Shivshakti Re-Rolling Mills Pvt. Ltd., Jalna V. Income-tax Officer,

ITA 1883/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1641 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P BAIRAGRA SHRI ANIL CHAWARE
• Section: 69C; 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 1 883 /PN/201 4 / ASSESSMENT YEAR : 20 0 7 - 0 8 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD., C - 57 TO 63, ADDL. MIDC, AURANGABAD ROAD, JALNA 431203 . / APPELLANT PAN: AA ICS1136J VS. THE INCOME TAX OFFICER , WARD - 1(3), JALNA . / RESPONDENT / APPELLANT BY : SHRI J.P. BAIRAGRA / APPELLANT BY : SHRI J.P. BAIRAGRA / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 0 7 .0 7 . 201 6 / DATE OF PRONOUNCEMENT: 13 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , AURANGABAD , DATED 26 . 0 8 .20 14 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 1 883 /PN/20 1 4 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD. 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTIC ULARS OF INCOME IN RESPECT OF ALLEGED SUPPRESSION OF PRODUCTION AND CONSEQUENTIAL ADDITION. 2. THE LEARNED CIT(APPEALS) FURTHER ERRED IN CONFIRMING THE PENALTY OF RS.2,02,493/ - LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE ISSUE RAISED IN TH E PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 2,02,493/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF TMT BARS. INFORMATION WAS RECEIVED FROM THE OFFICE OF CENTRA L EXCISE & CUSTOMS, AURANGABAD THAT THE ASSESSEE HAD INDULGED IN MANUFACTURE OF FINISHED GOODS AND ITS REMOVAL WITHOUT PAYING EXCISE DUTY. AN ADJUDICATION ORDER WAS PASSED BY CCE, AURANGABAD QUANTIFYING THE VALUE OF ADJUDICATION ORDER WAS PASSED BY CCE, AURANGABAD QUANTIFYING THE VALUE OF SUPPRESSED PRODUCTION OR EXCISE EVASION . FURT HER, IN VESTIGATION WAS ALSO DONE BY THE DGCEI I.E. DIRECTO R GENERAL OF CENTRAL EXCISE INTELLIGENCE, WHEREIN THE ASSESSEE ADMITTED TO HAVE CLANDESTINELY REMOVED FINISHED GOODS WITHOUT PAYMENT OF EXCISE DUTY. IN THIS REGARD, THE ASSESSEE MADE A PETIT ION BEFORE THE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISSION FOR WAIVER OF PENALTY, INTEREST AND PROSECUTION. THE ASSESSEE MADE THE PAYMENT OF EXCISE DUTY AVOIDED IN ACCORDANCE WITH NOTICES ISSUED BY DGCEI. IN VIEW OF THE ABOVE SAID INFORMATION, THE A SSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THEREAFTER, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,26,85,101/ - AS ITA NO. 1 883 /PN/20 1 4 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD. 3 AGAINST RETURN ED INCOME OF RS.12,46,100/ - . PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. THE CIT(A) PARTLY CONFIRMED THE ADDITIONS BY RESTRICTING SUPPRESSION OF PRODUCTION TO 4% OF SUPPRE SSED SALE AMOUNTING TO RS.34,35,251/ - . THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT OF RS. 34,35,251/ - ON ACCOUNT OF SUPPRESSED PROFIT ON UNACCOUNTED MANUFACTURING AND SALE OF PRODUCTS AND ALSO INITIAL U NDISCLOSED INVESTMENT REQUIRED FOR THE SAME. PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS. 11,64,550/ - WAS LEVIED UPON THE ASSESSEE. 5. THE CIT(A) DELETED THE PENALTY ON THE ADDITIONS MADE ON ACCOUNT OF SUPPRESSED PRODUCTION. HOWEVER, IN RESPECT OF ADMISSION MADE BEFORE THE DGCEI OR THE CESTAT ABOUT THE CLANDESTINE REMOVAL OF GOODS I.E. TO THE EXTENT OF 217 MT OF TMT BARS ON WHICH THE PROFIT WORKED OUT TO RS. 1,71,881/ - , THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS CONFIRMED. FURTHER, ADDITION WAS MADE ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR THE ABOVE MENTIONED UNDISCLOSED PRODUCTION I.E. 10% OF SALE EQUIVALENT TO RS. 4,29,703/ - . THE CIT(A) THUS, RESTRICTED PENALTY UNDER SECTION 271(1)(C) OF THE ACT TO RS. 2,02,493/ - . 6. THE ASSESSEE IS IN A PPEAL AGAINST THE ORDER OF CIT(A). 7. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE ADDITION ON ACCOUNT OF CLANDESTINE REMOVAL OF TMT BARS, WHICH HAD BEEN AGREED UPON BEFORE THE EXCISE AUTHORITIES, WAS ONLY TO PURCHASE PEACE OF MIND AND TO AVOID LITIGAT ION. ITA NO. 1 883 /PN/20 1 4 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD. 4 HE FURTHER STATED IN THE ABSENCE OF ANY INVESTIGATION CARRIED ON BY THE ASSESSING OFFICER, THERE WAS NO EVIDENCE OF ANY SALES OUTSIDE THE BOOKS OF ACCOUNT AND HENCE, THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADDITION IN THE HANDS OF ASSESSEE WAS MADE BECAUSE OF INVESTIGATION C ARRIED OUT BY THE EXCISE AUTHORITIES. PURSUANT TO THE ACTION UNDERTAKEN BY THE DGCEI, THE ASSESSEE CONFESSED AND ADMITTED TO CLANDESTINE REMOVAL OF FINISHED GOODS WITHOUT PAYMENT OF EXCISE DUTY AND IN THIS REGARD, FILE D A PETITION BEFORE THE CENTRAL EXCIS E AND CUSTOMS SETTLEMENT COMMISSION FOR WAIVER OF PENALTY, INTEREST AND PROSECUTION. THE PETITION WAS ADMITTED AND DISPOSED OFF. HOWEVER, PENALTY WAS LEVIED UPON THE ASSESSEE IN ALL THE CASES BEFORE EXCISE AUTHORITIES. THE ASSESSING OFFICER MADE ADDITIO NS IN THE HANDS OF ASSESSEE, WHICH WERE DELETED BY CIT(A) AND GP RATE WAS APPLIED. AGAINST THE ORDER OF CIT(A), THE ASSESSEE CAME IN APPEAL BEFORE THE TRIBUNAL, WHICH CONFIRMED THAT THE ASSESSEE WAS LIABLE TO PAY TAX ON THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE @ 4% OR ACTUAL GP DECLARED BY THE ASSESSEE, WHICHEVER WAS HIGHER, ON THE VALUE OF CLANDESTINE REMOVAL OF MATERIAL AS ADMITTED BY THE ASSESSEE. 10. THE ISSUE WHICH ARISES BEFORE US I S WHETHER IN SUCH CIRCUMSTANCES, THE ASSESSEE CAN BE SAID TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME MAKING IT ITA NO. 1 883 /PN/20 1 4 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD. 5 LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE DGCEI HAD TAKEN ACTION AGAINST CERTAIN PERSONS AND THERE WERE ALLEG ATIONS OF CLANDESTINE REMOVAL OF GOODS BY MANUFACTURERS OF STEEL INCLUDING THE ASSESSEE, WHO IN TURN, HAD FILED A PETITION BEFORE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISSION IN THIS REGARD, THEN THE FACTUM OF GOODS BEING REMOVED CLANDESTINELY STANDS E STABLISHED. THE TRIBUNAL WHILE DECIDING THE APPEAL IN THE CASE OF ASSESSEE VIDE CONSOLIDATED ORDER IN SHREE OM ROLLING MILLS PVT. LTD. VS. ADDL. CIT IN ITA NOS.125 & 127/PN/2012 AND CROSS APPEALS IN ITA NOS.430 & 431/PN/2012, RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09 VIDE ORDER DATED 15.07.2015 AND VIDE CORRIGENDUM DATED 17.02.2016 CONFIRMED THE ADDITION OF ADDITIONAL INCOME IN THE HANDS OF ASSESSEE. IN THESE CIRCUMSTANCES, THE ASSESSEE IS LIABLE TO HAVE CONCEALED ITS INCOME BY NOT OFFERING THE INCOM E ON SUCH CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE ADDITION IN THE HANDS WAS MADE @ 4% OR ACTUAL GP DECLARED BY THE ASSESSEE WHICHEVER WAS HIGHER ON THE VALUE OF SUCH SUPPRESSED PRODUCTION TO THE EXTENT OF RS.1,71,881/ - , AS REFERRE D TO BY THE CIT(A) IN THE ORDER PASSED AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO COMPUTE THE ADDITIONAL INCOME ON THIS ACCOUNT AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE ON SUCH ADDITION. WE HOLD SO. 1 1 . ANOTHER ADDITION MADE IN THE CASE OF THE ASSESSEE WAS UNDER SECTION 69C OF THE ACT ON ACCOUNT OF COST OF RAW MATERIAL UTILIZED FOR SUPPRESSED PRODUCTION. THE TRIBUNAL DELETED THE AFORESAID ADDITION IN THE HANDS OF ASSES SEE AND CONSEQUENTLY, NO PENALTY IS LEVIABLE ON THE SAID ADDITION. ITA NO. 1 883 /PN/20 1 4 SHIVSHAKTI RE - ROLLING MILLS PVT. LTD. 6 ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE PENALTY TO BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON ADDITION ON ACCOUNT OF GP RATE . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 13 TH DAY OF JULY , 201 6 . SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 13 TH JULY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), AURANGABAD ; 4. / THE CIT , AURANGABAD ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE