M/s. J.B. Metal Industries (P) Ltd., New Delhi V. ITO, New Delhi

ITA 5363/DEL/2010

• Counselvise Citation: 536320114 RSA 2010
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: D V TANEJA
• Keywords: Competent authority; Right to appeal

Judgement Text

ITA NO. 5363/ DEL/ 2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 5 3 63 /DEL/201 0 A.Y. : 20 0 6 - 07 M/S J.B. METAL INDUSTRIES (P) LTD., D - 288, VIVEK VIHAR, DELHI ( PAN: AA ACJ5000E) VS. ITO, WARD 4(1), CENTRAL REVENUE BUILDING, I.P. ESTATE, NEW DELHI 110 002 (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. D.V. TANEJA, CA DEPARTMENT BY : SH. GAURAV DUDEJA, SR. DR DATE OF HEARING : 22 - 6 - 201 5 DATE OF ORDER : 2 4 - 6 - 201 5 ORDER PER H.S. SIDHU : J M THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 19 / 10 /201 0 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - VII, NEW DELHI ON THE FOLLOWING GROUNDS: - 1. L D. CIT(A) HAS ERRED IN FACTS AND IN LAW IN CONFIRMING ADDITION. AS ALLEGED EXCESS STOCK OF COPPER SCARP RS. 21,86,699/ - . 2. THE AVERMENT OF AO THAT ASSESSEE HAS NOT FILED RECONCILIATION FOR EXCESS STOCK IS MISCONCEIV ED AND IS OPPOSED TO FACTS LAW AND CIRCUMSTANCES OF CASE. AND CONFIRMED BY THE LD. CIT(A) IS BAD IN LAW. ITA NO. 5363/ DEL/ 2010 2 THE APPELLANT DURING COURSE OF PROCEEDINGS HAD EXPLAINED ALLEGED STOCK OF COPPER WHEREAS IT WAS GUESSTIMATE BY EXCISE PERSONNEL WITHOUT WEIGHTING E ACH BAG. THE ADDITION MADE IS ON ACCOUNT OF MERE SURMISES, CONJECTURES AND ASSUMPTIONS. THE ADDITION MADE AND SUSTAINED BY LD. CIT(A) IS BAD IN LAW. THE AO HAS ERRED IN FACTS AND IN LAW IN CHARGING INTEREST U/S. 234B. AS APPELLANT DENIES ITS LIABILI TY FOR LEVY OF SUCH INTEREST. 3. THE ORDER PASSED BY LD. CIT(A) TOWARDS CONFIRMATION OF EXCESS TOCK OF COPPER IS BAD IN LAW. 2. THE FACTS NARRATED BY THE REVENUE A UTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, NEED NOT TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT THE AO HAS MADE THE ADDITION IN DISPUTE ON THE BASIS OF DOCUMENTARY EVIDENCE OF THE EXCISE AUTHORITIES ON ACCOUNT OF EXCESS STOCK OF COOPER, COLLECTED BY WAY OF SURVEY BY THE EXCISE DEPARTMENT. THE ASSESSEE HAS FILED AN APPEAL BEFORE THE COMMISSIONER (APPEALS), CENTRAL EXCISE, DELHI - II AGAINST THE ORDER OF JOINT COMMISSIONER, CENTRAL EXCISE, DELHI - I. THE COMMISSIONER (APPEALS), CENTRAL EXCISE, DELHI - I I HAS ALSO DECIDED THE SAME AGAINST THE ASSESSEE AND AGGRIEVED WITH THE SAID ORDER OF THE ITA NO. 5363/ DEL/ 2010 3 COMMISSIONER(APPEALS), CENTRAL EXCISE, DELHI - II, ASSESSEE APPEALED BEFORE THE CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI WHERE THE APPEAL IS STILL PENDING. 3.1 LD. FIRST APPELLATE AUTHORITY HAS DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE ON THE BASIS OF THE FINDING OF THE EXCISE AUTHORITIES WITHOUT ANY INDEPENDENT EVIDENCE. HE REQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASIDE TO THE AO TO DECIDE THE S AME, KEEPING IN VIEW OF THE DECISION OF THE CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI. 4. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER S PASSED BY THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RDS AS WELL AS THE DOCUMENTARY EVIDENCE S FILED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK, WE ARE OF THE VIEW THAT LD. CIT(A) HAS DECIDED THE ISSUE IN DISPUTE IN PARA 4 & 4.1 AT PAGES 2 & 3 IN HIS IMPUGNED ORDER. FOR THE CONVENIENCE, WE ARE REPRODUCING TH E PARA 4 & 4.1 OF THE IMPUGNED ORDER AS UNDER: - 4. GROUNDS OF APPEAL NO.2(I) & 2(II) RELATE TO TILE GRIEVANCE OF THE APPELLANT AGAINST THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.21,86,669/ - ON ACCOUNT OF EXCESS STOCK OF COPPER. IT W AS SUBMITTED 011 BEHALF OF THE APPELLANT INTER - ALIA THAT ITA NO. 5363/ DEL/ 2010 4 'ADDITION HAS BEEN MADE ON THE BASIS OF SURVEY BY EXCISE DEPARTMENT. BASIC DEFECTS IN SURVEY OF EXCISE DEPARTMENT - (A) NO PROPER WEIGHMENT OF STOCK AND (B)STOCK WAS ESTIMATED ON GUESS WORK AND EYE ES TIMATION. EXCESS AND SHORTAGE NOT CONSIDERED. IF EXCESS AND SHORTAGE WAS PROPERLY CONSIDERED THERE WAS NEITHER EXCESS NOR SHORTAGE . THE APPELLANT DURING COURSE OF PROCEEDINGS HAD EXPLAINED ALLEGED STOCK OF COPPER WHEREAS IT WAS GUESSTIMATE BY EXCISE PERSO NAL WITHOUT WEIGHING IN EACH BAG. THE ADDITION MADE IS ON ACCOUNT OF MERE SURMISES, CONJECTURES AND ASSUMPTIONS. THE ADDITION MADE IS BAD IN LAW. DURING COURSE OF ASSESSMENT PROCEEDING. T E ASSESSEE SUBMITTED THAT WHATEVER IS REVEALED BY THE PHYSICAL VERIFI CATION OF STOCK BY THE EXCISE DEPARTMENT THAT IS FAR BEYOND REALITY. MERELY ON THE BASIS OF EYE ESTIMATION DEPARTMENT HAS DRAWN AN ADVERSE INFERENCE. IT HAS BEEN HELD IN THE SCORES OF DECISION UNDER THE EXCISE LAW THAT SUCH KIND OF PHYSICAL VERIFICATION IS NOT TENABLE IN THE EYE OF LAW. WE WISH TO SUBMIT BELOW MENTIONED CASE LAW SETTLED AT THE STAGE OF TRIBUNAL WHICH IS THE HIGHEST FACT FINDING AUTHORITY : - - SHIV STEEL ROLLING MILLS VS.CCE 2005 (186) ELT 326 (TRIBUNAL) - BHUSHAN LTD VS. CCE 2005 (186) ELT 19 7 (TRIBUNAL) - MOOLCHAND STEELS LTD. VS CCE 2005 (187) ELT 387 (TRIBUNAL) ITA NO. 5363/ DEL/ 2010 5 - AGRA STEEL CORP. VS.CCE 2002 (48) RLT 298 (TRIBUNAL) - DHULICHAND SILK MILLS PVT.LTD. VS.CCE 2001 (133) ELT 468 (TRIBUNAL). IF PROPER WEIGHMENT WOULD HAVE BEEN DONE THERE WILL NOT BE ANY VARIATION. TAKING ONLY EXCESS AND IGNORING SHORTAGE AND WITHOUT RECONCILIATION ADDITION HAS BEEN MADE WHICH IS WHOLLY UNJUSTIFIED AND DESERVES TO BE DELETED. IT WAS SUBMITTED BEFORE LD. A. O . G.P. & NP. COMPARISON - GROSS PROFIT AND NET PROFIT COMPARIS ON WITH THE LAST TWO YEARS IS ENCLOSED. FROM THE CHART IT IS EVIDENCE THAT GROSS PROFIT RATIO INCREASED FROM 4.11% IN FIN. YEAR 2003 - 04 TO 6.37% IN FIN. YEAR 2005 - 06 AND SIMILARLY NET PROFIT RATIO INCREASED FROM 0.07% IN FIN. YEAR 2003 - 04 TO 0.16% IN FIN.Y EAR 2005 - 06. ALTHOUGH THERE WAS DECLINE IN TURNOVER OVER THE LAST TWO YEARS THERE WAS INCREASE. IN G.P. & NP RATES. BOOKS OF ACCOUNT ARE AUDITED REPORT OF AUDITOR IS CLEAN. NO DISCREPANCY WAS NOTICED EXCEPT ALLEGED SURVEY OF EXCISE DEPARTMENT. CONSIDERING PAST HISTORY AND NO DISCREPANCY NOTICED IN ACCOUNTS THE ADDITION ON MERE G UE S STIMATE AND WITHOUT WEIGHING EACH BAG THE ADDITION MADE IS OPPOSED TO FACTS LAW AND CIRCUMSTANCES OF THE CASE. THE ADDITION MADE IS UNWAR R ANTED AND HAS NO RELEVANCE TO BOOKS OF AC COUNT AND STOCK. THE ADDITION MADE MAY PLEASE BE ORDERED BE DELETED. THEREFORE, ENTIRE DISCREPANCY ON ACCOUNT OF SHORTAGE OF STOCK COULD NOT BE TREATED AS UNDISCLOSED INCOME.' 4.1 I HAVE CONSIDERED THE WRITTEN SUBMISSION ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE ASSESSING OFFICER IN ITA NO. 5363/ DEL/ 2010 6 THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT AND THE FACTS ON RECORD. IT IS FOUND THAT THE ISSUE REGARDING EXCESS STOCK OF COPPER SCRAP HAS BEEN DECIDED BY THE LEARNED COMMISSIONER(APPEALS), CENTRAL EXCISE, DEL HI - IL AGAINST THE APPELLANT THEREBY CONFIRMING THE ORDER PASSED BY THE JOINT COMMISSIONER, CENTRAL EXCISE , DELHI - I AND THE APPELLANT HAS FILED APPEAL AGAINST THE ORDER OF COMMISSIONER(APPEALS),CENTRAL EXCISE, DELHI - IL BEFORE CUSTOMS, EXCISE AND S ERVICE TAX APPELLATE TRIBUNAL, NEW DELHI WHERE THE MATTER IS STILL PE NDING . THEREFORE L AM OF THE CONSIDERED VIEW THAT THE ADDITION OF RS.21,86,669/ - ON ACCOUNT OF EXCESS STOCK OF COPPER DESERVES TO BE SUSTAINED. HOWEVER A.O. MAY TAKE ACTION IN CONSONANCE WITH THE DE CISION OF THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI. SUBJECT TO THE ABOVE REMARKS, GROUNDS OF APPEAL NO.2(I) & 2(II) ARE DISMISSED. 6. AFTER GOING THROUGH THE AFORESAID FINDING PASSED BY THE LD. CIT(A), WE ARE OF THE VIEW THAT REVENUE AUTHORIT IES HA VE NOT GIVEN ANY INDEPENDENT FINDING ON THE BASIS OF ANY EVIDENCE EXCEPT THE DOCUMENTARY EVIDENCE C OLLECTED BY THE CUSTOMS & EXCISE DEPARTMENT AGAINST WHICH THE ASSESSEE S APPEAL IS PENDING BEFORE THE CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI. IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE ISSUE IN DISPUTE REQUIRES RECONSIDERATION/ READJUDICATION AT THE LEVEL OF THE AO. ACCORDINGLY, WE DIRECT THE AO TO DECIDE THE ISSUE IN DISPUTE AFRESH UNDER THE LA W, KEEPING IN VIEW OF THE DECISION OF CUSTOMS, EXCISE & ITA NO. 5363/ DEL/ 2010 7 SERVICE TAX APPELLAT E TRIBUNAL, NEW DELHI , AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND TO PRODUCE ANY EVIDENCE FOR SUBSTANTIATING ITS CLAIM BEFORE THE AO. WE MAKE IT CLEAR THAT ASSESSEE HAS STATUTORY RIGHT TO APPEAL, IF SO, ADVISED, BEFORE THE COMPETENT AUTHORITY. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 /0 6 /2015. S D / - S D / - [S. V. MEHROTRA ] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 2 4 /0 6 /2015 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES