Assistant Commissioner of Income-tax, V. Amar Amit Jalna Alloys Pvt. Ltd.,

ITA 240/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9195 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-07-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Rejection of books of accounts; Unexplained investment; Business income
• Section: 69C; 142(1); 147; 68; 145; 148; 144

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.240 AND 241/PUN/2014 / ASSESSMENT YEAR : 2002-03 ASST.COMMISSIONER OF INCOME TAX , CIRCLE-1, JEEVAN SUMAN, LIC BLDG., 2 ND FLOOR, CANNOUGHT PLACE, N-5, CIDCO., AURANGABAD. . / APPELLANT V/S AMAR AMIT JALNA ALLOYS PVT. LIMITED, D/52/5, ADDITIONAL MIDC AREA, JALNA. PAN : AABCA5522B. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : THESE TWO APPEALS FILED BY THE REVENUE ARE EMANATING OUT OF TWO ORDERS OF COMMISSIONER OF INCOME TAX (A) AURANGAB AD DATED 29.11.2013 FOR THE ASSESSMENT YEAR 2002-03. 2. WE FIRST TAKE UP APPEAL IN ITA NO.240/PUN/2014. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- 3.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF INGOTS. ASSESSEE FILED ITS RETURN OF INC OME FOR / DATE OF HEARING : 06.07.2017 / DATE OF PRONOUNCEMENT: 14.07.2017 2 A.Y. 2002-03 ON 31.10.2002 DECLARING TOTAL LOSS OF RS.5,05,75,280/-. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. AO NOTED THAT DESPITE SERVICE OF NOTICES ON VARIOUS OCCA SIONS, THERE WAS NO REPRESENTATION FROM THE SIDE OF ASSESSEE. HE AC CORDINGLY FRAMED ASSESSMENT U/S 144 OF THE ACT VIDE ORDER DT.10.0 1.2005 AND DETERMINED THE TOTAL INCOME, BEFORE ALLOWING SET OFF OF LOSSE S, AT RS.5,12,89,558/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.29.11.2013 (IN APPEAL NO.ABD/CIT(A)/22/2008-09) GRANTED PARTIAL RELIEF TO T HE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A), AURANGABAD IS CORRECT IN E STIMATING THE SALES 30% MORE THAN THE DECLARED SALES BY THE ASSES SEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AURANGABAD IS CORRECT IN ESTIMATION @ 5% PR OFIT ON ESTIMATED SALES? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 4. AO ON THE BASIS OF THE SCRUTINY OF BALANCE-SHEET NOTIC ED THAT THE AUDITOR HAD COMMENTED THAT THE CLOSING STOCK WAS A CCEPTED BY HIM WHICH WAS TAKEN AND CERTIFIED BY THE ASSESSEE AND NO QUANTITATIVE RECORDS WERE MAINTAINED BY ASSESSEE. IT W AS NOTICED BY THE AO THAT ASSESSEE HAD MANUFACTURED INGOTS OF VALU E AT RS.9,02,45,683/- AND THE EXPENSES OF ELECTRICITY WAS RS.5,98,93,265/-. HE WAS OF THE VIEW THAT THE CONSUMPTION OF POWER WAS EXTREMELY HIGH CORRESPONDING TO THE PRODUCT ION AND THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND IN THE ABSENCE OF 3 QUANTITATIVE RECORDS, IT WAS EASY FOR ASSESSEE TO MANIPUL ATE THE PRODUCTION. AO WAS OF THE VIEW THAT THE GENERAL POWER CONSUMPTION SHOULD BE AROUND 30% TO 40% OF THE FINISHED PRODUCTS. CONSIDERING THE POWER CONSUMPTION SHOWN BY T HE ASSESSEE, THE PRODUCTION ACCORDING TO THE AO SHOULD HAV E BEEN TO THE EXTENT OF RS.11,97,00,000/- AS AGAINST THE PRODUCTION OF RS.9,02,45,683/- SHOWN BY THE ASSESSEE. HE ACCORDINGLY CONCLUDED THAT THERE WAS A SUPPRESSION OF PRODUCTION TO THE EXTENT OF RS.2.50 CRORES AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO GRA NTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER : 8. I HAVE CAREFULLY CONSIDERED THE AVAILABLE FACTS OF THE CASE, ASSESSMENT ORDER AND STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED WITH THE APPEAL MEMO. AT THE OUTSET IT HAS BEEN NOTI CED THAT THE BUSINESS/FACTORIES OF THE APPELLANT COMPANY HAVE BE EN CLOSED AS THE DIRECTORS OF THE APPELLANT COMPANY HAVE BEEN FACING VARIOUS FINANCIAL AND OTHER PROBLEMS. IN. VIEW OF THE ABOVE FACTS, NO ONE ATTENDED AND THE A.O. HAS MADE EX-PARTE ASSESSMENT U/S 144 OF TH E ACT. IT HAS BEEN NOTICED THAT THE SALE OF THE GOODS MANU FACTURED HAS BEEN SHOWN BY THE APPELLANT IN THE AUDITED MANUFACTURING AND P&L ACCOUNT AT RS.8,88,19,383/- AND THE LOSS HAS BEEN S HOWN IN THE RETURN AT RS.5,05,75,280/-. IT HAS ALSO BEEN NOTICE D FROM THE ASSESSMENT ORDER OF THE A.O. THAT THE LOSS HAS RESU LTED MAINLY ON ACCOUNT OF HUGE EXPENDITURE INCURRED TOWARDS ELECTR ICITY RS.5,98,93,265/-, INTEREST TO MSFC, JALNA RS.1,12,2 8,372/- AND OTHER EXPENSES WHICH INCLUDE RAW MATERIAL WHICH FOR MS AT LEAST 60% OF THE COST OF SALES. IN VIEW OF THE ABOVE FACTS, T HE INCOME OF THE CURRENT YEAR UNDER APPEAL ASSESSED BY THE A.O. U/S 144 OF THE ACT AT RS.5,12,89,558/- BEFORE ALLOWING SET-OFF OF BROUGHT FORWARD LOSSES IN RESPECT OF SALE OF RS.8,88,19,383/- APPEARS TO BE O N VERY MUCH HIGHER SIDE. THE A.O HAS MADE ADDITION OF RS.2,50,00,000/- TOWA RDS SUPPRESSED PRODUCTION/SALE WITHOUT REJECTING BOOKS OF ACCOUNTS . THE ADDITIONAL ITSELF IS NOT JUSTIFIED AS THE ALLEGED UNDISCLOSED SALE/PRODUCTION CANNOT BE ADDED WITHOUT CONSIDERING THE UNDISCLOSED COST OF PRODUCTION. IT IS SETTLED LAW THAT THE POWERS OF TH E ASSESSING OFFICER TO MAKE BEST JUDGMENT ASSESSMENT ARE NOT ARBITRARY POW ERS AND HE SHOULD BE GUIDED BY RULES OF JUSTICE, EQUITY AND GO OD CONSCIENCE. IT IS ALSO SETTLED LAW THAT THE ESTIMATE OF THE INCOME MU ST BE HONEST AND FAIR AND COMPARABLE CASES ARE TO BE CONSIDERED WHIL E ESTIMATING THE INCOME. 4 FROM THE STATEMENT OF FACTS FILED BY THE APPELLANT WITH THE APPEAL MEMO, IT HAS BEEN NOTICED IN RESPECT OF MAJOR ADDIT IONS TOWARDS DISPUTED OUTSTANDING LIABILITY OF ELECTRICITY EXPEN DITURE PAYABLE TO MSEB RS.3,97,36,791/-, THE APPELLANT HAS POINTED OU T THAT THE MAJOR LIABILITY OF JALNA PLANT RELATES TO THE EARLIER YEA RS AND NOT THE CURRENT YEAR AND HENCE THE ADDITION IS NOT JUSTIFIED. FURTH ER, AS REGARDS MAJOR ADDITION OF RS.2,49,52,754/- U/S 41(1), IT HAS BEEN NOTICED THAT THE APPELLANT HAS SHOWN THE LIABILITY TOWARDS SUNDRY CR EDITORS IN THE BALANCE SHEET AS PER AUDITED BOOKS OF ACCOUNTS WHER EAS THE A.O HAS ASSUMED WITHOUT ANY EVIDENCE THAT LIABILITY TO THE EXTENT OF 25% HAS BEEN CEASED. AS REGARDS ANOTHER MAJOR ADDITION OF R S.2,50,00,000/- TOWARDS SUPPRESSED PRODUCTION/ SALE IT HAS BEEN NO TICED THAT THE A.O HAS MADE THE ADDITION ON THE BASIS OF ESTIMATIO N OF PRODUCTION ON THE BASIS OF ELECTRICITY EXPENDITURE WITHOUT BRINGI NG ON RECORD ANY SPECIFIC EVIDENCE ABOUT SUPPRESSION OF PRODUCTION O R UNACCOUNTED SALE. IN VIEW OF THE ABOVE FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE A.O IS NOT JUSTIFIED IN MAKING THE AB OVE MENTIONED HUGE ADDITIONS WITHOUT REJECTING BOOKS OF RESULTS U/S 14 5 OF THE ACT. HOWEVER, THE REASONABLE ADDITION IS BEING MADE IN T HE NEXT PARA. IT IS A FACT THAT THE APPELLANT DID NOT ATTEND THE ASSESSMENT PROCEEDINGS DUE TO VARIOUS DIFFICULTIES AND HENCE O NLY AUDITED FINAL STATEMENTS OF ACCOUNT COULD BE CONSIDERED. EVEN NOW THE APPELLANT COMPANY, WHICH HAS BECOME DEFUNCT, DID NOT HAVE REL EVANT RECORD AND RESPONSIBLE PERSONS FOR PRODUCING AND EXPLAININ G THE SAME. CONSIDERING THE TOTALITY OF THE FACTS, I AM OF THE CONSIDERED VIEW THAT THE SALE OF THE APPELLANT COMPANY AS WELL AS PROFIT OF THE APPELLANT COMPANY IS TO BE ESTIMATED AT SOME REASONABLE FIGUR E. THE SALE DECLARED BY THE APPELLANT IS AT RS.8,88,19,383/-, H OWEVER, AS THE APPELLANT DID NOT PRODUCE EVIDENCE SUPPORTING THE S ALE, THE SAME HAS BEEN ESTIMATED AT RS. 11,54,65,198/- (30% MORE THA N THE DECLARED SALES). THE PROFIT ON THE SAID SALE HAS BEEN ESTIMA TED @ 5%. THEREFORE, THE NET PROFIT OF THE CURRENT YEAR IS TO BE ASSESSED AT RS.57,73,260/- AS AGAINST LOSS DECLARED BY THE APPE LLANT FOR THE CURRENT YEAR AT RS. 5,05,75,280/-. THE ADDITION OF RS. 10,18,64,838/- MADE BY THE A.O TO THE INCOME RETURNED IS, THEREFOR E, CONFIRMED TO THE EXTENT OF RS.5,63,48,540/-[RS.5,05,75,280/- (+) RS. 57,73,260/-] BY REJECTING BOOK RESULTS U/S 145 OF THE ACT AND BY ES TIMATING SALE AND NET PROFIT. THE APPELLANT GETS RELIEF OF RS.4,55,16 ,298/-. GROUND NOS. 2 & 3 ARE PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APP EAL BEFORE US. 5. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THE CASE FILE REVEALS THAT THE AUTHORIZED REP RESENTATIVE SMT. DEEPA KHARE VIDE HER LETTER DT.06.07.2017, HAS WITHD RAWN HER POWER OF ATTORNEY AND THUS RESCUED HERSELF FROM APPEAR ING ON BEHALF OF THE ASSESSEE. CONSIDERING THESE FACTS, WE PROPOSE TO 5 DECIDE THE ISSUE EXPARTE-QUA THE ASSESSEE AFTER HEARING THE LD.D.R. AND ON THE BASIS OF MATERIAL ON RECORD. 6. BEFORE US, LD.D.R. TOOK US THROUGH THE FINDINGS OF AO AND STRONGLY SUPPORTED THE ORDER OF AO. 7. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ESTIMATION OF SUPPRESSED PRODUCTION. IT IS AN UNDISPUTED FACT THAT THE ASSESSMENT WAS FRAMED BY THE AO U/S 144 OF THE ACT AN D THE ADDITIONS WERE MADE ON THE BASIS OF MATERIAL ON RECORD. W E FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE HAS NOTED THAT AO H AD MADE HUGE ADDITIONS WITHOUT REJECTING THE BOOKS OF ACCOUNTS U /S 145 OF THE ACT AND THAT AO WHILE PASSING ORDER U/S 144 OF THE ACT SHOULD HAVE BEEN GUIDED BY THE RULES OF JUSTICE, EQUITY AND GOOD CONSCIENCE AND SHOULD NOT HAVE MADE ADDITION IN ARBITRARY MANNE R. HE HAS FURTHER OBSERVED THAT THE ESTIMATE OF SUPPRESSE D PRODUCTION WAS NOT SUPPORTED BY ANY EVIDENCE OF UNACCOUNTED SALES . LD.CIT(A) WHILE GRANTING PARTIAL RELIEF TO THE ASSESSEE HAS NO TED THAT THE ELECTRICITY EXPENSES ALSO RELATED TO EARLIER YEARS AND NOT ONL Y FOR THE YEAR UNDER CONSIDERATION ALONE. HE, THEREFORE, CONS IDERING THE FACT, THAT THE ASSESSEE HAS BECOME DEFUNCT AND IN T HE ABSENCE OF RELEVANT RECORDS ESTIMATED THE SALES AND NET PROFITS. BE FORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMON STRATE ANY FALLACY IN THE FINDINGS OF LD.CIT(A). CONSIDERING THE TOTALITY OF T HE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.C IT(A) AND THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 6 8. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.241/PUN/2014. 9. IN THIS CASE, PROCEEDINGS U/S 147 OF THE ACT WERE INIT IATED BY ISSUE OF NOTICE U/S 148 OF THE ACT WHICH WAS ISSUED ON 26 .03.2009 AND DULY SERVED ON ASSESSEE. IT WAS NOTED THAT NO R ETURN OF INCOME WAS FILED BY ASSESSEE IN RESPONSE TO NOTICE U/S 148 OF THE ACT NOR IT FILED ANY SUBMISSIONS DURING THE ASSESSMENT PROCEEDINGS. THEREAFTER THE ASSESSMENT WAS FRAMED U/S 144 R.W.S. 147 OF THE ACT VIDE ORDER DATED 30.12.2009 AND THE TOTAL INCOME, BEFORE S ET OFF BROUGHT FORWARD LOSSES, WAS DETERMINED AT RS.9,24,68,232/- AND TOTAL TAXABLE INCOME WAS DETERMINED AT RS.3,99,33,826/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A) WHO VIDE ORDER DATED 29.11.2013 (IN APPEAL NO.ABD/CIT(A)/128/2009-10) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A), AURANGABAD IS CORRECT IN E STIMATING THE SALES 30% MORE THAN THE DECLARED SALES BY THE ASSES SEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) AURANGABAD IS CORRECT IN ESTIMATION @ 5% PRO FIT ON ESTIMATED SALES? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 10. BEFORE US, LD.D.R. TOOK US THROUGH THE FINDINGS OF AO. I T WAS SUBMITTED THAT ASSESSEE HAD EFFECTED SALES OF RS.4.11 CRO RES TO PARVATI STEEL RE-ROLLING MILLS ON WHICH PARVATI STEEL HAD CL AIMED CENVAT CREDIT OF RS.67.47 LACS, THE SALES WERE EFFECTED WITH OUT ANY 7 CORRESPONDING PURCHASES DISCLOSED IN THE RETURN OF INCOME AND THUS THERE WAS UNEXPLAINED INVESTMENT IN PURCHASE OF RAW -MATERIAL FOR MANUFACTURING AND SELLING GOODS TO PARVATI STEEL OF RS.4 .11 CRORES WHICH WAS REQUIRED TO BE ADDED U/S 69C OF THE A CT AND ACCORDINGLY ADDITION WAS MADE. HE FURTHER SUBMITTED THAT DURING THE YEAR ASSESSEE HAD DEPOSITED AND WITHDRAWN AMOUNTS BOTH IN CHEQUE AND CASH ON VARIOUS DAYS FROM THE CURRENT ACCO UNT HE THEREFORE SUBMITTED THAT AO HAD RIGHTLY MADE THE ADDITION. 11. WE HAVE HEARD LD.D.R. AND PERUSED THE MATERIAL ON RE CORD. WE FIND THAT LD.CIT(A) HAS DECIDED THE ISSUE BY OBSERVING A S UNDER : 11.2 THE NEXT ISSUE TO BE DECIDED IS WHETHER THE A DDITION OF RS.4,11,12,500/- IS JUSTIFIED ON MERITS OF THE CASE . IN THIS REGARD, IT HAS BEEN NOTICED THAT THE A.O. HAS MADE ADDITION ON THE GROUND THAT IN RESPECT OF SALES EFFECTED TO M/S PARVATI STEEL RE-R OLLING MILLS, JALNA OF RS.7,01,64,753/-, THE APPELLANT HAS NOT RECORDED PU RCHASES IN THE BOOKS OF ACCOUNTS AMOUNTING TO RS.4,11,12,500/-. T HE A.O. HAS FURTHER STATED THAT THE SOURCE OF THE SAID AMOUNT DEPOSITED IN BANK AND UTILIZED FOR PURCHASES IS UNEXPLAINED AND HENCE ADDED THE SA ME U/S 68 OF THE ACT. IN RESPECT OF THE ISSUE UNDER APPEAL THE AUDITED MA NUFACTURING ACCOUNT OF THE APPELLANT IS MOST RELEVANT AND HENCE THE SAME IS REPRODUCED BELOW --------------------------------------------------- --------------------------------------------------- ---- PARTICULARS 31.3.2002 31.3.2001 INCOME: SALE OF FINISHED GOODS 88555599 93132712 SALE OF M.S. BAR 263784 33331 CLOSING STOCK OF SCARP 224136 2390705 CLOSING STOCK OF FINISHED GOODS 1319200 207252 EXCISE DUTY MODVAT 8004078 8795529 TOTAL RS 98473897 104681504 ========== =========== 8 EXPENDITURE : OP STOCK OF FINISHED GOODS 207252 1349698 OPENING STOCKOF SEMI FINISHED (RUNNER R) 121975 41395 OP STOCK OF SCRAP 2390705 162050 CONSUMPTION OF RAW MATERIAL, STORES AND OTHER EXPENSES SCRAPS 56892206 62974644 FERRO MAGNAIZE 207480 229127 B.P.SET 141625 155520 RAMMING MASS 33227 36997 BORIC ACID 13857 16023 ELECTRICITY CHARGES 59893265 54501294 PRODUCTION WAGES 245078 265764 EXCISE DUTY 12397925 12906593 INWARD EXPENSES 1225741 74678 TOTAL RS 133817198 132770693 GROSS PROFIT \ (LOSS) (35343301) (28089189) =========== =========== --------------------------------------------------- --------------------------------------------------- ---- THE TOTAL SALES SHOWN ABOVE ARE RS.8,85,55,599/- + RS.2,63,784/- = RS.8,88,19,383/-. THE DETAILS OF SALES FILED BY THE APPELLANT WITH TH E A.O. AS REPORTED BY THE A.O. VIDE LETTER DATED 21/01/2011 ARE AS UNDER S. NO PARTICULARS SALES A/C EXCISE DUTY PAYABLE SALES TAX PAYABLE GROSS 1 GOVARDHAN RE ROLLING MILL 7,730,190 1,236,830 358,682 9,325,702 2 PARTILE METAL INDUSTRIES 183,210 29,314 8,500 221,024 3 PARVATI RE ROLLING MILL 58,160,960 9,305,759 2,698,034 70,164,753 4 SHRI OM RE ROLLING MILL 10,108,045 1,617,285 469,014 12,194,344 5 SURENDRA RE ROLLING MILL 133,658 21,385 6,202 161,245 6 VIJAY RE ROLLING MILL 227,400 36,384 10,551 274,335 MISC SALES (INCLUDING PARVATI RE ROLLING MILL) 12,275,920 SALES AS PER BALANCE SHEET 88,819,383 9 ON PERUSAL OF THE ABOVE MANUFACTURING ACCOUNT AND A LSO IN VIEW OF QUANTITATIVE DETAILS IN THE AUDIT REPORT, IT CANNOT BE SAID THAT THE APPELLANT HAS NOT DISCLOSED PURCHASES IN RESPECT OF GOODS SOLD TO M/S PARVATI STEEL RE-ROLLING MILLS. IN THIS REGARD, THE APPELLANT HAS POINTED OUT THAT THE A.O HAS WORKED OUT THE FIGURE OF RS.4,11,12,500/- IN RESPECT OF UN DISCLOSED PURCHASES ON THE BASIS OF AMOUNT TRANSFERRED BY THE APPELLANT FROM DEOGIRI BANK ACCOUNT NO.74 TO THE BANK ACCOUNT NO.122 OF M/S AMI T STEEL TRADERS. THE A.O. HAS IGNORED THE FACT THAT HE HIMSELF HAS P OINTED OUT THAT THE SAID AMOUNT HAS BEEN RECEIVED BACK BY THE APPELLANT FROM M/S PARVATI STEEL RE-ROLLING MILLS. THEREFORE, THE WITHDRAWALS ON VARIOUS DATES FROM THE SAID BANK ACCOUNT ARE AVAILABLE FOR RE-DEPOSIT OF THE SAME IN THE SAID BANK ACCOUNT. THEREFORE, THE A.O. SHOULD HAVE WORKED OUT PEAK DEPOSIT WHICH IS MUCH LESS. THE AR OF THE APPELLANT HAS FURTHER ARGUED THAT NO BUSINESSMAN SHALL DISCLOSE SALES IN THE BOOKS OF ACCOUNTS AND SHALL S UPPRESS PURCHASE EXPENDITURE; IF THE CONTENTION OF THE A.O. IS ACCEP TED, THEN THE BOOKS OF ACCOUNTS OF THE APPELLANT WOULD NOT HAVE RESULTED I N TO LOSS OF RS.5,03,35,064/- AS THE PROFIT OF THE APPELLANT WOU LD HAVE BEEN INCREASED BY RS.4,11,12,500/- THE APPELLANT HAS FURTHER POINTED OUT THAT AS PER T HE PROVISIONS OF INCOME TAX ACT AND THE MACHINERY SET-UP BY THE GOVE RNMENT, THE A.O. IS DUTY BOUND TO ASSESS THE CORRECT INCOME OF THE ASSE SSEES; IF THE A.O. IS OF THE OPINION THAT THE APPELLANT HAS ONLY SHOWN SA LES AND HAS NOT SHOWN PURCHASES IN RESPECT OF THE SAID SALES, HE SH OULD HAVE HELD THAT THE APPELLANT HAS SHOWN EXCESS PROFIT OF RS.4,11,12 ,500/- IN THE FINAL STATEMENTS OF ACCOUNTS AND BOOK RESULTS ARE GROSSLY INCORRECT AND HENCE HE SHOULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND B OOK RESULTS AND SHOULD HAVE ESTIMATED THE PROFIT OF THE APPELLANT B Y CONSIDERING THE TURNOVER AND APPLYING THE PROFIT RATE CONSIDERING T HE COMPARABLE CASES OF OTHER MANUFACTURERS OF STEEL. THE ABOVE CONTENT IONS OF THE APPELLANT HAVE BEEN CONSIDERED WHILE DECIDING THE APPEAL FOR THE SAME YEAR I.E. A.Y.2002-03, AGAINST THE ORDER U/S 144 OF THE ACT D ATED 10/01/2005. IN THIS APPELLATE ORDER DATED 29/11/2013, IT HAS BE EN HELD THAT THE PROVISIONS OF SECTION 145 ARE APPLICABLE TO THE FAC TS OF THE CASE OF THE APPELLANT AND ACCORDINGLY THE SALE AND PROFIT FOR T HE YEAR UNDER APPEAL HAVE BEEN ESTIMATED AND THE PROFIT HAS BEEN ASSESSE D AT RS.57,73,260/- AS AGAINST CURRENT YEARS LOSS RETUR NED BY THE APPELLANT AT RS.5,05,75,280/-. THIS HAS RESULTED INTO ADDITI ON OF RS.5,63,48,540/- TO THE INCOME RETURNED. IN VIEW O F THE ABOVE FACTS NO SEPARATE ADDITION IS JUSTIFIED ON ACCOUNT OF ALLEGE D UNDISCLOSED PURCHASES OF RS.4,11,12,500/-. 12. ON PERUSAL OF THE ABOVE FINDINGS OF LD.CIT(A), WE FIND THAT HE HAS NOTED THAT SINCE THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED, THE SALES AND PROFITS FOR THE YEAR HAS BEEN ESTIMATED WHICH HAS RESULTED INTO ADDITION OF RS.6.63 CRORES (ROUNDED OFF) AND THE REFORE NO SEPARATE ADDITION OF RS.4,11 CRORES (ROUNDED OFF) ON ACCO UNT OF 10 ALLEGED PURCHASES IS WARRANTED. BEFORE US, REVENUE HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). WE THEREFO RE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. THUS THE APPEAL OF REVENUE IS DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DIS MISSED. ORDER PRONOUNCED ON 14 TH DAY OF JULY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 14 TH JULY, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. THE CIT(A) AURANGABAD. THE CIT, AURANGABAD. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER , // TRUE COPY / / //TRUE COPY// ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE