INCOME-TAX OFFICER, WARD-6(2) JAIPUR, NEW CENTRAL REVENUE BUILDING, JAIPUR V. PANKAJ JAIN, JAIPUR

ITA 1035/JPR/2024

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A), which had deleted the addition made by the AO regarding the undervaluation of imported paper cup machines by the assessee, Pankaj Jain. The AO had initially added an amount of Rs. 83,41,378 to the assessee's income, alleging that the machines were undervalued. However, the CIT(A) found that the AO's addition was not supported by independent evidence and relied on a CESTAT order which had overturned the Customs Department's valuation. The revenue's appeal to the Tribunal was based on the contention that the CIT(A) had erred in relying on the CESTAT order without considering the ongoing litigation in similar cases involving the assessee's wife.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46823 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: CESTAT order, High Court appeal against CESTAT order
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL PARIHAR; HOLDING
• Assessee Lawyers: P.C. PARWAL
• Keywords: Set aside; Reassessment proceedings; Question of law
• Section: 147; 142(1); 250; 69

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1035/JPR/2024 fu/kZkj.k o\"kZ@Assessment Year : 2017-18. Income Tax Officer, Ward-6(2) Jaipur. cuke Vs. Pankaj Jain C-6, Inderpuri Colony, Lal Kothi Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABAPJ0224A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri P.C. Parwal, C.A. jktLo dh vksjls@Revenue by :Mrs. Swapnil Parihar, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 18/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 07/04/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the revenue against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC) Delhi dated 10.06.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2017-18. The Revenue has raised the following grounds of appeal :- 1. Whether on the facts and circumstances of the case and in law the ld. CIT (A) has learned in allowing the appeal of the assessee merely relying on the order of CESTAT and without going into the merits of the case. 2. Whether on the facts and circumstances of the case and in law the ld. CIT (A) has erred in deleting the addition of Rs. 83,41,378/- made on account of under valuation 2 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. of imported paper cup machine(s) in spite of the fact that on similar facts assessee’s wife case is pending before the Hon’ble High Court against CESTAT order. 3. Whether on the facts and circumstances of the case and in law the ld. CIT (A) has erred in deleting the addition without appreciating the fact that the department has filed an appeal before the Hon’ble Rajasthan High Court in the case of assessee’s wife Ms. Sonal Jain vide appeal no. ITA 20/2024, ITA 24 to 26/2024, which is still pending. 2. The brief facts of the case are that the assessee is an Individual and engaged in trading of import of paper cup machine from China and sale it in domestic markets. He filed his return of income on 03.10.2017 declaring total income at Rs. 2,63,760/-. On perusal of information received from Commissioner of Customs, Inland Container Depot, Patpadganj, ICD, Delhi through Deputy Director, Directorate General of Goods & Service Tax Intelligence, Jaipur, the AO observed that the assessee has imported 16 paper cup machines from China vide DIN entry no. 5275518 dated 16.05.2016. The assessee undervalued / under-invoiced the machinery imported to the tune of Rs. 1,36,62,031/- and also mis-declared the goods in respect of its model. The AO conducted reassessment proceedings under section 147 read with section 144B. Multiple notices under section 142(1) were issued, and the appellant provided responses and submitted various documents during the proceedings. The assessee filed the order of CESTAT dated 28.04.2023 (PB 8-31) wherein it was held that there is no undervaluation of the imported machinery. It was further explained that similar addition made in case of his wife 3 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. Sonal Jain was deleted by the ITAT on the basis of the CESTAT order. The AO, however, rejected the contention of the assesseeby holding that (a) In case of assessee’s wife Sonal Jain, against the order of CESTAT dated 08.02.2022, the department is contesting in High Court which is pending, (b) There is a possibility of filing an appeal against the order of CESTAT dated 28.04.2023 in assessee’s case also. Accordingly, the