M/s. Sigma Diagnostics (I) Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(3), Baroda

ITA 2786/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60208 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 09-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Reopening of assessment
• Section: 147

Judgement Text

ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI A.M.) I.T.A. NOS. 2782 TO 2786/AHD/2011 (ASSESSMENT YEAR: 2001 02 TO 2005-06 ) M/S. SIGMA DIAGNOSTICS (I) PRIVATE LTD ., 321, G.I.D.C., POR-RAMAN GAMADI DISTRICT BARODA-391243 (APPELLANT) VS. INCOME TAX OFFICER, WARD 4(3), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. (RESPONDENT) PAN: AACCS 9782J APPELLANT BY : SHRI ANIL R. SHAH. RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 19-3-2012 DATE OF PRONOUNCEMENT : 4-4-12 PER BENCH. THESE FIVE APPEALS BY THE ASSESSEE FOR THE ASSESSM ENT YEARS 2001-02 TO 2005-06 ARE DIRECTED AGAINST THE ORDER O F THE LD. CIT (A). SINCE IDENTICAL ISSUES ARE INVOLVED IN THESE APPEAL S, THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN ITS GR OUND OF APPEAL FOR THE ASSESSMENT YEARS 2001-02 TO 2004-[05 IS REGARDI NG THE VALIDITY OF ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 2 REOPENING OF ASSESSMENTS U/S.147 OF THE I.T. ACT. T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REOPENING IN THESE ASSESSMENT YEARS ARE BAD IN LAW SINCE THERE WAS NO PERSONAL SATISFA CTION OF THE ASSESSING OFFICER IN THE REASONS RECORDED BY HIM WH ILE REOPENING THE ASSESSMENTS. HE REFERRED TO THE COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER WHILE REOPENING THE ASSESSMENT U/ S. 147 OF THE ACT FILED IN THE COMPILATION ON THIS ISSUE. HE SUBMITTE D THAT THE SATISFACTION WAS THAT OF THE CENTRAL EXCISE AND CUS TOMS DEPARTMENT OFFICERS AND THERE BEING NO PERSONAL SATISFACTION O F THE ASSESSING OFFICER AND THE SATISFACTION BEING MERELY A BORROWE D ONE, THE NOTICE U/S. 148 OF THE ACT WAS INVALID. HE SUBMITTED THA T THERE WAS A VARIATION BETWEEN THE ADDITION MADE BY THE ASSESSIN G OFFICER IN THE REOPENED ASSESSMENT U/S. 147 OF THE ACT AND THE REA SONS RECORDED FOR REOPENING THE CASE U/S. 147 OF THE ACT. HE RELI ED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN EN GINEERING WORKS P. LTD., (1992) 198 ITR 297 (SC). THE LD. D.R. SUBM ITTED THAT THE ASSESSMENT FOR A.Y. 2001-02 WAS MADE U/S. 143(1) OF THE ACT. THE ASSESSEE HAS ACCEPTED BEFORE THE EXCISE OFFICERS TH AT IT WAS MAINTAINING TWO SETS OF INVOICES AND THE INFORMATIO N REGARDING EVASION OF TAX GIVEN BY CENTRAL EXCISE DEPARTMENT I S A VALID INFORMATION IN THE POSSESSION OF THE ASSESSING OF FICER JUSTIFYING THE REOPENING OF THE CASE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS REGARDING TH E LEGAL GROUND RAISED BY THE ASSESSEE. WE HAVE ALSO PERUSED THE C OPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER WHILE REO PENING THE ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 3 ASSESSMENTS U/S. 147 OF THE ACT FILED IN THE COMPIL ATION BY THE ASSESSEE. WE FIND THAT THERE WERE VALID REASONS FOR REOPENING THE ASSESSMENTS IN THIS CASE. THE EVASION WAS DETECTED BY THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT AND THE INFORMATION W AS PASSED ON TO THE INCOME TAX DEPARTMENT. THE ASSESSEE COULD NO T CONTROVERT THE ALLEGATION THAT IT WAS MAINTAINING TWO SETS OF INVO ICES TO EVADE THE PAYMENTS OF DUE TAXES. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY ESTABLISH THAT IT WAS HIS OWN SATIS FACTION BASED ON THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT AND WE DO NOT FIND ANY INFIRMITY IN REOP ENING THE ASSESSMENT U/S. 147 OF THE ACT AND ACCORDINGLY THE ISSUE IS DECIDED AGAINST THE ASSESSEE. 4. ON MERITS OF THE CASE, THE LD. COUNSEL HAS RAISE D TWO ISSUES, IDENTICAL IN ALL THE FIVE ASSESSMENT YEARS IN APPEA L BEFORE US, NAMELY THE ADDITION OF THE VALUE OF GOODS REMOVED WITHOUT PAYMENT OF EXCISE DUTY AND SEPARATE ADDITION FOR ALLEGED EVASION OF E XCISE DUTY. HE SUBMITTED THAT ALTERNATIVELY ONLY THE NET PROFIT RA TE CAN BE APPLIED TO THE VALUE OF THE GOODS REMOVED WITHOUT PAYMENT OF E XCISE DUTY AND FOR THE ALLEGED EVASION OF EXCISE DUTY. HE SUBMITT ED THAT IT HAS NOT DEBITED EXCISE DUTY IN ITS PROFIT AND LOSS ACCOUNT AND THEREFORE, NO SEPARATE DISALLOWANCE WAS CALLED FOR. HE RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. PRESIDENT INDUSTRIES 258 ITR 654 (GUJ.) WHEREIN HELD THAT ONL Y THE REALIZATION OF THE EXCESS OVER THE COST INCURRED COULD FORM PART O F THE PROFIT INCLUDED IN THE CONSIDERATION FOR THE SALES. THE L D. DR HAS OPPOSED ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 4 THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE PURCHASE PRICE OF THE GOODS REMOVED BY THE ASSESSEE WITHOUT PAYMENT OF EXCISE DUTY WERE ALREADY DEBITED BY THE ASSESSEE IN ITS ACCOUNT BOOKS AND THERE WAS NO EVIDENCE THAT THE ASSESSEE HAS PURCHASED THE SAME OUTSIDE HIS BOOKS OF ACCOUNT AND THEREFORE, SALE VALUE OF THE GOODS REMOVED HAD TO BE ADDED AS INCOM E OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE ORDER OF THE ASSESSING OFFICER AND CIT (A). WE FIND THAT RATIO OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. PRESIDENT INDUSTRIES (SUPRA) APPLIES TO THE FACTS O F THE CASE OF THE ASSESSEE. THERE IS NO FINDING IN THIS CASE THAT THE INVESTMENT MADE IN THE PURCHASE OF GOODS IN QUESTION WAS ALREADY ACCOU NTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. NO DISCREPANCY IN THE QUANTITY DETAIL OF THE ASSESSEE HAS BEEN BROUGHT ON RECORD. IN THESE FACTS OF THE CASE WE HOLD THAT THE ENTIRE VALUE OF THE GOODS REMOVED WITHOUT PAYMENT OF EXCISE DUTY COULD NOT BE TREATED AS INCO ME IN THE HANDS OF THE ASSESSEE. IN THE FACTS OF THE CASE WE HOLD T HAT THE ENDS OF JUSTICE SHALL BE MET BY ESTIMATING THE NET PROFIT E LEMENT IN THE GOODS REMOVED BY THE ASSESSEE WITHOUT PAYMENT OF EXCISE D UTY @ 20% OF THE VALUE THEREOF FOR EACH ASSESSMENT YEAR AND IT S HALL COVER THE ADDITION ON ACCOUNT OF EVASION OF EXCISE DUTY ALSO. ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 5 6. WE DIRECT ACCORDINGLY AND THE GROUNDS OF APPEAL OF THE ASSESSEE ON THIS ISSUE FOR ALL THE ASSESSMENT YEARS IN APPEAL BEFORE US ARE PARTLY ALLOWED. 7. IN THE RESULT ALL THE FIVE APPEALS OF THE ASSESS EE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 4 4 - 2012. SD/- SD/- (ANIL CHATURVEDI) (G. C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NOS.2782 TO 2786/AHD/2011 ASSTT.YEARS 200 1-02 TO 2005-06 . 6 1.DATE OF DICTATION 19 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 20 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 27 - 3 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 4 - 4 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 4 - 4 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 4 - 4 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..