Yash Organics Ltd., V. The ACIT, Circle-8,

ITSSA 116/AHD/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8140 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-08-2011
• Assessment Year: misc
• Appeal Filed On: 23-04-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Documents seized

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , , , , !' !' !' !', , , , #$ #$ #$ #$ %% % & %% % & %% % & %% % &, , , , ' ' ' ' ( ' ( ' ( ' ( ' BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KR. SHRAWAT, JUDICIAL MEMBER) IT(SS)A NO.116/AHD/2004 [BLOCK PERIOD : 02-8-1996 TO 11-2-2000] YASH ORGANICS LTD. A-27, SHRI RAMNAGAR SOCIETY VEJALPUR AHMEDABAD. /VS. ACIT, CIR.8 AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .& / 0 (/ ASSESSEE BY : SHRI SAKAR SHARMA ' / 0 (/ REVENUE BY : SHRI S.S. PARIDA DATE OF HEARING : 25 TH AUGUST, 2011 DATE OF PRONOUNCEMENT : 30 TH AUGUST, 2011 (2 / O R D E R PER G.D. AGARWAL , VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S)-XIV, AHMEDABAD DATED 4.3.2004 ARISING OUT OF THE ORDER OF THE ASSE SSING OFFICER UNDER SECTION 158BC OF THE INCOME TAX ACT, 1961. 2. AS PER CONCISE GROUNDS OF APPEAL, THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE: 1. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHO LDING ORDER OF THE AO PASSING ORDER U/S.158BC OF THE ACT WITHOUT APPRE CIATING THAT PROCEEDINGS UNDER SECTION 132A ON THE BASIS OF WHIC H PROCEEDINGS U/S.158BC HAD BEEN INITIATED ON THE APPELLANT ITSEL F WERE INVALID. HE OUGHT TO HAVE HELD ORDER PASSED U/S.158BC TO BE VOI D AB INITIO. 2. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHOL DING ORDER OF THE AO DETERMINING UNDISCLOSED INCOME U/S.158B9B0 WITHO UT APPRECIATING THAT ALL TRANSACTIONS RELATING TO SALES WERE DULY R ECORDED IN THE BOOKS OF THE APPELLANT AND THEREFORE, PROVISIONS OF SECTION 158BC OUGHT TO HAVE NOT BEEN INVOKED ON THE APPELLANT. IT(SS)A NO.116/AHD/2004 -2- 3. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFI RMING ADDITION OF RS.20,38,17,981/- PARTLY ON ACCOUNT OF SUPPRESSION IN SALE PRICE AND PARTLY ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE-COMPANY DERIVES INCOME FROM PRODUCTION AND SALE OF INDUSTRIAL FUEL OIL AND INDUSTRIAL SOLVENT. THAT THE POLICE A UTHORITIES VIZ. DSP, RURAL, AHMEDABAD SEIZED ONE TANKER CONTAINING 8,000 LITRES OF SOLVENT IN THE 3 RD WEEK OF JANUARY, 2000. HE ALSO SEIZED CERTAIN DOCUMENTS . THAT AS ON 11-2-2000, THE REVENUE AUTHORITIES REQUISITIONED THOSE DOCUMENTS U NDER SECTION 132A AND ON THAT BASIS, THE PROCEEDINGS UNDER SECTION 158BC WAS INITIATED AGAINST THE ASSESSEE-COMPANY. THAT THE ALLEGATION OF THE POLIC E AUTHORITIES WAS THAT THE ASSESSEE WAS SELLING SOLVENT FOR MIXING WITH THE PE TROL. THE DIRECTORS OF THE ASSESSEE-COMPANY WERE CHARGE-SHEETED. THAT INCOME- TAX PROCEEDINGS ARE ENTIRELY BASED UPON THE ALLEGATIONS AND THE CHARGE SHEET OF THE POLICE DEPARTMENT. THAT NOW CRIMINAL CASE AGAINST DIRECTO RS OF THE ASSESSEE-COMPANY HAVE BEEN DECIDED AND ALL THE DIRECTORS HAVE BEEN E XONERATED. THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS RELIED UPON THE STATEMENT OF CERTAIN PERSONS TAKEN BEFORE THE POLICE AUTHORITIES. JUDIC IAL MAGISTRATE HAS CONSIDERED THOSE STATEMENTS AND HAVE FOUND THAT THE POLICE HAS RECORDED THE STATEMENT UNDER COERCION. THAT THE ORDER OF THE JUDICIAL MAG ISTRATE WAS NOT AVAILABLE DURING THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES . HE THEREFORE REQUESTED THAT THE ORDER OF THE JUDICIAL MAGISTRATE SHOULD BE ADMITTED AS AN ADDITIONAL EVIDENCE. HE ALSO SUBMITTED THAT AFTER CONSIDERING THE DECISION OF THE JUDICIAL MAGISTRATE NO ADDITION WOULD SURVIVE BECAUSE THE EN TIRE FINDINGS OF THE AO WAS BASED UPON THE ALLEGATIONS OF THE POLICE AUTHOR ITIES AS WELL AS STATEMENTS OF CERTAIN PERSONS RECORDED BY THE POLICE AUTHORITIES. THAT THE ALLEGATIONS OF THE POLICE AUTHORITIES HAVE NOT BEEN UPHELD BY THE JUDI CIAL MAGISTRATE. SIMILARLY, THE JUDICIAL MAGISTRATE HAS GIVEN THE FINDING THAT THE STATEMENT RECORDED BY THE POLICE AUTHORITIES WAS RECORDED UNDER COERCION AND THEREFORE CANNOT BE RELIED UPON. HE THEREFORE REQUESTED THAT THE ORDER OF THE JUDICIAL MAGISTRATE SHOULD IT(SS)A NO.116/AHD/2004 -3- BE ADMITTED AS ADDITIONAL EVIDENCE AND THE ADDITION MADE BY THE AO SHOULD BE DELETED. 4. THE LEARNED DR STRONGLY OBJECTED TO THE ADMISSIO N OF ADDITIONAL EVIDENCE AND HE SUBMITTED THAT THE PROCEEDINGS UNDE R THE INCOME TAX ACT AND THE CRIMINAL PROCEEDINGS ARE DIFFERENT. IN THE CRI MINAL PROCEEDINGS, THE GOVERNMENT HAS TO ESTABLISH BEYOND DOUBT THE INFRAC TION OF ANY LAW BY THE ACCUSED WHILE INCOME-TAX PROCEEDINGS IS WITH REGARD TO DETERMINATION OF THE INCOME OF THE ASSESSEE BASED UPON THE EVIDENCE AVAI LABLE ON RECORD. HE THEREFORE SUBMITTED THAT THE ORDER OF THE JUDICIAL MAGISTRATE HAS NO RELIANCE SO FAR AS THE DETERMINATION OF THE INCOME OF THE ASSES SEE IS CONCERNED AND THEREFORE THE SAME SHOULD NOT BE ADMITTED. HE FURT HER SUBMITTED THAT IF THE BENCH IS PLEASED TO ADMIT THE ADDITIONAL EVIDENCE, THEN THE MATTER SHOULD BE SET AIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTE R TAKING INTO CONSIDERATION THE ORDER OF THE JUDICIAL MAGISTRATE. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE ASSESSMENT PROCEEDINGS WERE TAKEN ON THE BASIS OF ACTION OF THE POLICE AUT HORITIES. IN FACT THE REVENUE HAS REQUISITIONED THE DOCUMENTS SEIZED BY THE POLIC E AUTHORITIES UNDER SECTION 132A. PROCEEDINGS U/S.158BC WERE TAKEN AGAINST THE ASSESSEE ON THE BASIS OF DOCUMENTS REQUISITIONED U/S.132A FROM POLICE DEPART MENT. THE AO IN PARA 4.4. OF THE ASSESSMENT HAS ALSO RECORDED THE FOLLOW ING FINDINGS: 4.4 THE POLICE AUTHORITIES, NAMELY, DSP, RURAL, AH MEDABAD SEIZE DONE TANKER CONTAINING 8000 LITRES OF SOLVENT IN TH E THIRD WEEK OF JANUARY, 2000. THE SOLVENT WAS ISSUED BY M/S.YASH ORGANICS LTD. AND WAS SUPPOSED TO BE DELIVERED TO ONE M/S.RAJ CHEMICA LS AT AGRA. BUT INSTEAD OF GOING TO AGRA, IT WAS SUSPECTED THAT THI S TANKER WAS GOING TO DELIVER THE SOLVENT SOMEWHERE IN GUJARAT ONLY. DUR ING THE COURSE OF THEIR PROCEEDINGS, THE POLICE SEIZED THE LEDGER AND INVOICES OF F.Y.1999- 2000 OF THE ASSESSEE. ALSO, ONE SUITCASE FULL OF DOCUMENTS WAS SEIZED. THE SAME WAS HANDED OVER TO THE REVENUE DURING THE COURSE OF REQUISITION PROCEEDINGS ON 11.2.2000. THEY THEREFO RE FORM THE SEIZED MATERIAL IN THE CASE OF THE ASSESSEE. SINCE THE OR IGINAL LEDGER AND SALE INVOICES WERE REQUIRED BY THE POLICE, COPIES OF THE SAME WERE HANDED IT(SS)A NO.116/AHD/2004 -4- OVER. THE POLICE CONDUCTED CERTAIN PRELIMINARY ENQ UIRIES AND ALL THE DIRECTORS OFT HE ASSESSEE NAMELY SHRI PARAS DS SAVL A, SHRI RUPESH K. SAVLA AND SHRI MANOJ S. SAVLA AS WELL AS OTHER RESP ONSIBLE PERSONS OF THE GROUP WERE DETAINED UNDER THE PREVENTION OF BLA CK MARKETING ACT. A CHARGE SHEET HAS ALSO BEEN FILED BY THE POLICE AG AINST THE MAIN PERSONS MANAGING THE AFFAIRS OF THE ASSESSEE. FROM THIS FACT, IT IS EVIDENT THAT THE ORDER OF THE JUDICIAL MAGISTRATE WOULD BE RELEVANT WHILE ADJUDICATING THE INCOME OF THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION. WE ALSO FIND THAT THE ORDER OF THE JUDICIAL MAGISTRATE IS DATED 11-6-2004 WHILE THE ASSESSMENT ORDER IS DATED 22-2- 2002 AND THE ORDER OF THE CIT(A) IS DATED 4-7-2004. THUS, THE ORDER OF THE J UDICIAL MAGISTRATE WAS NOT AVAILABLE WHEN THE ASSESSMENT PROCEEDINGS OR THE AP PELLATE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY WAS TAKEN UP. CONSID ERING TOTALITY OF THE ABOVE FACTS, IN OUR OPINION, IT WOULD BE IN THE INTEREST OF JUSTICE TO ADMIT ADDITIONAL EVIDENCE IN THE FORM OF ORDER OF THE LEARNED FIFTH JUDICIAL MAGISTRATE FIRST CLASS, AHMEDABAD (RURAL) AT AHMEDABAD. HOWEVER, WE ACCEPT THE ALTERNATE REQUEST OF THE LEARNED DR THAT IF THE ADDITIONAL EV IDENCE IS ADMITTED, THEN THE MATTER NEEDS TO BE RE-EXAMINED BY THE AO. ADMITTED LY, THE ORDER OF THE LEARNED JUDICIAL MAGISTRATE WAS NOT AVAILABLE WHEN THE AO COMPLETED THE ASSESSMENT. IT WOULD BE PROPER IF THE AO EXAMINES THE ISSUE AFRESH IN THE LIGHT OF THE ORDER OF THE LEARNED JUDICIAL MAGISTRATE. W E THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BAC K TO THE FILE OF THE AO. WE DIRECT THE ASSESSEE TO PRODUCE ORDER OF THE LEARNED JUDICIAL MAGISTRATE BEFORE THE AO AND THEREAFTER THE AO IS DIRECTED TO MAKE TH E ASSESSMENT DE NOVO IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE AO WILL GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. SINCE WE HAVE SET ASIDE THE ORDER OF THE AUTHORI TIES BELOW AND RESTORED THE MATTER BACK TO THE FILE OF THE AO, VARIOUS OTHE R GROUNDS RAISED BY THE ASSESSEE NEED NO SEPARATE ADJUDICATION. IT(SS)A NO.116/AHD/2004 -5- 7. IN THE RESULT, ASSESSEES APPEAL IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT THE DATE MENTIONED O N THE FIRST PAGE OF THIS ORDER. SD/- SD/- ( %% % & %% % & %% % & %% % & /MUKUL KR. SHRAWAT ) ' ' ' ' /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !' !' !' !' /VICE-PRESIDENT PLACE : AHMEDABAD C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD