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2016 (7) TMI 921 - HC - Income TaxAssessment based only on the statement under Section 133A - Levy of penalty under Section 67 of the KVAT Act - finding of excess stock and suppression of sale - Held that:- It is seen that the Revenue relied on letter dated 18.09.2007 issued by V. Ahammed to the Assistant Director of Income Tax (Investigation) clarifying his statement under Section 133A of the Act. This shows that the maker of the statement himself has re-affirmed the statement and nothing has been produced by the assessee to show that the contents of the statement are incorrect. In such a situation, we cannot accept the contention now raised by the learned counsel for the assessee and hold the assessments to be illegal. During the course of hearing, the learned for the appellant produced before us order No.TRL-08/06-07 dated 08.08.2007, whereby the penalty proceedings under Section 67 of the Act were compounded by the assessee on payment of ₹ 28000/- as compounding fee which shows that the total suppression detected was only ₹ 2,10,595/-. This means that the penalty proceedings were initiated on the basis that there was excess stock of ₹ 14,38,785. In the final order that was passed, the said amount is now reduced to ₹ 2,10,595. Since the assessment under the Income Tax Act has been completed quantifying the suppression of sale based on the excess stock detected in the inspection conducted by the authorities under the KVAT Act on 17.08.2006, the reduction in the excess stock as seen in the final order passed in the proceedings under Section 67of the KVAT Act, should have an impact on the assessment under the Income Tax Act also. Therefore, though we confirm the orders impugned before us, we are of the view that the assessee is entitled to get the benefit of the reduced excess stock as determined by the authorities of the KVAT Act in their order No.TRL- 08/06-07 dated 08.08.2007. For that matter, we remit the proceedings to the Assessing Officer, who will issue revised orders taking into account the order dated 08.08.2007 passed by the Intelligence Officer, Squad No.II, Tirur. The appeals are accordingly disposed of remitting the matter to the Assessing Officer to pass fresh orders as directed above.
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