Century Plyboards (India) Ltd., CHENNAI V. ACIT, CHENNAI

ITA 37/CHNY/2015

• Counselvise Citation: 3721714 RSA 2015
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Documents seized

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.37/MDS/2015 / ASSESSMENT YEAR : 2006-07 M/S CENTURY PLYBOARDS (INDIA) LTD 12, SRIMAN SRINIVASAN ROAD ALWARPET, CHENNAI 600 018 VS. THE ASSTT. COMM ISSIONER OF INCOME-TAX COMPANY CIRCLE VI(2) CHENNAI [PAN AABCC 1682 J ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI T. BANUSEKAR, CA /RESPONDENT BY : DR. B NISCHAL, JCIT / DATE OF HEARING : 04 - 1 1 - 2015 ! / DATE OF PRONOUNCEMENT : 27 - 11 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHENN AI, DATED 30.10.2014 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. SHRI T. BANUSEKAR, LD. REPRESENTATIVE FOR THE ASSE SSEE SUBMITTED THAT M/S SHARON VEENERS PVT. LTD MERGED W ITH THE ASSESSEE- COMPANY. ACCORDING TO THE LD. REPRESENTATIVE, THER E WAS A SEARCH CONDUCTED BY THE CENTRAL EXCISE AUTHORITIES IN THE PREMISES OF M/S ITA NO. 37/15 :- 2 -: SHARON VEENERS PVT. LTD. ON 17.5.2005. THE ASSESSI NG OFFICER FOUND THAT THE ASSESSEE UNDERVALUED THE SALE PRICES IN T HE INVOICES AND THE ACTUAL SALE WAS EFFECTED AT A HIGHER PRICE. THE AS SESSING OFFICER ALSO FOUND THAT THE ASSESSEE COLLECTED ` 1,10,02,310/- OVER AND ABOVE THE ACTUAL INVOICE PRICE. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICULARLY PAGE 7, THE ASSESSING OFFICER FOUND TH AT FOR THE YEAR UNDER CONSIDERATION THE UNDERVALUATION OF THE SALES WAS T O THE EXTENT OF ` 1,36,73,546/- AND THE TOTAL SALE VALUE WAS ` 1,55,91,898/-. THE ASSESSEE IS ALSO LIABLE TO PAY EXCISE DUTY OF ` 19,18,352/-. THE ASSESSING OFFICER SPECIFICALLY FOUND THAT THERE WAS NO UNACCOUNTED PURCHASES MADE BY THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICE R THAT THE EXCISE AUTHORITIES FOUND THAT THERE WAS UNACCOUNTED PURCHA SES AND SALES, THEREFORE, THE ENTIRE UNACCOUNTED SALES CANNOT BE T REATED AS INCOME OF THE ASSESSEE BECAUSE THERE WAS CORRESPONDING PURCH ASES OF RAW MATERIAL WHICH WAS ALSO NOT RECORDED IN THE BOOKS O F ACCOUNT. REJECTING THE EXPLANATION OF THE ASSESSEE, THE ASS ESSING OFFICER HAS TAKEN THE ENTIRE SALE VALUE OF ` 1,55,91,898/- AS INCOME OF THE ASSESSEE. ACCORDING TO THE LD. REPRESENTATIVE, WHE N THE ASSESSING OFFICER FOUND THAT THERE WAS NO UNACCOUNTED PURCHAS ES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, DEFINITELY, TH E RAW MATERIAL WOULD HAVE BEEN PURCHASED IN THE EARLIER ASSESSMENT YEARS, THEREFORE, ITA NO. 37/15 :- 3 -: THE ENTIRE UNACCOUNTED SALES CANNOT BE TAKEN AS INC OME OF THE ASSESSEE. 3. REFERRING TO THE EXCISE DUTY ELEMENT OF ` 19,18,352/-, THE LD. REPRESENTATIVE SUBMITTED THAT WHEN THE ASSESSEE UN DERVALUED THE INVOICE, THE EXCISE DUTY IS NOT PAYABLE TO THE EXTE NT OF ` 19,18,352/-. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED I N MAKING ADDITION OF ` 19,18,352/-. 4. REFERRING TO THE NEXT GROUND OF APPEAL WITH REGARD TO THE ADDITION OF ` 2,75,098/-, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT ACCOUNTED FOR THE JOB CHARGES RECEIVED FROM M/S SHARON WOOD INDUSTRIE S PVT. LTD. THEREFORE, THE ASSESSING OFFICER COMPUTED THE JOB C HARGES AT ` 2,75,098/-. ACCORDING TO THE LD. REPRESENTATIVE, DU RING 1.6.2005 TO 11.6.2005, ABOUT 73066 NA OF CORE VEENERS WAS PEELE D BY M/S SHARON VEENERS PVT. LTD ON BEHALF OF M/S SHARON WOOD INDUS TRIES PVT. LTD. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE AS SESSEE ONLY ON THE GROUND THAT THERE WAS NO SUPPORTING DOCUMENT. ACCO RDING TO THE LD. REPRESENTATIVE, THE FIGURES REFERRED BY THE ASSESSI NG OFFICER IS CONFUSING, THEREFORE, THE MATTER NEEDS TO BE VERIFI ED BY THE ASSESSING OFFICER. ITA NO. 37/15 :- 4 -: 5. ON THE CONTRARY, DR. B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF SEARCH OPERATION BY THE CENTRAL EXCISE AUTHORITIES, IT WAS FOUND THA T THE ASSESSEE WAS UNDERVALUING THE SALES AND DURING THE YEAR UNDER CO NSIDERATION THE UNDERVALUATION OF SALES WAS AT ` 1,36,73,546/-. THE ACTUAL SALES TOGETHER WITH EXCISE DUTY COMES TO ` 1,55,91,898/-. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE HAS SUPPRESSE D THE EXCISE DUTY PAYABLE TO THE EXTENT OF ` 19,18,352/-. DURING THE ASSESSMENT YEAR 2005-06, THE ASSESSEE HAS PAID MORE THAN ` 2,23,00,000/- OUTSIDE THE BOOKS OF ACCOUNT TO M/S SHREE ENTERPRISE FROM DELHI BRANCH OFFICE. THE SOURCE FOR MAKING THIS AMOUNT OF ` 2,23,00,000/- IS CERTAINLY FROM THE UNACCOUNTED SALES MADE BY THE ASSESSEE DURING THE ASSESSMENT YEAR 2005-06. IN THE ABSENCE OF SUPPORTING DOCUMEN TS, THE ASSESSING OFFICER COULD NOT ESTABLISH THE UNDERVALUATION FOR EARLIER ASSESSMENT YEARS. SINCE THE MATERIALS AVAILABLE ON RECORD CLE ARLY SUGGEST UNDERVALUATION DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER HAS TAKEN THE ENTIRE AMOUNT OF ` 1,55,91,898/- AS INCOME OF THE ASSESSEE. ON A QUERY FROM THE BENCH WHEN THE ASSESSING OFFICER HIMSELF OBSERVED THAT THERE WAS NO UNACCOUNTED PURC HASES MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, HOW THE ASSESSEE WAS ABLE TO MAKE UNACCOUNTED SALES, THE LD. DR SUBM ITTED THAT THE ITA NO. 37/15 :- 5 -: MATTER NEEDS TO BE CLARIFIED BY THE ASSESSING OFFIC ER, THEREFORE, IT MAY BE REMITTED BACK TO THE ASSESSING OFFICER FOR VERIF ICATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THERE WAS A SEARCH BY THE CENTRAL EXCISE AUTHORITIES IN THE PRE MISES OF THE ASSESSEE. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT BASED UPON THE INTELLIGENCE INPUT RECEIVED BY THE C ENTRAL EXCISE AUTHORITIES A SEARCH WAS CARRIED ON AT VARIOUS BRAN CH OFFICES OF THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATION, S EVERAL INCRIMINATING MATERIAL WAS FOUND BY THE CENTRAL EXCISE AUTHORITIE S. IT APPEARS THAT THE CENTRAL EXCISE AUTHORITIES ALSO FOUND UNDERVALU ATION OF THE SALE PRICE AND THE ASSESSEE HAS RECEIVED ABOUT ` 1,10,02,310/- OVER AND ABOVE THE ACTUAL INVOICE PRICE. THE CENTRAL EXCISE AUTHORITIES WORKED OUT THE EXCISE DUTY AND CESS TO THE EXTENT OF ` 17,95,576/-. THE CENTRAL EXCISE AUTHORITIES HAVE RECORDED THE STATEM ENT FROM SHRI NANDLAL SHARMA, EXECUTIVE OF M/S SHARON VEENERS PVT . LTD AND ONE SHRI SAWANT RAM KURI, BRANCH MANAGER, DELHI OFFICE. THE ASSESSING OFFICER FURTHER FOUND THAT M/S SHARON VEENERS PVT. LTD. ACCEPTED THE UNDERVALUATION OF THE SALE PRICE AND PAID ` 50 LAKHS TOWARDS EXCISE DUTY LIABILITY AS ON 31.3.2006. BASED ON THE INVES TIGATION MADE BY THE CENTRAL EXCISE AUTHORITIES, THE ASSESSING OFFICER F OUND THAT THE UNDERVALUATION OF SALES TO THE EXTENT OF ` 1,36,73,546/- AND THE EXCISE ITA NO. 37/15 :- 6 -: DUTY PAYABLE OF ` 19,18,352/- WOULD BE THE TOTAL UNDERVALUATION, HENCE, THE ENTIRE SUM OF ` 1,55,91,898/- HAS TO BE TREATED AS INCOME OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT INCOME-TAX ACT IS A SPECIAL ENACTMENT FOR COMPUTATI ON OF TOTAL INCOME AND LEVY OF TAX THEREON. THEREFORE, THE ASSESSING OFFICER, UNDER THE INCOME-TAX ACT, HAS TO CONDUCT THE ENQUIRY INDEPEND ENTLY. DURING THE COURSE OF INVESTIGATION BY THE INCOME-TAX AUTHORITI ES, THE MATERIAL SEIZED BY THE CENTRAL EXCISE AUTHORITIES CAN ALSO B E TAKEN INTO CONSIDERATION. IN OTHER WORDS, THE STATEMENT RECOR DED BY THE CENTRAL EXCISE AUTHORITIES AND THE DOCUMENTS SEIZED BY THEM MAY BE ONE OF THE FACTOR TO BE TAKEN INTO CONSIDERATION WHILE COM PLETING THE ASSESSMENT UNDER THE INCOME-TAX ACT. IN THIS CASE, THE ASSESSING OFFICER, WITHOUT MAKING ANY INDEPENDENT ENQUIRY, HA S SIMPLY PLACED ON THE CONCLUSION REACHED BY THE CENTRAL EXCISE AUTHOR ITIES. MOREOVER, WHEN THE ASSESSING OFFICER HIMSELF FINDS THAT THERE WAS NO UNACCOUNTED PURCHASES DURING THE YEAR UNDER CONSIDE RATION, IT IS NOT KNOWN HOW THE ASSESSEE WAS ABLE TO SELL THE PRODUC T OUTSIDE THE BOOKS OF ACCOUNT TO THE EXTENT OF ` 1,55,91,898/-. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCOR DINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE OF ADDITION OF ` 1,55,91,898/- INCLUDING THE EXCISE DUTY PAYABLE OF ` 19,18,352/- IS ITA NO. 37/15 :- 7 -: REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. FOR THE SAKE OF CONSISTENCY, THE JOB WORK CHARGES SAID TO BE RECEIV ED FROM M/S SHARON WOOD INDUSTRIES PVT. LTD. TO THE EXTENT OF ` 2,75,098/- IS ALSO REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RECONSIDER THE ISSUES AFRESH IN THE LIGHT OF THE MA TERIAL AVAILABLE ON RECORD AND THERE AFTER DECIDE THE SAME IN ACCORDANC E WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 27 TH NOVEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF