Income-tax Officer, V. M/s. Adinath Concost Pvt. Ltd., Jalna

ITA 396/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7027 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-11-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Section: 69C; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.396/PUN/2016 / ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD-2, JALNA . /APPELLANT VS. M/S. ADINATH CONCOST PVT. LTD., PLOT NO.E-12, PHASE-II, ADDL. MIDC AREA, JALNA 431 203 PAN : AAECA9498F . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 30.11.2017 / DATE OF PRONOUNCEMENT: 30.11.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-I, AURANGABAD, DATED 09-12-2015 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX AC T, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : I. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A), AURANGABAD HAS ERRED IN DELETING THE PENALTY OF RS. 21,87,868J- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961. II. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A), AURANGABAD HAS ERRED IN NOT FOLLOWING HIS OWN ORDER S WHEREIN HE HAS CONFIRMED THE FACT OF SUPPRESSED PRODUCTION IN THE ORDER OF QUANT UM APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR UNDER CONSIDERATION. III. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A), AURANGABAD HAS ERRED IN NOT FOLLOWING HIS OWN ORDER S WHEREIN HE HAD ESTIMATED THE PROFIT @ 4% OF THE ESTIMATED SALE VALUE OF SUPPRESS ED PRODUCTION WHICH WAS NOTHING BUT CONCEALED INCOME. UNDER SUCH CIRCUMSTAN CES, HE SHOULD HAVE CONFIRMED THE PENALTY ALSO. ITA NO.396/PUN/2016 M/S. ADINATH CONCOST PVT. LTD., 2 IV. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE ORDER OF THE LEARNED CIT(A), AURANGABAD BE QUASHED AND THAT THE ORDER OF THE AO BE RESTORED. V. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE. HOWEVER, LD. DR FOR THE REVENUE POINTED OUT THAT TH E ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDERS OF THE TRIBUNAL. W E PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LD. DR FOR THE REVENUE. 4. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRES ENT APPEAL IS AGAINST DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE A SSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF INGOTS/BILLETS. IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT, THE ADDITIONS WERE MADE ON ACCOUNT OF ESTIMATED SUPPRESSED PRODUCTION OF INGOTS ON THE GROUND OF V ARIATION IN CONSUMPTION OF ELECTRICITY, VIS-A-VIS PRODUCTION. THE CIT(A) CONF IRMED THE ADDITION TO THE EXTENT OF GROSS PROFIT @4% ON THE ALLEGED SUPPRESSED PRODUCTI ON AND SALE OUT OF BOOKS OF ACCOUNT. THE TRIBUNAL IN ITA NO.1557/PN/2012 & ITA NO.1628/PN/2012, ORDER DATED 15-07-2015 DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER AND ALSO THE ADDITION CONFIRMED BY THE CIT(A) SINCE, NO EVIDENCE REGARDING UNACCOUNTED PURCHASES OR SALES WERE FOUND. HOWEVER, BEFORE PAS SING OF THE ORDER OF TRIBUNAL (SUPRA), THE ASSESSING OFFICER IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITIONS MADE IN THE HANDS OF THE ASSES SEE. THE ASSESSING OFFICER LEVIED PENALTY ON THE ESTIMATED GROSS PROFIT @4% OF SUPPRESSED SALE WHICH ADDITION WAS UPHELD BY THE CIT(A). THE ASSESSING OFFICER HE LD THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT O F RS.71,80,090/- ON WHICH HE LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT F OR CONCEALING THE PARTICULARS OF INCOME AT RS.21,87,868/-. ITA NO.396/PUN/2016 M/S. ADINATH CONCOST PVT. LTD., 3 6. THE CIT(A) REFERRING TO THE ORDER OF THE TRIBUNA L (SUPRA) NOTED THAT THE QUANTUM APPEAL FILED BY THE ASSESSEE HAS BEEN ALLOW ED IN FAVOUR OF THE ASSESSEE AND HENCE, HE HELD THAT NO PENALTY IS LEVIABLE UNDE R SECTION 271(1)(C) OF THE ACT. FURTHER, THE ESTIMATED ADDITION ON ACCOUNT OF UNEXP LAINED INVESTMENT IN PURCHASES WAS ALSO DELETED IN THE FIRST APPEAL BY THE CIT(A). HE OBSERVED THAT PENALTY LEVIED UNDER SECTION 271(1)(C) COULD NOT BE LEVIED WHERE THE INCOME WAS ESTIMATED AFTER REJECTION OF BOOKS OF ACCOUNT. 7. AFTER HEARING THE LD. DR FOR THE REVENUE AND ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD ON THIS LIMITED ISSUE, WE FIND THAT IN OTHER CASES OF STEEL GROUP SIMILAR ISSUE OF LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT WAS RAISED. THE TRIBUNAL IN THE CASE OF ACIT, JALNA CIRCLE, JALNA V S. M/S. RISHI STEEL & ALLOYS PVT. LTD. AND OTHER CONNECTED APPEALS IN ITA NOS. 161, 1 62, 164 & 167/PUN/2016 RELATING TO THE ASSESSMENT YEARS 2004-05 AND 2009-1 0, ORDER DATED 17-11-2017 RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. BHAGYALAXMI STEEL ALLOYS PVT. IN ITA NOS. 991 & 992/PUN/2015 RELATING TO ASSESSMENT YEAR 2011-12, ORDER DATED 18-10-2017 HAS HELD AS UNDER : 5. ON HEARING THE LD. DR FOR THE REVENUE AND ON AF TER GOING THROUGH THE ORDERS OF THE INCOME-TAX AUTHORITIES AS WELL AS THE ORDERS OF THE TRIBUNAL IN THE CASES OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. AND SHR EE OM ROLLING MILLS PVT. LTD. (SUPRA), WE ARE OF THE OPINION THAT THE ISSUES RAISED IN THESE APPEALS STAND COVERED BY THE SAID DECISIONS IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. FOR THE SAKE OF COMPLETENESS OF THIS ORD ER, WE PROCEED TO EXTRACT THE OPERATIONAL PARAS HEREUNDER OF THE SAID ORDERS OF THE TRIBUNAL HEREUNDER. IN THE CASE OF ACIT VS. BHAGYALAXMI STEEL ALLOYS PV T. LTD. (SUPRA) THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING IN PARA NO.28 AS UNDER : 28. FROM THE ABOVE, WE FIND THE CIT(A) HAS CONSIDE RED ALL THE ASPECTS WHICH LED THE ASSESSEE TO DISCLOSE 982.82 UNITS PER MT WHICH INCLUDE THAT THE ASSESSEE MAINTAINED THE RECORDS PROPERLY AND TH E BOOKS OF ACCOUNTS HAVE BEEN AUDITED, NO METHOD FOR RECORDED DAY-TO-DA Y ELECTRICITY CONSUMPTION, DECLARATION OF 7% BURNING LOSS BY VARI OUS STEEL MANUFACTURING UNITS IN JALNA & SURROUNDING AREA, REPORTS OF EXCIS E DEPARTMENT THAT FOR 1 MT OF MS INGOTS/BILLETS, 1026 ELECTRICITY UNITS ARE REQUIRED, ETC., AND THE DECISION OF HONBLE CE&S TRIBUNAL AND THE PUNE BENC H OF THE TRIBUNAL IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (SUPRA) ETC. NOTHING INCRIMINATING MATERIAL HAS BEEN BROUGHT BY THE REVENUE AUTHORITIE S TO TAKE A CONTRARY VIEW AGAINST THE FINDINGS OF CIT(A). WE THEREFORE FIND THE ORDER OF THE CIT(A) TO BE A REASONED ONE AND ACCORDINGLY AFFIRM THE SAM E. THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.396/PUN/2016 M/S. ADINATH CONCOST PVT. LTD., 4 IN THE CASE OF ACIT VS. SHREE OM ROLLING MILLS PVT. LTD. (SUPRA) ALSO THE PUNE BENCH OF THE TRIBUNAL (WHERE BOTH OF US ARE PA RTIES) HELD AS UNDER : 11. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDE RS OF THE REVENUE AS WELL AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. T HE DELETION OF PENALTY U/S.271(1)(C) OF THE ACT IN RESPECT OF THE ESTIMATE D ADDITIONS IS A DECIDED ISSUE. THERE ARE MANY JUDGMENTS TO SUPPORT THE SAM E. THEREFORE, IN PRINCIPLE, WE CONFIRM THE ORDER OF THE CIT(A) AND D ELETE THE PENALTY RELATABLE TO THE ESTIMATED ADDITION. 12. HOWEVER, WITH REGARD TO THE PENALTY LEVIED RELA TING TO THE ADDITION OF RS.76,48,922/- IS CONCERNED, WE FIND, THE REVENUE R AISED GROUND NO.4 OF ITS APPEAL. IN THE SAID GROUND NO.4, THE REVENUE OPINE S THAT PENALTY ON THE INCOME RELATABLE TO THE CLANDESTINE SALE OF UNRECOR DED PRODUCTION NEEDS TO BE CONFIRMED, EVEN IF THE RELATED PROFITS OF RS.76, 48,922/- IS ESTIMATED APPLYING THE FLAT RATE OF 4%. LD. AR FOR THE ASSESS EE ARGUED THAT THE SAID INCOME IS ARRIVED AT BY THE ASSESSEE AGAIN BASED ON THE ESTIMATION ON THE ESTIMATED SALE OF THE GOODS CLANDESTINELY REMOVED B Y THE ASSESSEE. THE UNRECORDED PRODUCTION WAS ALSO THE PRODUCT OF ESTIM ATION BY THE DGCEI AND EVENTUALLY THE SAME WAS ACCEPTED BY THE SETTLEMENT COMMISSION. ABSENCE OF ANY INCRIMINATING MATERIAL IN SUPPORT OF THE SAI D CLANDESTINELY REMOVED GOODS, ITS QUANTITY AND ALSO EARNING OF PRECISE AMO UNT OF INCOME OF THE SAID GOODS, AUTHORITIES RESORTED TO ESTIMATIONS. REVENU E IS NOT PRIVY TO THE RELEVANT FACTS (1) PRECISE QUANTITY OF SUCH RECORDE D SALES AND (2) PRECISE INCOME OUT OF THE SALE OF SUCH GOODS AND THEY MEREL Y RELIED ON THE FIGURES GIVEN BY THE ASSESSEE. THE QUANTITY OF UNACCOUNTED PRODUCTION IS ESTIMATED BY THE EXCISE DEPARTMENT AND THE TAXABLE INCOME IS ESTIMATED FOR THE INCOME-TAX DEPARTMENT BY THE ASSESSEE APPLYING THE FLAT RATE OF 4%. DESPITE THE ABSENCE OF ANY DISCUSSION IN THE ORDER OF THE CIT(A) ON THIS PART OF THE ISSUE OF ARGUMENT, SPECIALLY, THE CIT(A) GRA NTED RELIEF PRESUMING THAT THIS SEGMENT OF INCOME IS ALSO ARRIVED AT BY THE ES TIMATION. IN OUR VIEW, THE SAID PRESUMPTION IS FAIR AND REASONABLE. IN ANY CASE, NOTHING IS BROUGHT TO OUR NOTICE BY THE LD. DR TO DEMONSTRATE THE ESTI MATIONS ARE NOT INVOLVED BOTH IN ARRIVING AT THE FIGURE OF UNRECORD ED SALES AND THE TAXABLE INCOME. FOR OUR MIND, IT APPEARS THAT THE INCOME OF RS.76,48,922/- IS ALSO THE PRODUCT OF ESTIMATION AN D THE SAME IS ACCEPTED BY THE AO/CIT(A)/ITSC. THEREFORE, IT CONSTITUTES A REASONABLE PRESUMPTION BY THE CIT(A). THEREFORE, THE ORDER OF CIT(A) IS FAIR AND REASONABLE FOR THE SAID REASONS TOO. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. FROM THE ABOVE EXTRACTED PORTIONS OF THE ORDER O F THE TRIBUNAL, WE FIND THE LD. DRS ARGUMENT THAT THE PROFIT RELATABLE TO THE UNACCOUNTED PRODUCTION CONSTITUTES CONCEALED INCOME AND THEREFORE THE PENA LTY IS LEVIABLE STANDS REJECTED FOR THE REASON THAT THE UNACCOUNTED SALES AS WELL A S QUANTIFICATION OF THE RELATED PROFITS/CONCEALED INCOME/ADDITIONAL INCOME HAS REDU CED IN ESTIMATIONS DESPITE THE FACT OF UNACCOUNTED PRODUCTION AND CLANDESTINE REMO VAL OF THE GOODS-CUM- UNACCOUNTED SALES THE CONCEALMENT IS UNSUSTAINABLE IN LAW, IF THE ESTIMATION OF PROFITS INVOLVED AND NO SPECIFIC RELATABLE INCOME I S PRECISELY QUANTIFIED. THEREFORE, WE ARE OF THE OPINION THAT THE ORDERS OF THE CIT(A) IN THESE 4 APPEALS ARE FAIR IN DELETING THE PENALTY FOR THE ABOVE CITED REASONS AL SO. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE REVENUE IN THESE 4 APPEALS ARE DISMIS SED. 8. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ADDITION MADE BY THE ASSESSING OFFICER ON THE CLANDESTINE REMOVAL OF GOO DS WAS ESTIMATED BY THE CIT(A). HOWEVER, THE SAID ADDITION HAS BEEN DELETE D BY THE TRIBUNAL AND THE OTHER ADDITION MADE UNDER SECTION 69C OF THE ACT HAS ALSO BEEN DELETED BY THE CIT(A) ITA NO.396/PUN/2016 M/S. ADINATH CONCOST PVT. LTD., 5 AND UPHELD BY THE TRIBUNAL. IN THE TOTALITY OF THE ABOVE AND IN VIEW OF THE RATIO LAID DOWN BY THE TRIBUNAL (SUPRA), WE UPHOLD THE ORDER O F CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ACCORDI NGLY, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS, THE 30 TH DAY OF NOVEMBER, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE; DATED : 30 TH NOVEMBER, 2017. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-I, AURANGABAD 4. CIT-I, AURANGABAD 5. , , B BENCH PUNE; 6. / GUARD FILE.