ACIT, New Delhi V. Shri Ravi Goyal, New Delhi

ITA 691/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3678 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-04-2017
• Assessment Year: 1987-1988
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Principle of natural justice
• Section: 143(3); 147; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NOS. 688, 689, 690, 691 & 692/DEL/2 012 A.YRS. : 1984-85, 1985-86, 1986-87, 1987-88 & 1989- 90 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 23(1), NEW DELHI ROOM NO. 190, CR BUILDING, I.P. ESTATE, NEW DELHI VS. SH. RAVI GOYAL, LEGAL HEIR OF SH. S.P. GOEL, S-347, GREATER KAILASH-II, NEW DELHI 110 048 (PAN: AAGPG7134D) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. F.R. MEENA, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THESE APPEALS AGAINST THE S EPARATE IMPUGNED ORDERS ALL DATED 14.11.2011 PASSED BY THE LD. CIT(A)-XXIII, NEW DELHI RELEVANT TO ASSESSMENT YEARS 1984-85, 19 85-86, 1986-87, 1987-88 & 1989-90 RESPECTIVELY. SINCE THE ISSUES I NVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THE APPEAL S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH ASSESSMENT YEAR 1984-8 5. 2. THE GROUNDS RAISED IN ALL THE APPEALS ARE SIMIL AR AND COMMON, EXCEPT THE DIFFERENCE IN FIGURES AND GP RATE, HENC E, WE ARE ONLY 2 REPRODUCING THE GROUNDS IN RESPECT OF ASSESSMENT YE AR 1984-85 AS UNDER:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,24,42,758/- ON ACCOUNT OF GP RATE OF 22.92% APPL IED ON SUPPRESSED PRODUCTION OF RS. 5,63,22,462/- ON TH E BASIS OF CONSUMPTION OF TOTAL WEIGHT OF RAW MATERIA L AS PER SEIZED FORM A. II) ON THE FACTS AND ON THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 11,00,064/- ON ACCOUNT OF SCRAP AT 8% OF TOTAL CONSUMPTION OF RAW MATERIAL AS PER SEIZED FORM A. III) ON THE FACTS AND ON THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 84,600/- ON ACCOUNT OF INTEREST RELATABLE TO INTERE ST FREE ADVANCE. IV) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1984-85 ON 16.10.198 5, DISCLOSING A TOTAL INCOME OF RS. 6,070/-. THE CENTRAL EXCISE DEP ARTMENT HAD 3 CONDUCTED A SEARCH ON 23.06.1988 AT THE PREMISES OF THE ASSESSEE, WHEREIN IT WAS FOUND THAT THE ASSESSEE HAD SUPPRESS ED CONSUMPTION OF TIN SHEETS DURING VARIOUS ASSESSMENT YEARS. AN ASSE SSMENT UNDER SECTION 147 R.W.S. 143(3) WAS COMPLETED BY THE THEN DY. CIT , SPECIAL RANGE - I, GHAZIABAD ON 29.03.1996 AT AN INCOME OF RS. 1,37,26 ,926/- AGAINST THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS COMMON ORDER DATED 30.03.1999 FOR ASSESSMENT YEARS 1984-85 TO 1987- 88, AND ASSESSMENT YEAR 1989-90, SET ASIDE THE ASSE SSMENT, DIRECTING THAT THE RECORDS SEIZED BY THE EXCISE DEPARTMENT BE EXAMINED, INCLUDING FORM A SUBMITTED TO THE DIRECTOR GENERAL OF FOREIGN TRADE (DGFT), RG-23 REGISTER AND IMPORT REGISTER, AND ALSO THE ASSESSEE S SUBMISSIONS REGARDING SALE OF AGRICULTURAL' APPLIANCES. THE SET ASIDE ASSESSMENT WAS COMPLETED UNDER SECTION 144 R.W.S. 250 OF THE ACT O N 23.03.2001 AT THE SAME INCOME OF RS. 1,37,26,926/-. THE CIT(A)-XXIII, DISMISSED THE APPEAL OF THE APPELLANT, PRIMARILY ON THE GROUND TH AT THE ASSESSEE WAS ADOPTING DILATORY TACTICS IN ORDER TO AVOID THE ADJ UDICATION OF THE ISSUES INVOLVED IN THE GROUND OF APPEAL. THE ITAT IN A COM MON ORDER FOR THE ASSESSMENT YEARS 1984-85 TO 87-88, AND 1989-90, DAT ED 18.07.2008, SET ASIDE ALL THE ASSESSMENTS TO THE FILE OF THE ASSESS ING OFFICER FOR HIS FRESH ADJUDICATION AFTER TAKING INTO CONSIDERATION ALL TH E EVIDENCES AND MATERIALS ON RECORD AND THE CONTENTION RAISED BY TH E ASSESSEE. THE ASSESSING OFFICER, AFTER CALLING FOR VARIOUS DETAIL S AND CONSIDERING THE REPLIES FILED BY THE ASSESSEE, MADE THE SAME ADDITI ONS TO THE RETURNED INCOME AS HAD BEEN MADE IN THE EARLIER ORDER DATED 23.03.2001. IN THE 4 ORDER UNDER SECTION 143(3) R.W.S. 254, DATED 24.12. 2009, THE FOLLOWING ADDITIONS WERE MADE VIDE HIS ORDER DATED 28.12.2010 AND ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 1,37,26,926/-. I) GROSS PROFIT OF 22.092% APPLIED ON SUPPRESSED PRODUCTION OF RS. 56322462/- ON BASIS OF CONSUMPTION OF TOTAL WEIGHT OF RAW MATERIAL AS PER FORM A RS. 1,24,42,758/- II) VALUE OF SCRAP AT 8% OF TOTAL CONSUMPTION OF RAW MATERIAL AS PER FORM A RS. 11,00,064/- III) DISALLOWANCE OF INTEREST RELATABLE TO INTEREST FREE ADVANCES RS. 84,600/- IV) CLUBBING OF INCOME OF SMT. R. MANI GOEL RS. 93 ,434/- 4. AGAINST THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 14.11.201 1 HAS ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CI T(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND STA TED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITIONS. 7. THE PRESENT APPEAL CAME UP BEFORE THE BENCH MAN Y TIMES AND MOST OF THE TIMES THE CASE WAS ADJOURNED ON THE REQ UEST OF THE LD. DR AND LASTLY ON 16.01.2017 THE HEARING WAS ADJOURNED FOR 05.04.2017 ON THE WRITTEN REQUEST OF THE LD. DR AND BENCH HAS GRA NTED LAST OPPORTUNITY TO THE LD. DR IN THE PRESENCE OF SH. S.K. CHATURVED I, CA/A.R. OF THE ASSESSEE. BUT TODAY I.E. ON 05.04.2017 NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPIN G IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO 5 ISSUE NOTICE AGAIN AND AGAIN, THEREFORE, WE ARE DEC IDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEV ANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES. WE FIND THAT LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE NOS. (I) TO (III) VIDE PARA NO. 10 TO 13.2 AT PAGES NO. 16 TO 25 OF THE IMPUGNED ORDER WHICH READS AS UNDER:- {10} I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSIONS, THE REPORTS OF THE ASSESSING OFFICER AND THE APPELL ATE HISTORY OF THIS CASE. THE ORDER IN APPEAL, BEING THE ORDER UNDER SECTION 143(3) R.W.S. 254, DATED 24.12.2009, IS IN SUM AND SUBSTANCE, IDENTICAL TO THE ORDER UNDER SECTION 143 (3) R.W.S. 250 DATED 29.03.1996, ARRIVING AT THE SAME ASSESSME NT OF TOTAL INCOME OF RS. 1,37,26,926/-. THE ASSESSING OF FICER ESTIMATED THE SUPPRESSED PRODUCTION OF VALUE OF RS. 5,63,22,462/- OUT OF IMPORTED TIN SHEETS CONSUMED A S PER DETAILS IN FORM A SUBMITTED BEFORE THE JT. CHIEF CO NTROLLER OF IMPORTS AND EXPORTS, AND SEIZED DURING THE SEARCH B Y THE CENTRAL EXCISE DEPARTMENT ON 23.06.1988. A GROSS PR OFIT RATE OF 22.092% WAS APPLIED ON THE SUPPRESSED PRODUCTION TO ARRIVE AT INCOME OF RS. 1,24,42,758/-. A SEPARATE A DDITION OF INCOME OF RS. 11,00,064/- WAS MADE FOR VALUE OF SCR AP AT 8% 6 OF THE TOTAL CONSUMPTION OF RAW MATERIAL AS PER THE SEIZED FORM A. IT IS AN UNDENIABLE FACT THAT THE SEIZED FO RM A SHOWING CONSUMPTION OF 20699 METRIC TONNES OF TIN S HEETS, IS THE PRIMARY EVIDENCE RELIED UPON IN THE ASSESSMENT ORDERS OF 29.03.1996 AND 24.12.2009. NO OTHER SUPPORTING EVID ENCE OF IMPORT OF RAW MATERIAL OR PRODUCTION OF FINISHED PR ODUCTS IN EXCESS OF THAT ACCOUNTED FOR IN THE BOOKS IS ON REC ORD. EVEN DURING THE SUBSEQUENT SEARCH BY THE INCOME TAX DEPA RTMENT ON 14.09.1994, NO EVIDENCE WAS FOUND TO PROVE THAT UN- RECORDED PURCHASES EITHER OF IMPORTED OR INDIGENOUS TIN SHEETS OR THE CONSEQUENT PRODUCTION AND SALE OF UND ISCLOSED GOODS WAS CARRIED OUT IN THE ASSESSMENT YEARS 1984- 85 TO 1987-88 AND 1989-90. THE APPELLANT HAS ALL ALONG CO NTENDED THAT THE FIGURES OF CONSUMPTION AND PRODUCTION PROV IDED BY IT IN FORM A WERE INFLATED IN ORDER TO OBTAIN IMPORT L ICENSES FOR HIGHER QUANTITY OF RAW MATERIAL. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CONTENDED THAT THE ADDITIONAL PRODUCTION MAY HAVE ORIGINATED FROM HIGH SEAS PURCHASES, OR PU RCHASES FROM THE DOMESTIC MARKET. HOWEVER, NO SUCH EVIDENCE WAS FOUND DURING THE SEARCH. THE ORDER DATED 20.10.1994 OF THE ADDL. DIRECTOR GENERAL OF FOREIGN TRADE, HOLDING TH AT THE ALLEGATION OF MIS-UTILIZATION OF IMPORTED MATERIAL HAD BEEN FOUND TO BE UN-SUBSTANTIATED, AND THAT MATERIAL IMP ORTED 7 AGAINST THE LICENSES WAS PROPERLY ACCOUNTED FOR, CA NNOT BE BRUSHED ASIDE. {11} MOREOVER, THE ASSESSING OFFICER HAS OBTAINED T HE COPY OF THE SEIZED FORM A DURING THE REMAND PROCEEDINGS AND ALSO VERIFIED THE ACTUAL QUANTITY OF IMPORT OF RAW MATER IAL AS PER THE LICENSES ISSUED FROM THE OFFICE OF THE DGFT DUR ING THE PERIOD UNDER CONSIDERATION. AS PER THE FORM A, THE RAW MATERIAL CONSUMPTION BETWEEN ASSESSMENT YEAR 1984-8 5 AND 1987-88 WAS 20699 MT, WHEREAS AS PER THE ORDER OF T HE ADD!. DG OF FT, THE QUANTITY IMPORTED AGAINST THE LICENSE S WAS 9025 MT UPTO THE ASSESSMENT YEAR 1992-93. IN THE APPELLA NT'S BOOKS OF ACCOUNTS, THE QUANTITY IMPORTED BY THE APP ELLANT UPTO ASSESSMENT YEAR 1989-90 IS DISCLOSED AT 8059.9 75 MT. THE QUANTITY ACTUALLY IMPORTED BY THE APPELLANT DUR ING THIS PERIOD WAS 8118.706 MT, AS VERIFIED BY THE ASSESSIN G OFFICER FROM DGFT. HENCE, THE TOTAL DIFFERENCE WORKED OUT B Y THE ASSESSING OFFICER WORKS OUT TO 1130.015 MT, IF THE LICENSE WISE DIFFERENCE IS CONSIDERED, AND 59.025 MT IF SET OFF IS ALLOWED. IN THE REMAND REPORT OF THE ASSESSING OFFI CER DATED 30.03.2011, IT IS ADMITTED THAT NO INDEPENDENT DOCU MENTS ARE IN THE POSSESSION OF THE DEPARTMENT TO PROVE THAT T HE APPELLANT HAD ACTUALLY IMPORTED THE QUANTITY OF MAT ERIAL MENTIONED IN FORM A. IT IS ALSO ADMITTED THAT THE A SSESSING 8 OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEED INGS COMPLETED ON 29.03.1996 HAD VERIFIED FROM DGFT THE FIGURES OF ACTUAL IMPORT BY THE APPELLANT, WHICH WAS ALSO M ENTIONED IN THE ASSESSMENT ORDER. THE QUANTITIES-OF CONSUMPT ION ADOPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS DATED 29.03.1996 AND 24.12.2009, AND ALSO TAKEN BY THE CENTRAL EXCISE DEPARTMENT IN THEIR ORDERS DATED 4.1 1.1997 AND 20.05.2009 ARE BASED ENTIRELY ON THE FIGURES PR OVIDED BY THE APPELLANT IN FORM A, WHICH IS ESSENTIALLY AN AP PLICATION FOR IMPORT LICENSE, IN WHICH THE APPLICANT DECLARES DET AILS OF PREVIOUS IMPORT AND CONSUMPTION. IN THE ORDER OF TH E ITAT, DELHI, DATED 18.07.2008, SETTING ASIDE THE EARLIER ASSESSMENT PROCEEDINGS OF THE FIVE CONCERNED ASSESSMENT YEARS, IT WAS HELD THAT THE ASSESSING OFFICER HAD DETERMINED THE UNDISCLOSED PRODUCTION SOLELY ON THE BASIS OF THE D ECLARATION GIVEN IN FORM A, STATING THE TOTAL CONSUMPTION OF R AW MATERIAL THEREIN. THE CENTRAL EXCISE AUTHORITIES HAD ALSO DE TERMINED THE UNDISCLOSED PRODUCTION ON THE BASIS OF PARTICUL ARS GIVEN IN FORM A, SUBMITTED BEFORE THE JT. CHIEF CONTROLLER O F EXPORTS AND IMPORTS FOR OBTAINING IMPORT QUOTA. THE HON'BLE ITAT, WHILE SETTING ASIDE THE ASSESSMENTS, TOOK NOTE OF T HE ORDER DATED 16.08.2007 PASSED BY THE CESTAT, DIRECTING RE - ADJUDICATION OF THE ISSUE WITH REGARD TO UNDISCLOSE D PRODUCTION. THE HON'BLE CESTAT IN THE VARIOUS ORDER S PASSED 9 ON 18.02.1997, 01.07.1999 AND 10.09.2007, HAS TAKEN ADVERSE NOTE OF THE FAILURE OF THE CENTRAL EXCISE D EPARTMENT TO CONSIDER THE REPORT OF INVESTIGATION CARRIED OUT FROM THE CUSTOMS AND DGFT OFFICE IN RESPECT OF ACTUAL IMPORT OF RAW MATERIAL. THE MOST RECENT ORDER OF THE CESTAT, PRIN CIPAL BENCH, NEW DELHI DATED 30.09.2011, GRANTING STAY ON RECOVERY OF AMOUNTS IN DISPUTE READS AS UNDER:- '2. THERE IS NO RUNNING AWAY FROM THE FACT THAT THE ASSESSEE HAD PRESENTED A ROSY PICTURE OF PRODUCTION OF TIN C ONTAINERS TO IMPORT LARGE QUANTITY OF RAW MATERIAL FOR THE MANUF ACTURE OF THEIR FINAL PRODUCT VIZ. TIN SHEETS. WHEN THE DEMAN D WAS CONFIRMED AGAINST THEM IN APRIL, 1991, THE ORDER WA S CHALLENGED AND BY FINAL ORDER NO. A/323-326/97-NB D ATED 18.02.1997, THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE COMMISSIONER HAD NOT GRANTED OPPO RTUNITY OF PERSONAL HEARING ALTHOUGH HE HAD RESERVED THE OR DER ON THE ASPECT OF VERIFICATION OF FIGURES OF QUANTITY OF TI N SHEETS IMPORTED BY THE ASSESSEE AND THE CONTENTION OF THE APPELLANT THAT THE ENTIRE DEMAND WAS BASED ON APPLICATION FIL ED WITH THE DIRECTOR GENERAL OF FOREIGN TRADE FOR GRANT OF IMPO RT LICENSE FOR IMPORT OF TIN SHEETS. THE TRIBUNAL SET ASIDE TH E ORDER OF APRIL, 1991 AND SENT THE MATTER BACK FOR FRESH ADJU DICATION AFTER DIRECTING GRANT OF PERSONAL HEARING AND PUTTI NG THE 10 APPELLANTS TO NOTICE AS TO WHAT THEY HAD TO SAY ON THE FIGURES ARRIVED AT BY THE COLLECTOR AFTER VERIFICATION AND INVESTIGATION OF FIGURES. 3. A FRESH ADJUDICATION ORDER WAS PASSED CONFIRMING THE DEMAND WHICH WAS AGAIN CHALLENGED BEFORE THE TRIBUN AL. THE TRIBUNAL VIDE FINAL ORDER NO. A/455/97-NB DATED 1.7 .97 ONCE AGAIN REMANDED THE CASE, DIRECTING THE COMMISSIONER TO RE- ADJUDICATE THE CASE AFTER FURNISHING A COPY OF REPO RT OF ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE AND CO PY OF REPORT OF INVESTIGATION, AS ALREADY DIRECTED BY THE TRIBUNAL IN ITS FIRST REMAND ORDER. ONCE AGAIN, DEMAND WAS CONF IRMED BY THE COMMISSIONER VIDE HIS ORDER DATED 31.7.2002 NECESSITATING FRESH APPEAL TO THE TRIBUNAL WHICH BY FINAL ORDER NO. 478/07 DATED 16.8.2007 REMANDED THE CASE TO THE ADJUDICATING AUTHORITY AFTER NOTING THAT THE COMMIS SIONER HAD NOT DECIDED ON THE MERITS OF THE CASE AND HAD NOT C OMPLIED WITH THE DIRECTION GIVEN IN THE REMAND ORDER. 4. NOW WE COME TO THE PRESENT IMPUGNED ORDER WHERE THE DEMAND HAS BEEN RE-CONFIRMED AND DIRECTION OF THE T RIBUNAL FOR FURNISHING COPY OF THE INVESTIGATION OF FIGURES OF IMPORT AND REPORT OF THE ADDITIONAL DIRECTOR GENERAL OF FO REIGN TRADE HAS NOT BEEN CARRIED OUT. SINCE THE ADJUDICATION OR DER IN THIS CASE CONTINUES TO SUFFER FROM THE VICE OF VIOLATION OF PRINCIPLES 11 OF NATURAL JUSTICE AND SINCE THE TRIBUNAL'S ORDER R EGARDING FURNISHING OF COPIES OF REPORT THEREIN ABOVE SPECIF IED HAS NOT BEEN IMPLEMENTED, WE GRANT THE PRAYER FOR WAIVER OF PRE- DEPOSIT AND STAY RECOVERY OF AMOUNTS OF DISPUTE DUR ING THE PENDENCY OF THE APPEAL.' {12} AFTER CAREFUL CONSIDERATION, I HAVE COME TO TH E CONCLUSION THAT THE ASSESSMENT ORDER IS BASED SOLEL Y ON THE FIGURES OF CONSUMPTION OF RAW MATERIAL SUBMITTED BY THE APPELLANT IN FORM A FOR OBTAINING IMPORT LICENSES, BUT IS NOT SUPPORTED BY ANY OTHER MATERIAL EVIDENCE SHOWING HI GHER IMPORT/PURCHASE/ PRODUCTION, THAN IS AVAILABLE IN T HE BOOKS OF ACCOUNTS. THE DGFT ORDER RELIED UPON BY THE APPELLA NT CATEGORICALLY HOLDS THAT THE APPELLANT WAS ISSUED L ICENSES DURING THE PERIOD OF JULY 1984 TO 1991-92 FOR IMPOR T OF ONLY 9025 MT AS AGAINST 20699 MT CLAIMED BY THE APPELLAN T IN THE SEIZED FORM A. THE ASSESSING OFFICER HAS OBTAINED T HE ACTUAL FIGURES OF IMPORT BY THE APPELLANT FROM THE DGFT, W HICH STANDS AT 8118.706 MT. THE APPELLANT WAS REQUIRED T O TALLY EACH LICENSE OBTAINED FROM DGFT WITH EACH BILL OF E NTRY RECORDED IN ITS BOOKS OF ACCOUNT IN ORDER TO JUSTIF Y ITS STAND THAT NO EXCESS IMPORT HAD TAKEN PLACE. AFTER VERIFI CATION, IT IS FOUND THAT THE TOTAL IMPORT ON THE BASIS OF LICENSE S ISSUED BETWEEN 16.07.1984 AND 25.08.1987 WORKS OUT TO 8115 .772 MT AS AGAINST 8118.706 MT AS PER THE DGFT. THE DIFF ERENCE OF 1130.015 MT WORKED OUT BY THE ASSESSING OFFICER PERTAINS TO LICENSE NOS. 3079530, 2240176, 2240923, 2241059, 2241060, 2246544 AND 2247084. THE ACTUAL IMPORTS, A S VERIFIED FROM THE BILLS OF ENTRY PRODUCED BY THE AP PELLANT ARE FOUND TO BE AS UNDER:- 12 LICENSE NO. DATE OF ISSUE QUANTITY IMPORTED BY ASSESSEE DATE OF IMPORT AS PER BILL OF ENTRY QUANTITY IMPORTED AS PER DGFT 2239923 16.07.84 248.433 99.905 50.000 198.020 38.916 78.000 04.01.1985 04.01.1985 18.01.1985 05.02.1985 06.04.1985 06.04.1985 713.274 713.274 3079530 27.09.84 224.850 20.620 16.01.1988 17.08.1991 245.470 245.114 2240176 15.10.84 79.345 88.860 36.847 18.11.87 17.03.87 11.09.91 205.052 208.072 2240240 06.12.84 99.170 21.583 08.05.85 02.09.85 120.753 120.753 2240272 18.12.84 222.010 21.11.85 222.010 2240274 19.12.84 119.00 44.000 21.01.85 08.05.85 163.000 163.000 2240333 30.12.84 272.736 35.270 06.09.85 04.10.85 308.006 308.006 2240411 29.01.85 199.436 246.000 19.09.86 25.09.86 445.436 445.436 2240460 15.02.85 446.000 12.07.85 445.900 13 2240620 11.04.85 50.000 08.06.85 37.000 12.06.85 38.847 08.09.85 47.920 16.09.85 49.230 16.09.85 222.997 222.997 2240923 08.11.85 197.842 06.05.86 199.736 23.08.86 38.850 18.11.87 58.630 08.04.87 64.253 24.06.87 559.311 559.510 2241058 27.12.85 0 0 2241059 27.12.85 71.020 05.08.87 71.020 2241060 27.12.85 69.979 05.08.87 69.979 2241061 27.12.85 113.000 16.05.86 60.053 11.06.86 199.600 18.07.86 39.879 26.09.86 123.990 03.04.87 197.506 15.04.87 73.473 05.04.87 98.785 24.06.87 145.713 19.05.87 1051,999 1052.000 14 2246544 28.11.86 159.673 06.04.87 59.303 27.02.87 137.646 17.03.87 79.581 10.08.87 20.620 10.08.87 411.484 04.09.87 19.960 04.09.87 20.887 04.09.87 136.045 08.08.87 316.386 08.08.87 79.345 22.02.88 170.750 13.06.88 1511.680 1511.680 2247084 27.01.87 111.190 23.04.87 162.650 05.08.87 96.465 09.06.87 196.332 16.01.88 52.093 30.04.88 618.730 618.730 2253406 25.08.87 228.178 18.02.88 75.215 07.03.88 196.990 07.03.88 115.543 09.03.88 219.642 13.05.88 305.487 13.05.88 1141.055 1141.045 2482388 17.12.87 0 0 TOTAL 8115.7 72 811 8.526 15 {12.1} THEREFORE, IT IS FOUND THAT THE ACTUAL SHOR TAGE OUT OF TIN IMPORTED ON THE BASIS OF LICENSES ISSUED FOR 81 18.706 MT WORKS OUT TO ONLY 2.754 MT, WHICH IS UNDOUBTEDLY NE GLIGIBLE. THE DIFFERENCE OF 59.025 MT EARLIER ARRIVED AT IS M AINLY RELATABLE TO THE IMPORT OF 20.620 MT ON LICENSE NO. 3079530, AND OF 36.847 MT ON 11.09.1991 ON LICENSE NO. 22401 76. AFTER CONSIDERING THE IMPORT IN 1991-92 OF 57.467 M T, THE FIGURE OF TOTAL IMPORT BETWEEN ASSESSMENT YEAR 1984 -85 AND 1989-90 COMES TO 8058.283 MT, WHICH IS MARGINALLY L ESS THAN THE QUANTITY OF 8059.975 MT RECORDED IN THE APPELLA NT'S BOOKS OF ACCOUNTS. THE COMBINED IMPORT OF A TOTAL QUANTIT Y OF 8115.772 MT ON THE BASIS OF LICENSES ISSUED BETWEEN 16.07.1984 AND 17.12.1987, IS SUPPORTED BY THE BILL S OF ENTRY, AS WELL AS THE ORDER OF THE ADDL. DG OF FOREIGN TRA DE DATED 20.10.1994. THE ADDITION MADE OF UNACCOUNTED PRODUC TION AND SCRAP OUT OF ALLEGED UNDISCLOSED IMPORTS, ENTIR ELY ON THE BASIS OF THE SEIZED FORM A, IS ACCORDINGLY FOUND TO BE WITHOUT BASIS, AND IS DELETED. {13} AT GROUND OF APPEAL NO.6, THE APPELLANT HAS CO NTESTED DISALLOWANCE OF PART OF INTEREST ON THE BORROWINGS FROM THE BANK OF MAHARASHTRA. IT IS CONTENDED THAT THE BORRO WED FUNDS HAVE NOT BEEN UTILIZED FOR THE PURPOSE OF MAKING NO N-INTEREST BEARING ADVANCES. IN THIS CONNECTION, IT WAS SUBMIT TED THAT: 16 'THE LEARNED ACIT CIRCLE 23(1) HAS ERRED BOTH ON FA CTS AND IN LAW IN MAKING ADDITION OF RS. 84,600/- ON ACCOUNT O F DEEMED INTEREST @12% ON ADVANCES GIVEN TO MR. RAVI GOYAL F OR RS.7,05,OOO/-. THE LEARNED ACIT CIRCLE 23(1) HAS NO T TRIED TO APPRECIATE THE ASSESSEE'S SUBMISSION THAT THE ABOVE ADVANCES HAS NOT BEEN GIVEN FROM INTEREST BEARING FUND RATHE R FROM INTERNAL GENERATED FUND. IT IS FURTHER SUBMITTED TH AT IN THE BALANCE SHEET THERE IS A DEBIT BALANCE OF RS. 7,05, 000/- TO MR. RAVI GOYAL WITH A CORRESPONDING CREDIT BALANCE OF RS.3,OO,OOO/-. HENCE THE NET INTEREST FREE ADVANCE IS RS. 4,05,000/- ONLY WHICH HAS BEEN FINANCED BY CAPITAL OF MR. S.P.GOYAL AND INTERNAL ACCRUAL. IT IS CLEAR FROM TH E BALANCE SHEET. HENCE ADDITION OF RS.84,600/- ON ACCOUNT OF DEEMED INTEREST ON ADVANCES GIVEN TO RAVI GOYAL IS BAD IN LAW AND LIKELY TO BE DELETED. THE SAME VIEW HAS BEEN GIVEN BY YOUR PREDECESSOR IN THE CASE OF THE ASSESSEE FOR A.Y. 1992-93. RELIANCE MAY ALSO PLACED IN THE CASE OF COMMISSIONE R OF INCOME TAX AND OTHERS VS RADICO KHAITAN LTD. (2004) 274 ITR 354. IN WHICH THE ALLAHABAD HIGH COURT HAS HELD THA T THE ASSESSEE COMPANY HAS SUFFICIENT FUNDS OTHER THAN TH E BORROWED MONEY FOR GIVING THE AMOUNT IN QUESTION AS LOAN TO ITS SISTER CONCERN, WHICH FINDING HAS NOT BEEN SPEC IFICALLY 17 CHALLENGED IN THE PRESENT APPEAL, WE ARE OF THE CON SIDERED OPINION THAT THE CONDITIONS OF SECTION 36 (1) (III) OF THE ACT HAVE BEEN COMPLIED WITH AND, THEREFORE THE ASSESSEE COMPANY WAS ENTITLED TO FULL ALLOWANCE OF THE AMOUN T OF INTEREST PAID BY IT ON BORROWED CAPITAL' RELIANCE M AY ALSO BE PLACED UPON THE FOLLOWING CASES: CIT VS BOMBAY SAMACHAR LIMITED 74 ITR 723 CIT VS. SRIDEV ENTERPRISES 192 ITR 165 DAIL INVESTMENTS LTD. VS. DEPUTY COMMISSIONER OF IN COME TAX 73 TTJ 22' {13.1} IT IS SEEN THAT THIS ISSUE WAS THE SUBJECT O F APPEAL IN ASSESSMENT YEARS 1991-92 AND 1992-93. IN THE ORDER FOR THE ASSESSMENT YEAR 1992-93 OF THE CIT (A) XXIII DATED 31.03.2011, THIS ISSUE WAS HELD IN FAVOUR OF THE AP PELLANT, AFTER CONSIDERING THE ORDER OF THE ITAT, DELHI FOR THE ASSESSMENT YEAR 1991-92, WHEREIN IT WAS HELD:- '9.3 WE HAVE HEARD THE LEARNED REPRESENTATIVE OF TH E PARTIES, ALSO GONE THROUGH THE RELEVANT RECORD AND PERUSED T HE PAPER BOOK. WHILE THE ASSESSEE IS SHOWING INTEREST INCOME OF RS. 22,98,869/-, HE CLAIMED AN EXPENDITURE OF RS. 17,87 ,839/-, OUT OF WHICH A SUM OF RS. 17,05,334/- IS ENTIRELY O N LOANS RAISED FROM BANK OF MAHARASHTRA INCLUDING BROUGHT F ORWARD 18 LOSS OF RS. 2,08,53,626/-. THE ASSESSEE IS ALSO HAV ING INTEREST FREE FUNDS FAR EXCEEDING THE AMOUNT ADVANCED TO THE PARTIES ALLEGED AS NON-BUSINESS ADVANCES AS PER DETAILS ON PAGE 128 ALREADY REFERRED TO ABOVE. THIS BEING THE POSITION, IT CANNOT BE HELD THAT THE ASSESSEE HAD ADVANCED INTEREST BEA RING BORROWING TO THE PARTIES INVOLVED. WE, THEREFORE, A RE OF THE VIEW THAT NO ADDITION ON THIS ACCOUNT WAS CALLED FO R. THUS, GROUND NO. 14 IS ALLOWED.' {13.2} THE APPELLANT HAS SHOWN THAT AS AGAINST THE INTEREST FREE ADVANCE OF RS. 7,05,000/- TO SHRI RAVI GOYAL, THE BALANCE SHEET SHOWS A CREDIT BALANCE OF RS. 3,00,000/- IN T HE NAME OF SHRI RAVI GOYAL. HENCE, THE INTEREST FREE ADVANCE I S ONLY RS. 4,05,000/-, WHICH IS OUT OF CAPITAL OF RS.6,53,883/ - AS WELL AS INTERNAL ACCRUAL. THE BALANCE SHEET INDICATES THAT THE APPELLANT HAD SUFFICIENT FUNDS FROM WHICH THE INTER EST FREE ADVANCE COULD HAVE BEEN ADVANCED. THE ASSESSING OFF ICER HAS NOT PROVEN THE UTILIZATION OF THE INTEREST BEARING FUNDS IN MAKING THE INTEREST FREE ADVANCES. IN THE BODY OF T HE ORDER, THE DISALLOWANCE OF INTEREST IS STATED TO BE 'AS DI SCUSSED IN ASSESSMENT YEAR 1993-94 AT PAGE NO. 14 TO IS'. HENC E, THE OBSERVATION OF THE ASSESSING OFFICER CANNOT BE SAID TO BE BASED ON FACTS OR ON VERIFICATION OF THE UTILIZATIO N OF BORROWED FUNDS. NO DISALLOWANCE OF INTEREST PAID TO THE BANK IS JUSTIFIED 19 WITHOUT REBUTTAL OF THE APPELLANT'S CONTENTION THAT THE ADVANCES HAD BEEN GIVEN FROM HIS OWN CAPITAL AND IN TERNALLY GENERATED FUNDS. HENCE, THE ADDITION MADE OF RS. 84 ,600/- ON THIS ACCOUNT IS DELETED. 8.1 ON PERUSING THE ABOVE FINDING OF THE LD. CIT(A) , WITH REGARD TO GROUND NO. 2 & 3 ARE CONCERNED, WE FIND THAT THE A SSESSING OFFICER ESTIMATED THE SUPPRESSED PRODUCTION OF VALUE OF RS. 5,63,22,462/- OUT OF IMPORTED TIN SHEETS CONSUMED AS PER DETAILS IN FORM A SUBMITTED BEFORE THE JT. CHIEF CONTROLLER OF IMPORTS AND EXPORTS, AN D SEIZED DURING THE SEARCH BY THE CENTRAL EXCISE DEPARTMENT ON 23.06.19 88. A GROSS PROFIT RATE OF 22.092% WAS APPLIED ON THE SUPPRESSED PRODU CTION TO ARRIVE AT INCOME OF RS. 1,24,42,758/-. A SEPARATE ADDITION OF INCOME OF RS.11,00,064/- WAS MADE FOR VALUE OF SCRAP AT 8% OF THE TOTAL CONSUMPTION OF RAW MATERIAL AS PER THE SEIZED FORM A. IT IS AN UNDENIABLE FACT THAT THE SEIZED FORM A SHOWING CONSUMPTION OF 20699 METRIC TONNES OF TIN SHEETS, IS THE PRIMARY EVIDENCE RELIED UPON IN THE ASSESSMENT ORDERS OF 29.03.1996 AND 24.12.2009. NO OTHER SUPPO RTING EVIDENCE OF IMPORT OF RAW MATERIAL OR PRODUCTION OF FINISHED PR ODUCTS IN EXCESS OF THAT ACCOUNTED FOR IN THE BOOKS IS ON RECORD. EVEN DURIN G THE SUBSEQUENT SEARCH BY THE INCOME TAX DEPARTMENT ON 14.09.1994, NO EVIDENCE WAS FOUND TO PROVE THAT UN-RECORDED PURCHASES EITHER OF IMPORTED OR INDIGENOUS TIN SHEETS OR THE CONSEQUENT PRODUCTION AND SALE OF UNDISCLOSED GOODS WAS CARRIED OUT IN THE ASSESSMENT YEARS 1984-85 TO 20 1987-88 AND 1989-90. THE ASSESSEE HAS ALL ALONG CON TENDED THAT THE FIGURES OF CONSUMPTION AND PRODUCTION PROVIDED BY I T IN FORM A WERE INFLATED IN ORDER TO OBTAIN IMPORT LICENSES FOR HIG HER QUANTITY OF RAW MATERIAL. IN THE ASSESSMENT ORDER, THE ASSESSING OF FICER HAS CONTENDED THAT THE ADDITIONAL PRODUCTION MAY HAVE ORIGINATED FROM HIGH SEAS PURCHASES, OR PURCHASES FROM THE DOMESTIC MARKET. H OWEVER, NO SUCH EVIDENCE WAS FOUND DURING THE SEARCH. THE ORDER DAT ED 20.10.1994 OF THE ADDL. DIRECTOR GENERAL OF FOREIGN TRADE, HOLDING TH AT THE ALLEGATION OF MIS-UTILIZATION OF IMPORTED MATERIAL HAD BEEN FOUND TO BE UN- SUBSTANTIATED, AND THAT MATERIAL IMPORTED AGAINST T HE LICENSES WAS PROPERLY ACCOUNTED FOR, CANNOT BE BRUSHED ASIDE. MO REOVER, THE ASSESSING OFFICER HAS OBTAINED THE COPY OF THE SEIZED FORM A DURING THE REMAND PROCEEDINGS AND ALSO VERIFIED THE ACTUAL QUANTITY O F IMPORT OF RAW MATERIAL AS PER THE LICENSES ISSUED FROM THE OFFICE OF THE D GFT DURING THE PERIOD UNDER CONSIDERATION. AS PER THE FORM A, THE RAW MAT ERIAL CONSUMPTION BETWEEN ASSESSMENT YEAR 1984-85 AND 1987-88 WAS 206 99 MT, WHEREAS AS PER THE ORDER OF THE ADD!. DG OF FT, THE QUANTIT Y IMPORTED AGAINST THE LICENSES WAS 9025 MT UPTO THE ASSESSMENT YEAR 1992- 93. IN THE ASSESSEES BOOKS OF ACCOUNTS, THE QUANTITY IMPORTED BY THE APPELLANT UPTO ASSESSMENT YEAR 1989-90 IS DISCLOSED AT 8059.975 MT . THE QUANTITY ACTUALLY IMPORTED BY THE APPELLANT DURING THIS PERI OD WAS 8118.706 MT, AS VERIFIED BY THE ASSESSING OFFICER FROM DGFT. HENCE, THE TOTAL DIFFERENCE WORKED OUT BY THE ASSESSING OFFICER WORKS OUT TO 11 30.015 MT, IF THE LICENSE WISE DIFFERENCE IS CONSIDERED, AND 59.025 M T IF SET OFF IS ALLOWED. 21 IN THE REMAND REPORT OF THE ASSESSING OFFICER DATED 30.03.2011, IT IS ADMITTED THAT NO INDEPENDENT DOCUMENTS ARE IN THE P OSSESSION OF THE DEPARTMENT TO PROVE THAT THE APPELLANT HAD ACTUALLY IMPORTED THE QUANTITY OF MATERIAL MENTIONED IN FORM A. IT IS ALS O ADMITTED THAT THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS COMPLETED ON 29.03.1996 HAD VERIFIED FROM DGFT THE FIGURES OF ACTUAL IMPORT BY THE APPELLANT, WHICH WAS ALSO MENTIONED I N THE ASSESSMENT ORDER. THE QUANTITIES-OF CONSUMPTION ADOPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS DATED 29.03.1996 AND 24.12.20 09, AND ALSO TAKEN BY THE CENTRAL EXCISE DEPARTMENT IN THEIR ORDERS DA TED 4.11.1997 AND 20.05.2009 ARE BASED ENTIRELY ON THE FIGURES PROVID ED BY THE APPELLANT IN FORM A, WHICH IS ESSENTIALLY AN APPLICATION FOR IMP ORT LICENSE, IN WHICH THE APPLICANT DECLARES DETAILS OF PREVIOUS IMPORT AND C ONSUMPTION. IN THE ORDER OF THE ITAT, DELHI, DATED 18.07.2008, SETTING ASIDE THE EARLIER ASSESSMENT PROCEEDINGS OF THE FIVE CONCERNED ASSESS MENT YEARS, IT WAS HELD THAT THE ASSESSING OFFICER HAD DETERMINED THE UNDISCLOSED PRODUCTION SOLELY ON THE BASIS OF THE DECLARATION GIVEN IN FOR M A, STATING THE TOTAL CONSUMPTION OF RAW MATERIAL THEREIN. THE CENTRAL EX CISE AUTHORITIES HAD ALSO DETERMINED THE UNDISCLOSED PRODUCTION ON THE B ASIS OF PARTICULARS GIVEN IN FORM A, SUBMITTED BEFORE THE JT. CHIEF CON TROLLER OF EXPORTS AND IMPORTS FOR OBTAINING IMPORT QUOTA. THE ITAT, WHILE SETTING ASIDE THE ASSESSMENTS, TOOK NOTE OF THE ORDER DATED 16.08.200 7 PASSED BY THE CESTAT, DIRECTING RE-ADJUDICATION OF THE ISSUE WITH REGARD TO UNDISCLOSED PRODUCTION. THE HON'BLE CESTAT IN THE VARIOUS ORDER S PASSED ON 22 18.02.1997, 01.07.1999 AND 10.09.2007, HAS TAKEN AD VERSE NOTE OF THE FAILURE OF THE CENTRAL EXCISE DEPARTMENT TO CONSIDE R THE REPORT OF INVESTIGATION CARRIED OUT FROM THE CUSTOMS AND DGFT OFFICE IN RESPECT OF ACTUAL IMPORT OF RAW MATERIAL. THE MOST RECENT ORDE R OF THE CESTAT, PRINCIPAL BENCH, NEW DELHI DATED 30.09.2011, GRANTI NG STAY ON RECOVERY OF AMOUNTS IN DISPUTE READS AS UNDER:- '2. THERE IS NO RUNNING AWAY FROM THE FACT THAT THE ASSESSEE HAD PRESENTED A ROSY PICTURE OF PRODUCTION OF TIN C ONTAINERS TO IMPORT LARGE QUANTITY OF RAW MATERIAL FOR THE MANUF ACTURE OF THEIR FINAL PRODUCT VIZ. TIN SHEETS. WHEN THE DEMAN D WAS CONFIRMED AGAINST THEM IN APRIL, 1991, THE ORDER WA S CHALLENGED AND BY FINAL ORDER NO. A/323-326/97-NB D ATED 18.02.1997, THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE COMMISSIONER HAD NOT GRANTED OPPO RTUNITY OF PERSONAL HEARING ALTHOUGH HE HAD RESERVED THE OR DER ON THE ASPECT OF VERIFICATION OF FIGURES OF QUANTITY OF TI N SHEETS IMPORTED BY THE ASSESSEE AND THE CONTENTION OF THE APPELLANT THAT THE ENTIRE DEMAND WAS BASED ON APPLICATION FIL ED WITH THE DIRECTOR GENERAL OF FOREIGN TRADE FOR GRANT OF IMPO RT LICENSE FOR IMPORT OF TIN SHEETS. THE TRIBUNAL SET ASIDE TH E ORDER OF APRIL, 1991 AND SENT THE MATTER BACK FOR FRESH ADJU DICATION AFTER DIRECTING GRANT OF PERSONAL HEARING AND PUTTI NG THE APPELLANTS TO NOTICE AS TO WHAT THEY HAD TO SAY ON THE FIGURES 23 ARRIVED AT BY THE COLLECTOR AFTER VERIFICATION AND INVESTIGATION OF FIGURES. 3. A FRESH ADJUDICATION ORDER WAS PASSED CONFIRMING THE DEMAND WHICH WAS AGAIN CHALLENGED BEFORE THE TRIBUN AL. THE TRIBUNAL VIDE FINAL ORDER NO. A/455/97-NB DATED 1.7 .97 ONCE AGAIN REMANDED THE CASE, DIRECTING THE COMMISSIONER TO RE- ADJUDICATE THE CASE AFTER FURNISHING A COPY OF REPO RT OF ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE AND CO PY OF REPORT OF INVESTIGATION, AS ALREADY DIRECTED BY THE TRIBUNAL IN ITS FIRST REMAND ORDER. ONCE AGAIN, DEMAND WAS CONF IRMED BY THE COMMISSIONER VIDE HIS ORDER DATED 31.7.2002 NECESSITATING FRESH APPEAL TO THE TRIBUNAL WHICH BY FINAL ORDER NO. 478/07 DATED 16.8.2007 REMANDED THE CASE TO THE ADJUDICATING AUTHORITY AFTER NOTING THAT THE COMMIS SIONER HAD NOT DECIDED ON THE MERITS OF THE CASE AND HAD NOT C OMPLIED WITH THE DIRECTION GIVEN IN THE REMAND ORDER. 4. NOW WE COME TO THE PRESENT IMPUGNED ORDER WHERE THE DEMAND HAS BEEN RE-CONFIRMED AND DIRECTION OF THE T RIBUNAL FOR FURNISHING COPY OF THE INVESTIGATION OF FIGURES OF IMPORT AND REPORT OF THE ADDITIONAL DIRECTOR GENERAL OF FO REIGN TRADE HAS NOT BEEN CARRIED OUT. SINCE THE ADJUDICATION OR DER IN THIS CASE CONTINUES TO SUFFER FROM THE VICE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND SINCE THE TRIBUNAL'S ORDER R EGARDING 24 FURNISHING OF COPIES OF REPORT THEREIN ABOVE SPECIF IED HAS NOT BEEN IMPLEMENTED, WE GRANT THE PRAYER FOR WAIVER OF PRE- DEPOSIT AND STAY RECOVERY OF AMOUNTS OF DISPUTE DUR ING THE PENDENCY OF THE APPEAL.' 8.2 WE FURTHER NOTE THAT THE ASSESSMENT ORDER IS BA SED SOLELY ON THE FIGURES OF CONSUMPTION OF RAW MATERIAL SUBMITTED BY THE ASSESSEE IN FORM A FOR OBTAINING IMPORT LICENSES, BUT IS NOT SUPPORT ED BY ANY OTHER MATERIAL EVIDENCE SHOWING HIGHER IMPORT/PURCHASE/ PRODUCTION , THAN IS AVAILABLE IN THE BOOKS OF ACCOUNTS. THE DGFT ORDER RELIED UPON B Y THE ASSESSEE CATEGORICALLY HOLDS THAT THE APPELLANT WAS ISSUED L ICENSES DURING THE PERIOD OF JULY 1984 TO 1991-92 FOR IMPORT OF ONLY 9 025 MT AS AGAINST 20699 MT CLAIMED BY THE APPELLANT IN THE SEIZED FOR M A. THE ASSESSING OFFICER HAS OBTAINED THE ACTUAL FIGURES OF IMPORT B Y THE ASSESSEE FROM THE DGFT, WHICH STANDS AT 8118.706 MT. THE ASSESSEE WAS REQUIRED TO TALLY EACH LICENSE OBTAINED FROM DGFT WITH EACH BILL OF E NTRY RECORDED IN ITS BOOKS OF ACCOUNT IN ORDER TO JUSTIFY ITS STAND THAT NO EXCESS IMPORT HAD TAKEN PLACE. AFTER VERIFICATION, IT IS FOUND THAT T HE TOTAL IMPORT ON THE BASIS OF LICENSES ISSUED BETWEEN 16.07.1984 AND 25. 08.1987 WORKS OUT TO 8115.772 MT AS AGAINST 8118.706 MT AS PER THE DGFT. THE DIFFERENCE OF 1130.015 MT WORKED OUT BY THE ASSESSING OFFICER PER TAINS TO LICENSE NOS. 3079530, 2240176, 2240923, 2241059, 2241060, 224654 4 AND 2247084. THE ACTUAL IMPORTS, AS VERIFIED FROM THE B ILLS OF ENTRY PRODUCED BY THE ASSESSEE WERE REPRODUCED IN THE IMPUGNED OR DER IN THE TABULATION 25 FORM. THEREFORE, IT WAS FOUND THAT THE ACTUAL SHORT AGE OUT OF TIN IMPORTED ON THE BASIS OF LICENSES ISSUED FOR 8118.706 MT WOR KS OUT TO ONLY 2.754 MT, WHICH IS UNDOUBTEDLY NEGLIGIBLE. THE DIFFERENCE OF 59.025 MT EARLIER ARRIVED AT IS MAINLY RELATABLE TO THE IMPORT OF 20. 620 MT ON LICENSE NO. 3079530, AND OF 36.847 MT ON 11.09.1991 ON LICENSE NO. 2240176. AFTER CONSIDERING THE IMPORT IN 1991-92 OF 57.467 MT, THE FIGURE OF TOTAL IMPORT BETWEEN ASSESSMENT YEAR 1984-85 AND 1989-90 COMES T O 8058.283 MT, WHICH IS MARGINALLY LESS THAN THE QUANTITY OF 8059. 975 MT RECORDED IN THE APPELLANT'S BOOKS OF ACCOUNTS. THE COMBINED IMPORT OF A TOTAL QUANTITY OF 8115.772 MT ON THE BASIS OF LICENSES ISSUED BETWEEN 16.07.1984 AND 17.12.1987, IS SUPPORTED BY THE BILLS OF ENTRY, AS WELL AS THE ORDER OF THE ADDL. DG OF FOREIGN TRADE DATED 20.10.1994. THEREFO RE, THE ADDITION MADE OF UNACCOUNTED PRODUCTION AND SCRAP OUT OF ALL EGED UNDISCLOSED IMPORTS, ENTIRELY ON THE BASIS OF THE SEIZED FORM A , WAS ACCORDINGLY FOUND TO BE WITHOUT BASIS, AND WAS RIGHTLY DELETED BY TH E LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUES IN DISPUTE AND ACCO RDINGLY, WE DISMISS THE GROUND NOS. (I) & (II) RAISED BY THE REVENUE. 8.3 WITH REGARD TO GROUND NO. (III) RELATING TO ADD ITION OF RS. 84,600/- ON ACCOUNT OF INTEREST RELATABLE TO INTEREST FREE A DVANCE IS CONCERNED, WE FIND THAT THE ASSESSEE HAS CONTESTED DISALLOWANCE OF PART OF INTEREST ON THE BORROWINGS FROM THE BANK OF MAHARASHTRA. AS PER THE ASSESSEE THE BORROWED FUNDS HAVE NOT BEEN UTILIZED FOR THE PURPO SE OF MAKING NON- 26 INTEREST BEARING ADVANCES. WE OBSERVED THAT IT WAS THE CONTENTION BEFORE THE LD. CIT(A) THAT ACIT CIRCLE 23(1) HAS ERRED BOT H ON FACTS AND IN LAW IN MAKING ADDITION OF RS. 84,600/- ON ACCOUNT OF DEEME D INTEREST @12% ON ADVANCES GIVEN TO MR. RAVI GOYAL FOR RS.7,05,OOO/-. IT WAS ALSO SUBMITTED THAT THE ACIT CIRCLE 23(1) HAS NOT TRIED TO APPRECIATE THE ASSESSEE'S SUBMISSION THAT THE ABOVE ADVANCES HAS N OT BEEN GIVEN FROM INTEREST BEARING FUND RATHER FROM INTERNAL GENERATE D FUND. ALSO IN THE BALANCE SHEET THERE IS A DEBIT BALANCE OF RS. 7,05, 000/- TO MR. RAVI GOYAL WITH A CORRESPONDING CREDIT BALANCE OF RS.3,OO,OOO/ -. HENCE THE NET INTEREST FREE ADVANCE WAS RS. 4,05,000/- ONLY WHICH HAS BEEN FINANCED BY CAPITAL OF MR. S.P.GOYAL AND INTERNAL ACCRUAL. THUS IT IS CLEAR FROM THE BALANCE SHEET. HENCE ADDITION OF RS.84,600/- ON ACC OUNT OF DEEMED INTEREST ON ADVANCES GIVEN TO RAVI GOYAL IS BAD IN LAW AND LIKELY TO BE DELETED. WE FURTHER NOTE THAT THE SAME VIEW HAS BEE N GIVEN BY THE THEN LD. CIT(A) IN THE CASE OF THE ASSESSEE FOR A.Y. 19 92-93. RELIANCE WAS ALSO PLACED IN THE CASE OF COMMISSIONER OF INCOME TAX AND OTHERS VS RADICO KHAITAN LTD. (2004) 274 ITR 354 IN WHICH THE ALLAHABAD HIGH COURT HAS HELD THAT THE ASSESSEE COMPANY HAS SUFFI CIENT FUNDS OTHER THAN THE BORROWED MONEY FOR GIVING THE AMOUNT IN QUESTIO N AS LOAN TO ITS SISTER CONCERN, WHICH FINDING HAS NOT BEEN SPECIFICALLY CH ALLENGED IN THE PRESENT APPEAL, WE ARE OF THE CONSIDERED OPINION THAT THE C ONDITIONS OF SECTION 36(1)(III) OF THE ACT HAVE BEEN COMPLIED WITH AND, THEREFORE THE ASSESSEE COMPANY WAS ENTITLED TO FULL ALLOWANCE OF THE AMOUN T OF INTEREST PAID BY IT ON BORROWED CAPITAL'. RELIANCE WAS ALSO PLACED UP ON THE FOLLOWING CASES: 27 CIT VS BOMBAY SAMACHAR LIMITED 74 ITR 723 CIT VS. SRIDEV ENTERPRISES 192 ITR 165 DAIL INVESTMENTS LTD. VS. DEPUTY COMMISSIONER OF IN COME TAX 73 TTJ 22' 8.3.1 WE FURTHER NOTE THAT THE PRESENT ISSUE WAS T HE SUBJECT OF APPEAL IN ASSESSMENT YEARS 1991-92 AND 1992-93. IN THE ORDER FOR THE ASSESSMENT YEAR 1992-93 OF THE CIT(A)-XXIII DATED 3 1.03.2011, THIS ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE, AFTER CON SIDERING THE ORDER OF THE ITAT, DELHI FOR THE ASSESSMENT YEAR 1991-92, WH EREIN IT WAS HELD:- '9.3 WE HAVE HEARD THE LEARNED REPRESENTATIVE OF TH E PARTIES, ALSO GONE THROUGH THE RELEVANT RECORD AND PERUSED T HE PAPER BOOK. WHILE THE ASSESSEE IS SHOWING INTEREST INCOME OF RS. 22,98,869/-, HE CLAIMED AN EXPENDITURE OF RS. 17,87 ,839/-, OUT OF WHICH A SUM OF RS. 17,05,334/- IS ENTIRELY O N LOANS RAISED FROM BANK OF MAHARASHTRA INCLUDING BROUGHT F ORWARD LOSS OF RS. 2,08,53,626/-. THE ASSESSEE IS ALSO HAV ING INTEREST FREE FUNDS FAR EXCEEDING THE AMOUNT ADVANCED TO THE PARTIES ALLEGED AS NON-BUSINESS ADVANCES AS PER DETAILS ON PAGE 128 ALREADY REFERRED TO ABOVE. THIS BEING THE POSITION, IT CANNOT BE HELD THAT THE ASSESSEE HAD ADVANCED INTEREST BEA RING BORROWING TO THE PARTIES INVOLVED. WE, THEREFORE, A RE OF THE 28 VIEW THAT NO ADDITION ON THIS ACCOUNT WAS CALLED FO R. THUS, GROUND NO. 14 IS ALLOWED.' 8.3.2 WE FURTHER OBSERVED THAT THE ASSSESSEE HAS S HOWN THAT AS AGAINST THE INTEREST FREE ADVANCE OF RS. 7,05,000/- TO SHRI RAVI GOYAL, THE BALANCE SHEET SHOWS A CREDIT BALANCE OF RS. 3,00,00 0/- IN THE NAME OF SHRI RAVI GOYAL. HENCE, THE INTEREST FREE ADVANCE I S ONLY RS. 4,05,000/-, WHICH IS OUT OF CAPITAL OF RS.6,53,883/- AS WELL AS INTERNAL ACCRUAL. THE BALANCE SHEET INDICATES THAT THE ASSESSEE HAD SUFFI CIENT FUNDS FROM WHICH THE INTEREST FREE ADVANCE COULD HAVE BEEN ADVANCED. THE ASSESSING OFFICER HAS NOT PROVEN THE UTILIZATION OF THE INTER EST BEARING FUNDS IN MAKING THE INTEREST FREE ADVANCES. IN THE BODY OF T HE ORDER, THE DISALLOWANCE OF INTEREST IS STATED TO BE AS DISCUSS ED IN ASSESSMENT YEAR 1993-94 AT PAGE NO. 14 TO 15. HENCE, THE OBSERVATIO N OF THE ASSESSING OFFICER CANNOT BE SAID TO BE BASED ON FACTS OR ON V ERIFICATION OF THE UTILIZATION OF BORROWED FUNDS. NO DISALLOWANCE OF I NTEREST PAID TO THE BANK IS JUSTIFIED WITHOUT REBUTTAL OF THE ASSESSEES CON TENTION THAT THE ADVANCES HAD BEEN GIVEN FROM HIS OWN CAPITAL AND INTERNALLY GENERATED FUNDS. HENCE, THE ADDITION MADE OF RS. 84,600/- ON THIS AC COUNT WAS RIGHTLY DELETED, WHICH DOES NOT NEED ANY INTERFERENCE ON OU R PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY, THE GROUND NO. (III) IS DISMISSED. 9. FOLLOWING THE CONSISTENT VIEW AS TAKEN IN THE ASS ESSMENT YEAR 1984-85 IN APPEAL NO. 688/DEL/2012), AS AFORESAID, VIDE PARA NO. 29 8.1 TO 8.3.2 OF THIS ORDER, AS AFORESAID, WE UPHOLD TH E ORDERS OF THE LD. CIT(A) ON THE COMMON AND IDENTICAL ISSUES INVOL VED IN APPEAL NO. 689 TO 692/DEL/2012 (A.YRS. 1 985-86, 1986-87, 1987-88 & 1989- 90 ) AND ACCORDINGLY, DISMISS THE GROUND NO. (I) TO (I II) RAISED IN THESE APPEALS. 10. IN THE RESULT, ALL THE 05 APPEALS FILED BY THE R EVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON07/04/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIA L MEMBER DATE 07/04/2017 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