ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI vs. BEACH MINERAALS COMPANY, TIRUNELVELI

आदेश / O R D E R PER ABY T. VARKEY, JM: These cross appeals preferred by the assessee and the Revenue are

arising out of the common appellate order passed by the Learned

Commissioner of Income Tax (Appeals)-19, Chennai [in short ‘CIT(A)’]

dated 18.10.2023 in relation to the assessment orders dated 28.08.2021

& 26.08.2021 passed u/s 143(3)/153A of the Income-tax Act, 1961 [in

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 2 ::

short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015 short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015 short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015-16 & 2016-

17.

engaged in the business of engaged in the business of mining, processing and refining beach mining, processing and refining beach

minerals which are primarily exported to foreign countries. A search minerals which are primarily exported to foreign countries. A search minerals which are primarily exported to foreign countries. A search

action u/s 132 of the Act upon the assessee on 25.10.2018. In the course action u/s 132 of the Act upon the assessee on 25.10.2018. In the course action u/s 132 of the Act upon the assessee on 25.10.2018. In the course

of search, several documents & electronic material were found and seized of search, several documents & electronic material were found and seized of search, several documents & electronic material were found and seized

pursuant to which the AO rsuant to which the AO inter alia initiated proceedings u/s 153A of the initiated proceedings u/s 153A of the

Act for the relevant AYs 2015 Act for the relevant AYs 2015-16 & 2016-17. From the seized electronic 17. From the seized electronic

material viz., tally data, it was noted that the assessee was maintaining tally data, it was noted that the assessee was maintaining tally data, it was noted that the assessee was maintaining

two sets of accounts, one titled “ two sets of accounts, one titled “ori” and other titled “IT”. Upon enquiry, ”. Upon enquiry,

the accounts manager of the assessee affirmed in his statement recorded the accounts manager of the assessee affirmed in his statement recorded the accounts manager of the assessee affirmed in his statement recorded

u/s 132(4) of the Act that the assessee was maintaining parallel sets of u/s 132(4) of the Act that the assessee was maintaining parallel sets of u/s 132(4) of the Act that the assessee was maintaining parallel sets of

accounts for banking & financial purposes and other for income accounts for banking & financial purposes and other for income accounts for banking & financial purposes and other for income-tax

purposes. The AO in the course of assessment inferred that the accounts s. The AO in the course of assessment inferred that the accounts s. The AO in the course of assessment inferred that the accounts

maintained under the title “ maintained under the title “IT” was in form of suppression of income by ” was in form of suppression of income by

inflating expenses in the tally data. After calling for explanation from the inflating expenses in the tally data. After calling for explanation from the inflating expenses in the tally data. After calling for explanation from the

assessee, the AO observed that the assesse assessee, the AO observed that the assessee had inflated the expenses e had inflated the expenses

and several expenses were not supported by documentary evidences and and several expenses were not supported by documentary evidences and and several expenses were not supported by documentary evidences and

therefore made disallowances out of several heads of expenses therefore made disallowances out of several heads of expenses therefore made disallowances out of several heads of expenses

aggregating to Rs.31,73,00,700/ aggregating to Rs.31,73,00,700/- & Rs.22,00,26,846/- in AYs 2015 in AYs 2015-16 &

2016-17 respectively.

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 3 ::

appeal before the Ld. CIT(A) who upon examining the contentions of the appeal before the Ld. CIT(A) who upon examining the contentions of the appeal before the Ld. CIT(A) who upon examining the contentions of the

assessee in light of the findings of the AO, took a view that, the books of assessee in light of the findings of the AO, took a view that, the books of assessee in light of the findings of the AO, took a view that, the books of

accounts of the assessee was not reliable an accounts of the assessee was not reliable and that the assessee was d that the assessee was

unable to support the expenses with proper bills and vouchers. The Ld. unable to support the expenses with proper bills and vouchers. The Ld. unable to support the expenses with proper bills and vouchers. The Ld.

CIT(A) accordingly rejected the books of accounts. At the same time, CIT(A) accordingly rejected the books of accounts. At the same time, CIT(A) accordingly rejected the books of accounts. At the same time,

according to Ld. CIT(A), the disallowance of entire expenses made by the d. CIT(A), the disallowance of entire expenses made by the d. CIT(A), the disallowance of entire expenses made by the

AO was excessive as it was resulting in abnormally high profits which was it was resulting in abnormally high profits which was it was resulting in abnormally high profits which was

held to be not appropriate in assessee’s line of business. Following the held to be not appropriate in assessee’s line of business. Following the held to be not appropriate in assessee’s line of business. Following the

order passed by the coordinate bench of this Tribunal in assessee’s own order passed by the coordinate bench of this Tribunal in assessee’s own order passed by the coordinate bench of this Tribunal in assessee’s own

case for earlier AY 2013 case for earlier AY 2013-14, the Ld. CIT(A) estimated the profits of the e profits of the

assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly

allowed the appeals of the assessee. The relevant findings of the Ld. allowed the appeals of the assessee. The relevant findings of the Ld. allowed the appeals of the assessee. The relevant findings of the Ld.

CIT(A) are noted to be as under: CIT(A) are noted to be as under:-

“7.5.8 The undersigned has duly examined the additional submi The undersigned has duly examined the additional submi The undersigned has duly examined the additional submission made by the Appellant Firm. There exists no doubt about the made by the Appellant Firm. There exists no doubt about the made by the Appellant Firm. There exists no doubt about the maintenance of two sets of books of accounts by the Appellant Firm. The maintenance of two sets of books of accounts by the Appellant Firm. The maintenance of two sets of books of accounts by the Appellant Firm. The AO on the basis of the statement recorded during the course of the AO on the basis of the statement recorded during the course of the AO on the basis of the statement recorded during the course of the search from the Accounts Manager has identified tha search from the Accounts Manager has identified that one is titled as t one is titled as “ori” and another is “IT” which denotes that “Original” and “Income “ori” and another is “IT” which denotes that “Original” and “Income “ori” and another is “IT” which denotes that “Original” and “Income Tax”. The AO in the assessment order has made a finding that in the Tax”. The AO in the assessment order has made a finding that in the Tax”. The AO in the assessment order has made a finding that in the accounts maintained under the title “Ori” is the original books of accounts maintained under the title “Ori” is the original books of accounts maintained under the title “Ori” is the original books of accounts where all the receipts an accounts where all the receipts and expenditures have been duly d expenditures have been duly reflected. In the accounts under the title “IT” is the accounts where reflected. In the accounts under the title “IT” is the accounts where reflected. In the accounts under the title “IT” is the accounts where expenditures have been inflated and the net income is arrived to expenditures have been inflated and the net income is arrived to expenditures have been inflated and the net income is arrived to disclose the same in the return of income filed. However, the Appellant disclose the same in the return of income filed. However, the Appellant disclose the same in the return of income filed. However, the Appellant during the course o during the course of appellate proceedings has contended that terming f appellate proceedings has contended that terming the “original” and “IT” is wrong and the appropriate term is “audited” the “original” and “IT” is wrong and the appropriate term is “audited” the “original” and “IT” is wrong and the appropriate term is “audited” and “unaudited”. The undersigned has considered that the terming is and “unaudited”. The undersigned has considered that the terming is and “unaudited”. The undersigned has considered that the terming is

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 4 ::

inappropriate to arrive a meaningful decision in respect of variou inappropriate to arrive a meaningful decision in respect of variou inappropriate to arrive a meaningful decision in respect of various issues raised by the Appellant in the grounds of appeal. raised by the Appellant in the grounds of appeal.

