The Income-tax Officer, Amritsar. V. M/s. Everest Engineering & Sales, Amritsar.

ITA 598/ASR/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73194 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN RATTAN
• Keywords: Business income; Document seized; Principle of natural justice; Documents seized; Reassessment proceedings
• Section: 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.594 TO 598(ASR)/2011 ASSESSMENT YEARS:2004-05 TO 2008-09 PAN :AAAFE3306R INCOME TAX OFFICER, VS. M/S.EVEREST ENGG. AND SALE S, WARD 3(1), PLOT NO.34, IDC P.O. RAYON AND AMRITSAR. SILK MILLS, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.MAHAVIR SINGH, DR RESPONDENT BY:SH. NAVEEN RATTAN, ADVOCATE DATE OF HEARING: 07/01/2014 DATE OF PRONOUNCEMENT:17/01/2014 ORDER PER BENCH ; THESE FIVE APPEALS OF THE REVENUE ARISE FROM THE T WO DIFFERENT ORDERS OF CIT(A), AMRITSAR, ONE FOR THE ASSESSMENT YEARS 2 004-05, 2005-06 & 2006-07 AND ANOTHER FOR THE ASSESSMENT YEARS 2007-0 8 & 2008-09 EACH DATED 20.10.2011. SINCE THE ISSUES IN ALL THE APPE ALS ARE IDENTICAL, THEREFORE, ALL THE APPEALS ARE BEING TAKEN UP TOGETHER BY THIS CONSOLIDATED ORDER FOR THE 2 SAKE OF CONVENIENCE. THE REVENUE HAS RAISED FOLLOWI NG GROUNDS IN THE APPEALS: ITA NO. 594(ASR)/2011 FOR THE A.Y. 2004-05 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15, 32,450/- OBSERVING THAT THE AO HAS NOT PLACED ANY POSITIVE A ND RELEVANT EVIDENCE ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS RIG HTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ABSENCE OF ASSESSES HAVING PRODUCED THE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENCE WITH REGARD TO SYSTEMATIC UNDE R INVOICING OF SALES POINTED OUT TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SYSTEMATIC UNDER INVOICING OF SALES HAD BEEN ADMITTED BY SH. RAVI K HANNA, MANAGER AN AUTHORIZED SIGNATORY OF THE FIRM DURING INVESTIGATION OF THE CASE BEFORE THE DIRECTOR GENER AL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF . ITA NO. 595(ASR)/2011 FOR THE A.Y. 2005-06 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.54, 64,800/- OBSERVING THAT THE AO HAS NOT PLACED ANY POSITIVE A ND RELEVANT EVIDENCE ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS RIG HTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ABSENCE OF 3 ASSESSES HAVING PRODUCED THE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENCE WITH REGARD TO SYSTEMATIC UNDE R INVOICING OF SALES POINTED OUT TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SYSTEMATIC UNDER INVOICING OF SALES HAD BEEN ADMITTED BY SH. RAVI K HANNA, MANAGER AN AUTHORIZED SIGNATORY OF THE FIRM DURING INVESTIGATION OF THE CASE BEFORE THE DIRECTOR GENER AL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF . ITA NO. 596(ASR)/2011 FOR THE A.Y. 2006-07 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.67, 56,200/- OBSERVING THAT THE AO HAS NOT PLACED ANY POSITIVE A ND RELEVANT EVIDENCE ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS RIG HTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ABSENCE OF ASSESSES HAVING PRODUCED THE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENCE WITH REGARD TO SYSTEMATIC UNDE R INVOICING OF SALES POINTED OUT TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SYSTEMATIC UNDER INVOICING OF SALES HAD BEEN ADMITTED BY SH. RAVI K HANNA, MANAGER AN AUTHORIZED SIGNATORY OF THE FIRM DURING INVESTIGATION OF THE CASE BEFORE THE DIRECTOR GENER AL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF . 4 ITA NO. 597(ASR)/2011 FOR THE A.Y. 2007-08 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.67, 80,210/- OBSERVING THAT THE AO HAS NOT PLACED ANY POSITIVE A ND RELEVANT EVIDENCE ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS RIG HTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ABSENCE OF ASSESSES HAVING PRODUCED THE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENCE WITH REGARD TO SYSTEMATIC UNDE R INVOICING OF SALES POINTED OUT TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SYSTEMATIC UNDER INVOICING OF SALES HAD BEEN ADMITTED BY SH. RAVI K HANNA, MANAGER AN AUTHORIZED SIGNATORY OF THE FIRM DURING INVESTIGATION OF THE CASE BEFORE THE DIRECTOR GENER AL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF . ITA NO. 598(ASR)/2011 FOR THE A.Y. 2008-09 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.23, 88,820/- OBSERVING THAT THE AO HAS NOT PLACED ANY POSITIVE A ND RELEVANT EVIDENCE ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS RIG HTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ABSENCE OF ASSESSES HAVING PRODUCED THE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENCE WITH REGARD TO SYSTEMATIC UNDE R INVOICING OF SALES POINTED OUT TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. 5 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SYSTEMATIC UNDER INVOICING OF SALES HAD BEEN ADMITTED BY SH. RAVI K HANNA, MANAGER AN AUTHORIZED SIGNATORY OF THE FIRM DURING INVESTIGATION OF THE CASE BEFORE THE DIRECTOR GENER AL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF . 2. SINCE THE ISSUES IN ALL THE APPEALS ARE IDENTICA L, THEREFORE, WE TAKE UP APPEAL OF THE REVENUE IN ITA NO.594(ASR)/2011 FOR T HE A.Y. 2004-05 AND OUR ORDER HEREINBELOW SHALL BE IDENTICALLY APPLICAB LE IN ALL OTHER APPEALS I.E. FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09. 3. THE BRIEF FACTS OF THE CASE ARE THAT AS PER INFO RMATION, THE ASSESSEE HAS BEEN UNDER INVOICING ITS SALES AND THE UNRECORD ED INCOME OF THE FIRM WAS COLLECTED BY THE PERSONS CONNECTED WITH THE AFFAIR S OF THE ASSESSEE. ACCORDINGLY, OFFICE OF THE DIRECTORATE GENERAL OF C ENTRAL EXCISE INTELLIGENCE, REGIONAL UNIT, CONDUCTED A SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE, RESIDENCE OF THE PARTNERS AND DELHI O FFICE, MAJOR DEALERS OF THE ASSESSEE OUTSIDE PUNJAB AND MAIN SUPPLIERS OF RAW M ATERIAL SIMULTANEOUSLY ON 17.08.2007. THE INVESTIGATION WAS CONCLUDED BY T HE OFFICE OF THE DGCEI, LUDHIANA AND THE OUTCOME OF THE SAME IS AVAILABLE AT PAGES 1 TO 22 OF AOS ORDER. THE SAID OUTCOME OF THE INVESTIGATION IN THE FORM OF SHOW CAUSE 6 NOTICE WAS GIVEN TO THE ASSESSEE. THE AO THEREAFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE MADE AN ADDITION OF RS. 15,32,450/- DURING THE IMPUGNED YEAR AND SIMILAR ADDITIONS WERE MADE IN O THER YEARS. IT IS PERTINENT TO REPRODUCE THE RELEVANT PART OF AOS OR DER AT PAGES 20 TO 26 AS UNDER: THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF JET PUMP, CAR WASHERS/SCOOTER WASH ERS ETC. AFTER ANALYZING THE REPORT AND COMPARING THE SAME WITH TH E RETURN OF THE ASSESSEE, IT IS FELT THAT THE ASSESSEE HAS SUPPRESS ED THE SALES BY RESORTING TO UNDER VALUATION OF GOODS IN THE SALE V OUCHERS AND DIFFERENTIAL AMOUNTS OVER AND ABOVE THE INVOICE VAL UE WAS BEING RECEIVED IN CASH OR IN THE FORM OF DEMAND DRAFTS IS SUED IN THE NAME OF SH. RAVI KHANNA MANAGING-CUM-AUTHORISED SIGNATORY O F THE FIRM. THESE FACTS HAVE ALSO BEEN ADMITTED BY SH. RAVI KHA NNA MANAGER CUM AUTHORISED SIGNATORY OF THE FIRM. THE SUPPRESSE D SALES HAVE BEEN REPORTED FOR THE A.Y. 2004-05 AT RS.15,32,450/-. AS PER THE RETURN OF THE ASSESSEE FIRM HAS DECLARED SALES IN ITS RETURN OF INCOME AT RS.63,01,610/-. ACCORDINGLY, TOTAL SALES COMES TO RS.78,34,060/-. S INCE THE ASSESSEE HAS ALREADY CLAIMED ALL THE EXPENSES AS PE R TRADING AND PROFIT & LOSS ACCOUNT, THE SUPPRESSED SALES OF RS.1 5,32,450/- IS THE EXTRA INCOME OF THE FIRM WHICH HAS NOT BEEN DISCLOS ED BY THE ASSESSEE FIRM MEANING THEREBY THAT THE ASSESSEE HAS CONCEALE D THE INCOME TO THE TUNE OF RS.15,32,450/-. ACCORDINGLY, THERE IS REASONS TO BELIEVE THAT INCOM E TO THE TUNE OF RS.15,32,450/- CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR THE A.Y. 2004-05 WITHIN THE MEANING OF SECTION 147 READ WITH SECTION 148 OF THE I.T. ACT, 1961 FOR FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. ACCORDINGLY, ON THE BASIS OF ABOVE RECORDED REASONS BEING RATIONAL AND RELEVANT , NOTICE U/S 148 WAS ISSUED O N 4.12.2008 WAS SERVED UPON THE ASSESSEE FIRM ON 9.12.2008. 7 SAME ORIGINAL RETURN IN RESPONSE TO SECTION 148 WAS FILED ON 5.1.2009. NOTICE U/S 143(2) DATED 2.2.2009 WAS SERVED UPON TH E ASSESSEE ON 5.2.2009 FIXING THE CASE FOR 12.2.2009 WHEN COUN SEL OF THE ASSESSEE ATTENDED THE OFFICE AND COPY OF REASONS RECORDED WA S GIVEN AND WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS ON 2.3.2009. ON 2.3.2009 COUNSEL OF THE ASSESSEE MADE WRITTEN RE QUEST TO ADJOURN THE CASE AND VIDE NOTICE U/S 143(2) AND 142 (1) DATED 2.6.2009 WAS FIXED FOR 18.6.2009 REQUIRING THE ASSESSEE TO F URNISH THE FOLLOWING INFORMATION. 1. COMPLETE BOOKS OF ACCOUNTS, BILLS/VOUCHERS AND O THER RELEVANT RECORDS. 2. DATE-WISE SALES AND PURCHASE GIVING BILL NO. NAM ES AND ADDRESSES OF THE PARTIES AS WELL AS QUANTITY AND Q UALITY OF GOODS PURCHASED/SOLD FOR THE PERIOD 1.4.2003 TO 31.3.2004. ON THE FIXED DATE WRITTEN SUBMISSIONS WERE MADE AS UNDER: 1. THAT SH. RAVI KHANNA IS THE MANAGING CUM AUTHORI SED SIGNATORY AND POWER OF ATTORNEY HOLDER OF THE FIRM. HE IS MANAGING THE AFFAIRS OF THE BUSINESS OF THE FIRM . 2. THAT THE CENTRAL EXCISE PREVENTIVE BRANCH ASKED THE ASSESSEE TO PRODUCE ALL BOOKS OF ACCOUNTS, BILLS BO OKS AND SALES/PURCHASE BILLS AND EXPENSES VOUCHERS, CAS H BOOK LEDGER AND BILL BOOKS FOR THE PERIOD 1.4.2001 TO 31.3.2006. 3. THAT THE ASSESSEE FIRM COLLECTED ALL THE BOOKS A ND ON 6.11.2006 SH. RAVI KHANNA CARRIED ALL THE BOOKS FOR GETTING PHOTOSTAT. 4. THAT AT 4.30 PM, HE WENT TO MATA MANDIR AMRITSA R AND PARKED HIS CAR NO. PB-02N 3137 NEAR THE MANDIR AND ALL THE BOOKS WERE IN THE CAR. 8 5. THAT AT 5.30 PM WHEN HE CAME BACK, HE FOUND THAT CAR WAS MISSING AND SH. RAVI KHANN LODGED THE COMPLAINT AND THE BOOKS OF ACCOUNTS STOLEN ALONGWITH THE CAR ARE NOT AVAILABLE. FURTHER DURING THE HEARING ON 18.6.2009, IT WAS ASK ED TO FURNISH COPIES OF THE DOCUMENT OTHER THAN DOCUMENTS ENCLOSED WITH THE SHOW CAUSE NOTICE FIXING THE CASE FOR 29.6 .2009 AND FURTHER FOR 13.7.2009 WHEN IT WAS STATED BY THE SH. RAVI KHANNA THAT SUCH PAPERS ARE NOT AVAILABLE. ASSESSEE WAS AGAIN ASKED VIDE THIS OFFICE NOTICE US / 142(1) AND 143(2) DT. 30.10.2009 TO FURNISH DOCUMENTS IN SUPPO RT OF RETURN OF NCOME FILED ALONGWITH EXPLANATION AS TO WHY THE ASSESSMENT BE NOT MADE AS PER THE ABOVE REASONS RECORDED AS IT FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND RECORDS FIXING T HE CASE FOR 9.11.2009. WRITTEN SUBMISSION WERE MADE AGAIN AS UNDER: 1. THAT THE BOOKS OF ACCOUNT HAVE BEEN STOLEN AND CANN OT BE PRODUCED. 2. THAT THE ASSESSEE HAS NOT MADE ANY UNDER-INVOICING AND THE GENUINE SALES HAVE BEEN MADE SHOWN IN THE SALE S TAX RETURNS AS WELL AS INCOME TAX RETURNS. THE SUBMISSIONS OF THE ASSESSEE IS NOT ACCEPTABLE B Y SUPPRESSING THE SALES ON ACCOUNT OF UNDERINVOICING, SALES TAX HAS ALSO BEEN PAID LESSER ACCORDINGLY. ON 13.11.2009 SH. VIJAY UMAT COUNSEL OF THE ASSESSE E ATTENDED ALONG WIH SH. RAVI KHANNA AND WAS AGAIN ASKED TO M AKE EXPLANATION AS TO WHY ASSESSMENT BE NOT MADE AS ABO VE FIXING THE CASE FOR 18.11.2009. ON 18.11.2009 SH. VIJAY UMAT COUNSEL OF THE ASSESSE E ATTENDED ALONGWITH SH. RAVI KHANNA AND MADE NO EXPLANATION . REQUESTED ADJOURNMENT AND CASE ADJOURNED TO 23.11.2 009. NO SUBMISSIONS WERE MADE AND REQUESTED ADJOURNMENT AND CASE ADJOURNED TO 30.11.2009. 9 WRITTEN SUBMISSIONS WERE MADE VIDE LETTER 15.1.2009 AS UNDER: THAT THE SHOW CAUSE NOTICE IS WITHOUT SUPPORTING E VIDENCES FOR WHICH ASSESSEE IS TO GIVE REPLY AND ASSESSEE MAY BE GIVEN SUFFICIENT TIME TO REPLY THE SAME AND WE ARE NOT IN POSSESSION OF THE ENTIRE RECORD AS THE SAME HAS BEEN RESUMED BY T HE DGCEI LUDHIANA AND SOME OF THE RECORD HAS BEEN STOLEN. AS THE ASSESSEE FAILED TO MAKE THE REQUIRED EXPLANA TION, AGAIN VIDE FINAL SHOW CAUSE NOTICE DT. 11.12.2009 WAS ASK ED TO MAKE EXPLANATION AS UNDER FIXING THE CASE FOR 21.12.2009 . YOU WERE PROVIDED THE COPY OF THE DETAILED SHOW CAU SE NOTICE ISSUED BY THE CENTRAL EXCISE LUDHIANA WHICH WAS ALS O PROVIDED TO YOU BY THE SAID AUTHORITIES REGARDING UNDERINVOI CING OF THE BILLS (BILLWISE) AND RECEIVING THE ADDITIONAL PAYME NTS OUT OF BOOKS. IT WAS ASKED DURING THE PROCEEDING TO MAKE EXPLANAT ION AS TO WHY THE ASSESSMENT MAY NOT BE MADE AS PER THE SHOW CAUSE NOTICE AS PER WHICH IT HAS BEEN FOUND AND ESTABLISH ED REGARDING THE UNDERINVOICING OF THE SALES. NO EXPLANATION HAS BEEN FURNISHED BY YOU DURING THE PROCEEDING BEFORE MY PREDECESSOR OR AND ALSO BEFORE THE UNDERSIGNED DESPITE OF MORE THAN SUFFICIENT OPPORTU NITIES PROVIDED TO YOU. THE COPY OF THE STATEMENT OF SH. RAVI KHANNA, AUTHO RISED SIGNATORY DATED 3.9.2007 IS ENCLOSED HEREWITH AS P ER WHICH ABOVE FACTS IS ADMITTED. ACCORDINGLY, IT IS AGAIN ASKED TO MAKE EXPLANATION ON 18.12.2009 AS TO WHY THE ASSESSMENT BE NOT MADE AS PER REASONS RECORDED BY REJECTING THE BOOKS OF ACCOUNT S ACCORDINGLY AND WHY ADDITION OF RS.1532450 AS WORKE D OUT AS PER SHOW CAUSE NOTICE, MAY NOT BE ADDED TO INCOME O N ACCOUNT OF SUPPRESSION OF SALES. 10 WRITTEN SUBMISSIONS TO ABOVE SHOW CAUSE HAVE BEEN M ADE VIDE LETTER DT. 21.12.2009 WHICH IS REPRODUCED AS UNDER: 1. THAT WE HAVE REQUESTED NUMBER OF TIMES TO SUPPLY US EVIDENCES IN RESPECT OF UNDERINVOICING OF THE SALES MADE BY THE FIRM BUT YOU HAVE NOT BEEN ABLE TO SUPPLY AN Y EVIDENCE TILL TODAY. 2. THAT YOU HAVE SUPPLIED US THE STATEMENT CHART OF DE TAILS OF ACTUAL SALES AMOUNT INVOICE AMOUNT AND SUPPRESSE D AMOUNT AS CHECK OUT FROM THE RECORDS RESUMED. 3. YOU HAVE SUPPLIED US CHART OF SUPPRESSED SALES BUT NOT SUPPLIED ANY EVIDENCE. 4. EVEN TODAY WE ARE REQUESTING TO SUPPLY THE EVIDENCE IN POSSESSION. 5. THAT THE DGCEI LUDHIANA HAS ISSUED THE SHOW CAUSE NOTICE AND THE SAME HAS NOT BEEN ADJUDICATED AT THE IR END. 6. THE CHART IS JUST HYPOTHETICAL AND IS NOT SUPPORTED BY EVIDENCE. 7. THAT OUR GOODSELF HAS SUPPLIED THE STATEMENT OF FIR MS EMPLOEES SH. RAVI KHANNA IN WHICH HE ADMITTED THAT HE HAS SOLD ACCESSORIES TO DIFFERENT FIRMS IN HIS INDI VIDUAL CAPACITY AND FIRM M/S. EVEREST SALES IS NOT RESPONS IBLE FOR ANY ACT DONE IN HIS INDIVIDUAL CAPACITY. THE SUBMISSION OF THE ASSESSEE IS NOT ACCEPTABLE AT ALL AS UNDER: MORE THAN SUFFICIENT OPPORTUNITIES HAVE BEEN PROVID ED AS ABOVE TO MAKE EXPLANATION OF UNDER INVOICING AS PER SHOW CAUSE NOTICE BASED ON ALL MATERIAL EVIDENCES O F SYSTEMATIC UNDERINVOICING. 11 AS PER THE ABOVE REPLY, THE FACTS HAVE BEEN ADMITTE D WITH ONLY EXCUSE THAT ACT HAS BEEN DONE BY SH. RAVI KHAN NA EMPLOYEE OF THE FIRM AND NOT BY THE FIRM WHO IS MANAGING CUM AUTHORIZED SIGNATORY AND POWER OF ATTORNEY HOLDER OF THE FIRM AND LOOKING AFTER THE A FFAIRS OF THE FIRM AND FAMILY MEMBER ( SON, HUSBAND AND BROTH ER) OF THE PARTNERS OF THE FIRM. IT HAS BEEN ADMITTED BY SH. RAVI KHANNA AS PER STAT EMENT RECORDED AS UNDER: QUESTION NO.17. YOU ARE BEING SHOWN A FILE CONTAIN ING PAGES 1 TO 156 WHICH WAS RECOVERED FROM B/15 GREATE R KAILASH ENCLAVE-II, NEW DELHI ON 17.8.07 DURING THE SEARCH RESUMED UNDER PANCHNAMA ALREADY SHOWN TO YO U, THIS FILE CONTAINS NOTES, WRITTEN BY YOU, ON YOU FI RMS LETTER HEAD FROM PAGE 1 TO 45. THESE NOTES ARE ADDR ESSED TO YOUR DELHI BRANCH WITH DIRECTIONS DELHI OFFICE , SG. RAJPAL FOR ACTION CONTAINING DATES AND INVOICE NUM BER, AMOUNT OF INVOICE, NAME OF THE PARTY ( IN SOME CASE S) G.R. NUMBERS AND DIFFERENTIAL AMOUNT OVER AND ABOVE THE INVOICE AMOUNT. PLEASE GO THROUGH THESE AND OFFER Y OUR COMMENTS ON THE DETAILS GIVEN TEREIN. ANS. I HAVE SEEN PAGES 1 TO 145 AND HAVE PUT MY DAT ED SIGNATURE ON THE SAME AS A TOKEN OF HAVING SEEN AND GONE THROUGH THE SAME. I AGREE WITH THE QUESTION AND ADM IT THAT ON THE LETTER HEAD PAGES WHEREVER RATES SHOWN (ACTUAL RATES IN THAT CASE) ALONG WITH CALCULATIONS VIS-- VIS THE NUMBER OF PIECES, THE PAYMENTS MENTIONED ON THE RIGHT HAND SIDE ARE PAYMENT RECEIVED OVER AND ABOVE THE INVOICE VALUE ONLY. FOR EXAMPLE ON PAGE NO. 19 INVO ICE NO.R-84 DATED 5.8.2006 HAS BEEN DESCRIBED. THE INVO ICE AMOUNT IS 24640, THE WORKED OUT AMOUNT IS 63885 AND DIFFERENTIAL AMOUNT IS RS39245/-. QUESTION 18. WHO USED TO COLLECT THE AMOUNT OF GOOD S SOLD OVER AND ABOVE THE INVOICE AMOUNT AS DISCUSSED IN YOUR ANSWER IN QUESTION NO.17. 12 ANS I USE TO COLLECT THE AMOUNT IN CASH PERSONALLY AND THE AMOUNT COLLECTED WAS SPENT ON BUYING ACTIVITIE S OF THE ACCESSORIES ETC (PURCHASE). RAJPAL WAS SENT THE LETTER TO NOTE THE GUARANTEE TO THE PUMP SUPPLIERS BECAUSE WE GIVE GUARANTEE FOR ONE YEAR. AS STATED AS PER EARLIER REPLY OF THE ASSESSEE AS A BOVE SH. RAVI KHANNA IS THE MANAGING CUM AUTHORISED SIGNATOR Y AND POWER OF ATTORNEY HOLDER OF THE FIRM. HE IS MAN AGING THE AFFAIRS OF THE BUSINESS OF THE FIRM AND HOW CAN THEN THE FIRM IS NOT RESPONSIBLE FOR ANY ACT DONE BY THE FIRM. MORE IMPORTANTLY THE PARTNERS OF THE FIRM ARE HIS W IFE SMT. RASHMI KHANNA, MOTHER SMT. ASH KHANNA AND YOUNGER BROTHER SH. SANJAY KHANNA. AS PER THE DETAILED REPORT OF THE DGCEI, LUDHIANA AS ABOVE, FACTS REGARDING THE SYSTEMATIC UNDER INVO ICING HAVE BEEN ESTABLISHED WITH ALL POSSIBLE CIRCUMSTANT IAL AND OTHER EVIDENCES AS DETAILED THEREIN AS ABOVE WH ICH HAVE DULY BEEN ACCEPTED AND ADMITTED BY SH. RAVI KHANNA MANAGING CUM AURHORISED SIGNATORY OF THE FIR M AND WHO IS ACTUALLY LOOKING AFTER THE AFFAIRS OF T HE FIRM. THUS, THE SUBMISSION OF THE ASSESSEE THAT NO EVIDEN CE HAS BEEN PROVIDED IS NOT ACCEPTABLE AS EVERY ANGLE HAS BEEN COVERED AND ESTABLISHED AS PER DETAILED REPORT AS ABOVE AND MOREOVER ADMITTED BY THE ASSESSEE AND FACTS ESTABLISHED DO NOT NEED ANY FURTHER EVIDENCE OR CLARIFICATION. THE SUBMISSION OF THE ASSESSEE THAT DEPARTMENT HAS NOT ADJUDICATED THE MATTER OF UNDER INVOICING I S NOT ACCEPTABLE AS THE FACTS OF UNDERINVOICING BASED ON MATERIAL FACTS HAVE BEEN ESTABLISHED ADMITTED AND M ATTER MAY NOT BE ADJUDICATING DUE TO REASONS OTHER THAN UNDERINVOICING AS PER THE EXCISE ACT. ACCORDINGLY, INCOME ESCAPED AS ABOVE ON ACCOUNT OF UNDERINVOICING THE SALES IS HEREBY ADDED TO INCO ME BY REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE AC T ACCORDINGLY. 13 ACCORDINGLY ASSESSMENT IS MADE AND INCOME IS COMPUTED AS UNDER: INCOME RETURNED 24910 INCOME ADDED AS ABOVE 1532450 TOTAL INCOME 1557360 4. BEFORE THE LD. CIT(A), THE ASSESSEE AGITATED THE INITIATION OF PROCEEDINGS U/S 147 VIDE GROUNDS NO. 1 & 2 AND ALSO ON MERITS. THE LD. CIT(A), HOWEVER, REJECTED GROUNDS NO. 1 & 2 BEING L EGAL GROUNDS ON AGITATION AGAINST INITIATION OF THE REASSESSMENT PR OCEEDINGS VIDE PARA 9 TO 9.2 OF HIS ORDER. THEREAFTER, THE LD. CIT(A) AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE WAS OF THE VIEW VIDE PARA 11 AND THERE AFTER THAT THE ENQUIRY OF THE AO WAS INCOMPLETE TO PROVE THAT THERE IS SUPPR ESSION OF SALES, SEIZED DOCUMENTS WERE NOT SUPPLIED OR CONFRONTED TO THE AS SESSEE. THE ASSESSEE HAS DISCHARGED ITS BURDEN THAT NO UNDER INVOICING HAS B EEN DONE THROUGH AFFIDAVIT. HE FURTHER HELD THAT THE AO IS DUTY BOUN D TO BRING NEW MATERIAL ON RECORD TO SUPPORT HIS VIEW. HE ALSO OBSERVED THAT T HE ASSESSEE HAS SUPPRESSED THE SALES IN ONE YEAR CANNOT BE GENERALIZED BY OTHE R YEARS. THE RELEVANT PART OF THE REQUEST OF THE ASSESSEE NUMBER OF TIMES TO SUPPLY THE EVIDENCES IN RESPECT OF UNDER INVOICING HAS BEEN SHORT-LISTED BY THE LD. CIT(A), WHICH IS REPRODUCED AS UNDER: 14 THAT WE HAVE REQUESTED NUMBER OF TIMES TO SUPPLY U S EVIDENCES IN RESPECT OF UNDER-INVOICING OF THE SALES MADE BY THE FIRM BUT YOU HAVE NOT BEEN ABLE TO SUPPLY ANY EVIDENCE TILL TODAY. 2) THAT YOU HAVE SUPPLIED US THE STATEMENT CHART O F DETAILS OF ACTUAL SALES AMOUNT, INVOICE AMOUNT AND SUPPRESSED AMOUNT AS CHECKED OUT FROM THE RECORDS RESUMED 3) YOU HAVE SUPPLIED US CHART OF SUPPRESSED SALES B UT NOT SUPPLIED ANY EVIDENCE. 4) EVEN TODAY WE ARE REQUESTING TO SUPPLY THE EVIDE NCE IN POSSESSION. 5) THAT THE DGCEI, LUDHIANA HAS ISSUED THE SHOW CAU SE NOTICE AND THE SAME HAS NOT BEEN ADJUDICATED AT THEIR END. 6) THE CHART IS JUST HYPOTHETICAL AND IS NOT SUPPOR TED BY EVIDENCE. 7) THAT YOUR GOODSELF HAS SUPPLIED THE STATEMENT OF FIRMS EMPLOYEE, SH. RAVI KHANNA IN WHICH HE ADMITTED THAT HE HAS SO LD ACCESSORIES TO DIFFERENT FIRMS IN HIS INDIVIDUAL CAPACITY AND FIRM , M/S. EVEREST SALES IS NOT RESPONSIBLE FOR ANY ACT DONE IN HIS INDIVIDU AL CAPACITY. THEREFORE, THE LD. CIT(A) OBSERVED THAT NO ADDITION CAN BE MADE WITHOUT PROVIDING THE ASSESSEE AN OPPORTUNITY ALONGWITH DO CUMENTS ON WHICH THE AO INTENDS TO RELY UPON. THE LD. CIT(A) RELIED UP ON THE DECISION IN THE CASE OF KISHIN CHAND CHELLARAM VS. CIT 125 ITR 713 (SC) AND DECISIONS OF VARIOUS OTHER COURTS OF LAW AND FINALLY WAS OF T HE VIEW VIDE PARA 11.4 OF HIS ORDER THAT IT WOULD BE FAIR AND JUDICIOUS THAT THE AO MUST GIVE OPPORTUNITY TO REBUT THE EVIDENCE IN THE POSSESSION OF THE AO WHICH THE AO FAILED TO DO SO BEFORE REJECTING THE CLAIM OF THE A SSESSEE. HE RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW IN THIS REGARD. FINALLY, THE LD. CIT(A) 15 DELETED THE ADDITION, WHICH FOR THE SAKE OF CONVENI ENCE IS REPRODUCED AS UNDER: 11.6. FURTHER, I FIND THAT NO INDEPENDENT ENQUIRY HAS BEEN MADE BY THE AO TO PROVE THAT THERE IS SUPPRESSIONS OF SALES . I HAVE ALSO GONE THROUGH THE CASE RECORDS AND FIND THAT NO EVIDENCE ON RECORD WITH REGARD TO THE EVIDENCE OF SUPPRESSIONS OF SALES WIT H THE A.O. EXCEPT THE SHOW CAUSE ISSUED BY THE DGCEI, LUDHIANA. MOREO VER, COY OF THE SEIZED DOCUMENTS WERE NOT SUPPLIED/CONFRONTED TO TH E ASSESSEE. NO WORKING OF SUPPRESSIONS SALES WAS DISCLOSED TO THE ASSESSEE. ONCE THE INITIAL BURDEN BY PROVIDING AN AFFIDAVIT THAT NO S UCH SALES ARE SUPPRESSIONS WAS TAKEN FROM M/S. EVEREST ENGG. WORK S, IS DISCHARGED THE ONUS SHIFTS ON THE A.O. TO PROVE TO ITS CONTRAR Y. THE AO IS DUTY BOUND TO BRING NEW MATERIAL ON RECOR D IN SUPPORT OF HIS VIEW. IN THE TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE AND IN VIEW OF THE AOS FAILURE TO SUPPLY EVIDENCE TO THE APPELLANT IT IS NOT A SUFFICIENT EVIDENCE TO SAY THAT THE APPELLANT HAS S UPPRESSED SALES. UNDER THESE FACTS, I AM INCLINED TO AGREE WITH THE APPELLANTS ARGUMENTS THAT THE ADDITIONS HAVE BEEN MADE WITHOUT ANY SOLID BASIS AND SOUND FOOTING AND WITHOUT GIVING ADEQUATE OPPOR TUNITY OF BEING HEARD AND BEING CONFRONTED WITH THE INFORMATION SO BEING UTILIZED AGAINST THE APPELLANT. I HAVE OBSERVED AND GATHERED FROM RECORDS THAT THE AO HAS ACTED ON HALF BAKED INFORMATION WITHOUT CARRYING OUT ANY IND EPENDENT VERIFICATION AND WITHOUT EVEN KNOWING THE FINAL ST ATUS OF THE PRELIMINARY SHOW CAUSE NOTICE ISSUED BY THE DGCEI, LUDHIANA OR EVEN DURING THE REMAND PROCEEDINGS. I AM OF THE VI EW THAT AO WAS NOT JUSTIFIED TO MAKE AN ADDITION MERELY ON THE BAS IS OF THE INFORMATION GIVEN BY THE DGCEI, LUDHIANA. IT HAS BE EN SPECIFICALLY BROUGHT INTO MY NOTICE THAT THE DGCEI HAS MERELY IS SUED SHOW CAUSE NOTICE TO THE APPELLANT AND PROCEEDINGS ARE NOT YET CONCLUDED. 11.7. UNDER SUCH CIRCUMSTANCES MERELY RELYING UPON THE SHOW CAUSE NOTICE BY DGCEI, LUDHIANA FOR MAKING THE ADDITION I S NOT A SOUND & SUFFICIENT GROUND FOR ADDITION. THE ORDER PASSED BY THE AO ITSELF SPEAKS AND MAKE THE REFERENCE OF THE SHOW CAUSE NO TICE ISSUED BY THE 16 DGCEI ON THE BASIS OF WHICH ADDITION WAS MADE. EVE N SO MUCH SO THE PRINCIPLES OF NATURAL JUSTICE SUCH AS CONFRONTI NG THE MATERIAL & PROVIDING OPPORTUNITY TO CROSS EXAMINE THE WITNESSE S WAS NEVER ALLOWED IN SPITE OF THE FACT THAT THERE WAS CONSIST ENT DEMAND BY THE APPELLANT. I FIND THAT UNDER SUCH CIRCUMSTANCES, TH E ORDER PASSED BY THE AO IS MERELY UPON SUSPICION WITHOUT ANY STRONG & RELEVANT EVIDENCE. IN THE INTEREST OF NATURAL JUSTICE, THE T RADING ADDITIONS OF RS.15,32,450/- FOR THE ASSTT. YEAR 2004-05 OF RS.54 ,64,800/- FOR ASSTT. YEAR 2005-06 AND OF RS.67,56,200/- FOR THE A.Y. 200 6-07 SO MADE BY THE AO; BEING UNSUSTAINABLE AND UNSUBSTANTIATED WIT HOUT PLACING ON RECORD BY THE AO ANY FINAL, CONCLUSIVE AND POSITIVE EVIDENCE ARE HEREBY DELETED AS NEITHER CALLED FOR NOR JUSTIFIED. 5. THE LD. JCIT(DR), MR. MAHAVIR SINGH, AT THE OUTS ET, ARGUED THAT THE INVESTIGATION CONDUCTED BY THE DGCEI, LUDHIANA WAS PROVIDED TO THE ASSESSEE IN THE FORM OF SHOW CAUSE NOTICE, WHERE ON E FILE CONTAINING 156 HAND-WRITTEN PAGES WERE RECOVERED WHICH WAS PROVIDE D TO THE ASSESSEE AS ANNEXURE A-1. HOW THE ASSESSEE HAS MADE THE UNDER I NVOICING AS PER ACTUAL BILLS AND THE HAND-WRITTEN PAGES ARE REPRODUCED IN THE SAID INVESTIGATION IN THE FORM OF SHOW CAUSE NOTICE. MR. RAVI KAHANNA IS THE MANAGING CUM AUTHORISED SIGNATORY OF THE ASSESSEE FIRM, IN WHICH HIS FAMILY MEMBERS ARE PARTNERS I.E. SM. RASHMI KHANNA W/O SH. RAVID KHANN A, SMT. ASHA KHANNA MOTHER OF SH. ARVI KHANNA AND SH. SANJAY KHANNA YO UNGER BROTHER OF SH. RAVI KHANNA. MR. RAVI KHANNA IN THE STATEMENT BEFO RE THE EXCISE AUTHORITIES HAS ADMITTED THAT HE LOOKS AFTER THE E NTIRE WORK OF THE FIRM INCLUDING SALE, PURCHASE, PRODUCTION, MARKETING AND LEGAL MATTERS AS 17 AUTHORISED SIGNATORY AND ALL THE FINANCIAL MATTERS OF THE FIRM ARE EXCLUSIVELY LOOKED AFTER BY HIM. SIMULTANEOUSLY SEARCH AT THE BUSINESS PREMISES OF M/S. BOLTS HOUSE, LUCKNOW WAS CONDUCTED AND STATEMENT O F SH. VINOD KRISHAN SINGHAL, PARTNER, WAS RECORDED ON THE SPOT WHO HAS ADMITTED THAT THEY PLACE ORDERS WITH SH. RAVI KHANNA WHO CONVEYS THE TOTAL VALUE OF THE CONSIGNMENT; THAT THE TOTAL VALUE COMPRISES OF TWO TYPES OF PAYMENTS, ONE VALUE IS THE INVOICE VALUE FOR WHICH BANK DRAFT IS PREPARED IN THE NAME OF SH.RAVI KHANNA AND THE OTHER IS THE AMOUNT OVER AND ABOVE THE INVOICE VALUE WHICH IS REMITTED THROUGH BANK DRAFTS MADE OU T IN THE NAME OF SH. RAVI KHANNA AND THIS AMOUNT IS SETTLED WITH SH.RAVI KHANNA ON TELEPHONE. A COPY OF SUCH DOCUMENT RECORDED BY THE AO IS MARKE D AS ANNEXURE B-1 BY THE SAID DEPARTMENT. MR. RAVI KHANNA ADMITTED ON BEING CONFRONTED WITH THE HAND-WRITTEN NOTE WHICH IS AVAILABLE AT PAGE 6 OF AOS ORDER AND IS REPRODUCED AS UNDER: THAT ON THE LETTER HEAD PAGES THE RATES ARE SHOWN A LONG WITH THE CALCULATION VIS--VIS THE NUMBER OF PIECES, THE PAY MENT DETAILS MENTIONED ON THE RIGHT SIDE ARE PAYMENTS RECEIVED O VER AND ABOVE THE INVOICE VALUE. FOR EXAMPLE ON PAGE NO.19 INVOICE NO .84 DATED 05.08.2006 HAS BEEN DESCRIBED, THE INVOICE AMOUNT I S RS.24640/-, THE WORKED OUT AMOUNT IS RS.63885/- AND THE DIFFERENTIA L AMOUNT IS RS.39,245/-. 5.1. MR. RAVI KHANNA ADMITTED HAT HE COLLECTED THE SAID AMOUNT OF OVER AND ABOVE THE INVOICE VALUE. MR. RAVI KHANNA STATE D IN HIS STATEMENT ON 18 17.9.2007 THAT MASTER UDIT KHANNA HIS SON IS A MINO R AND A STUDENT AND THAT THE TRANSACTIONS OF CASH RECEIPTS IN HIS BANK ACCOU NT PERTAIN TO THE OVER AND ABOVE PAYMENTS RECEIVED FROM THE DELHI BASED PARTIE S TOWARDS THE SALE OF ACCESSORIES AND CAR WASHERS AS ADMITTED IN HIS STA TEMENT DATED 03.09.2007. ENQUIRIES FROM THE MAJOR BUYERS OF THE ASSESSEE WHO SE NAMES FIGURED IN THE HAND WRITTEN NOTE FILE, WERE INITIATED BY THE INT ELLIGENCE DEPARTMENT AND STATEMENTS OF SH. R.N. AGGARWAL, OF M/S. ROYAL SAL ES CORPORATION, SH. BHAGWAN GOYAL OF M/S. CHACHA TANKI WALA, SH. RAJESH GUPTA PROP. OF M/S. R.M.TRADERS, SH.GOPAL SAHNI PARTNER OF M/S. SHIV NA RAIN SAHNI & SONS, SH. AMARJIT SINGH PROP. EVEREST ENGG. AND EQUIPMENTS, G .B.ROAD, DELHI, SH. NARINDER KUMAR JAIN PROP. OF M/S. R.M. KUMAR ENTERP RISES, AGRA, SH. PARDEEP KUMAR GUMBAR PARTNER OF M/S. KASHMIR ELECTR IC & TRADING CO. SAHARANUR AND MOHD. FAHIM PROP. OF M/S. RELIANCE EN GG. CO. LUCKNOW WERE RECORDED, WHO HAVE VERY CATEGORICALLY ADMITTED THAT THE SAID PAGES OF HAND-WRITTEN NOTE FILE CONTAIN DETAILS OF INVOICE ISSUED TO THEM, DESCRIPTION AND QUANTITY OF GOODS, ACTUAL RATE OF GOODS, INVOIC E VALUE AND DIFFERENTIAL AMOUNT. ALL THE SAID STATEMENTS WERE CONFRONTED TO SH. RAVI KHANNA ESPECIALLY TO QUESTION NO. 17 & 18 WHERE HE HAS AD MITTED THAT AS RECORDED IN THE HAND WRITTEN NOTE FILE, HE HAD BEEN RECEIVING P AYMENTS OVER AND ABOVE THE INVOICE VALUE. ALL THE PARTIES ALSO ADMITTED AN D AGREED TO SUCH FACTS. 19 FURTHER ENQUIRIES BY THE SAID INTELLIGENCE AUTHORIT Y WERE, CAUSED FROM THE BANKS AT PATNA AND LUCKNOW ALSO CONFIRMED OF THE BA NK DRAFTS ISSUED BY THEM IN THE NAME OF SH. RAVI KHANNA AND WHEN CONFRO NTED MR. RAVI KHANNA WHO ADMITTED TO HAVE RECEIVED THE PAYMENTS O VER AND ABOVE THE INVOICE VALUE. MR. RAVI KHANNA USED THE OVER AND AB OVE AMOUNT IN THE FIXED DEPOSITS IN HIS NAME AND HIS FAMILY MEMBERS ETC. TH E ASSESSEE RESORTED TO UNDER VALUATION SELECTIVELY. THE BUYERS SITUATED AT FAR FLUNG PLACES AND THE BUYERS WHO WERE ACTUAL USERS OF THE CAR/SCOOTER WAS HERS, WERE SOLD THE GOODS AT ACTUAL RATES AND WHERE THE ASSESSEE DID NO T HAVE AN ARRANGEMENT TO COLLECT DIFFERENTIAL AMOUNTS OVER AND ABOVE THE INV OICE AMOUNT OR WHERE THE BUYERS WANTED THE FULL AMOUNT BILLS. ULTIMATELY, T HE INTELLIGENCE DEPARTMENT OBSERVED THAT THERE WAS UNDER INVOICING BY THE ASSE SSEE. ALL THESE BILLS WERE AVAILABLE WITH THE ASSESSEE FOR ALL THE YEARS IN TH E FORM OF CHARTS WHICH WERE CONFRONTED TO THE ASSESSEE BY THE INTELLIGENCE DEPA RTMENT. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE WAS NOT HAVING ANY MATERIAL WITH HIM AND THE ARGUMENTS MADE BEFORE THE LD. CIT(A) THAT HE WA S NOT CONFRONTED WITH THE MATERIAL IS BASELESS, WHICH IS A MATTER OF RECO RD. THE ASSESSEE WAS GIVEN OPPORTUNITIES MANY TIMES AS IS EVIDENT FROM THE OR DER-SHEET OF THE CASE BUT THE ASSESSEE HAS NOT COOPERATED AND HAS NOT FURNISH ED ANY EXPLANATION. A COPY OF SHOW CAUSE NOTICE OF THE EXCISE DEPARTMENT WAS PROVIDED TO THE 20 ASSESSEE. THE ASSESSEE HAS TAKEN PLEA THAT SOME REC ORDS HAVE STOLEN. SUCH EXPLANATION CANNOT ABSOLVE THE ASSESSEE OF SUBMITT ING THE EXPLANATION. IT WAS ALSO SHOW CAUSED ON 11.12.2009 WHICH IS EVIDEN T FROM THE ORDER OF THE A.O. REPRODUCED HEREINABOVE ALONGWITH COPY OF STAT EMENT OF SH. RAVI KHANNA BUT NO EXPLANATION WAS GIVEN BY THE ASSESSEE FOR THE REASONS BEST KNOWN TO HIM. IN THE FACTS AND CIRCUMSTANCES WHEN A LL THE MATERIAL WAS IN POSSESSION OF THE ASSESSEE, THE LD. CIT(A) IS NOT J USTIFIED IN CONCLUDING THE MATTER AND IN DELETING THE ADDITION MADE BY THE AO BY OBSERVING THAT THE MATERIAL WAS NOT SUPPLIED TO THE ASSESSEE AND THE M ATERIAL HAS BEEN USED WITHOUT CONFRONTING TO THE ASSESSEE. MOREOVER, THER E IS NO BAR OF USING MATERIAL COLLECTED BY OTHER DEPARTMENTS AND FINDING S OF THE LD. CIT(A) THAT THE AO IS BOUND TO COLLECT NEW MATERIAL IS WITHOUT ANY BASIS AND THEREFORE, THE LD. DR MR. MAHAVIR SINGH PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A) AND UPHOLD THE ORDER OF THE A.O. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. NAVEEN RAT TAN, ADVOCATE, ON THE OTHER HAND, ARGUED THAT THE AO HAS ACTED UPON T HE SHOW CAUSE NOTICE OF THE DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE , LUDHIANA AND NO MATERIAL. WAS PROVIDED TO THE ASSESSEE INSPITE OF M ANY REQUESTS MADE. HE RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT (A) AND THE ORDER OF THE 21 LD. CIT(A), WHICH HE ARGUED IS A PERFECT ORDER. HE ALSO ARGUED AT THE MOST, THE MATERIAL USED BY THE ASSESSEE CAN BE FOR ONE AN D HALF YEAR AND CANNOT BE GENERALIZED FOR ALL THE IMPUGNED YEARS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE DIRECTOR G ENERAL OF CENTRAL EXCISE INTELLIGENCE, LUDHIANA HAS CONDUCTED A SEARCH AT T HE BUSINESS PREMISES OF THE ASSESSEE, RESIDENCE OF THE PARTNERS, MAJOR DEAL ERS AND SUPPLIERS OF RAW MATERIAL ON 17.08.2007 AND THE OUTCOME OF THE INVE STIGATIONS WERE GIVEN IN THE FORM OF SHOW CAUSE NOTICE TO THE ASSESSEE BY TH E SAID DEPARTMENT. THE SAID COPY OF THE INVESTIGATION IN THE FORM OF SHOW CAUSE NOTICE WAS SUPPLIED TO THE ASSESSEE BY THE AO. THE LD. CIT(A) HAS TIME AND AGAIN ON THE BASIS OF THE SUBMISSIONS AND THE EXPLANATION PUTFORTH BEF ORE HIM HAS STATED THAT THE SEIZED DOCUMENTS WERE NOT SUPPLIED OR CONFRONT ED TO THE ASSESSEE. HE HAS MENTIONED ABOUT THE REQUESTS MADE BY THE ASSESS EE NUMBER OF TIMES BEFORE THE AO TO SUPPLY SUCH EVIDENCES. IT WAS OBS ERVED BY LD. CIT(A) THAT IT IS A MATTER OF PRINCIPLE OF NATURAL JUSTICE THAT A FAIR OPPORTUNITY HAS TO BE AFFORDED AND A.O. HAS FAILED TO DO SO AND HE HAS RE LIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW IN THIS REGARD. HE ALSO HELD IN PARA 11.6 & 11.7 THAT NO INDEPENDENT ENQUIRY HAS BEEN MADE BY THE A.O. HE AL SO FURTHER MENTIONED THAT NO WORKING OF SUPPRESSION OF SALES WAS DISCLOS ED TO THE ASSESSEE AND THE 22 AO IS DUTY BOUND TO BRING NEW MATERIAL ON RECORD AN D ACCORDINGLY, HE DELETED THE ADDITION OF THE IMPUGNED YEAR AND OTHER YEARS. 7.1. IN THIS REGARD, ON PERUSAL OF THE FACTS, WE AR E OF THE VIEW THAT IT IS NOT CORRECT TO SAY THAT THE ASSESSEE IS NOT HAVING ANY MATERIAL WITH HIM, AS IS EVIDENT FROM THE SHOW CAUSE NOTICE BEING THE INVEST IGATION OF DGCEI, LUDHIANA, WHICH WAS SUPPLIED TO THE ASSESSEE BY THE AO. MR. RAVI KHANNA, IS ALSO MANAGING CUM AUTHORISED SIGNATORY OF THE A SSESSEE CANNOT BE DENIED. HE HAS ADMITTED OF HAVING RECEIVED THE OVER AND ABOVE AMOUNTS OF THE INVOICE VALUE WHICH HAS BEEN USED IN DEPOSITING THE AMOUNTS IN THE ACCOUNT OF HIS SON MASTER UDIT KHANNA ETC. HE HAS A LSO ADMITTED ON THE ENQUIRY OF THE MAJOR BUYERS WHOSE STATEMENTS WERE P ROVIDED TO HIM AND ALL THE BUYERS IN THE STATEMENTS HAVE ADMITTED, AS MENT IONED HEREINABOVE TO HAVE MADE THE PAYMENTS OF DIFFERENTIAL AMOUNTS OVER AND ABOVE THE ACTUAL RATE OR INVOICE VALUE. MR. RAVI KHANNA HAS ALSO AD MITTED BEFORE THE SAID DEPARTMENT OF HAVING RECEIVED THE AMOUNTS OVER AND ABOVE, AS ADMITTED IN THE HAND WRITTEN NOTE FILE IN THE COURSE OF SEARCH BY THE SAID DEPARTMENT. ALL OTHER INVESTIGATIONS HAVE BEEN ADMITTED BEFORE THE SAID DEPARTMENT, HAS NEVER BEEN DENIED. THEREFORE, IT IS INCORRECT TO SA Y THAT THE ASSESSEE IS NOT IN POSSESSION OF THE MATERIAL. BUT ALL THE ANNEXURES INVOICE WISE AND YEAR-WISE ARE ALSO AVAILABLE WITH THE ASSESSEE PROVIDED BY TH E EXCISE DEPARTMENT AND 23 PART OF THE SHOW CAUSE NOTICE GIVEN TO THE ASSESSEE BY THE AO IS A MATTER OF RECORD. THEREFORE, TO PLEAD BEFORE THE INCOME TAX D EPARTMENT ESPECIALLY BEFORE THE AO OR THE LD. CIT(A) THAT THE ASSESSEE H AS NOT BEEN CONFRONTED WITH THE MATERIAL IS PRIMA FACIE INCORRECT POSITION AND CANNOT BE ACCEPTED. ALSO THE FINDINGS OF THE LD. CIT(A) THAT THE AO SHO ULD HAVE COLLECTED NEW MATERIAL, PROBABLY THE LD. CIT(A) WAS OF THE VIEW T HAT HE CANNOT REPLY UPON THE MATERIAL COLLECTED BY THE EXCISE DEPARTMENT. AC CORDING TO US, THE LD. CIT(A) IS NOT JUSTIFIED IN COMING TO SUCH CONCLUSIO N WITH REFERENCE TO THE MATERIAL OF EXCISE DEPARTMENT ESPECIALLY WHEN ON T HE SAID BASIS, THE CASE OF REASSESSMENT PROCEEDINGS HAS BEEN INITIATED AND THE LEGAL GROUNDS RAISED BEFORE HIM WITH REFERENCE TO INITIATION OF REASSESS MENT PROCEEDINGS HAVE BEEN REJECTED. HOWEVER, THE MATERIAL IN POSSESSION OF THE AO SHOULD HAVE ACTUALLY BEEN CONFRONTED WITH THE ASSESSEE AS HAS R IGHTLY BEEN OBSERVED BY THE LD. CIT(A). WE CONCUR WITH THE VIEWS OF THE LD . CIT(A) TO THAT EXTENT. BUT AT THE SAME TIME, IN THE PRESENT FACTS AND CIRC UMSTANCES OF THE CASE, WHEN THE ASSESSEE IS ALREADY HAVING MATERIAL IN HIS POSSESSION THROUGH EXCISE DEPARTMENT, IT CANNOT BE SAID ESPECIALLY WHE N THE UNDER INVOICING HAS BEEN ADMITTED BY THE MANAGING CUM AUTHORISED SI GNATORY MR. RAVI KHANA, AS MENTIONED HEREINABOVE AND IN THE SHOW CAU SE NOTICE. IT IS PRE- 24 MATURE TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSE E AND DELETE THE ADDITION SO MADE BY THE AO, WHEN THERE IS CLEAR CUT ADMISSIO N OF THE ASSESSEE THAT UNDER INVOICING OF THE SALE HAS BEEN DONE AND MONE Y HAS BEEN BROUGHT THROUGH CHANNELS AS SUBMITTED AND AVAILABLE IN AOS ORDER, THEN THE ASSESSEE CANNOT BE FREED SIMPLY THAT THE MATERIAL HAS NOT B EEN CONFRONTED ESPECIALLY WHEN THE MATERIAL WAS AVAILABLE WITH HIM, AS MENTIO NED HEREINABOVE. IT WILL BE IN THE INTEREST OF JUSTICE, IF THE WHOLE MATTER IS RESTORED TO THE FILE OF THE AO, WHO WILL SUPPLY THE WHOLE MATERIAL WITH HIM TO THE ASSESSEE FOR REBUTTAL AND ALSO CONDUCT ENQUIRIES AND USE THE MAT ERIAL ONLY AFTER CONFRONTING TO THE ASSESSEE. THE AO IS DIRECTED TO MAKE ASSESSMENT DENOVO KEEPING IN VIEW THE ENQUIRIES MADE BY THE DGCEI, LU DHIANA AND ANY OTHER INDEPENDENT ENQUIRY BUT BY AFFORDING ADEQUATE OPPOR TUNITY OF BEING HEARD AND PASS PROPER AND SPEAKING ORDER. ACCORDINGLY, TH E APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE THE FACTS IN APPEALS IN ITA NOS. 595 TO 59 8(ASR)/2011 FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 ARE IDENTICAL T O THE FACTS IN THE APPEAL OF THE REVENUE IN ITA NO.594(ASR)/2011 FOR THE A.Y. 2004-05, THEREFORE, OUR ORDER HEREINABOVE IN ITA NO.594(ASR)/2011 FOR T HE A.Y. 2004-05 SHALL IDENTICALLY BE APPLICABLE TO APPEALS IN ITA NOS. 5 95 TO 598(ASR)/2011 FOR 25 THE ASSESSMENT YEARS 2005-06 TO 2008-09 AND THEREFO RE, ALL THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE IN ITA NOS. 594 TO 598(ASR)/2011 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH JANUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH JANUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. EVEREST ENGINEERING & SALES AMRIT SAR. 2. THE ITO WARD 2(1), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR