M/s Som Distilleries Pvt. Ltd., Bhopal V. The ACIT 1(2), Bhopal

ITSSA 1/IND/2011

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9147 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 30-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRIDULA BAJPAI
• Assessee Lawyers: R N GUPTA
• Keywords: Unexplained investment; Document seized; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Onus to prove; Documents seized
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AACCS0397P I.T(SS).A.NO . 1/IND/2011 PERIOD 1.4.1990 TO 10.9.2001 M/S. SOM DISTILLERIES PVT.LTD., ACIT, 1(2), 23, ZONE II, M.P.NAGAR, VS BHOPAL BHOPAL APPELLANT RESPONDENT I.T(SS).A.NO. 2/IND/2011 PERIOD 1.4.1990 TO 10.9.2001 ACIT, 1(2), M/S. SOM DISTILLERIES PVT.LTD., BHOPAL VS 23, ZONE II, M.P.NAGAR, BHOPAL APPELLANT RESPONDENT ASS ESSEE BY : SHRI SUMIT NEMA AND SHRI R. N. GUPTA, ADV. RESPONDENT BY : SMT. MRIDULA BAJPAI, CIT DR DATE OF HEARING : 1 2 . 0 3 .201 3 DATE OF PRONOUNCEMENT : 30 . 0 4 .201 3 O R D E R -: 2: - 2 PER R. C. SHARMA, A.M. THESE ARE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 31.1.201 1 FOR THE PERIOD 1.4.1990 TO 10.9.2001 IN RESPECT OF ORDER PA SSED U/S 158BC/254/143(3) OF THE INCOME-TAX ACT, 1961, 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THERE WAS SEARCH A T BUSINESS PREMISES OF THE ASSESSEE, CONSEQUENTLY ASSESSMENTS WERE FRAMED U/S 158BC READ WITH SECTION 143(3) ON 5.9.20 03, WHEREIN ADDITIONS WERE MADE FOR UNACCOUNTED PURCHAS ES. IN AN APPEAL AGAINST THE ORDER DATED 5.9.2003, THE CIT (A) VIDE HIS ORDER DATED 29.9.2004 REDUCED THE INCOME OF THE ASS ESSEE SUBSTANTIALLY. IN A FURTHER APPEAL FILED BY THE ASS ESSEE BEFORE THE TRIBUNAL, THE FINDINGS OF THE LOWER AUTHORITIES WERE SET ASIDE AND MATTER WAS REMANDED BACK TO THE FILE OF A SSESSING OFFICER WITH SPECIFIC DIRECTIONS. THESE DIRECTIONS WERE RELATED TO DETERMINATION OF UNDISCLOSED PURCHASES ALLEGED TO B E MADE BY THE ASSESSEE WITH REFERENCE TO CERTAIN SEIZED DOCUM ENTS I.E. LPS-2, 25, 34, 59, 65 ETC. IN THE ORIGINAL ASSESSME NT ORDER SO -: 3: - 3 FRAMED, THE ASSESSING OFFICER ALLEGED THAT THESE AR E THE DOCUMENTS WHICH SHOW THAT THE ASSESSEE WAS IN A CON NIVANCE AND COLLISION WITH THE EXCISE AUTHORITIES. ACCORDIN GLY, THE ADDITION WAS MADE IN THE FIRST ROUND BY THE ASSESSI NG OFFICER. THE PRECISE DIRECTION OF THE TRIBUNAL IN ITS ORDER DATED 18.3.2005 WERE AS UNDER :- 'ON THE ISSUE NO.3 RELATED TO THE ROLE OF SHRI RAVI DANG, THE CROSS EXAMINATION OF SHRI RAVI DANG IS NECESSARY ALSO BECAUSE THIS PERSON IS ALLEGED TO BE ONE OF THE CONTRIBUTORY FACTOR FOR ESTIMATING THE QUANTITY OF PURCHASES OF UNACCOUNTED MOLASSES IN THE NAME OF ASSESSEE AS WELL AS IN THE NAME OF OTHE R SO CALLED BOGUS CONCERNS, AND IN ESTIMATING THE ALLEGED UNDISCLOSED INCOME. ASSESSEE'S CONTENTION ALSO REMAINED THAT RAVI DANG HAS HIS OWN SET UP AND HE HAS BEEN PROCURING MOLASSES FOR ASSESSEE AS WELL AS FOR OTHERS AS AN AGENT. THE INDORE BENCH OF THE TRIBUNAL IN THE CASE OF PRAKASH & CO. V/S. ITO, 32 ITC 128 HAS HELD THAT IT IS WELL SETTLED LEGAL POSITION THAT BURDEN OF PROOF IS ON THE PERSON WHO -: 4: - 4 ALLEGES THE BENAMI IN RESPECT OF THE TRANSACTION', IT IS PERTINENT TO POINT OUT OVER HERE THAT ON THE CONTEN TION OF THE ASSESSEE THAT OPPORTUNITY OF CROSS EXAMINING SHRI RAVI DANG WAS NOT AFFORDED TO THE ASSESSEE, TH E AO COMMENTED THAT THE STATEMENT OF SHRI RAVI DANG WAS RECORDED IN THE PRESENCE OF THE DIRECTOR OF THE ASSESSEE COMPANY, AND THE OBSERVATION OF THE LD. C1T(A) IS THAT THE CROSS EXAMINATION OF RAVI DANG WAS NOT NECESSARY EVEN OTHERWISE AS THE ESTIMATION OF UNDISCLOSED INCOME IS BASED ON SEVERAL OTHER CORROBORATIVE EVIDENCE. WE DO NOT AGREE WITH THE COMMENT OF THE AO AND OBSERVATION OF THE LD. CIT(A) IN THIS REGARD SINCE ABIDANCE OF THE PRINCIPLE OF NATURAL JUSTICE IS MANDATORY ESPECIALLY WHEN THE DEPARTMENT INTENDS TO USE THE STATEMENT OF PERSONS OR ANY OTHER MATERIAL AGAINST THE ASSESSEE. WITHOUT EXAMINING SHRI RAVI DANG PROPERLY IT IS VERY DIFFIC ULT TO COME TO THE CONCLUSION THAT THE ENTIRE PURCHASES OF MOLASSES IN THE NAME OF SO-CALLED BOGUS CONCERNS ORDERED BY SHRI RAVI DANG AS WERE ACTUALLY FOR THE -: 5: - 5 ASSESSEE ONLY. WE IN VIEW OF AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE SET-ASIDE THE ORDER OF TH E LOWER AUTHORITIES IN THIS REGARD AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO ADJUDICATE THE ISSUE ABOUT THE EXTENT OF ROLE OF RAVI DANG. ALL AG ENT OF THE ASSESSEE AS TO WHETHER THE ENTIRE PURCHASES OF MOLASSES ORDERED IN THE NAME OF THE ALLEGED BOGUS CONCERNS THROUGH SHRI RAVI DANG WAS ACTUALLY MADE ON BEHALF OF AND FOR THE ASSESSEE ONLY AND NOT FOR ANY OTHER CONCERN, AFTER PROVIDING OPPORTUNITY TO CROSS EXAMINE SHRI RUN' DANG BY THE ASSESSEE AND AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AFRESH IN THIS REGARD. THE ISSUE NO. 4 IS REGARDING PURCHASES OF MOLASSES IN THE NAME OF BENAMI/BOGUS CONCERNS AND PRODUCTION AND SALE OF THE PRODUCT OUTSIDE THE ACCOUNT, AS TO WHETHER THE ENTIRE PURCHASE OF MOLASSES MADE IN THE NAME OF THE ALLEGED BENAMI/BOGUS CONCERNS WERE MADE ON BEHALF OF THE ASSESSEE OR THE ONLY QUANTITY OF MOLASSES WHICH WERE UNLOADED AT THE FACTORY PREMISES OF THE -: 6: - 6 ASSESSEE WAS ACTUALLY PURCHASED IN THE NAME OF THOSE ALLEGED BENAMI/BOGUS CONCERN OR WAS THERE ANY UNACCOUNTED PURCHASE OF MOLASSES OR NOT EVEN ONLY BE ANSWERED AFTER THE OUTCOME OF CROSS EXAMINATION OF THE PERSONS CONCERNED FROM WHOM THE ASSESSING OFFICER HAD CALLED INFORMATION AND ON THE BASIS OF WHICH HE CAME TO THE CONCLUSION THAT THE ENTIRE PURCHASES OF MOLASSES MADE IN THE NAME OF THE ALLEGED BENAMI/BOGUS CONCERNS WAS ACTUALLY, FOR THE ASSESSEE. WE THUS WHILE SETTING ASIDE THE FINDINGS OF THE LOWER AUTHORITIES ON THE ISSUE REMAND THE MATTE R BACK TO THE FILE OF THE AO TO ADJUDICATE THE SAME A FTER AFFORDING PROPER OPPORTUNITY OF CROSS EXAMINATION O F THOSE PERSONS FROM WHOM THE AO HAD COLLECTED THE INFORMATION AFTER SEARCH TO ESTABLISH THAT ALL THE PURCHASES OF MOLASSES MADE BY THOSE ALLEGED BENAMI/BOGUS CONCERN WAS ACTUALLY ON BEHALF OF THE ASSESSEE. IT IS FURTHER DIRECTED THAT WHILE EXAMINI NG THE ISSUE AFRESH THE AO WILL VERIFY IN WHOSE NAME -: 7: - 7 STATE EXCISE COMMISSIONER HAVING JURISDICTION OVER THE ALLEGED BOGUS CONCERN, HAD ISSUED NDC, THEIR SALES- TAX REGISTRATION NO., EXCISE REGISTRATION NO. ETC. DISCLOSED THEREIN. HE WILL ALSO EXAMINE THAT AS TO WHETHER C FORMS UNDER THE CENTRAL SALES-TAX ACT WERE ISSUED TO THE PURCHASER FOR ONWARDS SUBMISSION TO THE SUGAR MILL. THE AO WILL ALSO EXAMINE THE TRANSPORT PERMIT ON THE BASIS OF WHICH THE TANKER CARRYING MOLASSES HAD MOVED FROM ONE PLACE TO ANOTHER WHICH CONTAINS THE DETAILS LIKE NAME. ADDRESS OF THE LICENSEE, QUANTITY OF MOLASSES TO BE EXPORTED, NAME AND ADDRESS OF PERSON TO WHOM MOLASSES IS BEING EXPORTED, PLACE TO WHICH MOLASSES IS TO BE EXPORTED, PLACE FROM WHERE THE MOLASSES TO BE EXPORTED, ROUTE OF THE TANKER AND THE PERIOD UPT O WHICH THE PERMIT WILL BE VALID. HE WILL ALSO VERIFY THE ISSUANCE OF EXCISE VERIFICATION CERTIFICATE BY THE EXCISE OFFICER HAVING JURISDICTION OVER THE PLACE WHERE TH E MOLASSES WAS DELIVERED SHOWING THAT THE PARTICULAR TANKER UNLOADED THE MOLASSES AT A PARTICULAR PLACE. IT -: 8: - 8 IS PERTINENT TO MENTION OVER HERE THAT ALL THESE DOCUMENTS ARE PART OF THE TOTAL TRANSACTION AND THE SUGAR MILL KEEPS THEIR RECORD AND, THEREFORE. THESE ARE MATERIAL DOCUMENTS TO ARRIVE AT A DEFINITE CONCLUSION ABOUT THE DESTINATION OF THE MOLASSES ALLEGED TO BE PURCHASED BY THE ASSESSEE IN THE NAME OF THE SO CALLED BENAMI/BOGUS CONCERNS. BESIDES EXAMINING THE EXTENT OF ROLE OF SHRI RAVI DANG THE AO WILL ALSO EXAMINE THE ROLE OF OTHER EMPLOYEES LIKE KAILASH BULCHANDANI ABOUT WHOM THE CONTENTION OF THE ASSESSEE REMAINED THAT HE HAD NOT MADE THE DRAFTS OUT OF THE MONEY PROVIDED BY THE ASSESSEE AND OPPORTUNITY OF CROSS EXAMINING THE SAME WAS NOT AFFORDED TO THE ASSESSEE BEFORE USING HIS STATEMENT S AGAINST THE ASSESSEE BY THE AO IN THIS REGARD THE A O WILL AFFORD THE PROPER OPPORTUNITY OF CROSS EXAMINI NG SHRI KAILASH BULCHANDANI TO THE ASSESSEE. THE FURTHER CONTENTION OF THE ASSESSEE REMAINED THAT REVENUE DID NOT BRING ANY EVIDENCE ON RECORD THAT UMASHANKAR DIXIT, PANNASINGH, RAJESHKUMAR -: 9: - 9 AJESHKUMAR ARE THE EMPLOYEES OF THE ASSESSEE AND THERE IS NO STATEMENT OF THESE PERSONS ADMITTING THEREIN BY THEM THAT THEY ARE IN THE EMPLOYMENT OF THE ASSESSEE AND PARTICIPATING IN THE PURCHASE OF MOLASSES. THE CONTENTION OF THE ASSESSEE ALSO REMAINED THAT THE AO WHILE RELYING ON STATEMENTS OF THESE PERSONS AGAINST THE ASSESSEE. HAD NOT GIVEN OPPORTUNITY TO CROSS EXAMINE THESE PERSONS TO THE ASSESSEE .WE ,THUS, DIRECT THE ASSESSING OFFICER TO AFFORD PROPER OPPORTUNITY OF CROSS EXAMINATION OF THESE PERSONS TO THE ASSESSEE WHILE ADJUDICATING THEIR ROLE IN PURCHASING THE UNACCOUNTED MOLASSES I N THE NAME OF ASSESSEE AND AS TO WHETHER BANK DRAFTS WERE PURCHASED BY THEM OUT OF THE FUNDS RECEIVED FROM THE ASSESSEE ONLY. ABOUT THE CONTENTION OF THE ASSESSEE THAT PURCHASE OF MOLASSES IN THE NAME OF OTHER CONCERN BY THE ASSESSEE WAS NOT AT ALL POSSIB LE AND FEASIBLE DUE TO STRICT CONTROL OF STATE AND CEN TRAL EXCISE DEPARTMENT OVER THE MOVEMENT OF THE MOLASSES WE HAVE ALREADY EXPRESSED OUR VIEW -: 10: - 10 HEREINABOVE THAT ONLY ON THE BASIS OF THE STATEMENT S OF AN OFFICER OF THE EXCISE DEPARTMENT DEPLOYED AT THE FACTORY PREMISES OF THE ASSESSEE RECORDED AT THE TI ME OF SEARCH OF THE PREMISES, A SERIOUS ALLEGATION OF CONNIVANCE OF THE ENTIRE EXCISE DEPARTMENT INCLUDIN G STATE AND CENTRAL CANNOT BE LEVELLED AND TO ESTABLI SH THE SAME BEYOND DOUBT A THOROUGH ENQUIRY IS REQUIRED TO BE CONDUCTED, AND ACCORDINGLY WE HAVE SET-ASIDE THE MATTER FOR THE SAME TO THE FILE OF TH E A 0. THE FINDINGS OF THE LOWER AUTHORITIES ON UNACCOUNTED PURCHASE OF MOLASSES, EARNING OF THE UNDISCLOSED INCOME THEREON AND ADDITION MADE IN THIS ACCOUNT ARE THEREFORE SET ASIDE. THE GROUND NO S. 9, 11, 12, AND 19 TO 41 RAISING ISSUE NOS. 3 AND 4 ARE THUS PARTLY DECIDED IN FAVOUR OF THE ASSESSEE. 10.3.4) AGAINST THE ALLEGATION THAT THE ASSESSEE HA D PURCHASED UNACCOUNTED MOLASSES IN ITS OWN NAME, THE MAIN SUBMISSION OF THE ASSESSEE, AS DISCUSSED ABOVE, REMAINED THAT THERE IS NO DIFFERENCE AS ALLEGED AND ALL THE PURCHASES OF MOLASSES ARE TRULY -: 11: - 11 AND FULLY RECORDED. ITS FURTHER CONTENTION IS THAT THE AO HAD NOT SUPPLIED THE REQUISITE INFORMATION AND DID NOT CONFRONT THE COLLECTED MATERIAL ON THE BASI S OF WHICH HE CAME TO THE CONCLUSION THAT ASSESSEE HAD PURCHASED UNACCOUNTED MOLASSES IN ITS OWN NAME AND THEREFORE THE ASSESSEE COULD NOT EXPLAIN THE ALLEGATION. THE SUBMISSION OF THE LD. AR IS THAT TH E AO ON THE BASIS OF WHICH TABULATION IN TABLE AT PAG E 63 AND 64 OF THE ASSESSMENT ORDER STATES THAT AS PER INFORMATION COLLECTED BY HIM FROM VARIOUS SUGAR MIL LS, THE ASSESSEE'S PURCHASE OF MOLASSES WAS 36067.75 MT, THE AO THEN WITHOUT ANY FURTHER DISCUSSION IN TABLE AT PARA 16.1 AT PAGE 103 OF HIS ORDER STATES THAT AS PER D-5 REGISTERS (SEIZED DOCUMENT BFS 27 AND 28) MOLASSES PURCHASES FOUND RECORDED UP TO 10-1-2001 WERE ONLY 32946.06 MT AND HENCE THE AO TREATED THE DIFFERENCE 3121.69 MT (36067.7) - 32946.06) AS THE UNRECORDED PURCHASES OF THE ASSESSEE. HIS FURTHER SUBMISSION IS THAT LD. CIT(A) IN PARA I6.5.2(III) AT PAGE 43 OF HIS ORDER SAYS THAT THE -: 12: - 12 LD. AR IS REFERRING TO PURCHASES UP TO 10-1-2001 AT 39227.125 MT, BUT AT THE SAME TIME NOT EXPLAINING THE CONTENTS OF TABLE IN PARA 16.1 (PAGE 103) OF TH E ASSESSMENT ORDER, WHEREAS AS PER D-5 RECORD, THE MOLASSES PURCHASED UPTO 10-1-2001 IS MENTIONED AT 32946.06 M'I'. THE CIT(A) ON THE BASIS OF SUCH OBSERVATION COMPUTED UNACCOUNTED PURCHASE AT 6281.065 NIT (39227.125 - 329-16.06) AS AGAINST 3121.69 M.T. COMPUTED BY THE AO. IT HAS BEEN EXPLAINED BY THE LD. AR BEFORE US THAT BOTH THE LOW ER AUTHORITIES ARE UNANIMOUS IN THEIR FINDINGS THAT AS PER EXCISE REGISTER THE ASSESSEE'S PURCHASES UPTO 1 0- 1-2001 ARE 329-16.06 MT. HOWEVER, SO FAR AS AO IS CONCERNED HE SAYS THAT AS PER INFORMATION COLLECTED BY HIM THE PURCHASE OF MOLASSES UPTO 10-1-2001 IS 36067. 75 MT. THE CIT(A) ON THE CONTRARY SAYS THE PURCHASES UPTO 10-1-2001 OF THE ASSESSEE ARE 39227.125 MT . IT HAS ALSO BEEN POINTED OUT BY THE LD. AR THAT DURING THE COURSE OF FIRST APPEAL PROCEEDINGS. IT WAS SUBMITTED BEFORE THE ID. CIT(A) -: 13: - 13 THAT THERE IS NO DIFFERENCE AS ALLEGED AND ALL THE PURCHASES OF MOLASSES ARE TRULY AND FULLY RECORDED AND THE AO HAS NOT SUPPLIED THE REQUISITE INFORMATI ON TO GIVE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE ALLEGATION . 10.3.5) SO FAR THE CONTENTION OF THE ASSESSEE THAT THE AO HAD NOR SUPPLIED THE REQUISITE INFORMATION, WE D O NOT FIND FORCE THEREIN SINCE ALL THE RELEVANT DOCUM ENT AS REQUIRED BY THE ASSESSEE WERE MADE AVAILABLE DURING THE FIRST APPELLATE PROCEEDINGS AND THE COMMENT OF THE ASSESSING OFFICER WAS ALSO CALLED FO R BY THE LD. CIT(A) ON THE OBJECTION RAISED BY THE ASSESSEE. SINCE, WE ARE REMANDING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATI ON OF THE MATERIAL ISSUES REGARDING UNACCOUNTED PURCHASE OF MOLASSES ETC. AFTER AFFORDING OPPORTUNITY TO CRO SS EXAMINE THE PERSONS WHOSE STATEMENT SHAVE BEEN USED AGAINST THE ASSESSEE, WE GRANT LIBERTY TO THE ASSESSEE TO MAKE AN APPLICATION REQUESTING OF SUPPL Y OF ANY FURTHER MATERIAL DOCUMENT WHICH WAS NOT SUPPLIED BEFORE THE LD. CIT(A), WHICH THE ASSESSEE NEEDS TO PRESENT ITS CASE PROPERLY, THE ASSESSING OFFICER WILL SUPPLY THE SAME TO THE ASSESSEE. THE -: 14: - 14 ASSESSING OFFICER HAS SHOWN 2109.05 MT AS UNACCOUNTED PURCHASE IN THE NAME OF ASSESSEE DURING THE FINANCIAL YEAR 1998-99 AND 3121.69 MT OF UNACCOUNTED PURCHASE IN FY 2000-2001. THE COMPUTATION OF THE AO IS BASED ON SEIZED REGISTER D -5 AND OTHER INFORMATION COLLECTED FROM THE SUGAR MILL S. SO FAR PURCHASE OF MOLASSES OF 21 09.05 MT IN FY 1998-99 IS CONCERNED. THE LD. CIT(A) HAS CONFIRMED THE SAME IN ABSENCE OF ANY COMMENT OF THE ASSESSEE ON THE DIFFERENCE. SO FAR PURCHASE OF MOLASSES OF 3121. 69 MT IN FY 2000-2001 IS CONCERNED, THE ID. C1T(A) HAS CALCULATED THIS FIGURE AT 6281.065 MT (39227.125 -32946.06 MT) ON THE BASIS THAT WHILE REFERRING PURCHASES UPTO 10-1-2001 AT 39227.125 MT BY THE ASSESSEE, THE ASSESSEE HAS NOT EXPLAINED THE CONTENTS OF TABLE IN PARA 16.1 (PAGE 103) OF THE ASSESSMENT ORDER WHERE AS PER D-5 RECORD THE MOLASSES PURCHASED UP TO 10-1-2001 I.E. THE DATE OF SEARCH IS MENTIONED AT 32946.06 M.T. . AS, IT IS APPARENT FROM THE ASSESSMENT ORDER THAT THE AO HAS WORKED-OUT THE UNACCOUNTED PURCHASES IN THE NAME OF ASSESSEE ON THE BASIS OF SEIZED REGISTER D-5 AND OTHER INFORMATION COLLECTED FROM THE SUGAR MILL. FR OM THE ASSESSMENT ORDER AT PARA NO. 16 PAGE 103 WE FIND THAT THE AO HAD WORKED-OUT THE TOTAL QUANTITY OF MOLASSES PURCHASED BY THE ASSESSEE ON COMPARISON -: 15: - 15 OF THE D-5 REGISTER WITH THE ACTUAL PURCHASES MADE BY THE ASSESSEE IN HIS AND ALSO IN THE NAME OF VARIOUS OTHER PARTIES BUT THE AO WHILE WORKING-OUT THE FINAL FIGURE IN THIS REGARD HAS NOT SUPPLIED TH E DATE-WISE DIFFERENCE AND OTHER MATERIAL INFORMATION LIKE TRUCK NO. BY WHICH THE MOLASSES WERE TRANSPORTED, DETAILS OF PAYMENTS, EXCISE VERIFICATI ON PASS ETC. WE THUS REMAND THE MATTER BACK TO THE FIL E OF AO TO SUPPLY ALL THESE MATERIAL INFORMATION TO T HE ASSESSEE AND AFFORD HIM PROPER OPPORTUNITY OF BEING HEARD ON THE MATTER BEFORE COMING TO A DEFINITE CONCLUSION REGARDING THE TOTAL UNACCOUNTED PURCHASES OF MOLASSES MADE BY THE ASSESSEE IN ITS OWN NAME. 3. IN THE SECOND ROUND, THE ASSESSING OFFICER AGAIN UPHELD THE ADDITION AS MADE IN THE ORIGINAL ASSESSM ENT WITHOUT PRECISELY FOLLOWING THE DIRECTION OF THE TR IBUNAL, WHICH ARE BINDING ON HIM. IN AN APPEAL FILED BY THE ASSES SEE, THE CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF UNDI SCLOSED PURCHASES, HOWEVER, HE HAS APPLIED NET PROFIT RATE OF 3 % AS DIRECTED BY THE TRIBUNAL. AGAINST THIS ORDER OF CIT (A), BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. -: 16: - 16 4. SHRI SUMIT NEMA, ALONGWITH SHRI R.N. GUPTA APPEARED ON BEHALF OF THE ASSESSEE AND CONTENDED THAT THE OR DER PASSED BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS IS VITIATED IN LAW AND ON FACTS SINCE THE LD. ASSESSING OFFICER DID NOT FOLLOW THE DIRECTIONS OF THE APPELLATE TRIBUNAL IN I.T.A.NO. 112/2004 AND 123/2004 DATED 18.3.2005 AND ALSO HAD NO NEW EVIDENCE AND THE LD. CIT(A) HAS ERRED IN CONFIR MING THE FINDINGS OF THE ASSESSING OFFICER ON THE SAID ALLEG ATION WITHOUT DELIBERATING THE ISSUE IN THE LIGHT OF THE HON'BLE TRIBUNALS ORDER. THUS THE FINDING OF BOTH THE ASSESSING OFFIC ER AND THE CIT(A) ARE UNLAWFUL, WHOLLY WRONG AND INJUDICIOUS I N THE ABSENCE OF ANY NEW EVIDENCE AS INDICATED BY THE TRI BUNAL IN ITS EARLIER ORDER AND THEREFORE, SUCH FINDINGS BE Q UASHED. 5. MR.NEMA FURTHER CONTENDED THAT THE LD. LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN THEIR FINDIN GS THAT THE ASSESSEE HAD PURCHASED UNACCOUNTED MOLASSES IN VARI OUS YEARS AS UNDER. SUCH UNLAWFUL AND UNJUSTIFIED FINDI NGS ARE VITIATED AS NO NEW EVIDENCE WAS COLLECTED BY THE AS SESSING OFFICER AS DIRECTED BY THE HON'BLE TRIBUNAL. THE LD . ASSESSING OFFICER IN MAKING SUCH ADDITION HAS NOT FOLLOWED TH E SPECIFIC -: 17: - 17 DIRECTIONS OF THE APPELLATE TRIBUNAL FOR COLLECTING SPECIFIC EVIDENCES ON THE ISSUE OF THE ALLEGED UNACCOUNTED P URCHASE OF THE MOLASSES AND THEREFORE THE FINDINGS BE QUASHED AND THE ADDITION BE DELETED. 6. AS PER LD. AUTHORIZED REPRESENTATIVE , THE ASSESSIN G OFFICER HAS WRONGLY WORKED OUT UNDISCLOSED TURNOVER IN ASSESSMENT YEARS 1996-97 TO 2001-02 IN COMPLETE DIS REGARD OF THE DIRECTION OF THE HON'BLE I.T.A.T., HENCE SUCH E STIMATE OF UNDISCLOSED TURNOVER AND ITS SALE VALUE HAS NO LEGS TO STAND. HE FURTHER CONTENDED THAT NET PROFIT RATE APPLIED W AS ARBITRARY, INCORRECT AND IN COMPLETE DISREGARD TO THE DIRECTIO N OF THE I.T.A.T., HENCE SUCH COMPUTATION OF NET PROFIT SHOU LD BE DELETED. 7. ON THE OTHER HAND, THE LD. CIT DR, SMT. MRIDULA BAJPAI,CONTENDED THAT AS PER SEIZED DOCUMENTS, THE ASSESSING OFFICER HAS FOUND OUT UNDISCLOSED PURCHASES, WHICH HAVE NOT BEEN ENTERED IN THE REGULAR BOOKS OF ACCOUNT, ACCOR DINGLY, ADDITION SO MADE WAS PERFECTLY JUSTIFIED. SHE INVIT ED OUR ATTENTION TO LPS-2 PAGES 1 TO 4, WHICH IS A COPY OF LETTER DATED 1.9.1995 FROM THE DY. COMMISSIONER ( EXCISE ), UJJA IN, -: 18: - 18 ADDRESSED TO THE COMMISSIONER, GWALIOR, SHOWING THE REASON FOR NOT TAKING ANY ACTION ON M/S. MOHAN & COMPANY, BHOPAL, WAS FOUND FROM THE PREMISES OF THE ASSESSEE, WHO WA S WHOLE SALE DEALER OF IMFL AND ALSO DEALS IN THE PRODUCTS OF THE ASSESSEE. AS PER LD. CIT DR, THE ASSESSEE HAS REGUL AR BUSINESS TRANSACTION WITH THE SAID FIRM, THEREFORE, THIS LET TER DATED 1.9.1995 CANNOT BE IGNORED, WHEREAS CONTENTION OF L D. AUTHORIZED REPRESENTATIVE WAS THAT THE SAID LETTER DOES NOT SHOW ANY INVOLVEMENT OF THE ASSESSEE IN ANY MANNER AS ALLEGED BY THE ASSESSING OFFICER AND THE FINDINGS S O ARRIVED AT BY THE ASSESSING OFFICER WAS A WILD GUESS WORK WITH OUT ANY EVIDENCE OF SUPPORT. THE LD. CIT DR ALSO INVITED OU R ATTENTION TO OTHER SEIZED DOCUMENTS AS REFERRED BY THE ASSES SING OFFICER IN HIS ASSESSMENT ORDER. 8. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FROM THE RECORD, WE FOUND THAT IN THE FIRS T ROUND OF APPEAL, HON'BLE I.T.A.T. VIDE ITS ORDER DATED 18.3. 2005 HAS GIVEN SPECIFIC DIRECTION WHILE REMANDING THE MATTER BACK TO THE ASSESSING OFFICER. IN THE REMAND PROCEEDINGS, THE A SSESSING OFFICER WAS TO FOLLOW THE DIRECTIONS GIVEN BY THE T RIBUNAL FOR -: 19: - 19 ARRIVING AT UNDISCLOSED PURCHASES/ PRODUCTION AND P ROFIT EARNED THEREON. HOWEVER, WHILE FRAMING ASSESSMENT A FRESH, THE ASSESSING OFFICER HAS AGAIN RECOMPUTED PROFIT O N UNDISCLOSED PRODUCTION BY APPLYING NET PROFIT RATE BY DISALLOWING CERTAIN EXPENDITURE, WHICH WAS NOT AS P ER DIRECTION OF I.T.A.T. NO WHERE I.T.A.T. HAS ASKED T HE ASSESSING OFFICER TO REWORK OUT THE NET PROFIT RATE AS DISCLO SED BY THE ASSESSEE IN ITS AUDITED ACCOUNTS FILED WITH RETURN OF INCOME. THE ASSESSING OFFICER AGAIN MADE ADDITION IN RESPEC T OF INVESTMENT IN UNACCOUNTED PURCHASES. BY THE IMPUGNE D ORDER, THE LD. CIT(A) AFTER CONSIDERING THE DIRECTI ONS GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 18.3.2005, WORKED O UT SALE VALUE OF UNACCOUNTED PRODUCTION AND BY APPLYING NET PROFIT RATE AS DIRECTED BY THE TRIBUNAL REWORKED OUT UNACC OUNTED PROFIT ON SUCH PRODUCTION. AFTER RECORDING HIS FIND ING AT PAGES 105 TO 114, THE CIT(A) REDUCED THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME ON UNACCOUNTED SALES TO RS. 3,13,41,085/-. ACCORDINGLY, ADDITION WAS SUSTAINED TO THE EXTENT OF RS. 3,13,41,085/- ON ACCOUNT OF PROFIT EA RNED BY -: 20: - 20 ASSESSEE ON UNACCOUNTED PRODUCTION AND SALE. PRECIS E OBSERVATION OF THE CIT(A) IN THIS REGARD WAS AS UND ER :- IN VIEW OF ABOVE FINDINGS, DIRECTIONS OF THE HON' BLE I.T.A.T. AND RELYING ON THE PRONOUNCEMENTS ON JUDICIAL DISCIPLINE AND HIERARCHY, THE COMPUTATION OF UNDISCLOSED INCOME IS MADE BY ADOPTING THE UNDISPUTED YIELD RATES AS COMPUTED IN ORIGINAL ASSESSMENT ORDER BY TAKING AVERAGE SALE RATE EXCLUDING DUTIES, RATES AND TAXES, BY ADOPTING THE NET PROFIT RATE AS PER BOOKS OF ACCOUNT OF THE ASSESSEE, THE COMPUTATION OF UNDISCLOSED INCOME IS GIVEN IN THE CHART BELOW. THE AVERAGE SALE RATE FOR DIFFERENT YEARS HAS BEEN ADOPTED AS PER THE ORDER O F HON'BLE I.T.A.T. PAGE NO. 98. F.Y. UNACCOUNTED PURCHASE OF MOLASSES (M. T.) YIELD IN PROOF LITRE ( PER M. T. UNACCOUNTED PRODUCTION OF SPIRIT ( IN PROOF LITRE) AVERAGE SALE, RATE OF IMFL, CL SPIRIT AND SPIRIT TO BE ADOPTED AS PER I.T.A.T.S DIRECTIONS (RS.) SALE VALUE OF UNACCOUNTED PRODUCTION ( RS.) NEW PROFIT % AS PER AUDITE D ACCOU NTS PROFIT ON ACCOUNTED PRODUCTION & SALE (RS.) 95-96 3470.35 329.33 11,42,890 28.15 2,49,72,154.49 2.70 % 8,68,653.83 96-97 834.18 330.40 2,75,613.07 20.38 50,24,426.30 3.13% 1,75,811.92 97-98 2,586.16 343.17 8,87,492.53 21.15 1,72,35,104 .88 3.81 % 7,15,154.73 98-99 13,818.38 312/60 43.19.625/59 33.86 13.66.29. 757.35 5.28% 77,22,661.18 -: 21: - 21 99-00 26,511,94 311.31 8,52,53,432.04 22.19 17,48,0 7,690.64 4.95 % 90,67,611.02 00-01 41,337.165 319.67 1,33,14,251.54 31.03 36,00, 26,676.81 3.12% 1,27,93,192..61 TOTAL 41,00,38,224.00 3,13,41,085 FROM THE CHART ABOVE, THE UNDISCLOSED INCOME ON ACC OUNT OF PURCHASE, PRODUCTION AND SALE OF UNACCOUNTED MOL ASSES PURCHASED BY THE ASSESSEE IS DIFFERENT ASSESSMENT Y EARS OF THE BLOCK PERIOD COMES TO RS. 3,13,41,085/- AS A GAINST UNDISCLOSED INCOME OF RS. 20,67,51,667/- COMPUTED B Y THE ASSESSING OFFICER. I, THEREFORE, SUSTAIN ADDITI ON OF RS. 3,13,41,085/-. THE RELATED GROUND NOS. 17 TO 24 OF THE APPELLANT ARE PARTLY ALLOWED. 9. IT IS CLEAR FROM THE CHART GIVEN HEREINABOVE THAT T HE CIT(A) HAS REWORKED OUT PROFIT ON UNACCOUNTED PRODU CTION BY TAKING THE NET PROFIT RATE AS DIRECTED BY TRIBUNAL IN ITS ORDER AND ALSO AVERAGE SALE RATE OF IMFL, C.L SPIRIT AND SPIRIT. WE FOUND THAT AFTER CONSIDERING THE DIRECTIONS GIVEN B Y THE TRIBUNAL AND GIVING DUE JUSTIFICATION FOR THE VALUE OF UNACCOUNTED PURCHASE OF MOLASSES VIS--VIS YIELD IN PROOF LITRE, THE CIT(A) HAS CORRECTLY ARRIVED AT UNACCOUNTED PRO DUCTION OF SPIRIT ( IN PROOF LITRE ). THEREAFTER, APPLYING THE AVERAGE SALE -: 22: - 22 RATE, HE COMPUTED SALE VALUE OF UNACCOUNTED PRODUCT ION ON WHICH ACTUAL NET PROFIT RATE OF RESPECTIVE YEARS AS DISCLOSED IN THE AUDITED ACCOUNT OF ASSESSEE, WHICH WAS AS PER D IRECTION OF THE TRIBUNAL, WERE APPLIED AND PROFIT ON UNACCOUNTE D PRODUCTION WAS WORKED OUT. IN VIEW OF THE DETAILED FINDING GIVEN BY THE LD.CIT(A), WE DO NOT FIND ANY INFIRMIT Y IN THE NET PROFIT WORKED OUT BY THE LD.CIT(A) ON THE UNACCOUNT ED PRODUCTION THEREBY REDUCING ADDITION TO THE EXTENT OF RS. 3,13,41,085/-. 10. THE CIT(A) HAS ALSO DELETED THE ADDITION MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN PURCHASES OF MOLASSES AMOUNTING TO RS. 3,11,94,880/ -. THE PRECISE OBSERVATION OF THE CIT(A) WAS AS UNDER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION OF THE LD. COUNSEL AFTER CAREFULLY PERUSING THE ORDER OF HON'BLE I.T.A.T. ON THIS POIN T. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS. 1.00 CRORE ON THIS ISSUE IN THE ORIGINAL ASSESSMENT ORDER WHICH WAS DELETED BY CIT(A)-I, BHOPAL. IN DEPARTMENTS APPEAL BEFORE THE HON'BLE TRIBUNAL, IT -: 23: - 23 WAS HELD THAT THE ADDITION OF RS. 1.00 CRORE MADE O N ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASES OF MOLASSES IS NOT SUPPORTED BY ANY EVIDENCE OR SEIZED DOCUMENT BUT THE ADDITION OF RS. 1,00,00,000/- IS MADE BY THE ASSESSING OFFICER ON THE BASIS OF CONJECTURES AND SURMISES. THE LD.COUNSEL IN HIS ABOVE MENTIONED SUBMISSION HAS REPRODUCED THE RELEVANT PORTION OF THE HON'BLE I.T.A.TS ORDER IN THIS REGARD. THIS ISSUE WAS FINALLY ADJUDICATED BY THE HON'BLE I.T.A.T. AFTER GOING THROUGH THE ORIGINAL ASSESSMENT ORDER AND THE ORDER OF CIT(A)-I, BHOPAL. THUS, IN MY CONSIDERED VIEW, THERE IS NO DIRECTION OF THE HON'BLE TRIBUNAL TO RECOMPUTE THE WORKING CAPIT AL INVESTMENT MADE BY THE APPELLANT IN THE PURCHASE OF MOLASSES AND HENCE, THE ADDITION OF RS. 3,11,94,880/- WAS MADE ON WRONG FOOTING. THIS ISSUE WAS NOT REMANDED TO THE ASSESSING OFFICER BY THE HON'BLE I.T.A.T.. THEREFORE, THE SAID ADDITION IS BEYOND THE DIRECTIONS OF THE ORDER OF THE APPELLATE -: 24: - 24 TRIBUNAL AND THE SAME CANNOT BE SUSTAINED IN APPEAL . THIS GROUND IS DECIDED IN FAVOUR OF THE APPELLANT. 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT ADDITION MADE IN THE ORIGINAL ASSE SSMENT AMOUNTING TO RS. 1 CRORE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASES WAS DELETED BY THE TRIBUNAL . THIS ISSUE WAS NOT REMANDED TO THE ASSESSING OFFICER, TH EREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REWORKING TH E ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE LD. CIT(A) AFTER DEALING IN GREAT DETAIL AT PAGE 103 AND 104 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE REASS ESSMENT PROCEEDINGS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASES ON THE PLEA THAT TRIBUNAL HAVE ALREADY DE LETED THIS ADDITION IN ITS ORDER DATED 18.3.2005. NO INTERFERE NCE IS REQUIRED IN THE ORDER OF CIT(A). NOW COMING TO THE APPEAL FILED BY THE ASSESSEE, WHEREIN ASSESSEE HAS ALLEGED THE A CTION OF LOWER AUTHORITIES FOR RECORDING FINDING WITH REGARD TO UNACCOUNTED PURCHASES OF MOLASSES MADE BY THE ASSES SEE IN VARIOUS YEARS. FROM THE RECORD, WE FOUND THAT AFTER MAKING -: 25: - 25 DETAILED INQUIRY AND INVESTIGATION, THE ASSESSING O FFICER HAS COMPUTED UNACCOUNTED PURCHASES OF MOLASSES MADE BY THE ASSESSEE IN VARIOUS YEARS. HOWEVER, WHILE COMPUTING THE YIELD IN PROOF LITRE AND SPIRIT, THE ASSESSING OFFICER HA S NOT FOLLOWED THE DIRECTION GIVEN BY THE TRIBUNAL. WE ALSO FOUND THAT THE ASSESSING OFFICER HAS NOT TAKEN THE AVERAGE SALE RA TE OF IMFL, C.L. AND SPIRIT, AS DIRECTED BY THE TRIBUNAL. HOWE VER, THE CIT(A) HAS PROPERLY FOLLOWED THE DIRECTIONS GIVEN B Y THE TRIBUNAL AND WORKED OUT SALE VALUE OF UNACCOUNTED PRODUCTION. NO INTERFERENCE IS REQUIRED IN THE ORDE R OF CIT(A). ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH APRIL, 2013. CPU* 4.29.30.4