DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Alishan Steel Pvt. Ltd., Kolkata

ITA 1719/KOL/2010

• Counselvise Citation: 171923514 RSA 2010
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P ROY
• Assessee Lawyers: A K TULSYAN F
• Section: 145

Judgement Text

I.T.A. NO. 1719/KOL. /2010 & ITA NO. 1720/KOL/2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.K. BANSAL (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NOS. 1719 & 1720/KOL./ 2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 DEPUTY COMMISSIONER OF INCOME TAX,................. ......................APPELLANT CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. ALISHAN STEEL PVT. LTD.,...................... ................................RESPONDENT 51, VIVEKANANDA ROAD, KOLKATA-700 007 [PAN : AAACG 9883 E] APPEARANCES BY: SHRI A.K. TULSYAN, F.C.A., FOR THE ASSESSEE SHRI A.P. ROY, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 30, 2014 DATE OF PRONOUNCING THE ORDER : JULY 30, 2014 O R D E R PER GEORGE MATHAN: ITA 1719/KOL/2010 IS AN APPEAL FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-V III, KOLKATA IN APPEAL NO.352/CIT(A)-VIII/KOL./08-09 DATED 18.06.20 10 FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 1720/KOL/2010 IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-VIII, KOLKATA IN I.T.A. NO. 1719/KOL. /2010 & ITA NO. 1720/KOL/2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 2 OF 5 APPEAL NO. 356/CIT(A)-VIII/KOL./08-09 DATED 18.06.2 010 FOR THE ASSESSMENT YEAR 2007-08. 2. A.P. ROY , LD. JCIT, SR. D.R., REPRESENTED ON BEHALF OF THE R EVENUE AND SHRI A.K. TULSYAN, F.C.A., REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEALS, THE GROUNDS RAISED ARE SUBSTANTIALLY IDENTICAL EXCEPT FOR THE FIGURES. THE GROUNDS IN ITA NO. 1719/KOL/2010 ARE AS FOLLOWS:- (1) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW BY DELETING THE ADDITION OF RS.86,80,068/- STATING THAT THE BASIS FOR ESTIMATIO N EMPLOYED BY THE AO FOR ESTIMATING APPELLANTS UNACC OUNTED PRODUCTION AND THE APPELLANTS RESULTANT ESTIMATED INCOME IS NOT JUSTIFIABLE IN LAW OR FACTS. (2) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW BY DELETING THE ADDITION OF RS.41,16,543/- STATING THAT ESTIMATION OF INITIAL C APITAL REQUIREMENT IS A COROLLARY TO THE GROUND OF SUPPRES SION OF PRODUCTION. (3) THAT THE IMPUGNED ORDER OF THE CIT(A) IS PERVER SE AND DESERVES TO BE SET ASIDE AND THE ORDER OF THE AO TO BE RESTORED. 4. THE GROUNDS IN ITA NO. 1720/KOL/2010 ARE AS FOLLOWS:- (1) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW BY RETAINING ADDITION AMOUNT ING TO RS.3,38,130/- AND DELETING THE REMAINING ADDITION O F RS.2,92,29,665/- STATING THAT THE BASIS FOR ESTIMAT ION EMPLOYED BY THE AO FOR ESTIMATING APPELLANTS UNACC OUNTED PRODUCTION AND THE APPELLANTS RESULTANT ESTIMATED INCOME IS NOT JUSTIFIABLE IN LAW OR FACTS. (2) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW BY RETAINING ADDITION AMOUNT ING TO RS.4,05,756/- AND DELETING THE REMAINING ADDITION O F RS.1,03,45,086/- STATING THAT ESTIMATION OF INITIAL CAPITAL REQUIREMENT IS A COROLLARY TO THE GROUND OF SUPPRES SION OF PRODUCTION. I.T.A. NO. 1719/KOL. /2010 & ITA NO. 1720/KOL/2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 3 OF 5 (3) THAT THE IMPUGNED ORDER OF THE CIT(A) IS PERVER SE AND DESERVES TO BE SET ASIDE AND THE ORDER OF THE AO TO BE RESTORED. 5. IN REGARD TO GROUND NO. 1, IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT IT WAS NOTICED BY THE ASSESSING OFFIC ER THAT THE ASSESSEE MANUFACTURES MS INGOTS FROM THE RAW MATERIALS SCRAP . THE ASSESSING OFFICER HAD VERIFIED THE ELECTRICITY CONSUMPTION AN D HAD TABULATED THE SAME IN RESPECT OF THE ELECTRICITY CONSUMED FOR PRO DUCING 1 METRIC TON OF MS INGOTS. THE SAME WAS COMPARED WITH OTHER COMPANI ES. IT WAS NOTICED THAT THE ASSESSEE WAS SHOWING 60% TO 120% MORE ELEC TRICITY CONSUMPTION THAN SOME OF THE OTHER CONCERNS IN THE SAME LINE OF PRODUCTION. CONSEQUENTLY THE ASSESSING OFFICER HAD REJECTED THE ASSESSEES BOOKS OF ACCOUNT AND HAD COMPUTED THE OU T OF BOOKS PRODUCTION OF MS INGOTS BY HOLDING AN AVERAGE OF 90 0 UNITS OF ELECTRICITY BEING CONSUMED FOR MANUFACTURING 1 METRIC TON OF MS INGOTS. THE ASSESSING OFFICER HAD CONSEQUENTLY MADE ADDITION OF OUT OF BOOKS PRODUCTION COMPUTED. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) HAD DELETED THE ADDITION MADE WITHOUT ANY VALID REASON. 6. IT WAS THE FURTHER SUBMISSION IN RESPECT OF THE GROUND NO. 2, THE ASSESSING OFFICER HAD ESTIMATED THE INITIAL OUT OF THE BOOKS CAPITAL REQUIRED FOR THE OUT OF BOOKS PRODUCTION OF THE MS INGOTS AND HAD TREATED 10% OF THE OUT OF BOOKS SALE CONSIDERATION AS INITI AL CAPITAL AND HAD MADE THE ADDITION THERETO WHICH WAS ALSO WRONGLY DELETED BY THE LD. CIT(APPEALS). IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER R ESTORED. 7. IN REPLY, LD. A.R. VEHEMENTLY SUPPORTED THE ORDE R OF THE LD. CIT(APPEALS). LD. A.R. DREW OUR ATTENTION TO PAGE 2 9 OF THE ORDER OF LD. CIT(APPEALS) FOR THE ASSESSMENT YEAR 2006-07. IT WA S THE SUBMISSION THAT THE LD. CIT(APPEALS) HAS REVERSED THE ACTION OF THE ASSESSING OFFICER IN I.T.A. NO. 1719/KOL. /2010 & ITA NO. 1720/KOL/2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 4 OF 5 REJECTING THE ASSESSEES BOOKS. IT WAS THE SUBMISSI ON THAT THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE FINDING OF THE LD. CIT(APPEALS) IN ACCEPTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS THE SUBMISSION THAT AS THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN A CCEPTED, THERE IS NO ROOM FOR ESTIMATION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING O FFICER HAS INVOKED THE PROVISIONS OF SECTION 145 AND HAS REJECTED THE ASSESSEES BOOKS OF ACCOUNT IN PARA 6.1 OF HIS ORDER. A PERUSAL OF THE ORDER OF LD. CIT(APPEALS) IN PARAS 29 & 30 SHOWS THAT THE LD. CIT(APPEALS) HA S HELD THAT THE CONDITIONS PRESCRIBED IN SECTION 145(3) OF THE ACT HAVE NOT BEEN FULFILLED AND CONSEQUENTLY REJECTION OF THE BOOKS UNDER SECTI ON 145 OF THE ACT CANNOT BE HELD TO BE VALID. THIS FINDING OF THE LD. CIT(APPEALS) HAS NOT BEEN CHALLENGED BY THE REVENUE. AS THIS FINDING HAS NOT BEEN CHALLENGED, THE CONSEQUENTIAL ESTIMATION OF THE INCOME AS DELET ED BY THE LD. CIT(APPEALS) WOULD BE ON RIGHT FOOTING IN SO FAR AS WITHOUT REJECTION OF THE BOOKS OF ACCOUNT THE INCOME OF THE ASSESSEE CAN NOT BE ESTIMATED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 STANDS DISMISSED. 10. A PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSES SMENT YEAR 2007-08 SHOWS THAT FOR THIS YEAR ALSO IN PARA 3 OF THE ASSE SSMENT ORDER, THE ASSESSING OFFICER HAS REJECTED THE ASSESSEES BOOKS OF ACCOUNT. HOWEVER, A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) FOR TH E ASSESSMENT YEAR 2007- 08 SHOWS THAT THE LD. CIT(APPEALS) HAS UPHELD THE R EJECTION OF THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER. CONSEQUENT TO THE REJECTION OF THE BOOKS OF ACCOUNT BEING UPHELD, THE LD. CIT(APPEALS) HAD GIVEN 50% DEDUCTION IN RESPECT OF THE SUPPRESSED PRODUCTION A ND CONSEQUENT DEDUCTION IN RESPECT OF THE OUT OF BOOKS INITIAL CA PITAL. LD. D.R. HAS NOT BEEN ABLE TO DISLODGE THIS FINDING OF THE LD. CIT(A PPEALS). CONSEQUENTLY I.T.A. NO. 1719/KOL. /2010 & ITA NO. 1720/KOL/2010 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 5 OF 5 THE FINDING OF THE LD. CIT(APPEALS) FOR THE ASSESSM ENT YEAR 2007-08 ALSO STANDS CONFIRMED. 11. IN THE RESULT, THE APPEALS OF THE REVENUE FOR T HE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2014. SD/- SD/- P.K. BANSAL GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 30 TH DAY OF JULY, 2014 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. ALISHAN STEEL PVT. LTD. 51, VIVEKANANDA ROAD, KOLKATA-700 007 (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.