Sh. Parshotam Aggarwal, Mandi Gobindgarh V. Principal Commissioner of Income Tax, Ludhiana

ITA 521/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1602 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 143(3); 153A; 263; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.521/CHD/2015 (ASSESSMENT YEAR : 2005-06) SH.PARSHOTAM AGGARWAL VS. THE PRINCIPAL C.I.T.(CENTRAL), # 378, SECTOR 3-C, LUDHIANA. G.T.ROAD, GIRDHAR MARKET, MANDI GOBINDGARH. PAN: ABBPA0540P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI SUSHIL KUMAR, DR DATE OF HEARING : 01.12.2015 DATE OF PRONOUNCEMENT : 04.12.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA DATED 16.3.2015, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2005- 06 ON 9.8.2012 IN PURSUANCE OF A NOTICE UNDER SECTI ON 2 153A OF THE ACT DECLARING INCOME OF RS.8,10,280/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 153A OF THE ACT READ WITH SECTION 143(3) OF THE ACT VIDE ORDER DATE D 31.1.2013 ACCEPTING THE RETURNED INCOME OF RS.8,10, 280/- THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO THE ASSESSEE DATED 8.1.2015 BY THE PRINCI PAL COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA OBSE RVING THAT THE ORDER PASSED BY THE ASSESSING OFFICER SEEM S TO BE ERRONEOUS AS WELL PREJUDICIAL TO THE INTEREST OF TH E REVENUE. THE MAIN CONTENTION OF THE PRINCIPAL COMMISSIONER OF INCOME TAX IN THIS SHOW CAUSE NOTIC E WAS THAT CERTAIN INFORMATION WAS RECEIVED FROM THE ASSISTANT DIRECTOR C/O DIRECTORATE GENERAL OF CENTR AL EXCISE INTELLIGENCE, REGIONAL UNIT, SARABHA NAGAR, LUDHIANA VIDE ITS OFFICE LETTER F.NO.IV(6)LRU/INV/12/2005/4 DATED 1.1.2015. AS PE R THIS ORDER, M/S R.P.MULTIMETALS PVT. LTD. HAS BEEN FOUND INDULGING IN BOGUS PURCHASES OF LOCAL SCRAP AND SAL E OF IMPORTED SCRAP. ON THE BASIS OF THIS INFORMATION, THE PRINCIPAL COMMISSIONER OF INCOME TAX WAS OF THE VIE W THAT THE PARTY HAS AVAILED CENVAT CREDIT ON THE DOMESTIC DUT Y PAID SCRAP WITHOUT ACTUAL RECEIPT OF THE SAME. FURTHER HE NO TICED THAT THE ISSUE OF BOGUS PURCHASE OF LOCAL DUTY PAID SCRAP WE IGHING 1112.395MT AND BOGUS SALE OF IMPORTED SCRAP AS NOTE D IN THE ORDER OF THE ADDL. COMMISSIONER, CENTRAL EXCISE, CH ANDIGARH-I HAS ESCAPED THE ATTENTION OF THE ASSESSING OFFICER WHILE ASSESSING THE INCOME OF THE ASSESSEE UNDER THE INCO ME TAX ACT. IN THE LIGHT OF THESE FACTS, THE LEARNED COMMISSION ER OF INCOME 3 TAX FORMED THE OPINION THAT THE ORDER PASSED BY TH E DCIT, CENTRAL CIRCLE-III, LUDHIANA UNDER SECTION 15 3A READ WITH SECTION 143(3() OF THE ACT DATED 31.1.201 3 IS PRIMA FACIE ERRONEOUS IN SO FAR AS IT IS PREJUDICIA L TO THE INTEREST OF THE REVENUE. AN OPPORTUNITY OF BEING H EARD WAS GIVEN TO THE ASSESSEE. HOWEVER, NO REPLY TO TH E SAID SHOW CAUSE NOTICE WAS FILED BY THE ASSESSEE. 3. THE LEARNED COMMISSIONER OF INCOME TAX FORMED AN OPINION THAT AS THE ASSESSEE IS PROPRIETO R OF A CONCERN, NAMELY R.P. MULTIMETALS PVT. LTD. AND AS P ER THE ORDER OF THE EXCISE DEPARTMENT, THE ASSESSEE M/S R. P. MULTIMETALS PVT. LTD. HAS BEEN FOUND INDULGING IN B OGUS PURCHASES OF LOCAL SCRAP AND SALE OF IMPORTED SCRAP . SINCE THE ADDL.CIT, CENTRAL EXCISE, CHANDIGARH-I, H AS HELD THAT THE ASSESSEE M/S R.P. MULTIMETALS PVT. LT D. HAS AVAILED CENVAT CREDIT ON THE DOMESTIC DUTY PAID SCR AP WITHOUT ACTUAL RECEIPT OF THE SCRAP AND CONSEQUENTL Y, ORDERED THE RECOVERY OF CENVAT CREDIT OF RS.24,12,4 97/-, INTEREST AND FURTHER IMPOSED PENALTY OF RS.24,12,49 7/- ON ASSESSEE M/S R.P. MULTIMETALS PVT. LTD. RELYING ON A NUMBER OF JUDGMENTS OF VARIOUS HIGH COURTS, THE PRI NCIPAL COMMISSIONER OF INCOME TAX HELD THAT THE ASSESSMENT IN THIS CASE WAS MADE WITHOUT PROPER ENQUIRY AND, THEREFORE, IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE. IT WAS ALSO OBSERVED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX THAT NOT ONLY THE ASSESS ING OFFICER HAS NOT MADE PROPER ENQUIRY AND HAS NOT VER IFIED 4 THE CORRECTNESS AND GENUINENESS OF ASSESSEES EXPLA NATION BUT HE HAS ALSO MADE THE ASSESSMENT ORDER WITHOUT P ROPER APPLICATION OF MIND AND WITHOUT PROPERLY APPRECIATI NG THE FACTS. IN THIS WAY, THE ORDER PASSED BY THE ASSESS ING OFFICER UNDER SECTION 153A OF THE ACT READ WITH SEC TION 143(3) OF THE ACT DATED 31.1.2013 WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND WAS SET ASIDE WITH THE DIRECTION TO THE ASSESSI NG OFFICER TO MAKE THE ASSESSMENT DE-NOVO AFTER PROPER LY EXAMINING THE FACTS OF THE CASE AND RELEVANT LEGAL PROVISIONS AND CONDUCTING PROPER ENQUIRY AND AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 4. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE SHOW CAUS E NOTICE ISSUED BY THE PRINCIPAL COMMISSIONER OF INCO ME TAX UNDER SECTION 263 OF THE ACT IS BASED SOLELY ON AN INFORMATION RECEIVED FROM THE EXCISE AUTHORITIES IN RELATION TO M/S R.P. MULTIMETALS PVT. LTD. AND NOT IN RELATION TO THE ASSESSEE. THE ASSESSEE SHRI PARSHO TAM AGGARWAL IS AN INDIVIDUAL AND HAS SHOWN INCOME UNDE R THE HEAD SALARY FROM M/S R.P. MULTIMETALS PVT. LTD . BEING THE DIRECTOR OF THE COMPANY AND SHARES FROM THE PARTNERSHIP FIRM, NAMELY R.P.ALLOYS & FORGINGS MGG. A COPY OF COMPUTATION IS PLACED AT PAPER BOOK PAGE 1. THE COMPUTATION WAS SHOWN TO US TO EMPHASIZE THE FACT T HAT THE ASSESSEE IS ONLY A DIRECTOR IN M/S R.P. MULTIME TALS 5 PVT. LTD. AND ON THE BASIS OF SOME INFORMATION RECE IVED IN THE CASE OF COMPANY, IN WHICH THE ASSESSEE IS A DI RECTOR THE ASSESSMENT MADE IN ASSESSEES CASE CANNOT BE HE LD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURTHER, IT WAS SUBMITTED THAT THE PRINCI PAL COMMISSIONER OF INCOME TAX GOT CONFUSED BETWEEN THE IDENTITY OF THE COMPANY M/S R.P. MULTIMETALS PVT. L TD. AND THE ASSESSEE. SINCE IN THE SHOW CAUSE, THOUGH ISSUED TO THE ASSESSEE, THE PRINCIPAL COMMISSIONER OF INCO ME TAX HAS REFERRED M/S R.P. MULTIMETALS PVT. LTD. AS THE ASSESSEE. IT SEEMS THAT THE SHOW CAUSE NOTICE WAS INTENDED TO BE ISSUED TO M/S R.P. MULTIMETALS PVT. LTD. AND WAS WRONGLY ISSUED TO THE ASSESSEE. IN THIS RE GARD, OUR ATTENTION WAS ALSO INVITED TO THE COPY OF SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE UNDER SECTION 263 OF THE ACT, WHEREBY THE PAN NUMBER OF THE ASSESSEE IS SHOWN TO BE ABBPA0540P, WHICH IS THE CORRECT PAN NUMBER OF THE ASSESSEE SHRI PARSHOTAM AGGARWAL, WHILE THE FACTS MENTIONED IN THE SHOW CAUSE NOTICE RELATES TO M/S R .P. MULTIMETALS PVT. LTD., WHOSE PAN NUMBER IS AABCR608 6R. THE COPIES OF THE PAN NUMBERS ARE ATTACHED IN THE P APER BOOK FILED BY THE ASSESSEE. THE SUM AND SUBSTANCE OF THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSE SSEE WAS THAT THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS WRONGLY ISSUED TO THE ASSESSEE SINCE THE FA CTS STATED THEREIN DO NOT PERTAIN TO THE ASSESSEE AND U NDER SOME MISTAKE THE SAME HAS BEEN ISSUED TO THE ASSESS EE. THEREFORE, THE ORDER FRAMED UNDER SECTION 263 OF TH E ACT 6 IN PURSUANCE OF THE SAID SHOW CAUSE HOLDING THE OR DER OF THE ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT AS PER LAW. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. FROM THE PAPER BOOK FLED BY THE ASSESSEE AND THE SP ECIFIC PAGES SHOWN BY THE LEARNED COUNSEL FOR THE ASSESSEE TO US, WE OBSERVE THAT THE ASSESSEE IS AN INDIVIDUAL D RAWING SALARY FROM THE COMPANY M/S R.P. MULTIMETALS PVT. L TD. AS HE IS THE DIRECTOR IN THE SAID COMPANY AND ALSO REC EIVES SHARES FROM THE PARTNERSHIP FIRM M/S R.P. ALLOYS & FORGINGS MGG. THE FACTS STATED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT DO NOT PERTAIN TO THE ASSESSEE AS THERE IS A REFERENCE OF SOME INFORMATIO N RECEIVED BY THE EXCISE AUTHORITIES IN THE CASE OF M/S R.P. MULTIMETALS PVT. LTD., WHICH IS THE COMPANY HAVING INDEPENDENT IDENTITY OTHER THAN THAT OF THE ASSESSE E. JUST BECAUSE THE ASSESSEE IS A DIRECTOR IN THE SAID COMPANY, NO ADVERSE INFERENCE AGAINST THE ASSESSEE CAN BE DRAWN ON THE BASIS OF ANY SUCH INFORMATION. SIN CE THE KIND OF PURCHASES AND OTHER TRANSACTIONS REFERRED T O IN THE INFORMATION RECEIVED FROM THE EXCISE DEPARTMENT ARE NOT AT ALL BEING ENTERED INTO BY THE ASSESSEE, HOW CAN THE 7 ORDER FRAMED BY THE ASSESSING OFFICER IN ASSESSEES CASE BE HELD TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. EVEN THE LEARNED D.R. BEF ORE US COULD NOT CONTROVERT THE FACT THAT THE FACTS MENTIO NED IN THE SHOW CAUSE NOTICE ACTUALLY PERTAIN TO THE COMPA NY M/S R.P. MULTIMETALS PVT. LTD. AND NOT IN THE CASE OF THE ASSESSEE. SINCE THE FACTS DO NOT RELATE TO THE ASS ESSEE, THE ORDER FRAMED BY THE ASSESSING OFFICER IN ASSESS EES CASE CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF DECEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 4 TH DECEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8