NIRAMAL INDUCTOMELTS PVT. LTD, Jaipur V. ITO, Jaipur

ITA 99/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99434 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH JCIT DHK
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 99/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2006-07 . M/S. NIRMAL INDUCTOMELTS PVT. LTD., F-167-169, UDYOG VIHAR, JAITPURA, JAIPUR. CUKE VS. THE INCOME-TAX OFFICER, WARD 7(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCN 8927 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MUKESH KHANDELWAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH, (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06.10.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/10/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-III, JAIPUR DATED 06.11.2013 FOR THE A.YS. 2006-07. THE SOLE GROUND RAISED IN THE APPEAL IS AS UNDER :- THAT THE LD. CIT (A) HAS ERRED SERIOUSLY ON THE F ACTS AND IN LAW IN SUSTAINING PENALTY LEVIED BY THE LD. AO U/S 271(1)( C) OF THE INCOME TAX ACT, 1961 FOR RS. 2,55,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED THE RETURN OF INCOME ON 31.02.2006 DECLARING NIL INCOME. THE ASSESSMENT WA S COMPLETED UNDER SECTION 143(30 2 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. OF THE I.T. ACT, 1961 ON 30.12.2008 AT A TOTAL INCO ME OF RS. 1,72,64,760/-. IN THE SAID INCOME THE PROFIT EARNED ON THE UNRECORDED SALES WA S MENTIONED AT RS. 2,54,572/- AND INVESTMENT IN PURCHASE OF UNRECORDED SALES WAS MADE TO THE TUNE OF RS. 15,33,570/-. AFTER COMPLETING THE ASSESSMENT, A SHOW CAUSE NOTIC E UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS ISSUED FOR CONCEAL ING THE PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE LD. A/R OF THE ASSESSEE HAS ELABORATELY MADE SUBMISSION WHICH WERE MENTIONED BY THE A.O. IN HIS ORDER AS UNDER :- PROFIT EARNED ON UNRECORDED SALES : THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING OF MS INGOTS. IN THIS CASE, A SEARCH ACTION WAS CONDUCTED BY THE CEN TRAL EXCISE DEPARTMENT ON 03.10.2005 AT THE FACTORY/BUSINESS PR EMISES AND FOUND THAT THE ASSESSEE HAD CLANDESTINELY REMOVED GOODS W EIGHTING 2027.32 MT. ALTHOUGH, BEFORE HONBLE EXCISE SETTLEMENT COMMI SSION, THE ASSESSEE FILED A SETTLEMENT PETITION AND THE COMMISSION ACCE PTED THAT THE ABOVE SAID QUANTITY WAS ONLY 1783.94 MT IN STEAD OF 2027. 32 MT. DURING THE COURSE OF ASSESSMENT THE AO HAD NOTED THAT THE ASSE SSEE ADMITTED THE SAME BEFORE THE SETTLEMENT COMMISSION AND HAD AGREE D TO PAY THE ADDITIONAL EXCISE DUTY OF RS. 50,50,575/- WHICH WAS 16.32% OF THE UNACCOUNTED SALES. ACCORDINGLY THE AO WORKED OF THE UNACCOUNTED SALE AT RS. 3,06,71,415/- AND AFTER APPLYING THE GP RATE OF 0.83%, WHICH WAS DECLARED BY THE ASSESSEE IN THE LAST YEAR, ESTIMATE D THE PROFIT OF RS. 2,54,572/- EARNED ON UNACCOUNTED SALE AND ADDITION WAS MADE ACCORDINGLY. THE CIT (A) VIDE HIS APPEAL ORDER NO. 215/JPR/08-09 DATED 05.11.2009, HAS CONFIRMED THE FINDINGS OF AO ON THE ISSUE, AND ADDITION WAS ALSO CONFIRMED. BEFORE, ITAT, THE ASSESSEE HAS NOT PRESSED ON THIS ISSUE. THUS, ADDITION WAS ALSO SUSTAINED BY ITAT. ON THIS ISSUE, THE AR STATED VIDE HIS LETTER DATED 14.3.2011 THAT OF COURSE THE ASSESSEE COMPANY HAS MADE UNDISCLOSED SA LES WHICH WAS ADMITTED BY IT BEFORE THE HONBLE SETTLEMENT COMMIS SION OF EXCISE, BUT THE FACT IS THAT THE ASSESSEE DID NOT EARN ANY PROFIT O N THE SAME .THERE WAS NO PROOF WITH YOUR PREDECESSOR TO PROVE EARNING OF ANY ACCOUNTED INCOME ON SUCH UNACCOUNTED SALE AND WHATEVER INCOME WAS ADDED BY HIM WAS PURELY ON ESTIMATIONS. IT IS ALSO NOT OUT O F PLACE TO MENTION THAT 3 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. DURING THE SEARCH PROCEEDINGS UNDERTAKEN BY THE EXCI SE DEPARTMENT AND DURING THE COURSE OF SCRUTINY NOTHING CAME TO THE N OTICE ABOUT APPLICATION OF SUCH UNACCOUNTED INCOME. THEREFORE, THIS ADDITIO N IS ALSO PURELY ON ESTIMATION WITHOUT ANY CORROBORATIVE EVIDENCE. THER EFORE, THIS ADDITION ALSO CAN NOT BE MADE AS A BASIS FOR LEVY OF PENALTY . SIMILARLY IN RESPECT OF INVESTMENT IN UNRECORDED PU RCHASES/SALES, THE AO HAS AGAIN RECORDED THE SUBMISSIONS OF THE ASSESSEE IN THE FOL LOWING MANNER :- INVESTMENT IN UNRECORDED PURCHASES/SALES : ON THE BASIS OF SEARCH CONDUCTED BY EXCISE DEPARTMENT, IT WAS ESTABLISHED T HAT THE ASSESSEE WAS FOUND TO HAVE MADE UNACCOUNTED PRODUCTION/SALE OF R S. 3,06,71,415/- AS DISCUSSED SUPRA. THUS, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISHED THE DETAILS OF EACH PURCHASE THAT COULD BE ATTRIBUTED TO THE AFORESAID UNRECORDED SALE. THE ASSESSEE VIDE HIS REPLY DATED 29.12.2008 STATED THAT AS THE PURCHASE AND SA LES WERE UNRECORDED IT WAS DIFFICULT TO ASCERTAIN THE PEAK PURCHASES. A FTER CONSIDERING THE FACT OF CASE AND CIRCUMSTANCES, THE THEN AO HAD COME TO THE CONCLUSION THAT 5% OF TOTAL UNRECORDED SALES, WAS THE UNACCOUNTED I NVESTMENT IN THE SAME AND ACCORDINGLY, ADDITION OF RS. 15,33,570/- W AS MADE. THE CIT (A) HAS ALSO CONFIRMED THE FINDING OF THE AO ON THE ISS UE BUT CONSIDERING THE REASONABILITY OF SUCH UNACCOUNTED INVESTMENT, THE A DDITION WAS RESTRICTED TO RS. 5 LACS. THE HONBLE ITAT, JAIPUR BENCH, JAIP UR HAS ALSO CONFIRMED THE FINDING AS WELL AS THE QUANTUM OF ADDITION SUST AINED BY THE CIT (A) ON THIS ISSUE VIDE HIS APPEAL ORDER NO. ITA NO. 72/JP/ 2010 DATRED 16.08.2010. ON THIS ISSUE, AR OF THE ASSESSEE SUBMITTED VIDE HI S LETTER DATED 14.03.2011 THAT ADDITION ON ACCOUNT OF ALLEGED INVESTMENT FOR UNDERTAKING UNACCOUNTED TRANSACTIONS, THE SAME WAS MADE BY YOUR PREDECESSOR ON ESTIMATION ONLY WHICH FACT IS APPARE NT FOR THE ASSESSMENT ORDER .. ON APPEAL BEFORE THE HONBLE CIT 9A), SUCH ADDITION WAS REDUCED TO RS. 5,00,000/- AND SUCH VERDICT OF THE H ONBLE CIT (A) WAS ALSO SUSTAINED BY THE HONBLE ITAT ALSO. THIS TREATMENT ITSELF IS A PROOF TO THE FACT OF APPLICATION OF ASSUMPTION AND PRESUMPTION W HILE MAKING THIS ADDITION . HE HAS ALSO MADE RELIANCE UPON THE DECISIONS AWAR DED BY THE RAJ. HIGH COURT IN THE CASE OF SHIV LAL TAK VS. CIT (251 ITR 373) AND OTHERS. THE SUBMISSION FILED BY THE AR ON BOTH THE ISSUES, IS CONSIDERED BUT NOT FOUND CORRECT. FROM THE ABOVE FACTS, IT IS A ESTABLISHED FACTS THAT THE ASSESSEE HAD MADE UNRECORDED SALES AND CONCEALM ENT OF INCOME BY 4 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. WAY OF NOT DISCLOSING SALE IN HIS REGULAR BOOKS OF ACCOUNT. THIS FACTS WAS ALSO ADMITTED BY THE ASSESSEE ITSELF BEFORE THE SET TLEMENT COMMISSION OF EXCISE DEPARTMENT, THEREFORE, THE CONCEALMENT ALREAD Y STANDS ESTABLISHED. THUS IT IS AN OFFENCE FOR WHICH PENAL PROVISION OF SECTION 271(1)(C) ARE CLEARLY APPLICABLE IN THIS CASE. 3. AFTER RECORDING THE SUBMISSIONS, THE AO HAS CONC LUDED THAT THE ASSESSEE HAS DELIBERATELY AND WILLFULLY CONCEALED THE INCOME AND FILED THE INACCURATE PARTICULARS OF INCOME AND, THEREFORE, HE HAS IMPOSED THE PENALTY. 4. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE AO, HAS FILED APPEAL BEFORE LD. CIT (A), WHO HAS CONFIRMED THE ORDER PASSED BY THE AO. 5. NOW THE ASSESSEE IS BEFORE US. 6. THE PRIMARY ARGUMENT BEFORE US BY THE LD. A/R OF THE ASSESSEE IS THAT THE ADDITIONS WERE MADE AND SUSTAINED BY THE AUTHORITIE S BELOW AND CONFIRMED BY THE TRIBUNAL PURELY ON THE BASIS OF ESTIMATION AND THER E WAS NO CORROBORATIVE EVIDENCE, THEREFORE, IT WAS CONTENDED BY THE LD. A/R FOR THE ASSESSEE THAT THE ADDITION MADE ON THE BASIS OF ESTIMATION DO NOT ATTRACT THE IMPOSITI ON OF PENALTY. FOR THIS PURPOSE, HE RELIED ON THE VARIOUS JUDGMENTS AS UNDER :- ADDL. CIT VS. AGGARWAL MISTHAN BHANDAR (RAJ.) 131 ITR 619 INDER SINGH SANKHALA VS. ITO (ITAT JODHPUR) 68 TT J 463. ITO VS. GANPAT LAL JAIN (ITAT, JODHPUR) 24 TW 323 . CIT VS. SURESH CHAND MITTAL (SC) 251 ITR 9. SHIV LAL TAK VS. CIT (RAJ.) 251 ITR 373. CIT VS. B.D. RAM CHANDRA (BOMBAY HC) 150 ITR 242 CIT VS. KERALA SPINNERS LTD. (KER.) 247 ITR 541. CIT VS. DHILLON RICE MILLS (P&H) 256 ITR 47. 5 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. CIT VS. J.H. PARABIA (TRANSPORT) P. LTD. (2006) 2 84 ITR 361 (GUJ.) 7. ON THE CONTRARY, THE LD. D/R FOR THE REVENUE HAS RELIED ON THE ORDERS PASSED BY THE AUTHORITIES BELOW AND JUSTIFIED THE IMPOSITION OF PENALTY. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE THE TRIBUNAL HAS CONFIRMED THE ESTIMATED PROFIT OF RS. 2,54,572/- EARNED ON UNACCOUNTED SALES MADE ON THE BASIS OF GP RATE OF 0.83% DECLARED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR ON THE B ASIS OF THE ASSESSEE AGREED TO PAY THE ADDITIONAL EXCISE DUTY OF RS. 50,50,575/- W HICH WAS 16.32% OF UNACCOUNTED SALES. THE ESTIMATE OF PROFIT DERIVED BY THE AO WA S NOT MERELY ON THE BASIS OF SURMISES OR WITHOUT ANY MATERIAL BUT WAS BASED ON T HE ADMISSION MADE BY THE ASSESSEE BEFORE THE EXCISE SETTLEMENT COMMISSION. THEREFORE, TO SAY THAT THE ENTIRE EXERCISE HAS BEEN DONE MERELY ON THE ESTIMATION IS INCORRECT. THE ASSESSMENT ORDER, IN OUR OPINION IS BASED ON THE MATERIAL FOUND AND ADMI SSION MADE BY THE ASSESSEE BEFORE EXCISE SETTLEMENT COMMISSION. THE PROCEDURE ADOPTED BY AO AND THE LD. CIT (A) IS LOGICALLY THE CORRECT WAY OF DETERMINATION AND ESTI MATION OF PROFIT ON THE UNACCOUNTED SALES AND ON ACCOUNT OF INVESTMENT MADE IN UNACCOUN TED PURCHASES AND SALES. MOREOVER, IN THE ORDER PASSED BY THE TRIBUNAL IN TH E QUANTUM APPEAL BEARING ITA NO. 72/JP/2010, BOTH THE ADDITIONS WERE SUSTAINED. THE ADDITIONS CONFIRMED BY THE TRIBUNAL WERE NOT MERELY ON THE BASIS OF ESTIMATION BUT ON THE BASIS OF MATERIAL FOUND DURING THE SEARCH CONDUCTED BY THE EXCISE DEPARTMENT AND FURTHER ON ACCOUNT OF ADMISSION MADE BY THE ASSESSEE BEFORE THE EXCISE SET TLEMENT COMMISSION. THE 6 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. ASSESSEE HAS NOT PRESSED THE SECOND ISSUE BEFORE TH E TRIBUNAL. THUS THE ADDITION MADE BY THE AO, WAS SUSTAINED BY THE TRIBUNAL IN ITA NO. 72/JP/2010. THEREFORE, THE JUDGMENTS CITED BY THE LD. A/R OF THE ASSESSEE ARE CLEARLY DISTINGUISHABLE ON FACTS AND ARE NOT APPLICABLE. 9. AFTER THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT, (2013) 358 ITR 593 (SC) THERE IS NO QUEST ION ASSESSEE OFFERING INCOME TO BUY PEACE . IN THE PRESENT CASE THE LD. COUNSEL FOR THE ASSESSEE WOULD HAVE BEEN RIGHT IF IT WAS A SIMPLE CASE OF ONE ESTIMATION AGAINST THE OTH ER. HOWEVER, IN OUR OPINION, THERE ARE INCRIMINATING MATERIAL WHICH WERE GATHERED DURI NG THE COURSE OF SEARCH CONDUCTED BY THE EXCISE DEPARTMENT AND ADMITTED BY THE ASSESSE E BEFORE THE EXCISE SETTLEMENT COMMISSION. ON THE BASIS OF ADMISSION MADE BY THE ASSESSEE, THE INCOME WAS ESTIMATED ON THE BASIS OF PAST HISTORY OF THE ASSES SEE AND THAT WAS BASED ON THE MATERIAL FOUND REFERRED HEREIN ABOVE . THE ADDITIO N MADE BY THE AO, THOUGH WAS CHALLENGED BEFORE LD. CIT (A) AND BEFORE THE ITAT, BUT THE TRIBUNAL SUSTAINED THE ADDITION ON THE BASIS OF THE MATERIAL ADMITTED BY T HE ASSESSEE IN THE PROCEEDINGS INITIATED BY THE EXCISE DEPARTMENT. IN OUR VIEW, TH E LD. COUNSEL FOR THE ASSESSEE IS NOT RIGHT IN HIS CONTENTION THAT WHENEVER AN ASSESSMENT IS MADE ON THE BASIS OF FLAT RATE OF PROFIT ON ESTIMATION BASIS, NO INFERENCE CAN BE MAD E THAT THE ASSESSEE HAS CONCEALED THE INCOME. IN THE PRESENT CASE, THE AO HAS ESTIMAT ED THE INCOME ON THE BASIS OF THE MATERIAL SEIZED DURING THE SEARCH CONDUCTED BY THE EXCISE AUTHORITIES AND ADMISSION MADE BY THE ASSESSEE. THEREFORE IT IS NOT A CASE OF MERE ESTIMATION BUT WAS A CASE OF 7 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD. DERIVING INCOME BASED ON UNDISCLOSED INVESTMENT/PUR CHASES AND UNDISCLOSED SALES OF THE PRODUCT. IN OUR VIEW, ASSESSEE HAS CONCEALED T HE PARTICULARS OF INCOME AND, THEREFORE, THE ASSESSEE IS LIABLE FOR IMPOSITION OF PENALTY ON ACCOUNT OF CONCEALED INCOME. THEREFORE, WE FIND NO INFIRMITY IN THE ORDE R OF LD. CIT (A) WHICH IS CONFIRMED. 11. IN THE RESULT, THE APPEAL OF THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/201 5. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/10/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S. NIRMAL INDUCTOMELTS PVT. LTD., J AIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 7(3), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.99/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 8 ITA NO. 99/JP/2014 A.Y. 2006-07. M/S. NIRMAL INDUCTOMELTS PVT. LTD.