M/s. Rajwani Synthetics Pvt. Ltd., Surat V. The Income tax Officer, Ward-4(1), Surat

ITA 4192/AHD/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57212 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-02-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 23-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: HARDIK VORA
• Keywords: Unexplained expenditure
• Section: 131; 148; 144; 69C; 10B

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %&' ( ) %&' ( ) %&' ( ) %&' ( ), , , , &* + & ' &* + & ' &* + & ' &* + & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND B.P. JAIN, ACCOUNTANT MEMBER) ITA NO.4192/AHD/2007 [ASSTT.YEAR : 2000-2001] RAJWANI SYNTHETICS PVT. LTD. 320, SHALIMAR MARKET RING ROAD, SURAT. /VS. ITO, WARD-4(1) SURAT. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 12 3 4 &/ ASSESSEE BY : SHRI HARDIK VORA + 3 4 &/ REVENUE BY : SHRI VINOD TANWANI 6 3 27*/ DATE OF HEARING : 9 TH FEBRUARY, 2012 89: 3 27*/ DATE OF PRONOUNCEMENT : 02-03-2012 &; / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE FOR A.Y.2000-2001 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-I, SURAT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE HAS REQUEST ED FOR DISPOSAL OF THE GROUND NO.4 OF THE APPEAL FIRST, AS IT WAS RELATED TO THE LEGAL ISSUE. THE GROUND NO.4 OF THE ASSESSEES APPEAL READS AS UNDER : 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) H AS ERRED IN CONFI RMING THE ACTION OF THE AO IN NOT ALLOWING DEDUCTION U/S.10B OF THE ACT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS TAKEN ADDITIONAL GROUND BEFORE THE CIT(A) THAT THE ASSESSEE IS AN HUNDRED PERCENT EOU AND ELIGIBLE FOR DEDUCTION UNDER SECTIO N 10B. HE ADMITTED THAT THIS CLAIM WAS NOT MADE BY THE ASSESSEE BEFORE THE AO. HE RELIED ON THE DECISION IN CIT VS. JAI PARABOLIC SPRINGS LTD., 306 ITR 42 (DELHI). THE LEARNED DR HAS OPPOSED TO THE SUBMISSIONS OF THE LE ARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT NO SUCH CLAIM FOR DEDU CTION UNDER SECTION 10B ITA NO.4192/AHD/2007 -2- WAS MADE BY THE ASSESSEE BEFORE THE AO. HE SUBMITT ED THAT EVEN ON MERITS, THE ASSESSEE COULD NOT ESTABLISH THAT IT IS AN HUND RED PERCENT EOU COMPANY AND THAT WHETHER ANY INCOME MADE WOULD QUALIFY FOR EXPO RT AND EOU BENEFIT OR NOT. HE SUBMITTED THAT IN FACT THE ASSESSEE WAS IN VOLVED IN EOU SCAM. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT NO SUCH CLAIM UNDER S ECTION 10B WAS MADE BY THE ASSESSEE BEFORE THE AO. THIS GROUND DOES NOT E MANATE FROM THE ASSESSMENT ORDER. FURTHER, THE ASSESSEE COULD NOT ESTABLISH T HAT IT IS AN HUNDRED PERCENT EOU COMPANY. THE CIT(A) ON TECHNICAL AS WELL AS ON MERITS HAS DISMISSED THIS ADDITIONAL GROUND OF THE ASSESSEE. NO MATERIA L IS PLACED BEFORE US TO CONTROVERT THE FINDINGS OF THE CIT(A) IN THIS REGAR D AND ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED, AND THERE BEING NO MERIT IN THE CONTENTION OF THE ASSESSEE, THE GROUND NO.4 OF THE ASSESSEE IS DISMISSED. 5. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD.CIT(A)HAS ERRED IN CONFIRMING T HE ACTION OFT HE AO IN MAKING ADDITION OF RS.12,590/- FOR INCOME ESTIMATED @ 1% ON ALLEGED CASH SALES OF RS.12,58,998/- 6. THE LEARNED COUNSEL FORT THE ASSESSEE SUBMITTED THAT THE INCOME HAS BEEN DETERMINED AT THE RATE OF 1% OF THE ALLEGED CASH SA LES ON MERELY ESTIMATE BASIS AND THERE IS NO JUSTIFICATION FOR THE SAME. THE LE ARNED DR SUBMITTED THAT THE ESTIMATION OF INCOME AT 1% OF THE ALLEGED CASH SALE S IS MOST REASONABLE. HE SUBMITTED THAT THE ASSESSEE WAS NON-COOPERATIVE AND HAS NOT FILED EVEN RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 I SSUED BY THE AO. HE SUBMITTED THAT THE ASSESSEE HAS NOT SUBMITTED ANY D ETAILS AND BOOKS OF ACCOUNTS AND HAS CLAIMED THAT THE BOOKS OF ACCOUNTS WERE SEI ZED BY THE EXCISE DEPARTMENT AND REMAINING RECORDS WERE DESTROYED IN FIRE ON 5-5-2004 IN ITS OFFICE PREMISES. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). ITA NO.4192/AHD/2007 -3- 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND T HAT THE ASSESSEE HAS NOT FILED ITS RETURN OF INCOME IN RESPONSE TO THE N OTICE UNDER SECTION 148 OF THE ACT. CLAIM OF THE ASSESSEE WAS THAT THE BOOKS OF A CCOUNTS WERE SEIZED BY THE EXCISE AND REVENUE DEPARTMENT AND REMAINING RECORDS WERE DESTROYED IN FIRE ON 5-5-2004 IN ITS OFFICE PREMISES. ON A SPECIFIC QUERY FROM THE BENCH THAT WHETHER THE ASSESSEE HAS EVER APPLIED FOR COPIES OF EXTRACT OF THE RELEVANT RECORD RECEIVED BY THE DEPARTMENT FROM THE EXCISE D EPARTMENT, THE LEARNED COUNSEL FOR THE ASSESSEE SHOWED ITS INABILITY AND C ONCEDED THAT NO SUCH REQUEST WAS MADE BY THE ASSESSEE IN THIS REGARD. IN THESE FACTS OF THE CASE AND ALSO CONSIDERING THAT SHRI RAJWANI, DIRECTOR OF THE ASSE SSEE-COMPANY HAS ADMITTED THAT THE NET PROFIT WAS APPROXIMATELY 1% OF THE TUR NOVER, WE HOLD THAT THE ESTIMATION MADE AT 1% OF THE TURNOVER COULD NOT BE SAID TO BE EXCESSIVE, WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. 8. THE GROUND NO.2 OF THE ASSESSEES APPEAL READS A S UNDER: 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIR MING THE ACTION OF THE AO IN MAKING ADDITION OF RS.8,24,059/- FOR INCOME E STIMATED @ 1% ON ESTIMATED TURNOVER OF RS.8,24,05,874/- 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE INCOME HAS BEEN ADDED BY WAY OF ESTIMATE ONLY AND THERE IS NO MATER IAL BROUGHT ON RECORD TO SUPPORT THE ADDITION MADE BY THE DEPARTMENT. HE SU BMITTED THAT THE ASSESSEES EXPORT TURNOVER FOR SIX MONTHS FROM APRIL 1999 TO S EPTEMBER, 1999 FOR TWO UNITS AT RS.4.12 CRORES WAS FOUND AND THERE WAS NO BASIS FOR DETERMINING THE TURNOVER OF THE ASSESSEE AT RS.8.24 CRORES FOR THE WHOLE YEAR AND APPLYING A NET PROFIT AT 1% TO ARRIVE AT THE QUANTUM OF THE INCOME OF THE ASSESSEE. THE LEARNED DR HAS OPPOSED THE SUBMISSION OF THE LEARNE D COUNSEL. HE SUBMITTED THAT THE ASSESSEE WAS NON-COOPERATIVE AND HAS NOT F ILED ITS RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT BY THE AO. HE SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED THE BO OKS OF ACCOUNTS AND OTHER ITA NO.4192/AHD/2007 -4- RECORDS BY CLAIMING THAT THESE WERE SEIZED BY THE E XCISE DEPARTMENT AND THE REMAINING RECORDS WERE DESTROYED IN THE FIRE ON 5-5 -2004. HE SUBMITTED THAT THE ASSESSEES EXPORT TURNOVER FOR SIX MONTHS FROM APRIL, 1999 TO SEPTEMBER, 1999 AT RS.4.12 CRORES COULD NOT BE DISPUTED BY THE ASSESSEE AND THE ACTION OF THE AO IN ESTIMATING THE INCOME AT 1% OF THE TURNOV ER WAS MOST REASONABLE. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEES EXPORT TURNOVER FOR SIX MONTHS FROM APRIL, 1999 TO SEPTEMBER, 1999 AT RS.4.12 CRORES COULD NOT DISPUTED BY THE ASSESSEE. IN VIEW OF THE FACT THAT THE ASSESSEES EXPORT TURNOVER FOR THE SIX MONTHS FOR T HE TWO UNITS AT RS.4.12 CRORES WAS NOT DISPUTED BY THE ASSESSEE, WE HOLD THAT THE ESTIMATION OF THE ASSESSEES TOTAL EXPORT TURNOVER FOR THE WHOLE YEAR AT RS.8.24 CRORES COULD NOT BE SAID TO BE UNJUSTIFIED OR EXCESSIVE. IN REPLY TO A SPECIFI C QUERY FROM THE BENCH THAT WHETHER THE ASSESSEE HAS EVER APPLIED FOR COPIES OF THE EXTRACT OF THE SEIZED MATERIAL RECEIVED BY THE DEPARTMENT FROM THE EXCISE DEPARTMENT, THE LEARNED COUNSEL FOR THE ASSESSEE SHOWED ITS INABILITY AND S UBMITTED THAT THE ASSESSEE COULD NOT APPLY FOR THE COPIES THEREOF. WE FIND TH AT THE ASSESSEE HAS NOT MADE ANY ENDEAVOUR TO FILE ANY EXPLANATION WITH REGARD T O THIS ISSUE AND NO EFFORT WAS MADE BY THE ASSESSEE TO OBTAIN THE EXTRACT OF T HE SEIZED MATERIALS WITH THE EXCISE DEPARTMENT OR BY OBTAINING BANK STATEMENT FR OM THE BANKS OR OBTAINING ACCOUNTS COPIES OF ITS CREDITORS AND DEBTORS ETC. I N ORDER TO PROVE THE ACTUAL EXPORT TURNOVER OF THE ASSESSEE. IN THESE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MISTAKE IN THE ORD ER OF THE CIT(A) IN CONFIRMING THE AOS ACTION IN ESTIMATING THE ASSESS EES EXPORT TURNOVER FOR THE WHOLE YEAR AT RS.8.24 CRORES AND APPLYING NET PROFI T AT 1% THEREON TO ESTIMATE THE PROFIT. ACCORDINGLY, THE GROUND NO.2 OF THE AS SESSEES APPEAL IS DISMISSED. 11. THE GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UNDER: 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIR MING THE ACTION OF THE AO IN MAKING ADDITION OF RS.17,71,200/- FOR ALLEGED UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT ON PURCHASE OF ADV. LICENSE/ARO ITA NO.4192/AHD/2007 -5- 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO BASIS FOR ADDITION MADE BY THE DEPARTMENT FOR ALLEGED UNEXPLA INED EXPENDITURE UNDER SECTION 69C OF THE ACT ON PURCHASE OF ADVANCE LICEN SE/ARO. HE SUBMITTED THAT COPIES OF STATEMENTS OF SHRI HASTIMAL JAIN AND SHRI ROOPCHAND JAIN WERE NEVER GIVEN TO THE ASSESSEE BY THE DEPARTMENT. HE SUBMITTED THAT THE NAME OF THE ASSESSEE DOES NOT APPEAR IN THE STATEMENT OF TH ESE TWO PERSONS WHO ARE SAID TO BE MIDDLEMEN FOR THE PURCHASE OF ARO. HE RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ACIT VS. AKRUTI DYEING & PRINTING MILLS PVT. LTD., TAX APPEAL NO.997 OF 2008 ORDER DA TED 27-1-2009 IN SUPPORT OF HIS ARGUMENTS. THE LEARNED COUNSEL FOR THE ASSE SSEE IN THE ALTERNATIVE SUBMITTED THAT THE TELESCOPIC BENEFIT FOR THE ADDIT IONS ARE ELIGIBLE TO THE ASSESSEE, WHICH MAY BE ALLOWED TO IT. THE LEARNED DR HAS OPPOSED THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. HE REFERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE C ASE OF THE REVENUE AND SUBMITTED THAT SHRI RAJWANI IN ITS STATEMENT UNDER SECTION 131 OF THE ACT HAS ADMITTED THAT HE HAS RECEIVED PREMIUM AT THE RATE O F 30% OF THE UNTILISED ARO AND PAYMENT OF PREMIUM WAS IN CASH. HE SUBMITTED T HAT SHRI ROOPCHAND JAIN WAS KNOWN TO HIM AND HAS ADMITTED THE PURCHASE OF A RO THROUGH HIM. HE SUBMITTED THAT THE DECISION RELIED UPON BY THE LEAR NED COUNSEL OF THE ASSESSEE IS DISTINGUISHABLE ON FACTS. HE SUBMITTED THAT TELESC OPIC BENEFIT IN THIS CASE WAS NOT ALLOWABLE TO THE ASSESSEE. 13. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE DEPARTMENT HAS PRODUCED THE DETAILS OF ARO FOR THE AMOUNT OF RS.59 .04 LAKHS AND HAS CONFRONTED TO THE ASSESSEE THE STATEMENT OF SHRI RO OPCHAND JAIN AND HASTIMAL JAIN UNDER SECTION 131. SHRI ROOPCHAND JAIN HAS ST ATED IN HIS STATEMENT UNDER SECTION 131 OF THE ACT THAT HE HAD RECEIVED PREMIUM AT THE RATE OF 30% ON UNUTILISED ADVANCE LICENSE/ARO AND MADE THE PAYMENT OF PREMIUM IN CASH. THE DIRECTOR OF THE ASSESSEE-COMPANY, SHRI RAJWANI HAS ALSO ADMITTED IN STATEMENT RECORDED UNDER SECTION 131 OF THE ACT ON 17-1-2006 THAT SHRI ROOPCHAND JAIN WAS KNOWN TO HIM AND HAS ALSO ADMITT ED THE PURCHASE OF THE ITA NO.4192/AHD/2007 -6- ADVANCE LICENSE/ARO THROUGH HIM. THE ASSESSEE COUL D NOT SHOW ANY EVIDENCE THAT IT HAS EVER TRIED TO OBTAIN THE COPY OF THE STATEMENT OF ROOPCHAND JAIN FROM DEPARTMENT. THE ASSESSEE HAS BEEN, THROU GHOUT, NON-COOPERATIVE WITH THE DEPARTMENT. IN THESE CIRCUMSTANCES AND I N VIEW OF THE FACTS OF THE CASE, WE HOLD THAT THE AO WAS JUSTIFIED IN ASSESSIN G PREMIUM AT THE RATE OF 30% PAID IN CASH BY THE ASSESSEE-COMPANY FOR THE PURCHA SE OF ADVANCE LICENSE/ARO AS THE ASSESSEE COULD NOT FURNISH ANY E XPLANATION REGARDING THE SOURCE THEREOF. THE AO HAS PROVIDED NUMBER OF OPPO RTUNITIES TO THE ASSESSEE TO FILE EXPLANATION ON THIS ISSUE, WHICH THE ASSESS EE FAILED TO COMPLY WITH AND THE ASSESSMENT HAS TO BE FRAMED EX PARTE UNDER SECTION 144 R.W.S. 147 OF THE ACT. 14. HOWEVER, WE FIND THAT THE ALTERNATIVE CLAIM OF THE ASSESSEE REGARDING ALLOWANCE OF TELESCOPIC BENEFIT TO THE ASSESSEE SEE MS TO BE JUSTIFIED. THE AO HAS MADE ADDITION BY WAY OF ESTIMATE AT RS.12,590/- AND RS.8,24,059/- ON CASH SALES FOUND BY THE EXCISE AUTHORITIES AND EXPORT TU RNOVER RESPECTIVELY AND THEREFORE THE SAME WAS AVAILABLE WITH THE ASSESSEE DURING THE RELEVANT YEAR. ACCORDINGLY, WE DIRECT THAT TO THE EXTENT OF THE IN COME OF RS.12,590/- AND RS.8,24,059/- ADDED IN THE HANDS OF THE ASSESSEE, T HE TELESCOPIC BENEFIT OUT OF THE ADDITION MADE OF RS.17,71,200/- UNDER SECTION 6 9C OF THE ACT ON ACCOUNT OF UNEXPLAINED PURCHASE OF ADVANCE LICENSE/ARO BE A LLOWED TO THE ASSESSEE AND THE ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDIT URE UNDER SECTION 69C ON PURCHASE OF ADVANCE LICENSE/ARO BE RESTRICTED TO TH E BALANCE AMOUNT REMAINING THEREOF I.E. RS.9,34,551/-. ACCORDINGLY, THE GROUND NO.3 OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' ( ) %&' ( ) %&' ( ) %&' ( ) /B.P. JAIN) &* + &* + &* + &* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT