The ACIT, 3(1), Indore V. M/s Mittal Appliances Ltd., Indore

ITA 649/IND/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5605 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 05-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: SHRI; S N AGRAWAL
• Keywords: Audit objection; Tangible material; Reason to believe
• Section: 142(1); 147; 148; 263

Judgement Text

ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 649/IND/2013 ASSESSMENT YEAR: 2001-02 ACIT 3(1) INDORE :: APPELLANT VS M/S MITTAL APPLIANCES LTD. INDORE ./ PAN: AABCM 1903A :: RESPONDENT REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA ! ' #$ DATE OF HEARING 8.11.2016 %&'( #$ DATE OF PRONOUNCEMENT 21.11.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 30.8.20 13. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 2 2. THE FOLLOWING GROUNDS OF APPEAL ARE RAISED BY THE REVENUE :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE REOPENING THE CASE WAS NOT PROPER IN ABSENCE OF ANY VALID REASON BECAUSE THERE WAS INFORMATION IN HANDS OF THE A.O. IN THE FORM OF AUDIT OBJECTION. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT TH E REOPENING WAS NOT VALID BECAUSE THE HON'BLE SUPREME COURT HAS HELD THAT THE MATERIAL AVAILABLE WITH THE A.O. IN THE FORM OF AUDIT OBJECTION CAN BE UTILISED FOR INITIATING THE PROCEEDINGS U/S 147 OF THE ACT 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DECISION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 66,00,000/- MADE BY THE A.O. ON ACCOUNT OF SHARE ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 3 CAPITAL AND SHARE PREMIUM IS NOT ACCEPTABLE SINCE T HE HON'BLE ITAT HAS ACCEPTED THE SHARE CAPITAL IN THE CASE OF LUNKAD GROUP OF COMPANIES AS GENUINE IN THE A.UY. 2004-05 AND 2005-06 THE FACTS OF WHICH WERE ENTIRELY DIFFERENT TO THAT OF THIS YEAR. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE DECISION OF THE LD. CIT(A) IN DELETING THE ADDITIO N OF RS.40,00,000/- ON ACCOUNT OF UNSECURED LOAN AND RS.3,16,143/- IN RESPECT OF INTEREST THEREON OBSERV ING THAT THE A.O. HAS ACCEPTED THE LOAN AS GENUINE IN ANOTHER CASE FOR A.Y. 2007-08 BECAUSE THE ASSESSMEN T ORDER REFERRED BY THE LD. CIT(A) IS PROPOSED TO BE SET ASIDE U/S 263 BEING ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. 2.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.5,30,000/- MADE BY THE A.O. ON ACCOUNT OF CASH ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 4 EXPENDITURE MADE FOR PROVIDING ENTIRE HOLDING THAT THE MAIN GROUND (GROUND NO. 2 AND 2.1 ABOVE) ARE ALLOWE D BECAUSE ON THESE POINTS THE DECISION IS NOT ACCEPTE D AND APPEAL IS PREFERRED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.51,60,0 39/- MADE BY THE A.O. ON ACCOUNT OF SUPRESSION OF SALES OBSERVING THAT THE ASSESSEE HAS RECONCILED THE EXCI SE DUTY WHEREAS NO SUCH RECONCILIATION WAS FURNISHED BEFORE THE A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.51,60,0 39/- MADE BY THE A.O. ON ACCOUNT OF SUPRESSION OF SALES BECAUSE THERE WAS CLEARLY DIFFERENCE IN THE MODVAT UTILISED AS PER AUDIT REPORT FURNISHED BY THE ASSES SEE. 3. THE EFFECTIVE GROUND IS GROUND NO. 1 AND 1.1. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 5 INCOME ON 31 ST OCTOBER, 2001. THE CASE WAS PROCESSED U/S 143(1) OF THE ACT ON 20.12.2002. THE CASE WAS REOPEN ED U/S 147 OF THE ACT AND THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 22.8.2007 IN RESPONSE TO WHICH THE ASSESSE E FILED THE RETURN OF INCOME ON 15 TH SEPTEMBER, 2005. THE ASSESSMENT WAS REOPENED U/S 148 READ WITH SECTION 147 OF THE ACT AND THE MATTER TRAVELLED UP TO THE TRIBUNAL AND THE TRANSACTION SET ASIDE THE MATTER TO THE FILE OF THE ASS ESSING OFFICER AND AFTER VERIFICATION, THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON FOLLOWING REASONS. :- ON VERIFICATION, IT IS NOTICE THAT THE ASSESSEE HA S MANUFACTURED UTENSILS ALLOYS AND SOLD THEM UNDER PAYMENT OF CENTRAL EXCISE DUTY THROUGH MODVAT CREDIT/ACCOUNT WHICH ARE AS UNDER :- SALES OF APPLIANCES RS. 16,77,70,039 AS PER P & L ACCOUNT PAYMENT TO CENTRAL EXCISE DUTY RS, 75,12,186.95 ON FURTHER VERIFICATION, IS IS SEEN THAT THE ASSES SEE COMPANY UTILIZED MODVAT CREDIT ACCOUNT FOR PAYMENT OF EXCISE DUTY AS SHOWN IN ANNEXURE-6 OF 3CD AUDIT REP ORT AS UNDER :- ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 6 PARTICULARS OP. BALANC E MODVAT CREDIT AVAILED MODVAT CREDIT UTILIZED ON CLEARANCE OF FINISHED GOOD EXCISABLE CLOSING BALANCE RG 23 PT.II- A (RAW MATERIAL) 1,061, 721 8,229,78 5 7,639,917 1,651,589 RG 23 PT. II-C (CAPITAL GOODS) 15,360 198,393 103,351 110,402 TOTAL 7,743,268 IN THIS WAY THE EXCESS EXCISE DUTY OF RS. 2,31,081/ - (RS.7743268 - RS.7512187) WAS PAID AS PER INVOICES ISSUED ON CLEARANCE OF FINISHED GOODS. BESIDES, THE ASSESSEE COMPANY HAS ALSO CONCEALED SALES OF RS.51,60,039/- (231081 X 22.33) BY UTILIZING EXCESS MODVAT CREDIT. THE ASSESSEE VIDE NOTICE ISSUED U/S 142(1) DATED 03.21.2010 WAS ASKED TO EXPLAIN THE DISCREPANCY AS MENTIONED ABOVE. THE ASSESSEE SUBMITTED THE REPLY VIDE LETTER DATED 10.12.2010, AS MENTIONED BELOW :- 1. IN THIS RESPECT IT IS CLARIFIED THAT THE ASSESS EE HAS DULY ACCOUNTED FOR ENTIRE AMOUNT OF SALES IN IT S BOOKS OF ACCOUNT AND THERE WAS NO SUPPRESSION OF AN Y SALE AS PER EXCISE RECORD/ACT ALSO. A RECONCILIATIO N STATEMENT OF EXCISE DUTY PAID/ADJUSTED THROUGH EXCI SE RECORD AS COMPARED TO THE FINANCIAL STATEMENT WAS FILED BEFORE YOU. THE SAID CHART IS AGAIN ENCLOSED FOR YOUR READY REFERENCE. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 7 2. ON PERUSAL OF THE SAID CHART YOU WILL FIND THAT ASSESSEE COMPANY HAD PAID FOLLOWING AMOUNT OF EXCISE DUTY DURING THE YEAR UNDER CONSIDERATION :- THROUGH RG-23 PART IIA (MODVAT) RS. 7639917 THROUGH RG-23 PART IIC (MODVAT) RS. 103351 THROUGH PLA RS. 430531 RS. 8173799 3. THAT AS PER THE MERCANTILE SYSTEM OF ACCOUNTING THE ASSESSEE HAS TO MAKE PROVISION OF EXCISE DUTY O N CLOSING STOCK OF FINISHED GOODS AS ON 31ST MARCH OF EVERY YEAR. 4. THAT AS PER THE BOOKS OF ACCOUNTS PROVISION OF EXCISE DUTY OF FINISHED GOODS AS APPEARING IN THE BOOKS OF ACCOUNTS AS ON 01.04.2000 WAS OF RS. 732279.89. THAT OUT OF THE SAID PROVISION OF EXCIS E DUTY THE ASSESSEE HAD ADJUSTED AN AMOUNT OF RS. 661612.05 TOWARDS SALE OF OLD STOCK DURING THE YEAR UNDER CONSIDERATION. FURTHER PROVISION OF RS. 1195921.77 WAS MADE DURING THE YEAR ON CLOSING STOCK OF FINSIHED GOODS AS ON 31.03.2001. THE WHOL E TRANSACTION CAN BE SUMMARIZED AS UNDER :- PROVISION OF EXCISE DUTY ON FINISHED GOODS :- OPENING BALANCE 732279.89 ADD : PROVISION DURING THE AY 2001-02 119521.77 852801.66 LESS : EXCISE DUTY ADJUSTED TOWARDS SALE OF OLD STOCK 661612.05 CLOSING BALANCE 190189.61 5. THAT AS PER DEAILS SUBMITTED IN PARA 2 THE ASSESSEE HAS PAID TOTAL EXCISE DUTY OF RS. 8173799/ - DURING THE AY 2001-02. THAT OUT OF THE SAID EXCISE DUTY PAYMENTS DURING THE YEAR THE ASSESSEE HAD ADJUSTED EXCISE DUTY TOWARDS SALE OF OLD STOCK OF R S. 661612.05 IN THE AY 2001-02 IN PARA 4 ABOVE. THUS ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 8 BALANCE AMOUNT OF RS.7512186.95 (RS. 8179799 - RS. 661612.05) WAS DEBITED IN THE P&L ACCOUNT DURING TH E AY 2001-02. THUS THE ASSESSEE HAD DULY ACCOUNTED FOR ENTIRE AMOUNT OF SALE IN ITS BOOKS OF ACCOUNTS AND THERE WAS NO SUPPRESSION OF ANY SALE AS PER EXCISE RECORD ALSO. THE SUBMISSIONS OF THE ASSESSEE WERE DULY CONSIDERE D HOWEVER, NOT FOUND TO BE CONVINCING. IT IS VERY MU CH EVIDENT FROM THE AUDIT REPORT THAT THERE HAS BEEN DIFFERENCE IN THE EXCISE DUTY ACTUALLY PAID AND WHA T HAS BEEN OFFERED BY THE ASSESSEE. HENCE, A SUM OF RS. 51,60,039/- IS ADDED IN THE INCOME OF ASSESSEE AS CONCEALED SALES PROCEED. PENALTY PROCEEDINGS U/S 271(1)(C) IS INITIATED SEPARATELY. 3. THE MATTER TRAVELLED TO THE LEARNED CIT(A) AND THE LEARNED CIT(A) HAS ANNULLED THE ASSESSMENT ORDER BY OBSERVING AS UNDER :- 4. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE ASSE SSMENT ORDER, THE GROUNDS OF APPEAL AND THE APPELLANT S S UBMISSION. THE APPELLANT IN THE PRESENT CASE HAD FILED ITS RET URN OF TOTAL INCOME ON 31-10-2001 DECLARING TOTAL INCOME OF RS 2590840/-. INTIMATION WAS ALSO PASSED U/S 143(1)(A) ON 20- 12-2002. ON THE BASIS OF AUDIT OBJECTION, THE COMPL ETED ASSESSMENT OF THE APPELLANT COMPANY WAS REOPENED WI TH THE ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 9 PRIOR PERMISSION OF THE CIT ON 22-08-2005. IN THE R EASON AS RECORDED FOR REOPENING OF THE CASE, THE THEN AO NOT ED THAT THE AMOUNT OF EXCISE DUTY AS MENTIONED IN THE TAX AUDIT REPORT IN FORM OF MODVAT UTILISED OF RS 7743268/- DID NOT TALLY WITH THE AMOUNT AS DEBITED IN THE PROFIT & LOSS ACC OUNT OF RS 7512187/- AND THEREBY IT WAS OBSERVED THAT THE APPE LLANT HAD DEBITED LESSER AMOUNT OF EXCISE DUTY OF RS 2310 81/- IN THE P & L ACCOUNT AND FROM THIS AMOUNT THE AO WORKE D OUT CONSEQUENTIAL CONCEALMENT IN TURNOVER OF RS 5160039 /-. THE APPELLANT HAD FILED OBJECTIONS WHICH REMAINED TO BE DECIDED BY THE AO AT THE TIME OF PASSING OF THE ORIGINAL AS SESSMENT ORDER ON 29-12-2006. THE APPELLANT HAD PREFERRED A N APPEAL, BEFORE THE LD CIT(A) AND IN THE APPEAL THE ASSESSMENT ORDER WAS QUASHED BY STATING THAT THE AO HAS NOT FOLLOWED THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF GKN DRIVESHAFT (INDIA) LIMITED AS REPORTED IN 259 ITR 19 AND LD.CIT(A) ALSO HELD THAT THERE WAS ALSO NO MERIT IN THE REASON AS RECORDED BY THE AO FOR REOPENING O F THE CASE. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 10 4.1.1 THE DEPARTMENT HAS CHALLENGED THE ORDER OF MY PREDECESSOR BEFORE THE HON'BLE ITAT. HON'BLE ITAT V IDE ITS ORDER DT 20.10.2009 FOLLOWING THE DECISION OF THE H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SICA EDUCA TIONAL TRUST AS REPORTED IN 10 ITJ 05 HAS HELD THAT NON- D ISPOSING OF THE OBJECTION IS THE CURABLE DEFECTS AND ACCORDINGL Y DIRECTED THE AO TO FIRST DISPOSE OFF THE OBJECTION AGAINST R EOPENING OF ASSESSMENT OF THE APPELLANT AND THEN PROCEED FURTHE R. 4.1.2 THE AO WHILE PASSING THE ORDER FOLLOWING THE DIRECTION OF THE HON'BLE ITAT, PASSED AN ORDER ON 2 2-11- 2010. THE AO IN HIS ORDER IN PARA 5(B) HAS ACCEPTED THAT THE PRESENT CASE WAS REOPENED ON THE BASIS OF REVENUE A UDIT OBJECTION. IN THE SAID PARA IT WAS ALSO DISCUSSED T HAT THE AMOUNT OF MODVAT UTILISED OF RS 7743268/- AS PER AU DIT REPORT DID NOT TALLY WITH THE AMOUNT OF EXCISE DUTY DEBITED IN THE PROFIT & LOSS ACCOUNT OF RS 7512187/-. ACCORDIN GLY, AO CAME TO FORM A VIEW THAT APPELLANT DEBITED A LESSER AMOUNT OF RS. 231081/- AS EXCISE DUTY EXPENSE IN PROFIT AN D LOSS ACCOUNT AND ACCORDINGLY CAME TO AN ABRUPT CONCLUSIO N THAT SUCH EXCISE DUTY MUST HAVE BEEN CONCEALED AND THUS ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 11 ESTIMATED THAT CORRESPONDING UNACCOUNTED SALES MUST BE OF RS. 5160039/-. THIS WAS THE ONLY REASON FOR REOPENI NG OF THE CASE. IN PARA 5(C), IT WAS STATED THAT THE PRIOR PE RMISSION OF THE LD CIT WAS OBTAINED WHICH WAS CHALLENGED BY THE APPELLANT ON THE GROUND THAT PERMISSION OF ONLY ADD L CIT WAS REQUIRED ON THE FACTS OF THE PRESENT CASE. THE AO I N PARA 5(D) REPRODUCED THE REASON AS RECORDED BY HIS PREDECESSO R FOR REOPENING OF THE COMPLETED ASSESSMENT. THE TABLE AS DISCUSSED IN THE REASONS FOR REOPENING IS REPRODUCE D AS UNDER:- PARTICULARS OPENING BALANCE MODVAT CREDIT AVAILED MODVAT CREDIT UTILIZED ON CLEARANCE OF FINISHED GOODS/ EXCISABLE CLOSING BALANCE [RG23PT IIA [RAW MATERIAL] 1,061,721 8,229,785 7,639,917 1,651,589 RG 23PT II-C [ CAPITAL GOODS] 15,360 198,393 103,351 110,402 4.1.3 THE AO IN PARA 5[E] OF HIS ORDER REPRODUCED T HE OBJECTION AS RAISED BY THE APPELLANT. THE AO ALSO R EPRODUCED THE RECONCILIATION STATEMENT AS FURNISHED BY THE AP PELLANT BEFORE THE AO, WHICH IS REPRODUCED AS UNDER: ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 12 RECONCILIATION STATEMENT OF EXCISE DUTY PAID PARTICULARS MODVAT RG23 PT II A MODVAT RG 23 PT 11 P.L.A TOTAL OPENING BALANCE 1,061,722 15,360 252,795 1,329,877 DEPOSIT TAKEN/ MODVAT CREDIT CLAIMED 8,229,785 198,393 370,000 8,798,178 TOTAL 9,291,507 213,753 622,795 10,128,055 DUTY PAID/ UTILISED 7,639,917 103,351 430,531 8,173,799 CLOSING BALANCE 1,651,590 110,402 192,264 1,954,256 TOTAL EXCISE DUTY PAYMENT DURING THE YEAR 817379 9 LESS:- EXCISE DUTY ADJUSTED TOWARDS SALE OF OLD STO CK [ OUT OF OPENING STOCK OF FINISHED GOODS ] 661 612 EXCISE DUTY CHARGED TO THE PROFIT & LOSS ACCOUNT 7512187 PROVISION OF CENTRAL EXCISE DUTY ON FINISHED GOODS OPENING BALANCE 733279.89 ADD;- PROVISION MADE DURING THE YEAR 119521.77 852801.66 LESS:- EXCISE DUTY ADJUSTED TOWARDS SALE OF OLD STO CK 661612.05 190189.61 4.1.4 THE AO WHILE DECIDING THE OBJECTION OF THE APPELLANT, IN PARA F.2 HAS STATED THAT, RECONCILIATION STATEMENT OF EXCISE DUTY PAID/ ADJUSTED THROUGH EXCISE RECORD AS COMPARED TO FINANCIAL STATEMENTS WERE FILED WHICH WERE PLACED ON RECORD H OWEVER THE SAME WILL BE SUBJECT TO VERIFICATION FROM THE BOOKS OF ACCOUNT VIS A VIS SUPPORTING PAPERS AND EXCISE RECORDS. THE AO IN PARA F.3 HAS OBSERVED THAT THE APPELLANT HAS FAILED TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT A ND IN PARA F.4 THE AO STATED THAT IT IS APPARENT THAT THE AO H AD THE ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 13 SUFFICIENCY OF REASON TO BELIEVE THAT SALES WAS SUP PRESSED TO THE EXTENT OF RS 5160039/-. 4.1.5 I HAVE CONSIDERED THE REASON AS RECORDED BY THE AO FOR REOPENING OF THE COMPLETED ASSESSMENT. THE NOTICE W AS ISSUED ON THE BEHEST OF THE REVENUE AUDIT PARTY AND THE AO OBTAINED PRIOR PERMISSION OF THE CIT EVEN WHEN ONLY JCIT/ AD DL CIT IS AUTHORISED TO GIVE PERMISSION. THE APPELLANT HAS AL SO CHALLENGED THE REASSESSMENT BY STATING THAT THERE W AS NO TANGIBLE MATERIAL IN POSSESSION OF THE AO AS TO PRO VE THE LIVE LINK OF CONCEALMENT OF INCOME. THE AO WHILE DECIDIN G THE OBJECTION AS RAISED BY THE APPELLANT UTTERLY FAILED TO COMMENT ON THE RECONCILIATION STATEMENT AS FURNISHED BY THE AP PELLANT. THE APPELLANT HAS EXPLAINED THAT IN TAX AUDIT REPORT, T HE REQUIREMENT IS ONLY TO PROVIDE INFORMATION ABOUT TH E MODVAT AS CLAIMED BY THE APPELLANT AND AS UTILISED BY THE APPELLANT. IT WAS ALSO EXPLAINED THAT TOTAL AMOUNT OF EXCISE DUTY AS PAID BY THE APPELLANT WAS OF RS 8173799/- AND NOT OF RS 774 3268/- AS CONSIDERED BY THE AO WHILE RECORDING REASON FOR REO PENING OF THE CASE. THE APPELLANT DURING THE COURSE OF APPELL ATE ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 14 PROCEEDING PROVIDED THE SAME INFORMATION IN DIFFERE NT ORDER, THE SAME IS REPRODUCED AS UNDER:- S. NO. DESCRIPTION AMOUNT (RS) 1 MODVAT RG23 PT II A 7,639,917 2 MODVAT RG 23 PT 11 103,351 7,743,268 3 EXCISE DUTY UTILIZED THROUGH THE PLA ACCOUNT 430,531 8,173,799 4 LESS EXCISE DUTY UTILIZED TOWARDS THE PROVISION AS MADE IN RESPECT OF OPENING STOCK OF FINISHED GOODS 661,612 EXCISE DUTY DEBITED IN THE PROFIT & LOSS ACCOUNT 7,512,187 4.1.6 AS PER THIS RECONCILIATION TABLE TOTAL EXCISE DUTY PAID COMES TO RS.81,73,799/- INCLUDING EXCISE DUTY ACTUA LLY PAID OF RS.4,30,531/- AND MODVAT CREDIT OF RS. 77,43,268/-. OUT OF THIS, A REDUCTION IS MADE OF RS.6,61,612/- AS THE EXCISE DUTY UTILIZED TOWARDS PROVISION IN RESPECT OF OPENING STOCK OF FI NISHED GOODS, WHICH RESULTS INTO A BALANCE FIGURE OF RS.75,12,187 /- WHICH WAS CLAIMED AS EXCISE DUTY EXPENSE IN PROFIT AND LO SS ACCOUNT. 4.1.7 THE AO CANNOT PICK AND CHOOSE TWO DIFFERENT F IGURES FROM THE RETURN OF APPELLANT ITSELF AND ASSUME THAT A FI GURE OF EXCISE DUTY WAS SECRETLY PAID. IT IS COMMON SENSE THAT APP ELLANT WILL NOT CONCEAL ANY EXCISE DUTY PAYMENT ESPECIALLY WHEN BOTH FIGURES ARE SHOWN IN THE RETURN OF INCOME. THE AO P ICKED UP TWO FIGURES OF EXCISE DUTY FROM THE RETURN OF APPELLANT ITSELF, NAMELY ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 15 THE EXCISE DUTY OF RS. 7512186/- CLAIMED AS EXPENSE IN PROFIT AND LOSS ACCOUNT AND TAX AUDIT REPORT OF APPELLANT WAS SHOWING MODVAT CREDIT CLAIM OF RS.77,43,268/-. AS BOTH THES E FIGURES ARE PICKED UP FROM THE RETURN OF APPELLANT ITSELF, IT I S DIFFICULT TO COMPREHEND AS TO HOW IT COULD LEAD TO A CONCLUSION THAT THE DIFFERENCE OF THESE TWO FIGURES OF RS. 2,31,082/- W AS A SUPPRESSED CLAIM OF EXCISE DUTY AND CONSEQUENTLY IT IS IMPOSSIBLE TO COME TO A CONCLUSION FROM SUCH REPORT ED NUMBERS THAT CERTAIN SALES OF RS.51,60,039/- WERE TRANSACTE D OUTSIDE BOOKS OF ACCOUNT, ESTIMATED FROM THAT FIGURE OF RS. 2,31,082/- BY APPLYING EXCISE DUTY RATE. WITHOUT ANY IOTA OF EVI DENCE OF UNACCOUNTED SALES, THE FIGURES REPORTED IN BOOKS CA NNOT BE USED TO COME TO SUCH ABSURD CONCLUSION. 4.1.8 IN VIEW OF THESE FACTS AS ALSO OF SPECI FIC DIRECTION OF THE HONBLE ITAT, THE AO WAS REQUIRED TO EXAMINE RECONC ILIATION STATEMENT FILED BY APPELLANT AND TO FIND ANY MISTAK E OR GAP IN THE EXPLANATION. BUT AO HAS REMAINED SILENT ON SUCH RECONCILIATION NOT ONLY IN THE ORDER DECIDING ISSUE OF REOPENING, BUT ALSO IN THE REASSESSMENT ORDER, WHICH PROVES TH AT STAND OF APPELLANT WAS CORRECT. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 16 4.1.9 THUS, THE BASIC INTENTION OF THE DECISIO N OF THE HON'BLE APEX COURT IN THE CASE OF GKN DRIVESHAFT (INDIA) LI MITED HAS BEEN DEFEATED. THE AO HAS THEREFORE NOT FOLLOWED TH E DIRECTION GIVEN BY THE HON'BLE ITAT, INDORE BENCH. IF THE AO CONSIDERED THE OBJECTION IN RIGHT PERSPECTIVE IN THAT CASE , T HERE WAS NO REASON FOR HIM TO JUSTIFY THE REOPENING OF THE CASE . I AM THEREFORE OF THE CONSIDERED OPINION THAT THE AO HAS GROSSLY ERRED IN NOT DECIDING THE OBJECTION OF APPELLANT. THERE WAS NO TANGIBLE MATERIAL IN POSSESSION OF THE AO AS TO HAV E LIVE LINK WITH THE CONCEALMENT OF INCOME. 4.1.10 HENCE, THE BASIS OF REOPENING ITSELF WAS NO T PROPER IN VIEW OF RECONCILIATION STATEMENT OF APPELLANT, W HICH WAS NOT REJECTED BY AO, AS ALSO BOTH THE FIGURES WERE PICKE D UP FROM APPELLANTS OWN RETURN OF INCOME, WHICH COULD NEVER LEAD TO PROVE UNACCOUNTED SALE, WHEN THERE WAS NO EXTERNAL EVIDENCE TO PROVE UNACCOUNTED SALES. HENCE THE VERY BASIS OF REASON TO BELIEVE GIVEN BY AO FAILS, BECAUSE THERE WAS NO TA NGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ES CAPMENT OF INCOME FROM ASSESSMENT AND THEREFORE REOPENING OF T HE CASE ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 17 CANNOT BE SUSTAINED AND FOR THIS PURPOSE RELIANCE I S PLACED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF K ELVINTOR INDIA LTD. (SC) 320 ITR 561. IN PARA 15 OF THE ORDER OF A RECENT DECISION BY HONBLE DELHI HIGH COURT IN CASE OF ORI ENT CRAFT LTD. (APPEAL ITA NO.555/2012, DATED 12.12.2012), IT WAS NOTED THAT AO REACHED THE BELIEF THAT THERE WAS ESCAPMENT OF I NCOME ON GOING THROUGH THE RETURN OF INCOME FILED BY THE AS SESSEE AFTER HE ACCEPTED THE SAME U/S 143(1) WITHOUT SCRUTINY. THIS IS NOTHING BUT A REVIEW OF EARLIER PROCEEDINGS DEPRECA TED BY SUPREME COURT IN CASE OF KELVINATOR (SUPRA). THEN T HEY FURTHER NOTED THAT THERE IS NO WHISPER OF REASONS RECORDED OF ANY TANGIBLE MATERIAL WHICH CAME TO POSSESSION OF AO SU BSEQUENT TO THE ISSUE OF INTIMATION. IT REFLECTS AN ARBITRARY E XERCISE OF POWER CONFERRED U/S 147. RELYING ON THE AFORESAID DECISI ONS AS WELL AS ON THE FACTS OF THE CASE DISCUSSED ABOVE, IT IS HELD THAT REOPENING U/S 147 WAS NOT PROPER IN ABSENCE OF ANY VALILD REASON TO FORM A BELIEF REGARDING ESCAPMENT OF INCO ME. THEREFORE, GROUND NO. (1) OF APPEAL IS ALLOWED. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 18 5. DURING THE COURSE OF HEARING, THE LEARNED DR SUBMITTED THAT THE ASSESSEES ORIGINAL ASSESSMENT WAS COMPLETED U/S 143 READ WITH SECTION 147 OF THE ACT. THEREAFTER, THE MATTER TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL ALLOWED THE APPEAL OF THE DEPARTMENT AND THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFI CER AND THE PRELIMINARY GROUND WAS DIRECTED TO BE DISPOSED OF . THE ASSESSEES OBJECTION WAS FOR REOPENING THE ASSESSMENT ORDER AND AFTER THE OBJECTION, THE ASSESSING OFFICER WAS OF THE VIEW THAT DURING THE ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE IS MANUFACTURING UTENSILS AND SO LD THEM UNDER PAYMENT OF CENTRAL EXCISE DUTY THROUGH MODVAT CREDIT. IT WAS FOUND THAT THE ASSES SEE COMPANY HAS UTILISED THE MODVAT CREDIT. MOREOVER, THE COMPANY HAS ALSO CONCEALED THE SALES. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT AS PER THE BOOK S OF ACCOUNTS THE PROVISIONS OF EXCISE DUTY ON FINISHED G OODS, AS ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 19 APPEARING IN THE BOOKS OF ACCOUNTS, AS ON 1.4.2002 WAS R S. 732279/-. OUT OF THE SAID PROVISIONS OF EXCISE DUTY, THE ASSESSEE HAS ADJUSTED THE AMOUNT OF RS.661612/- TOWARDS SALE OF OLD STOCK DURING THE YEAR UNDER CONSIDERATION. THUS, THE ASSESSEE HAS MADE PAYMENT OF EXCISE DUTY ADJUSTING THE EXCISE DUTY TOWARDS THE SALE OF OLD STOC K. THIS, THIS WAS A NEW INFORMATION. THEREFORE, THE ASSES SING OFFICER HAS REOPENED THE ASSESSMENT AND THE REOPENING IS JUSTIFIED. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE INFORMATION WHICH WAS AVAILABLE TO HIM. THEREFORE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN AL LOWING THE APPEAL ON THE GROUND THAT THE REOPENING IS NOT CORRECT . 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A) AND THE DECISION IN THE CASE OF CIT VS. KELVINATOR OF IND IA LTD.; 320 ITR 561 AND ORIENT CRAFT LTD. (DELHI) ITA NO. 555/2012 DATED 12.12.2012. THE LEARNED COUNSEL FOR TH E ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 20 ASSESSEE SUBMITTED THAT THE PRELIMINARY CONDITION FOR ISSUING THE NOTICE U/S 147 OF THE ACT IS THAT THE AS SESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR SUBJECT TO PROVISIONS OF SECTIONS 148 TO 153 OF THE ACT. HOWEVER, IN THE CASE OF THE ASSESSEE, THE REASON TO BELIEVE WAS NOT ESCAPEMENT OF INCOME BUT THE PRESUMPTION WAS O F REVENUE AUDIT WHICH IS NOT PROPER AND LEGAL BY ISSUE OF NOTICE U/S 147 AND 148 OF THE ACT. THE SECOND OBJECT ION IS THAT THE ASSESSING OFFICER HAS NOT DISPOSED OF THE OBJECTIONS OF THE ASSESSEE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES . LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LEARNED CIT(A) HAS HELD THAT WHILE REOPENING T HE ASSESSMENT, REASONS FOR REOPENING ARE REPRODUCED IN TH E ORDER OF THE LEARNED CIT(A) AS UNDER :- ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 21 PARTICULARS OPENING BALANCE MODVAT CREDIT AVAILED MODVAT CREDIT UTILIZED ON CLEARANCE OF FINISHED GOODS/ EXCISABLE CLOSING BALANCE [RG23PT IIA [RAW MATERIAL] 1,061,721 8,229,785 7,639,917 1,651,589 RG 23PT II-C [ CAPITAL GOODS] 15,360 198,393 103,351 110,402 8. THE ASSESSING OFFICER REOPENED THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSEE HAS UTILISED THE AMOUNT OF MODVAT CREDIT AMOUNTING TO RS.7743268/- AS PER THE AUDI T REPORT WHICH DID NOT TALLY WITH THE EXCISE DUTY DEBI TED TO THE PROFIT AND LOSS ACCOUNT RS.7512187/-. THEREFORE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSE SSEE HAS DEBITED LESSER AMOUNT OF RS.231081/- AS EXCISE DUT Y EXPENSES IN PROFIT AND LOSS ACCOUNT AND ACCORDINGLY CAM E TO THE CONCLUSION THAT THE EXCISE DUTY MUST HAVE BEEN CONCEALED AND ESTIMATED THE CORRESPONDING UNACCOUNTED SALES OF RS.5160039. FROM THE ABOVE TABLE, THE LEARNED CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAS EXPLAINED I N THE TAX AUDIT REPORT THAT THE REQUIREMENT IS ONLY TO P ROVIDE INFORMATION ABOUT MODVAT CREDIT, AS CLAIMED AND UTILISED ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 22 BY THE ASSESSEE. THE TOTAL AMOUNT OF EXCISE DUTY WAS RS.8173799/- AND NOT RS.7743268/-. THE ASSESSEE HAS FILED RECONCILIATION STATEMENT AND AS PER THE RECONCILI ATION TABLE, EXCISE DUTY PAID COMES TO RS. 8173799/- INCLUD ING EXCISE DUTY ACTUALLY PAID RS. 430531/- AND MODVAT CREDIT OF RS. 7743268/-. OUT OF THIS, RS. 661612/- AS EXCIS E DUTY WAS UTILISED TOWARDS THE PROVISION IN RESPECT OF OPEN ING STOCK OF FINISHED GOODS WHICH RESULTED IN BALANCE FIG URE OF RS. 7512187/- WHICH IS CLAIMED AS EXCISE DUTY EXPENSE S IN THE PROFIT AND LOSS ACCOUNT. THE LEARNED CIT(A) WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS PICKED AND CHOSE T WO DIFFERENT FIGURES FROM THE RETURN OF INCOME FILED B Y THE ASSESSEE. THE ASSESSEE HAS SHOWN EXCISE DUTY PAYMENT IN HIS RETURN OF INCOME. THE ASSESSING OFFICER HAS TAKEN UP TWO FIGURES OF EXCISE DUTY FROM THE RETURN OF THE AS SESSEE THAT THE EXCISE DUTY OF RS. 7512186/- CLAIMED AS EXPEN SES IN PROFIT AND LOSS ACCOUNT AND IN TAX AUDIT REPORT MODV AT ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 23 CREDIT CLAIMED WAS RS. 7743268/-. THEREFORE, WHEN THE SE TWO FIGURES WERE PICKED UP FROM THE RETURN OF INCOM E AND AUDIT REPORT FILED BY THE ASSESSEE, IT CANNOT BE PROVE D THAT THE ASSESSING OFFICER HAS ANY INFORMATION. MOREOVER, T HE ASSESSING OFFICER HAS, BY BOOKING THE TWO FIGURES, C OME TO THE CONCLUSION THAT THERE ARE UNACCOUNTED SALES BUT THE RE IS NO TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND, THEREFOR E, THE REOPENING OF THE CASE CANNOT BE SUSTAINED. WE FIND THAT THE LEARNED CIT(A) HAS VERIFIED THE ACCOUNTS, RECONC ILIATION STATEMENT OF EXCISE DUTY PAID WHICH WAS FILED BEFORE T HE ASSESSING OFFICER AND THE LEARNED CIT(A) AND THE LEAR NED CIT(A) HAS HELD THAT THERE IS NO REASON TO BELIEVE THAT THERE IS SEPARATION OF SALE TO THE EXTENT OF RS.5160039/-. W E ALSO GET SUPPORT FROM THE ORDER OF THE HON'BLE APEX COUR T IN THE CASE OF KELVINATOR OF INDIA LTD. AND ORIENT CRAFT LTD. ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 24 (SUPRA). WE, THEREFORE, FIND NO MERIT IN THIS APPEAL O F THE REVENUE AND DISMISS THE SAME. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 21 NOVEMBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER )'* / DATED : 21 NOVEM BER, 2016. DN/ ITA NO. 649/IND/2013 ACIT VS. MITTAL APPLIANCES 25