ACIT, Alwar V. M/S SUPREME CYLINDERS LTD., Alwar

ITA 9/JPR/2011

• Counselvise Citation: 923114 RSA 2011
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 05-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: R N GOYAL
• Keywords: Reopening of assessment; Loose papers; Principle of natural justice; Corroborative evidences; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 147; 148

Judgement Text

1 ITA 9(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 9/JP/2011 ASSTT. YEAR : 2001- 02. THE ACIT, CIRCLE-2, VS. M/S. SUPREME CYLINDERS L TD., ALWAR. A-146K, INDUSTRIAL AREA, BHIWADI, ALWAR. (APPELLANT) (RESPONDENT) C.O. NO. 25/JP/2011 ( ARISING OUT OF ITA NO. 9/JP/2011 ) ASSTT. YEAR : 2001-02. M/S. SUPREME CYLINDERS, VS. THE ACIT, CIRCLE-2, BHIWADI, ALWAR. ALWAR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI VED JAIN & SHRI R N GOYAL DATE OF HEARING : 19.08.2011 DATE OF PRONOUNCEMENT : 09.09.2011 ORDER DATED : 09/09/2011. PER R.K. GUPTA, J.M. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE DEPAR TMENT :- 1) THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 16,97,475/- MADE ON ACCOUNT OF INFLATED PURCHASES. 2 2) THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITIONS OF RS. 1,12,82,308/- & RS. 5,61,198/- MADE ON ACCOUNT OF SUPPRESSION OF SA LE OF SCRAP AND ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF SCRA P RESPECTIVELY. 3) THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF COMMISSION EXPENSES OF RS. 4,60,502/- IGNORING THE FACT THAT T HE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION WITH REGARD TO SUCH PAYMENT. 4) THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF REIMBURSEMENT OF FREIGHT EXPENSES OF RS. 6,94,186/- IGNORING THE FACT THAT THE ASSESSEE DID NOT DELIVER SCRAP ON FOR BASIS AND THE FREIGHT WAS BORNED BY THE PURCHASER PARTIES. 2. IN CROSS OBJECTION THE ASSESSEE IS OBJECTING IN CONFIRMING THE ACTION OF THE AO IN ISSUING NOTICE UNDER SECTION 148. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LIMITED COMPANY ENGAGED IN MANUFACTURING OF LPG CYLINDERS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT PERIOD DECLARING INCOME, WHICH WAS ASSESSED U/S 143 (3) OF THE ACT AFTER PROPER SCRUTINY AND A DETAILED REASONED ORDER WAS PASSED VIDE ORDER DATED 28.03.2003 . THE INCOME WAS ASSESSED AT RS. 26932932/- AS AGAINST THE DECLARED INCOME OF RS. 2,63,05,760/- . A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF APPELLANT AT BHIWADI AND HEAD OFFICE AT DELHI ON 22-11-2004 BY THE INVESTIGA TION WING, JAIPUR. DURING THE COURSE OF SURVEY CERTAIN LOOSE PAPERS, BILLS OF PURCHASES OF GOODS WERE FOUND WHICH WERE IMPOUNDED. 4. SUBSEQUENT AFTER THE RECEIPT OF INTIMATION FROM INVESTIGATION WING, JAIPUR THE AO INITIATED THE PROCEEDINGS FOR REOPENING THE ASSESSM ENT U/S 147 OF THE ACT. IT WAS INFORMED BY THE ADIT (INV.), JAIPUR THAT DURING THE COURSE O F SURVEY PURCHASE BILLS FOR THE RELEVANT 3 PERIOD FROM M/S LAXMI STEELS DELHI AND FARIDABAD , RK STEELS AND RK STEELS TRADING CORPORATION DELHI WERE FOUND. THE AO OBSERVED THAT THESE BILLS DO NOT CONTAIN ANY STAMP OF SALES TAX CHECK POST AND WEIGHMENT SLIP OF BHIWADI. FURTHER, SUCH PURCHASES DID NOT FIND PLACE IN THE MATERIAL INWARD REGISTER MAIN TAINED AT THE FACTORY GATE OF THE ASSESSEE AND GOOD RECEIPT REGISTER. THEREFORE, KEEP ING IN VIEW THESE FACTS AND OTHER IRREGULARITIES NOTED AT THE TIME OF SURVEY THE AO I NITIATED THE PROCEEDINGS U/S 147 OF THE ACT AFTER RECORDING REASONS IN THIS REGARD. THE AO ALSO OBTAINED THE APPROVAL FROM THE CIT, ALWAR BEFORE ISSUE OF NOTICE U/S 148 OF THE A CT. 5. AFTER CONSIDERING THE SUBMISSIONS IN RESPECT TO REOPENING OF THE ASSESSMENT, THE LD. CIT (A) FOUND THAT REOPENING OF THE ASSESSMENT WAS CORRECT. ACCORDINGLY HE CONFIRMED THE REOPENING OF ASSESSMENT. HOWEVER, ON MERIT THE LD. CIT (A) AFTER DISCUSSING THE ISSUE IN DETAIL DELETED THE VARIOUS ADDITIONS MADE BY AO. THE ADDITIONS DELETED BY LD. CIT (A) ARE AGITATED HERE BEFORE THE TRIBUNAL BY THE DEPARTMENT ARE DISPOSED OFF IN THE FOLLOWING MANNER. 6. THE FIRST ISSUE IS AGAINST DELETING THE ADDITION OF RS. 16,97,475/- ON ACCOUNT OF INFLATED PURCHASES. THE ASSESSING OFFICER BY GIVING THE FOLLOWING REASONS MADE THE IMPUGNED ADDITION :- 4.1 INFLATED PURCHASES IN THE ASSESSEE`S CASE PROCEEDINGS U/S 147 HAVE BEE N INITIATED WHEREIN THIS WAS ON OF THE REASONS THAT THE ASSESSEE HAS SH OWN INFLATED PURCHASES TO THE EXTENT OF RS. 21,15,396/-. THE INFLATED PURC HASES HAVE BEEN SHOWN FROM THE FOLLOWING PARTIES AND THE RELEVANT FACTS A RE DISCUSSED HEREUNDER:- 4 4.1.1 M/S LAXMI STEELS, FARIDABAD RS. 16,78,191/- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S THIS ISSUE HAS BEEN DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE O F THE ASSESSEE. ON PERUSAL OF PAGE NO. 34 OF EXHIBIT A-22 IT IS FOUND THAT THIS PAGE SHOWS ACCOUNT OF LAXMI STEELS, FARIDABAD WHEREIN THERE IS OPENING BALANCE OF RS. 11,74,751/- AND IN ADDITION TO THAT THERE ARE E NTRIES FOR PURCHASE BILLS AS DETAILED BELOW:- OPENING BALANCE RS. 11,74,751/- 20.4.2000 RS. 3,22,897/- 21.4.2000 RS. 3,41,279/- 21.4.2000 RS. 2,85,527/- 21.4.2000 RS. 2,84,416/- RS. 24,35,022/- CLOSING BALANCE NIL AS PER ABOVE WORKING THE INFLATED PURCHASES SHOWN IN THE CURRENT YEAR COMES AT RS. 24,35,022-11,74,751= RS. 12,60,271/-. IN THE REASONS RECORDED INFLATED PURCHASES HAVE BEEN SHOWN FROM LA XMI STEEL, FARIDABAD OF RS. 16,78,191/- WHICH IS NOT CORRECT A ND ACCORDINGLY THE FIGURE OF RS. 12,60,271/- IS BEING TAKEN. 4.1.2 M/S LAXMI STEELS, DELHI-RS. 2,85,400/- 4.1.3 M/S R. K. STEELS TRADING CO RPN., DELHI-RS. 18,282/- 4.1.4 M/S R. K. STEELS, DELHI R S. 1, 33,522.95/-. TOTAL PURCHASES SHOWN FROM THE ABOV E PARTIES COMES TO RS. 16, 97,475/- IN RESPECT OF THE ABOVE PURCHASES SHOWN THE ASSESSE E HAS SUBMITTED THAT THE PURCHASES ARE ACTUAL AND THE OBSERVATIONS AS ME NTIONED IN THE REASONS ARE NOT CORRECT. 5 7. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT ( A) WHICH HAS BEEN TABULATED AT PAGES 10 TO 13. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 16,97,475/- ON ACCOUNT OF INFLATED PURCHASES. THE FINDINGS HAVE BEEN RECORDED BY LD. CIT (A) IN THIS RESPECT ARE RECORDED IN PARA 6.3 AT PAGES 13 & 14 OF HIS ORDER WHICH ARE AS UNDER :- 6.3 : I HAVE CAREFULLY CONSIDERED THE FINING BY AO AND SUBMISSIONS OF LEARNED AR , THE ORIGINAL ASSESSMENT RECORDS AND LOOSE PAPERS IMPOUNDED , COPIES OF BILLS FOR PURCHASES, FILED WI TH PAPER BOOKS , COPY OF ACCOUNT OF THE PARTIES , STOCK REGISTER AND OTHE R IMPOUNDED BILLS AND VOUCHERS. IT REVEALS THAT THE LEARNED AO HAS NOT TAKEN CARE T O VERIFY WHAT HE HAS STATED IN HIS ORDER . APART FROM THE MISTAKES APPAR ENT FROM THE REASONS OF RE OPENING , HE HAS NOT GONE THROUGH THE BILLS WHICH CONTAIN THE FULL PARTICULARS IN RESPECT OF EXCISE DUTY, SALES TAX , STORES INSPECTION RECORD , ENTRIES IN THE STOCK REGISTER AND ALL THE MATERIAL NOT BEING HR/ LPG SHEETS. HE HAS NOT BROUGHT ON RECORD ANY ADVERSE MA TERIAL . HE HAS NEITHER ISSUED ANY SUMMONS TO THE PARTIES HE HAS A LSO NOT RECORDED THE FINDINGS FOR DISBELIEVING THE CONFIRMATION SUBMITT ED BY RK STEEL/ RK TRADING CORPORATION AND PAYMENTS MADE TO THE PARTIE S BY ACCOUNT PAYEE CHEQUE IN NORMAL COURSE OF BUSINESS . HE HAS NOT TAKEN CARE TO EXPLAIN WHERE FROM THE FIGURE OF RS. 285400/- TAKE N IN CASE OF M/S LAXMI STEELS DELHI IS BORN OUT INSPITE OF OBJECTION S OF THE ASSESSEE . HE HAS ALSO NOT LOOKED INTO THE STATEMENT OF ACCOUNT S UBMITTED FOR R.K. STEELS, DELHI THAT AN AMOUNT OF RS. 55045.05 IS A CREDIT TO THE ACCOUNT OF RK STEEL ON ACCOUNT OF CANCELLATION OF CHEQUE AN D PURCHASES ARE NOT TO THE TUNE OF RS. 133522.95 BUT TO THE TUNE OF RS. 81477.90 AND THAT 6 TOO CONTAIN THE PURCHASE OF 55045.05 ON ACCOUNT OF PURCHASES OF MACHINERY SPARES , THE BILLS OF WHICH BEAR THE STAM P OF CHECK POST AND SALE IS AGAINST C FORM . I HAVE PERSONALLY VERIFIED FROM THE IMPOUNDED BOOKS WITH THE PRESENT AO. IT IS FOUND THAT PURCHAS ED FOR RS. 3,41,279/- ON 21.04.2000 IS PLACED AT PAGE-13 OF ANNEXURE A-3, PURCHASED OF RS. 2,85,527/- ON 21.04.2000 IS PLACED AT PAGE-20 OF AN NEXURE A-3, PURCHASED FOR 2,84,416/- ON 21.04.2000 IS PLACED ON PAGE-27 ANNEXURE A-3 AND PURCHASED FOR 26,152/- DATED 30.04.2000 IS PLACED ON PAGE NO. 222 OF ANNEXURE A-1 WHICH DO NOT CONTAIN ALL THE DE FICIENCY POINTED OUT BY THE AO ON THE BASIS OF INSPECTORS REPORT. IT IS PRINCIPLE OF NATURAL JUSTICE THAT ANY INQUIRY EITHER FROM THE DEPARTMENT OR OUT SIDE AGENCY, IS USED AGAINST THE ASSESSEE THE AUTHORITY HAS TO GIVE REASONABLE OPPORTUNITY ON IT WHICH HAS NOT BEEN COMPLIED BY TH E AO. PURCHASE FOR RS. 3,22,897/- DATED 20.04.2000 , FOR WHICH THE AR SUBMITTED