE FIND THAT THE ASSESSEE DECLARED EXCESS PROFIT IN BOOKS OF ACCOUNT AS UNDER:- VRUNDAVAN GOKUL A. SALE AS PER BOOKS . 29,83,16,856 19,68,09,729 B 10% G.P. IF APPLIED 2,98,31,685 1,96,80,972 FOR ESTIMATION . C G.P. DECLARE D I N 6,59,08,430 4,26,79,226 BOOKS OF ACCOUNT . D. ( C - B) EXCESS PROFIT 3,60,76,745 2,29,98,254 DECLARED I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 17 18. FROM THE ABOVE DISCUSSION, WE FIND THAT THE CIT (A) IS NOT CORRECT IN APPLYING NET PROFIT RATE DECLARED BY THE ASSESSEE AS THAT NET PROFIT INCLUDES SOME PORTION OF PROFIT ON SUPPRESSE D TURNOVER. THEREFORE, IT CAN BE HELD THAT ESTIMATION MADE BY C IT(A) IS FAIR AND REASONABLE ESTIMATION OF PROFIT ON SUPPRESSED SALE. THE ESTIMATION MADE BY THE CIT(A) IS ON HIGHER SIDE. 19. NOW THE QUESTION REMAINS TO BE SEE THAT UNDER T HE FACTS AND CIRCUMSTANCES WHAT SHOULD BE THE FAIR AND REASONABL E PROFIT ON SUPPRESSED TURNOVER. THE NET PROFIT RATE IN THE CA SE OF ASSESSEES AND COMPARABLE CASES ARE 13.20%, 10.68% AND 7.38%, 3.65% IN CASE OF VRUNDAVAN CERAMICS PVT. LTD., GOKUL CERAMIC S PVT. LTD.. RAMCO CERAMICS PVT. LTD. AND FERRO GLAZED TILES PVT . LTD. RESPECTIVELY. AS DISCUSSED AND STATED ABOVE THAT T HE ABOVE NET PROFIT RATE OF ASSESSEES INCLUDES SOME PORTION OF PROFIT O F SUPPRESSED TURNOVER. THEREFORE, TO GIVE EFFECT OF THAT AND ON ACCOUNT OF FAIR AND REASONABLE ESTIMATION, WE ARE OF THE VIEW THAT THE AVERAGE NET PROFIT RATE OF ALL 4 UNITS WILL BE A GOOD BASIS FOR FAIR A ND REASONABLE ESTIMATION OF PROFIT ON SUPPRESSED TURNOVER. IT IS SETTLED POSITION THAT IN ESTIMATION, SOME GUESS WORK CANNOT BE RULED OUT. THE AVERAGE NET PROFIT RATE OF ALL 4 UNITS COMES TO 8.72%. IN THAT RATE, IF WE INCLUDE 0.28% TO COVER MISCELLANEOUS BENEFIT OF THE TURNOVE R OUT OF THE BOOKS OF ACCOUNT, THAT WILL BE A FAIR AND REASONABLE RATE OF PROFIT WHICH COMES TO 9%. THIS RATE OF 9% NET PROFIT WILL BE FA IR AND REASONABLE ON THIS COUNT ALSO THAT THE ASSESSEE WILL NOT GET MAJO R BENEFIT OF PROFIT OF EVASION OF EXCISE DUTY AS EXCISE DEPARTMENT HAS ALR EADY TAKEN I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 18 ACTION IN THIS REGARD. ON APPLICATION OF 9% RATE O F PROFIT, THE RELEVANT CALCULATIONS ARE AS UNDER:- PARTICULARS VRUNDAVAN GOKUL SUPPRESSED SALE 21,52,03,905 8,00.77,050 9% NET PROFIT RATE FOR 1,93,68,351 72,06,934 ESTIMATION ADDITION SUSTAINED BY 2,84,06,905 85,52,2 29 CIT(A) 9% PROFIT ADDITION 1,93,68,351 72,06,934 SUSTAINABLE BALANCE EXCESS 90,38,554 13,45,295 20. IN ACCORDANCE WITH ABOVE CALCULATION, WE CONFIR M THE ADDITION TO THE EXTENT OF RS.1,93,68,351/- IN THE HANDS OF V RUNDAVAN AND RS.72,06,934/- IN THE HANDS OF THE GOKUL AND BALANC E ADDITION RS.90,38,554/- IN CASE OF VRUNDAVAN AND RS.13,45,29 5/- IN THE CASE OF GOKUL OUT OF THE TOTAL ADDITION SUSTAINED BY CIT (A) ARE DELETED. 21. THE LEARNED REPRESENTATIVES OF THE PARTIES SUBM ITTED THAT FACTS OF THE CASE IN GOKUL CERAMICS PVT. LTD. ARE SIMILAR . THEREFORE, THE CROSS APPEAL OF THAT CASE IS ALSO DECIDED IN ACCORD ANCE WITH ABOVE DISCUSSION. 22. IN THE RESULT, APPEALS OF ASSESSEE ARE PARTLY A LLOWED AND APPEALS BY REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9-09-2011. SD/- SD/- (N.R.S. GANESAN) ( A. L. GEHLOT ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. RAJKOT, I TA. 141,166,1 42 &167-RJT-2011. A.Y.20 07-08. 19 DT : 09-09-2011. NVA/- COPY TO: 1. VRUNDAVAN CERAMICS PVT. LTD.,WANKANER. 2. THE DY. C.I.T., CIRCLE-1, RAJKOT. 3. THE CIT(A)- RAJKOT. 4. THE C.I.T. 5. THE D.R., I.T.A.T., RAJKOT. TRUE COPY. BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT.