Sheo Shakti Coke Industries Vs ACIT (ITAT Kolkata)
From the perusal of above finding of the Ld. CIT(A), we find that he has lucidly dealt with all the facts pertaining to discrepancies noticed in the financials of the assessee-firm and has also referred to various charts depicting the profitability of the assessee-firm in preceding years vis-à-vis other related concerns of the same group and operating in the same field and even the same area. We find merit in the finding of Ld. CIT(A) rejecting the book results and invoking the provision of section 145(3) of the Act and this action of the Ld. CIT(A) has also not been challenged before us by the assessee by raising a specific ground.
Further the ld. counsel for the assessee miserably failed to controvert the finding of Ld. CIT(A) by placing any material in its support. The only argument made by ld. counsel for the assessee is that the assessee-firm is consistently being allowed to the deduction u/s 80IC of the Act but had not said anything about the correctness of profit earned during the year.
The case relied by the ld. counsel for the assessee in the case of M/s. Goodcare Pharma Pvt. Ltd. (supra) is also not be of any benefit to assessee since the fact are not similar and more specifically the issue of rejection of book results was not before the coordinate bench of Kolkata in the case of M/s. Goodcare Pharma Pvt. Ltd. (supra) and, therefore, it shall not be applicable on the instant issue raised before us.
We, therefore, under the given facts and circumstances of the case and detailed enquiry conducted by the Ld. CIT(A), which remained uncontroverted by the ld. counsel for the assessee find no reason to interfere in the finding of Ld. CIT(A) applying the gross profit rate of 40% on the turnover disclosed by the assessee as against the gross profit rate of 57.01% disclosed by the assessee and accordingly has rightly charged the difference of the profit that is 17.01% (57.01% less 40%) on the gross turnover for the year as “Income from other sources”. Accordingly, ground no. 2, 3 & 4 raised by the assessee are dismissed. Appeal of the assessee for A.Y. 2013-14 is dismissed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The instant three appeals filed by the assessee against the separate orders commonly dated 24.09.2019 passed by the Ld. CIT(A)- 11, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for A.Y. 201314, 2014-15 & 2015-16.
2. As the issue raised in all the three appeals are common and relates to the same assessee, we are adjudicating the common issue on the basis of the facts pertaining for A.Y. 2013-14. Our decision in the appeal for A.Y. 2013-14 shall apply mutatis-mutandis on the remaining two appeals also.
3. The grounds of appeal raised by the assessee for A.Y. 2013-14 reads as under:
“i. That the order of Ld. CIT(A) is against the law and facts of the case.
ii. That in the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in conditional allowing section 80IC taking 40% G.P. Rate.
iii. That in the facts and in the circumstances of the case and in law, the Ld. CIT(A) has wrongly restricted to G.P. percentage of 40% for allow ability u/s 80IC of the Income Tax Act though the appellant’s G.T. 57.01%. Appellant in regularly assessed u/s 143(3) of the Income Tax Act since A.Y. 2007-08 and full Gross Profit had been allowed for deduction u/s 80IC of the Act.
iv. That in the facts and circumstances of the case in in law, the Ld. CIT(A) has wrongly taken about G.P. and restricted to G.P. – 40% and wrongly stated that rest amount be taken for tax.
v. That the appellant craves leave for the permission to add, delete or amend the grounds of appeal before or at the time of bearing of appeal.”
4. Brief facts of the case as called out from the records are that the assessee is a partnership firm engaged in the business of running coke industries. The assessee is claiming deduction under section 80IC of the Act consistently. For the year under consideration, the assessee has claimed deduction u/s 80IC of the Act at Rs. 14,48,09,592/-. E-return of income filed on 30.09.2013. The case selected for scrutiny through CASS followed by serving of notices u/s 143(3) and 142(1) of the Act.
5. During the course of assessment proceedings, the Ld. AO examined various details received from the assessee. The Ld. AO noted various anomalies in the financial transactions specially the genuineness of sales and transportation cost and also the purchases from related parties could not be verified. Ld. AO came to a conclusion that the profits shown by the assessee firm are not genuine and are fabricated and transactions are colourable. Ld. AO, accordingly, denied the deduction u/s 80IC of the Act and along with the other minor additions assessed the income at Rs. 17,22,89,990/-in the following manner:
“Profit disclosed as per P & L a/c treated as income from undisclosed sourcesRs. 14,48,09,592/-
(A) Add: As discussed above U/s. 43B