THE PHOTOCOPY OF THE PURCHASE BILLS WHERE ALL THE FORMA LITIES OF OTHER LAW HAS BEEN MET BY THE ASSESSEE. FURTHER THE ASSESSEE ALSO PRODUCED THE PHOTOCOPY OF BILLS FOR PURCHASE OF RS. 2,85,400/- ( 2,85,800/-) IN CASE OF LAXMI STEEL DELHI AND RS. 18,282/- IN CASE OF R.K. STEEL TRADING CORPORATION, DELHI WHICH HAS ALL AUTHENTICATED INGR EDIENT. THE LD. AO EVEN HAVE ADDED 1,33,522.95 IN CASE OF R.K.STEEL, D ELHI WHICH INCLUDES CANCELLATION OF CHEQUE FOR RS. 55,045.05, DOUBLE AD DITION OF PURCHASE FOR RS. 18,282/- BY THE AO. THIS ACCOUNT ONLY CONTA INS REMAINING FOUR BILLS OF PURCHASE OF SPARE PARTS FOR RS. 60,195/- F OR WHICH THE LD. AR PRODUCED THE PHOTOCOPY OF PURCHASE BILLS AND CONFIR MATION FROM THE PARTY BEFORE THE AO AT THE TIME OF RE-ASSESSMENT WH ICH HAD NOT BEEN CONSIDERED BY THE LD. AO AT THE TIME OF FRAMING RE- ASSESSMENT. THE SAME HAS ALSO BEEN VERIFIED BY ME AND FOUND THAT AL L THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. IT APPEARS THAT THE LD. AO HAD NOT APPLIED HIS MIND AT THE TIME OF RE-FRAMING THE ASSE SSMENT ORDER. THE LEARNED AO WHILE DISCHARGING HIS FUNCTIONS HAS NOT LOOKED QUANTITATIVE RECONCILIATION OF THE STEEL CONSUMED AND PRODUCTION MADE WHICH 7 CONTAIN IN THE MAIN BODY OF ORIGINAL ASSESSMENT ORD ER. HE HAS NOT POINTED OUT ANY DISCREPANCY IN THE QUANTITATIVE REC ONCILIATION. LOOKING TO THE TOTALITY OF FACTS AS MENTIONED ABOVE ,THE ADDITION MADE BY LEARNED AO AT RS. 16,97,475/- IS NOT WARRANTED. THEREFORE, THE ADDITION IS DELETED.THE ASSESSEE GETS RELIEF OF RS. 16,57,746/-. 8. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 9. THE LD. D/R PLACED STRONG RELIANCE ON THE ORDER OF THE AO, PART OF THE ORDER WAS READ ALSO. ACCORDINGLY HE SUBMITTED THAT THE LD. CI T (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 10. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF LD. CIT (A) AND IT WAS SUBMITTED THAT THE LD. CIT (A) H AS APPRECIATED ALL THE FACTS IN RIGHT PERSPECTIVE AND, THEREFORE, THE ORDER OF LD. CIT (A ) IS LIABLE TO BE CONFIRMED. IT WAS ALSO SUBMITTED THAT FOR ASSESSMENT YEAR 1999-2000 ALSO S IMILARLY THE CASE WAS REOPENED AND ADDITIONS WERE MADE ON ACCOUNT OF PURCHASES, WHICH HAVE BEEN DELETED BY THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO . 560/JP/2007 AND ITA NO. 513/JP/2007 VIDE ORDER DATED 26.10.2007. ATTENTION OF THE BENCH WAS DRAWN ON RELEVANT PARA OF THE ORDER OF THE TRIBUNAL. 11. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) AND ALSO THE ORDER OF THE TRIBUNAL, WE FIND THAT LD. CIT (A) HAS GIVEN A FIND ING OF FACT WHICH HAS BEEN REPRODUCED SOMEWHERE ABOVE IN THIS ORDER. THE LD. CIT (A) HAS EXAMINED EACH AND EVERY FACT OF THE CASE BY VERIFYING PERSONALLY FROM THE IMPOUNDED BOO KS OF ACCOUNT AND THEREAFTER IT WAS FOUND THAT NO ADDITION CAN BE MADE ON ACCOUNT OF IN FLATED PURCHASES. WE FURTHER NOTED THAT FOR ASSESSMENT YEAR 1999-2000 THE CASE OF THE ASSESSEE WAS REOPENED IN VIEW OF 8 PROVISIONS OF SECTION 147/148 AND ADDITIONS ON ACCO UNT OF PURCHASES WERE ALSO MADE. AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL FOUND THAT THE AO AND LD. CIT (A) WAS NOT JUSTIFIED IN MAKING AND CONFIRMING THE ADDITION ON ACCOUNT OF INFLATED PURCHASES. ENTIRE ADDITION MADE BY AO WHICH WAS CONFIRMED BY L D. CIT (A) WAS DELETED BY THE TRIBUNAL. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE HOLD THAT THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY AO. ACC ORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A). 12. SECOND ISSUE IS IN RESPECT OF DELETING THE ADDI TION OF RS. 1,12,82,308/- AND RS. 5,61,198/- MADE ON ACCOUNT OF SUPPRESSION OF SALE O F SCRAP AND ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF SCRAP RESPECTIVELY. 13. THE AO MADE THE IMPUGNED ADDITION BY RECORDING THE FOLLOWING REASONS :- IN THIS CASE IT WAS FOUND THAT THE ASSESSEE COMPAN Y HAS SHOWN SALES OF SCRAP AMOUNTING TO RS. 137,60,422/-. IT WAS ALSO OB SERVED THAT IN THE PRECEDING YEAR I.E 1999-2000 SCRAP OF 779.989 MT WA S SOLD @ 5800/- PMT AS AGAINST MARKET RATE OF RS. 10700 PMT AND THE BALANCE AMOUNT THEREOF WAS TAKEN IN CASH AS WAS DONE IN PAST ALSO. DURING THE COURSE OF SURVEY OPERATION ON 22-11-2004 CERTAIN LOOSE PAPER WERE FOUND AND IMPOUNDED WHEREIN IT WAS FOUND THAT THE ASSESSEE CO MPANY IS SELLING SCRAP AT HIGHER RATE BUT THE BILLING WAS MADE AT TH E LOWER RATE. THE DIFFERENCE IN THE BILLING PRICE AND ACTUAL PRICE WA S TAKEN IN CASH. SIMILAR ENTRIES WERE ALSO FOUND IN SUBSEQUENT YEAR I.E. FY 2003-04 AND 2004-05 WHICH CLEARLY INDICATES THAT THE ASSESSEE C OMPANY IS FOLLOWING THE PRACTICE OF UNDER INVOICING THE SCRAP SOLD AND RECEIVING CASH WHICH NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. THE AR OF THE ASSESSEE WAS ASKED TO FURNISH HIS EXPLANATION ON THE ABOVE ISSUE . IN HIS SUBMISSION THE AR HAS POINTED OUT THAT THERE IS MISTAKE IN CAL CULATION OF UNDERSTATED PERCENTAGE MENTIONED IN THE REASONS REC ORDED FOR REOPENING 9 OF THE CASE WHEREIN IT IS MENTIONED THAT THE UNACCO UNTED MONEY OF 55% WAS TAKEN. ALSO OBJECTED FOR TAKING SALE PRICE OF R S. 10700. ALSO SUBMITTED THAT SIMILAR CASE OF THIS TRADE ARE SHOWI NG LESSER RATES OF SCRAP SALE. ASSESSEES SUBMISSION IN DETAIL HAS BEEN CONSIDERED AND ALSO THE DETAILS IN RESPECT OF SALE OF SCRAP HAVE BEEN CONSIDERED. I N THE ASSESSEES CASE DURING THE COURSE OF SURVEY OPERATION CERTAIN INCRI MINATING DOCUMENTS WERE FOUND WHICH HAVE ESTABLISHED THAT THE SCRAPE W AS SOLD AT 10700 PMT OR MORE THAN THAT DURING THE YEAR PRIOR TO THE YEAR UNDER CONSIDERATION AS WELL AS IN SUBSEQUENT PERIODS ALSO . ACCORDING IT WILL BE IN THE FITNESS OF THINGS THAT AT LEAST THE ASSESSEE HAS SOLD SCRAP AT RS. 10700 PMT AS AGAINST DISCLOSED RATE OF 5800 PMT AND THE DIFFERENCE WAS TAKEN IN CASH WHICH IS NOT ACCOUNTED FOR. IN THE ASSESSEES CASE WHILE RECORDING REASONS FOR REOPENING OF THE CASE THE VALUE OF SCRAP SOLD TAKEN AT RS. 13760422/- AND ON VERIFICATION FROM FINAL ACCOUNTS IT IS FOUND THAT THE SCRAP SOLD IS O F RS. 15365480/- . FURTHERMORE IN THE CONCLUDING PART OF THE RELEVANT PARA THE AO OBSERVED THAT THE UNDERSTATEMENT OF SCRAP SOLD WAS TO THE TUNE OF RS. 55% I.E. THE DIFFERENCE OF 10700 AND 5800. IT IS FO UND THAT THIS PERCENTAGE IS NOT CORRECT AND UNDERSTATEMENT IS TO THE EXTENT OF 50.42% OF THE ACTUAL SALE PRICE OR IN REVERSE IT MAY BE TA KEN AS UNDERSTATEMENT 4900/- PMT FOR CALCULATING UNDERSTATED VALUE. THE A SSESSEES MAIN OBJECTION REGARDING CALCULATION MISTAKE IS PARTLY A CCEPTABLE AND ACCORDINGLY THE SAME IS ACCEPTED. IN VIEW OF ABOVE DETAILED DISCUSSION THE UNDERSTATE D VALUE OF SCRAP COMES AT RS. 2302.512 X 4900 = 11282308/-. ACCORDIN GLY I HAVE COME TO THE CONCLUSION THAT THE ASSESSEE HAS SUPPRESSED SALE OF MS SCRAP TO THE TUNE OF RS. 1128230. ACCORDINGLY A SUM OF RS. 1 1282308/- IS TREATED AS UNRECORDED SALE AND ADDED TO THE TOTAL I NCOME. 10 14. DETAILED SUBMISSIONS WERE MADE BEFORE LD. CIT ( A) WHICH ARE RECORDED IN PARA 7.2 AT PAGE 16 OF THE ORDER OF LD. CIT (A) AS UNDER :- 7.2 THE LEARNED AR HAS MADE SUBMISSIONS AND FILED PAPER BOOK . THE MAIN CONTENTION MADE BY HIM THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED C OMPREHENSIVE DETAILS AND RECORDS IN RESPECT OF SALE OF SCRAP WHI CH ARE AS FOLLOWS: A) VIDE PARA 3 OF THE QUARRY LETTER DATED 2.01.200 3 THE LEARNED AO HAS ASKED THE DETAILS OF SCRAP , COMMISSION PAID ON SCRAP . SAME WAS EXAMINED IN DETAILS AND THE PARTICULARS WERE FU RNISHED TO HIM IN RESPECT OF GENERATION OF SCRAP , SALE OF SCRAP A LONGWITH THE BILLS RAISED ON THE PARTIES , CLOSING STOCK OF SCRAP AND VALUATION THEREOF . THE COPY OF ACCOUNT CONFIRMATION OF THE PARTIES W ERE ALSO SUBMITTED ALONGWITH THEIR PAN , ADDRESS FOR TEST CH ECK , WHICH WERE AS FOLLOWS : 1. OM ENGG INDSUTRIES 2. RABY CASTINGS PVT LIMITED 3. SETH ALLOYS PVT LIMITED B) DURING REASSESSMENT PROCEEDINGS FOR AY 1999-2000 , THE ASSESSEE HAS SUBMITTED THE BILLS OF VARIOUS OTHER S CRAP GENERATING AND SELLING UNITS AND ALSO PRODUCED THE SCRAP TRADE R FOR DEPOSITION BEFORE AO IN REMAND PROCEEDINGS . THE ATTENTION WAS ALSO DRAWN AT RATES OF SCRAP PREVAILING WHICH WERE QUOTED IN E CONOMIC TIMES . COPY OF THOSE BILLS IN WHICH RATES CHARGED ARE LO WER OR EQUAL TO THE COMPANY WERE PLACED ON RECORD IN THE PAPER BOO K . C) NO LOOSE PAPER WAS THERE INDICATING THE RATE OF 10,700/- PER MT. THERE IS NO BASIS FOR TAKING THE RATE OF 10,700 /-EXCEPT GUESS WORK. 11 D) THE ISSUE HAS BEEN WELL EXAMINED BY THE LEARNED AO IN REMAND PROCEEDINGS FOR AY 1999-2000, BY LEARNED CIT APPEAL IN APPEAL PROCEEDINGS. THE ADDITION MADE HAS BEEN DELETED. ON AN APPEAL BEFORE ITAT BY THE DEPT, THE APPEAL HAS BEEN DISMIS SED AND ORDER OF CIT HAS BEEN UPHELD. E) THE BILLS OF THE PARTIES TO WHOM THE SCRAP HAS B EEN SOLD IS WERE IN CUSTODY OF AO . A REQUEST WAS MADE TO SUMMON AN Y OF THE PARTY FOR DEPOSITION IN THIS REGARD FOR RATES CHARG ED FORM THEM. THE NEITHER DURING THE DISPOSAL OF OBJECTIONS NOR DURIN G ASSESSMENT PROCEEDINGS SUMMONED ANY PARTY. F) THE COMPANY HAS SOLD THE SCRAP AT BEST MARKET RA TES, THE RATES ARE VERIFIABLE FROM THE ASSESSMENT RECORDS OF OTHER ASSESSEE IN YOUR CIRCLE, BUYING/SELLING THE SCRAP. G) THE SALE OF SCRAP WAS SUBJECT TO LEVY OF EXCISE DUTY AND SUPERVISION OF EXCISE AUTHORITIES IN RESPECT OF PRI CING AND QUANTITY BOTH. THE ASSESSEE ALSO FILED CONFIRMATIONS FROM FEW PART IES WITH THEIR PAN AND THE BILLS OF OTHER MANUFACTURING ENGAGED IN SIMILAR TRADE , WHICH ARE PLACED ON RECORD . THE RATE CHARGED BY TH E ASSESSEE WAS @ RS. 5800/- PER MT BEFORE EXCISE . AFTER EXCISE TH E RATE WORKS OUT TO RS. PER MT . ON COMPARISON THE RATES CHARGE D BY THE ASSESSEE ARE BETTER. 15. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIO NS AND PERUSING THE MATERIAL ON RECORD AND ALSO TAKING INTO CONSIDERATION THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 1999-2000 AND ALSO TAKING INTO CONSIDERATION THE DE CISION OF TRIBUNAL FOR ASSESSMENT YEAR 1999-2000 (SUPRA) DELETED THE ADDITION MADE BY AO. FINDINGS OF LD. CIT (A) IN RESPECT 12 TO DELETION OF ADDITION OF RS. 1.12 CRORES OR ODD H AVE BEEN RECORDED IN PARA 7.3 AT PAGES 16 TO 18 ARE AS UNDER :- 7.3(A) ON PERUSAL OF ASSESSMENT RECORD , SUBMI SSION OF THE ASSESSEE AND EVIDENCE PRODUCED BY THE ASSESSEE, IT HAS BEEN NOTICED THAT THE LEARNED AO HAS NOT COME OUT ANY EVIDENCE TO SUPPORT THE PRICE OF RS. 10700/- ASSUMED BY HIM . THERE ARE LOT OF ERRORS IN THE REASONS FOR REOPENING AND CONTRADICTIONS. THE CALCULATION OF RS . 11282308/- IS ARBITRARY , WHICH HAS BEEN ARRIVED AT WITHOUT CONSI DERING THE ELEMENT OF EXCISE DUTY. IN THE REASONS RECORDED BY HIM HE HAS TAKEN THE FIGURE OF RS. 6673.35 PER MT , BY DIVIDING THE FIGURE OF 15365480/- BY QU ANTITY OF 2302.512 MT , BUT WHILE MAKING THE ASSESSMENT HE HAS TAKEN T HE RATE OF 5800/- FOR THE REASONS REFERRED FOR AY 1999-2000. THE AOS AC TION IS NOT JUSTIFIABLE AS TO THE FACTS WHILE WORKING OUT THE F IGURE OF RS. 11282308/- .IT SHOWS NOT APPLYING THE MIND BY AO. MOREOVER HE HAS NOT COME OUT WITH ANY SUPPORTING EVIDENCE OF ASSESSEE SELLING TH E SCRAP @ RS. 10700/- PER MT. HE HAS NOT KEPT IN MIND THAT SALE IS SUBJEC T TO SUPERVISION OF EXCISE AUTHORITIES AND LEVY OF EXCISE DUTY. THE BIL LS FOR SALE OF SCRAP CONTAIN EXCISE DUTY AND SALES TAX AS WELL . IT WOULD BE PERTINENT TO QUOTE THE FINDING OF LEAR NED CIT APPEAL IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 WHICH ARE AS FOLLOWS : PARA 9.1 DURING THE ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE APPELLANT HAD SOLD 779.898 MT SCRAP AT THE RATE OF 5800/- PM. HE OBSERVED THAT THE MARKET RATE OF SCRAP DURIN G THE RELEVANT PERIOD WAS AT 10700/- PMT. THEREFORE, HE C ONCLUDED THAT THE APPELLANT COLLECTED RS. 36,65,948/- OUTSID E THE BOOKS OF ACCOUNTS. THE AO ALSO OBSERVED THAT A SIMILAR ADDIT ION WAS 13 MADE IN THE A.Y. 2002-2003 ON THE BASSIS OF NOTING RECORDED ON THE PAPERS FOUND AT THE TIME OF SURVEY. HE ACCORDIN GLY HELD THAT THE APPELLANT EARNED INCOME OUTSIDE THE BOOKS OF AC COUNT TO THAT EXTENT AND MADE THE ADDITION ACCORDINGLY. DURING THE APPELLATE PROCEEDINGS THE AR OF THE APPE LLANT OBJECTED TO THE AFORESAID ADDITION AND MADE THE FOL LOWING SUBMISSIONS:- DURING HERRING THE REMAND REPORT THE ASSESSEE COMP ANY HAS PRODUCED SALES BILLS OF SCRAP OF LPG CYLINDERS MANU FACTURING PARTIES. A PARTY IN PERSON WAS ALSO PRODUCED WHO US ED TO BUY SCRAP FROM LPG CYLINDERS MANUFACTURES DURING FY 31. 03.1999. THE PARTY SUBMITTED HIS AFFIDAVIT AND ALSO PRODUCED HIS PURCHASE BILLS FOR THE FINANCIAL YEAR ENDED 31.03.1999. THE ASSESSEE COMPANY HAS SOLD SCRAP AT HIGHEST MARK ET RATE DURING RELEVANT FINANCIAL YEAR, THE SELLING RATE OF ASSESSEE COMPANY AS PER COPY OF BILLS WORKED TO RS. 6878/- P ER MT. COPY OF ECONOMIC TIMES DATED 27.03.2002 WAS ALSO PR ODUCED, IN WHICH MELTING SCRAP HAS BEEN QUOTED AT RS. 6700/ - PER METRIC TON. THE RATES QUOTED IN ECONOMIC TIMES ARE MARKET/ DELIVERY RATES. THE RATES IN THE YEAR 1999 COULD NOT BE HIGH ER THAN RATES FOR THE YEAR 2002. A SPECIFIC REQUEST WAS MADE TO A.O. TO PROVIDE THE BASIS OF RATE AT RS. 10700/- PER MT OF SCRAP TO CONTROVERT THE SA ME. THE LEARNED A.O. IN PARA 3 OF ASSESSMENT ORDER HAS STAT ED MARKET RATE OF RS. 10700/- PER MT. WHEREAS IN THE REMAND REPORT IT HAS BEEN STATED THAT THE A.O RIGHTLY ESTIMATED THE RAT E AT RS. 10700/- PER M.T. OF SCRAP., WHICH PROVES THAT THERE WAS NOT BASIS FOR TAKING THE RATE OF RS. 10700/-. THE REAS ON TO BELIEVE FOR REOPENING WAS ALSO BASED ON SURMISES AND JUNCTU RES. ANY KIND OF LOOSE PAPER WAS NOT FOUND RELEVANT TO FINAN CIAL YEAR 31.03.99. 14 9.3 AS ALREADY DISCUSSED ABOVE THE MATTER WAS REFER RED BACK TO THE AO FOR RE-EXAMINATION IN VIEW OF SOME ADDITIONA L EVIDENCES FILED BY THE LD. AR DURING THE APPELLATE PROCEEDING S. THE AO SUBSEQUENTLY ALLOWED OPPORTUNITY TO PRODUCE SUPPORT ING DOCUMENTS WITH A VIEW TO JUSTIFY PURCHASES FROM THE SE PARTIES. THE EXCERPTS OF THE AOS REMAND REPORT ARE AS UNDER :- ADDITION ON ACCOUNT OF SCRAP SALE HAS ALREADY BEEN DISCUSSED EARLIER IN THIS REPORT. THE RATE OF RS. 5800/- STAT ED IN THE ORDER TAKEN BY THE AO IS WITHOUT THE EXCISE ELEMENT. AFTE R CHARGING EXCISE ON RS. 5800/- PER MT IT BECOMES RS. 6819/- P ER MT. 7.3(B) I HAVE CONSIDERED THE FACTS OF THE CA SE AND SUBMISSIONS OF THE AR OF THE APPELLANT CAREFULLY IN A.Y. 1999- 2000 HONHBLE ITAT JAIPUR ITA NO. 513/JP/2007 ORDER DATED 26.10.2007 ON THE SAME ISSUE, HAS UPHELD THE ORDER OF THE CIT(A), ALWAR. THE AO, WHILE ESTIMATING MARKET RATE OF RS. 10700/- PMT HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT HOW HE ARRIVED AT THAT FIGURE. THIS IS A CASE OF SURVEY DURING THE COURSE OF WHICH A NUMBER OF INCRIMINATING DOCUM ENTS PERTAINING TO APPELLANTS BUSINESS WERE IMPOUNDED. THE AO HAS FAILED TO BRING ON RECORD REFERENCES TO ANY DOCUMEN T WHEREIN SALES OF SCRAP HAS BEEN WORKED OUT BY THE APPELLANT AT RS. 10,700/- DURING THE RELEVANT PERIOD. THE AO HAS REF ERRED THAT CERTAIN LOOSE PAPERS WERE FOUND AND IMPOUNDED ON WH ICH ENTRIES WERE FOUND FOR A.Y. 2003-2004 AND 2004-2005 IN THIS REGARD. HOWEVER, HE HAS FAILED TO BRING ANY MATERIA L OR RECORD TO SHOW THAT HOW THE NOTINGS MADE ON THE PAPERS PERTAI NING TO FINANCIAL YEAR 2003-2004 AND 2004-2005 ARE RELEVAN T TO ASSESSMENT YEAR UNDER REFERENCE. THE AO HAS NOT BRO UGHT ON ANY MATERIAL TO JUSTIFY THE ADDITION UNDER THIS HEA D IN THE REMAND 15 REPORT ALSO. THEREFORE, UNDER THESE CIRCUMSTANCES I T IS CLEAR THAT THE AO MADE THE ADDITION UNDER THIS HEAD ONLY ON TH E BASIS OF PRESUMPTIONS AND SURMISES. IN VIEW OF THIS THE ADDI TION MADE BY THE AO CANNOT BE SUSTAINED. THEREFORE, THE ADDITION OF RS. 1,12,82,308/- IS HEREBY DELETED. 16. IN RESPECT TO ADDITION OF RS. 5 LACS OR ODD, TH E AO MADE ADDITION FOLLOWING THE REASONS AS UNDER :- UNDERSTATED VALUE OF CLOSING STOCK: IN THE ASSESSEES CASE THE CLOSING STOCK OF SCRAP IS 128.450 MT WHICH COMES TO PMT RATE OF RS. 6331/- WHEREAS THE SCRAP IS SOLD @ 10700 PMT AS DIS CUSSED ABOVE. THE ASSESSEE COMPANY HAS VALUED THE CLOSING STOCK OF SC RAP AT NET REALISABLE VALUE, ACCORDINGLY THE COMPANY HAS SUPPRESSED THE V ALUE OF CLOSING STOCK OF SCRAP. IN VIEW OF THESE FACTS, I HAVE COME TO TH E CONCLUSION THAT THE UNDERSTATED VALUE OF CLOSING STOCK COMES AT RS. 128 .450 X (10700- 6331)=561198/- WHICH IS ADDED AS VALUE OF CLOSING S TOCK AND THE INCOME IS ENHANCED TO THAT EXTENT. 17. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) DELETED THE ADDITION BY GIVING THE FOLLOWING REASONS AT PARA 8.2 AND 8.3 AT PAGE 1 9 :- 8.2 THE LD. AR OF THE ASSESSEE ON THE OTHER HAND ARGUES AND SUBMITTED THAT THE COMPANY HAS VALUED THE CLOSING STOCK OF SC RAP AT SELLING RATE PREVAILING AS ON 31.03.2001 EXCLUSIVE OF EXCISE DUT Y . THE TOTAL CLOSING STOCK OF SCRAP WAS OF RS.813222/- CONSISTING OF MS SCRAP OF RS. 745010/- AND ZINK ASH RS. 68212/- WHICH WAS BROUGHT TO THE N OTICE OF DURING ASSESSMENT PROCEEDINGS AS WELL REASSESSMENT PROCEED INGS . THE AO HAS ACTED BLINDLY ON THE REASONS RECORDED TO MAKE THE A DDITIONS . THE POLICY FOR VALUATION OF CLOSING STOCK WAS BEING FOLLOWED B Y ASSESSEE WAS 16 CONSISTENT . THE AO HAS APPLIED THE VALUATION RATE OF RS. 10700/- WHICH IS IMAGINARY , AS HE APPLIED THE RATE FOR SALE OF SCRA P. ACCORDINGLY THE ADDITION MADE ON ACCOUNT OF INFLATION OF STOCK TO T HE TUNE OF RS. 561198/- WORKED OUT NEED TO BE DELETED. 8.3 THE ISSUE OF SELLING RATE OF SCRAP H AS BEEN DISCUSSED IN DETAILED IN GROUND NO 7 . SINCE THE AO HAS BASED HIS VALUATI ON @ 10700/- FOR THE CLOSING STOCK AGAINST THE VALUATION OF CLOSING STOC K AS PER BOOKS OF ACCOUNTS OF THE COMPANY BASED ON MARKET RATE , BEIN G FOLLOWED CONSISTENTLY , THE ADDITION OF RS. 561198/- MADE BY LEARNED AO BE AND HEREBY DELETED. 18. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) ON WHICH RELIANCE HAS BEEN PLACED BY RESPECTIVE PARTIES, WE FIND NO INFIR MITY IN THE FINDING OF LD. CIT (A) IN RESPECT TO BOTH THE ADDITIONS DELETED BY HIM. THE LD. CIT (A) HAS DELETED THE ADDITION OF RS. 1.12 CRORES OR ODD ON ACCOUNT OF SUPPRESSION OF SALE OF SCRAP FOLLOWING THE ORDER OF TRIBUNAL FOR EARLIER YEAR I.E. 1999-2000 WHERE SIMI LAR ADDITIONS WERE MADE BY THE AO. THE FINDING OF LD. CIT (A) ARE BASED ON THE FINDING OF TRIBUNAL FOR EARLIER YEAR, THEREFORE, WE SEE NO REASON TO INTERFERE WITH THIS FINDING. 19. REGARDING DELETION OF RS. 5,61,198/-, AGAIN LD. CIT (A) HAS DELETED THE ADDITION BY GIVING A FINDING OF FACT WHICH REMAINED UNCONTRO VERTED, THEREFORE, WE CONFIRM THE ORDER OF LD. CIT (A) IN THIS RESPECT ALSO. 20. NEXT ISSUE RELATES TO DELETING THE ADDITION OF RS. 4,60,502/- ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES. 17 21. THE AO MADE THE ADDITION BY OBSERVING AS UNDER :- COMMISSION EXPENSES: IN THE ASSESSEES CASE IT IS FOUND THAT IT HAS CLAIMED COMMISSION EXPENSES @ RS. 200 PMT ON SCRAP SOLD. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN SCR AP SALE OF RS. 2302.512 MT ON WHICH COMMISSION OF RS. 460502 HAS B EEN CLAIMED. IT IS FOUND THAT THE ASSESSEE COULD NOT FURNISH ANY SATIS FACTORY EXPLANATION WITH REGARD TO PAYMENT OF COMMISSION; THEREFORE, THE SAM E IS DISALLOWED. ACCORDINGLY A SUM OF RS. 460502 CLAIMED AS COMMISSI ON PAID IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 22. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A) AND IT WAS SUBMITTED THAT SIMILAR ADDITION WAS MADE FOR ASSESSMENT YEAR 1999- 2000 ALSO AND THE SAME HAVE BEEN DELETED BY THE TRIBUNAL. ACCORDINGLY THE LD. CIT (A ) HAS DELETED THIS ADDITION ALSO BY GIVING FOLLOWING FINDING IN PARA 9.3 AT PAGE 20 OF HIS ORDER :- 9.3 FROM THE PERUSAL OF FACTS , IT REVEA LS THAT THE AO HAS PROCEEDED ON IMAGINARY FIGURES AND PRESUMPTIONS AND OVERLOOKE D THE AUTHENTICATED BOOKS OF ACCOUNTS . THE ASSESSEE HAD REQUESTED BEFO RE THE AO TO ISSUES SUMMONS TO THE CONCERNED PARTY TO VERIFY THE CLAIM VIDE LERRER DATED 24.12.2008 WHICH HAS BEEN IGNORED BY THE AO AT THE TIME OF ASSESSMENT. THE FACTS OF PAYMENT OF COMMISSION IS PROVED WITH T HE COPY OF ACCOUNT AND BANK STATEMENT SUBMITTED BY ASSESSEE . ACCORDIN GLY THE ADDITION MADE FOR AN AMOUNT OF RS. 460502/- BE AND HEREBY DE LETED. 23. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) AS HE HAS DEL ETED THIS ADDITION CONSIDERING THE EARLIER APPELLATE ORDER. IN ASSESSMENT YEAR 1999-2000 ALSO SIMILAR ADDITION WAS MADE. MATTER REACHED UPTO THE STAGE OF TRIBUNAL AND THE TRIBUNAL HAS CONFIRMED THE DELETION. FINDING 18 OF TRIBUNAL HAS BEEN RECORDED IN PARA 4.2 AT PAGE 2 7 OF ITS ORDER. THEREFORE, WE HOLD THAT LD. CIT (A) WAS JUSTIFIED IN DELETING THIS ADDITION ALSO. 24. REMAINING ISSUE IS AGAINST DELETING THE ADDITIO N OF RS. 6,94,186/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF REIMBURSEMENT. 25. THE AO MADE THE ADDITION BY OBSERVING FOLLOWING REASONS :- REIMBURSEMENT OF EXPENSES : IN THE ASSESSEES CASE IT IS FOUND THAT THE ASSESSEE COMPANY BEING REIMBURSED A FIXED AMOUN T OF FREIGHT EXPENDITURE INCURRED BY THE COMPANY TO THE POINT OF DELIVERY DIRECTED BY THE OIL COMPANIES, THE BUYER OF SCRAP INCURRED EXPE NDITURE OF TRANSPORTATION. THE ASSESSEE SOLD SCRAP NOT FOR DEL IVERY EVEN THOUGH CLAIMED FREIGHT ON SCRAP SALE WHICH RESULTED SUPPRE SSION OF PROFIT RS. 694186/-. THE BREAK-UP OF EXPENDITURE IS GIVEN BELO W: FREIGHT OUTWARD CLAIMED RS.8700782/- FREIGHT REIMBURSED RS. 8006597/- BALANCE RS. 694186/- 26. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) FOUND THAT SIMILAR ADDITION WAS MADE IN EARLIER YEAR AND THE TRIBUNAL HAS DELETED T HE ADDITION. ACCORDINGLY HE DELETED THIS ADDITION ALSO. FINDING OF LD. CIT (A) HAVE BE EN RECORDED IN PARA 10.3 AT PAGE 21 OF HIS ORDER ARE AS UNDER :- 10.3 I HAVE CONSIDERED THE FINDING OF L EARNED AO AND SUBMISSIONS OF LEARNED AR CAREFULLY WHEN ACTUAL FREIGHT CHARGES FOR DIFFERENT DESTINATIONS AND ARE SUPPORTED WITH GR OF THE TRANS PORTERS AND COPY OF BILLS OF SCRAP ALSO CONTAIN THE MODE OF TRANSPORT A ND TRUCK NO. ETC. WHICH WERE PRODUCED BEFORE THE AO FOR VERIFICATION AT THE TIME ASSESSMENT BUT 19 THE LD. AO HAS NOT TAKEN PAIN TO VERIFY THE FACTS. THIS ISSUE WAS ALSO INVOLVED IN A.Y. 1999-2000. THE HONBLE ITAT HAS DE LETED THE ADDITION MADE ON THIS ISSUE. UNDER THE FACTS AND CIRCUMSTANC ES THE ACTION OF AO FOR ADDITION OF AN AMOUNT OF RS. 694186/- IS NOT JUSTIF IED AND DELETED . ACCORDINGLY THE GROUND OF APPEAL IS ALLOWED. 27. AFTER CONSIDERING THE ORDERS OF AO AND LD. CIT (A) AGAIN WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A) AS HE HAS DELETED THE AD DITION FOLLOWING THE ORDER OF TRIBUNAL FOR EARLIER YEAR WHERE SIMILAR ADDITION WAS MADE. A CCORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE ALSO. 28. NOW WE WILL TAKE UP THE CROSS OBJECTION OF THE ASSESSEE. 29. THE ONLY GROUND IS AGAINST UPHOLDING REOPENING OF THE ASSESSMENT. 30. THE ASSESSMENT IN THIS CASE WAS REOPENED BY ISS UING NOTICE UNDER SECTION 148 DATED 28.3.2008. BEFORE ISSUING NOTICE UNDER SECTI ON 148, REASONS WERE RECORDED BY THE AO, COPY OF WHICH ARE PLACED AT PAGES 165 TO 167 OF THE PAPER BOOK. THE LD. CIT (A) HAS UPHOLD THE REOPENING OF THE ASSESSMENT. 31. NOW THE LD. COUNSEL OF THE ASSESSEE HERE BEFORE THE TRIBUNAL STATED THAT REOPENING OF THE ASSESSMENT IS BAD IN LAW AS THE SAME IS REOP ENED AFTER EXPIRY OF FOUR YEARS. IT WAS ALSO SUBMITTED THAT THERE WAS NO FAILURE ON THE PAR T OF THE ASSESSEE FOR CONCEALING ANY PARTICULARS OR SUBMITTING THE DETAILS. THEREFORE, A FTER FOUR YEARS REOPENING OF ASSESSMENT WAS NOT VALID AS EARLIER ASSESSMENT WAS COMPLETED U NDER SECTION 143(3). ATTENTION OF THE BENCH WAS DRAWN ON COPY OF ASSESSMENT ORDER PLACED IN THE PAPER BOOK AT PAGES 157 TO 160. IT WAS ALSO SUBMITTED THAT THE ASSESSMENT WAS COMPLETED ON 28.3.2003 WHEREAS 20 REASONS HAVE BEEN RECORDED ON28.3.2008 WHICH IS UND ISPUTEDLY AFTER FOUR YEARS OF COMPLETION OF ASSESSMENT. 32. ON THE OTHER HAND, THE LD. D/R STATED THAT THIS ISSUE MAY BE DISPOSED OFF ON MERIT. RELIANCE WAS PLACED ON THE ORDER OF LD. CIT (A). 33. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THE LEGAL ISSU E RAISED THROUGH CROSS OBJECTION. THE COPY OF REASONS RECORDED ON 28.3.2008 IS PLACED AT PAGES 165 TO 167 OF THE PAPER BOOK AND IT IS SEEN THAT THE AO HAS OBSERVED IN LAST PAR A OF REASONS RECORDED THAT HE HAS REASON TO BELIEVE THAT ASSESSEE COMPANY CONCEALED ITS INCO ME WHICH HAS ESCAPED ASSESSMENT BY FURNISHING INCOMPLETE AND INACCURATE PARTICULARS WI THIN THE MEANING OF SECTION 147. NO WHERE IT HAS BEEN MENTIONED IN THE REASONS RECORDED THAT ANY INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS. THE ASSESSMENT IN THIS CASE WAS COMPLETED U NDER SECTION 143(3) ON 28.3.2003. THE REASONS HAVE BEEN RECORDED AFTER EXPIRY OF FOUR YEARS WHICH IS NOT PERMISSIBLE AS PER PROVISIONS OF LAW AND ON ACCOUNT OF VARIOUS JUDGMEN TS PRONOUNCED BY THE HONBLE APEX COURT AS WELL AS VARIOUS HIGH COURTS. VARIOUS HIGH COURTS HAVE DECIDED THIS ISSUE THAT REOPENING OF THE ASSESSMENT AFTER EXPIRY OF FOUR YE ARS IS BAD IN LAW WHERE NO INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASS ESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS. VARIOUS DECISIONS DECIDED BY HONB LE HIGH COURTS ARE REPORTED IN CASE OF INDIAN FARMERS FERTILIZERS CO-OP. LTD., 171 TAXMAN 379 (DEL.), IN CASE OF TANNA BUILDERS PVT. LTD., 283 ITR 448 (BOM.), IN CASE OF K.C.P, LT D. 146 ITR 284 (AP), IN CASE OF VARELI WEAVERS PVT. LTD., 240 ITR 77 (GUJ.) ETC. THEREFORE , WITHOUT GOING INTO DETAIL FURTHER, WE HOLD THAT REOPENING OF ASSESSMENT WAS BAD IN LAW AS THE SAME WAS REOPENED AFTER EXPIRY 21 OF FOUR YEARS AS THE ORIGINAL ASSESSMENT WAS COMPLE TED UNDER SECTION 143(3) OF THE ACT, THAT TOO WITHOUT BRINGING ANY MATERIAL ON RECORD TH AT ANY INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE T RULY AND FULLY ALL MATERIAL FACTS. ACCORDINGLY WE QUASH THE ASSESSMENT BY HOLDING THAT THE SAME WAS BAD IN LAW. 34. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 35. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- THE ACIT, CIRCLE-2, ALWAR. M/S. SUPREME CYLINDERS LTD., BHIWADI. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 9(2)/JP/2011) BY ORDER, AR ITAT JAIPUR.