7.5.9 The Appellant during the course of appellate proceedings has The Appellant during the course of appellate proceedings has The Appellant during the course of appellate proceedings has submitted a detailed reason for the incomplete and erroneous manner in submitted a detailed reason for the incomplete and erroneous manner in submitted a detailed reason for the incomplete and erroneous manner in which the books of accounts were maintained. The main reaso which the books of accounts were maintained. The main reaso which the books of accounts were maintained. The main reason for the poor maintenance of accounts was the capturing of primary accounting poor maintenance of accounts was the capturing of primary accounting poor maintenance of accounts was the capturing of primary accounting data in the tally accounts by the operational staff who were not well data in the tally accounts by the operational staff who were not well data in the tally accounts by the operational staff who were not well versed in accounting and the absence of qualified accounting staff at versed in accounting and the absence of qualified accounting staff at versed in accounting and the absence of qualified accounting staff at multiple remote locations where the p multiple remote locations where the processing plant and warehouses of rocessing plant and warehouses of the Appellant are situated. The multiple tally accounts found during the the Appellant are situated. The multiple tally accounts found during the the Appellant are situated. The multiple tally accounts found during the search was due to the fact that making accounting entries at multiple search was due to the fact that making accounting entries at multiple search was due to the fact that making accounting entries at multiple locations. The non locations. The non-availability of accurate information regarding the availability of accurate information regarding the transactions at the time making the entries in the tally accounts and ons at the time making the entries in the tally accounts and ons at the time making the entries in the tally accounts and omission to make accounting entries contemporaneously led to either omission to make accounting entries contemporaneously led to either omission to make accounting entries contemporaneously led to either absence of narration or incorrect / erroneous narration for the entries absence of narration or incorrect / erroneous narration for the entries absence of narration or incorrect / erroneous narration for the entries made in the books of accounts. The Appellant also expla made in the books of accounts. The Appellant also explained that entries ined that entries were wrongly made by crediting the ledger accounts of group companies were wrongly made by crediting the ledger accounts of group companies were wrongly made by crediting the ledger accounts of group companies while debiting the relevant expenditure account in the books of the while debiting the relevant expenditure account in the books of the while debiting the relevant expenditure account in the books of the Appellant Firm in cases where the payments were made by the Appellant Firm in cases where the payments were made by the Appellant Firm in cases where the payments were made by the Appellant Firm itself from the borrowing Appellant Firm itself from the borrowings made from such group s made from such group companies. The Appellant also explained that while crediting the ledger companies. The Appellant also explained that while crediting the ledger companies. The Appellant also explained that while crediting the ledger account of group companies, mistakes occurred in adopting the name of account of group companies, mistakes occurred in adopting the name of account of group companies, mistakes occurred in adopting the name of the group company due to similarity in the names of various group the group company due to similarity in the names of various group the group company due to similarity in the names of various group companies. The Appellant companies. The Appellant also explained that it was unable to reconcile also explained that it was unable to reconcile the discrepancies pointed out by the AO during the course of the discrepancies pointed out by the AO during the course of the discrepancies pointed out by the AO during the course of assessment proceedings and also unable to furnish the bills and assessment proceedings and also unable to furnish the bills and assessment proceedings and also unable to furnish the bills and vouchers in support of the expenditure genuinely incurred by it, in view vouchers in support of the expenditure genuinely incurred by it, in view vouchers in support of the expenditure genuinely incurred by it, in view of passage of time, frequent changes in the staff handling accounts and of time, frequent changes in the staff handling accounts and of time, frequent changes in the staff handling accounts and multiplicity of group companies. multiplicity of group companies.

7.5.10 The undersigned has carefully examined the submissions The undersigned has carefully examined the submissions The undersigned has carefully examined the submissions adduced by the Appellant to substantiate the maintenance of multiple adduced by the Appellant to substantiate the maintenance of multiple adduced by the Appellant to substantiate the maintenance of multiple accounts. At the outset there accounts. At the outset there exists no dispute about the turnover exists no dispute about the turnover returned by the Appellant by both the AO and the Appellant. returned by the Appellant by both the AO and the Appellant. returned by the Appellant by both the AO and the Appellant.

7.5.11 In the instant case of the Appellant the undersigned is of the In the instant case of the Appellant the undersigned is of the In the instant case of the Appellant the undersigned is of the view that the reasons explained by the Appellant for the discrepancies view that the reasons explained by the Appellant for the discrepancies view that the reasons explained by the Appellant for the discrepancies that occurred in that occurred in the books of accounts as identified by the AO in the the books of accounts as identified by the AO in the assessment order are reasonable and acceptable having regard to the assessment order are reasonable and acceptable having regard to the assessment order are reasonable and acceptable having regard to the nature of the business, the remote locations where the business nature of the business, the remote locations where the business nature of the business, the remote locations where the business operations are carried out, non operations are carried out, non-availability of skilled accounting staf availability of skilled accounting staff in such remote locations, multiplicity of group companies with similar such remote locations, multiplicity of group companies with similar such remote locations, multiplicity of group companies with similar sounding names and frequent intergroup company transactions. sounding names and frequent intergroup company transactions. sounding names and frequent intergroup company transactions. Notwithstanding the same, once the discrepancies in the books of Notwithstanding the same, once the discrepancies in the books of Notwithstanding the same, once the discrepancies in the books of accounts have been identified by the AO and the Appellant accounts have been identified by the AO and the Appellant accounts have been identified by the AO and the Appellant was

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 5 ::

confronted with the same, the Appellant is required to reconcile the said confronted with the same, the Appellant is required to reconcile the said confronted with the same, the Appellant is required to reconcile the said discrepancies and produce bills and vouchers in support of the discrepancies and produce bills and vouchers in support of the discrepancies and produce bills and vouchers in support of the expenditures in respect of such discrepancies were pointed out by the expenditures in respect of such discrepancies were pointed out by the expenditures in respect of such discrepancies were pointed out by the AO. In cases where the discrepancies were ex AO. In cases where the discrepancies were explained to be arising from plained to be arising from the crediting of ledger accounts of a wrong group entity instead of the the crediting of ledger accounts of a wrong group entity instead of the the crediting of ledger accounts of a wrong group entity instead of the correct group entity while debiting the expenditure incurred by a group correct group entity while debiting the expenditure incurred by a group correct group entity while debiting the expenditure incurred by a group entity on behalf of the Appellant, it is necessary to identify the name of entity on behalf of the Appellant, it is necessary to identify the name of entity on behalf of the Appellant, it is necessary to identify the name of the correct group entity which incurred the expenditure on behalf of the t group entity which incurred the expenditure on behalf of the t group entity which incurred the expenditure on behalf of the Appellant and adduce evidence to show that the corresponding entry for Appellant and adduce evidence to show that the corresponding entry for Appellant and adduce evidence to show that the corresponding entry for the same is found in the ledger account of the Appellant in the books of the same is found in the ledger account of the Appellant in the books of the same is found in the ledger account of the Appellant in the books of such correct group entity. such correct group entity.

7.5.12 In cases wher In cases where the discrepancy has been explained to be e the discrepancy has been explained to be arising from the erroneous crediting of the ledger account of a group arising from the erroneous crediting of the ledger account of a group arising from the erroneous crediting of the ledger account of a group entity while debiting the expenditure account though the expenditure entity while debiting the expenditure account though the expenditure entity while debiting the expenditure account though the expenditure has been met by the Appellant itself out of received on transfer through has been met by the Appellant itself out of received on transfer through has been met by the Appellant itself out of received on transfer through banking channel from the group entity, it is necessary on the part of the anking channel from the group entity, it is necessary on the part of the anking channel from the group entity, it is necessary on the part of the Appellant to identify the relevant transactions of transfer of funds Appellant to identify the relevant transactions of transfer of funds Appellant to identify the relevant transactions of transfer of funds through bank from the group entity and incurring of expenditure by the through bank from the group entity and incurring of expenditure by the through bank from the group entity and incurring of expenditure by the Appellant from such funds by withdrawing th Appellant from such funds by withdrawing the same from the bank. e same from the bank. Moreover, in both the categories of discrepancies, it is necessary for the Moreover, in both the categories of discrepancies, it is necessary for the Moreover, in both the categories of discrepancies, it is necessary for the Appellant to produce the bills and vouchers in support of the relevant Appellant to produce the bills and vouchers in support of the relevant Appellant to produce the bills and vouchers in support of the relevant expenditure in respect of which the corresponding credit entries were expenditure in respect of which the corresponding credit entries were expenditure in respect of which the corresponding credit entries were erroneously made i erroneously made in the books of accounts.

7.5.13 In this regard, the Appellant has brought out various In this regard, the Appellant has brought out various In this regard, the Appellant has brought out various constraints being faced by it in carrying out such reconciliation and constraints being faced by it in carrying out such reconciliation and constraints being faced by it in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by furnishing the supporting bills and vouchers in the written submission by furnishing the supporting bills and vouchers in the written submission by stating that it is unable stating that it is unable to do so at present in view of the passage of to do so at present in view of the passage of time and frequent changes in the accounting staff working with the time and frequent changes in the accounting staff working with the time and frequent changes in the accounting staff working with the Appellant. It is considered that the said submission of the Appellant Appellant. It is considered that the said submission of the Appellant Appellant. It is considered that the said submission of the Appellant cannot be disregarded in view of the genuineness of the practical cannot be disregarded in view of the genuineness of the practical cannot be disregarded in view of the genuineness of the practical difficulties expressed by the Appellant. At the same time, it is also not lties expressed by the Appellant. At the same time, it is also not lties expressed by the Appellant. At the same time, it is also not possible to accept the correctness of the claims in the books of account possible to accept the correctness of the claims in the books of account possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are unless the discrepancies pointed out in the Assessment Order are unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliation. subjected to necessary reconciliation.

7.5.14 In this context, it is pertinent to observe that this is not a case is context, it is pertinent to observe that this is not a case is context, it is pertinent to observe that this is not a case where the Appellant is attempting to give incorrect reasons for its where the Appellant is attempting to give incorrect reasons for its where the Appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouchers. Having regard to inability to produce the supporting bills and vouchers. Having regard to inability to produce the supporting bills and vouchers. Having regard to the discussion made in the preceding paragraphs, it the discussion made in the preceding paragraphs, it needs to be needs to be observed that there is no dispute regarding the fact that the books of observed that there is no dispute regarding the fact that the books of observed that there is no dispute regarding the fact that the books of account of the Appellant for the assessment years under consideration account of the Appellant for the assessment years under consideration account of the Appellant for the assessment years under consideration are erroneous and inaccurate. Though the Appellant is unable to are erroneous and inaccurate. Though the Appellant is unable to are erroneous and inaccurate. Though the Appellant is unable to reconcile the discrepancies / inaccurac reconcile the discrepancies / inaccuracies by furnishing the correct ies by furnishing the correct details of the relevant transactions along with the supporting bills and details of the relevant transactions along with the supporting bills and details of the relevant transactions along with the supporting bills and

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 6 ::

vouchers the same cannot be taken as a reason to disallow the vouchers the same cannot be taken as a reason to disallow the vouchers the same cannot be taken as a reason to disallow the expenditure when the turnover is not disputed. expenditure when the turnover is not disputed.

7.5.15 Even though the claims of the Appell Even though the claims of the Appellant in the books of ant in the books of account cannot be accepted in toto in the face of the discrepancies account cannot be accepted in toto in the face of the discrepancies account cannot be accepted in toto in the face of the discrepancies brought out by the AO in the Assessment Order, making disallowance of brought out by the AO in the Assessment Order, making disallowance of brought out by the AO in the Assessment Order, making disallowance of the major portion of expenditure in respect of which such discrepancies the major portion of expenditure in respect of which such discrepancies the major portion of expenditure in respect of which such discrepancies were noticed is also not a were noticed is also not appropriate in the facts of the case. On making ppropriate in the facts of the case. On making disallowance of entire expenditure in respect of which the discrepancies disallowance of entire expenditure in respect of which the discrepancies disallowance of entire expenditure in respect of which the discrepancies were found as sought to be done by the AO in the Assessment Order, were found as sought to be done by the AO in the Assessment Order, were found as sought to be done by the AO in the Assessment Order, the total income of the Appellant was assessed at Rs.32,10,88,220/ the total income of the Appellant was assessed at Rs.32,10,88,220/ the total income of the Appellant was assessed at Rs.32,10,88,220/-and Rs.22,42,24,706/ Rs.22,42,24,706/- for the AY(s) 2015-16 & 2016-17 as against the 17 as against the turnover Rs. 102,27,63,096/ Rs. 102,27,63,096/- and Rs. 62,17,07,761/- for the FY(s) for the FY(s) 2014-15 and 2015 15 and 2015-16 relevant to the AY(s) 2015-16 and 2016 16 and 2016-17

7.5.16 The said assessment(s) have resulted in impliedly con The said assessment(s) have resulted in impliedly con The said assessment(s) have resulted in impliedly considering the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014 the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014 the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014-15 and 2015-16 respectively, which is abnormally high in the line of 16 respectively, which is abnormally high in the line of 16 respectively, which is abnormally high in the line of business of the Appellant Firm and not appropriate to the facts and business of the Appellant Firm and not appropriate to the facts and business of the Appellant Firm and not appropriate to the facts and circumstances of the case. It may be appr circumstances of the case. It may be appreciated that the said eciated that the said abnormality in the profit margin is indicative of the fact that the abnormality in the profit margin is indicative of the fact that the abnormality in the profit margin is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be discrepancies in the accounts pointed out by the AO cannot be discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of expenditure by the considered to be arising wholly from wrong claims of expenditure by the considered to be arising wholly from wrong claims of expenditure by the Appellant. As per the provisions Appellant. As per the provisions of section 250 and 251 of the Act, the of section 250 and 251 of the Act, the Commissioner of Income Tax Appeals, is entitled to make such enquiry Commissioner of Income Tax Appeals, is entitled to make such enquiry Commissioner of Income Tax Appeals, is entitled to make such enquiry as he thinks fit and may pass such other order in Appeal as he thinks fit. as he thinks fit and may pass such other order in Appeal as he thinks fit. as he thinks fit and may pass such other order in Appeal as he thinks fit. Thus, the undersigned while disposing of the appeal u/s 250 of the Act i Thus, the undersigned while disposing of the appeal u/s 250 of the Act i Thus, the undersigned while disposing of the appeal u/s 250 of the Act is entitled to enter into the shoes of the Assessing Officer and decide the entitled to enter into the shoes of the Assessing Officer and decide the entitled to enter into the shoes of the Assessing Officer and decide the issue.

7.5.17 In this background, it is considered that the books of accounts In this background, it is considered that the books of accounts In this background, it is considered that the books of accounts of the Appellant Firm, which are inaccurate, do not facilitate arriving at of the Appellant Firm, which are inaccurate, do not facilitate arriving at of the Appellant Firm, which are inaccurate, do not facilitate arriving at true and correct profits of true and correct profits of the Appellant Firm and they are required to be the Appellant Firm and they are required to be rejected by invoking the provisions of Section 145(3) of the Act. rejected by invoking the provisions of Section 145(3) of the Act. rejected by invoking the provisions of Section 145(3) of the Act. Accordingly, the books of accounts of the Appellant Firm for the FY(s) Accordingly, the books of accounts of the Appellant Firm for the FY(s) Accordingly, the books of accounts of the Appellant Firm for the FY(s) 2014-15 and 2015 15 and 2015-16 are hereby rejected. Thus, having rejected the 16 are hereby rejected. Thus, having rejected the books of accounts, the business income of the Appellant Firm is required ks of accounts, the business income of the Appellant Firm is required ks of accounts, the business income of the Appellant Firm is required to be estimated under the said provisions, consequent to rejection of the to be estimated under the said provisions, consequent to rejection of the to be estimated under the said provisions, consequent to rejection of the books of accounts. books of accounts.

7.5.18 Now, the issue before the undersigned is that, what can be Now, the issue before the undersigned is that, what can be Now, the issue before the undersigned is that, what can be the reasonable profit that the reasonable profit that can be attributable to the Appellant Firm in can be attributable to the Appellant Firm in conduct of business. The Appellant Firm in the return of income filed has conduct of business. The Appellant Firm in the return of income filed has conduct of business. The Appellant Firm in the return of income filed has claimed the net profit margin at the rate of 0.37% and 0.68% for the claimed the net profit margin at the rate of 0.37% and 0.68% for the claimed the net profit margin at the rate of 0.37% and 0.68% for the FY(s) 2014-15 and 2015 15 and 2015-16 relevant to the AY(s) 2015-16 and 2016 16 and 2016-17

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 7 ::

and the average net profit disclosed by the Appellant Firm for all the and the average net profit disclosed by the Appellant Firm for all the and the average net profit disclosed by the Appellant Firm for all the years under consideration is worked out to be at 0.73%. years under consideration is worked out to be at 0.73%.

7.5.19 At this juncture it is significant to bring it on record in such At this juncture it is significant to bring it on record in such At this juncture it is significant to bring it on record in such circumstances that my predecessor in the case of the A circumstances that my predecessor in the case of the Appellant’s own ppellant’s own case vide Appellate Order in ITA No. 669/2021 case vide Appellate Order in ITA No. 669/2021-22 dated 27.02.2023 for 22 dated 27.02.2023 for the AY 2013-14 where the facts and circumstances were similar, has 14 where the facts and circumstances were similar, has 14 where the facts and circumstances were similar, has held that 30% of the turnover can be the appropriate income of the held that 30% of the turnover can be the appropriate income of the held that 30% of the turnover can be the appropriate income of the Appellant Firm. The said order was ta Appellant Firm. The said order was taken up before the Hon’ble ITAT ken up before the Hon’ble ITAT Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has upheld the decision of my predecessor in rejecting the books of accounts upheld the decision of my predecessor in rejecting the books of accounts upheld the decision of my predecessor in rejecting the books of accounts and restricted the and restricted the net profit ratio @ 2.21% on sales turnover for net profit ratio @ 2.21% on sales turnover for estimating the same while determining the total business income of the estimating the same while determining the total business income of the estimating the same while determining the total business income of the Appellant’s Firm.

…..

7.5.22 The undersigned to have the judicial discipline, by respectfully The undersigned to have the judicial discipline, by respectfully The undersigned to have the judicial discipline, by respectfully following the decision of the Hon’ble ITAT Chennai in the Appellant’s own following the decision of the Hon’ble ITAT Chennai in the Appellant’s own following the decision of the Hon’ble ITAT Chennai in the Appellant’s own case for the AY 2013 case for the AY 2013-14, the net profit ratio of the Appellant Firm is 14, the net profit ratio of the Appellant Firm is taken @ 2.21% on the sales turnover in determ taken @ 2.21% on the sales turnover in determining the business ining the business income of the Appellant Firm for the years under consideration. income of the Appellant Firm for the years under consideration. income of the Appellant Firm for the years under consideration. Accordingly, the Accordingly, the AO is hereby directed to compute the business AO is hereby directed to compute the business income ( Net Profit ) of the Appellant @ 2.21% income ( Net Profit ) of the Appellant @ 2.21% of the turnover of the turnover for each assessment year under consideration. for each assessment year under consideration.

7.5.23 Further the AO while determining the taxable income of the Further the AO while determining the taxable income of the Further the AO while determining the taxable income of the Appellant Appellant is is directed directed to to consider consider the the interest interest receipts receipts and and commission receipts commission receipts credited to the P&L account separately separately for each assessment year 2015 assessment year 2015-16 and 2016-17 respectively. Thus, the va 17 respectively. Thus, the various grounds raised upon these issues are treated grounds raised upon these issues are treated partly allowed. partly allowed.”

Revenue are in now in appeal before us. Revenue are in now in appeal before us.

reiterated the findings of the AO. He submitted that, the search enquiries dings of the AO. He submitted that, the search enquiries dings of the AO. He submitted that, the search enquiries

had revealed that the assessee w had revealed that the assessee was maintaining parallel sets of accounts, as maintaining parallel sets of accounts,

one set of accounts reflecting the actual receipts one set of accounts reflecting the actual receipts & expenses and another expenses and another

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 8 ::

set of accounts maintained for tax purpose set of accounts maintained for tax purpose. According to Ld. CIT, DR the ng to Ld. CIT, DR the

expenditure booked in accounts maintained for tax purposes was higher accounts maintained for tax purposes was higher

than the original set of accounts resulting in the net profit original set of accounts resulting in the net profit to be lower. He to be lower. He

contended that, by inflating expenses, the assessee was generating contended that, by inflating expenses, the assessee was generating contended that, by inflating expenses, the assessee was generating

unaccounted funds which were used for hich were used for on-money payments payments in relation to

property purchases. He pointed out that, the assessee was unable to . He pointed out that, the assessee was unable to . He pointed out that, the assessee was unable to

furnish supportings for these expenses and therefore the AO rightly held for these expenses and therefore the AO rightly held for these expenses and therefore the AO rightly held

that these expenses were not genuine. He therefore supported th that these expenses were not genuine. He therefore supported th that these expenses were not genuine. He therefore supported the AO’s

action of not rejecting the books of accounts but making separate action of not rejecting the books of accounts but making separate action of not rejecting the books of accounts but making separate

additions based on inflation of expenses, additions based on inflation of expenses, on the basis of seized material on the basis of seized material.

He further submitted that, if the Ld. CIT(A)’s action of rejecting the books He further submitted that, if the Ld. CIT(A)’s action of rejecting the books He further submitted that, if the Ld. CIT(A)’s action of rejecting the books

of accounts is upheld, then the of accounts is upheld, then the profits ought to be estimated at 53% profits ought to be estimated at 53% viz.,

the profitability of another assessee, M/s the profitability of another assessee, M/s Industrial Minerals Company, Industrial Minerals Company,

which according to AO, was comparable to the assessee. The Ld. CIT, DR which according to AO, was comparable to the assessee. The Ld. CIT, DR which according to AO, was comparable to the assessee. The Ld. CIT, DR

further argued that, the Ld. CIT( further argued that, the Ld. CIT(A) having rejected the books of accounts, A) having rejected the books of accounts,

ought to still have adjudicated the merits of the disallowance of expenses, ought to still have adjudicated the merits of the disallowance of expenses, ought to still have adjudicated the merits of the disallowance of expenses,

which according to him, was made on different footings. Overall therefore which according to him, was made on different footings. Overall therefore which according to him, was made on different footings. Overall therefore

he prayed that the order of Ld. CIT(A) be reversed and the AO’s he prayed that the order of Ld. CIT(A) be reversed and the AO’s he prayed that the order of Ld. CIT(A) be reversed and the AO’s order be

restored. The Ld. CIT, DR also furnished a written synopsis of his restored. The Ld. CIT, DR also furnished a written synopsis of his restored. The Ld. CIT, DR also furnished a written synopsis of his

arguments, which has been taken on record. arguments, which has been taken on record.

CIT(A). He submitted that, the Ld. CIT(A) had followed CIT(A). He submitted that, the Ld. CIT(A) had followed CIT(A). He submitted that, the Ld. CIT(A) had followed the decision

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 9 ::

rendered by this Tribunal in assessee’s own case in rendered by this Tribunal in assessee’s own case in rendered by this Tribunal in assessee’s own case in ITA No.

366/CHNY/2023 for earlier AY 2013 for earlier AY 2013-14 and therefore urged that order of 14 and therefore urged that order of

the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also

filed a written note rebutting the arguments raise filed a written note rebutting the arguments raised by the Ld. CIT, DR. In d by the Ld. CIT, DR. In

this written note, the assessee has separately objected to the validity of this written note, the assessee has separately objected to the validity of this written note, the assessee has separately objected to the validity of

the income-tax assessment framed u/s 153A of the Act on the ground tax assessment framed u/s 153A of the Act on the ground tax assessment framed u/s 153A of the Act on the ground

that there was no incriminating material unearthed in the course of that there was no incriminating material unearthed in the course of that there was no incriminating material unearthed in the course of

search.

CIT(A)/AO; and considered the material placed before us. As noted and considered the material placed before us. As noted and considered the material placed before us. As noted

earlier, search was conducted u/s 132 of the Act upon the assessee on earlier, search was conducted u/s 132 of the Act upon the assessee on earlier, search was conducted u/s 132 of the Act upon the assessee on

25.10.2018, pursuant to which the AO had reopened income 25.10.2018, pursuant to which the AO had reopened income 25.10.2018, pursuant to which the AO had reopened income-tax

assessments for AYs 2013 sments for AYs 2013-14 to 2018-19 u/s 153A of the Act. It is not in 19 u/s 153A of the Act. It is not in

dispute that, the assessee was maintaining two sets of books of accounts, dispute that, the assessee was maintaining two sets of books of accounts, dispute that, the assessee was maintaining two sets of books of accounts,

which was found in the course of search and also affirmed by the which was found in the course of search and also affirmed by the which was found in the course of search and also affirmed by the

accounts manager in his statement recorded u/s 13 accounts manager in his statement recorded u/s 132(4) of the Act. 2(4) of the Act.

According to the Revenue, the receipts and expenses maintained in tally According to the Revenue, the receipts and expenses maintained in tally According to the Revenue, the receipts and expenses maintained in tally

data titled ‘ori’ was the actual results of the assessee and that the was the actual results of the assessee and that the was the actual results of the assessee and that the

accounts maintained under title ‘ accounts maintained under title ‘IT’ was where expenses were inflated to ’ was where expenses were inflated to

arrive at suppressed pro arrive at suppressed profits for income-tax purposes. According to tax purposes. According to

assessee however, the tally data titled ‘ assessee however, the tally data titled ‘ori’ contained unaudited, ’ contained unaudited,

incomplete data whereas the tally data ‘ incomplete data whereas the tally data ‘IT’ was finalized on the basis of ’ was finalized on the basis of

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 10 ::

complete audited data gathered from all locations/sites of the assessee. complete audited data gathered from all locations/sites of the assessee. complete audited data gathered from all locations/sites of the assessee.

The fact however remains that, there were two parallel sets of books of The fact however remains that, there were two parallel sets of books of The fact however remains that, there were two parallel sets of books of

accounts being maintained by the assessee which was unearthed in accounts being maintained by the assessee which was unearthed in accounts being maintained by the assessee which was unearthed in

course of search and which suggested discrepancies and also raised prima course of search and which suggested discrepancies and also raised prima course of search and which suggested discrepancies and also raised prima

facie doubt regarding correctness of the book facie doubt regarding correctness of the books of accounts. s of accounts. According to

us therefore, these seized electronic material coupled with the statement us therefore, these seized electronic material coupled with the statement us therefore, these seized electronic material coupled with the statement

given by the accounts manager u/s 132(4) of the Act given by the accounts manager u/s 132(4) of the Act given by the accounts manager u/s 132(4) of the Act, over-all,

constituted incriminating material unearthed in the course of search and constituted incriminating material unearthed in the course of search and constituted incriminating material unearthed in the course of search and

hence the preliminary plea of the assessee objecting to the validity of ary plea of the assessee objecting to the validity of ary plea of the assessee objecting to the validity of

jurisdiction assumed by the AO u/s 153A of the Act for want of jurisdiction assumed by the AO u/s 153A of the Act for want of jurisdiction assumed by the AO u/s 153A of the Act for want of

incriminating material, is hereby rejected. incriminating material, is hereby rejected.

impugned in these cross impugned in these cross-appeals are squarely covered by the decision ls are squarely covered by the decision

rendered by the coordinate bench of this Tribunal in assessee’s own case rendered by the coordinate bench of this Tribunal in assessee’s own case rendered by the coordinate bench of this Tribunal in assessee’s own case

for AY 2013-14 in ITA No. 366/Chny/2023, which was the first AY of the 14 in ITA No. 366/Chny/2023, which was the first AY of the 14 in ITA No. 366/Chny/2023, which was the first AY of the

block period, wherein it was held as under: block period, wherein it was held as under:-

“14. Having heard the rival contentions, carefully considered the Having heard the rival contentions, carefully considered the Having heard the rival contentions, carefully considered the submissions, and perused the material placed on record. The case of the submissions, and perused the material placed on record. The case of the submissions, and perused the material placed on record. The case of the assessee firm for the Ay 2013 assessee firm for the Ay 2013-14 was assessed by the department u/s 14 was assessed by the department u/s 143(3) vide order dated 08.03.2016, thereafter upon a s 143(3) vide order dated 08.03.2016, thereafter upon a search action u/s earch action u/s 132 of the Act on BMC Group on 25.10.2018 the same was reassessed 132 of the Act on BMC Group on 25.10.2018 the same was reassessed 132 of the Act on BMC Group on 25.10.2018 the same was reassessed u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of search, it was found that the assessee firm was maintaining parallel sets search, it was found that the assessee firm was maintaining parallel sets search, it was found that the assessee firm was maintaining parallel sets of accounts. Evidences were g of accounts. Evidences were gathered by the search team in the form athered by the search team in the form disks, laptops. Loose sheets pertaining to unaccounted receipts/ disks, laptops. Loose sheets pertaining to unaccounted receipts/ disks, laptops. Loose sheets pertaining to unaccounted receipts/ payments, deposition of key persons etc. Statement of Shri P Senthil payments, deposition of key persons etc. Statement of Shri P Senthil payments, deposition of key persons etc. Statement of Shri P Senthil

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 11 ::

Muthu Kumar, Accounts Manager of the assessee firm were taken, Muthu Kumar, Accounts Manager of the assessee firm were taken, Muthu Kumar, Accounts Manager of the assessee firm were taken, according to the sai according to the said statements Modus Operandi of accounting of the d statements Modus Operandi of accounting of the assessee firm was scripted by the Ld AO. Exhaustive workings a/w assessee firm was scripted by the Ld AO. Exhaustive workings a/w assessee firm was scripted by the Ld AO. Exhaustive workings a/w screen shots of the ledger accounts were produced in the Assessment screen shots of the ledger accounts were produced in the Assessment screen shots of the ledger accounts were produced in the Assessment Order by the Ld AO and disallowances were made. Aggrieved by the Order by the Ld AO and disallowances were made. Aggrieved by the Order by the Ld AO and disallowances were made. Aggrieved by the additions, the assessee agitated on the issues before the Ld CIT(A). Ld , the assessee agitated on the issues before the Ld CIT(A). Ld , the assessee agitated on the issues before the Ld CIT(A). Ld CIT (A), without touching the merits of individual additions, have CIT (A), without touching the merits of individual additions, have CIT (A), without touching the merits of individual additions, have observed that the reasons explained by the appellant for the observed that the reasons explained by the appellant for the observed that the reasons explained by the appellant for the discrepancies that occurred in the books of accounts as identifie discrepancies that occurred in the books of accounts as identifie discrepancies that occurred in the books of accounts as identified by the AO in the assessment order are reasonable and acceptable having AO in the assessment order are reasonable and acceptable having AO in the assessment order are reasonable and acceptable having regard to the nature of business, the remote locations where the regard to the nature of business, the remote locations where the regard to the nature of business, the remote locations where the business operations are carried on, the non business operations are carried on, the non-availability of skilled availability of skilled accounting staff in such remote locations, multipl accounting staff in such remote locations, multiplicity of group icity of group companies with similar sounding names and frequent inter companies with similar sounding names and frequent inter companies with similar sounding names and frequent inter-group company transactions. It is further noticed by the Ld CIT(A) that various company transactions. It is further noticed by the Ld CIT(A) that various company transactions. It is further noticed by the Ld CIT(A) that various discrepancies as have been identified by the AO and the appellant was discrepancies as have been identified by the AO and the appellant was discrepancies as have been identified by the AO and the appellant was confronted with the same, the appe confronted with the same, the appellant is required to reconcile the said llant is required to reconcile the said discrepancies. However, since the appellant has brought out various discrepancies. However, since the appellant has brought out various discrepancies. However, since the appellant has brought out various constraints in carrying out such reconciliation and furnishing the constraints in carrying out such reconciliation and furnishing the constraints in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it supporting bills and vouchers in the written submission by stating that it supporting bills and vouchers in the written submission by stating that it is unable to do so at present in view of the passage of time and frequent ble to do so at present in view of the passage of time and frequent ble to do so at present in view of the passage of time and frequent changes in the accounting staff working with the appellant. It is changes in the accounting staff working with the appellant. It is changes in the accounting staff working with the appellant. It is considered by the Ld CIT(A) that the said submission of the appellant considered by the Ld CIT(A) that the said submission of the appellant considered by the Ld CIT(A) that the said submission of the appellant cannot be disregarded in view of the genuineness of cannot be disregarded in view of the genuineness of cannot be disregarded in view of the genuineness of the practical difficulties expressed by the appellant. At the same time, it is not difficulties expressed by the appellant. At the same time, it is not difficulties expressed by the appellant. At the same time, it is not possible to accept the correctness of the claims in the books of account possible to accept the correctness of the claims in the books of account possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are unless the discrepancies pointed out in the Assessment Order are unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliati subjected to necessary reconciliation. Ld CIT(A) decided the appeal with on. Ld CIT(A) decided the appeal with the following observations: the following observations:

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 12 ::

production and processing expenses to the tune of Rs.2.80 Crores production and processing expenses to the tune of Rs.2.80 Crores production and processing expenses to the tune of Rs.2.80 Crores in the original Assessment Order. The facts narrated in the said in the original Assessment Order. The facts narrated in the said in the original Assessment Order. The facts narrated in the said Assessment Order clearly bring out the fact that the appella Assessment Order clearly bring out the fact that the appella Assessment Order clearly bring out the fact that the appellant maintained the bills and vouchers in support of the expenditure maintained the bills and vouchers in support of the expenditure maintained the bills and vouchers in support of the expenditure debited to the P&L Account and that the same were verified by the debited to the P&L Account and that the same were verified by the debited to the P&L Account and that the same were verified by the AO during the original Assessment proceedings. AO during the original Assessment proceedings.

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 13 ::

logical and reasonable indicator of true and logical and reasonable indicator of true and correct profits of the correct profits of the appellant. Since the appellant claimed exemption u/s.108 in the appellant. Since the appellant claimed exemption u/s.108 in the appellant. Since the appellant claimed exemption u/s.108 in the said Assessment Year, it is reasonable to infer that the business said Assessment Year, it is reasonable to infer that the business said Assessment Year, it is reasonable to infer that the business income disclosed in the return of income for the said Assessment income disclosed in the return of income for the said Assessment income disclosed in the return of income for the said Assessment Year represents the correct profits o Year represents the correct profits of the appellant for the said f the appellant for the said year. The said assessment year is the last year of claiming year. The said assessment year is the last year of claiming year. The said assessment year is the last year of claiming exemption u/s 108 by the appellant and there is only one exemption u/s 108 by the appellant and there is only one exemption u/s 108 by the appellant and there is only one intervening year be Veen the said assessment year and the instant intervening year be Veen the said assessment year and the instant intervening year be Veen the said assessment year and the instant assessment year. Having regard to the same, assessment year. Having regard to the same, I am of the I am of the considered view that the net profit margin of 29.77% disclosed by considered view that the net profit margin of 29.77% disclosed by considered view that the net profit margin of 29.77% disclosed by the appellant the said AY 2011 the appellant the said AY 2011-12 is a reliable indicator of the true 12 is a reliable indicator of the true profits of the appellant for the instant assessment year also. profits of the appellant for the instant assessment year also. profits of the appellant for the instant assessment year also. Hence, I consider it appropriate to estimate Hence, I consider it appropriate to estimate the net profit margin the net profit margin for the instant Assessment Year at 30% of the sales turnover for for the instant Assessment Year at 30% of the sales turnover for for the instant Assessment Year at 30% of the sales turnover for the purpose of estimating the business income of the appellant. the purpose of estimating the business income of the appellant. the purpose of estimating the business income of the appellant. The AO is accordingly directed to determine the business income of The AO is accordingly directed to determine the business income of The AO is accordingly directed to determine the business income of the appellant at 30% of the sales turn the appellant at 30% of the sales turnover of Rs.183.35 gores. over of Rs.183.35 gores. Since the business income is being determined on estimate basis, Since the business income is being determined on estimate basis, Since the business income is being determined on estimate basis, it is held that the individual additions made to the income in the it is held that the individual additions made to the income in the it is held that the individual additions made to the income in the original Assessment Order dated 08.03.2016 get subsumed in the original Assessment Order dated 08.03.2016 get subsumed in the original Assessment Order dated 08.03.2016 get subsumed in the said estimated business income and t said estimated business income and the same not required to be he same not required to be considered separately. The AO is directed to consider the interest considered separately. The AO is directed to consider the interest considered separately. The AO is directed to consider the interest receipts receipts of of Rs.14,11,587/ Rs.14,11,587/- and and commission commission receipts receipts of of Rs.6,91,482/ Rs.6,91,482/- credited to the P&L account separately apart from credited to the P&L account separately apart from the estimated business income while determin the estimated business income while determining the total income. ing the total income. The relevant grounds of appeal arc therefore partly allowed." The relevant grounds of appeal arc therefore partly allowed." The relevant grounds of appeal arc therefore partly allowed."

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 14 ::

assessed income of the assessee was computed at Rs. 104.73/ assessed income of the assessee was computed at Rs. 104.73/ assessed income of the assessee was computed at Rs. 104.73/- Crores, whereas the total sales turnover, which was untouched and remain whereas the total sales turnover, which was untouched and remain whereas the total sales turnover, which was untouched and remain undisputed was Rs. 183.25 Crores, thus undisputed was Rs. 183.25 Crores, thus the resultant % of Net Profit the resultant % of Net Profit was arrived at 57.12%, this % was considered as absolutely abnormal was arrived at 57.12%, this % was considered as absolutely abnormal was arrived at 57.12%, this % was considered as absolutely abnormal and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that such a huge profit margin is abnormally high in any line of business and such a huge profit margin is abnormally high in any line of business and such a huge profit margin is abnormally high in any line of business and thus indicative that the discrepancies pointed out in the accounts by the that the discrepancies pointed out in the accounts by the that the discrepancies pointed out in the accounts by the Ld AO cannot be considered to be arising wholly from the wrong claims Ld AO cannot be considered to be arising wholly from the wrong claims Ld AO cannot be considered to be arising wholly from the wrong claims of expenditure by the assessee/appellant. Ld CIT(A) thus after of expenditure by the assessee/appellant. Ld CIT(A) thus after of expenditure by the assessee/appellant. Ld CIT(A) thus after considering the books of accounts of the assessee firm, as inaccu considering the books of accounts of the assessee firm, as inaccu considering the books of accounts of the assessee firm, as inaccurate which do not facilitate to arrive at true and correct profit of the appellant which do not facilitate to arrive at true and correct profit of the appellant which do not facilitate to arrive at true and correct profit of the appellant have rejected the same by invoking the provisions of section 145(3) of have rejected the same by invoking the provisions of section 145(3) of have rejected the same by invoking the provisions of section 145(3) of the Act. Under the facts of the present case, we approve the observation the Act. Under the facts of the present case, we approve the observation the Act. Under the facts of the present case, we approve the observation of Ld CIT(A) relating to reje of Ld CIT(A) relating to rejection of the books of assessee and uphold ction of the books of assessee and uphold the same. Ld CIT(A) consequently, estimated the profit of the firm the same. Ld CIT(A) consequently, estimated the profit of the firm the same. Ld CIT(A) consequently, estimated the profit of the firm @30% of the sale turnover, the basis for 30% was returned income of @30% of the sale turnover, the basis for 30% was returned income of @30% of the sale turnover, the basis for 30% was returned income of AY 2011-12, wherein the assessee has earned a profit of 29.77% before 12, wherein the assessee has earned a profit of 29.77% before 12, wherein the assessee has earned a profit of 29.77% before claiming exemption u/s 10B of the Act. On perusal of the order of Ld exemption u/s 10B of the Act. On perusal of the order of Ld exemption u/s 10B of the Act. On perusal of the order of Ld CIT(A), it is not transpired that while estimating the profit taking the CIT(A), it is not transpired that while estimating the profit taking the CIT(A), it is not transpired that while estimating the profit taking the base year as AY 2011 base year as AY 2011-12 (FY 2010-11), whether this fact was 11), whether this fact was confronted to the assessee firm or not to submit their objectio confronted to the assessee firm or not to submit their objectio confronted to the assessee firm or not to submit their objections or confirmation on the same. However, to demonstrate the actual ratio of confirmation on the same. However, to demonstrate the actual ratio of confirmation on the same. However, to demonstrate the actual ratio of profit and its comparability with the year under consideration (FY 2012 profit and its comparability with the year under consideration (FY 2012 profit and its comparability with the year under consideration (FY 2012- 13, AY2013-14), Ld AR of the assessee firm had submitted a chart of 14), Ld AR of the assessee firm had submitted a chart of 14), Ld AR of the assessee firm had submitted a chart of production for the financial years 2010 production for the financial years 2010-11 to 2016-17, the same 17, the same extracted as under: extracted as under:-

BEACH MINERALS COMPANY BEACH MINERALS COMPANY June 2023 June 2023

Financial Garnet ilmenite Total Total Year Qty Value Value Qty Value Qty Value

2010-11 24500 158152677 158152677 0 0 24500 24500 158,152,677

2011-12 57856 408896991 408896991 23184 332034863 81040 81040 740,931,854

2012-13 84091 837603370 837603370 60190 995980129 144281 144281 1,833,583,499

2013-14 55288 659312080 659312080 40992 514625364 96280 96280 1,173,937,444

2014-15 52550 504126598 504126598 41500 518636498 94050 94050 1,022,763,096

2015-16 43000 374261914 374261914 19800 247445847 62800 62800 621,707,761

2016-17 3312 28831737 28831737 12600 157465539 15912 15912 186,297,276

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 15 ::

AY 2013-14 is similar to the AYs 2015 14 is similar to the AYs 2015-16 & 2016-17 impugned before us. 17 impugned before us.

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 16 ::

Accordingly, we do not see any reason to take a different view in the Accordingly, we do not see any reason to take a different view in the Accordingly, we do not see any reason to take a different view in the

relevant years before us. Likewise, the argument of the Ld. CIT, DR ore us. Likewise, the argument of the Ld. CIT, DR ore us. Likewise, the argument of the Ld. CIT, DR

urging that the net profit rate ought to be adopted at 53% instead of urging that the net profit rate ought to be adopted at 53% instead of urging that the net profit rate ought to be adopted at 53% instead of

2.21% as estimated by this Tribunal in assessee’s own case for earlier AY 2.21% as estimated by this Tribunal in assessee’s own case for earlier AY 2.21% as estimated by this Tribunal in assessee’s own case for earlier AY

2013-14 cannot be countenanced. Also, we note that, the entity 14 cannot be countenanced. Also, we note that, the entity 14 cannot be countenanced. Also, we note that, the entity viz.,

Industrial Mineral Company urged by the Revenue to be comparable to Industrial Mineral Company urged by the Revenue to be comparable to Industrial Mineral Company urged by the Revenue to be comparable to

the assessee, was demonstrated before us to be in different line of the assessee, was demonstrated before us to be in different line of the assessee, was demonstrated before us to be in different line of

business and hence, this entity identified by the Revenue is held to be not business and hence, this entity identified by the Revenue is held to be not business and hence, this entity identified by the Revenue is held to be not

comparable.

books of accounts are rejected, the disallowance of items of expenses books of accounts are rejected, the disallowance of items of expenses books of accounts are rejected, the disallowance of items of expenses

ought to be separately adjudicated and decided upon as to whether it is ought to be separately adjudicated and decided upon as to whether it is ought to be separately adjudicated and decided upon as to whether it is

to be separately added to the estimated business income. According to to be separately added to the estimated business income. According to to be separately added to the estimated business income. According to us

however, once the books of account are rejected by invoking the the books of account are rejected by invoking the the books of account are rejected by invoking the

provisions of section 145 of the Act and the income is estimated to the provisions of section 145 of the Act and the income is estimated to the provisions of section 145 of the Act and the income is estimated to the

best of judgment as per the provisions of section 144 of the Act, the said as per the provisions of section 144 of the Act, the said as per the provisions of section 144 of the Act, the said

estimate is made in substitution of the b estimate is made in substitution of the business income that is to be usiness income that is to be

computed in accordance with the provisions contained in sections 30 to computed in accordance with the provisions contained in sections 30 to computed in accordance with the provisions contained in sections 30 to

43D as laid down in section 29 of the Act. Consequently, all the 43D as laid down in section 29 of the Act. Consequently, all the 43D as laid down in section 29 of the Act. Consequently, all the

deductions which are referred to in sections 30 to 43D of the Act are deductions which are referred to in sections 30 to 43D of the Act are deductions which are referred to in sections 30 to 43D of the Act are

deemed to have been taken into account while making such an estimate. aken into account while making such an estimate. aken into account while making such an estimate.

Useful reference in this regard may be made to Useful reference in this regard may be made to the decision of Hon’ble the decision of Hon’ble

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 17 ::

Andhra Pradesh High Court in the case of High Court in the case of Indwell Constructions Vs. Indwell Constructions Vs.

CIT (232 ITR 776) and Hon’ble Allahabad High Court in the case of and Hon’ble Allahabad High Court in the case of and Hon’ble Allahabad High Court in the case of CIT

vs Banwari Lal Banshidhar (229 ITR 229) vs Banwari Lal Banshidhar (229 ITR 229). For these reasons, we do For these reasons, we do

not agree with this plea of the Revenue. not agree with this plea of the Revenue.

Ld. CIT(A) in rejecting the books of accounts and estimating the total Ld. CIT(A) in rejecting the books of accounts and estimating the total Ld. CIT(A) in rejecting the books of accounts and estimating the total

income of the assessee. We accordingly uphold the same. come of the assessee. We accordingly uphold the same.

cross appeals under various grounds have been dealt with in terms of our cross appeals under various grounds have been dealt with in terms of our cross appeals under various grounds have been dealt with in terms of our

observations herein above. Contentions if any observations herein above. Contentions if any, which were not which were not argued or

dealt with become academic and thus not adjudicated separately. me academic and thus not adjudicated separately. me academic and thus not adjudicated separately.

the assessee and Revenue stands dismissed. the assessee and Revenue stands dismissed.

Order pronounced on the 26th day of November, 2024 Order pronounced on the 24, in Chennai.

Sd/- Sd/ Sd/- (जगदीश) (एबी टी. . वक�) (JAGADISH) (ABY T. VARKEY ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER /JUDICIAL MEMBER /ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated: 26th November November, 2024. TLN, Sr.PS

ITA Nos.1465 & 1466/Chny/2023 (AYs 20 2015-16 & 2016-17) CO Nos.33 & 34/Chny/2024 (AYs 20 2015-16 & 2016-17) M/s. Beach Minerals Co. M/s. Beach Minerals Co. :: 18 ::

आदेश क� �ितिलिप अ�ेिषत/Copy to Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. , Chennai / Madurai / Salem / Coimbatore. , Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF