M/s. Krishna Steel Industries, Nashik V. Assistant Commissioner of Income-tax,

ITA 511/PUN/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1329 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-11-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2015
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 511 /P U N/201 5 / ASSESSMENT YEAR : 20 0 7 - 0 8 M/S. KRISHNA STEEL INDUSTRIES A - 35, MIDC, PALKHED ROAD, DINDORI, NASHIK 422002 . / APPELLANT PAN: A A CFK6975C VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : S MT. DEEPA KHARE / RESPONDENT BY : SHRI SANJEEV GHEI / DATE OF HEARING : 22 . 1 1 .201 8 / DATE OF PRONOUNCEMENT: 28 . 11 .201 8 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - I , NASHIK , DATED 05 .0 3 .201 5 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 AGAINST ORDER PASSED UNDER SECTION 14 7 R.W . S. 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF REASSESSMENT U/S 147 WHEN REASONS RECORDED WERE NOT PROVIDED TO THE ASSESSEE AND THE OPPORTUNITY TO RAISE OBJECTIONS WERE NOT ALLOWED TO THE ASSESSEE. THE REASSESSMENT PROCEEDINGS THEREFORE BECOME INVALID IN LAW FOR NOT COMPLYING WITH THE MANDATORY PROCEDURE AS LAID DOWN BY SUPREME COURT IN GKN DRIVESHAFT. ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 2 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE PROCEEDINGS UNDERTAKEN UNDER EXCISE LAWS ARE SUFFICIENT TO MAKE ADDITION IN THE HANDS OF THE APPELLANT. LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PROCEEDINGS UNDER EXCISE ACT WERE DISPUTE AND WERE PENDING BEFORE THE APPELLATE AU THORITIES. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DETERMINING INCOME AT RS.93,10,971/ - TOWARDS ALLEGED CLANDESTINE SALES OF STEEL AS AGAINST RS.21,27,100/ - DECLARED BY THE APPELLANT. 4. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN MAKING A N ENHANCEMENT U/S 40A(3) OF RS.1,29,57,019/ - IN RESPECT OF INCOME WHICH WAS DETERMINED ON ESTIMATED BASIS AND THERE WAS NO MATERIAL TO SHOW THAT THE PAYMENTS EXCEEDED RS.20000/ - IN VIOLATION OF PROVISIONS OF SECTION 40A(3). THE SAID ENHANCEMENT BEING NOT WITHIN THE SCOPE OF POWERS PROVIDED IN SECTION 251 AS IT AMOUNTS TO FINDING A NEW SOURCE OF INCOME NOT PROCESSED BY AO, MAY BE HELD TO BE INVALID IN LAW. 3. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT IS NOT PRESSED, HENCE THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE RAISED IN GROUNDS OF APPEAL NO.2 AND 3 IS AGAINST ADDITION MADE ON ACCOUNT OF ALLEGED CLANDESTINE SALE OF STEEL. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF STEEL RE - ROLLING MILL. THE ASSESSING OFFICER RECEIVED INFORMATION CONSEQUENT TO THE ACTION OF DIRECTORATE GENERAL OF CENTRAL EXCISE THAT THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. HOWE VER, THE SAID EVASION OF EXCISE DUTY HAS BEEN MADE GOOD BY PAYING EXCISE DUTY. THE CASE OF ASSESSEE WAS REOPENED UNDER SECTION 147/148 OF THE ACT. THE ASSESSEE INCLUDED THE ADDITIONAL INCOME OF 21,27,100/ - BY APPLYING GP RATE OF 6.7% ON THE ALLEGED SA LES OF 2.75 CRORES. THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY. HOWEVER, THE ASSESSING OFFICER REJECTING THE BOOKS OF ACCOUNT, REJECTED THE PLEA OF ASSESSEE AND ADDED THE TOTAL SALES MADE BY ASSESSEE AS CONCEALED INCOME OF ASSESSEE. ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 3 6. THE CIT(A) HOWEVER, WAS OF THE VIEW THAT GP RATE HAS TO BE APPLIED , AFTER OBSERVING THAT THE ASSESSEE MUST HAVE PURCHASED RAW MATERIAL FOR MANUFACT URING THE ALLEGED CLANDESTINE SALES. HE THEN GOES IN TO THE EXERCISE OF COMPUTING ADDITIONAL INCOME IN THE HANDS OF AS SESSEE AND RESTRICTED ADDITION TO 93,10,971/ - . HOWEVER, HE FURTHER MADE ADDITION ON THE ALLEGED PURCHASES BEING MADE IN CASH AND APPLIED PROVISIONS OF SECTION 40A(3) OF THE ACT AND ADDED SUM OF 1,29,57,019/ - . 7. THE ASSESSEE IS IN APPEAL AGAINST BOTH THE ADDITIONS AND HAS RAISED THE ISSUE VIDE GROUNDS OF APPEAL NO.2 AND 3 AGAINST APPLICATION OF NET PROFIT RATE ON THE ALLEGED SALES OF CLANDESTINE REMOVAL OF GOODS. FURTHER, VIDE GROUND OF APPEAL NO.4, THE ASSESSEE IS AGGRIEVED BY DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT. 8. T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT EXCISE AUTHORITIES HAD RECEIVED INFORMATION IN RESPECT OF VARIOUS DEALERS AND THE TRIBUNAL HAS IN SERIES OF CASES DECIDED THE APPEALS OF OTHER DEALERS. REFERENCE WAS MADE TO THE DECISI ONS IN M/S. SHIVSAGAR STEEL ROLLING MILLS VS. ACIT IN ITA NOS.245/PN/2015, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 08.07.2016 AND IN BUNCH OF APPEALS WITH LEAD ORDER IN ACIT VS. M/S. GAJANAN BUILDERS IN ITA NOS.1543 TO 1549/PUN/2013, RELATING TO A SSESSMENT YEARS 2004 - 05 TO 2010 - 11, ORDER DATED 01.05.2017, WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 4% OVER AND ABOVE THE GP RATE DECLARED BY ASSESSEE AND IN CASE IT WAS HIGHER GP RATE DECLARED BY THE ASSESSEE, THEN THE SAID GP RATE IS TO BE AP PLIED. IN RESPECT OF SECOND ADDITION, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT WHERE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 4 9. THE LEARNED DEPAR TMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST ESTIMATION OF INCOME ON THE CLANDESTINE REM OVAL OF GOODS. THE INVESTIGATION WING OF EXCISE AUTHORITIES I.E. DGCEI CARRIED OUT INVESTIGATION AGAINST SEVERAL ROLLING MILLS AND IT WAS FOUND THAT THEY WERE ENGAGED IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE ASSESSEE ADMITTEDLY , IN THE SAID INVESTIGATION HAD ADMITTED TO THE SAID CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE ASSESSING OFFICER NOTED THE FIRST ASPECT AND ALSO NOTED THAT THERE WAS ERRATIC CONSUMPTION OF ELECTRICITY AND PRODUCTION OF FINISHED GOOD S AND WAS OF THE VIEW THAT TOTAL AMOUNT OF GOODS SO CLANDESTINELY REMOVED IS TO BE ADDED IN THE HANDS OF ASSESSEE. THE CIT(A) HOWEVER, WAS OF THE VIEW THAT ONLY GROSS PROFIT RATE IS TO BE APPLIED. THE ASSESSEE UNDOUBTEDLY, HAD APPLIED GP RATE OF 6. 7% ON THE AFORESAID GOODS AND OFFERED INCOME IN ITS HANDS. IT MAY BE POINTED OUT THAT GP RATE DECLARED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS 6. 7%. 11. WE HAVE ALREADY DECIDED SERIES OF CASES ON THIS ISSUE AND THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS MADE REFERENCE TO THE DECISION OF THE TRIBUNAL IN M/S. SHIVSAGAR STEEL ROLLING MILLS VS. ACIT (SUPRA) AND HAS POINTED OUT THAT THE NAME OF SAID CONCERN WAS ALSO PART OF THE SAID LIST PREPARED BY EXCISE AUTHORITIES. THE TRIBUNAL VIDE PARAS 9 TO 11 HAD HELD AS UNDER: - 9. ON PERUSAL OF RECORD AND AFTER CONSIDERING THE ISSUE RAISED, IT IS APPARENT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY ORDERS OF TRIBUNAL IN THE CASE OF STEEL RE - ROLLING MILL CASES. INVESTIGATION BY THE EXCISE AUTHORITIES WERE CARRIED OUT AGAINST SEVERAL ROLLING MILLS, WHO WERE FOUND TO HAVE ENGAGED IN CLANDESTINE REMOVAL OF GOODS TO SOME EXTENT. THEREAFTER, ADDITIONS WERE MADE BY CCE, PUNE. IN THE SAID CASES, WHEREIN THE SALES OF SAID CONCERNS WERE ES TIMATED AND EXCISE DUTIES WERE CHARGED THEREON. THE CESTAT, DELETED THE SAID ADDITIONS MADE ON SOME HYPOTHETICAL BASIS OF ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 5 CONSUMPTION OF ELECTRICITY AND PRODUCTION OF FINISHED GOODS. HOWEVER, THE ASSESSEE IN ALL THE CASES ACCEPTED ITS LIABILITY TO PAY EX CISE DUTY ON THE SUPPRESSED PRODUCTION OF GOODS, WHICH WERE CLANDESTINELY REMOVED WITHOUT PAYMENT OF EXCISE DUTY. THE INCOME TAX AUTHORITIES IN THE CASE OF SUCH PERSONS HAD TAKEN THE SAID INVESTIGATION AS BASE FOR MAKING ADDITION IN THE HANDS OF RESPECTIV E ASSESSEES. NO FURTHER INVESTIGATION WAS CARRIED OUT BY THE INCOME TAX DEPARTMENT AND THE SOLE BASIS FOR MAKING THE ADDITION WAS THE INVESTIGATION CARRIED OUT BY THE EXCISE AUTHORITIES. THE TRIBUNAL IN SERIES OF CASES TOOK NOTE OF THE FACTS AND WITH LEA D ORDER IN SHREE OM ROLLING MILLS PVT. LTD. VS. ADDL. CIT IN ITA NOS.125 & 127/PN/2012 AND CROSS APPEALS IN ITA NOS.430 & 431/PN/2012, RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09 VIDE ORDER DATED 15.07.2015 HAD CONSIDERED THE ISSUE AT LENGTH VIDE PARAS 54 TO 87 AND VIDE PARAS 88 AND 89, THE TRIBUNAL HAD DELETED THE ADDITION ON BOTH COUNTS I.E. ADDITION MADE ON ACCOUNT OF SUPPRESSED PRODUCTION AND ALLEGED INVESTMENT IN PURCHASES, WHICH READ AS UNDER: - 88. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, HAS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAIM OF THE ASSESSEE OF ADDITIONAL EXCISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEA R. ADMITTEDLY, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIR LY ADMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEARS. ACCO RDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SET TLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THERE IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTIGATION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFICER HAS FAILED TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES FOR 300 DA YS ON ACCOUNT OF ANY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS. FURTHER, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BE FORE THE EXCISE AUTHORITIES. 89. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVESTMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMOVED, IS NOT SUSTAINABLE. ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 6 ACCORDIN GLY, WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PURCHASES UNDER SECTION 69C OF THE ACT. 10. THEREAFTER, CORRIGENDUM ORDER WAS PASSED BY THE TRIBUNAL SUBSTITUTING PARA 88 OF THE TRIBUNAL VIDE ORD ER DATED 17.02.2016 AND IT WAS HELD AS UNDER: - 3. ON PERUSAL OF THE RECORD, WE FIND THAT BY AN ERROR, THE FINDINGS OF THE TRIBUNAL IN PARA 88 WITH SPECIAL REFERENCE TO FROM LINE 17 TO 22, NEEDS CORRECTION TO THE EXTENT THAT THE ADDITIONAL INCOME TO BE AD DED IN THE HANDS OF THE ASSESSEE IS EQUIVALENT TO PROFITS ON SUPPRESSED PRODUCTION @ 4% OR ACTUAL GP RATE DECLARED BY THE ASSESSEE WHICHEVER WAS HIGHER. IN VIEW THEREOF, WE PASS THIS CORRIGENDUM ORDER AND THE PARA 88 I.E. FROM LINE 17 TO 22 WOULD NOW BE S UBSTITUTED BY FOLLOWING PARA. 88. ADMITTEDLY, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE IN THE HANDS OF ASSESSEE, TH E ADDITIONAL INCOME @ 4% OR ACTUAL G.P. RATE DECLARED BY THE ASSESSEE FOR THAT YEAR, WHICHEVER IS HIGHER, ON VALUE OF SUCH ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE BEFORE THE EXCISE AUTHORITIES. THUS, THE AS SESSEE IS DIRECTED TO FILE THE REQUISITE DETAILS OF PROCEEDINGS BEFORE THE EXCISE AUTHORITIES, BEFORE THE ASSESSING OFFICER IN ORDER TO COMPUTE THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE IN THE RESPECTIVE YEARS. 11. IN THE FACTS OF THE PRESENT CASE B EFORE THE TRIBUNAL ADMITTEDLY, THERE WAS CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY TO THE EXTENT OF RS.30,62,540/ - . FOLLOWING THE RATIO LAID DOWN IN EARLIER CASES, THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE INCOME IN THE HANDS OF A SSESSEE BY APPLYING GP RATE AT 4% ON SAID VALUE OF RS.30,62,540/ - OR BY APPLYING HIGHER GP RATE, IF ANY, SO DECLARED BY THE ASSESSEE. HOWEVER, NO ADDITION WAS MADE UNDER SECTION 69C OF THE ACT ON ACCOUNT OF UNDISCLOSED PURCHASES ON ITEMS UTILIZED FOR THE MANUFACTURE OF TMT BARS. IT MAY BE KEPT IN MIND THAT THE ASSESSEE HAS ALREADY DECLARED RS.1,62,315/ - AS INCOME FROM OTHER SOURCES BY TAKING THE GROSS PROFIT AT 5.3%. FURTHER, THE ASSESSEE HAD DECLARED RS.36,785/ - AS ADDITIONAL INCOME, WHICH MAY BE VERIFI ED BY THE ASSESSING OFFICER AS PER DIRECTIONS. IN VIEW THEREOF, THERE IS NO MERIT IN THE ORDER OF ENHANCEMENT PASSED BY THE CIT(A) BY TAKING THE TOTAL PURCHASES AS INCOME FROM OTHER SOURCE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED A S INDICATED ABOVE. ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 7 12. THE ISSUE ARISING IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SHIVSAGAR STEEL ROLLING MILLS VS. ACIT (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT THE ASSESSING OFFICER TO RESTRI CT THE ADDITION BY APPLYING GP RATE OF 4% OVER AND ABOVE GP RATE DECLARED BY ASSESSEE. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME BY APPLYING GP RATE OF 6. 7% ON ALLEGED CLANDESTINE REMOVAL OF GOODS . HOWEVER, WE DIRECT THE ASSESSING OFFICER TO FOLLOW OUR EARLIER ORDER AND MAKE ADDITION BY APPLYING GP RATE OF 4% OVER AND ABOVE THE GP RATE DECLARED BY ASSESSEE. THUS, THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY ASSESSEE ARE PARTLY ALLOWED. 13. NOW, COMING TO GROUND OF APPEAL NO.4, WHERE THE BOO KS OF ACCOUNT HAVE BEEN REJECTED AND THERE IS ESTIMATION OF PROFITS IN THE HANDS OF ASSESSEE, THEN THE PROVISIONS OF SECTION 40A(3) OF THE ACT CANNOT BE INVOKED FOR THE PROPOSITION THAT THE ASSESSEE HAD MADE PURCHASES IN CASH OUTSIDE THE BOOKS. ACCORDINGL Y, THERE IS NO MERIT IN THE AFORESAID ADDITION AND THE SAME IS DELETED. THE GROUND OF APPEAL NO.4 RAISED BY ASSESSEE IS THUS, ALLOWED. 1 4 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF NOVEMB ER , 201 8 . S D/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 28 TH NOVEM BER , 201 8 . GCVSR ITA NO. 511 /P U N/20 1 5 KRISHNA STEEL INDUSTRIES 8 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - I , NASHIK ; 4. THE CIT - I , NASHIK ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE