Deputy Commissioner of Income-Tax, Central Circle -1, Aurangabad V. Nilesh Steel & Alloys Pvt Ltd., Jalna

ITSSA 101/PUN/2022

AI Insights

The case involves three appeals by the Revenue against M/s. Nilesh Steel & Alloys Pvt. Ltd. concerning the assessment years 2008-09 to 2010-11. The primary issue in these appeals was the deletion of substantial additions made by the Assessing Officer (AO) based on estimated suppressed production inferred from electricity consumption. The CIT(A) had deleted these additions, leading to the Revenue's appeal. The Tribunal examined the evidence and precedents, noting the absence of any direct evidence of suppressed production despite a search and seizure operation. The Tribunal's decision was influenced by similar previous cases where such additions were also deleted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137735 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-02-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 11-10-2022
• Other Referred Cases: ITA Nos. 1636 and 1637/PUN/2012
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / IT(SS)A Nos.99 to 101/PUN/2022 निर्धारण वषा / Assessment Years : 2008-09 to 2010-11 DCIT, Central Circle-1, Aurangabad Vs. M/s. Nilesh Steel & Alloys Pvt. Ltd., D-69, Additional MIDC Area, Jalna, 431203, Maharashtra PAN : AABCN4686K Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : These appeals by the Revenue arise out of three separate orders passed by the CIT(A), Pune-12 on 15-07-2022 in relation to the assessment years 2008-09 to 2010-11. Since connected issues are raised in these appeals, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. A.Y.2008-09 : 2. The only issue raised by the Revenue is against the deletion of addition of Rs.11,32,21,946/- by the ld. CIT(A) which was Assessee by None Revenue by Shri Keyur Patel Date of hearing 09-02-2023 Date of pronouncement 09-02-2023 IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd., 2 made by the Assessing Officer (AO) on account of suppressed production estimated on the basis of electricity consumption. 3. Briefly stated, the facts of the case are that the assessee is engaged in the manufacturing of MS billets and MS melting/MS rolls. The return was filed u/s.139(1) declaring total income at Rs.1.85 crore. Thereafter, notice u/s.148 was issued and assessment was completed u/s.143(3) r.w.s.147 determining total income at Rs.15.88 crore. This was followed by a search and seizure action u/s.132 on the assessee company on 02-05-2013. In compliance to the notice u/s.153A, the assessee furnished return declaring total income at Rs.1.85 crore, as was originally shown. During the course of assessment proceedings, the AO concluded that the assessee suppressed production for 5725.220 Metric Ton, which was valued at Rs.11.32 crore. This supposed suppression was deduced on the basis of electricity consumption made by the assessee. The resultant addition was made, which came to be deleted in the first appeal, against which the Revenue has come up in appeal before the Tribunal. 4. We have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd., 3 assessee despite notice. It is seen that the entire edifice made by the AO of suppressed production by the assessee is founded on the electricity consumption. Despite search, nothing was found out to indicate that the assessee was engaged in suppressing production. Neither there is any reference to excess stock found during the search nor to any sale or purchase bills which were not recorded in the books of account. It is seen that the AO made similar additions for the A.Yrs. 2004-05 and 2009-10 as well. The Tribunal, vide its order dated 30-11-2015 in ITA Nos. 1636 and 1637/PUN/2012, has countenanced the deletion of addition. The ld. DR fairly conceded that the facts and circumstances for the year under consideration are similar. Respectfully following the precedent, we uphold the impugned order in deleting such addition. A.Y. 2009-10 : 5. Facts for the A.Y. 2009-10 are mutatis mutandis similar in which the addition of Rs.4.64 crore was made by the AO on account of suppressed production on the basis of electricity consumption. The AO also made an addition of Rs.58,12,720/- IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd., 4 on account of working capital required for suppressed production. The ld. CIT(A) deleted both these additions. 6. Following the view taken herein above for the A.Y. 2008-09, we uphold the impugned order in deleting both the additions because the second addition on account of working capital required for the suppressed production is based on the primary addition of suppressed production and is consequential. A.Y. 2010-11 7. The facts for this year are also similar to the A.Y. 2008-09. However, instead of making consequential addition towards working capital required for making the suppressed production, the AO for the year under consideration, extrapolated the suppressed production to the presumed purchases and went on further to hold that such presumed purchases must have been made in cash in contravention to section 40A(3) of the Act. This led to the making of the addition u/s.40A(3) of the Act. The ld. CIT(A) deleted both the additions. 8. Here again, we find that the factual scenario prevailing for the instant year is similar to that of the earlier years. The addition made u/s.40A(3) is consequential to the addition of suppressed IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd., 5 production made by the AO. Following the view taken herein above for the two years, we uphold the impugned order. 9. In the result, all the appeals stand dismissed. Order pronounced in the Open Court on 09 th February, 2023. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; ददन ांक Dated : 09 th February, 2023 सतीश आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील थी / The Appellant; 2. प्रत्यथी / The Respondent 3. 4. 5. The CIT(A)-12, Pune The Pr. CIT( Central), Nagpur DR, ITAT, ‘A’ Bench, Pune 6. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अदधकरण ,पुणे / ITAT, Pune IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd., 6 Date 1. Draft dictated on 09-02-2023 Sr.PS 2. Draft placed before author 09-02-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *