Heera Petrochemicasl Pvt. Ltd., Dhule V. Assistant Commissioner of Income-tax,

ITA 1981/PUN/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9485 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-01-2018
• Assessment Year: 2003-2004
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 148

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1965 AND 1981 TO 1983/PUN/2014 / ASSESSMENT YEARS : 2003-04 AND 2004-05 HEERA PETROCHEMICALS PVT. LTD., C/O. SHRI INDARSING VANESING RAJPUT, DIRECTOR, BEHIND MOTHA MARUTI TEMPLE, GAVALI WADA, NANDURBAR, DIST. NANDURBAR 425 412 PAN : AAACH8124P . /APPELLANT VS. ACIT, CIRCLE-3(1), DHULE -424001 . / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 23.01.2018 / DATE OF PRONOUNCEMENT: 24.01.2018 / ORDER PER BENCH : THERE ARE 4 APPEALS FILED BY THE ASSESSEE UNDER CONSIDER ATION INVOLVING ASSESSMENT YEARS 2003-04 AND 2004-05. THE AP PEALS ITA NOS. 1981 AND 1982/PUN/2014 FILED BY THE ASSESSEE ARE T HE QUANTUM APPEALS AGAINST THE ORDERS OF CIT(A)-I, NASHIK DATED 22-0 9-2014 AND THE APPEALS ITA NOS. 1965 AND 1983/PUN/2014 FILED BY THE ASSESSEE RELATE TO THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961. FIRST WE PROCEED TO ADJUDICATE THE QUANTUM APPEALS PER TAINING TO ADDITIONS. ITA NO.1965 AND 1981 TO 1983/PUN/2014 HEERA PETROCHEMICALS PVT. LTD., 2 ITA NOS. 1981 AND 1982/PUN/2014 BY ASSESSEE A.YRS. 2003-04 AND 2004-05 ASSESSMENTS U/S.144 R.W.S148 OF THE ACT 2. BEFORE US, AT THE OUTSET, LD. AR FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL SOLVENT, MINERAL TURPENTINE OIL, PAIN TS, SOLVENTS, ETC. ASSESSEE FILED THE RETURNS OF INCOME ON 01 -12-2003 AND 01-11-2004 FOR A.YRS. 2003-04 AND 2004-05 DECLARING LOSS OF RS.32,35,445/- AND RS.6,67,957/- RESPECTIVELY. THERE WAS INVESTIGATION BY THE SALES TAX AND CENTRAL EXCISE DEPARTM ENTS ON THE ASSESSEE AND THE SAME RESULTED IN SEIZURE OF INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNT OF THE ASSESSEE. THE SALES-TAX DE PARTMENT WAS OF THE VIEW THAT THE DIFFERENTIAL AMOUNT OF INTER-STATE AND INTRA-STATE SALES HAVE BEEN EVADED BY THE ASSESSEE AND THE SAME CONSTITUTES UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, AO REOPENE D THE ASSESSMENTS OF THE ASSESSEE AND THE REASSESSED INCOME OF THE ASSESSEE AT RS.3,01,13,406/- AND RS.2,95,84,459/- WAS DETER MINED FOR A.YRS. 2003-04 AND 2004-05 RESPECTIVELY. LD. AR FOR THE ASSESSEE SUBMITTED THAT NON-AVAILABILITY OF THE DOCUMENTS CREATED INSURMOUNTABLE HURDLES FOR THE ASSESSEE IN REPRESENTING T HE CASES PROPERLY BEFORE THE INCOME-TAX AUTHORITIES. HE FURTHER SUBMITTED THAT PROCEEDINGS BEFORE THE SALES-TAX DEPARTMENT ARE NOW PE NDING BEFORE THE SALES TAX APPELLATE TRIBUNAL. LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONS MADE BY THE AO IN BOTH THE YEARS AR E ON ADHOC BASIS AND REQUIRED TO BE DELETED, IN PRINCIPLE. 3. FURTHER, LD. AR SUBMITTED THAT THE CASE OF THE ASSES SEE IS COMPARABLE TO MANY OTHER CASES WHERE THERE WAS ALLEGAT ION OF UNACCOUNTED PRODUCTION OF NAPTHELENE AS WELL AS THE ALLEGA TION OF ADULTERATION OF OILS. FURTHER, LD. AR FOR THE ASSESSEE FILED A COPY OF THE ITA NO.1965 AND 1981 TO 1983/PUN/2014 HEERA PETROCHEMICALS PVT. LTD., 3 ORDER OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SH RIRAM PETROLEUM INDUSTRIES VS. ITO IN ITA NOS. 293 & 294/PN/20 12, ORDER DATED 16-01-2014 AND SUBMITTED THAT THE PRESENT QUAN TUM APPEALS UNDER CONSIDERATION NEEDS TO BE SET-ASIDE TO THE FILES O F THE AO. HE DREW OUR ATTENTION TO THE FACTS OF THE SAID CASE AND SU BMITTED THAT ISSUES AND THE PROCEEDINGS OF THE SAID CASE BEFORE THE S ALES-TAX, CENTRAL EXCISE AND INCOME-TAX AUTHORITIES ARE IDENTICAL TO THE CASE OF THE ASSESSEE. HE ALSO SUBMITTED THAT, IN THE SAID CASE , THERE WAS CBI RAID ALSO ADDITIONALLY. THE FACT THAT THE DOCUMENTS NECES SARY FOR PROPER ADJUDICATION OF THE DISPUTES WERE NOT READILY AVA ILABLE AS THEY ARE SEIZED BY THE RELEVANT AUTHORITIES CITED ABOVE. SAME IS THE PROBLE M WITH THE ASSESSEE. THEREFORE, TAKING A CUE FROM THE SAID TRIBUNAL ORDER, LD. AR FOR THE ASSESSEE SUBMITTED THAT ASSESSM ENTS MADE U/S.144 R.W.S.148 OF THE ACT SHOULD BE SET-ASIDE TO THE FILE OF AO FOR FRESH ADJUDICATION. LD. AR MADE A STATEMENT AT BAR THA T HE SHALL COOPERATE WITH THE PROCEEDINGS METICULOUSLY AND FILE REQUI RED PAPERS TO THE AO. THIS IS THE REPLY OF LD. AR TO THE ALLEGATION OF LD. DR FOR THE REVENUE THAT THE ASSESSEE NEVER COOPERATED TO THE R EASSESSMENT PROCEEDINGS AND NEVER COMPLIED WITH THE STATUTORY NOTICE S ISSUED TO HIM. 4. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF REQUEST OF THE LD. AR FOR THE ASSESSEE FOR REMANDING THE ISSUES TO THE FILE OF AO . WE HAVE PERUSED THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRIRAM PETROLEUM INDUSTRIES (SUPRA) RELIED UPON BY THE LD. AR FOR THE ASSES SEE AND FIND IT RELEVANT TO EXTRACT THE FINDINGS GIVEN BY THE TRIBUNAL A ND THE SAME READS AS UNDER : 4. THE MATTER WAS CARRIED BEFORE THE CIT(A) ON VAR IOUS COUNTS WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE S TAND OF THE ASSESSEE BEFORE US IS THAT CIT(A) HAS ERRED IN CONFIRMING REO PENING WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HA S SIMPLY RELIED ON ITA NO.1965 AND 1981 TO 1983/PUN/2014 HEERA PETROCHEMICALS PVT. LTD., 4 INFORMATION GIVEN BY SALES TAX DEPARTMENT WITHOUT G IVING HIS OWN FINDINGS AND APPLYING HIS OWN MIND AND CIT(A) ERRED IN RELYING ON THE DOCUMENTS AND EVIDENCES OBTAINED ON THE BACK OF THE ASSESSEE WITHOUT GIVING ANY OPPORTUNITY TO REBUT THE SAME. THIS IS V IOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE CIT(A) ALSO ERRED IN REJECT ING BOOKS OF ACCOUNTS, WITHOUT APPRECIATING THE FACT THAT THE BOOKS AND AL L THE DOCUMENTS/PAPERS WERE NOT AT ALL AVAILABLE WITH THE ASSESSEE AND WERE IN CUSTODY OF THE CBI, AND ALTERNATIVELY SUBMITTED THAT THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER H AS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS. THE CIT( A) ALSO FAILED TO ADJUDICATE GROUND NO.6 TO 15 WHICH WERE ON THE MERI T. THE CIT(A) ALSO ERRED IN CONFIRMING THE ADDITION OF RS.2,40,22,290/ - BEING ALLEGED SALES TAX EVADED AS PER THE SALES TAX DEPARTMENT. IT WAS ALSO POINTED THAT THE SALES TAX IS SUB JUDICIOUS BEFORE CONCERNED SALES T AX TRIBUNAL. THE ASSESSING OFFICER HAS NOT JUSTIFIED IN MAKING ADDIT ION BASED ON ACCOUNT OF EVASION SALES TAX WHILE THE CONCERNED DOCUMENTS WERE WITH THE CBI. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DIS PUTE THE FACT THAT THE ISSUE OF ADDITIONS BASED ON SALES TAX EVASION I S SUB JUDICIOUS BEFORE THE CONCERNED SALES TAX DEPARTMENT AND DOCUMENTS WE RE WITH THE CBI AT THE RELEVANT POINT OF TIME. IN VIEW OF ABOVE, WE FIND THAT THE ASSESSEE HAS NOT BEEN PROVIDED DUE OPPORTUNITY OF HEARING BE CAUSE HE WAS NOT HAVING THE BENEFIT OF BOOKS OF ACCOUNT AT RELEVANT POINT OF TIME AS THE SAME WERE WITH THE CBI AT THAT TIME. MOREOVER, THE ISSUE OF ADDITION BASED ON SALES TAX EVASION IS SUB JUDICIOUS BEFORE THE CONCERNED SALES TAX TRIBUNAL. FROM THE ABOVE FACTS, WE ARE OF THE V IEW THAT THE ASSESSEE HAS NOT BEEN PROVIDED DUE OPPORTUNITY OF H EARING BEFORE MAKING VARIOUS ADDITIONS AGAINST HIM ON VARIOUS COU NTS, WHICH IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ISSUE TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW. THE ASSESSEE WILL BE AT LIBERTY TO HAVE THE BENEFIT OF DOCUMENTS CLAIMED TO HAVE BEEN SEIZED BY THE CBI AT THE RELEVANT POINT O F TIME AND THE ASSESSING OFFICER IS ALSO AT LIBERTY TO LOOK INTO T HE RELEVANT FINDINGS OF SALES TAX DEPARTMENT TOUCHING THE ISSUE BEFORE HIM. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE IN THE PROCEEDINGS BEFOR E THE ASSESSING OFFICER, SO THAT, THE PROPER ADJUDICATION OF THE MA TTER MAY BE DONE. SINCE WE ARE RESTORING THE ISSUE TO THE ASSESSING O FFICER ON A PRELIMINARY ISSUE, WE ARE REFRAINING FROM COMMENTING ON THE MERIT OF THE ISSUE AT HAND. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. CONSIDERING THE ABOVE FINDING WHICH SUPPORTS THE CASE OF THE ASSESSEE, WE ARE OF THE OPINION THAT IT IS A FIT CASE FOR RE MANDING THE ISSUES ON MERIT TO THE FILE OF AO FOR FRESH ADJUDICATION. 6. SO FAR AS THE ISSUES RELATING TO THE CORRECTNESS OF RE OPENING OF THE ASSESSMENTS U/S.144 R.W.S. 148 OF THE ACT RAISED IN G ROUNDS OF APPEAL NO.1 TO 4 OF BOTH THE YEARS, LD. AR FOR THE ASSES SEE SUBMITTED THAT THEY MAY BE TREATED AS NOT PRESSED. AFTER HEA RING FOR THE LD. DR FOR THE REVENUE ON THE LEGAL ISSUES, WE PROCEED TO DISMISS GROUNDS OF APPEAL NO. 1 TO 4 IN BOTH THE APPEALS AS NOT PRESSED. ITA NO.1965 AND 1981 TO 1983/PUN/2014 HEERA PETROCHEMICALS PVT. LTD., 5 7. DURING THE ASSESSMENT PROCEEDINGS, ON THE ISSUES RAISE D VIDE GROUNDS OF APPEAL NO. 6 TO 11, WE DIRECT THE AO TO ADJUD ICATE THESE ISSUES AFRESH AFTER OBTAINING RELEVANT DOCUMENTS FROM THE ASSESSEE FOR BOTH THE YEARS. ASSESSEE IS ALSO DIRECTED TO COMPLY WIT H THE DIRECTIONS OF THE AO IN THE REMAND PROCEEDINGS. EVEN IF SOME OF TH E SAID DETAILS ARE TO BE FILED FOR THE FIRST TIME IN THE NATURE OF ADDITIONAL EVIDENCES, THE AO IS DIRECTED TO ADMIT THE SAME AND MAKE USE OF TH OSE PAPERS IN THE INTEREST OF ADMINISTRATION OF JUSTICE. WITH THESE DIRECT IONS, WE SET ASIDE THE ORDERS OF THE AO/CIT(A) AND REMAND THE GROUN DS RAISED BEFORE US IN BOTH THE APPEALS ON MERITS FOR FRESH CONSIDER ATION AND FOR WANT OF A SPEAKING ORDER BY THE AO. AO SHALL GRANT REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANC E WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED B Y THE ASSESSEE IN BOTH THE YEARS ARE PARTLY ALLOWED FOR STATISTICAL PURPO SES. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1965 AND 1983/PUN/2014 BY ASSESSEE A.YRS. 2003-04 AND 2004-05 PENALTY U/S.271(1)(C) OF THE ACT 9. COMING TO THE PENALTY ORDERS PASSED BY THE AO U/S.2 71(1)(C) OF THE ACT, WE FIND THESE PENALTY ORDERS ARE RELATABLE TO TH E ADDITIONS MADE BY THE AO IN THE APPEALS DISCUSSED ABOVE IN ITA NO S. 1981 AND 1982/PUN/2014 FOR THE A.YRS. 2003-04 AND 2004-05 RESPE CTIVELY. IN PARA NO.9 ABOVE, WE HAVE REMANDED THE GROUNDS RAISED B Y THE ASSESSEE ON MERITS FOR BOTH THE ASSESSMENT YEARS UND ER CONSIDERATION TO THE FILE OF AO FOR FRESH ADJUDICATION AND WANT OF A SPEA KING ORDER ON EACH OF THE ISSUES. WE HAVE ACCEPTED THE PLEA OF LD. AR FOR THE ASSESSEE AND DISMISSED THE LEGAL GROUNDS RAISED BY THE ASSESSEE AS ITA NO.1965 AND 1981 TO 1983/PUN/2014 HEERA PETROCHEMICALS PVT. LTD., 6 NOT PRESSED. CONSEQUENT TO THE SAME, WE ARE OF THE OPINION THAT THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A) IN BOT H THE ASSESSMENT YEARS UNDER CONSIDERATION ARE NOT SUSTAINAB LE IN THE PRESENT FORM AS THE ADDITIONS STANDS REMANDED TO THE FILE OF THE AO. THEREFORE, WE SET ASIDE THE PENALTY ORDERS PASSED BY TH E AO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THES E APPEALS ALSO ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. TO SUM UP, ITA NOS. 1981 AND 1982/PUN/2014 FILED BY T HE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NOS. 1965 AND 1983/PUN/2014 FILED BY THE ASSESSEE ARE ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 24 TH JANUARY, 2018. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A) - I, NASHIK 4 . 5. CIT - I, NASHIK % , , A BENCH PUNE; 6 . / GUARD FILE.