Shriram Petroleum Industries, Nandurbar V. ITO wd-3[4] Pune, Pune

ITA 293/PUN/2012

• Counselvise Citation: 29324514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 13-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADARSH KUMAR MODI
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Rejection of books of accounts; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.293 & 294/PN/2012 (A.YS.2003-04 & 2004-05) SHRIRAM PETROLEUM INDUSTRIES, RAJIV GANDHI VYAPARI SANKUL, NEAR AMDHAR KARYALAY, TALUKA & DIST. NANDURBAR 425412 PAN: AAOFS1009H APPELLANT VS. ITO, WARD 3(4), DHULE RESPONDENT APPELLANT BY : SHRI SUNIL PATHAK RESPONDENT BY : SHRI ADARS H KUMAR MODI DATE OF HEARING : 09.01.2014 DATE OF ORDER : 16.01.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THESE APPEALS PERTAIN TO THE SAME ASSESSEE FO R TWO ASSESSMENT YEARS. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. IN ITA NO.293/PN/2012 FOR 2003-04, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: REOPENING 1. THE LD. C1T(A) ERRED IN CONFIRMING REOPENING WITHOU T APPRECIATING THE FACT THAT THE LD. A.O. HAS SIMPLY RELIED ON THE INFORMATION GIVING BY THE SALES TAX DEPARTMENT WITHOUT 2 GIVING HIS OWN FINDINGS AND APPLYING HIS OWN MIND . HENCE THE REOPENING IS BAD IS LAW AND LIABLE TO THE QUASH ED. NATURAL JUSTICE VIOLATED 2. THE LD. CIT(A) ERRED IN RELYING ON THE DOCUMENTS AN D EVIDENCES OBTAINED ON THE BACK OF THE ASSESSEE WITH OUT GIVING ANY OPPORTUNITY TO REBUT THE SAME. AS THE PR INCIPLES OF NATURAL JUSTICE ARE GROSSLY VIOLATED, THE ORDER MAY BE QUASHED. REJECTION OF BOOKS 3. THE LD. CIT(A) ERRED IN REJECTION OF BOOKS OF ACCOUNTS, WITHOUT APPRECIATING THE FACT THAT THE BOOKS AND ALL THE DOCUMENTS/PAPERS WERE NOT AT ALL AVAILABLE WITH THE ASSESSEE AND WERE IN CUSTODY WITH THE CBI, AND FURT HER THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE LD. A.O. HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOO KS OF ACCOUNTS. NON ADJUDICATION OF GROUNDS 4. THE LD. CIT(A) FAILED TO ADJUDICATE FROM GROUND NO. 6 TO 15 WHICH ARE ON MERITS OF THE CASE. ESTIMATION OF G.P. 5. THE LD.CIT(A)ERRED IS CONFIRMING THE ADDITION OF RS. 25,79,575/- BY ESTIMATING THE G.P. ON THE GROUND THAT ASSESSEE HAS NOT: PRODUCED SUPPORTING BILLS WITHOUT APPRECIATING THE BOOKS AND ALL OTHER DOCUME NTS/ PAPERS WERE IN THE CUSTODY OF CB1. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT ESTIMATE OF 5 % G.P. IS W ITHOUT ANY BASIS, AND THE A.O. HAS NOT GIVEN ANY COMPARABLES. ADDITION ON ACCOUNT OF SALES TAX EVADED 6. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS.2,40,22,290/- BEING ALLEGED SALES TAX EVADED AS PER THE SALES TAX DEPARTMENT, WITHOUT APPRECIATING THE FACT THAT, THE ASSESSEE HAS NOT EVADED ANY SALES TAX AND HENCE THE ADDITION MAY BE DELETED. 7. WITHOUT PREJUDICE TO ABOVE, EVEN IF THE SALES TAX I S PAID LESS, IT WOULD BE ANY EXPENDITURE TO THE ASSESSEE AND NOT THE INCOME. THE APPELLANT PRAYS THAT SUCH EXPENSE MAY B E ALLOWED. 3 ADDITION ON ACCOUNT OF UNEXPLAINED PURCHASES 8. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,91,22,940/- AS UNRECORDED PURCHASES ON THE GRO UND THAT THERE IS A DIFFERENCE IN THE SALES RECORDED BY THE ASSESSEE, WITHOUT APPRECIATING THE FACT THAT THERE IS NO SUPPRESSED SALE AND FURTHER BOOKS AND DOCUMENTS WER E WITH THE CB1. ADDITION OF G.P. ON SUPPRESSED SALES 9. THE LD. C1T(A) ERRED IN CONFIRMING THE ADDITION OF RS.10,06,470/- BEING PROFIT EARNED ON SALE OF UNREC ORDED PURCHASED, WITHOUT APPRECIATING THE FACT THAT, THER E IS NO SUPPRESSED SALE AND FURTHER BOOKS AND DOCUMENTS WERE WITH THE CB1. ADDITION OF PROFIT ON ACCOUNT OF SALE IN LOCAL MARK ET 10. THE LD. CIT(A) ERRED IN CONFIRMED THE ADDITION OF RS.2,09,30,565/- BY ASSUMING THAT 69,76,855 LITRES WERE SOLD IN LOCAL MARKET AT A MARGIN OF RS.3 PER LITRE. THE ADDITION IS BASED ON ASSUMPTIONS AND SURMISES, WITH OUT: ANY BASIS OR EVIDENCES. 11. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAILED T O APPRECIATE THE FACT THAT THE ADDITION OF G.P. HAS A LREADY BEEN ESTIMATED, AND HENCE SEPARATE ADDITION FOR ALLEGED SALE OF LOCAL MARKET WOULD AMOUNT TO DOUBLE ADDITION. HENCE THE ADDITION MAY BE DELETED. 12. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A FIRM DEALING IN THE MANUFACTURE OF INDUSTRIAL SOLVENT, M INERAL TURPENTINE OIL, ETC. THERE WAS A SEARCH BY THE CENTRAL BUREAU OF INVESTIGATION (CBI) IN THE BUSINESS PREMISES OF THE ASSESSEE ON 2 5.06.2004 AND BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED. THE AS SESSING OFFICER UTILIZED THE INFORMATION AND AFTER EXAMINING THEREO F, PROCEEDED TO ISSUE A NOTICE U/S.148. THE ASSESSEE FILED A RETUR N OF INCOME DECLARING TOTAL INCOME OF RS.NIL. ON 28.11.2003. I N RESPONSE TO NOTICE U/S.148, THE ASSESSEE DID NOT FILE ANY RETUR N. THE ASSESSING OFFICER MADE ADDITIONS OF RS.6,76,62,565/- ON VARIO US COUNTS AND 4 ASSESSED THE TOTAL INCOME AT RS.6,76,62,670/-. THE ASSESSING OFFICER HAS PASSED U/S.143(3) R.W.S. 147 OF I.T. AC T. 4. THE MATTER WAS CARRIED BEFORE THE CIT(A) ON VARI OUS COUNTS WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE STAND OF THE ASSESSEE BEFORE US IS THAT CIT(A) HAS ERRED IN CONF IRMING REOPENING WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OF FICER HAS SIMPLY RELIED ON INFORMATION GIVEN BY SALES TAX DEPARTMENT WITHOUT GIVING 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 TH E SAME. THIS IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE CI T(A) ALSO ERRED IN REJECTING BOOKS OF ACCOUNTS, WITHOUT APPRECIATING T HE FACT THAT THE BOOKS AND ALL THE DOCUMENTS/PAPERS WERE NOT AT ALL AVAILABLE WITH THE ASSESSEE AND WERE IN CUSTODY OF THE CBI, AND AL TERNATIVELY SUBMITTED THAT THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS. THE CIT(A) ALSO FAILED TO ADJUD ICATE GROUND NO.6 TO 15 WHICH WERE ON THE MERIT. THE CIT(A) ALSO ERR ED IN CONFIRMING THE ADDITION OF RS.2,40,22,290/- BEING ALLEGED SAL ES TAX EVADED AS PER THE SALES TAX DEPARTMENT. IT WAS ALSO POINTED THAT THE SALES TAX IS SUB JUDICIOUS BEFORE CONCERNED SALES TAX TRIBUNA L. THE ASSESSING OFFICER HAS NOT JUSTIFIED IN MAKING ADDITION BASED ON ACCOUNT OF EVASION SALES TAX WHILE THE CONCERNED DOCUMENTS WER E WITH THE CBI. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DIS PUTE THE FACT THAT THE ISSUE OF ADDITIONS BASED ON SALES TAX EVAS ION IS SUB JUDICIOUS BEFORE THE CONCERNED SALES TAX DEPARTMENT AND DOCUMENTS WERE WITH THE CBI AT THE RELEVANT POINT OF TIME. I N VIEW OF ABOVE, WE FIND THAT THE ASSESSEE HAS NOT BEEN PROVIDED DUE OP PORTUNITY OF HEARING BECAUSE HE WAS NOT HAVING THE BENEFIT OF BO OKS OF ACCOUNT AT RELEVANT POINT OF TIME AS THE SAME WERE WITH THE CB I 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 5 FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT BEEN PROVIDED DUE OPPORTUNITY OF HEARING BEFORE MAKING VARIOUS ADDITI ONS AGAINST HIM ON VARIOUS COUNTS, WHICH IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE OR DER OF CIT(A) AND RESTORE THE ISSUE TO THE ASSESSING OFFICER WITH A D IRECTION 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 SEIZE D BY THE CBI AT THE RELEVANT POINT OF TIME AND THE ASSESSING OFFICE R IS ALSO AT LIBERTY TO LOOK INTO THE RELEVANT FINDINGS OF SALES TAX DEP ARTMENT TOUCHING THE ISSUE BEFORE HIM. THE ASSESSEE IS ALSO DIRECTE D TO COOPERATE IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER, SO TH AT, THE PROPER ADJUDICATION OF THE MATTER MAY BE DONE. SINCE WE A RE RESTORING THE ISSUE TO THE ASSESSING OFFICER ON A PRELIMINARY ISS UE, WE ARE REFRAINING FROM COMMENTING ON THE MERIT OF THE ISSU E AT HAND. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. SIMILAR ISSUE AROSE IN ITA NO.294/PN/2012. FACT S BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE ARE RE STORING THE ISSUE TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E AS DISCUSSED ABOVE. 7. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 16 TH DAY OF JANUARY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 16 TH JANUARY, 2014 GCVSR 6 COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. THE DR, B BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE