M/s Varun Steel Casting Pvt. Ltd., Mandi Gobindgarh V. DCIT, Mandi Gobindgarh

ITA 684/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80987 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 684/CHD/2014 ASSESSMENT YEAR: 2008-09 M/S VARUN STEEL CASTING PVT. LTD., VS THE DCIT, CIR CLE, MANDI GOBINDGARH MANDI GOBINDGARH PAN NO. AABCV2852R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK GOYAL RESPONDENT BY : SHRI J.S. NAGAR DATE OF HEARING : 07/10/2014 DATE OF PRONOUNCEMENT : 28.10.2014 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29.5.2014 OF CIT(A), PATIALA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE I.T . ACT. WHEN THERE IS NO SUCH DEFECT IN THE DULY AUDITED BOOKS O F ACCOUNT. 2. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF RS. 6,00,000/- ON ACC OUNT OF ADHOC ADDITION AGAINST OF RS. 9,41,193/- MADE BY AS SESSING OFFICER ON ACCOUNT OF G.P. WITHOUT CITING ANY COMPA RATIVE CASE OR BASIS OF GP RATE. 2 3. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 3,26,418/- BEING MODVAT REVERSED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAS CLAIMED TO HAVE MA DE PURCHASES OF PIG IRON AMOUNTING TO RS. 25,19,190/- FROM M/S ROHIT ISPAT (INDIA), MANDI GOBINDGARH. LATER ON, CENTRAL EXCISE AUTHORITIES FOUND THAT M/S ROHIT ISPAT (INDIA) WHICH WAS A PROPRIETY CONCERN OF SHRI SURESH YADAV WAS IN DULGING IN NEFARIOUS TRADING ACTIVITIES BY ISSUING PAPER BILLS. THE ASSESSING OF FICER HAS DISCUSSED THE DETAILS OF FINDINGS BY THE EXCISE AUTHORIZES IN THE ASSESSM ENT ORDER AT PAGES 2 TO 6. THIS INFORMATION WAS CONFRONTED TO THE ASSESSEE AND ASSESSEE MADE DETAILED REPLY. IN VIEW OF THESE SUBMISSIONS ULTIMATELY THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN GP RATE OF 1.77% WHEREAS GP RATE OF 1.84% IN THE EARLIER YEAR AT 2.01% IN ASSESSMENT YEAR 2006-07. THEREFORE, CONSIDERING ALL THE FACTS THE ASSESSING OFFICER APPLIED THE GP RATE OF 2.05%. THE ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEE HAD ALSO REDUCED THE IN COME BY LOADING THE COST OF PURCHASES ON ACCOUNT OF REVERSED CENVAT AMOUNTING T O RS. 3,26,418/-. HOWEVER, NO SEPARATE ADDITION WAS MADE ON THIS AMOUNT IN VIE W OF THE ESTIMATION OF GP. 4. ON APPEAL LD. CIT(A) DECIDED THIS ISSUE VIDE PAR A 4.4 WHICH IS AS UNDER:- 4.4 I HAVE CONSIDERED THE SUBMISSIONS MADE. AS REGA RDS GROUND NO.2, THE FACTS MARSHALED BY THE ASSESSING O FFICER DISCUSSED IN THE PRECEDING PARAGRAPHS AMPLY PROVES THAT THE ENTIRE PURCHASES FORM M/S ROHIT ISPAT BOGUS. THE FI NDING OF THE EXCISE AUTHORITIES WERE CONFIRMED BY THE ASSESS ING OFFICER BY MAKING INDEPENDENT ENQUIRY WHICH REVEALE D THAT M/S ROHIT ISPAT WAS NOT DOING ANY ACTUAL TRADING AC TIVITY. THE DIRECTOR OF THE ASSESSEE COMPANY MR. DINESH KUM AR BANSAL AGREED TO REVERSE THE CENVAT WHICH ALSO ENDO RSE THE FACT THAT THE TRANSACTION WAS BOGUS. THE ASSESSEE W AS 3 CONFRONTED WITH THE STATEMENT OF SR. YADAV, SR. SUB HAS AND SR. DINESH KUMAR BANSAL DURING THE ASSESSMENT PROCE EDINGS. THE ASSESSEE WAS ALSO INFORMED ABOUT THE ENQUIRIES MADE BY THE DEPT. AND WAS ALSO ASKED TO PRODUCE THE PROPRIE TOR OF M/S ROHIT ISPAT WHICH COULD NOT BE COMPLIED WITH BY THE ASSESSEE. IT COULD NOT GET EVEN THE COPY OF A./C OF M/S ROHIT ISPAT CONFIRMED. THUS, THE APPELLANT FAILED TO DIS CHARGE HIS ONUS. LOOKING INTO THE FACTS OF THE CASE IT CAN NO W BE SAID THAT THE ASSESSING OFFICER HAS BASED HIS FINDING ON LY ON THE BASIS OF REPORT OF EXCISE AUTHORITY. AS REGARDS TH E CONTENTION OF THE APPELLANT THAT IT WAS THE DUTY OF THE APPELLANT TO SUBSTANTIATE THE TRANSACTION PARTICULA RLY LOOKING INTO THE CLINCHING REPORT OF THE EXCISE AUTHORITY A ND VARIOUS STATEMENTS OF THE PARTIES CONCERNED. THESE WERE DU LY CONFRONTED TO THE APPELLANT AND HE WAS NOT PRECLUDE D FROM PRODUCING THE PERSONS WITH WHAM HE ENTERED INTO THE TRANSACTIONS. FURTHER, THE ASSESSMENT IS MADE ON TH E BASIS OF FACTS GATHERED AND DULY CONFRONTED TO THE APPELLANT . THE CASE LAW CITED BY THE APPELLANTS ARE DISTINGUISHABLE. T HEREFORE, THE GROUND NO.2 OF THE APPELLANT IS DISMISSED. LOO KING INTO THE FACTS OF THE CASE, IT IS ALSO HELD THAT BOOKS O F A/C ARE RIGHTLY REJECTED BY THE ASSESSING OFFICER. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE MAINLY S UBMITTED THAT IN SIMILAR CASES IN THE CASE OF TEXUS STEELS PVT LTD, MANDI GO BINDGARH V DCIT IN ITA NO. 450/CHD/2012 AND 459/CHD/2012 WHERE AGAIN BOGUS PUR CHASES FROM ROHIT ISPAT (INDIA) WERE INVOLVED, THE TRIBUNAL AFTER ANALYZING THE SITUATION HAS ESTIMATED THE ADDITION AT RS. 4 LAKHS INSTEAD OF RS. 31,56,40 1/-. HE STRONGLY RELIED ON THIS ORDER. THE LD. COUNSEL WAS DIRECTED TO FILE THE GP RATE CHART. 6. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT NO DOUBT IN THE CASE OF TAXUS STEELS PVT LTD. VS. DCIT (SUPRA) FOLLOWIN G ANOTHER ORDER OF THE TRIBUNAL IN THE CASE OF GIAN CASTINGS (P) LTD V DCI T IN ITA NO. 451/CHD./2012 4 THE ADDITION WAS RESTRICTED TO RS. 4 LAKHS, BUT FAC TS HAVE NOT BEEN DISCUSSED IN DETAIL. THE GP CHART GIVEN BY THE ASSESSEE IS AS U NDER:- A/Y TURNOVER GP NP GP RATIO NP RATIO 2006-07 274334487 5530589 254651 2.01 0.09 2007-08 275361277 5088377 3058441 1.85 1.11 2008-09 350254522 6219158 2592785 1.78 0.74 8. WE ALSO FIND THAT SIMILAR CASES HAVE BEEN DECIDE D RECENTLY RELATING TO STEEL MILLS PARTICULAR THE CASE OF ITO VS. M/S SAR DAR STEEL ROLLING MILLS, MANDI GOBINDGARH IN ITA NO. 711/CHD/2012 WHEREIN G P RATE WAS ESTIMATED AT 5% FOLLOWING THE ORDER IN THE CASE OF M/S SINGH ST EEL & ALLIED INDUSTRIES, MANDI GOBNINDGARH V ITO (ITA NO. 688/CHD/2012). N O DOUBT THE FACTS IN THESE CASES WERE ALSO ESTIMATION OF PROFIT BECAUSE OF HIGH CONSUMPTION OF ELECTRICITY. CONSIDERING THESE FACTS AND THE FACTS OF THE CASE AS WELL AS THE RATIO OF THE DECISION IN THE CASE OF TEXUS (SUPRA), WE AR E OF THE OPINION THAT ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IS TOTALLY JUSTIFIED BECAUSE GP HAS BEEN ESTIMATED AT 2.05% BY ASSESSING OFFICER WHICH IS FURTHER REDUCED BY LD. CIT(A) AND COMES TO LESS THAN 2% IS LESS THAN THE GP ESTIMATED IN OTHER CASES @ 4.5 5%. IN THESE CIRCUMSTANCES W E FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 9. IN THE RESULT, ASSESSEE APPEAL IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28.10.2014 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR 5