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Showing 201 to 220 of 1722 Records
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2019 (9) TMI 1528 - CESTAT KOLKATA
Demand of penalty - suppression of facts or not - tax and interest is not in dispute and was already paid by the appellants before the issuance of the show cause notice and have been appropriated by the Adjudicating Authority in the adjudication order - HELD THAT:- It is found from the records that the appellants have erred in applying the price applicable to the SAIL to the unrelated buyers at the factory gate in respect of stock transfers. The transactions were duly recorded in their books of account. On being pointed out, they immediately deposited the Central Excise duty along with appropriate interest.
On perusal of records, it is observed that the learned Commissioner(Appeals) has failed to bring on record any ingredient of suppression of facts with an intent to evade payment of duty. There is nothing found regarding the ingredient of suppression of facts, fraud, collusion or any willful misstatement etc.
Penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1527 - CESTAT NEW DELHI
CENVAT Credit - Inputs or capital goods? - TMT bars, plates, channels, cement, MS angles, CR coils, joints, shapes and sections, etc. - goods used in construction of civil structures of factory shed and parts thereof - time limitation - HELD THAT:- If the articles on which the appellant herein has availed the cenvat credit fulfil the said User Test Principle, those clearly falls within the definition of capital goods as defined under Rule 2(k) of the Cenvat Credit Rules, 2004 - this principles of User Test has been laid down in various decisions including COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT].
The certificate issued by the Chartered Engineer has specifically certified that the impugned goods have been used by the appellant in their various plants and machinery such as boiler, EOT Crane, Ducting, Material Lifting Lifts, Winding drums, etc. This specific mention falsifies the observation of Commissioner(Appeals) that no physical verification about the equipment and the process thereof for manufacture of electrical insulation press boards has been done by the Chartered Engineer. Otherwise also law has been settled that the certificate issued by the authorised Chartered Accountant’s or Chartered Engineer’s having presumption of correctness attached to it cannot be rejected unless and until there is sufficient evidence to rebut the said presumption attached to those certificate.
Thus, there are no reason to reject the certificates rather it is held that the certificates as an evidence produced by the appellant proving the satisfaction of the user principle test, as far as the impugned objected goods are concerned.
Time Limitation - HELD THAT:- The present is not the case of suppression of facts on part of appellant nor there is any apparent intention of appellant to evade duty. Hence, Department was not entitled to invoke the extended period of limitation.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1526 - CESTAT KOLKATA
Convertible Foreign exchange or not - FIRC received in Indian Currency [INR] - HELD THAT:- In the instant appeals filed by the appellants, it is an undisputed fact that the payment has been received through foreign bank i.e. Mizuho Corporate Bank Ltd, for which, FIRC has been issued by the banks. The copy of FIRC has been submitted during the course of adjudication proceedings, which is evident from the recordings of both the adjudicating and appellate authorities.
The instant appeals are squarely covered by the decision of the Tribunal in the case of SUN-AREA REAL ESTATE PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [2015 (5) TMI 885 - CESTAT MUMBAI] where it was held that FIRCs were issued and there is a specific certification that the payment has not been received in non-convertible rupees, which establishes that the payment received and mentioned in the FIRCs are other than non-convertible foreign exchange, in other words, the payment is in convertible foreign exchange.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1525 - CESTAT KOLKATA
Valuation of imported goods - SMPS Power Supply Board used for controlled power supply in Set Top Box - MPEG-2 Card used as main board of Set Top Box - rejection of declared value - redetermination of value - demand of differential duty - redemption fine - penalty - HELD THAT:- The imported goods are electronic printed circuit board. A layman will not be able to decide the nature of the product and the possible use for such products by casual inspection. Reference to the website cannot only be the basis for loading of the value of the imported goods and demanding differential duty. The goods lying in the Customs’ charge need to be examined and a suitable expert opinion obtained as to the nature of the goods.
Power Supply for DTH - HELD THAT:- The Investigating Agency” has concluded that the imported goods were “SMPS Power Supply Board used for control power supply”. The appellants’ contention is that these are meant for Free to Air Set Top Box used for receiving unencrypted broad-cast signals. In this case also a layman will not be able to decide the nature of the product and possible use for such product. Reference to website cannot be the only basis for loading the value of the imported goods and demanding differential duty. The goods lying in the Customs’ charge need to be examined and a suitable expert opinion as to the nature of the goods. Therefore, proper valuation of the goods is required to be re-determined in the light of Section 14 of the Customs Act 1962 read with the Customs Valuation Rules 2007.
The impugned order is set aside and the issue is remanded to the adjudicating authority for passing a denovo order after getting the goods examined by an expert for taking opinion as to the exact nature of the goods. Such expert opinion as well as the basis for re-determination of value, should be shared with the appellant and an opportunity should be given for rebuttal of the same - Appeal allowed by way of remand.
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2019 (9) TMI 1524 - CESTAT NEW DELHI
Classification of goods - articles of paper and paper board and other products of printing industry - to be classified as products of printing Industry or not - Book Cover - printed electricity bill - waste and scrap of paper - SSI Exemption under N/N. 8/2003-CE dated 01.03.2003 - penalty.
Book Cover - HELD THAT:- The book cover under consideration is infact ‘cover page’ or ‘title cover’ of the book and is an integral part of the book. The book cover classified under heading 4820 are general stationary items and merely for the protection of the book from wear and tear. The case law in M/S Kailash Printing Press stated above is squarely applicable to the classification of the product under dispute - the classification of this book cover/cover page of the book under CET heading 4901 is upheld.
Printed electricity bill - HELD THAT:- The electricity bill is fully printed on both sides and has few blank spaces on the front page to be filled specific to the consumption and charges etc. Not only it has advertisements but all instructions with respect to the consumption and charges plan are also printed on the bill. Thus, it cannot be accepted that the argument of the learned Departmental Representative that the printing is merely incidental to the primary use - thus, the printed electricity bills have been correctly classified under heading 4911 in the impugned Order-in-Appeal and the Revenue’s plea to classify the same under heading 4920 is not acceptable.
Classification of waste and scrap of paper - HELD THAT:- The waste and scrap of paper under reference is not liable to excise duty and the findings of the Order-in-Appeal are upheld - benefit of SSI Notification no. 8/2003-CE and Notification 01/2011-CE and cum-duty benefit also allowed.
Penalty - HELD THAT:- There are no infirmity in the order of Commissioner (Appeals) in reducing penalty to 50% of the demand confirmed under Section 11AC of the Central Excise Act, 1944 for the reason that all the transactions were duly recorded in books of account and the invoices were duly issued, hence the charge of willful suppression cannot be sustained and the respondents were eligible for reduction in the penalty.
There are no infirmity in the impugned Order-in-Appeal and same is upheld - appeal dismissed - decided against Revenue.
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2019 (9) TMI 1523 - CESTAT KOLKATA
Classification of goods - organic composite solvent oil (OCS) - to be classified under tariff sub heading 2710 11 19 as ‘others’ appearing under the main heading 271011 as “light oil and preparation” - HELD THAT:- The issue stands squarely decided in their favour in the case of KUCHCHAL CHEMICALS LTD. VERSUS COMMISSIONER OF C. EX., LUCKNOW [2013 (9) TMI 538 - CESTAT NEW DELHI], wherein the Tribunal has held that Organic Composite Solvent cannot be classified under chapter 27.
Further, in the instant case, sole reliance has been placed by the Ld. Commissioner on the Chemical Examiner’s report. As rightly pointed out by the Ld. Advocate that, in the testing report it has been stated that the sample drawn from the appellant’s premises is liquid containing mixture of hydrocarbons having distillation range from 35 degree to 58 degree Celsius and flash point below 25 degree Celsius. The classification adopted by the Ld. Commissioner is not in consonance with the Note no. 4 to Chapter 27 of the Tariff which states that “Light Oil and Preparations” are those of which 90% or more by volume (incl. losses) distilled at 210 degree Celsius, whereas the Chemical Examiner has stated that the range of distillation of product is 35 degree to 58 degree Celsius which is much below 210 degree Celsius. Hence the classification under chapter 271011 cannot be adopted.
The classification adopted by the Ld. Commissioner cannot be approved and hence, the entire duty demand, interest and penalty are set aside - Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1522 - CESTAT NEW DELHI
Valuation - related party or not - requirement to pay duty on transaction value at which the said goods have been sold by the related person - suppression of material facts regarding sale of excisable goods to related person - extended period of limitation - HELD THAT:- The Court below have ignored the fact that there are also sales to unrelated parties at same prices or even lower price, as compared to the transaction value for clearance to M/s P. K. Industries. Further, classification of M/s P. K. Industries as related person of the appellant as per Accounting Standard AS(18) issued by the Institute of Chartered Accountants of India, is not equal to the definition of related person under Section 4(3)(b) of the Central Excise Act - Admittedly, in the facts of these appeals, the appellant is a Private Limited company whereas the said M/s P. K. Industries is a partnership firm and thus they are not interconnected undertakings.
Another coordinate Bench of this Tribunal in M/S. PHILIPS ELECTRONIC INDIA LTD. AND PHILIPS ELECTRONICS NY. THE NETHERLANDS VERSUS CCE-CHANDIGARH [2015 (11) TMI 1161 - CESTAT NEW DELHI] under the fact that 97-98% of the goods were sold to related person and balance 2-3% to independent buyer, there being no allegation that independent buyer is also a related person and the transaction value of independent buyer was similar to sale price of alleged related person, there is no allegation that the transaction value that the independent buyer is not genuine. It was held that when assessee has sales on regular basis to independent buyers, it cannot be said that assessee has so arranged that goods manufactured by him are generally sold by him to or through a related person.
These appeals by way of remand to the adjudicating authority to determine the show cause notice denovo in accordance with law - Appeal allowed by way of remand.
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2019 (9) TMI 1521 - CESTAT KOLKATA
Valuation - inclusion of value of discount in the assessable value - transaction value of the inputs were determined by reducing 1.9% from the price of the inputs which was payable by the said assessee to the bank - time limitation - HELD THAT:- In the case of INDIA PISTONS LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI [2007 (9) TMI 89 - CESTAT, CHENNAI] the Tribunal while considering a similar issue in the context of inclusion of 1.9% discount in the value of the raw material supplied to TML held that the interest received from the buyer of the goods by their bankers was not to be included in the assessable value of the goods purchased by them from the assessee.
In the present case, the SCN issued to the Appellants proceeds on the basis that the transaction value of the raw materials/inputs should be inclusive of 1.9% discount and therefore, the assessable value of the Axles should be re-determined. When the Commissioner dropped the proceedings initiated against the manufacturer of raw material received by the petitioners, on the very same issue of determination of assessable value of such raw material, the present proceedings initiated against the Appellants on the basis that the value of raw material should be enhanced by the very same discount of 1.9% cannot be confirmed.
Time Limitation - HELD THAT:- The entire exercise was revenue neutral inasmuch the differential duty if any, payable, was available as CENVAT Credit to TML. Therefore, there is no question of any suppression with an intent to evade payment of duty. Consequently, the extended period of limitation has been erroneously invoked.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1520 - CESTAT KOLKATA
CENVAT Credit - denial of credit on input and input service credit, used in the generation of electricity, which was supplied to the appellant’s Damanjodi unit, for consumption in manufacture of Alumina - period March, 2005 to September, 2014 - HELD THAT:- Taken into consideration the principles of law decided by the Hon’ble Supreme Court in the case of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [2009 (8) TMI 14 - SUPREME COURT] and the decision of the Hon’ble Rajasthan High Court in the case of COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [2018 (9) TMI 822 - RAJASTHAN HIGH COURT]. It is found that the Alumina Plant at Damanjodi, the Aluminium metal plant at Angul and the captive power plant, are integral parts of the same captive arrangement. Electricity, generated in the CPP, is captively used by both the units for manufacture of excisable goods. There is no sale of electricity by the appellant to its Damanjodi unit. Therefore, the ratio of decision of the Hon’ble Supreme Court, in the case of Maruti Suzuki is not applicable to the facts of the present case.
In the case of COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [2018 (9) TMI 822 - RAJASTHAN HIGH COURT], the Hon’ble High Court of Rajasthan, after elaborate discussions, have distinguished the case of Maruti Suzuki case and held that input, input services used in captive power plant for generation of electricity and the excess electricity cleared by the appellant in favour of their sister units, without there being any sale in view of captive arrangement, i.e. electricity generated in one unit being consumed in the other unit of the same company in addition to its being consumed in the same unit also, cenvat credit on inputs and input services is eligible in terms of Rule 2(k) and 2(l) of the Cenvat Credit Rules, 2004.
The case of CCE, Jaipur Vs. Shree Cement Ltd. is squarely applicable to the present case. Accordingly, the credit of duty/taxes paid on inputs/input services used in the generation of electricity consumed at the Koraput Plant, is eligible - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1519 - CESTAT KOLKATA
Demand of service tax alongwith the penalty - services provided outside India after 18.04.2006 - duty and interest were deposited on being pointed out before issuance of SCN - HELD THAT:- The issue relating to payment of tax on reverse charge on services received from outside India for the period post 18.04.2006 was a question of interpretation of law. The duty and interest were deposited on being pointed out by the department in 2007 much prior to the issuance of the Show Cause Notice. Further it is found that the Hon’ble Madras High Court in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. JSW STEELS LIMITED [2017 (7) TMI 603 - MADRAS HIGH COURT].
Following the ratio laid down by the Hon’ble High Court, the penalty imposed is set aside - appeal allowed in part.
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2019 (9) TMI 1518 - CESTAT KOLKATA
Classification of services - services rendered under the subject contracts by the appellant - work of turnkey contracts on lump sum basis of design, engineering, fabrication, supply and erection, installation, commissioning of Central Air Conditioning plants at the customer’s premises - to be classified as “works contract” under Section 65(105)(zzzza) and hence liable to service tax on and from 01.06.2007 or as “erection, commissioning and installation” service under Section 65(39a) and taxable under Section 65(105)(zzd) of the Act for the period prior thereto? - HELD THAT:- This issue is no more res integra in view of the decision of the Hon’ble Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT]. While holding that indivisible works contracts were liable to service tax only on and from 1st June, 2007, whereafter Finance Act 2007 expressly made such contracts liable to service tax and it was held that Works contract were not chargeable to service tax prior to 1.6.2007.
Respectfully following the above decision of the Hon’ble Supreme Court, which are fully applicable to the instant case, it can be concluded that the services rendered by the appellant under the subject contracts are classifiable as works contract and are not liable to service tax under the Act during the period involved - the demand of tax and interest confirmed by the impugned order and the penalty imposed are unsustainable.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1517 - CESTAT KOLKATA
CENVAT Credit - Input Service Distributor - whether credit distributed on ISD invoices issued by the said Regional Sales Offices (RSO) of the companies are admissible? - HELD THAT:- Since the Department has accepted the admissibility of Cenvat credit of the service tax on input services distributed by the RSOs of the applicants as ISDs for subsequent periods in case of both TSL and TSLD and identical issues are involved in the present appeals, accepting the principle of certainty and consistency in tax matters, it is held that the Cenvat credits availed in all the instant appeals are also legally and correctly availed by the appellants. Consequently, discussion on the other contentions raised by the parties in these appeals would be a mere academic exercise and, hence, not resorted to.
Reliance may be placed in the case of M/S. TATA STEEL LTD., M/S. SAIL, DURGAPUR STEEL PLANT AND COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS CCE, JAMSHEDPUR, CCE, BOLPUR AND M/S. SAIL, DURGAPUR STEEL PLANT [2016 (1) TMI 1059 - CESTAT KOLKATA] where it was held that Since the department has accepted the admissibility of cenvat credit on rails and railway track materials involving the same assessee, i.e., M/s SAIL, for subsequent period under the CCR, 2004 and identical issue is also involved in M/s Tata Steel’s case, therefore, adopting the principle of certainty and consistency in tax matters, the appellants are eligible to credit on rails and railway track materials.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1516 - CESTAT KOLKATA
Renting of Immovable Property Services - short payment of Service Tax - POT Rules - N/N. 18/2011-ST dated 1.3.2011 - period 2009-10 to 2012-13 - HELD THAT:- None of the submissions as made by the Appellant has been considered by the learned Assistant Commissioner, who has failed to observe and refer to the relevant provisions of Rule 6(1) of the Service Tax Rules, as existing upto 31.03.2011 and has simply referred to the provisions which are effective from 01.04.2011 and which cannot be applied in the instant case since the amounts which have been written off as bad-debts pertained to the period prior to 01.04.2011. The learned Assistant Commissioner should have appreciated the fact that the liability under the Act upto 31.03.2011 was on cash basis i.e. Service Tax was payable only on receipt of consideration for services rendered since the language employed in the said Rule 6(1) clearly provides that Service Tax shall be paid by the 6th day/5th day of the month following the calendar month in which payments are received towards the value of taxable services.
The actual amount written off as bad-debts during the period 2011-12 is ₹ 28,07,404/- out of which ₹ 25,69,660/- pertains to the unrealized consideration for rendition of taxable services during the period falling before 01.04.2011 and the balance amount of ₹ 2,37,744/- pertained to the services rendered during the Financial Year 2011-12 in view of which the same has not been claimed for reduction from the balance of opening debtors since the liability on the said amount of ₹ 2,37,744/- was payable on accrual basis unlike in case of ₹ 25,69,660/- which was required to be paid only on receipt of the said amount.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1515 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD
Sanction of scheme of Amalgamation - seeking various directions regarding holding and convening of various meetings - section 230-232 of Companies Act - HELD THAT:- Both the Transferor Companies are wholly owned subsidiaries of the Applicant Transferee Company and as no compromise is offered by the Applicant Transferee Company under the Scheme of Amalgamation to the creditors and considering the fact that the net worth of the Companies including the Applicant Transferee Company is positive, it is deemed appropriate to order that meetings of the Secured Creditors ( including secured debenture holders) and Unsecured Creditors (including unsecured debenture holders) of the Applicant Transferee Company are not required to be held and are hereby dispensed with.
Various direction regarding issuance of various meetings issued - application disposed off.
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2019 (9) TMI 1514 - ITAT JAIPUR
Ad hoc trading addition - Non invoking provisions of Section 145(3) - AO has given reasons for making ad hoc disallowance that too as a lump sum trading addition as the freight expenses were not fully supported by proper bills and vouchers - HELD THAT:-Though the term used by the A.O. in the assessment order being the trading addition is not justified when there is no rejection of books of account u/s 145(3) of the Act. However, in substance, the A.O. has made this addition on account of claim of expenses not verifiable. The A.O. has not given the finding that the claim of expenditure is either excessive or bogus having regard to the facts of turnover during the year under consideration and nature of business of the assessee. There is no dispute that in the business of the assessee, the freight expenses are inevitable and therefore, if the claim is not found to be excessive or bogus then merely because of the some of the expenses are not supported by proper vouchers, no ad hoc disallowance is called for.
If certain claim of expenditure is not found to be incurred wholly and exclusively for the business purpose of the assessee then the same is liable to be disallowed. However, if the expenditure incurred by the assessee is found for the business purpose of the assessee then due to certain irregularity in maintaining the supporting evidence an ad hoc disallowance is not called for. Accordingly, without specifying the instance of the expenditure, which is either excessive or found not incurred for the business of the assessee, the action of the A.O. in making ad hoc disallowance and confirmed by the ld. CIT(A) is not justified. Hence, ad hoc disallowance is deleted. - Appeal of the assessee is allowed
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2019 (9) TMI 1513 - ITAT CHENNAI
Bogus LTCG - Exemption u/s.10(38) denied - HELD THAT:- As noticed that the assessee has not been given a fair opportunity to prove the genuineness but the assessment has been made primarily based on the evidences collected by the Revenue in the course of the investigation conducted by them on the brokers / share broking entities etc. This is not permissible. This being so, in the interests of natural justice, the issue of the genuineness of the transactions require re-adjudication. Since, the right to exemption must be established by those who seek it, the onus therefore lies on the assessee. In order to claim the exemption from payment of income tax, the assessee had to put before the Income Tax authorities proper materials which would enable them to come to a conclusion.
AO must keep in mind that the onus of proving the exemption rests on the assessee. If the AO does have any evidence to the contrary, it is to be put to the assessee for his rebuttal. The internal communications of the Revenue are evidences for drawing an opinion on possible wrong claims but they are not the final evidence.
AO shall require the assessee; to establish who, with whom, how and in what circumstances the impugned transactions were carried out etc., to prove that the impugned transactions are actual, genuine etc. The assessee shall comply with the AO’s requirements as per law. The AO is also free to conduct appropriate enquiry as deemed fit. The Assessing Officer shall also bring on record the role of the assessee in promoting the company and relationship of the assessee with other promoters, role of the assessee in inflating the price of shares, etc. as had been held in the case of Kanhaiyalal & Sons (HUF) [2019 (2) TMI 1640 - ITAT CHENNAI]. The AO shall furnish adequate opportunity to the assessee on the material etc to be used against it and on appreciation of all the aspects, the AO would decide the matter in accordance with law. - Appeal of assessee allowed for statistical purposes.
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2019 (9) TMI 1512 - MADRAS HIGH COURT
Settlement of surrender leave salary - petitioner superannuated on 31.05.2016, from the year 2011 onwards, the said practice of surrendering 15 days or 50% of the earn leave per year was done away by the appellants Corporation on account of financial crises - HELD THAT:- The action based on the settlement entered into under Section 12(3) of the Act was not available to the respondent/writ petitioner, because the appellants Transport Corporation is citing financial crisis. The learned Single Judge took into consideration the facts placed before him and also noted the circular dated 09.01.2017 and taking note of the fact that there is record to show that the appellants transport corporation pleaded financial crises for non-settling the surrender leave salary, allowed the writ petition.
The learned Single Judge has rightly gone into the factual position and took note of stand of the appellants corporation as to why earlier they did not permit surrender and allowed the writ petition - appeal dismissed.
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2019 (9) TMI 1511 - ITAT PUNE
Addition on account of suppressed production on the basis of electricity consumption - CIT (A)-I directing that no addition can be made merely on basis of electricity consumption formula - HELD THAT:- We find there is no dispute on the fact that the Assessing Officer made addition based on the estimation with reference to the consumption of electricity. This is a case where the DGCEI scrutinized the accounts of the assessee. We further find on similar facts in the case of Bhagyalaxmi Steel Alloys Pvt. .[2015 (7) TMI 1264 - ITAT PUNE]the relief was granted by the Tribunal to the assessee. Aggrieved with the said relief granted by the CIT(A), the Revenue filed the present appeal informing that the Revenue already filed an appeal before the Hon’ble Jurisdictional High Court for the earlier assessment years and, therefore, this is the intention of the Revenue to file the present appeal is to keep the issue alive on this issue .
Considering the same, in our view, such reasons for filing the appeal is unsustainable.
Considering all, we are of the opinion that the order of the CIT(A) is fair and reasonable on this issue and it does not call for any interference. Thus, the relevant grounds raised by the Revenue are dismissed.
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2019 (9) TMI 1510 - MADRAS HIGH COURT
Validity of report in Form VSI – 1 dated 30.05.2014 - pursuant to the enforcement proceedings, an order of assessment has been passed - stay vacated for non-payment of batta - HELD THAT:- The Writ Petition is closed as infructuous.
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2019 (9) TMI 1509 - ITAT MUMBAI
Reopening of assessment u/s 147 - Estimation of income on bogus purchases - HELD THAT:- In the original return of income was processed u/s 143(1) and the only requirement under law to initiate reassessment proceedings was that learned AO had reasons to believe that certain income escaped assessment in the hands of the assessee. AO was clinched with tangible material in the shape of information from investigation wing / Sales Tax Department which, prima facie, suggested possible escapement of income in the hands of the assessee. Nothing more was required at this stage. Therefore, the reassessment proceedings were perfectly valid. Nothing on record support the legal grounds raised by assessee before us. Therefore, these grounds stand dismissed.
Estimation of additions of bogus purchases - There could be no sale without actual purchase of material keeping in view the assessee’s nature of business. The assessee was in possession of primary purchase documents and the payments to the supplier was through banking channels. The sales turnover reflected by the assessee was not disputed / disturbed by Ld.AO. However, at the same time, the assessee miserably failed to substantiate the purchases during assessment proceedings.
Notices issued u/s 133(6) remained unresponded to in all the cases. Under such circumstances, the additions which could be sustained, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. first appellate authority has rightly done.
Assessee was dealing in a low-margin item like iron & steel which attracts lower rate of tax, the estimation made by Ld. CIT(A) would be slightly on the higher side. We modify the same to 5% of suspicious purchases which comes to ₹ 4,64,973/-. The Ld. AO is directed to recompute the income in terms of our order. The grounds, on merits, stands partly allowed.
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