M/s Anant Steel P Ltd, Indore V. The DCIT 1(1), Indore

ITA 820/Ind/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0458 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-02-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: S N AGRAWAL
• Keywords: Business income; Loose papers; Capital expenditure
• Section: 143(3); 40(a)(ia); 43; 13; 145(3); 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA.NO.820/IND/2018 ASSESSMENT YEAR 2013-14 M/S ANANT STEEL PVT. LTD, 170/10 FILM COLONY, RNT MARG, INDORE PAN : AACCA1283E : APPELLANT V/S DCIT-1(1), INDORE : REVENUE ITA.NO.876/IND/2018 ASSESSMENT YEAR 2013-14 DCIT-1(1), INDORE : REVENUE V/S M/S ANANT STEEL PVT. LTD, 170/10 FILM COLONY, RNT MARG, INDORE PAN : AACCA1283E : APPELLANT ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 2 ASSESSEE BY SHRI S.N. AGRAWAL, CA REVENUE BY S HRI S.S. MANTRI, CIT DATE OF HEARING 1 0 .02.2021 DATE OF PRONOUNCEMENT 1 0 .0 3 .2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED CROSS APPEALS FILED AT THE INST ANCES OF THE ASSESSEE AND REVENUE PERTAINING TO ASSESSMENT YEAR 2013-14 A RE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX-III (IN S HORT LD. CIT], INDORE DATED 31.08.2018 WHICH IS ARISING OUT OF THE ORDER U/S 1 43(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 29.003.2016 FRAM ED BY DCIT-1(1), INDORE. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD CIT[A[ ERRED IN ASSESSING NET PROFIT OF THE ASSESSE E COMPANY AT RS 1,45,33,103/- AS AGAINST LOSS OF RS 3,62,89,590/- AS DECLARED IN THE BOOKS OF ACCOUNT. 1.2[ THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT[A[ ERRED IN REJECTING THE GROUND OF APPEAL WHER EIN IT WAS CLAIMED THAT CASE OF THE ASSESSEE COMPANY WAS SELECTED UNDE R CASS AND THEREFORE ADDITION NEED TO BE RESTRICTED TO THE REASON FOR SELECTION OF THE CASE UNDER SCRUTINY ONLY. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 3 2[ THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD CIT[A[ ERRED IN APPROVING THE REJECTION THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE ACT AS CORRECT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION M ADE BEFORE HER. 3.1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD CIT[A[ ERRED IN ESTIMATING THE RATE OF NET PROFIT AT 2.30 AND THEREBY ASSESSING THE AMOUNT OF NET PROFIT OF RS 1,45,33, 103/ _ AS AGAINST NET LOSS OF RS 3,62,89,590/ - AS DECLARED IN THE BOOKS OF ACCOUNT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 3.2[ THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT[A] ERRED IN APPROVING THE REFERENCE OF GP RATE AS CONSIDERED BY THE ASSESSING OFFICER OF M/S JAIDEEP ISPAL & ALLOYS P LIMITED & M/S RATHI IRON & STEEL LTD. PITHAMPUR WHILE ESTIMATING THE INCOME OF THE ASSESSEE EVEN WHEN DATA OF THE SAME WAS NOT PRO VIDED TO THE ASSESSEE FOR ITS COMMENTS AND MORE SO WHEN TURNOVER AND BANK LOANS OF THESE COMPANIES WERE VERY HIGH AS COMPARED THE SAME WITH THE ASSESSEE COMPANY. 4. THE ASSESSEE RESERVED ITS RIGHT TO ADD, ALTER AND M ODIFY THE GROUNDS OF APPEAL AS TAKEN BY THE ASSESSEE. 3. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, THE LD CIT(A) IS JUSTIFIED IN RESTRICTING THE ADDITION OF RS. 11,34,71,546/- IN TERMS OF N.P. 2.3% OF SALES OF RS. 63,18,74,061/- THOUGH IN THE ASSESSMENT ORDER THE AO MADE ADDITION ON ACCOUNT OF ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 4 SUPPRESSED GROSS PROFIT.' . 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN THE LAW, THE LD CIT(A) IS JUSTIFIED IN UPHOLDING ADDITI ON TO EXTENT OF RS. 1,45;33;10 3/- ONLY AS AGAINST SUPPRESSED BUSINESS' PROFIT DETERMI NED BY ASSESSING OFFICER AT RS, 11,34,71,546/- (WRONGLY MENTIONED AS RS. 10,16,87,108/- IN ASSESSMENT ORDER). THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT FROM OR OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF RUNNING OF ROLLING MILLS SITUATED AT PITHAMPUR. THE ASSESSEE F ILED ITS E- RETURN OF TOTAL INCOME FOR THE ASSESSMENT YEAR 2013- 14 ON 29-09-20 13 DECLARING TOTAL LOSS OF RS 3,23,10,986/-. CASE SELECTED FOR SCRUTINY AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ASSESSMENT COMPLETED U /S 143(3) OF THE ACT ASSESSING TOTAL INCOME AT RS 9,59,44,715/- BY THE L D. A.O AFTER MAKING FOLLOWING ADDITIONS: - S.NO. NATURE OF ADDITION AMOUNT (RS.) 1 ADDITION ON ACCOUNT OF ESTIMATING NET P ROFIT @5% OF DECLARED TURNOVER 10,16,87,108 2 ADDITION UNDER SECTION 40(A)(IA) OF THE ACT 1,04,019 3 ADDITION ON ACCOUNT OF CAPITAL EXPENDITURE 53,500 TOTAL ADDITION 10,18,44,627 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT( A). ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 5 THE LEARNED CIT(A) FOLLOWING THE ORDER AS PASSED FO R THE ASSESSMENT YEAR 2012- 13 RESTRICTED THE AMOUNT OF N ET PROFIT AT 2.30% OF TOTAL SALES AT RS 1,45,33,103/- AS AGAINST LOSS OF RS 3,62,89,590/- SHOWN BY THE APPELLANT. TH E LD CIT(A) ALSO DELETED THE ADDITION MADE BY THE ASSESS ING OFFICER INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE INCOME TAX ACT. 6. AGAINST THE ORDER AS PASSED BY THE LD CIT(A) BOT H THE ASSESSEE AND DEPARTMENT BOTH ARE IN APPEAL BEFORE T HE TRIBUNAL. 7. WE WILL FIRST TAKE UP THE ASSESSEES APPEAL ITA NO. 820/IND/2018. 8. GROUND NO.1.1 RAISED BY THE ASSESSEE SEEMS TO BE GENERAL IN NATURE WHICH THUS NEEDS NO ADJUDICATION. 9. AS REGARDS GROUND NO.1.2 CHALLENGING THE SCOPE O F ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 6 SCRUTINY BY LD. A.O, SINCE NO SPECIFIC SUBMISSIONS HAVE BEEN MADE BY LD. COUNSEL FOR THE ASSESSEE BEFORE US, IT SEEMS THAT ASSESSEE IS NOT INTERESTED TO PRESS THIS GROUN D AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 10. GROUND NO.2 RAISED BY THE ASSESSEE CHALLENGES TH E FINDING OF LD. CIT(A) CONFIRMING THE ACTION OF THE LD. A.O REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE A CT AND ESTIMATING THE NET PROFITS. 11. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE TURNOVER OF THE ASSESSEE DECREASED TO 63.18 CRORES FROM THE TUR NOVER OF RS.91.10 CRORES IN IMMEDIATELY PRECEDING YEAR. NET PROFIT IS ALSO IN NEGATIVE AT (-) 5.74% AS AGAINST NET PROFIT @ 0.5% IN THE PRECEDING YEAR. ON OBSERVING THESE FACTS LD. A .O SOUGHT VARIOUS INFORMATION FROM THE ASSESSEE IN ORDER TO E XAMINE THAT WHETHER THE BOOKS OF ACCOUNTS HAVE BEEN PROPER LY MAINTAINED GIVING THE CORRECT RESULTS AT THE END OF THE YEAR AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE R EJECTED ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 7 THE BOOK RESULTS U/S 145(3) OF THE ACT ON ACCOUNT O F THE FOLLOWING REASONS:- 1. FREIGHT EXPENSES IN CONNECTION WITH THE SCRAP PURCHASED FROM M/S ANANT TRADING COMPANY BOOKED IN THE BOOK OF THE ASSESSEE COMPANY AND NOT BOOKED IN THE BOOK OF M/S ANANT TRADING COMPANY. 2. FREIGHT RECEIPT IN CASE OF SCRAP PURCHASED FROM M/S HOTHOUR ISPAT P LIMITED NOT FOUND AVAILABLE. 3. IN CONNECTION WITH THE URD SCRAP PURCHASED IN CA SH THE ASSESSEE HAS ONLY MAINTAINED A HAND WRITTEN PAP ER FILE, FEW F THESE SLIPS WERE SCANNED AND PASTE IN T HE BODY OF ORDER. 4. FREIGHT AMOUNT INCREASED FROM RS.1,92,59,266/- T O RS.2,10,99,914/- AND THE AMOUNT OF FREIGHT WAS PAID IN TWO OR THREE DAYS. 5. THE AMOUNT OF WAGES INCREASED FROM RS.40,30,663/ - TO RS.52,81,000/- AND NO REGISTER WERE MAINTAINED B Y THE ASSESSEE. 6. GAS & FUEL WAS ALSO INCREASED FROM RS. 4,03,19,8 12/- ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 8 TO RS.5,78,69,121/- BUT THE ASSESSEE HAS NOT FURNIS HED ANY JUSTIFICATION FOR THE SAME. 7. THE AMOUNT OF EXCISE DUTY WAS NOT INCLUDED IN TH E FIGURE OF CLOSING STOCK AS PER PROVISION OF SECTION 145A OF THE ACT. 8. SUNDRY CREDITOR SHOWN OUTSTANDING FOR LAST TWO T O THREE YEARS OLD. 9. THE ASSESSEE HAS CLAIMED BURNING LOSS AT 12.48% AND SHOWN YIELD AT 87.51%. HOWEVER, IN THE CASE OF IRO N INDUSTRIES THE PERCENTAGE OF BURNING LOSS WAS HARDL Y 4 TO 5%. 10. THE ASSESSEE HAS RECEIVED SHOWN CAUSE NOTICE FR OM THE EXCISE DEPARTMENT WHEREIN TOTAL TURNOVER OF RS. 94.79 CRORES WERE NOTICED DURING THE ASST YEARS 2010-11 T O 2012-13. 11. TURNOVER OF THE ASSESSEE COMPANY REDUCED FROM RS.91.10 CRORES TO RS.63.18 CRORES. 12. BASED ON THE ABOVE INFORMATION LD. A.O ESTIMATED THE PROFIT AT 5% AS AGAINST THE NEGATIVE PROFIT OF (-) 5 .74% SHOWN ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 9 BY THE ASSESSEE. WHEN THE ASSESSEE APPROACHED LD. CIT(A) THE ACTION OF THE LD. A.O REJECTING THE BOOK RESULT S U/S 145(3) OF THE ACT WAS HELD TO BE CORRECT, HOWEVER L D. CIT(A) PARTLY DELETED BY ADDITION BY ESTIMATING THE PROFIT AT 2.3%. SO THE QUESTION BEFORE US IS THAT WHETHER THE LD. A.O WAS JUSTIFIED IN REJECTING THE BOOK OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT AND ESTIMATING THE NET PROFIT. 13. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE D ETAILED WRITTEN SUBMISSION AND THE PAPER BOOK RUNNING FROM PAGE 1 TO 106 TOOK US THROUGH ALL AS WELL AS THE OBSERVATI ON MADE BY THE LD. A.O ARE CONTENDING THAT THE ALLEGATION M ADE BY THE LD. A.O HAVE NO MERIT AND THE BOOK RESULTS OUGH T TO HAVE BEEN ACCEPTED. LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT ONE OF THE BASIS WAS THE SHOW CAUSE NOTICE RECEIVED FROM CENTRAL EXCISE DEPARTMENT FOR THE ALLEGED UNACCOUNT ED TURNOVER MADE BY THE ASSESSEE FOR ASSESSMENT YEAR 2 010-11 TO 2012-13 BUT THE SAME WILL NOT STAND FOR SINCE TH E HONBLE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 10 CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, N EW DELHI VIDE ITS ORDER DATED 27.09.2018 DECIDING IN FAVOUR OF THE ASSESSEE HAS QUASHED THE SHOW CAUSED NOTICE ISSUED BY EXCISE DEPARTMENT. RELIANCE ALSO PLACED ON VARIOUS DECISIONS MENTIONED IN THE PAPER BOOK. 14. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEM ENTLY ARGUED AND SUPPORTED THE ORDER OF LD. A.O AND SUBMI TTED THAT LD. A.O HAS RIGHTLY REJECTED THE BOOK RESULTS A ND ESTIMATED THE NET PROFIT AND THE DISCREPANCIES POIN TED OUT BY THE LD. A.O ARE CORRECT. 15. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES. THROUGH GROUND NO.2 ASSESSEE HAS CHALLENGED THE FINDING OF LD. CIT(A) C ONFIRMING THE ACTION OF LD. A.O REJECTING THE BOOK RESULTS U/S 145(3) OF THE ACT ESTIMATING THE NET PROFIT. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 11 16. WE OBSERVE THAT LD. A.O ON NOTICING THAT THE TU RNOVER OF THE ASSESSEE HAS DECREASED AND THE NET PROFIT HAS A LSO DECREASED DRASTICALLY, WANTED TO EXAMINE THE CORREC TNESS OF THE BOOK RESULTS AND IN THIS PROCESS LD. A.O EXAMIN ED THE BOOKS OF ACCOUNTS AND OBSERVED CERTAIN DEFECTS WHIC H IN HIS VIEW WERE SUFFICIENT TO REJECT THE BOOK RESULTS. S O IN ORDER TO ARRIVE AT A CONCLUSION THAT WHETHER THE CASE OF THE ASSESSEE IS FIT FOR REJECTING THE BOOK RESULTS U/S 145(3) OF THE ACT, WE NEED TO EXAMINE THE CORRECTNESS OF THE OBSERVATIONS MADE BY THE LD. A.O WITH AVAILABLE RECORDS BEFORE US. THERE FORE WE WILL DEAL EACH OF THE OBSERVATION ONE BY ONE. 16.1 FREIGHT EXPENSES IN CONNECTION WITH THE SCRAP PURCHASED FROM M/S ANANT TRADING COMPANY BOOKED IN THE BOOK OF THE ASSESSEE COMPANY AND NOT BOOKED IN THE BOOK OF M/S ANANT TRADING COMPANY. 16.2 OBSERVATION OF LD. A.O ON VERIFICATION OF SCRAP PURCHASE IT WAS NOTICED THA T THE ASSESSEE COMPANY SHOWN TO PURCHASE HUGE SCRAP FROM M/ S ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 12 ANANT TRADING COMPANY. ON FURTHER VERIFICATION IT W AS NOTICED THAT THE SCRAP COMING FROM BHAVNAGAR OR OTHER STATIO N AND DIRECTLY DELIVERED TO ASSESSEE. THE ASSESSEE CLAIMED FREIGHT EXPENSES IN ITS BOOKS OF ACCOUNTS WHEREAS THE PURCHA SE CLAIMED TO SHOWN FROM M/S ANANT TRADING COMPANY. THERE IS NO JUSTIFIABLE REASON FILED BY ASSESSEE AS TO WHY THE FREIGHT EXPENSE NOT BOOKED BY M/S ANANT TRADING COMPANY AND DIRECTLY CLAIMED BY ASSESSEE. 16.3 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: ANANT TRADING COMPANY WAS NOT AN INDEPENDENT ASSESSEE BUT A TRADING DIVISION OF THE ASSESSEE COMPANY. THAT SCRAP F ROM BHAVNAGAR (GUJARAT] PURCHASED THROUGH M/S ANANT TRAD ING COMPANY. THE SCRAP USED FOR MANUFACTURING TRANSFERRED FROM TRADING DIVISION [ ANANT TRADING COMPANY ] TO THE MANUFACTURING DIVISION. THE AMOUNT OF FREIGHT PAID BY THE ASSESSEE C OMPANY AND ALSO BY M/S ANANT TRADING COMPANY 16.4 OUR FINDING WE FIND THAT LD. A.O WAS NOT AWARE OF THE FACT THAT M/S ANANT TRADING COMPANY IS A UNIT/TRADING DIVISION OF THE ASSESSEE COMPANY NAMELY M/S ANANT STEEL PVT. LTD. THE OBSERVATION OF THE LD. A.O THAT PURCHASES ARE BEING MADE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 13 BY M/S ANANT TRADING COMPANY BUT NO FREIGHT EXPENSE S WERE BOOKED BY THEM IS NOT CORRECT SINCE THE ASSESS EE COMPANY HAD MADE ITS PURCHASES THROUGH ITS TRADING DIVISION AND BOOKED FREIGHT EXPENSES IN HIS BOOKS. THEREFORE THIS DEFECT POINTED OUT BY LD. A.O IS NOT CORRECT. 17. FREIGHT RECEIPT IN CASE OF SCRAP PURCHASED FROM M/S HOTHOUR ISPAT P LIMITED NOT FOUND AVAILABLE. 17.1 OBSERVATION OF LD. A.O ON VERIFICATION OF TRANSPORTATION PROOF OF SOME PA RTIES NOT FOUND ON RECORD SUCH AS PROOF OF ONE PARTY HOTHOUR L SPAT P. LTD. PURCHASE OF SCRAP SHOWN BY THE COMPANY BUT NO TRANSPORTATION PROOF FOUND ATTACHED WITH BUILTY. 17.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSEE: MOST OF THE TRANSPORT RECEIPTS AS ATTACHED WITH THE BI LLS WERE VERIFIED BY THE ASSESSING OFFICER BUT THE TRANSPORT REC EIPT AS ATTACHED WITH THE PAYMENT VOUCHERS WAS NOT SHOWN. S INCE, HE CALLED FEW MONTH VOUCHERS BUT TRANSPORT RECEIPT IN RESP ECT OF ENTIRE PURCHASES FROM M/S HOTHOUR ISPAT P LIMITED ARE ENCLOSED WITH THIS LETTER. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 14 17.3 OUR FINDING WE OBSERVE THAT THE ASSESSEE HAD MAINTAINED NECESSA RY RECORDS AND THE CORRESPONDING CHARGES OF TRANSPORT RECEIPT ARE GENERALLY ATTACHED TO THE BILLS OF SCRA P PURCHASED FROM HOTHOUR ISPACT PVT. LIMITED. AS ACCEPTED BY LD. A.O MOST OF THE TRANSPORT RECEIPTS WERE ATTACHED EXCEPT FEW AND THOSE ALSO ARE NOW BEEN PLA CED BEFORE US SHOWING THAT ASSESSEE IS MAINTAINING PROP ER RECORDS OF SCRAP PURCHASED FROM HOTHOUR ISPACT PVT . LT AND THE CORRESPONDING BILTIES OF TRANSPORT RECEIPTS . THUS WE FIND NO MERIT IN THIS DEFECT OBSERVED BY LD. A.O . 18. IN CONNECTION WITH THE URD SCRAP PURCHASED IN CA SH THE ASSESSEE HAS ONLY MAINTAINED A HAND WRITTEN PA PER FILE, FEW OF THESE SLIPS WERE SCANNED AND PASTED IN THE BODY OF ORDER. 18.1 OBSERVATION OF LD. A.O URD PURCHASE : - DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN PURCHASE FROM URD (UNREGISTERED ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 15 DEALER) OF RS.3,23,75,791/ -. ON PERUSAL OF DETAILS IT WAS NOTICED THAT THE ASSESSEE HAS ONLY MAINTAINED A HAN D WRITTEN PAPER FILE, NO VOUCHER OR OTHER DETAILS MAIN TAINED. THE ASSESSEE MADE ENTIRE PURCHASE IN CASH. 18.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSEE: THAT ENTIRE URD PURCHASE OF SCRAP WAS PROPERLY REC ORDED IN THE BOOKS OF ACCOUNT. THAT FINANCIAL TRANSACTIO N WAS PROPERLY RECORDED IN THE FINANCIAL BOOKS AND QUANT ITY RECORDS ARE ALSO RECORDED IN THE EXCISE RECORD OF THE ASSESSEE. THE ASSESSEE COMPANY HAS ALSO CONSUMED SCRAP QUANTITY FOR THE PURPOSE OF ITS MANUFACTURIN G. HENCE, THERE WAS NO REASON TO DISBELIEVE ON THE PURCHASES AS SHOWN BY THE ASSESSEE 3. 18.3 OUR FINDING THE CONCERN OF THE LD. A.O IS ONLY WITH REGARD TO H AND WRITTEN VOUCHERS IN SUPPORT OF THE SCRAP PURCHASED FROM UNREGISTERED DEALERS. WE OBSERVE THAT SUCH TYPE OF PURCHASE OF SCRAP FROM UNREGISTERED DEALERS IS A P ART OF ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 16 REGULAR BUSINESS AFFAIR BEING CARRIED OUT BY THE AS SESSEE SINCE LAST MANY YEARS. ASSESSEE IS REGISTERED WITH CENTRAL EXCISE DEPARTMENT AND THE INWARD AND OUTWARD OF ALL MATERIALS ARE UNDER WATCH AND DULY RECORDED IN THE EXCISE RECORDS. NO SUCH DISCREPANCY HAS BEEN OBSERVED BY THE LD. A.O IN THIS REGARD THAT SUCH TY PE OF SCRAP PURCHASED THROUGH HAND WRITTEN BILLS ARE NOT ENTERED IN THE EXCISE RECORDS. SINCE THE QUANTITAT IVE DETAILS ARE NOT IN DISPUTE AND THE ALLEGED PURCHASE S ARE DULY ACCOUNTED FOR IN THE REGULAR BOOKS, IN OUR VIE W LD. A.O WAS NOT CORRECT IN RAISING THE DOUBT ABOUT THE GENUINENESS OF THE SCRAP PURCHASED. THUS WE FIND N O MERIT IN THIS DEFECT OBSERVED BY LD. A.O. 19. FREIGHT AMOUNT INCREASED FROM RS.1,92,59,266/- T O RS.2,10,99,914/- AND THE AMOUNT OF FREIGHT WAS PAID IN TWO OR THREE DAYS. 19.1 OBSERVATION OF LD. A.O ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 17 THE COMPANY HAS CLAIMED FREIGHT INWARD CHARGE OF RS.2,10,99,914/- WHEREAS THE LAST FINANCIAL YEAR SH OWN TO RS.L,92,59,266/-. ON VERIFICATION OF THIS ACCOUNT IT WAS NOTICED THAT THE ASSESSEE COMPANY HAS MADE MOST OF THE PAYMENT IN CASH. ON PERUSAL OF PAYMENT VOUCHERS IT WAS NOTICED THAT ALL THE VOUCHERS WERE FOUND UNSIGNED AND WITHOUT REVENUE STAMP FURTHER, ON VERIFICATION OF FR EIGHT PAYMENT IT WAS ALSO NOTICED THAT THE ASSESSEE HAS DE BITED FRIGHT PAYMENT ON PARTICULAR DATES BUT THE SAME WAS CLAIMED TO PAID IN TWO-THREE DAYS. FOR EXAMPLE THE ASSESSEE C OMPANY HAS DEBITED FREIGHT PAYMENT TO BALAJI ROADLINES, BIL ARI OF RS. 18,500/-, RS.30,340/ -, RS.37,095/- AND RS.29,600/- ON 06.04.2012 WHEREAS THE PAYMENT SHOWN BY THE ASSESSE E IN CASH ON 07.04.2012 OF RS.30,00,000/-, 08.04.2012 OF RS.30,000/- AND 09.04.2012 OF RS. 25,535/-. IT IS VE RY DIFFICULT TO UNDERSTAND THAT THE DRIVER OR TRUCK OPERA TOR HAS DELIVERED THE GOODS ON PARTICULAR DATE AND RECEIVED PAYMENT IN CASH IN TWO THREE DAYS AND EVEN THE OPERATORS ARE NOT BELONGED TO INDORE BUT OUTSIDE. 19.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THAT DUE TO INCREASE IN THE PRICE OF DIESEL AND FROM DISTANCE WHERE THE SCRAP WAS PURCHASED BY THE ASSESSEE. THE AMOUNT O F FREIGHT WAS INCREASED IN THIS YEAR AS COMPARED THE SAME WITH THE PREVIOUS YEAR. THE ENTIRE TRANSPORT RECEIPT ARE AVAILABLE WITH TH E ASSESSEE FOR VERIFICATION. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 18 19.3 OUR FINDING LD. A.O OBSERVED THAT FREIGHT EXPENSES HAS INCREASED TO RS,2,10,99,914/- FROM RS.1,92,59,266/- INCURRED IN PRECEDING YEAR. NORMALLY THE INCREASE IN FREIGHT C OULD BE ON ACCOUNT OF CHANGE IN LOCATION OF PURCHASE OF RAW MATERIAL OR INCREASE IN THE RATE OF PURCHASE OR INC URRED IN PURCHASE OF MATERIAL. AS FAR AS FREIGHT RECEIPT S ARE CONCERNED THE ASSESSEE HAS MAINTAINED ALL OF THEM A ND LD. A.O HAS NO DOUBT ABOUT IT. THE CONCERN WAS WIT H REGARD TO PAYMENT IN CASH AND SECONDLY DELAY IN PAYMENT. IT IS NOT THE CASE OF REVENUE THAT THE PA YMENT IN EXCESS OF RS.35,000/- HAS BEEN MADE IN CASH DURI NG THE YEAR TO A PERSON ON A PARTICULAR DAY. THERE AR E FEW INSTANCES BEFORE US WHEREIN THE FREIGHT PAYMENT OF RS.35,000/- HAS BEEN PAID IN TWO INSTALMENTS BUT THE RE IS NO OBSERVATION OF ANY EXCESS FREIGHT BEING PAID. AS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE TRUCKS COMING FROM OUTSTATION STAYS FOR COUPLE OF DAYS FOR ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 19 UNLOADING AND THEN TAKING NEW ASSIGNMENT. THIS SEE MS TO BE A REASON FOR MAKING FEW OF PAYMENTS AFTER ONE OR TWO DAYS TO THE TRUCK DRIVERS. ONE MORE IMPORTANT FA CT BROUGHT TO OUR NOTICE AND NOT OPPOSED BY THE REVENU E AUTHORITIES THAT THE QUANTITY OF SCRAP PURCHASED FR OM OUTSIDE MADHYA PRADESH HAS INCREASED FROM 14031.868 MT TO 14147.220 MT AND ALSO THE AVERAGE AMOUNT OF RATE PER MT HAVE INCREASED FROM RS.1372 PER MT TO RS.1491/- PER MT. INCREASE IN FUEL PRICES IS ALSO A REASON. ALL THESE FACTS INDICATES THAT THERE IS NO DISCREPANCY IN THE FREIGHT EXPENSES PAID BY THE ASS ESSEE DURING THE YEAR AND THE OBSERVATION OF THE LD. A.O RAISING CONCERN AND DOUBTING THE CORRECTNESS OF THE FACTS ON THIS POINT IS NOT FOUND TO BE CORRECT. 20. THE AMOUNT OF WAGES INCREASED FROM RS.40,30,663 /- TO RS.52,81,000/- AND NO REGISTER WERE MAINTAINED BY THE ASSESSEE. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 20 20.1 OBSERVATION OF LD. A.O (V) THE ASSESSEE COMPANY HAS CLAIMED WAGES & ALLOWANCE OF RS.52 ,81,000/- DURING THE YEAR WHEREAS IN LAST FINANCIAL YEAR THE SAME WAS CLAIMED OF RS.40,30,663/-. IN SPITE OF DECREASE IN TURN OVER THE WAGES & ALLOWANCES WERE INCREASED. ON VERIFICATION OF BOOKS OF ACCOUNTS IT WAS NOTICED NO WAGES AND ALLOWANCES PAYMENT REGISTERS MAINTAINED BY THE COMP ANY AND THE COMPANY HAS ONLY PRODUCE LEDGER IN WHICH MONTH WISE CONSOLIDATED PAYMENT REFLECTED. EXCEPT MONTH WISE S UMMARY NOTHING WAS PRODUCED FOR VERIFICATION. 20.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THE AMOUNT OF WAGES AS PAID BY THE ASSESSEE WAS INCREASE D DUE TO INCREASED IN THE RATE OF WAGES AS PAID AND FOR NEW EM PLOYMENT. THE ASSESSEE KEEP FULL STRENGTH OF STAFF IN ITS PLANT. H OWEVER, PRODUCTION DEPENDS ON DEMAND OF THE PRODUCT OF THE ASSESSE E. THE ASSESSEE HAS ALSO DEDUCTED PF AND ESIC ON ENTIRE AMOU NT OF WAGES AS PAID. THE SALARY/WAGES REGISTER WAS ALSO MA INTAINED BY THE ASSESSEE COMPANY AND VERIFIED BY THE PF / ESIC AUTH ORITY. 20.3 OUR FINDINGS THE LD. ASSESSING OFFICER OBSERVED THAT THE AMOUN T OF WAGES WAS INCREASED FROM RS . 40,30,663/, TO RS 52,81,000/- AND NO REGISTER WERE MAINTAINED BY THE ASSESSEE. TH E ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 21 SAID VERSION OF THE ASSESSING OFFICER IS FACTUALLY NOT CORRECT AS THE ASSESSEE HAS PROPERLY MAINTAINED WAGES REGISTER AND ON ENTIRE AMOUNT OF WAGES PROVIDENT FU ND (IN SHORT PF) AND EMPLOYEES STATE INSURANCE CONTRIBUTION (IN SHORT ESIC) IS DEDUCTED AND PAID . THE AMOUNT OF WAGES WAS INCREASED DUE TO INCREASE IN TH E WAGE RATE IN THIS YEAR AS COMPARED TO LAST YEAR. SA LARY SHEET PREPARED IN EXCEL WITH THE CORRESPONDING CHAL LANS OF PF AND ESIC ARE PLACED ON RECORD. COPY OF STATEM ENT SHOWING THE MONTH, NUMBER OF EMPLOYEES, TOTAL WAGES PAID AND AVERAGE WAGES PAID BY THE ASSESSEE IS FILE D AND ON PERUSAL OF THE SAME WE FIND THAT THE AMOUNT OF AVERAGE WAGES PAID BY THE ASSESSEE INCREASED IN THI S YEAR. UNDER THESE GIVEN FACTS WHERE THE REGULAR REC ORDS OF WAGES AND PAYMENTS OF PF AND ESIC AND SUFFICIENT MATERIAL ON RECORDS SUPPORTS THE INCREASE IN THE WA GES EXPENDITURE DURING THE YEAR. THUS OBSERVATION OF L D. A.O CHALLENGING THE CORRECTNESS OF THE WAGES ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 22 EXPENDITURE HAS NO MERITS AND THUS IN OUR VIEW THIS IS NOT A DEFECT TO REJECT THE BOOK RESULTS. 21. GAS & FUEL WAS ALSO INCREASED FROM RS. 4,03,19,8 12/- TO RS.5,78,69,121/- BUT THE ASSESSEE HAS NOT FURNI SHED ANY JUSTIFICATION FOR THE SAME. 21.1 OBSERVATION OF LD.A.O. (VI) DURING THE YEAR UNDER CONSIDERATION THE ASSES SEE COMPANY HAS CLAIMED GAS &, FUEL OF RS.5,78,69,121/- WHEREAS THE SAME WAS CLAIMED IN LAST YEAR OF RS.4,03,19,812 /-. THERE IS NO JUSTIFICATION OF INCREASE IN THIS EXPENSE WAS FOUND ACCEPTABLE WHILE THE TURNOVER WAS DECREASED. 21.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSEE: THE GAS & FUELS RECEIVED FROM GALL, A GOVERNMENT UNDERTAKING. THE AMOUNT OF GAS & FUEL WAS INCREASED IN THIS YEAR AS COMPARED THE SAME WITH THE LAST YEAR, SINCE, THE RATE OF GA WAS INCREASED IN THIS YEAR AND MINIMUM SUPPLY GUARANTEED BY THE ASSE SSEE COMPANY. 21.3 OUR FINDINGS THE ASSESSING OFFICER IN THIS CASE O BSERVED THAT THE AMOUNT OF GAS & FUEL INCREASED FROM RS 4,03,19,812/- TO RS 5,78,69,121/- . WE OBSERVE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 23 THAT THE GAS TO THE PLANT IS SUPPLIED BY GAS AUTHORITY OF INDIA LIMITED (IN SHORT GAIL) THROUGH PIPE LINE COMPLETE DETAILS OF GAS SUPPLIED AND CORRESPONDING BILLS WERE PRODUCED BEFORE THE LD. ASSESSING OFFICER . THE SAME IS ALSO PLACED BEFORE US. THE AMOUNT OF GAS & FUEL EXPENSES HAVE INCREASED DUE TO HIKE IN THE PRI CE OF GAS IN THIS YEAR. COPY OF ACCOUNT OF GAS & FUEL IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WITH CORRESPON DING BILLS ARE PLACED BEFORE US. MONTH-WISE GAS & FUEL CONSUMED BY THE ASSESSEE AND CORRESPONDING AMOUNT OF BILLS ARE FILED. ON PERUSAL OF THE SAME WE FIND T HAT THERE IS A DECREASE IN THE CONSUMPTION OF GAS USED DURING THE YEAR BUT THERE IS AN INCREASE IN THE PRI CE OF GAS SUPPLIED BY GAIL. THIS FACT HAS NOT BEEN REBUTT ED BY LD. DEPARTMENTAL REPRESENTATIVE. THERE IS INCREA SE IN THE GAS AND FUEL EXPENSES INCURRED BY THE ASSESS EE DURING THE YEAR EVEN THOUGH THE TURNOVER HAS DECREASED, BUT THE INCREASE IN PRICE IS BEYOND THE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 24 CONTROL OF THE ASSESSEE. WE THEREFORE FIND NO REAS ON TO DOUBT THE GENUINENESS OF GAS AND FUEL EXPENSES INCURRED DURING THE YEAR. THIS FACT NOTICED BY LD. A.O REGARDING THE ANOMALY IN GAS AND FUEL EXPENSES HAS NO MERITS. 22. THE AMOUNT OF EXCISE DUTY WAS NOT INCLUDED IN THE FIGURE OF CLOSING STOCK AS PER PROVISION OF SECTION 145A OF THE ACT. 22.1 OBSERVATION OF LD. A.O. THE ASSESSEE COMPANY HAS NOT INCLUDED EXCISE DUTY COMPONENT WHILE CALCULATING THE CLOSING STOCK AND C LAIMED THAT THE COMPANY HAS MAINTAINED CLOSING STOCK OF EX CLUSIVE METHOD. SECTION 145A OF INCOME TAX ACT PROVIDES THA T THE INVENTORY WORKED OUT IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE MUST BE FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY CESS, DUTY OR TAX ACTUALLY PAID OR INCURRED. THE RELEVANT PROVISIONS 145 OF THE LT ACT ARE AS UNDER: 145A (A). NOTWITHSTANDING ANYTHING TO THE CONTRANY CONTAINED IN SECTION 145 (A) THE VALUATION OF PURCHASE AND SALE OF GOODS AND INV ENTORY FOR THE PURPOSES OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD I PROFITS AND GAINS OF BUSINESS OR PROFESSION I SHALL BE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 25 REGULARLY EMPLOYED BY THE ASSESSEE; AND FURTHER ADJ USTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. EXPLANATION. _ FOR THE PURPOSES OF THIS SECTION, ANY TAX, DUTY, CESS OR FEE (BY WL1ATEVER NAME CALLED) UNDER ANY LAW FOR THE TIME B EING IN FORCE, SHALL INCLUDE ALL SUCH PAYMENT NOTWITHSTANDING ANY RIGHT ARISING AS A CONSEQUENCE TO SUCH PAYMENT; 22.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THE ASSESSEE COMPANY HAS FOLLOWED THE EXCLUSION ME THOD, THE AMOUNT OF EXCISE DUTY WAS NOT DEBITED IN THE PROFIT & LOSS ACCOUNT AND THEREFORE THE SAME WAS NOT INCLUDED IN THE FIGU RE OF CLOSING STOCK. THE SAID TREATMENT IS ALSO APPROVED BY THE H ON'BLE APEX COURT IN THE CASE OF CIT VS M/S DYNAVISION LIMITED [ APPEAL NO 197 OF 2005] AS REPORTED IN 82 CCH 0211(ISCC) , COPY ENCLOSED. 22.3 OUR FINDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S VALUED ITS STOCK FOLLOWING THE EXCLUSION METHOD. IT WAS EXPLAINED THAT IN BOTH THE METHOD THE AMOUNT OF FRE IGHT REMAINS SAME. SINCE, IN THE INCLUSIVE METHOD THE AMOUNT OF TAXES PAID AT THE TIME OF PURCHASE OF RAW ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 26 MATERIAL NEEDS TO BE INCLUDED IN THE FIGURE OF CLOS ING STOCK AND AT THE SAME TIME THE AMOUNT OF TAXES INCLUDED IN THE FIGURE OF CLOSING STOCK REQUIRES TO BE DEBITED IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD OF TAXES ON CLOSING STOCK. THUS, ON ONE HAND THE AMOUN T IS SHOWN ON DEBIT SIDE OF THE PROFIT & LOSS ACCOUNT FOR THE AMOUNT OF TAXES PAID ON CLOSING STOCK AND AT TH E SAME TIME THE VALUATION OF THE CLOSING STOCK IS ALS O INCREASED BY THE SAME AMOUNT. HENCE, EFFECTIVELY THE RE IS NO CHANGE IN THE OVERALL PROFITABILITY OF THE ASSESSEE COMPANY. FURTHER SUCH TREATMENT IS AS PER PRINCIPLE LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS M/S DYNAVISION LIMITED 1 APPEAL NO 197 OF 20051 AS REPORTED IN 82 CCH 0211(ISCC]. THEREFORE THERE IS NO MERIT IN THE OBSERVATION OF THE LD. A.O REGARDING THE APP LICABILITY OF PROVISIONS OF SECTION 145A OF THE ACT. 23. SUNDRY CREDITOR SHOWN OUTSTANDING FOR LAST TWO TO THREE YEARS OLD. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 27 23.1 OBSERVATION OF LD.A.O. (VIII) ON PERUSAL OF CREDITOR LIST SUBMITTED BY THE COMPANY IT WAS NOTICED THAT SOME CREDITORS ARE SHOWN VERY OLD AND THE ASSESSEE HAS CONTINUOUSLY CLAIMED THE SAME AS LIABI LITY. M/S JANKI ISPAT P. LTD. AMOUNTING TO RS.2,00,966/- SHOWN SAME FROM 31.03.2011 TO TILL DATE. SIMILARLY, SOME OTHER CREDITOR SHOWN SAME FROM 31.03.2012 AND 31.03.2013 AND NO PR OOF OF PAYMENT FURNISHED BY THE COMPANY TILL THE DATE. 23.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THE AMOUNT OF SUNDRY CREDITORS OUTSTANDING FOR MORE THAN THREE YEARS OLD AND NOT PAYABLE WAS WRITTEN OFF IN THE BO OKS OF ACCOUNT BY THE ASSESSEE VOLUNTARILY. THE ASSESSEE IN THIS YEAR ALSO WRITTEN OFF AN AMOUNT OF RS 1,53,02,916/- IN ITS BOOKS OF ACCOU NT 23.3 OUR FINDINGS LD. A.O ON OBSERVING THAT SOME OF THE SUNDRY CREDIT ORS ARE OUTSTANDING FOR 2 TO 3 YEARS RAISED CONCERN ABO UT THEIR GENUINENESS. IT WAS BROUGHT TO OUR NOTICE BY LD. COUNSEL FOR THE ASSESSEE THAT PAST FEW YEARS HAVE B EEN A DIFFICULT TIME IN STEEL INDUSTRIES THERE WAS A ST EEP FALL ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 28 IN THE STEEL PRICES. PAYMENT TO CREDITORS WERE DELA YED DUE TO LACK OF FUNDS. NEGOTIATIONS WERE MADE FOR DECREASE IN THE PURCHASE AMOUNTS. IN SOME CASES DUE TO POOR QUALITY THERE WAS SOME DISPUTES WITH THE CREDITORS AND AMOUNT WAS NOT PAID. THE ASSESSEE HA S VOLUNTARILY WRITTEN OFF SOME OF THE CREDITORS APPEA RING IN ITS BOOK OF ACCOUNTS WHICH ARE MORE THAN 3 YEARS OL D AND THE SAME HAVE BEEN CREDITED TO THE PROFIT & LOSS ACCOUNT. IT THUS SHOWS THAT IN NORMAL COURSE OF BUSINESS SUCH ENTRIES OCCURS AS MOST TIMES THE CREDITORS ARE NOT PAID DUE TO POOR INABILITY OR OTH ER REASONS AND SOME TIMES ASSESSEE DO NOT RECEIVED THE PAYMENT FROM SUNDRY DEBTORS. BUT THE ASSESSEE IS WRITING OFF THE SUNDRY CREDITORS NOT PAYABLE AT ITS OWN AND OFFERING AS REVENUE IN PROFIT & LOSS ACCOUNT. S O THERE REMAINS NO REASON TO QUESTION THE GENUINENESS OF THE SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCO UNTS. THUS IT IS NOT A DEFECT TO QUESTION THE BOOK RESULT S. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 29 24. THE ASSESSEE HAS CLAIMED BURNING LOSS AT 12.48 % AND SHOWN YIELD AT 87.51%. HOWEVER, IN THE CASE OF IRO N I NDUSTRIES THE PERCENTAGE OF BURNING LOSS WAS HARDL Y 4 TO 5%. 24.1 OBSERVATION OF LD. A.O ON PERUSAL OF PRODUCTION OUTCOME SHOWN BY THE COMPA NY IT WAS NOTICED THAT THE COMPANY HAS SHOWN BURNING LOSS @12.48% AND YIELD @87.51% . IN THE MANUFACTURING OF IRON INDUSTRIES THE BURNING LOSS COMES HARDLY 4 TO 5%. TH EREFORE IT IS CLEAR THAT ASSESSEE COMPANY HAS NOT SHOWN ACTUAL PRODUCTION RESULT. 24.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THAT IN IRON INDUSTRIES SCRAP/BURNING LOSSES MAY BE VARIES BETWEEN 4 TO 5% BUT IN CASE OF ROLLING MILLS. THE PERCENTAGE OF SCRAP/ BURNING LOSSES INCURRED AT TWO STAGES. ONE, AT THE STAGE OF CONSUMPTION OF SCRAP TO MS INGOTS AND SECOND FROM M S INGOT TO STEEL BAR. THE PERCENTAGE OF BURNING LOSS DURING TH E PROCESS FROM MS SCRAP TO MS INGOT VARIES BETWEEN TO 5 TO 7% AND ALSO FROM INGOT TO STEEL BAR THE PERCENTAGE OF BURNING LOSS WAS AROUND 6%. HENCE, IN ONE STAGE THE PERCENTAGE OF BURNING LOSS WAS AROUND 6% ONLY. THE SCRAP AND BURNING LOSSES AS SHOWN BY THE APPELLANT WAS DULY ACCEPTED BY THE EXCISE DEPARTMENT. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 30 24.3 OUR FINDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S CLAIMED BURNING LOSS AT 12.48 AND SHOWN YIELD AT 87.51% AND FURTHER CLAIMED THAT IN IRON INDUSTRIES THE PERCENTAGE OF BURNING LOSS IS HARDLY 4 TO 5%. WE HOWEVER FIND MERIT IN THE SUBMISSION MADE BY LD. COUNSEL FOR THE ASSES SEE THAT IN IRON INDUSTRIES SCRAP/BURNING LOSS VARIES B ETWEEN 4 TO 6% BUT IN CASE OF ROLLING MILLS, THE PERCENTAG E OF SCRAP IS AT TWO STAGES, ONE AT THE STAGE OF CONSUMP TION OF SCRAP TO PRODUCE MS INGOTS AND SECOND STAGE FROM CONSUMPTION OF MS INGOT TO STEEL BAR. THE PERCENTAG E OF BURNING LOSS DURING THE PROCESS FROM SCRAP TO MS IN GOT VARIES BETWEEN TO 5 TO 7% AND ALSO FROM INGOT TO S TEEL BAR THE PERCENTAGE OF BURNING LOSS IS AROUND 6%. HE NCE, IN ONE STAGE THE PERCENTAGE OF BURNING LOSS IS AROU ND 6 ONLY. THE PERCENTAGE OF BURNING LOSS ALSO DEPENDS U PON THE QUALITY OF RAW MATERIAL PURCHASED BY THE ASSESS EE. THE PERCENTAGE OF BURNING LOSS IN CASE OF URD PURCH ASE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 31 IS COMPARATIVELY HIGHER THAN SCRAP PURCHASED FROM REGISTERED DEALER OR FROM INDUSTRIES. LD. DEPARTMEN TAL REPRESENTATIVE ALSO COULD NOT CONTROVERT THE FACT T HAT THE PERCENTAGE OF BURNING LOSS SHOWN BY THE ASSESSEE HA S BEEN DULY ACCEPTED BY THE EXCISE DEPARTMENT IN THIS YEAR AS WELL AS IN THE PREVIOUS YEARS. IT SEEMS THAT LD . A.O WAS NOT CLEAR ABOUT THE TYPE OF BUSINESS THE ASSESS EE IS ENGAGED INTO AS HE HAS ADOPTED THE BASIS OF IRON INDUSTRIES WHEREAS THE ASSESSEE IS INTO THE BUSINES S OF ROLLING MILLS. THE PERCENTAGE OF BURNING LOSS SHOW N BY THE ASSESSEE IS COMMENSURATE TO THE BURNING LOSS SH OWN IN OTHER ROLLING INDUSTRIES. WE THUS FIND NO DEFEC T IN THE BOOKS OF ACCOUNT WITH REGARD TO THE CLAIM OF BURNIN G LOSS AND THE YIELD SHOWN DURING THE YEAR. 25. THE ASSESSEE HAS RECEIVED SHOWN CAUSE NOTICE FR OM THE EXCISE DEPARTMENT WHEREIN TOTAL TURNOVER OF RS.94. 79 CRORES WERE NOTICED DURING THE A.YS 2010-11 TO 2012-13. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 32 25.1 OBSERVATION OF LD. A.O HERE IT IS PERTINENT TO MENTION THAT THE CASE OF AS SESSEE COMPANY THE CENTRAL EXCISE DEPARTMENT HAS CONDUCTED S EARCH ACTION DURING FY 2011-12 ON 05.01.2012. THE CENTRAL EXCISE DEPARTMENT HAS FOUND THAT THE ASSESSEE COMPANY HAS MAD E UNACCOUNTED SALE ALMOST EQUAL TO SALES DECLARED IN BOO KS OF ACCOUNTS. THE DGCEI HAS CONDUCTED SEARCH AT BUSINES S PREMISE AND OFFICE MAINTAINED BY THE COMPANY AND SE IZED VARIOUS INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNT S AND PREPARED INVENTORY OF STOCK. LATER ON, AFTER SCRUTINIZ ING THE DOCUMENTS AND BOOKS OF ACCOUNTS AND FOUND THAT THE ASSESSEE HAS MADE UNACCOUNTED SALES MORE THAN RS.97,00,00,000/ - DURING THE YEAR. FURTHER, THE CENTRAL EXCISE DEPARTM ENT HAS WORKED THE UNACCOUNTED PRODUCTION FOR AY 2010-11, A Y 2011- 12 AND 2012-13. ON THE BASIS OF INFORMATION RECEIVED FROM COMMISSIONER OF CENTRAL EXCISE IT WAS FOUND THAT THE COMMISSIONER OF CENTRAL EXCISE HAS PREPARED ANNEXURE A TO WORKED OUT ASSESSABLE VALUE (TURNOVER) FOR DIFFERENT YEARS. THE SAME IS REPRODUCED BELOW :- AY ASSESSABLE VALUE (TURNOVER) 2010 - 11 RS.2,11,34,335/ - 2011 - 12 RS.15,26,18,611/ - 2012 - 13 RS.77,41,64,850/ - TOTAL RS.94,79,17,806/ - THE ABOVE UNACCOUNTED TURNOVER IS FOUND BY THE EXCISE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 33 DEPARTMENT DURING SEARCH. THIS IS CLEAR EVIDENCE THAT ASSESSEE COMPANY HAS NOT SHOWN ACTUAL TURNOVER AND SUPPRESSE D ITS INCOME ON REGULAR BASIS. 25.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSEE: SHOW CAUSE NOTICE FROM EXCISE DEPARTMENT WAS ISSUED ON THE BASIS OF LOOSE PAPERS AND ALSO ON THE BASIS OF PRESUMPTIO N WHICH WAS NOT ACCEPTED BY THE ASSESSEE BUT CHALLENGED BEFORE THE APPROPRIA TE FORUM IN EXCISE DEPARTMENT. HON'BLE CESTAT QUASHED THE SHOW CAUSE NOTICE AS ISSUED BY THE COMMISSIONER OF CENTR AL EXCISE & CUSTOMS. HENCE, ON THE BASIS OF THAT SHOW CAUSE NO TICE NEITHER SALES CAN BE ESTIMATED NOR ANY ADVERSE VIEW CAN BE TAKEN IN THE ASST YEAR 2013-14. 25.3 OUR FINDINGS WE OBSERVE THAT THE LD. A.O RAISED CONCERN ABOUT TH E CORRECTNESS OF THE SALES TURNOVER SHOWN BY THE ASSE SSEE ON THE BASIS OF PROCEEDINGS CARRIED OUT BY EXCISE DEPARTME NT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11 TO ASS ESSMENT YEAR 2012-13 ALLEGING THAT THE ASSESSEE HAD UNACCOU NTED SALES TURNOVER OF 94.79 CRORES. THE SHOW CAUSE NOTICE WAS ISSUED ON THE BASIS OF PRESUMPTION AND THE SAME WAS ALSO CHALLENGED BY THE ASSESSEE COMPANY BEFORE CEST AT. ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 34 CESTAT VIDE ITS ORDER DATED 27.9.2018 HAS QUASHED T HE SHOW CAUSE NOTICE AS ISSUED BY THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS. THE RELEVANT FINDING OF CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (I N SHORT CESTAT) IN ITS ORDER DATED 27.9.2018 IS AT P AGE 25 PLACED AT PAGE 85 AND 86 OF THE PAPER BOOK AND REA DS AS FOLLOWS:- 25. IN VIEW OF AFOREMENTIONED FACTS AND SETTLED POSITION OF LAW, WE HOLD THAT THE ALLEGATION OF CLANDESTINE MANUFACTURE AND REMOVAL OF TMT BARS, MADE IN THE SCN, ON ASPL IS MERELY ON ASSUMPTION AND PRESUMPTION WITHOUT ANY MATERIAL EVIDENCE CORROBORATING THE SAID ALLEGATION. THE DEMAND OF DUTY ON ASPL, THEREFORE, IS NOT SUSTAINABLE. AS DEMAN D OF DUTY ITSELF IS NOT SUSTAINABLE, NO INTEREST OR PE NALTY COULD BE IMPOSED ON ASPL AS WELL AS ON OTHER APPELLANTS ON WHOM PENALTIES WERE IMPOSED UNDER RULE 26 OF THE CENTRAL EXCISE RULES, 2002 AND FOR THIS REASON WE ARE NOT DEALING WITH THEIR APPEALS SEPARATELY. FROM THE ABOVE FINDING OF CESTAT IT IS CLEAR THAT TH E ASSESSEE HAS BEEN HELD TO HAVE MADE NO UNACCOUNTED TURNOVER IN THE ASSESSMENT YEAR 2010-11 TO ASSESSME NT ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 35 YEAR 2012-13 AND ASSESSEE HAS BEEN GIVEN A CLEAN CH IT. THEREFORE THE BASIS OF LD. A.O OF QUESTIONING THE CORRECTNESS OF THE TURNOVER OF THE INSTANT ASSESSME NT YEAR IS NOT CORRECT AND THUS LIABLE TO BE DISMISSED AS THE ASSESSEE HAS SUCCEEDED BEFORE THE CESTAT AND THERE I S NO SPECIFIC OBSERVATION OF THE LD. A.O TO HAVE NOTI CED ANY INCIDENCE OF UNACCOUNTED TURNOVER DURING THE YEAR U NDER APPEAL. 26. TURNOVER OF THE ASSESSEE COMPANY REDUCED FROM RS.91.10 CRORES TO RS.63.18 CRORES. 26.1 OBSERVATION OF LD. A.O IT IS CLEAR FROM ABOVE THAT THE ASSESSEE COMPANY HAS NOT DISCLOSED ACTUAL TURNOVER BUT HUGE EXPENSES. THE COM PARATIVE CHART OF EXPENSES IS REPRODUCED BELOW :- PARTICULARS AY 2013 - 14 AY 2012 - 13 TURNO VER 631874061 911020141 FREIGHT INWARD 21099914 19259266 WAGES & ALLOWANCES 5281000 4030633 POWER CHARGE 198691991 175422274 ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 36 THE TURNOVER OF THE COMPANY HAS DECREASED BUT VARIO US EXPENSES RELATED WITH MANUFACTURING OF GOODS HAS BEE N INCREASED. IN THE ABOVE CONTEXT, THE BOOK RESULT SHO WN BY THE ASSESSEE FIRM IS FOUND NOT ACCEPTABLE. THE GROSS PR OFIT AND NET PROFIT SHOWN BY THE ASSESSEE FIRM ARE APPEARED VERY TOW AND DELIBERATELY. HENCE, BOOKS OF ACCOUNT OF THE ASSESS EE FIRM DESERVES TO BE REJECTED SX] S 145(3) OF THE INCOME TAX ACT, 1961 AND GROSS. PROFIT OF THE FIRM IS BEING CALCULATED AS PER BUSINESS TREND OF THIS FIELD. VIDE ORDER SHEET ENTRY DATED 2 2.03.2016 THE AR OF ASSESSEE WAS SHOW CAUSED AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED U/S 145(3). IN THIS CONNECTION THE AR OF ASSESSEE REPLIED ON 28.03.2016 AND SUBMIT TED EXPLANATION WHICH WAS NOT FOUND ACCEPTABLE. 26.2 SUBMISSION MADE BY LD. COUNSEL FOR THE ASSESSE E: THE AMOUNT OF SALES WAS REDUCED FROM RS 91.10 CRORES TO RS 63.18 CRORES DUE TO LOW DEMAND OF DOMESTIC STEEL BAR. SIN CE, HEAVY REDUCTION IN THE PRICE OF STEEL DUE TO CHINESE STEE L AVAILABLE AT LOW RATE. 26.3 OUR FINDINGS THE ASSESSING OFFICER OBSERVED THAT THE TOTAL TURNO VER OF THE ASSESSEE COMPANY HAS REDUCED FROM RS 91.10 CRORES TO RS 63.18 CRORES. THIS IS THE FACTUAL FINDING AND FOR THIS ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 37 REASON ONLY, THE ASSESSEE COMPANY INCURRED HUGE LOS SES. AS CLAIMED BY LD. COUNSEL FOR THE ASSESSEE DUE TO V ERY LOW DEMAND OF THE PRODUCT OF THE ASSESSEE, THE FIXE D EXPENSES AS INCURRED BY THE ASSESSEE REMAINED SAME OR RATHER INCREASED IN THIS YEAR AND THIS WAS THE MAIN REASON FOR INCURRING LOSSES.. THE ASSESSEE HAS NOT INCURRED LOSSES AS FAR AS CONSUMPTION OF MATERIAL WITH CORRESPONDING SALES AR E CONCERNED, THE SAME IS VERIFIABLE FROM THE FOLLOWIN G CHART:- S.NO. PARTICULARS 31.03.2013 31.03.2012 1.1 GROSS SALES 71,01,76,685 91,10,20,141 1.2 LESS EXCISE DUTY 7,84,34,016 8,53,32,420 NET SALES(NET OF EXCISE DUTY) 63,17,42,669 82,56,87,721 2.1 OPENING STOCK OF FINISHED GOODS 9,50,09,003 7,04,04 ,995 2.2 RAW MATERIAL CONSUMED 42,69,63,302 58,35,25,790 2.3 TRADED GOODS PURCHASED 12,58,499 10,24,716 TOTAL 52,32,30,804 65,49,55,501 2.4 LESS CLOSING STOCK OF FINISHED GOODS 11,15,55,115 9,50,09,003 ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 38 COST OF GOODS SOLD 41,16,75,689 55,99,46,498 MARGIN ON SALE OF GOODS PRIOR TO DIRECT EXPENSES 22,00,66,980 26,57,41,223 % OF MARGIN 34.83% 32.18% IN VIEW OF THE ABOVE, THE ASSESSEE EARNED HIGHER RA TE OF PROFIT ON SALES MADE BY IT. BUT, DUE TO HEAVY DIRECT EXPENSES THE AMOUNT OF LOSSES WAS INCURRED IN THIS YEAR AS COMPARED THE SAME WITH THE LAST YEAR. COMPARATIVE CHART OF DIRECT EXPENSES INCURRED BY THE ASSESSEE VIS-A-VIS THE SALES IS SHOWN BELOW:- S.NO. PARTICULARS 31.03.2013 31.03.2012 1.1 GROSS SALES 71,01,76,685 91,10,20,141 1.2 LESS EXCISE DUTY 7,84,34,016 8,53,32,420 NET SALES(NET OF EXCISE DUTY) 63,17,42,669 82,56,87,721 2.1 OPENING STOCK OF FINISHED GOODS 9,50,09,003 7,04,04,995 2.2 RAW MATERIAL CONSUMED 42,69,63,302 58,35,25,790 2.3 TRADED GOODS PURCHASED 12,58,499 10,24,716 TOTA L 52,32,30,804 65,49,55,501 2.4 LESS CLOSING STOCK OF FINISHED GOODS 11,15,55,115 9,50,09,003 COST OF GOODS SOLD 41,16,75,689 55,99,46,498 ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 39 MARGIN ON SALE OF GOODS PRIOR TO DIRECT EXPENSES 22,00,66,980 26,57,41,223 % OF MARGIN 34.83% 32.18% 3.1 DIR ECT EXPENSES 29,02,91,777 26,31,42,343 3.2 % OF DIRECT EXPENSES ON NET SALES 46% 32% THAT FROM THE ABOVE CHART IT IS CLEAR THAT LOSSES W ERE INCURRED BY THE ASSESSEE COMPANY DUE TO INCREASE IN DIRECT EXPENSES. THE PERCENTAGE OF DIRECT EXPENSES TO NET SALES IN LAST YEAR WAS AROUND 32% ONLY WHICH HA S INCREASED TO 46% IN THIS YEAR. FOR THIS REASON ONLY THE ASSESSEE COMPANY HAS INCURRED HUGE LOSSES. THE DETAIL OF DIRECT EXPENSES AS INCURRED BY THE ASSESSEE IN THIS YEAR AND THAT OF LAST YEAR IS AS U NDER:- S.NO . PARTICULARS 31.03.2013 31.03.2012 1.1 WAGES & ALLOWANCE 52,81,000 40,30,633 1.2 PF CONTRIBUTION ON WAGES 5,05,973 4,49,752 1.3 ESIC CONTRIBUTION ON WAGES 2,17,013 1,71,395 2 POWER CHARGES 19,86,91,991 17,54,22,274 3 GAS & FUELS 5,78,69,121 4,63,19,8 12 4 CONSUMPTION OF REFRACTORIES 38,10,233 41,61,514 ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 40 5 CONSUMPTION OF STORES AND SPARES 15,79,796 19,65,792 6 CONSUMPTION OF MOULD AND DIES CONSUMES 2,03,77,015 3,02,77,099 7 MACHINERY REPAIRS & MAINTENANCE EXP 5,16,792 1,01,053 8 WATER CHARGES 2,05,2 74 2,43,020 9 MUNICIPAL TAXES 7,42,004 NIL 10 ELECTRICITY EXPENSES 4,95,565 29,02,91,777 26,31,42,343 THAT ON PERUSAL OF THE ABOVE, WE FIND THAT MAJOR EXPENSES HAVE INCREASED IN THIS YEAR AS COMPARED TO LAST YEAR. THE SALES IN THE CASE OF THE ASSESSEE WAS DULY ACCEPTED BY THE SALES TAX DEPARTMENT, COPY OF SALES TAX ORDER PASSED ALONG WITH RECONCILIATION STATEMENT IS PLACED BEFORE US. WE OBSERVE THAT THE ASSESSEE HAS WRITTEN OFF THE AMOUNT NOT PAYABLE ON ACCOUNT OF FR EIGHT AND SUNDRY CREDITORS AND SHOWN THE SAME AS ITS OTHE R INCOME. SINCE, THE SAID AMOUNT IS DIRECTLY RELATED TO THE PURCHASE AND FREIGHT BOTH THE AMOUNT RELATES TO THE DIRECT EXPENSES. HENCE, THE AMOUNT THOUGH CREDITED IN ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 41 THE PROFIT & LOSS ACCOUNT DIRECTLY RELATES TO THE TRADING ACTIVITIES OF THE ASSESSEE COMPANY AND RIGHTLY CONS IDERED FOR CALCULATING THE GROSS PROFIT. 27. THE COMPARATIVE CHARTS OF VARIOUS ITEMS OF MANUFACTURING, TRADING AND PROFIT AND LOSS ACCOUNT OF PRECEDING YEAR AND CURRENT YEAR WHICH HAVE BEEN ARR IVED ON THE BASIS OF REGULAR BOOKS OF ACCOUNTS AND QUANTITA TIVE DETAILS MAINTAINED BY THE ASSESSEE ARE IN ITSELF LOUD AND C LEAR TO STATE THAT THE PERCENTAGE OF MARGIN HAS INCREASED DURING THE YEAR BUT THE PERCENTAGE OF DIRECT EXPENSES HAVE INCREASE D MUCH MORE THAN THAT WHICH HAS RESULTED INTO LOSSES. ALL THE DISCREPANCIES OBSERVED BY THE LD. A.O HAVE BEEN DUL Y REBUTTED BY THE FACTS OF THE CASE WHICH SHOWS THAT THE ASSESSEE HAS PROPERLY MAINTAINED THE BOOKS OF ACCOU NTS AND THE LD. A.O WAS NOT JUSTIFIED IN REJECTING THE SAME AND ESTIMATING THE PROFITS. ALSO THE BASIS TAKEN BY TH E LD. A.O ABOUT THE ALLEGED UNACCOUNTED TURNOVER OBSERVED BY THE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 42 EXCISE DEPARTMENT IS NO MORE A GOOD BASIS SINCE THE ASSESSEE HAS SUCCEEDED BEFORE CESTAT AND THE ALLEGED SHOW CAU SE NOTICE FOR THE UNACCOUNTED TURNOVER HAS BEEN QUASH ED. WE HAVE GONE THROUGH EACH AND EVERY FACT RELATING TO T HE OBSERVATION MADE BY LD. A.O AND COME TO THE CONCLUS ION THAT NO SUCH DISCREPANCY EXISTED AND WE ARE THUS SATISFI ED WITH THE LOSSES INCURRED DURING THE YEAR. WE THUS SET AS IDE THE FINDING OF LD. CIT(A) AND ARE OF THE CONSIDERED VIE W THAT LD. A.O GROSSLY ERRED IN REJECTING THE BOOKS OF ACCOUNT S OF THE ASSESSEE AND PROCEEDING AHEAD TO ESTIMATE THE NET P ROFIT RATE. 28. ACCORDINGLY GROUND NO.2 OF THE ASSESSEES APPEA L IS ALLOWED. 29. AS REGARDS GROUND NO.3 IS CONCERNED THROUGH WHI CH THE ASSESSEE HAS CHALLENGED THE FINDING OF LD. CIT(A) E STIMATING THE NET PROFIT RATE AT 2.3%, WE FIND THAT THIS GROU ND BECOMES INFRUCTUOUS AS WE HAVE ALREADY ALLOWED ASSESSEES G ROUND NO.2 AND HELD THAT LD. A.O WAS NOT JUSTIFIED IN REJ ECTING THE ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 43 BOOK OF ACCOUNTS AND ESTIMATING THE GROSS PROFIT RA TE. 30. GROUND NO.4 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 31. NOW WE TAKE UP REVENUES APPEAL WHEREIN THE SOL E GRIEVANCE OF THE REVENUE IS AGAINST THE FINDING OF LD.CIT(A) SUSTAINING THE ADDITION OF ESTIMATION OF NET PROFIT AT 2.3% OF THE TURNOVER AS AGAINST THE NET PROFIT OF 5% APPLIE D BY LD. A.O AFTER REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. WE ARE OF THE VIEW THAT ALL THE GROUNDS RAISED BY T HE REVENUE DESERVES TO BE DISMISSED AS WE HAVE ALLOWED THE ASS ESSEES GROUND THAT LD. CIT(A) ERRED IN APPROVING THE REJEC TION OF BOOKS OF ACCOUNTS OF THE ASSESSEE MADE BY THE LD. A .O U/S 145(3) OF THE ACT. SINCE WE HAVE EXAMINED THE FACT S OF THE CASE AND ALSO FOUND THAT THE DISCREPANCIES NOTICED BY THE LD. A.O ARE NOT CORRECT AS THE ASSESSEE HAS PROPERLY MA INTAINED THE QUANTITATIVE RECORDS AND BOOKS OF ACCOUNTS WITH SUPPORTING DOCUMENTS WITH REGARD TO THE DISCREPANCI ES ANANT STEEL PVT. LTD ITA NO.820 & 876/IND/2018 44 NOTICED BY THE LD. A.O. SINCE THE BOOKS OF ACCOUNT S HAVE BEEN HELD TO BE CORRECT AND NOT LIABLE TO BE REJECT ED, THE BOOK RESULTS NEEDS TO BE ACCEPTED BY THE REVENUE AUTHORI TIES, THEREFORE THERE REMAINS NO POSSIBILITY TO ESTIMATE THE NET PROFIT OF THE ASSESSEE. SINCE THE GROUND OF REVENU E RELATES TO ESTIMATION OF NET PROFIT ONLY THE SAME HAVE BEEN DI SMISSED. 32. IN THE RESULT APPEAL OF THE ASSESSEE RAISED VID E ITA NO.820/IND/2018 IS PARTLY ALLOWED AND THAT OF REVEN UES APPEAL RAISED VIDE ITA NO. 876/IND/2018 STANDS DISM ISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10 .03.2 021 SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 10 TH MARCH, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE