COMMISSIONER OF INCOME TAX Vs. CITI TILES LTD

JUDGEMENT

(1.) Revenue has filed these appeals raising identical questions concerning the same assessee for two separate assessment years. We had issued notice for final hearing for considering following substantial question of law:

(2.) We have, accordingly, heard the learned counsel for the parties. Facts as emerging from Tax Appeal No. 140 of 2014 may be noticed. The respondent-assessee is a company engaged in the business of ceramic tiles. For the assessment year 2005-06, the assessee-company had filed return of income on October 29, 2005, declaring total income as 'Nil', after claiming deduction under section 80IB of the Act and depreciations available. The company's book profit under section 115JB of the Act was worked out at Rs. 3,78,87,230/-.

(3.) In the scrutiny assessment undertaken by the Assessing Officer of such return, he found that there was search carried out at the premises of the dealers of the company by the excise authorities. Statements of the representatives of the dealers were recorded. On the basis of revelations made by such dealers indicating clandestine removal of goods of the company without paying excise duty, the search was also carried out at the business premises of the company. Statements of the representatives of the company were also recorded. On the basis of such materials, the Assessing Officer came to the conclusion that during the period of assessment years 2003-04, 2004-05 and 2005-06 upto July 13, 2005 (i.e. the date of the search), the assessee had received a sum of Rs. 64,95,365/- in cash. For the assessment year under consideration, the Assessing Officer out of the said cash receipts apportioned a sum of Rs. 46,78,545/-. He, accordingly, added such amount to the income of the assessee, both for normal computation as well as for computing book profit under section 115JB of the Act. In his order of assessment dated December 27, 2007, he also ordered initiation of penalty proceedings.