Aum Aluminium Pvt.Ltd., Panchmahal V. The ACIT., Panchmahal Circle, Godhra

ITA 805/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9137 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 19-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Reassessment proceedings; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133(6); 201; 274; 13; 145(3); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AUM ALUMIN I UM PVT. LTD., 25/2, GIDC, KALOL, DIST: PANCHMAHALS, GUJARAT PAN: AAACV6218Q (APPELLANT) VS THE ACIT, PANCHMAHAL CIRCLE, GODHRA (RESPONDENT) REVENUE BY : S H RI ALOK KUMAR , SR. D . R. ASSESSEE BY: S H RI PARIN SHAH , A.R. DATE OF HEARING : 16 - 02 - 2 017 DATE OF PRONOUNCEMENT : 22 - 02 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 1999 - 2000 , AR I SES FROM ORDER OF THE CIT(A) - I, BARODA DATED 01 - 12 - 2013 IN APPEAL NO. CAB/130/12 - 13 , IN PROCEEDINGS UNDER SECT ION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 805 / A HD/20 14 A SSE SSMENT YEAR 1999 - 2000 I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE PENALTY OF RS.3,51,855/ - U/S. 271(1)(C) OF THE ACT. 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE PENALTY ON ADDITION ON ACCOUNT OF ESTIMATION OF NET PROFIT . FURTHER IN THE QUANTUM APPEAL ALSO ALLEGED SALES OUTSIDE THE BOOKS HAVE BEEN DELETED AND NET PROFIT RATIO ESTIMATED HAS BEEN APPLIED ON THE SALES BOOKED AS PER BOOKS WHERE THE N.P IS ON ESTIMATION AND HENCE PENALTY SHOULD BE QUASHED. 2.0 THE PENALTY OR DER DATED 30.03.2009 IS TIME BARRED AS IT WAS SERVED ON 07/12/2009 AFTER A REASONABLE PERIOD OF SERVING THE SAME AND HENCE PENALTY IS TIME. 3. IN THIS RETURN OF INCOME DECLARING INCOME OF RS. 3 , 40 , 519/ - WAS FILED ON 31 ST DECEMBER, 1999. SUBSEQUENTLY, T HE ASSESSING OFFICER H AS RECEIVED INFORMATION FROM DDIT . INVESTIGATION, BARODA THAT THE ASSESSEE HAD CLANDESTINELY REMOVED GOODS WITHOUT PAYMENT OF EXCISE DUTY. THIS WAS ON THE BASIS OF SHOW CAUSE NOTICE ISSUED BY THE ADDITIONAL D.G., CENTRAL EXCISE, BARO DA. THEREFORE, THE CASE OF THE AS SESSEE WAS REOPENED U/S. 147 OF THE ACT. IN T HE CASE OF THE ASSESSEE SEARCH WAS CONDUCTED BY CENTRAL EXCISE AUTHORITIES AT ASSESSEE S MANUFACTURING UNIT AT KALOL AND ITS OFFICE PREMISES AT OTHER PLACES. THE CENTRAL EXCIS E AUTHORITIES SEIZED A BOOKING REGISTER OF TRANSPORTER FROM THE OFFICE DURING THE COURSE OF SEARCH ACTION WHICH REVEALED COMPLETE RECORD OF THE GOODS DISPATCHED BY THE ASSESSEE ON DIFFERENT DATES, WEIGHT OF THE GOODS, LORRY RECEIPT, DESTINATION ETC. THE A GGREGATE VALUE OF THE GOODS CLEARED AND DISPATCHED , WORKOUT AT RS . 2 , 82 ,5 8 , 106/ - . DURING THE COURSE OF I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 3 REASSESSMENT PROCEEDINGS, THE BOOK RESULT OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER U/S. 145(3) OF THE ACT. THE AGGREGATE VALUE OF SALE DE TECTED ON THE BASIS OF INFORMATION OF CENTRAL EXCISE AUTHORITIES WAS AT RS. 2 , 82 , 58 , 106/ - AND THE SALE DECLARED AS PER BOOKS OF ACCOUNTS WAS RS. 3 , 87 , 62 , 004/ - . THE ASSESSING OFFICER ESTIMATED NET PROFIT @ 3% ON THE AGGREGATE SALE OF RS. 6 , 70 , 20 , 110/ - WHICH COMES TO RS. 20 , 10 , 603/ - . THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO RESTRICTED THE ADDITION OF ESTIMATING THE NET PROFIT AT 1.5% ON SALE OF RS. 6 , 70 , 20 , 110/ - AND WORKED OUT THE REVISED TOTAL INCOME AT RS. 10 ,05,3 00/ - . DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) R.W.S 274 OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE U/S. 274 OF ACT FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER MENTIONED THAT ASSESSEE HA D SUBMITTED THE SAME REPLY WHICH WAS SUBMITTE D DURING THE COUR SE OF A SSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND IMPOSE D MINIMUM P ENALTY OF RS. 3 , 51 , 855/ - . AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 5. I HAVE CONSIDERED THE F ACTS OF THE CASE AS WELL AS THE ASSESSMENT ORDER OF THE A.O. BEFORE DECIDING THE CASE OF THE APPELLANT ON MERIT, IT WOULD BE APPROPRIATE TO DEAL WITH ITS GROUND OF APPEAL NO. 2 WHICH IS AS UNDER: I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 4 THE PENALTY ORDER DATED 30.03.09 IS TIME BARRED AS IT IS S ERVED ON 07/12/2009 AFTER A REASONABLE PERIOD OF SERVING THE SAME & HENCE IS TIME BARRED AND HENCE NEEDS TO BE QUASHED. 5.1 THE APPELLANT AS PER ABOVE GROUND OF APPEAL HAS SUBMITTED THAT THE PENALTY ORDER DATED 30/03/2009 IS TIME BARRED AS IT IS SERVED ON IT ON 07/12/2009 WHICH IS AFTER A REASONABLE PERIOD OF SERVICING OF THE SAME. HOWEVER, THE APPELLANT HAS NOT MADE ANY SUBMISSION WITH REGARD TO THIS GROUND OF APPEAL DESPITE THE FACT THAT SEVERAL NOTICES OF HEARINGS WERE ISSUED TO IT DURING THE COURSE OF APPELLATE PROCEEDINGS. THE APPELLANT IN ITS STATEMENT OF FACTS HAS ALSO N OT MENTIONED ANYTHING WITH REGARD TO THIS ISSUE. THE UNDISPUTED FACT IS THAT THE PENALTY ORDER IN THE CASE OF APPELLANT HAS BEEN PASSED ON 30/03/2009 WHICH IS ALSO ADMITTED BY THE APP ELLANT. THE ONLY ISSUE RAISED BY THE APPELLANT AS PER ITS ABOVE GROUND OF APPEAL IS THAT THE PENALTY ORDER DATED 07/12/2009 WAS SERVED ON IT ON 07/12/2009 WHICH IS AFTER A REASONABLE PERIOD OF SERVICING THE SAME. BUT THIS ONLY GROUND OF APPEAL WHICH IS WIT HOUT ANY PROPER SUBMISSION AND EVIDENCES CANNOT LEAD TO THE CONCLUSION THAT SUCH PENALTY ORDER IS BARRED BY LIMITATION UNLESS AND UNTIL PROPER FACTS AND DOCUMENTARY EVIDENCES ARE PRODUCED IN THIS REGARD. CONSIDERING THESE FACTS, THE ABOVE GROUND OF APPEAL NO. 2 OF THE APPELLANT CANNOT BE ENTERTAINED AND THEREFORE THE SAME IS DISMISSED. THE GROUND OF APPEAL NO. 1 OF THE APPELLANT IS THAT THE ORDER PASSED BY THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX LEVYING PENALTY OF RS . 3,51,855/ - UNDER SECTION 271(1 )( C) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND IN FACTS. THE GROUND OF APPEAL NO. 1.1 OF THE APPELLANT IS THAT THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX HAS LEVIED PENALTY ON THE ADDITION MADE ON ESTIMATION BASIS I.E. NET PROFIT %. WITH REGARD THESE TWO GROUNDS OF APPEAL OF THE APPEAL, IT IS MENTIONED THAT AN INTIMATION WAS RECEIVE D FROM DDIT (INV) UNIT - 1, BARODA THAT THE APPELLANT HAD CLAND ESTINELY REMOVED GOODS WITHOUT PAYMENT OF EXCISE DUTY. THIS WAS ON THE STRENGTH OF SHOW CAUSE NOTICE ISSUED B Y ADD I. DC, CENTRAL EXCISE, BARODA - II FROM F NO. DGCEI/WZU/205/30 - 70/2002 DTD 30 - 05 - 2002. THE CASE OF THE APPELLANT FOR AY 1999 - 2000 WAS THEREFORE REOPENED U/S 147 OF THE IT ACT. IN THE CASE OF THE APPELLANT, SEARCHES WERE CONDUCTED BY CENTRAL EXCISE AUT HORITIES AT ITS MANUFACTURING UNIT AT KALOL. BESIDES, SEARCHES WERE ALSO CONDUCTED AT THE OFFICE PREMISES OF (1) TRANSPORTER, M/S. MATANGI TRANSPORT CO., HARNI, BARODA (2) VINVIV HOLDING & TRADING CO. LTD., BHIVANDI, MUMBAI AND (3) M/S. ALLIED I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 5 ALUMINIUM PV T. LTD. 440, DUNCAN ROAD, MUMBAI. THE CENTRAL EXCISE AUTHORITIES SEIZED A BOOKING REGISTER OF TRANSPORTER WHICH WAS SEIZED BY CENTRAL EXCISE AUTHORITIES AT A/3 TO PANCHNAMA DTD 21 - 04 - 2001 AND THE SAME REVEALED COMPLETE RECORDS OF GOODS DISPATCHED BY THE AP PELLANT ON DIFFERENT DATES, WEIGHT OF THE GOODS, LORRY RECEIPT NO., DESTINATION ETC. THOSE DETAILS WERE SUMMARIZED IN THE FORM OF WORK - SHEET WHICH WAS DESCRIBING COMPLETE DATA OF GOODS DISPATCHED BY THE APPELLANT. THERE WERE 116 ITEMS APPEARING IN WORK - SHE ET D - II WHICH CLEARLY INDICATED THAT THE APPELLANT HAD DISPATCHED THE GOODS MANUFACTURED BY IT TO DIFFERENT DESTINATIONS. AS PER THE WORK - SHEET D - II, THE APPELLANT HAD DISPATCHED 307231.684 KG (UPTO FEB, 1999) & 27778.462 KG (UPTO MARCH, 1999) AGGREGATING 335010.15 KG OF ALUMINIUM SECTIONS WITHOUT PAYING EXCISE DUTY. THE AGGREGATE VALUE OF SECTIONS CLEARED CLANDESTINELY AND DISPATCHED WAS WORKED OUT AT RS. 2,82,58,106/ - . 5.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE AO THAT THE BOOK RESULTS OF THE APPELLANT WAS NOT RELIABLE. AS PER THE AO THE BOOKS OF ACCOUNT DID NOT REFLECT THE AFORESAID SALES WHICH WERE MADE THROUGH DISPATCH OF GOODS WITH THE HELP OF MATANGI TRANSPORT AND AS PER WORKSHEET (WS D - II). AS PER THE AO THE BOOKS OF ACCOUN T WERE NEITHER CORRECT NOR COULD BE DEPENDED UPON COMPLETELY. AS PER THE AO THE SALES OUTSIDE BOOKS OF ACCOUNT WERE OF RS. 2,82,58,106/ - AS PER THE WORKING IN WS D - II AND DISCUSSION MADE IN PARA - 3 TO THE SHOW CAUSE NOTICE ISSUED BY HIS OFFICE ON 10 - 10 - 2006 . THE AO THEREFORE HELD THAT THE BOOK RESULTS COULD NOT B E RELIED UPON AND THIS WAS A FIT CASE TO INVOKE PROVISIONS OF SECTION 145(3) OF THE ACT. AS PER THE AO THEREFORE, NET PROFIT WAS REQUIRED TO BE ESTIMATED. AS PER THE AO THE BOOK RESULTS FOR IMMEDIATE LY PRECEDING YEAR I.E. 1998 - 99 COULD NOT BE RELIED UPON COMPLETELY, AS THERE WAS REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY DURING THAT YEAR ALSO, WHICH WAS EVIDENT FROM THE DATA PREPARED BY CENTRAL EXCISE AUTHORITIES AS PER WS D - L. SINCE THERE IS NO LOGICAL BASE EMERGING OUT OF DATA FOR NET PROFIT & GROSS PROFIT FOR EARLIER 4 YEARS, NET PROFIT WAS ESTIMATED BY THE AO AT 3% OF SALE. THE AGGREGATE VALUE OF SUCH SALES WAS BASED ON WORKSHEET D - II WHICH INDICATED THAT THERE WERE AGGREGATE SALES OF RS. 2,82 ,58,106/ - OUTSIDE BOOKS OF ACCOUNT. AS PER THE AO THE SALES DECLARED AS PER BOOKS OF ACCOUNT WERE RS. 3,87,62,004/ - AND THE SALES DETECTED DURING THE SEARCH PROCEEDINGS OF CENTRAL EXCISE WERE AT RS. 2,82,58,106/ - . AS PER THE AO THEREFORE AGGREG ATE SALES WER E AT RS. 6,70,20,110 /. ACCORDINGLY NET PROFIT WAS ESTIMATED BY THE AO @ 3% ON AGGREGATE SALES OF RS. I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 6 6,70,20,110/ - WHICH WAS COMING TO RS. 20,10,603/ - AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE. 5.3 DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IT WAS ALSO OBSERVED BY THE AO THAT THE AFORESAID PRODUCTION COULD NOT BE MADE BY THE APPELLANT WITHOUT ANY RAW MATERIAL. AS PER THE AO THE SAID RAW MATERIAL WAS ALSO PURCHASED BY THE APPELLANT OUTSIDE BOOKS OF ACCOUNT. AS PER THE AO IN ADDITION TO THE SALES DECLARED BY THE APPELLANT, IT HAD PURCHASED RAW MATERIALS OUTSIDE BOOKS OF ACCOUNT, MANUFACTURED THE ALUMINIUM SECTIONS OUTSIDE BOOKS OF ACCOUNT AND SOLD THEM OUTSIDE BOOKS OF ACCOUNT. AS PER THE AO THE INVESTMENT IN THE PURCHASE OF RAW MATERI ALS FOR PRODUCTION AND SUBSEQUENT SALE OUTSIDE BOOKS OF ACCOUNT WAS ALSO NOT DECLARED BY THE APPELLANT IN ITS REGULAR BOOKS OF ACCOUNT. AS PER THE AO THE APPELLANT HAD NOT FURNISHED ANY DETAILS IN RESPECT OF RAW MATERIAL USED FOR SUCH CLANDESTINE PRODUCTIO N. ON GOING THROUGH WORK - SHEET D - II, IT IS NOTICED BY THE AO THAT THE AVERAGE SALES MADE BY THE APPELLANT DURING THE MONTH WAS THE RANGE OF NEARLY RS.22,00,000/ - WHICH HAD BEEN ROTATED BY THE APPELL ANT FOR PRODUCTION AND SALES OUTSIDE BOOKS OF ACCOUNT. THE REFORE, RS. 15, 00,000/ - WAS CONSIDERED BY THE AO AS INVESTMENT IN RAW MATERIALS OUTSIDE BOOKS OF ACCOUNT ON ESTIMATE BASIS, WHICH WAS ADDED BY HIM TO THE TOTAL INCOME OF THE APPELLANT BEING INVESTMENT IN THE RAW MATERIAL FOR PRODUCTION OUTSIDE BOOKS OF ACC OUNT U/S 69 OF THE ACT. 5. 4 AS PER THE AO WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE COMPUTATION OF APPELLANT'S INCOME WAS MADE NOT ONLY ON THE BASIS OF CENTRAL EXCISE COMMISSIONER'S ORDER BUT ALSO ON THE BASIS OF INDEPENDENT EVIDENCE AND RECORDS AVAI LABLE WITH THIS OFFICE. AS PER THE AO THE NOTICES ISSUED TO VERIFY PURCHASES U/S 133(6) WERE RETURNED UN - SERVED IN THE CASE OF STEEL & MATTERS AND KG METAL UDYOG. AS PER THE AO THE APPELLANT HAD NO EXPLANATION TO OFFER IN RESPECT OF AFORESAID NON COMPLIANC E. AS PER THE AO THE PURCHASES CLAIMED BY THE APPELLANT WERE THEREFORE ALSO NOT RELIABLE. AS PER THE AO BESIDES, IT WAS NOTICED THAT THE APPELLANT COULD NOT CO - RELATE THE CONSUMPTION OF RAW MATERIALS AND PRODUCTION ALONG WITH NUMBER OF ELECTRICAL UNITS CON SUMED. AS PER THE AO COMPARABLE INSTANCE GIVEN BY THE APPELLANT WAS THEORETICAL AND A SELF SERVING EVIDENCE. AS PER THE AO THE PURCHASE OF RAW MATERIAL FOR PRODUCTION OUTSIDE BOOKS OF ACCOUNT WAS ALSO NOT REFLECTED IN THE REGUL AR BOOKS OF ACCOUNT. AS PER T H E AO THE PROFIT EARNED ON SALES OUTSIDE BOOKS OF ACCOUNT WAS ALSO NOT DECLARED BY THE APPELLANT. IN VIEW OF THESE FACTS THE BOOKS I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 7 RESULTS WAS REJECTED BY THE AO BY INVOKING PROVISIONS CONTAINED IN SECTION 145(3) OF THE ACT AND NET PROFIT WAS ESTIMATED BY HIM AT RS.20,10,603/ - AND INVESTMENT IN RAW MATERIAL WAS ESTIMATED AT RS. 15,00,000 / - , AS INVESTMENT IN RAW MATERIAL OUTSIDE BOOKS OF ACCOUNTS. AS PER THE AO THE TOTAL INCOME OF APPELLANT WAS ASSESSED AT RS.20,12,795/ - . ACCORDING LY PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE IT ACT WERE INITIATED BY THE AO. 5.5 THE APPELLANT FILED APPEAL BEFORE THE CIT (APPEALS) AND THE CIT (APPEAL) VI, BARODA VI DE ORDER NO. CAB /VI - 446/06 - 07 DATED 18.11.2008 DI SPOSED THE APPEAL FILED BY THE APPELLANT AND NET PROFIT WAS ES TIMATED AT 1.5% ON SALE OF RS.6,70,20,110/ - AND THE REVISED TOTAL INCOME AFTER APPEAL EFFECT ORDER DATED 07.03.2008 WAS COMING TO RS.10,07,500/ - . FRESH OPPORTUNITY OF BEING HEARD WAS GIVEN BY THE AO TO THE APPELLANT IN RESPECT OF P ENALTY PROCEEDINGS U/S 27 1(1 )(C) OF THE IT ACT VIDE THIS OFFICE LETTER DATED 16.04.2008, 05.06.2008, 24.10.2008 AND 20.12.2008. AS PER THE AO THE APPELLANT SUBMITTED HIS REPLIES VIDE HIS LETTER DATED 05.09.2007, 24.12.2008 AND 13.01.2009. THE AO DID NOT ACCEPT THE SUBMISSION OF TH E APPELLANT AND LEVIED THE PEN ALTY OF RS. 3,51,855/ - U/S 271(1 )(C) OF THE IT ACT ON THE ADDITION OF RS. 10,55,556/ - (I.E. THE ADDITION WHICH WAS CONFIRMED BY THE LD. CIT (APPEAL)). 5.6 AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IT C ANNOT BE SAID THAT THE AO HAS LEVIED THE PENALTY U/S 271(1 )(C) IN THE CASE OF APPELLANT ON THE ADDITION MADE ON ESTIMATION BASIS. THE FACTS INVOLVED IN THE CASE OF APPELLANT CLEARLY SHOW THAT IT HAD NOT MADE TRUE DISCLOSURE OF ITS SALES AND NET PROFIT THER EON. IT WAS ONLY ON THE BASIS OF INFORMATION WHICH WAS RECEIVED BY THE AO FROM THE EXCISE DEPARTMENT THAT THE CASE OF THE APPELLANT WAS RE - OPENED AND ADDITION WAS MADE BY THE AO AFTER MAKING INDEPENDENT INQUIRY. THE FINDINGS OF THE AO CLEARLY SHOW THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT WAS NOT RELIABLE AT ALL AND THEREFORE AO WAS LEFT WITH NO OPTION BUT TO ESTIMATE THE PROFIT. THIS IS NOT THAT THE ADDITION IN THE CASE OF APPELLANT HAS BEEN MADE MERELY ON ESTIMATION BASIS AND THEREFORE PENALTY LEVIED BY THE AO CANNOT BE SUSTAINED. HERE IN THE CASE OF APPELLANT CERTAIN INFORMATION HAS BEEN RECEIVED BY THE AO FROM THE EXCISE DEPARTMENT AND AFTER MAKING CERTAIN INQUIRY ON THE BASIS OF SUCH INFORMATION THE PROFIT OF THE APPELLANT HAS BEEN ESTIMATED AFTER REJ ECTING THE BOOKS OF ACCOUNT. FURTHER BASED ON SUCH FINDINGS, THE PENALTY HAS BEEN LEVIED BY THE AO. THE LD. CIT (A) WHILE DECIDING THE ISSUE IN THE CASE OF APPELLANT IN HIS ORDER IN I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 8 APPEAL NO. CAB/VI - 448/06 - 07 DATED 28/01/2008 AT PARA 4,2 HAS CLEARLY OBSER VED THAT THE BOOKS OF THE APPELLANT CANNOT BE R ELIED UPON AS THE EXCISE SEARCH REVEALED THE SALES IN ITS CASE OUTSIDE BOOKS OF A CCOUNT AT 4.3 OF HIS ABOVE REFERRED ORDER, THE LD. CIT (A) HAS FURTHER OB SERVED THAT THE APPELLANT WAS FOUND SUPPRESSING THE SAL ES AND ITS BOOKS, OF ACCOUNTS DID NOT REFLECT CORRECT STATE OF AFFAIRS OF ITS BUSINESS. THESE FINDINGS OF THE LD. CIT (A) ALSO CLEARLY SHOW THAT THE PROFIT WAS NOT DISCLOSED BY THE APPELLANT TRULY AND FULLY FOR THE YEAR UNDER CONSIDERATION. THUS IT CAN BE SAID THAT EXPLANATION (1) BELOW THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS APPLICABLE IN THE CASE OF APPELLANT. CONSIDERING ALL THESE FACTS, I HOLD THAT THE AO HAS CORRECTLY LEVIED THE PEN ALTY OF RS. 3,51,855/ - U/S 271(1 )(C) OF IT ACT AND THEREFORE THE SAME IS CONFIRMED. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LEARNED COUNSEL CONTENDED BEFORE US THAT THE CO - ORDINATE BENCH OF ITAT, AHMEDABAD IN THE CASE OF ASSESSEE VIDE ITA NO. 1143, 2131 & 2132/AHD/2008 FOR ASSESSMENT YEAR 1999 - 200 0 ORDER DATE D 14 - 06 - 2013 REGARDING QUANTUM ADDITION HAS DECIDED THAT NO ADDITION ON ACCOUNT OF ESTIMATION OF PROFIT ON ACCOUNT OF UNACCOUNTED SALES CAN BE MADE BECAUSE THE DECISION OF THE EXCISE AUTHORITY ON THE CHARGE OF CLANDESTINE REMOVAL OF GOODS WAS SET ASIDE BY THE CE S TAT IN THE CASE OF THE ASSESSEE. THEREFORE, HE SUBMITTED THAT PENALTY IS REQUIRED TO BE DELETED ON THE BASIS DECISION OF CESTAT. ON OTHER HAND, DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF ITAT CO - ORDINATE BENCH ON THE QUANTUM ADDITION IN WHICH IT WAS HELD THAT NO ADDITION ON ACCOUNT OF ESTIMATION OF PROFIT ON ACCOUNT OF UNACCOUNTED SALES I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 9 CAN BE MADE IN V IEW OF THE DECISION OF CESTAT, THE RELEVANT PART OF THE DECISION IS REPRODUCED AS UNDER: - 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAD REJECTED THE BOOK RESULTS AND THEREAFTER ES TIMATED THE PROFIT OF 3% ON THE ENTIRE SALES OF RS. 6.7 CRORE WHICH INCLUDED THE SALES DECLARED AS PER BOOKS OF ACCOUNT OF RS. 3.83 CRORE AS WELL AS THE UNACCOUNTED SALES OF RS. 2.8 CRORES. THE NET PROFIT ESTIMATION WAS REDUCED TO 1.5% OF THE TOTAL SALES BY CIT(A). THE ASSESSEE HAS PLACED ON RECORD, THE DECISION OF CESTAT IN HIS CASE (IN APPEAL NO. E/5971600 OF 2007) WHEREIN THE CHARGE OF CLANDESTINE REMOVAL OF GOODS WERE SET ASIDE BY THE TRIBUNAL. NOTHING HAS BEEN BROUGHT BEFORE US TO DEMONSTRATE THAT THE AFORESAID ORDER OF EXCISE TRIBUNAL HAS BEEN SET ASIDE OR OVERRULED BY HIGHER AUTHORITIES. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT NO ADDITION ON ACCOUNT OF ESTIMATION OF PROFIT ON ACCOUNT OF UNACCOUNTED SALES CAN BE MADE IN THE PRESENT CASE. W E THUS DIRECT THAT THE NET PROFIT BE ESTIMATED AT 1.5% ON THE SALES DECLARED AS PER BOOKS (I.E. ON SALES OF RS. 3,87,62,004/ - ) THUS THE ASSESSEE GET PARTIAL RELIEF ON THIS GROUND. 5.1 IN VIEW OF THE ABOVE MENTIONED FACTS AND FINDINGS, WE NOTICED THAT QU ANTUM ADDITION ON THE BASIS OF WHICH THE PENALTY WAS LEVIED HAD BEEN SET ASIDE OR OVERRULED BY THE HIGHER AUTHORITY. WE H A VE ALSO NOTICED THE DECISION OF THE COORDINATE BENCH STA TING THAT NO ADDITIO N ON ESTIMATION OF PROFIT ON ACCOUNT OF UNACCOUNT ED SALES CAN BE MADE IN THE LIGHT OF THE DECISION OF THE EXCISE AUTHORITY CESTAT BY WHICH THE CHARGE OF CLANDESTINE REMOVAL OF GOODS WAS SET ASIDE IN THE CASE OF THE ASSESSEE. A FTER CONSIDERING THE ABOVE MENTIONED FACTS AND LEGAL FINDINGS WE CONSIDER THAT LEVYING OF PENALTY AT T HIS STAGE HAS BECOME INFRUCTUO U S , THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE . I.T.A NO. 805 /AHD/20 14 A.Y. 1999 - 2000 PAGE NO AUM ALUMIN I UM PVT. LTD VS. ACIT 10 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 22 - 02 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 22 /02 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,