- (1.) Leave granted.
(2.) These two appeals, being interconnected, were taken up for hearing together and are being disposed of by this common judgment. They arise out of a common judgment and order dated 2.3.2006 in ITA No. 50 of 2005 and Civil Writ Petition No. 800 of 2005 as also out of common judgment and order dated 3.4.2007 in Civil Review No. 15 and 16 of 2006 in ITA No. 50 of 2005 and C.W.P. No. 800 of 2005 passed by the High court of Himachal Pradesh, Shimla.
(3.) M/s Green World Corporation is a partnership concern of Shri R.S. Gupta and his wife Smt. Sushila Gupta. They had set up two units for manufacturing exercise books, writing pads, etc. at Parwanoo in the State of Himachal Pradesh in the year 1995. The said purported units were established after declaration and enforcement of a policy for tax holiday for certain period specified in the Union Budget. They had also set up a third unit for manufacturing computer software. They started filing income tax returns from the Assessment Year 1996-97 showing huge profits. In the return for the Assessment Year 2000-01 they disclosed their total sales to the tune of Rs. 1,51,69,515/- out of which a sum of Rs. 74,69,314/- was shown as net profit. Thus, the profits bore a proportion of 49% to the gross sales. For the earlier assessment year, i.e. 1999-2000, the proportion of the net profit to the total sales was as high as 66% because out of the total sales of Rs. 2,97,12,106/- net profits were declared to be to the tune of Rs. 1,96,77,631/-. For the subsequent three assessment years i.e. 2001-2002, 2002-2003 and 2003-2004, the proportionate net profits to the gross sales were 81%, 95% and 95% respectively. It is furthermore stated that the total investment on plant and machinery for unit No. 1 was shown to be just Rs. 1,25,000/- and a very small amount of money was shown to have been spent on plant and machinery for the second unit.;