The ACIT, Central Circle-1, RAJKOT-GUJARAT V. M/s. Jaysun Ceramics,

ITA 155/RJT/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94076 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI , ACCOUNTANT MEMBER . ITA. NO. 1 60 / RJT /20 1 3 (ASSESSMENT YEAR: 2008 - 09 ) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT APPELLANT VS. M/S. SUNHILL CERAMICS PVT. LTD. 8 - A, NATIONAL HIGHWAY, VILLAGE: DHUVA, TAL. WANKANER, DIST. RAJKOT RESPONDENT & ITA. NO. 1 95 / RJT /20 1 3 (ASSESSMENT YEAR : 2008 - 09 ) M/S. SUNHI LL CERAMICS PVT. LTD. 8 - A, NATIONAL HIGHWAY, VILLAGE: DHUVA, TAL. WANKANER, DIST. RAJKOT APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT RESPONDENT PAN: AADCS9239H & ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 2 ITA. NO. 165 / RJT /20 13 ( ASSESSMENT YEAR: 2008 - 09 ) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT APPELLANT VS. M/S. SUNSHINE CERAMICS 8 - A, NATIONAL HIGHWAY, VILLAGE: DHUVA, TAL. WANKANER, DIST. RAJKOT RESPONDENT & ITA. NO. 189 / R JT /20 13 (ASSESSMENT YEAR: 2008 - 09 ) M/S. SUNSHINE CERAMICS 8 - A, NATIONAL HIGHWAY, VILLAGE: DHUVA, TAL. WANKANER, DIST. RAJKOT APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT RESPONDENT PAN: AAIFS8071M & ITA. NO. 155 / RJT /20 13 (ASSESSMENT YEAR: 2008 - 09 ) ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 3 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT APPELLANT VS. M/S. JAYSUN CERAMICS , 8 - A, NATIONAL HIGHWAY, VILLAGE DHUVA, TAL. WANKANER, DIST. RAJKOT RESPONDENT & ITA. NO. 1 9 0 / RJT /20 13 (ASSESSMENT YEAR: 2008 - 09 ) M/S. JAYSUN CERAMICS, 8 - A, NATIONAL HIGHWAY, VILLAGE DHUVA, TAL. WANKANER, DIST. RAJKOT APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RA JKOT RESPONDENT PAN: AABFJ7929C / BY REVENUE : SHRI M. L. MEENA, D.R. / BY ASSESSEE : SHRI UTSAV R. DOSHI, C.A . / DATE OF HEARING : 28 .0 5 .2015 / DATE OF PRONOUNCEMENT : 26 .0 6 .2015 ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 4 ORDER PER BENCH : THESE T HREE SETS OF CROSS APPEALS FILED BY THREE DIFFERENT ASSESSEES ARE ARISING OUT F R OM THE RESPECTIVE ORDER S OF CIT (A) - IV, AHMEDABAD ON SIMILAR ISSUE . SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 16 0 / RJT /20 13 FOR A.Y. 2008 - 09, REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE PROFIT ON SUPPRESSED SALES @ 9% AS AGAINST @ 25% AS DETERMINED BY THE ASSESSING OFFICER AND THEREBY THE C IT(A) HAS RESTRICTED THE ADDITION TO RS.60 , 25 , 97 6/ - OUT OF TOTAL ADDITION OF RS. 1,67 ,3 8 , 8 1 2 / - (9% OF SUPPRESSED SALES OF RS. 6 ,6 9 ,5 5 , 291 / - I.E. RS. 60 , 25 , 976 / - ). 2. 1 IN ITA NO. 195 / RJT /20 1 3 FOR A.Y. 2008 - 09 , ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GR OUND S : ( 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS BAD IN LAW AND CONTRARY TO THE FACTS OF THE CASE. (2) THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE AO REJECTING THE BOOKS OF ACCOUNT U/S.145 OF THE ACT. (3) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ALLEGED ESTIMATED SUPPRESSED SALES AT RS.6,69,55,291/ - . (4) THE LEARNED CIT(A) ALSO ERRED I N FACTS AS ALSO IN LAW IN OBSERVING THAT PROFIT ELEMENT IN RESPECT OF SUPPRESSED SALES ESTIMATED BY AO @ 25% IS REASONAB LE. THE FINDING OF THE LEARNED CIT(A) IS ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 5 TOTALLY UNJUSTIFIED AND CONTRARY TO THE FACTS ON RECORD AND MAY KINDLY BE QUASHED. (5) THE LEARNED CIT(A) HAS ERRED IN RESTRICTING THE PROFIT ON SUPPRESSED SALES @ 9% AND HOLDING TO TAX THE SAME AS UNACCOUNTED INC OME. THUS CONFIRMING THE ADDITION OF RS.60,25,976/ - . (6) WITHOUT PREJUDICE THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE DISCREPANCIES IN COMPUTATION / ASCERTAINMENT OF ACTUAL MRP/WEIGHTED MRP ON THE BASIS OF SEIZED DOCUMENTS BY DGCEI AND THEREBY E RRED IN COMPUTING THE SUPPRESSED SALES AT RS. 6,69,55,291/ - . 3 . A SSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CERAMIC TILES OF VARIOUS SIZES AND MEASUREMENTS. THE ASSESSEE IS A PART OF THE ' VAMORA GROUP OF COMPANIES'. THE COMPANIES / UNITS CARRYING ON OPERATION UNDER THE BANNER OF THE SAME GROUP . A SEARCH OPERATION WAS CARRIED OUT BY DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMEDABAD (HEREINAFTER CALLED DGCEI) ON 17.01.2008 AT 50 PREMISES OF ASSESSEE. DGCEI ALLEGED SUPPRESSED SALE OF RS.6,69,55,594/ - ON THE BASIS OF ALLEGED DIFFERENCE IN SALE PRICES I.E. MRP AND PRICE COLLECTED FROM DEALER AND ISSUED SHOW CAUSE NOTICE TO ASSESSEE. DURING PENDENCY OF PROCEEDING BEFORE DGCEI, ASSESSING OFFICER ON THE BASES OF SHOW CAUSE NOTICE ISSUED BY DGCEI, ISSUED SHOW CAUSE NOTICE TO ASSESSEE FOR REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF PROFIT ON ALLEGED UNACCOUNTED SALES. DURING COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FURNISHED ALL THE DETAILS. HOWEVER, ASSESSING OFFICER ASSESSE D TOTAL INCOME AT RS.2,91,95,410/ - , WHEREIN HE REJECTED BOOKS OF ACCOUNT OF ASSESSEE U/S.145(3) OF THE ACT AND ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 6 ESTIMATED PROFIT @ 25% ON ALLEGED SUPPRESSED SALES OF RS.6,69,55,291 AND MADE ADDITION OF RS.1,67,38, 812/ - . 3.1 IN APPEAL, CIT(A) RESTRICTED THE ADDITION TO RS.60,25,976/, HOWEVER, TOTAL ADDITION OF RS.1,67,38,812/ - , 9% OF SUPPRESSED SALES (9% OF RS.6,69,55,291) I.E. RS.60,25,976/ - . NOW BOTH PARTIES ARE IN APPEAL BEFORE US. REVENUE IS AGAINST RESTRICTING THE PROFIT ON SUPPRESSED SALE @ 9% AS A GAINST 25 % DETERMINED BY ASSESSING OFFICER WHILE ASSESSEE IS IN APPEAL ON THE GROUNDS TAKEN IN APPEAL. ASSESSEE HAS OPPOSED MAINTAINABILITY OF ASSESSMENT WHICH IS MERELY BASED ON CUSTOM EXCISE PROCEEDING. WE FIND THAT SIMILAR ISSUE AROSE IN ITA NO. 117/R JT/2013 IN CASE OF VRUNDAVAN CERAMICS PRIVATE LIMITED VS. ACIT WITH DIFFERENT CASES, WHEREIN ITAT, RAJKOT HAS DEALT SIMILAR ISSUE BY OBSERVING AS UNDER: 10 . BEFORE US, REVENUE HAS OPPOSED THE RESTRICTION OF PROFIT ON SUPPRESSED SALE @ 9% AS AGAINST 25% AS DETERMINED BY ASSESSING OFFICER AND THEREBY REQUESTED THAT CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO RS.1,58,08,865/ - OUT OF TOTAL ADDITION OF RS.4,39,13,515/ - . ACCORDINGLY, ORDER OF CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF ASSESSING OF FICER BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE REJECTION OF BOOKS RESULT AND CONFIRMING THE ESTIMATED ADDITION ON ACCOUNT OF SUPPRESSED SALE AND PROFIT. CIT(A) ALSO ERRED ON FACTS AND ALSO IN LAW IN OBSERVING THAT PROFIT ELEMENT IN RESPECT OF SUPPRESSED SALES ESTIMATED BY ASSESSING OFFICER @ 25% IS REASONABLE. THE FINDING OF ASSESSING OFFICER IS TOTALLY UNJUSTIFIED AND CONTRARY TO THE FACTS ON RECORD AND MATTER ACCORDINGL Y BE QUASHED. LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT CIT(A) ERRED IN ALLEGING THAT ASSESSEE HAS SUPPRESSED MRP TO THE TUNE OF RS.17,56,54,060/ - ON WHICH IT WOULD HAVE EARNED PROFIT @ 9% AND THEREBY RETAINING /CONFIRMING ADDITION OF RS.1, 58,08,865/ - ON ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 7 ACCOUNT OF ALLEGED SUPPRESSED PROFIT. LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT T HE ADDITION SUSTAINED AS MENTIONED ABOVE IS TOTALLY UNJUSTIFIED ON FACT ALSO IN LAW AND DESERVES TO BE DELETED AND ACCORDINGLY SAME BE DELETED. WE FIND THAT ITAT, RAJKOT BENCH IN ITA NO. 141/RJT/2011 FOR A.Y. 2007 - 08 IN CASE OF VRUNDAVAN CERAMICS PVT. LTD. IN SIMILAR SET OF FACTS HAS RESTRICTED THE NET PROFIT TO 9% BY OBSERVING AS UNDER: 19. NOW THE QUESTION REMAINS TO BE SEE THAT UNDER THE FACTS AND CIR CUMSTANCES WHAT SHOULD BE THE FAIR AND REASONABLE PROFIT ON SUPPRESSED TURNOVER. THE NET PROFIT RATE IN THE CASE OF ASSESSEES AND COMPARABLE CASES ARE 13.20%, 10.68% AND 7.38%, 3.65% IN CASE OF VRUNDAVAN CERAMICS PVT. LTD., GOKUL CERAMICS PVT. LTD.. RAMCO CERAMICS PVT. LTD. AND FERRO GLAZED TILES PVT. LTD. RESPECTIVELY. AS DISCUSSED AND STATED ABOVE THAT THE ABOVE NET PROFIT RATE OF ASSESSEES INCLUDES SOME PORTION OF PROFIT OF SUPPRESSED TURNOVER. THEREFORE, TO GIVE EFFECT OF THAT AND ON ACCOUNT OF FAIR AND REASONABLE ESTIMATION, WE ARE OF THE VIEW THAT THE AVERAGE NET PROFIT RATE OF ALL 4 UNITS WILL BE A GOOD BASIS FOR FAIR AND REASONABLE ESTIMATION OF PROFIT ON SUPPRESSED TURNOVER. IT IS SETTLED POSITION THAT IN ESTIMATION, SOME GUESS WORK CANNOT BE RULED OUT. THE AVERAGE NET PROFIT RATE OF ALL 4 UNITS COMES TO 8.72%. IN THAT RATE, IF WE INCLUDE 0.28% TO COVER MISCELLANEOUS BENEFIT OF THE TURNOVER OUT OF THE BOOKS OF ACCOUNT, THAT WILL BE A FAIR AND REASONABLE RATE OF PROFIT WHICH COMES TO 9%. THIS RATE OF 9% NET PROFIT WILL BE FAIR AND REASONABLE ON THIS COUNT ALSO THAT THE ASSESSEE WILL NOT GET MAJOR BENEFIT OF PROFIT OF EVASION OF EXCISE DUTY AS EXCISE DEPARTMENT HAS ALREADY TAKEN ACT ION IN THIS REGARD. ON APPLICATION OF 9% RATE OF PROFIT, THE RELEVANT CA LCULATIONS ARE AS UNDER: - PARTICULARS VRUNDAVAN GOKUL SUPPRESSED SALE 21,52,03,905 8,00, 77,050 9% NET PROFIT RATE FOR 1,93,68,351 72,06,934 ESTIMATION ADDITION SUSTAINED BY 2,84,06,905 85,52,229 CIT(A) 9% PROFIT ADDITION 1,93,68,351 72,06,934 ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 8 SUSTAINABLE BALANCE EXCESS 90,38,554 13,45,295 20. IN ACCORDANCE WITH ABOVE CALCULATION, WE CONFI RM THE ADDITION TO THE EXTENT OF RS.1,93,68,351/ - IN THE HANDS OF VRUNDAVAN AND RS.72,06,934/ - IN THE HANDS OF THE GOKUL AND BALANCE ADDITION RS.90,38,554/ - IN CASE OF VRUNDAVAN AND RS.13,45,295/ - IN THE CASE OF GOKUL OUT OF THE TOTAL ADDITION SUSTAINED BY CIT(A) ARE DELETED. 21. THE LEARNED REPRESENTATIVES OF THE PARTIES SUBMITTED THAT FACTS OF THE CASE IN GOKUL CERAMICS PVT. LTD. ARE SIMILAR. THEREFORE, THE CROSS APPEAL OF THAT CASE IS ALSO DECIDED IN ACCORDANCE WITH ABOVE DISCUSSION. 22. IN THE RESUL T, APPEALS OF ASSESSEE ARE PARTLY ALLOWED AND APPEALS BY REVENUE ARE DISMISSED. SUBSEQUENTLY HONBLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO.6500 OF 2012 IN CASE OF FUTURA CERAMIC PVT. LTD. VS. STATE OF GUJARAT IN ITS DATED 20 TH DECEMBER, 201 2, IN SIMILAR SITUATION OBSERVED AS UNDER: FROM THE ABOVE, IT CAN BE SEEN THAT THE ASSESSMENT WHICH WAS PREVIOUSLY CONCLUDED WAS REOPENED ON THE PREMISE THAT DURING THE EXCISE RAID, IT WAS REVEALED THAT THE PETITIONER HAD CLANDESTINELY REMOVED GOODS WITHO UT PAYMENT OF EXCISE DUTY. THE SALES TAX DEPARTMENT, THEREFORE, FORMED A BELIEF THAT THE VALUE OF GOODS PLUS EXCISE DUTY EVADED SHOULD FORM PART OF THE TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF TAX UNDER THE VALUE ADDED TAX ACT. IT MAY BE THAT THE RAID CARRIED OUT BY THE EXCISE DEPARTMENT AND THE MATERIAL COLLECTED DURING SUCH PROCEEDINGS CULMINATING INTO ISSUANCE OF A SHOW - CAUSE NOTICE FOR RECOVERY OF UNPAID EXCISE DUTY AND PENALTY IN A GIVEN CASE SUFFICIENT TO RE - OPEN PREVIOUSLY CLOSED ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 9 ASSESSMENT. IN T HIS CASE, HOWEVER, WE ARE NOT CALLED UPON TO JUDGE THIS ISSUE AND WOULD THEREFORE NOT GIVE ANY DEFINITE OPINION. THE QUESTION, HOWEVER, IS WHETHER ON A MERE SHOW CAUSE ISSUED BY THE EXCISE DEPARTMENT, THE SALES TAX DEPARTMENT CAN MAKE ADDITIONS FOR THE PUR POSE OF COLLECTING TAX UNDER THE GUJARAT VALUE ADDED TAX ACT WITHOUT ANY FURTHER INQUIRY. IF THE ASSISTANT COMMISSIONER OF COMMERCIAL TAX HAS UTILIZED THE MATERIAL COLLECTED BY THE EXCISE DEPARTMENT; INCLUDING THE STATEMENTS OF THE PETITIONER AND OTHER REL EVANT WITNESSES AND HAD COME TO AN INDEPENDENT OPINION THAT THERE WAS IN FACT EVASION OF EXCISE DUTY BY CLANDESTINE REMOVAL OF GOODS, HE WOULD HAVE BEEN JUSTIFIED IN MAKING ADDITIONS FOR THE PURPOSE OF VAT ACT. IN THE PRESENT CASE, HOWEVER, NO SUCH EXERCIS E WAS UNDERTAKEN. ALL THAT THE ASSESSING OFFICER DID WAS TO RELY ON THE SHOW - CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. NOWHERE DID HE CONCLUDE THAT THERE WAS A CASE OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAX UNDER THE VAT ACT. MERELY BECAU SE THE EXCISE DEPARTMENT ISSUED A SHOW - CAUSE NOTICE, THAT CANNOT BE A GROUND TO PRESUME AND CONCLUDE THAT THERE WAS EVASION OF EXCISE DUTY IMPLYING THEREBY THAT THERE WAS ALSO EVASION OF TAX UNDER THE VAT ACT. IT IS NOT EVEN THE CASE OF THE DEPARTMENT THAT SUCH SHOW - CAUSE NOTICE PROCEEDINGS HAS CULMINATED INTO ANY FINAL ORDER AGAINST THE PETI - TIONER. WE WONDER WHAT WOULD HAPPEN TO THE ORDER OF REASSESSMENT, IF ULTIMATELY THE EXCISE DEPARTMENT WERE TO DROP THE PROCEEDINGS WITHOUT LEVYING ANY DUTY OR PENALTY FROM THE PETITIONER. ALL IN ALL, THE ASSISTANT COMMISSIONER HAS ACTED IN A MECHANICAL MANNER AND PASSED FINAL ORDER OF ASSESSMENT MERELY ON THE PREMISE THAT THE EXCISE DEPARTMENT HAS ISSUED A SHOW - CAUSE NOTICE ALLEGING CLANDESTINE REMOVAL OF THE GOODS. SU CH ORDER, THEREFORE, CANNOT BE SUSTAINED AND IS ACCORDINGLY QUASHED. WHEN THE ORDER IS EX FACIE ILLEGAL AND WHOLLY UNTENABLE IN LAW, MERE AVAILABILITY OF ALTERNATIVE REMEDY WOULD NOT PRECLUDE US FROM INTER FERING AT THIS STAGE IN A WRIT PETITION. ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 10 THUS, H ONBLE JURISDICTIONAL HIGH COURT HELD THAT CONCERN ASSISTANT COMMISSIONER , SALES TAX WAS NOT JUSTIFIED IN INITIATIN G ACTION AND PASSING FINAL ASSESSMENT ORDER MERELY ON THE PREMISES THAT EXCISE DEPARTMENT HAS ISSUED A SHOW CAUSE NOTICE ALLEGING CLANDESTINE REMOVAL OF GOOD S . SUCH ORDER WAS QUASHED. 10 . 1 SIMILAR VIEW HAS BEEN TAKEN BY HONBLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO. 1038 OF 2013 IN CASE OF FUTURA CERAMIC PVT. LTD. VS. STATE OF GUJARAT IN ITS ORDER DATED 13.11.2013 BY OBSERVING AS UNDER: [6.0] IN VIEW OF THE ABOVE DECISION OF DIVISION BENCH OF THIS COURT, THE IMPUGNED REASSESSMENT ORDER DESERVES TO BE QUASHED AND SET ASIDE. HOWEVER LIBERTY CAN BE RESERVED IN FAVOUR OF THE DEPARTMENT TO PASS AN ORDER AFRESH IN ACCORDANCE WITH L AW AND ON MERITS AFTER GIVING AN OPPORTUNITY TO THE PETITIONER AND IF PERMISSIBLE UNDER THE LAW NOW. [6.1] IN VIEW OF THE ABOVE AND FOR THE REASONS STATED ABOVE, PETITION SUCCEEDS. IMPUGNED ORDER PASSED BY THE ASSISTANT COMMERCIAL COMMISSIONER TAX (2), NA DIAD [ANNEXUREF TO THE PETITION] DATED 31.03.2012 IS HEREBY QUASHED AND SET ASIDE. HOWEVER, IT IS OBSERVED THAT THE SAME SHALL NOT AFFECT THE P ROCEEDINGS UNDER THE CENTRAL EXCISE ACT FOR WHICH THE SHOWCAUSE NOTICE HAS BEEN ISSUED. A LIBERTY IS ALSO RESERVE D IN FAVOUR OF THE DEPARTMENT TO PASS REASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAW AND ON MERITS AND AFTER GIVING FULLEST OPPORTUNITY TO THE PETITIONER AND IF PERMISSIBLE UNDER THE LAW NOW. RULE IS MADE ABSOLUTE TO THE AFORESAID EXTENT. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS. AGAIN IN THIS CASE REASSESSMENT WAS SET ASIDE ON THE GROUND THAT SAME WAS MECHANICALLY PASSED. 10 . 2 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING SAME RE ASONING, WE FIND THAT IT IS UNDISPUTED THAT INCOME TAX PROCEEDINGS ARE ARISING FROM THE RATE OF EXCISE DEPARTMENT AND MATERIAL COLLECTED DURING SEARCH PROCEEDINGS CULMINATED INTO ISSUANCE OF SHOW CAUSE NOTICE FOR RECOVERY OF UNPAID EXCISE DEPARTMENT AND PE NALTY ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 11 IN GIVEN CASES. WITHOUT PREJUDICE TO THE FINDING OF CUSTOM, EXCISE DEPARTMENT, QUESTION BEFORE US IS WHETHER ON MERE SHOW CAUSE NOTICE ISSUED BY EXCISE DEPARTMENT CAN BE MADE BASIS OF ADDITION FOR THE PURPOSE OF INCOME TAX ACT. INCOME TAX OFFICER H AS UTILIZED THE MATERIAL COLLECTED BY EXCISE DEPARTMENT INCLUDING STATEMENT OF PETITIONER AND OTHER RELEVANT PERSONS AS DISCUSSED ABOVE AND ON THE BASIS OF SAME. HE W OULD HAVE BEEN JUSTIFIED IN MAKING ADDITION FOR THE PURPOSE OF INCOME TAX DEPARTMENT IN PR ESENT CASE BY INDEPENDENT ENQUIRIES BY CONCERN INCOME TAX AUTHORITIES. N O SUCH EXERCISE WAS UNDERTAKEN BY INCOME TAX DEPARTMENT AT ALL . ASSESSING OFFICER HAS SIMPLY RELIED ON SHOW CAUSE NOTICE ISSUED BY EXCISE DEPARTMENT. NOWHERE DID HE CONCLUDE THAT TH ERE WAS A LARGE SCALE REMOVAL OF GOODS WITHOUT PAYMENT OF TAX UNDER INCOME TAX ACT. MERELY BECAUSE EXCISE DEPARTMENT ISSUED SHOW CAUSE NOTICE , THAT ALONE CANNOT BE A GROUND TO ASSUME AND CONCLUDE THAT THERE WAS EVASION OF INCOME TAX ACT AS WELL . IT IS NO T EVEN THE CASE OF DEPARTMENT THAT SUCH SHOW CAUSE NOTICE PROCEEDING H AS CULMINATED INTO ANY FINAL ORDER AGAINST PETITIONER. THIS MAKES IT CLEAR THAT CONCERN INCOME TAX OFFICER HAS ACTED UPON IN MECHANICAL MANNER AND PASSED ORDER OF ASSESSMENT MERELY ON P REMISES OF EXCISE DEPARTMENT ISSUED SHOW CAUSE NOTICE ALLEGING LARGE SCALE REMOVAL OF GOODS. THIS VIEW IS FORTIFIED BY DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF FUTURA CERAMIC PVT. LTD. (SUPRA). ITAT, RAJKOT BECNH IN ITA NO. 141/RJT/2011 FOR A.Y. 2007 - 08 WAS NOT HAVING ADVANTAGE OF ABOVE LEGAL DISCUSSION ON THIS ISSUE OF MAINTAINABILITY . UNDER FACTS AND CIRCUMSTANCES, ORDER OF CIT(A) CANNOT BE SUSTAINED. ACCORDINGLY , ORDER OF ASSESSING OFFICER ON THIS ISSUE IS QUASHED. IN VIEW OF ABOVE, ISSUE RA ISED IN REVENUES APPEAL GOES ACADEMIC. SAME MAY BE RAISED AS AND WHEN SITUATION ARISES FOR THIS. 10 . 3 SIMILAR ISSUE AROSE IN OTHER ASSESSEES CASE. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, WE HOLD THAT ORDERS PASSED BY INCOME TAX OFFICER CAN NOT BE SUSTAINED AND SAME ARE UPHELD. 11 . IN RESULT, APPEALS OF REVENUE ARE DISMISSED AND THAT OF ASSESSEES ARE ALLOWED. ITA NOS. 160 & 1 95 / R JT/ 13, 1 65 & 1 89 / R JT/ 13, 1 55 & 1 90 / R JT/ 13 FOR A.Y. 2008 - 09 PAGE 12 3.2 FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, ORDER OF ASSESSING OFFICER IS QUASHED. CONSEQUENTLY ISSUES RAISED IN REVENUE S APPEAL GOES ACADEMIC. SAME BE AGITATED AS AND WHEN SITUATION ARISES FOR THE SAME. 4. SIMILAR ISSUE AROSE IN OTHER TWO SETS OF APPEAL. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, WE HOLD THAT ORDERS PASSED BY CONCERN ASSESSING OFFICER CANNOT BE S USTAINED. SAME ARE QUASHED AND ISSUE RAISED IN REVENUES APPEAL GOES ACADEMIC AS STATED ABOVE. 5. IN RESULT, ALL APPEALS OF ASSESSEE ARE ALLOWED AND THAT REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF JUNE , 201 5 . SD/ - SD/ - (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT : DATED 26 /0 6 /2015 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, RAJKOT 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT