Income-tax Officer, V. M/s. Ruturaj Ispat Pvt. ltd., Jalna

ITA 164/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7212 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUN; DR VIVEK AGGARWAL ITA NOS

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.161 & 162/PUN/2016 / ASSESSMENT YEARS : 2004-05 & 2009-10 ACIT, JALNA CIRCLE, JALNA . /APPELLANT VS. M/S. RISHI STEEL & ALLOYS PVT. LTD., D-55/7, ADDL. MIDC AREA, JALNA 431 203 PAN : AABCR3131P . / RESPONDENT . / ITA NO.164/PUN/2016 / ASSESSMENT YEAR : 2009-10 ITO, WARD-2, JALNA . /APPELLANT VS. M/S. RUTUJA ISPAT PVT. LTD., PLOT NO.D-67, ADDL. MIDC AREA, JALNA 431 203 PAN : AACCR8562P . / RESPONDENT . / ITA NO.167/PUN/2016 / ASSESSMENT YEAR : 2009-10 ITO, WARD-2, JALNA . /APPELLANT VS. M/S. K.M. RE-ROLLS PVT. LTD., PLOT NO. D-56, ADDL. MIDC AREA, JALNA 431 203 PAN : AABCK2036L . / RESPONDENT ASSESSEE(S) BY : NONE REVENUE BY : DR. VIVEK AGGARWAL, CIT-DR ITA NOS.161, 162, 164 AND 167/PUN/2016 M/S. RISHI STEEL & ALLOYS PVT. LTD. M/S. RUTUJA ISPAT PVT. LTD., AND M/S. K.M. RE-ROLLS PVT. LTD. 2 / DATE OF HEARING : 16.11.2017 / DATE OF PRONOUNCEMENT: 17.11.2017 / ORDER PER BENCH : THERE ARE 4 APPEALS FILED BY THE REVENUE UNDER CONSIDERA TION INVOLVING 3 DIFFERENT ASSESSEES FOR THE ASSESSMENT YEARS 2 004-05 & 2009-10. THEY ARE FILED AGAINST THE SEPARATE ORDERS OF C IT(A)-1, AURANGABAD DATED 17-11-2015 & 27-11-2015 RESPECTIVEL Y. FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE BEING ADJUDICATED BY THIS COMPOSITE ORDER. 2. DESPITE THE SERVICE OF NOTICES, THERE WAS NONE TO R EPRESENT THE CASE OF THE ASSESSEES. CONSIDERING THE COVERED NAT URE OF THE ISSUES RAISED IN THESE APPEALS, WE PROCEED TO ADJUDICATE T HE APPEALS WITH THE ASSISTANCE OF LD. DR FOR THE REVENUE. 3. BEFORE US, AT THE OUTSET, LD. DR FOR THE REVENUE SUBMITTED THAT THESE ARE THE CASES WHERE DGCEI OF THE EXCISE DEPAR TMENT, GOVERNMENT OF INDIA CONDUCTED SEARCHES AND FOUND TH E ASSESSEES WERE ENGAGED IN CLANDESTINE REMOVAL OF THE GOODS WH ICH ARE PRODUCED OUTSIDE THE BOOKS OF ACCOUNT. ULTIMATELY, THE ASSESSEES OFFERED UNACCOUNTED ADDITIONAL INCOME RELATABLE TO THE SAID UNACCOUNTED PRODUCTION/UNACCOUNTED SALES. HE MENTI ONED THAT THE OFFERS OF THE RESPECTIVE ASSESSEES WERE REJECTED BY THE AOS AND THEY PROCEEDED TO ESTIMATE THE UNACCOUNTED PRODUCTION BA SED ON THE FACTOR OF CONSUMPTION OF ELECTRICITY IN THE MANUFAC TURING UNITS. THE PROFITS OF SUCH UNACCOUNTED PRODUCTION/UNACCOUNTED SALES WERE ITA NOS.161, 162, 164 AND 167/PUN/2016 M/S. RISHI STEEL & ALLOYS PVT. LTD. M/S. RUTUJA ISPAT PVT. LTD., AND M/S. K.M. RE-ROLLS PVT. LTD. 3 ESTIMATED APPLYING THE FLAT RATE OF 4%. ALL SUCH A DDITIONS WERE EVENTUALLY DELETED BY THE FIRST APPELLATE AUTHORITI ES RETAINING THE OFFER OF ADDITIONAL INCOME MADE BY THE ASSESSEES. 4. FURTHER, LD. DR FOR THE REVENUE FAIRLY SUBMITTED THAT THE PENALTY IS UNSUSTAINABLE IN SO FAR AS THE ESTIMATED ADDITIONS BASED ON THE ELECTRICITY CONSUMPTION IS CONCERNED. HOWEV ER, LD. DR MENTIONED THAT THE TRIBUNAL NEEDS TO APPRECIATE THE FACT THAT THE ASSESSEE IS ENGAGED IN THE UNACCOUNTED PRODUCTION O F THE GOODS AND UNACCOUNTED SALE OF THE SAME. CONSIDERING THE CONC EALMENT OF THE FACTS, AS PER LD. DR, THE PROFIT RELATABLE TO SUCH UNACCOUNTED SALE CONSTITUTE CONCEALED INCOME AND THE PENALTY TO THAT EXTENT IS REQUIRED TO BE SUSTAINED IN THE TRIBUNAL. FURTHER, HE ALSO MENTIONED THAT ON IDENTICAL ISSUES AND THE ARGUMENT OF LD. DR FOR THE REVENUE THE PENALTY WAS DELETED BY THE TRIBUNAL IN THE CASE S OF ACIT VS. BHAGYALAXMI STEEL ALLOYS PVT. LTD. VIDE ITA NOS. 99 0 AND 991/PUN/2015 ORDER DATED 18-10-2017, ACIT VS. SHREE OM ROLLING MILLS PVT. LTD. VIDE ITA NO.993/PUN/2015 ORDER DATE D 10-11-2017. 5. ON HEARING THE LD. DR FOR THE REVENUE AND ON AFT ER GOING THROUGH THE ORDERS OF THE INCOME-TAX AUTHORITIES AS WELL AS THE ORDERS OF THE TRIBUNAL IN THE CASES OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. AND SHREE OM ROLLING MILLS PVT. LTD. (SUPRA), WE ARE OF THE OPINION THAT THE ISSUES RAISED IN THESE APPEALS STA ND COVERED BY THE SAID DECISIONS IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE PROC EED TO EXTRACT THE OPERATIONAL PARAS HEREUNDER OF THE SAID ORDERS OF T HE TRIBUNAL HEREUNDER. IN THE CASE OF ACIT VS. BHAGYALAXMI STE EL ALLOYS PVT. ITA NOS.161, 162, 164 AND 167/PUN/2016 M/S. RISHI STEEL & ALLOYS PVT. LTD. M/S. RUTUJA ISPAT PVT. LTD., AND M/S. K.M. RE-ROLLS PVT. LTD. 4 LTD. (SUPRA) THE TRIBUNAL DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE BY HOLDING IN PARA NO.28 AS UNDER : 28. FROM THE ABOVE, WE FIND THE CIT(A) HAS CONSIDE RED ALL THE ASPECTS WHICH LED THE ASSESSEE TO DISCLOSE 982.82 UNITS PER MT WHICH INCLUDE THAT THE ASSESSEE MAINTAINED THE RECORDS PROPERLY AND TH E BOOKS OF ACCOUNTS HAVE BEEN AUDITED, NO METHOD FOR RECORDED DAY-TO-DA Y ELECTRICITY CONSUMPTION, DECLARATION OF 7% BURNING LOSS BY VARI OUS STEEL MANUFACTURING UNITS IN JALNA & SURROUNDING AREA, RE PORTS OF EXCISE DEPARTMENT THAT FOR 1 MT OF MS INGOTS/BILLETS, 1026 ELECTRICITY UNITS ARE REQUIRED, ETC., AND THE DECISION OF HONBLE CE&S TR IBUNAL AND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SRJ PEETY STEE LS PVT. LTD. (SUPRA) ETC. NOTHING INCRIMINATING MATERIAL HAS BEEN BROUGHT BY THE REVENUE AUTHORITIES TO TAKE A CONTRARY VIEW AGAINST THE FIN DINGS OF CIT(A). WE THEREFORE FIND THE ORDER OF THE CIT(A) TO BE A REAS ONED ONE AND ACCORDINGLY AFFIRM THE SAME. THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. IN THE CASE OF ACIT VS. SHREE OM ROLLING MILLS PVT. LTD. ( SUPRA) ALSO THE PUNE BENCH OF THE TRIBUNAL (WHERE BOTH OF US AR E PARTIES) HELD AS UNDER : 11. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDE RS OF THE REVENUE AS WELL AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. THE DELETION OF PENALTY U/S.271(1)(C) OF THE ACT IN RESPECT OF THE ESTIMATED ADDITIONS IS A DECIDED ISSUE. THERE ARE MANY JUDGMENTS TO SUPPORT THE SAME. THEREFORE, IN PRINCIPLE, WE CONFIRM THE ORDER OF THE CIT(A) AN D DELETE THE PENALTY RELATABLE TO THE ESTIMATED ADDITION. 12. HOWEVER, WITH REGARD TO THE PENALTY LEVIED RELA TING TO THE ADDITION OF RS.76,48,922/- IS CONCERNED, WE FIND, THE REVENU E RAISED GROUND NO.4 OF ITS APPEAL. IN THE SAID GROUND NO.4, THE REVENUE O PINES THAT PENALTY ON THE INCOME RELATABLE TO THE CLANDESTINE SALE OF UNR ECORDED PRODUCTION NEEDS TO BE CONFIRMED, EVEN IF THE RELATED PROFITS OF RS.76,48,922/- IS ESTIMATED APPLYING THE FLAT RATE OF 4%. LD. AR FOR THE ASSESSEE ARGUED THAT THE SAID INCOME IS ARRIVED AT BY THE ASSESSEE AGAIN BASED ON THE ESTIMATION ON THE ESTIMATED SALE OF THE GOODS CLANDE STINELY REMOVED BY THE ASSESSEE. THE UNRECORDED PRODUCTION WAS ALSO THE P RODUCT OF ESTIMATION BY THE DGCEI AND EVENTUALLY THE SAME WAS ACCEPTED B Y THE SETTLEMENT COMMISSION. ABSENCE OF ANY INCRIMINATING MATERIAL I N SUPPORT OF THE SAID CLANDESTINELY REMOVED GOODS, ITS QUANTITY AND ALSO EARNING OF PRECISE AMOUNT OF INCOME OF THE SAID GOODS, AUTHORITIES RES ORTED TO ESTIMATIONS. REVENUE IS NOT PRIVY TO THE RELEVANT FACTS (1) PREC ISE QUANTITY OF SUCH RECORDED SALES AND (2) PRECISE INCOME OUT OF THE S ALE OF SUCH GOODS AND THEY MERELY RELIED ON THE FIGURES GIVEN BY THE ASSE SSEE. THE QUANTITY OF UNACCOUNTED PRODUCTION IS ESTIMATED BY THE EXCISE D EPARTMENT AND THE TAXABLE INCOME IS ESTIMATED FOR THE INCOME-TAX DEPA RTMENT BY THE ASSESSEE APPLYING THE FLAT RATE OF 4%. DESPITE THE ABSENCE OF ANY DISCUSSION IN THE ORDER OF THE CIT(A) ON THIS PART OF THE ISSUE OF ARGUMENT, SPECIALLY, THE CIT(A) GRANTED RELIEF PRESUMING THAT THIS SEGMENT OF INCOME IS ALSO ARRIVED AT BY THE ESTIMATION. IN OUR VIEW, THE SAID PRESUMPTION IS FAIR AND REASONABLE. IN ANY CASE, NOTHING IS BROUGHT TO OUR NOTICE BY ITA NOS.161, 162, 164 AND 167/PUN/2016 M/S. RISHI STEEL & ALLOYS PVT. LTD. M/S. RUTUJA ISPAT PVT. LTD., AND M/S. K.M. RE-ROLLS PVT. LTD. 5 THE LD. DR TO DEMONSTRATE THE ESTIMATIONS ARE NOT I NVOLVED BOTH IN ARRIVING AT THE FIGURE OF UNRECORDED SALES AND THE TAXABLE INCOME. FOR OUR MIND, IT APPEARS THAT THE INCOME OF RS.76,4 8,922/- IS ALSO THE PRODUCT OF ESTIMATION AND THE SAME IS ACCEPTED BY THE AO/CIT(A)/ITSC. THEREFORE, IT CONSTITUTES A REASONABLE PRESUMPTIO N BY THE CIT(A). THEREFORE, THE ORDER OF CIT(A) IS FAIR AND REASONABLE FOR THE SAID REASONS TOO. ACCORDINGLY, THE GROUNDS RAISED BY TH E REVENUE ARE DISMISSED. 6. FROM THE ABOVE EXTRACTED PORTIONS OF THE ORDER OF T HE TRIBUNAL, WE FIND THE LD. DRS ARGUMENT THAT THE PROFIT RELATABLE TO TH E UNACCOUNTED PRODUCTION CONSTITUTES CONCEALED INCOME AND THEREFORE TH E PENALTY IS LEVIABLE STANDS REJECTED FOR THE REASON THAT THE UNACCO UNTED SALES AS WELL AS QUANTIFICATION OF THE RELATED PROFITS/CONCEALED INCOME/AD DITIONAL INCOME HAS REDUCED IN ESTIMATIONS DESPITE THE FACT OF UNAC COUNTED PRODUCTION AND CLANDESTINE REMOVAL OF THE GOODS-CUM-UNAC COUNTED SALES THE CONCEALMENT IS UNSUSTAINABLE IN LAW, IF THE ESTIMATION OF P ROFITS INVOLVED AND NO SPECIFIC RELATABLE INCOME IS PRECISELY QUANT IFIED. THEREFORE, WE ARE OF THE OPINION THAT THE ORDERS OF THE CIT(A) IN THESE 4 APPEALS ARE FAIR IN DELETING THE PENALTY FOR THE ABOVE CITED REASONS ALSO. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE REVENUE IN THE SE 4 APPEALS ARE DISMISSED. 7. IN THE RESULT, ALL THE 4 APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF NOVEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 17 TH NOVEMBER, 2017. ITA NOS.161, 162, 164 AND 167/PUN/2016 M/S. RISHI STEEL & ALLOYS PVT. LTD. M/S. RUTUJA ISPAT PVT. LTD., AND M/S. K.M. RE-ROLLS PVT. LTD. 6 / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - I , AURANGABAD CIT - I , AURANGABAD , , B BENCH PUNE; / GUARD FILE.