The ACIT, Circle-2(1)(2), Baroda V. M/s. Prime Ceramic Pvt. Ltd., Baroda

ITA 2489/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5629 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO.2489/AHD/2017 / ASSTT.YEAR : 2008-09 ACIT, CIR.2(1)(2) BARODA. VS. M/S.PRIME CERAMICS P.LTD. PADRA JAMBUSAR ROAD GAVASAD PADRA, BARODA 391 430 PAN : AABCP 3755 D ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI MUDIT NAGPAL, SR.DR ASSESSEE BY : SHRI KINJAL SHAH, AR / DATE OF HEARING : 30/09/2019 ! / DATE OF PRONOUNCEMENT: 01/10/2019 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF LD.CIT(A)-2, VADODARA DATED 30.8.2017 PASSED FOR THE ASSESSMENT YEAR 2008-09. 2. THOUGH REVENUE HAS TAKEN FOUR GROUNDS OF APPEAL, BUT IN BRIEF ITS GRIEVANCE IS THAT THE LD.CIT(A) HAS ERRED IN DELETI NG THE ADDITION OF RS.3,47,78,975/-. 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE ORDER ITAT PASSED IN 2607 & 2608/AHD/2015 FOR THE ASSTT.Y EARS 2006-07 AND 2009-10 IN THE ASSESSEES OWN CASE. IN BRIEF THE F ACTS ARE THAT THE AO ITA NO.2489/AHD/2017 2 HAS RECEIVED AN INFORMATION FROM DGCEI, AHMEDABAD W HO HAVE CONDUCTED AN INVESTIGATION WITH RESPECT TO ESCAPEME NT OF EXERCISE DUTY. ON THE BASIS OF THAT INFORMATION, IT WAS HARBOURED BY THE AO THAT THE ASSESSEE HAS REMOVED EXCISABLE GOODS FROM ITS PREMI SES WITHOUT PAYMENT OF EXCISE DUTY, AND THUS, A SALE TO THE EXT ENT OF RS.13,91,15,901/- IS OUT OF BOOKS. ON THE STRENGTH OF SHOW CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT, THE LD.AO WORKED O UT UNACCOUNTED SALE OF RS.13,91,15,901/- AND ADOPTED A PROFIT ELEM ENT AT 25% OF SUCH SALES. ACCORDINGLY, HE MADE ADDITION OF RS.3,47,78 ,975/-. DISSATISFIED WITH THIS ADDITION, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD S AND SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE INCLUDING THE ORD ERS OF CE&STAT, ITAT, AND CIT(A)-2, VADODARA IN, THE CASE OF APPEL LANT FOR EARLIER YEARS. 4.1. THE ONLY GROUND OF APPEAL IN E-APPEAL PERTAINS TO THE ADDITION OF RS.3,47,78,975/- MADE ON ACCOUNT OF GROSS PROFIT AT 25% OF THE UNACCOUNTED SALES WORKED OUT ON THE BASIS OF SEARCH OPERATION CARRIED OUT BY CENTRAL EXCISE DEPARTMENT. I HAVE AL SO GONE THROUGH THE ORDER OF HON'BLE CUSTOMS EXCISE & SERVICE TAX A PPELLATE TRIBUNAL DATED 12.05.2015 WHICH IS PLACED ON RECORD. IT IS N OTICED THAT THIS ORDER PERTAINS TO 35 ASSESSEES AND NAME OF THE APPE LLANT HAS BEEN INCORPORATED AS PRIME CERAMICS PVT. LTD. AT SR. NO. X WITH APPEAL NO. E/672/2011. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE PARTIES, THE HON'BLE CESTAT HAS SUMMARIZED THREE ISSUES FOR ADJU DICATION VIDE PARA-6 OF ITS ORDER WHICH ARE REPRODUCED AS UNDER: - '6. IN THESE PROCEEDINGS THE FOLLOWING ISSUES ARE R EQUIRED TO BE DELIBERATED UPON:- (I) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 AB OVE HAVE INDULGED IN CLANDESTINE MANUFACTURE AND CLEARANCE O F CERAMIC GLAZED MIXTURE (FRIT), IN VIEW OF THE ADJUDICATION ORDERS PASSED THE ADJUDICATING AUTHORITIES ON THE BASIS OF NATURA L GAS CONSUMPTION NORMS PER METRIC TON? (II) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 A ND 5.2 HAVE INDULGED IN UNDERVALUATION OF FRIT AND ALSO CLANDES TINELY CLEARED ITA NO.2489/AHD/2017 3 FRIT AS PER A PERSONAL LEDGERS RETRIEVED FROM A PEN -DRIVE RECOVERED FROM SANYO AND OTHER PERSONAL RECORDS AND PEN- DRIVES FROM THE CERAMIC TILE MANUFACTURERS READ WIT H THEIR STATEMENTS? (III) WHETHER THE ADJUDICATING AUTHORITIES WERE JUSTIFIED IN DENYING CROSS-EXAMINATION OF WITNESS UNDER THE PROV ISIONS OF SECTION 9D OF THE CENTRAL EXCISE ACT, 1944 READ WIT H THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE?' THE PERUSAL OF THE ORDER REVEALS THAT ALL THE ABOVE MENTIONED ISSUES HAVE BEEN DECIDED IN FAVOUR OF CEN TRAL EXCISE ASSESSEES AND ACCORDINGLY ALL THE APPEALS WE RE ALLOWED BY THE HON'BLE CE&STAT. SIMILAR ADDITION WAS MADE I N EARLIER YEARS ALSO AND MY PREDECESSOR VIDE ORDER DATED 11.0 6.2015 CONTAINED IN APPEAL NO. CAB/(A)-2/073/2014-15 HAS D ELETED THE SAME IN A.Y. 2006-07 AFTER RECORDING HIS FINDIN GS IN PARA-5 AND 6 OF THE ORDER WHICH ARE REPRODUCED AS UNDER:- '5. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND THE AO'S OBSERVATIONS MADE IN THE ASSESSMENT ORDER. A PERUSAL OF THE ASSESSMENT ORDER U/S. 143(3) RWS 147 OF THE IT ACT, 1961 SHOWS THAT THE AO HAS MADE THE ADDITION BY ESTIMATING THE GROSS PROFIT ON THE UNACCOUNTED SALES DETERMINED BY THE EXCISE AUTHORIT Y. FOR THIS PURPOSE, THE AO HAS COMPLETELY RELIED UPON THE DEMAND CUM SHOW CAUSE NOTICE ISSUED BY THE DGCEI, AHMEDABAD AND THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE, VADODARA-1 AS MENTIONED ABOVE. F OR CONTROVERTING THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS RELIED UPON THE INFORMATION A ND DOCUMENTS SUPPLIED BY THE EXCISE AUTHORITY IN THE F ORM OF DEMAND CUM SHOW CAUSE NOTICE AND HAVE ALSO REPRODUCED RELEVANT PARTS OF SUCH DEMAND CUM SHOW CAUSE NOTICE IN HER ASSESSMENT ORDER. THIS DEMAND C UM SHOW CAUSE NOTICE AS WELL AS THE ORDER PASSED BY TH E COMMISSIONER OF CENTRAL EXCISE, VADODARA-1 HAS BEEN QUASHED BY A COMBINED ORDER PASSED BY THE CESAT AHMEDABAD VIDE ORDER NO. A/10541-10571/2015 DATED 12.05.2015 IN THE CASE OF APPELLANT AS WELL AS 34 O THER ASSESSEES. ONCE DEMAND CUM SHOW CAUSE NOTICE AND THE ORDER OF COMMISSIONER OF CENTRAL EXCISE ON THE BASIS OF WHICH THE ASSESSMENT ORDER U/S. 143(3)/147 HAD B EEN PASSED, ARE QUASHED, THE ADDITION MADE IN THE ASSESSMENT ORDER BY RELYING UPON THE DEMAND CUM SHO W ITA NO.2489/AHD/2017 4 CAUSE NOTICE AND THE ORDER OF THE EXCISE COMMISSION ER HAS TO BE AUTOMATICALLY DELETED, IF IT IS FOUND THA T THE BASIS OF ADDITION MADE BY THE AO IS SOLELY UPON SUC H DOCUMENTS FURNISHED BY THE EXCISE AUTHORITY AND NO INDEPENDENT ENQUIRIES HAD BEEN UNDERTAKEN BY THE AO UNDER THE PROVISIONS OF IT ACT, 1951. THIS IS AS PE R THE RATIO LAID DOWN BY THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF VIMAL MOULDERS (I) LTD. 330 ITR 214 (DELHI) AND DECISION OF THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VIGNESH KUMAR JEWELLERS 222 C TR (MAD) 29. ACCORDINGLY, THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. 6. AS A RESULT, THE APPEAL IS ALLOWED.' 4.2. SINCE THE FACTS ARE IDENTICAL, I HAVE FOLLOWED THE ORDER OF MY PREDECESSOR IN A.Y. 2007-08. UNDISPUTEDLY, FACTS AR E IDENTICAL IN THIS YEAR ALSO AS THE UNACCOUNTED SALES HAVE BEEN DETERM INED ON THE BASIS OF DEMAND-CUM-SHOW CAUSE NOTICE ISSUED BY DGC EI, AHMEDABAD WHICH ALREADY STANDS QUASHED BY THE CE&ST AT, AHMEDABAD VIDE ORDER DATED 15.05.2015. 4.3. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE, THUS IT IS CLEAR THAT THE UNACCOUNTED SALES DETERMINED BY T HE CENTRAL EXCISE AUTHORITIES HAVE BEEN ALREADY DELETED AND, HENCE TH E ADDITION MADE BY THE ASSESSING OFFICER IN THE PRESENT INCOME-TAX PROCEEDINGS SOLELY ON THE BASIS OF ORDERS OF CENTRAL EXCISE AUTHORITIE S HAS NO LEGS TO STAND. ACCORDINGLY FOLLOWING THE ORDER OF MY PREDEC ESSOR IN A.Y. 2006-07 AND MY ORDER DATED 07.08.2015 OF A.Y. 207-0 8, I HOLD THAT NO ADDITION CAN NOW BE SUSTAINED IN THE CASE OF THE AP PELLANT AND HENCE THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.3, 47,78,975/- IS DIRECTED TO BE DELETED. THUS, THE APPELLANT SUCCEED S IN RESPECT OF GROUND OF APPEAL RAISED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 4. A PERUSAL OF THE ABOVE WOULD INDICATE THAT THE L D.CIT(A) HAS PLACED RELIANCE UPON THE ORDER PASSED BY HIS PREDEC ESSOR IN THE ASSTT.YEAR 2006-07. THIS ORDER OF THE PREDECESSOR IN THE ASSTT.YEAR 2006-07 HAS BEEN UPHELD BY THE TRIBUNAL IN ITA NO.2 607/AHD/2015. COPY OF THE TRIBUNALS ORDER HAS BEEN PLACED ON REC ORD. ITA NO.2489/AHD/2017 5 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, AND IN THE LIGHT OF ITATS ORDER DATED 16.10.2018 IN ASSTT.YEAR 2006-07 AND 20 09-10, WE ARE OF THE VIEW THAT ESTIMATION OF SALES AT RS.13,91,15,90 1/- BY THE AO WAS MADE ONLY ON THE BASIS OF A SHOW CAUSE NOTICE ISSUE D BY THE EXCISE DEPARTMENT. EVIDENCE POSSESSED BY THE AO IS INSUFF ICIENT, AND ON THE BASIS OF SUCH EVIDENCE, SALES OUT OF BOOKS CANNOT B E ESTIMATED AND CANNOT BE WORKED OUT. WHILE CONSIDERING THIS EVIDE NCE IN THE ASSTT.YEAR 2006-07, THE TRIBUNAL HAS OBSERVED THAT IDENTICAL S EARCH WAS CONDUCTED BY THE EXCISE DEPARTMENT UPON DIFFERENT CERAMIC PRO DUCT MANUFACTURERS, AND DISPUTE AT THEIR END TRAVELLED UPTO THE HONBLE SUPREME COURT ALSO. DECISION OF THE HONBLE SUPREME COURT IN CIVIL APPE AL NO.39019/2015 PASSED IN THE CASE OF COMMISSIONER OF CENTRAL EXCIS E & ST VS. ZIRCONIA CERA TECH GLAZES P.LTD. HAS ALSO BEEN MADE. SIMILA RLY RELIANCE HAS BEEN PLACED UPON THE DECISION OF HONBLE GUJARAT HI GH COURT IN CONSIDERING THIS MATERIAL VIS--VIS MATERIAL REFERR ED BY THE LD.AO. WE ARE SATISFIED THAT THE LD.CIT(A) HAS CONSIDERED THE ISSUE JUDICIOUSLY AND NO INTERFERENCE IS CALLED FOR. IN VIEW OF THE ABOV E DISCUSSION, APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 1 ST OCTOBER, 2019 AT AHMEDABAD. S D / - (AMARJIT SINGH) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/10/2019