M/s. Tayal Concast (P) LTd., Muzaffarnagar V. ITO, Muzaffarnagar

ITA 2107/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8336 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHA DRA SENIOR
• Assessee Lawyers: PREM PRAKASH; AASISH AGARWAL S
• Keywords: Gross profit estimation; Rejection of books of accounts; Search and seizure; Opportunity of being heard
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2107/DEL./2013 (ASSESSMENT YEAR : 2005-06) M/S. TAYAL CONCAST (P.) LTD., VS. ITO, WARD 2 (4), 321, SANJAY MARG, MUZAFFARNAGAR. MUZAFFARNAGAR 251 001. (PAN : AABCT1327P) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI PREM PRAKASH AND AASISH AGARWAL, ADVOCATES REVENUE BY : SHRI V.R. SONBHADRA, SENIOR DR DATE OF HEARING : 01.03.2016 DATE OF ORDER : 12.04.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. TAYAL CONCAST (P.) LTD. (HEREINAFT ER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 07.01.2013 PASSED BY THE C OMMISSIONER OF INCOME-TAX, MUZAFFARNAGAR QUA THE ASSESSMENT YEA R 2005-06 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE ORDER IS AGAINST LAW & FACTS ON RECORD . ITA NO.2107/DEL./2013 2 2. LD. AO WAS WRONG IN NOT ASSESSING DE NOVO AS PER DIRECTIONS OF ITAT AND IN REPEATING THE SET ASIDE A SSESSMENT ORDER. 3. LD. AO WAS WRONG IN REJECTING A/C BOOKS WITHOUT CONSIDERING THE A/C BOOKS. 4. LD. AO WAS WRONG IN NOT CONFRONTING THE EVIDENCE S USED AGAINST THE ASSESSEE DURING THE COURSES OF ASSESSME NT PROCEEDINGS. 5. LD. AO WAS WRONG IN NOT CONSIDERING THE AMOUNTS SURRENDERED BY THE ASSESSEE IN CALCULATING G.P. RAT E. 6. LD. AO WAS WRONG IN NOT SET OFF THE AMOUNTS SURR ENDERED AGAINST THE PROFIT ENHANCED BY HIM. 7. LD. CIT (A) WAS WRONG IN HOLDING THAT THE ASSESS EE WAS INDULGED IN PURCHASE AND SALE OF SPURIOUS CEMENT WI THOUT ANY BASE. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : DURI NG THE FIRST ROUND OF LITIGATION BEFORE INCOME TAX APPELLATE TRI BUNAL VIDE APPEAL NO.936 & 1898/DEL/2009 ORDER DATED 23.07.201 0, THE ASSESSING OFFICER WAS DIRECTED TO PASS AFRESH ORDER BY REEXAMINING THE ORDER OF LD. CIT (A), TRADE TAX TRIBUNAL AND OT HER RELATED ORDERS BY PROVIDING ADEQUATE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 3. ASSESSEE FILED RETURN OF INCOME DECLARING LOSS O F RS.13,64,000/- ON 31.10.2005, WHICH WAS SUBJECTED T O SCRUTINY AND CONSEQUENTLY, MR. PREM PRAKASH AGARWAL, ADVOCATE PU T ON APPEARANCE FROM TIME TO TIME, FILED VARIOUS REPLIES AND DETAILS, BOOKS OF ACCOUNT PRODUCED WERE IMPOUNDED AND EXAMIN ED. THE RETURN WAS SUPPORTED BY AUDITED REPORT. AS PER AUD ITED TRADING AND ITA NO.2107/DEL./2013 3 PROFIT & LOSS ACCOUNT, THE ASSESSEE COMPANY HAS SHO WN GROSS LOSS OF RS.1,15,224/- ON THE TOTAL TURNOVER OF RS.46,44, 381/- AS AGAINST THE GROSS PROFIT SHOWN IN THE IMMEDIATE PRECEDING Y EAR AT RS.23,53,539/- ON THE TOTAL TURNOVER OF RS.62,06,21 5/- I.E. ABOUT 37.56%. ASSESSEE WAS CALLED UPON TO EXPLAIN WHO HA S FILED COMPREHENSIVE REPLY. FINDING THE SUBMISSION MADE B Y THE ASSESSEE NOT SATISFACTORY, THE AO MADE AN ADDITION OF RS.27,86,629/- ON ACCOUNT OF LOW GROSS PROFIT. 4. THE AO VIDE ORDER DATED 27.12.2007 REJECTED THE BOOKS OF ACCOUNTS U/S 145 OF THE INCOME-TAX ACT, 1961 (HEREI NAFTER THE ACT) DUE TO VARIOUS DISCREPANCIES AND IN THE FRESH ORDER, THE AO AGREED WITH THE SAME AND ALSO REJECTED THE BOOKS OF ACCOUNTS. AFTER TAKING INTO ACCOUNT THE ORDER PASSED BY JOINT COMMISSIONER (APPEALS), IIND, TRADE TAX, SAHARANPUR, HQ MZR, A PPEAL NO.730/2008 YEAR 2004-05, PRANTIYA; 731/2008 YEAR 2 004-05, KENDRIYA, 732/2008, YEAR 2004-05, PRAVESHKAR, DATED LETTER NO.966/03-09-2009, COMPUTED THE TOTAL TURNOVER AFTE R TRADE TAX APPEAL AT RS.55,99,627/- FOR ASSESSMENT OF THE RELE VANT ASSESSMENT YEAR. THE AO OUT OF THE GROSS TURNOVER OF RS.55,99 627/- TREATED THE MANUFACTURING OF CEMENT AND LIME STONE SALES AT OF RS.46,99,262 AND TRADING OF CEMENT, COKE AND CLINKE R AT RS.9,00,365/-. THE GROSS PROFIT OF MANUFACTURED IT EM OF THE ITA NO.2107/DEL./2013 4 ASSESSEE IS TAKEN AT 33% WHICH COMES TO RS.15,50,75 7/- AND CONSEQUENTLY MADE THE ADDITION OF THE SAME. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT (A) WHO HAS PARTLY ALLOWED THE APPEAL BY DELETING THE ADDIT ION OF RS.2,03,481/- ON ACCOUNT OF SURRENDERED REMAINING L OANS/ SURRENDERED CREDITORS. FEELING AGGRIEVED, THE ASSE SSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. AR FOR THE ASSESSEE CONTENDED INTER ALIA THAT THE LD. CIT (A) HAS NOT RETURNED ANY FINDINGS ON THE TECHNI CAL OBJECTIONS RAISED BY THE ASSESSEE NOR HE HAS SUMMONED/PERUSED THE BOOKS OF ACCOUNT/REGISTER; THAT THE ASSESSEE HAS NOT BEEN PR OVIDED WITH AN OPPORTUNITY OF BEING HEARD AT THE TIME OF MAKING DE NOVO ASSESSMENT RATHER SIMPLY CALLED UPON THE ASSESSEE T O DISCLOSE AS TO HOW HE WAS NOT GRANTED ADEQUATE OPPORTUNITY OF BEIN G HEARD; THAT DURING THE REMAND REPORT, NONE OF THE CONTENTIONS H AVE BEEN CONTROVERTED BY THE AO; THAT THE ASSESSEE HAS DULY EXPLAINED THE PROCESS OF MANUFACTURING OF CEMENT CAUSING LOSS TO THE ASSESSEE BUT THIS FACT HAS NOT BEEN TAKEN INTO ACCOUNT BY TH E AO WHO HAS ITA NO.2107/DEL./2013 5 MADE ADDITION IN THE GROSS PROFIT ON ESTIMATION BAS IS. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIED UPON THE OR DERS PASSED BY THE AO AS WELL AS THE LD. CIT (A). 8. ITAT VIDE ORDER DATED 23.07.2010 IN APPEAL NO.93 6 & 1898/DEL/2009 FOR AYS 2005-06 AND 2000-01 REMANDED THE CASE BACK TO THE AO FOR DE NOVO ASSESSMENT BY MAKING FOL LOWING OBSERVATIONS:- 'FIRST OF ALL THE ASSESSING OFFICER SHOULD PASS A S PEAKING ORDER REGARDING VARIOUS OBJECTIONS RAISED BY THE ASSESSEE IN CONNECTION WITH VALIDITY OF RE-ASSESSMENT PROCEEDINGS IN A.Y. 2000-01 AND IF IT IS HELD BY THE A.O. THAT THE RE-ASSESSMENT PROCE EDINGS ARE VALID THEN HE SHOULD FRAME DE NOVO ASSESSMENT ORDER IN A. Y. 2000-01 AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHOULD FURNISH ALL HIS SUBMI SSIONS AND EVIDENCES BEFORE THE A.O. ON MERIT ALSO. SIMILARLY, IN A.Y 2005- 06, THE A.O. SHOULD PASS DE NOVO ASSESSMENT ORDER A FTER PROVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . WE WOULD LIKE TO MENTION THAT WHILE DECIDING THE ISSUE ON ME RIT IN BOTH THE YEARS, A.O. SHOULD KEEP IN MIND THE ORDERS OF LD. C IT(A) AS WELL AS THE ORDER OF COMMERCIAL TAX TRIBUNAL AS WELL AS SUBSEQUENT DEVELOPMENT. 9. THE ASSESSEE SUPPORTED THE RETURN OF INCOME FILE D DURING THE YEAR UNDER CONSIDERATION WITH AUDITED REPORT. AS P ER AUDITED REPORT, TRADING AND PROFIT & LOSS ACCOUNT, ASSESSEE HAS SHOWN GROSS LOSS AT RS.1,15,224/- ON THE TOTAL TURNOVER OF RS.4 6,44,381/-. WHEN THE AO COMPARED THE TOTAL TURNOVER OF THE YEAR UNDE R CONSIDERATION WITH THE IMMEDIATE PRECEDING YEAR IN WHICH THE ASSE SSEE HAS SHOWN TURNOVER OF RS.62,06,215/- WITH GROSS PROFIT OF RS.23,53,539/- I.E. 37.56%, HE HAS CALLED UPON THE ASSESSEE TO ITA NO.2107/DEL./2013 6 EXPLAIN. ASSESSEE COMPANY VIDE REPLY DATED 06.03.2 007 GIVEN THE REASONS FOR GROSS LOSS AS UNDER :- 1) PRODUCTION AND SALES ARE VERY LOW IN COMPARISON TO LAST YEAR. 2) 478 BAGS OF CEMENT WERE DAMAGED AT BRANCH OFFICE AT GURUKUL NARSON AND SALE RATE WAS RS.120/- AND TOTAL VALUE IS RS.57,360/- 3) RATE OF PURCHASE OF GYPSUM INCREASED TO RS.98 PE R MT AS AGAINST RS. 80/- PER MT DURING A.Y. 2004-05 I.E. IN CREASED BY 22.5% WHILE SALE RATE WAS EQUAL. 4) THE PRODUCTION WAS LESS IN QUANTITY AND ASSESSEE HAS TO PAY MINIMUM BILLS OF ELECTRICITY AN THUS IT HAS TO PAY RS.12,08,398/- AS AGAINST RS.7,81,059/-WHICH MIGHT BE PAYABLE IF THE ASSESSEE USED UNITS ABOVE THE MINIMUM UNITS AND THUS IT PAID RS.4 ,38,958/- EXTRA AND THE PROFIT WAS REDUCED FROM THE AMOUNT. 5) THE PRODUCTION WAS VERY LESS IN COMPARISON TO LA ST YEARS AND DUE TO LESS PRODUCTION AVERAGE EXPENSES WERE MO RE IN COMPARISON TO LAST YEARS. MOST OF THE EXPENSES ARE FIXED EXPENSES AND DO NOT DEPEND UPON THE PRODUCTION AND PRODUCTIO N MAY LESS OR MORE BUT THEY ARE SAME E.G. SALARY OF MISTRIES ETC. THUS THE EXPENSES WERE MORE AND PROFIT WAS LESS. 6) THE ASSESSEE DID PRODUCTION MOSTLY FROM THE CLIN KERS PURCHASE FROM THE MARKET AS AGAINST THE LAST YEAR, WHEN DOLOMITE WAS PURCHASE AND CLINKER WAS MANUFACTURED FROM DOLO MITE AND THEN AND CEMENT WAS PRODUCED. THE NEW PROCESS GAVE THE ASSESSEE MORE EXPENSES THEN LAST YEARS AND LESS PROFIT. CLIN KER PURCHASED FROM THE MARKET WAS COSTLY FROM THE COST OF MANUFAC TURING OF CLINKER. THE COST OF MANUFACTURING OF CEMENT DURING 01.04.04 TO 12.09.04 WAS RS.2638/- PER MT WHILE DURING A.Y.2004 -05, COST WAS RS.2378/- PER MT. THE METHOD OF PRODUCTION HAS CHANGED SUBSTANTIALLY AND THE GP CAN NOT BE COMPARED FROM T HE PREVIOUS YEARS. 7) FROM 15.12.04, THE ASSESSEE MANUFACTURED LIME ST ONE POWDER AND THE SAME WAS NEW PRODUCT AND THE SAME CA N NOT BE COMPARED FROM LAST YEAR. 8) THE ASSESSEE PURCHASE LIME STONE (DOLOMITE) FOR MANUFACTURING OF CEMENT AND IN CEMENT, LIME STONE O F KATCHERY QUALITY IS BEING USED. ISI AUTHORITIES STOPPED THE MANUFACTURING OF CEMENT VIDE THEIR LETTER DATED 07.10.2004 HENCE, AS SESSEE WAS FORCED TO SALE THE LIME STONE AS IT IS OR AFTER CRU SHING. HERE IT IS MENTIONED THAT MUZAFFARNAGAR DISTT. IS NOT A MARKET OF DOLOMITE, AND ASSESSEE APPROACHED CUSTOMERS AT VARIOUS PARTIE S AT VARIOUS ITA NO.2107/DEL./2013 7 PLACES AND FOUND THE CUSTOMERS AT FIROZABAD BUT THE Y AGREED TO PAY THEIR RATES I.E. MUCH LESS FROM THE COST OF THE ASSESSEE. THIS RATE WAS EQUAL TO RATES AT PONTA SAHIB (HP) AND DEH RADUN AND THE ASSESSEE HAD INCURRED FREIGHT EXTRA ON ITS PURCHASE . HENCE THERE WAS LOSS IN THIS ITEM. 10. ASSESSEE BY FILING ANOTHER REPLY DATED 07.11.20 04 INTIMATED THAT IT HAS STOPPED PRODUCTION OF CEMENT W.E.F. 13. 09.2004 AFTER POLICE RAID AND SURVEY CONDUCTED BY ISI DEPARTMENT WHEN THEY FOUND NO MANUFACTURING OF CEMENT AND THE ASSESSEE S TARTED CRUSHING OF DOLOMITE LYING WITH IT IDLE AFTER CLOSU RE OF THE PRODUCTION OF CEMENT. 11. FURTHER TO THE QUERY RAISED BY THE AO, ASSESSEE FILED ANOTHER REPLY DATED 19.06.2007 WHICH IS AS UNDER :- 1. DAMAGE OF 470 BAGS IS DUE TO WATER FROM THE ROO F IN THE GODWON AND BAGS BECAME USELESS AND WERE THROWN ON R OAD. 2. THE RATES OF GYPSUM INCREASED IN THE MARKER FOR ALL PURCHASES AS IS CLEAR FROM BILLS. 3. FROM 15.12.01 MANUFACTURING OF LIME STONE STARTE D. 4. PAYMENT OF MINIMUM ELECTRICITY BILLS THE SAME IS CLEAR FROM THE MONTHLY ELECTRICITY BILLS. 5. CEMENT CAN BE MANUFACTURED IF THE PRODUCER HAS 1 S1 MARK AND IF IT HAS NO MARK OF ISI, CEMENT CAN NOT BE MAN UFACTURED. ISI STOPPED THE USE OF ISI MARK WHICH MEANS THAT MANUFA CTURING OF CEMENT IS STOPPED. 6. LIST OF PURCHASERS OF CEMENT FILED 7. DETAILS ABOUT RAW MATERIAL AS ON 31.03.05 FILED. 8. DOLOMITE WAS CONSUMED IN THE MANUFACTURING OF DO LOMITE POWDER. 9. LIST OF PURCHASE OF CLINKER FILED. ITA NO.2107/DEL./2013 8 12. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE, NOW THE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS, AS TO WHETHER AO AS WELL AS CIT (A) HAVE ERRED IN REJECTING THE BOOKS OF ACCOUNT WITHOUT PERUSING THE SAME? 13. THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145 OF THE ACT BY MAKING FOLLOWING OBSERVATIONS :- THE A.O.S ORDER DATED 27/12/2007, THE BOOKS WERE R EJECTED U/S 145 OF THE I.T. ACT, ON VARIOUS DISCREPANCIES DISCUSSED AB OVE. I ALSO AGREE ON ALL THOSE ISSUES OF THE PREVIOUS ORDER OF THE A.O. AND I ALSO REJECT THE BOOKS OF A/CS AS PER U/S 145 OF THE I.T. ACT, 1961 AND I ALSO AGREE WITH ALL OTHER VERIFICATIONS AND CONCLUSION OF THE A.O.S ORDER DA TED 27/12/2007. 14. SIMILARLY, CIT (A), WITHOUT PERUSING THE BOOKS OF ACCOUNT, BUT BY RELYING UPON THE OBSERVATIONS MADE BY THE TH EN AO VIDE ORDER DATED 27.12.2007 BY WHICH BOOKS OF ACCOUNT HA VE BEEN REJECTED, AFFIRMED THE ORDER PASSED BY THE AO BY MA KING FOLLOWING OBSERVATIONS :- THE INCUMBENT AO AFTER CONSIDERING-THE AFORESAID D ISCREPANCIES POINTED OUT IN THE ORIGINAL ASSESSMENT ORDER REJECT ED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. THEREFORE, IN VIEW O F THE GLARING DISCREPANCIES POINTED OUT BY THE THEN AO, THE INCUM BENT AO HAD MATERIAL TO SUPPORT THE REJECTION OF BOOKS OF ACCOU NT. DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS THE AO HAD A LLOWED SUFFICIENT OPPORTUNITIES TO THE APPELLANT OF BEING HEARD, HOWEVER, IT WAS THE APPELLANT WHO, REITERATED HIS EARLIER SUBMI SSIONS FURNISHED BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT PR OCEEDINGS AS THE FACTS REMAINED THE SAME. THUS EVEN IF THE AO CONSID ERING PAST HISTORY OF THE CASE, REJECTED THE BOOKS OF ACCOUNT FOLLOWING THE FINDINGS OF THE THEN AO THERE WAS NOTHING WRONG IN THE ACTION OF THE AO. FURTHER, THE DISCREPANCIES AS POINTED OUT B Y THE THEN AO IN THE ASSESSMENT ORDER AND AS REPRODUCED ABOVE HAD NO T BEEN REBUTTED BY THE APPELLANT DURING THE COURSE OF FRES H ASSESSMENT PROCEEDINGS. ONUS WAS SQUARELY ON THE APPELLANT TO EXPLAIN THE SAME. THE APPELLANT HAS GIVEN VARIOUS REASONS FOR F ALL IN GP BUT THE SAME HAVE NO FORCE IN VIEW OF THE DISCREPANCIES AS POINTED OUT BY THE AO. ITA NO.2107/DEL./2013 9 15. BARE PERUSAL OF THE FINDINGS RETURNED BY THE AO AS WELL AS CIT (A), AS REPRODUCED ABOVE IN THE PRECEDING PARAS , GOES TO PROVE THAT BOTH AO AS WELL AS CIT (A) HAVE RELIED UPON TH E ORDER DATED 27.12.2007 PASSED BY THE THEN AO VIDE WHICH BOOKS O F ACCOUNTS WERE REJECTED, WHICH ORDER IS NON EST AS THE AO WAS DIRECTED TO MAKE DE NOVO ASSESSMENT. SO, IT IS PROVED THAT THE AO AS WELL AS CIT (A) HAVE PROCEEDED TO REJECT THE BOOKS MERELY A T THE INSTANCE OF THE THEN AO WHO HAS PASSED ORDER DATED 27.12.200 7 VIDE WHICH BOOKS OF ACCOUNT WERE REJECTED U/S 145 OF THE ACT. SO, THE FINDINGS OF THE AO AS WELL AS CIT (A) REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE U/S 145 OF THE ACT WITHOUT SCRUTINY ARE NO T SUSTAINABLE IN THE EYES OF LAW. 16. NOW NEXT QUESTION ARISES FOR DETERMINATION IN T HIS CASE IS, AS TO WHETHER AO AS WELL AS CIT (A) HAVE ERRED IN MAKING/CONFIRMING THE ADDITION OF RS.15,50,757/- BY TAKING INTO ACCOUNT THE DECLARED GROSS PROFIT OF RS.23,53, 539/- ON THE TOTAL TURNOVER OF RS.62,06,215/- IN THE IMMEDIATE P RECEDING YEAR (WHICH HAS BEEN SUBSEQUENTLY REDUCED TO 33% BY CIT (A) IN THE FIRST ROUND OF LITIGATION) ON THE BASIS OF R EJECTION OF BOOKS OF ACCOUNT U/S 145 BY THE THEN AO? ITA NO.2107/DEL./2013 10 17. WHEN THE BOOKS OF ACCOUNT ARE PROVED TO HAVE BE EN REJECTED BY THE AO ILLEGALLY AND ARBITRARILY WITHOUT PERUSIN G THE SAME, THE QUESTION OF ASSESSING THE GROSS PROFIT AT 37.56% BY THE AO ON THE BASIS OF PRECEDING YEARS GROSS PROFIT DOES NOT ARI SE. MOREOVER, WHEN THE REPLY FILED BY THE ASSESSEE COMPANY DATED 06.03.2007 AND 19.06.2007 DURING THE ASSESSMENT PROCEEDINGS AR E EXAMINED AS A WHOLE, IT LEADS TO THE CONCLUSION THAT THE GROSS LOSS AT RS.1,15,224/- ON TOTAL TURNOVER OF RS.46,44,381/- C LAIMED BY THE ASSESSEE IS NOT DUE TO THE SALE OUT OF BOOKS AS HAS BEEN HELD BY THE AO RATHER DUE TO NUMEROUS FACTORS VIZ. LOW PRODUCTI ON OF SALE IN COMPARISON TO LAST YEAR; DAMAGED COST OF 478 BAGS OF CEMENT VALUED AT RS.57,360; INCREASE IN THE RATE OF PURCHA SE OF GYPSUM FROM RS.98 PER MT AS AGAINST RS.80/- PER MT I.E. 22 .5% INCREASE DURING THE YEAR UNDER CONSIDERATION, WHILE THE SALE S RATE REMAINED THE SAME; THAT DUE TO LOW PRODUCTION IN TERMS OF QU ANTITY, THE ASSESSEE HAD TO PAY MINIMUM BILLS OF ELECTRICITY AT RS.12,08,398/- AS AGAINST RS.7,81,059/- WHICH MIGHT BE PAYABLE IF THE ASSESSEE USED UNITS ABOVE THE MINIMUM UNITS LEVEL AND CONSEQ UENTLY, IT HAS REDUCED THE PROFIT; THAT ASSESSEE MADE PRODUCTION M OSTLY FROM CLINKERS PURCHASED FROM THE MARKET AS AGAINST LAST YEAR AND THE NEW PROCESS WAS MORE EXPENSIVE THAN THE LAST YEAR L EADING TO LESS PROFIT BECAUSE DURING THE PERIOD 01.04.2004 TO 12.0 9.2004 THE RATE ITA NO.2107/DEL./2013 11 OF CLINKER WAS RS.2638 PER MT WHEREAS DURING AY 200 4-05 THE COST WAS RS.2378/- PER MT; THAT FROM 15.12.2004 THE ASSESSEE MANUFACTURED LIME STONE POWER WHICH WAS A NEW PRODU CT AND AS SUCH CANNOT BE COMPARED WITH THE CEMENT PRODUCTION OF LAST YEAR; THAT THE ASSESSEE STOPPED PRODUCTION OF CEMENT FROM 13.09.2004 AFTER POLICE RAID AND ISI DEPARTMENT AFTER CONDUCTI NG SURVEY VIDE LETTER DATED 07.11.2004, ORDERED STOPPAGE OF PRODU CTION WHEN THEY HAVE FOUND NO MANUFACTURING ACTIVITY OF CEMENT IN T HE FACTORY AND IN THESE CIRCUMSTANCES COMPARING THE GP RATE WITH I MMEDIATE PRECEDING YEAR IS WITHOUT ANY BASIS, HENCE NOT SUST AINABLE IN THE EYES OF LAW. 18. ALL THE AFORESAID FACTS AS TO THE LOW PRODUCTIO N, HIGHER RATES OF CLINKER, STOPPING OF PRODUCTION, POLICE RAIDS HA VE NOT BEEN CONTROVERTED BY THE AO IN ANY MANNER WHATSOEVER WHI CH ARE SUFFICIENT IN OUR VIEW TO HOLD THAT THE GROSS PROFI T OF THE ASSESSEE AT 33% BY MAKING COMPARISON WITH THE IMMEDIATE PRECEDI NG ASSESSMENT YEAR IS NOT JUSTIFIABLE IN ANY MANNER WH ATSOEVER. EVEN OTHERWISE, AT THE SECOND ROUND OF LITIGATION, THE A SSESSEE HAS NOT BEEN PROVIDED WITH ANY OPPORTUNITY OF BEING HEARD A ND THE AO AS WELL AS CIT (A) HAVE PROCEEDED ON THE BASIS OF ESTI MATION AND GUESSWORK AS WELL AS DATA REFERRED BY THEN AO, WHOS E ORDER HAS ALREADY BEEN SET ASIDE. ITA NO.2107/DEL./2013 12 19. EVEN OTHERWISE, FINDINGS RETURNED BY THE LD. CI T (A) THAT THE ASSESSEE HAS BEEN USING TRADEMARK WHICH WAS SIMILAR IN NAME TO THE ESTABLISHED BRAND LIKE ACC, BIRLA PLUS TO CONFU SE THE MIND OF THE CUSTOMER AND FOR THIS REASONS, RAID WAS CONDUCT ED AT THE ASSESSEES PREMISES ARE WITHOUT ANY EVIDENCE ON REC ORD. IN CASE, ANY RAID WAS CONDUCTED BY THE POLICE OR ANY OTHER D EPARTMENT, THE SAME IS REQUIRED TO BE PROVED BY THE CIVIL/CRIMINAL COURTS AND NO SUCH EVIDENCE FROM CIVIL/CRIMINAL COURTS HAVE COME ON RECORD. ALSO, NO EVIDENCE IS THERE ON RECORD IF EXCISE DEPA RTMENT HAS FOUND ANY EVASION OF TAX AND ALL THESE FINDINGS HAV E BEEN BASED UPON THE HEARSAY EVIDENCE BY THE LD. CIT (A), WHICH ARE NOT SUSTAINABLE. 18. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 12 TH DAY OF APRIL, 2016. SD/- SD/- (S.V. MEHROTRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF APRIL, 2016/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT, MUZAFFARNAGAR. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.