AO assessed the total income of the assessee at Rs. 86,05,138/- after adding the alleged undervaluation amount of Rs. 83,41,378/- to the declared income of Rs. 2,63,760/-. Aggrieved by the order of AO, the assessee preferred appeal before the ld. CIT (A). The ld. CIT (A) deleted the addition by holding that the AO did not provide any independent evidence to substantiate the claim of undervaluation and relied solely on the information from the Customs Department, which has been overturned by the CESTAT. The AO’s reliance on the possibility of an appeal against the CESTAT order being filed does not justify the addition, especially since no appeal has been filed within the stipulated time frame, making the CESTAT order final. 3. Being aggrieved, the revenue has filed the present appeal before the Tribunal. Before us, the ld. D/R supported the order of the AO and furnished paper book received from the AO. 4 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. 4. On the other hand, the ld. A/R of the assessee reiterated the submissions as were made before the ld. CIT (A). He, further, submitted his written submissions in support of his case, which are reproduced hereunder :- 1. “The assessee is engaged in trading of import of paper cup machine from China and sale it in domestic markets. He filed his return of income on 03.10.2017 declaring total income at Rs.2,63,760/-. 2. On perusal of the information received from Commissioner of Customs,Inland Container Depot, Patpadgang, ICD, Delhi through Deputy Director, Directorate General of Goods & Service Tax Intelligence, Jaipur,AO observed that the assessee has imported 16 paper cup machines from China vide DIN entry no.5275518 dt.16.05.2016. The assessee undervalued/ under invoiced the machinery imported to the tune of Rs.1,36,62,031/- and also misdeclared the goods in respect of its model. The assessee filed the order of CESTAT dt. 28.04.2023(PB 8-31) wherein it was held that there is no undervaluation of the imported machinery. It was further explained that similar addition made in case of his wife Sonal Jain was deleted by the Hon’ble ITAT on the basis of the CESTAT order. 3. The AO, however, rejected the contention of assessee by holding that:- a. In case of assessee’s wife Sonal Jain, against the order of CESTAT dated 08.02.2022, the department is contesting in High Court which is pending. b. There is a possibility of filing an appeal against the order of CESTAT dt. 28.04.2023 in assessee’s case also. Accordingly he made addition of Rs.83,41,378/- on account of undervaluation of the machines u/s 69 of the Act. 4. The Ld. CIT(A), NFAC deleted the addition made by AO by holding that the AO did not provide any independent evidence to substantiate the claim of undervaluation and relied solely on the information from the Customs Department which has been overturned 5 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. by the CESTAT. The AO’s reliance on the possibility of an appeal against the CESTAT order being filed does not justify the addition, especially since no appeal has been filed within the stipulated time frame making the CESTAT order final. Further the appellant also provided ITAT orders in case of his wife Sonal Jain where similar additions were deleted based on the CESTAT’s findings. 5. At the outset it is submitted that the CESTAT vide order dated 28.04.2023 has held that there is no undervaluation of the machines and thus set aside the order passed by Commissioner of Customs. Copy of the order is at PB 8-31. Against this order no appeal is filed to the High Court. Thus the order of CESTAT is final and therefore the addition made by the AO has been rightly deleted by Ld. CIT(A). 6. So far as appeal filed by the Commissioner of Custom to the Rajasthan High Court against the order passed by CESTAT in case of assessee’s wife Mrs. Sonal Jain, Proprietor M/s Tradewell is concerned, the Hon’ble High Court vide order dt. 14.8.2024 (PB 32-34) has dismissed the appeal filed by the Commissioner as non maintainable since the only substantial question relates to valuation of goods and thus no substantial question of law arise for consideration. Further against the order dt. 28.03.2023 (PB 35- 44) passed by Hon’ble ITAT in case of Smt. Sonal Jain, Hon’ble Rajasthan High Court vide order dt. 06.08.2024 (PB 45-49)has dismissed the appeal filed by the department. Hence the ground raised by the department stands infructuous. In view of above, addition of Rs.83,41,378/- made on account of under valuation of imported paper cup machines is rightly deleted by Ld. CIT(A) and thus the grounds of the department be dismissed.” 5. The ld. AR of the assessee also filed a detailed paper book in support of the contention so raised in the written submission and the index of the document submitted on 30.09.2024 are as under:- PAPER BOOK 6 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. S. No. Particulars Pg. No. Filed before AO/CIT(A) 1. Copy of submission filed before ld.CIT (A) 1-6 CIT (A) 2. Copy of Index of Paper Book filed before ld. CIT (A) 7 CIT (A) 3. Copy of order dt. 28.04.2023 of Hon’ble CESTAT, Delhi Bench in case of M/s. Jain & Sons vs. Commissioner of Custom 8-31 Both 4. Copy of order dt. 14.08.2024 of Hon’ble Rajasthan HighCourt in case of Commissioner of Custom vs. M/s. Tradewell in DB Custom Appeal No. 2/2022. 32-34 Reference 5. Copy of order dt.28.03.2023 of Hon’ble ITAT, Jaipur Bench in case of ITO vs. Smt. Sonal Jain in ITA No. 29 to 32/JP/2023. 35-44 Reference 6. Copy of order dt. 06.08.2024 of Hon’ble Rajasthan High Court in case of PCIT vs. Sonal Jain 45-49 Reference 6. We have heard the rival submissions, perused the material on record, gone through the orders of the revenue authorities.At the outset, we find that the case of the assessee is squarely covered by the decision of the Coordinate Bench of the Tribunal, Jaipur in the case of assessee’s wife Mrs. Sonal Jain in ITA Nos. 29 to 32/JP/2023 dated 28.03.2023 wherein the Tribunal after elaborately discussing the matter at great length, dismissed the appeal of the revenue by holding in para 2.6 to 5 of its order as under :- “2.6 We have heard both the parties and perused the materials available on record. It is not imperative to repeat the facts of the case as the ld. CIT(A) has elaborately discussed the issue in question and taken into consideration the order passed by the CESTAT wherein the appeal was decided in favour of the assessee on legality and merit and the order of the AO does not survive after the order of the CESTAT. The ld. CIT(A) respectfully followed the order of the CESTAT and 7 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. deleted the addition made by the AO and we also concur with the findings of the ld. CIT(A) which has merit. Thus the appeal of the Revenue is dismissed. 3.0 Since the appeal of the Revenue in ITA No.29/JP/2023 for the assessment year 2013-14 is dismissed, therefore, the decision taken therein shall apply mutatis mutandis in the appeals of the Revenue in ITA No. 30 to 32/JP/2023. Thus all the appeals of the Revenue are dismissed. 4.0 It is also pertinent to mention that in these appeals the liberty is granted to the Revenue in case they succeed in the appeals filed by them before Hon’ble Rajasthan High Court against the order of CESTAT and then in that eventuality afresh order would be passed by the AO considering the Hon’ble High Court judgement after providing opportunity of hearing to the assessee. 5.0 In the result, the above appeals of the Revenue are dismissed” 6.1 We note that appeal filed by the Commissioner of Custom to the Rajasthan High Court against the order passed by CESTAT in case of assessee’s wife Mrs. Sonal Jain, Proprietor M/s. Tradewell has been dismissed by the Hon’ble High Court vide order in DB Custom Appeal No. 2/2022 dated 14.08.2024 (PB Pages 32-34), as non maintainable since the only substantial question relates to valuation of goods and thus no substantial question of law arise for consideration. 6.2 We note that The Hon’ble Rajasthan High Court further dismissed the appeals of the Revenue filed against the order of ITAT Jaipur in the case of assessee’s wife Mrs. Sonal Jain vide order in DB IT Appeal Nos. 20/2024, 24/2024, 25/2024, 26/2024 dated 06.08.2024 (PB Pages 45-49). 8 ITA No. 1035/JPR/2024 Pankaj Jain, Jaipur. 6.3 Thus, in the totality of facts and circumstances and also placing reliance on the judgments of the Hon’ble Rajasthan High Court as mentioned hereinabove, we find no infirmity in the order of the ld. CIT (A), the same is upheld. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 07/04/2025. Sd/- Sd/- jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (Rathod Kamlesh Jayantbhai) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member fnukad@Dated:- /04/2025. *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- ITO, Ward-6(2), Jaipur. 2. izR;FkhZ@The Respondent- Pankaj Jain, Jaipur. 3. vk;djvk;qDr@CIT 4. vk;djvk;qDr@CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@Guard File {ITA No. 1035/JPR/2024} vkns'kkuqlkj@By order, lgk;d iathdkj@Asst. Registrar "