M/s. Shri Salasar ISPAT Pvt. Ltd., Nashik V. Addl. CIT, Range - 1, Nashik

ITA 720/PUN/2013

• Counselvise Citation: 72024514 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITHA RAO
• Keywords: Income from undisclosed sources; Principle of natural justice; Documents seized
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.720/PN/2013 ASSESSMENT YEAR : 2005-06 M/S. SHRI SALASAR ISPAT PVT. LTD., PLOT NO.19 TO 24, LAKMAPUR DINDORI, NASHIK - 423213 APPELLANT PAN: AACCS4973P VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, NASHIK RESPONDENT APPELLANT BY : PRAMOD SHINGTE RESPONDENT BY : SUNITHA RAO DATE OF HEARING : 19-01-2015 DATE OF PRONOUNCEMENT : 13-02-2015 O R D E R PER SUSHMA CHOWLA, J.M: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-II, NASHIK, DATED 14.01.2013 RELATING TO ASSESSMENT YEAR 2005 -06 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.2,81,205/- ON ACCOUNT OF TRANSACTION RECORDED IN THE DOCUMENTS SEIZED BY THE EXCISE DEPARTMENT FROM SHRI SANJAY MITTAL, WITHOUT CONSIDERING THAT THE OPPORTUNITY OF HIS CROSS-EXAMINATION WAS NOT AT ALL ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.2,81,205/- ON ACCOUNT OF TRANSACTION RECORDED IN THE DOCUMENTS SEIZED BY THE EXCISE DEPARTMENT FROM SHRI SANJAY MITTAL, WITHOUT CONSIDERING THAT THE SAID DOCU MENT SHOWED SEVERAL OTHER TRANSACTIONS NOT RELATED TO THE APP ELLANT. 2 ITA NO.720/PN/2013 M/S. SHRI SALASAR ISPAT PVT. LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.2,81,205/- ON ACCOUNT OF TRANSACTION RECORDED IN THE DOCUMENTS SEIZED BY THE EXCISE DEPARTMENT FROM SHRI SANJAY MITTAL, WITHOUT CONSIDERING THAT APPELLATE AUTHOR ITY OF EXCISE DEPARTMENT HAD ALREADY DELETED THE EXCISE DEMA ND RAISED BY EXCISE DEPARTMENT IN THE CASE OF THE APPE LLANT FOR SAID TRANSACTION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.2,81,205/- ON ACCOUNT OF TRANSACTION RECORDED IN THE DOCUMENTS SEIZED BY THE EXCISE DEPARTMENT FROM SHRI SANJAY MITTAL, WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE . 5. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, AMEND, MODIFY OR ALTER ANY OF THE GROUND OF APPEAL 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE ADDITION OF RS.2,81,205/- MADE ON THE BASIS OF TRANSACTION RECORDED IN THE DOCUMENTS SEIZED BY THE EXCISE DEPARTMENT FROM SHR I SANJAY MITTAL. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF M.S. BARS MAINLY FROM M.S. SCRAPS. DURING THE YEAR UNDER CONSIDERATION, SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 11.03.2005. DURING THE COURSE OF SURVEY, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF RS.24,50,000/- RELATING TO ASSESSMENT Y EAR 2005- 06 IN ADDITION TO THE REGULAR INCOME AND THE SAID ADDITION AL INCOME WAS INCLUDED IN THE INCOME FILED FOR THE YEAR UNDER CONSIDE RATION. THE ASSESSING OFFICER RECEIVED A REFERENCE FROM THE DGIT (INV.), B OMBAY AS PER LETTER DATED 24.08.2005 WHEREIN THE INFORMATION WAS RE CEIVED FROM CEIB, NEW DELHI REGARDING SEIZURE REPORT I.E. AE-II, DATED 2 8.03.2005, FOR THE ACTION TAKEN ON SHRI SANJAY MITTAL, PROPRIETOR OF B ALAJI STEELS, MUMBAI. THE SAID PERSON HAD ADMITTED THE CLANDESTINE CLEA RANCE FROM VARIOUS PARTIES INCLUDING THE ASSESSEE FOR QUANTITY OF 27.6 07 M.T. OF STEEL VALUED AT RS.6,34,915/-. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED THAT OUT OF 27.607 M.T. M.S. BARS AS PER THE R EPORT DATED 3 ITA NO.720/PN/2013 M/S. SHRI SALASAR ISPAT PVT. LTD. 28.03.2005, SHOW CAUSE NOTICE DATED 12.11.2007 FROM DY. COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, NASHIK III DIV ISION, HAD BEEN SERVICED ONLY FOR RS.12.23 M.T. WHICH WAS VALUED AT RS.2,81,405/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT S INCE SAID CLANDESTINE SALE WAS MADE OUTSIDE THE BOOKS OF ACCOUNT, T HE WHOLE AMOUNT WAS TO BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE AS THE EXPENSES INCURRED FOR EARNING THE INCOME HAD ALREADY BEEN DEBITED BY THE ASSESSEE. THEREFORE, SUM OF RS.2,81,405/- WAS TRE ATED AS CONCEALED INCOME OF THE ASSESSEE. 5. THE CIT(A) NOTED THAT THE ADDITION HAD BEEN MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE LEDGER SEIZED FROM ONE SHRI SANJAY MITTAL OF M/S. BALAJI STEELS, MUMBAI BY CENTRAL EXCISE DEPART MENT. AS PER THE ORDER OF DY. COMMISSIONER OF CUSTOMS AND CENTRA L EXCISE, NASHIK III DIVISION, DATED 06.07.2009, INFORMATION WAS RECEIV ED BY THE PREVENTIVE DIVISION THAT THE ASSESSEE WAS SELLING CTD BARS WITHOUT PAYMENT OF EXCISE DUTY THROUGH ONE BROKER I.E. SHRI SANJA Y MITTAL. IN HIS STATEMENT, SHRI SANJAY MITTAL HAD ADMITTED THE FACTS O F CLEARING THE GOODS WITHOUT PAYMENT OF EXCISE DUTY BY RECEIVING A BROK ERAGE OF 0.5% OF THE VALUE OF TRANSACTION. IT WAS ALSO NOTED BY THE CI T(A) THAT THE STATEMENT OF SHRI SANJAY MITTAL WAS CONFRONTED TO SHRI D INESH KAUSHIK, MANAGER OF THE ASSESSEE COMPANY, WHO DENIED THE CHARGE S STATING THAT THE SAME WERE BASED ON THE STATEMENT OF THIRD PARTY. THE CIT(A) ALSO NOTED THAT THE EXCISE DEPARTMENT HAD FILED AN APPEAL BEFO RE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONE , MUMBAI AGAINST THE ORDER OF COMMISSIONER (APPEALS), CENTRAL EXCISE AND CUSTOMS, NASHIK, WHO VIDE ORDER DATED 27.01.2010 HAD ALLOWE D THE ASSESSEES APPEAL. THE CIT(A) REJECTED THE PLEA OF ASSES SEE THAT NO ADDITION COULD BE MADE ON THE BASIS OF DOCUMENTS SEIZED FR OM THIRD PARTY WITHOUT GIVING AN OPPORTUNITY TO CONFRONT THE SAID PERSON, BEING 4 ITA NO.720/PN/2013 M/S. SHRI SALASAR ISPAT PVT. LTD. NOT TENABLE IN VIEW OF THE FACTS THAT PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND EVEN THE MANAGER OF THE ASSESSEE COMPAN Y WAS CONFRONTED WITH THE SAID EVIDENCES. THE CIT(A) THUS, UPHELD THE ADDITION OF RS.2,81,405/-. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. SHRI PRAMOD SHINGTE APPEARED FOR THE ASSESSEE AND M S SUNITHA RAO APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POIN TED OUT THAT THE COMMISSIONER, CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIB UNAL VIDE ORDER DATED 27.01.2010 ON APPEAL FILED BY THE ASSESSEE, HA D HELD THAT IN THE CASE OF THE ASSESSEE, NO GOODS WERE SEIZED. IT W AS FURTHER HELD THAT HOWEVER, IN PRESENT CASE, NO GOODS HAVE BEEN SEIZED. THE ONLY BASIS FOR RAISING DUTY DEMAND IS AN ENTRY IN PRIVAT E RECORD OF A BROKER. THERE IS NO FURTHER CORROBORATION TO PROVE THAT THE ENTRY CORRESPONDS TO CLANDESTINE CLEARANCE OF GOODS FROM APPELLANTS PREMIS ES. THEREFORE, RATIO OF THIS DECISION CANNOT BE APPLIED IN THE INST ANT CASE. THE SECOND APPELLANT WAS ALSO NOT CONFRONTED BY THE DEPARTMENT D URING RECORDING OF THE STATEMENT TO ESTABLISH THE CLANDESTINE NATURE O F THE SECOND TRANSACTION AS HELD BY THE DC. ON THE CONTRARY, THE S ECOND APPELLANT HAS OUT RIGHTLY DENIED THE CLEARANCE OF THE SECOND C ONSIGNMENT OF 12.235 MT. THE CASE LAW CITED BY DC IS THEREFORE, NOT APPLIC ABLE IN THE PRESENT CASE. THUS, THE ADDITION MADE ON ACCOUNT OF THE ALLEGED CLANDE STINE ENTRY IN THE DIARY OF THIRD PARTY AND WITHOUT THERE BEING ANY OTHER EVIDENCE FOUND TO CORROBORATE THE CLEARANCE OF GOODS FRO M THE PREMISES OF THE ASSESSEE, COMMISSIONER (APPEALS), CENTRAL EXCISE & C USTOMS, HAS DELETED THE ADDITION IN THE HANDS OF THE ASSESSEE. T HE BASIS FOR MAKING THE ADDITION IN THE INCOME TAX PROCEEDINGS IS THE S AID ALLEGED 5 ITA NO.720/PN/2013 M/S. SHRI SALASAR ISPAT PVT. LTD. ENTRY IN THE DIARY OF SHRI SANJAY MITTAL. HOWEVER, WHERE THE ADDITION WAS MADE ON THE BASIS OF INFORMATION RECEIVED FROM EXCISE D EPARTMENT IN RESPECT OF THE SAID ENTRY IN THE DIARY MAINTAINED BY S HRI SANJAY MITTAL, WHICH HAS BEEN HELD TO BE WITHOUT ANY BASIS BY TH E COMMISSIONER (APPEALS), CENTRAL EXCISE & CUSTOMS, DOES NOT WARRANT THE ADDITION IN THE HANDS OF THE ASSESSEE AT THIS JUNCTU RE. HOWEVER, IN CASE THE CESTAT REVERSES THE FINDING OF THE COMMISSIONER (APPEALS), CENTRAL EXCISE & CUSTOMS, THEN THE ASSESSING OFFICER IS AT LIBERTY TO ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION IN THE HANDS OF THE ASSESSEE IN VIEW OF THE ORDER OF THE COMMISSIONER (APPEALS), CENTRAL EXCIS E & CUSTOMS PASSED IN THE CASE OF THE ASSESSEE ITSELF. THUS , THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 13 TH DAY OF FEBRUARY 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 13 TH FEBRUARY, 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1. THE ASSESSEE; 2. THE DEPARTMENT; 3. THE CIT(A)-II, NASHIK; 4. THE CIT-II, NASHIK; 5. THE DR B BENCH, I.T.A.T., PUNE; 6. GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE