M/s. Saptashringi Steel Rolling Mills Pvt.Ltd, Nashik V. Assistant Commissioner of Income tax, Nashik

ITA 1436/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2506 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 1 436 /P U N/201 7 / ASSESSMENT YEAR : 20 07 - 08 M/S. SAPTASHRINGI STEEL ROLLING MILLS PVT. LTD., 22, KHARBANDA PARK, OPP. DWARKA CIRCLE, NASHIK 422011 . / APPELLANT PAN: A A ECS0139F VS. THE ASST . COMMISSIONER OF INCOME TAX, CIRCLE 2, NASHIK . / RESPONDENT / APPELLANT BY : SHRI SANKET JOSHI / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 27 . 0 2 .201 9 / DATE OF PRONOUNCEMENT: 08 . 0 3 .201 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 2 , NASHIK , DATED 09 . 0 2 .201 6 RELATING TO ASSESSMENT YEAR 20 07 - 08 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 1 47 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER - ON FACTS AND IN LAW, 1] THE ASSESSEE SUBMITS THAT IN THE INSTANT CASE, TH E NOTICE U/S 143(2) HAS NOT BEEN ISSUED BY THE A.O. AND HENCE, THE ASST. ORDER PASSED U/S ITA NO. 1 436 /P U N/201 7 M/S. SAPTASHRINGI STEEL ROLLING MILLS PVT. LTD. 2 143(3) R.W.S. 147 WITHOUT ISSUING THE NOTICE U/S 143(2) MAY BE DECLARED AS NULL AND VOID IN LAW. WITHOUT PREJUDICE TO THE ABOVE GROUND, IT IS SUBMITTED AS UNDER - 2 ] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.10,51,431/ - OUT OF THE TOTAL ADDITION OF RS.37,00,102/ - MADE BY THE A.O. ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS ON THE BASIS OF INVESTIGATIONS CONDUCTED AND INFORMATION RECEIVED FROM T HE CENTRAL EXCISE DEPT. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE WAS NOT ENGAGED IN ANY CLANDESTINE REMOVAL OF GOODS AND HENCE, THE ADDITION ON ACCOUNT OF ALLEGED UNDISCLOSED INCOME MADE SOLELY ON THE BASIS OF INFORMATION RECEIVED FROM EXCISE DEPT. WAS NOT WARRANTED ON FACTS OF THE CASE. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IT IS SUBMITTED AS UNDER 4] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.6,73,049/ - ON ACCOUNT OF UNDISCLOSED PROFIT ON ALLEGED UNDISCLOSED SALES MADE BY WAY OF CLANDESTINE REMOVAL OF GOODS WITHOUT APPRECIATING THAT THE SAID ADDITION WAS NOT WARRANTED ON FACTS. 5] THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.3,78,382/ - IN RESPECT OF UNACCOUNTED INITIAL INVESTMENT MADE FOR MAKI NG THE ABOVE UNDISCLOSED SALES WITHOUT APPRECIATING THAT THE ABOVE ADDITION WAS NOT JUSTIFIED ON FACTS OF THE CASE. 3. THE PRESENT APPEAL IS FILED AFTER DELAY OF 399 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY AND HAS POINTED OUT THAT BECAUSE OF HUGE FINANCIAL LOSSES, THE OPERATIONS OF THE COMPANY HAD TO BE SHUTDOWN AND THERE WERE SEVERE FAMILY DISPUTES AMONGST THE SHAREHOLDERS IN THE COMPANY AND THE MANAGEMENT OF THE COMPANY WAS SPLIT INTO TWO GROUPS. DUE TO SAID CIRCUMSTANCES, THE DECISION WITH REGARD TO COMPANY MATTERS WAS SEVERELY IMPAIRED. FURTHER, THE ASSESSEE POINTS OUT THAT BECAUSE OF FINANCIAL LOSSES, THE ACCOUNTS WERE TURNED INTO NPA AND THE ASSESSEE COULD NOT OPERATE ITS BUSINESS. IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, THE ASSESSEE PLEADED FOR CONDONATION OF DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL BY ABOUT 399 DAYS. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE CONDONE THE DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL . ITA NO. 1 436 /P U N/201 7 M/S. SAPTASHRINGI STEEL ROLLING MILLS PVT. LTD. 3 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED VIDE GROUNDS OF APPEAL NO.2 AND 3 IS AGAINST ADDITION MADE ON ACCOUNT OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. HE FURTHER S TATED THAT INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT VIS - - VIS UNDISCLOSED SALES MADE BY THE ASSESSEE. HOWEVER, THE HONBLE CESTAT HAS DELETED THE AFORESAID ADDITION AND HENCE, NO MERIT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE. FURTHE R, HE STATED THAT GROUND OF APPEAL NO.1 IN SUCH CIRCUMSTANCES WOULD BECOME ACADEMIC AND GROUNDS OF APPEAL NO.4 AND 5 ARE ON WITHOUT PREJUDICE BASIS. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BE LOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST ADDITION MADE BY THE AUTHORITIES BELOW ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS ON THE BASIS OF INVESTIGATION CARRIED OU T AND INFORMATION RECEIVE D FROM THE SALES TAX DEPARTMENT. THE ASSESSING OFFICER HAD RECEIVED THE AFORESAID INFORMATION CONSEQUENT TO SEARCH CONDUCTED BY THE OFFICERS OF DGCEI, ZONAL UNIT, MUMBAI ON 18.12.2006 AT THE OFFICE PREMISES OF ONE SHRI UMESH MODI. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS EVIDENCING CLANDESTINE CLEARANCE OF GOODS BY VARIOUS MANUFACTURERS OF TMT BARS LOCATED AT JALNA AND NASHIK WERE FOUND. THE STATEMENT OF PERSON SEARCHED WAS RECORDED, WHEREIN HE EXPLAINED THE MODUS OPERANDI AND ALSO THE DETAILS OF NAMES OF CUSTOMERS, QUANTITY OF MATERIAL, ETC. IN RESPECT OF ONE NAME GR , WHICH WAS MENTIONED IN HIS BOOKS OF ACCOUNT , HE STATED THAT GOODS IN ALL SUCH CASES WERE SUPPLIED TO THE ASSESSEE. THEREAFTER, STATEMENT OF SHRI MAHENDRA TA NK, THE DIRECTOR OF ASSESSEE COMPANY WAS RECORDED AND HE DENIED HAVING ANY DOCUMENTS IN THIS REGARD BUT ITA NO. 1 436 /P U N/201 7 M/S. SAPTASHRINGI STEEL ROLLING MILLS PVT. LTD. 4 ADMITTED TO CASH SALES MADE. THE ASSESSING OFFICER THUS, ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY ENTIRE TRANSACTION OF SALE OF GOODS OF 37,00,102/ - SHOULD NOT BE TREATED AS UNDISCLOSED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS PER STATEMENT OF SHRI MAHENDRA TANK, PURCHASES HAD BEEN MADE IN CASH AND HENCE , THE ASSESSEE SHOULD GET BENEFIT OF EXPENSES INCURRED AND THE SAME SHOULD BE ALLOWED TO ARRIVE AT THE INCOME ARISING OUT OF SUCH UNACCOUNTED SALES. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION AND MADE AN ADDITION OF 37,00,102/ - . THE CIT(A) RE STRICTED THE ADDITION BY APPLYING GP RATE AT 18.19% AND RESTRICTED THE ADDITION TO 6,73,049/ - I.E. PROFIT ON UNDISCLOSED SALES. HE FURTHER MADE AN ADDITION ON ACCOUNT OF INITIAL INVESTMENT OF 3,78,382/ - ; HENCE TOTAL ADDITION OF 10,51,431/ - WAS MADE IN THE HANDS OF ASSESSEE. 7. THE CASE OF ASSESSEE BEFORE US IS THAT THE AFORESAID ADDITION IS NOT JUSTIFIED IN THE HANDS OF ASSESSEE SINCE CESTAT IN APPEAL NO.E/442, 443/10 IN ASSESSEES CASE VIDE ORDER DATED 11.04.2017 AT PAGE 8 HAVE HELD THAT EVIDENCE RELIED UPON BY THE ADJUDICATING AUTHORITY FOR CONFIRMATION OF AMOUNT WAS NOT SUFFICIENT TO HOL D CHARGE OF CLANDESTINE REMOVAL. IT CLEARLY HELD THAT CHARGE OF CLANDESTINE REMOVAL SHOULD BE ESTABLISHED BEYOND ANY DOUBT ON THE BASIS OF TANGIBLE EVIDENCE, WH ICH ADJUDICATING AUTHORITY FAILED TO PROVE, THEREFORE THE ADDITION MADE IN THE HANDS OF ASSESSEE WAS DELETED. SINCE THE BASIS FOR MAKING ADDITION IN THE HANDS OF ASSESSEE WAS THE INVESTIGATION CARRIED OUT BY DGCEI IN THE CASE OF SHRI UMESH MODI AND OTHERS AND ONCE THE CESTAT IN ASSESSEES OWN CASE HAS DELETED THE AFORESAID ADDITION MADE ON THE ALLEGED CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY, THERE IS NO MERIT IN MAKING ANY ADDITION ON ACCOUNT OF SUCH ALLEGED CLANDESTINE REMOVAL OF GOODS AND THE SAME IS DELETED. THE GROUNDS OF APPEAL NO.2 AND 3 ITA NO. 1 436 /P U N/201 7 M/S. SAPTASHRINGI STEEL ROLLING MILLS PVT. LTD. 5 RAISED BY ASSESSEE ARE THUS, ALLOWED. THE GROUND OF APPEAL NO.1 IS DISMISSED AS ACADEMIC AND GROUN DS OF APPEAL NO.4 AND 5 ARE ON WITHOUT PREJUDICE AND SINCE WE HAVE ALLOWED GROUNDS OF APPEAL NO.2 AND 3, THOSE GROUNDS OF APPEAL DO NOT STAND. 8 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF MARCH , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 8 TH MARCH , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , NASHIK ; 4. THE PR. CIT - 2 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE