2015 (7) TMI 1265 - AT - Income Tax

Scope of consideration under the purview of section 254(2) - suppressed sales on account of settlement petition - Held that - As before us while arguing the Miscellaneous Application the Ld. Special AR has vehemently stressed that the Tribunal has erred in not extrapolating the sales for the entire year based on the evidence i.e. the petition before the Settlement Commission and hence there is an error in assumption of facts and mistake of law in this regard. We find no merit in the said arguments raised by the Ld. Special AR before us during the course of hearing of Miscellaneous Application and the same is beyond the scope of consideration under the purview of section 254(2) of the Act. As referred to by us in the paras hereinabove such a plea could have been raised by the Department during the appellate proceedings before the Tribunal for the first time. However in the absence of such plea being raised during the course of hearing of the main appeal raising of such an argument before the Tribunal vide Miscellaneous Application is sheer waste of judicial time and process of law. This is a fit case for levy of costs against the Department for raising frivolous and vexatious arguments and pleas about estimation of income which were never raised during the course of hearing of the appeal before the Tribunal Admittedly during the course of search and seizure operation on certain brokers evidences of clandestine removal of material without payment of Excise duty was found against the assessee. However no search and seizure operation was carried out against the assessee but the assessee claims that in order to buy peace of mind it had declared the said amount by way of petition before the Settlement Commission. The said offer made by the assessee was accepted in toto. It may be noted that the Excise authorities have the power to re-visit the offer made by the assessee in case any adverse material is available against the person making the offer. It may also be noted that the Settlement accepted in the hands of the assessee is for the financial year and is not restricted to the number of days for which it has offered. In other words once a person makes a settlement petition for a particular year on account of the evidence found for part of the period and once the petition is accepted in the hands of the assessee no further addition can be made on account of alleged clandestine removal of goods or suppressed sales in the absence of evidence for the balance period. Even on merits the Revenue has no case against the assessee. The reliance placed upon by the Ld. Special AR on the ratio laid down in assessee s own case relating to assessment year 2006-07 is misplaced as the addition in the hands of the assessee in that year was made on account of search and seizure operations carried out by the Income-tax Department wherein sales outside books were found for few days. However no independent investigation / inquiry by the Income-tax Department has been made before completing assessment proceedings against the assessee. The assessee had offered the additional income on account of such clandestine removal of goods before the Assessing Officer for assessment year 2007-08 and the same was the reason for reopening the assessment under section 148 of the Act. Once a particular fact was available with AO which was taken note of and considered by him during the assessment proceedings but the addition having been made on only on the issue of erratic consumption of electricity which is the basis of order passed by CCE Aurangabad who was also in knowledge of the clandestine removal of material and the investigation carried out by the DGCEI and the petition before the Settlement Commission even the Third Member of CESTAT was aware of all these proceedings but since the settlement petition filed by the assessee had been accepted in toto by the Settlement Commission no further addition could be made in the hands of the assessee on this ground in the absence of any inquiry or investigation by the Assessing Officer. As pointed out by us in the paras hereinabove the Ld. Special AR has failed to establish its case of the Tribunal in not considering any material and in the absence of the same no power can be exercised under section 254(2) of the Act. In the entirety of the above said facts and circumstances we hold that the Miscellaneous Application moved by the Revenue is not maintainable and the same is dismissed. - Decided against revenue

Issues Involved:
1. Erroneous assumption of material facts.
2. Mistaken conclusion regarding the computation of suppressed turnover based on electricity consumption.
3. Erroneous interpretation of the decision of the Hon. Supreme Court in the case of R.A. Castings.
4. Erroneous interpretation of the decision in assessee's own case reported in 137 TTJ 627 (Pune).
5. Maintainability of the present petition.

Detailed Analysis:

1. Erroneous Assumption of Material Facts:
The Revenue argued that the Tribunal overlooked crucial evidence, including a confessional statement by the Managing Director of the assessee company about clandestine removal and sale of ingots without excise duty payment. The Revenue contended that the Tribunal failed to consider the assessee's admission of suppressed sales and unaccounted purchases, which were not retracted. The Tribunal, however, noted that the entire assessments were framed based on information from the Central Excise Department and adjudication by the CCE, Aurangabad, which was later set aside by the CESTAT. The Tribunal concluded that the assessments had no legal basis after the CESTAT's decision, thereby addressing the Revenue's claims.

2. Mistaken Conclusion Regarding the Computation of Suppressed Turnover Based on Electricity Consumption:
The Revenue claimed that the Tribunal erroneously concluded that the Assessing Officer computed suppressed turnover solely based on electricity consumption without considering the admission of suppression of sales by the assessee. The Tribunal, however, observed that the assessments were primarily based on the CCE, Aurangabad's order, which was subsequently overturned by the CESTAT. The Tribunal also noted that no independent investigation was conducted by the Revenue, and the entire assessments relied on information from the Central Excise Department.

3. Erroneous Interpretation of the Decision of the Hon. Supreme Court in the Case of R.A. Castings:
The Revenue argued that the Tribunal misinterpreted the Supreme Court's decision in R.A. Castings, which was inapplicable to the present case due to the presence of evidence of suppression of production. The Tribunal, however, found that the CCE, Aurangabad's order, which formed the basis of the assessments, was set aside by the CESTAT, and thus, the assessments had no legal standing. The Tribunal also noted that the decision in R.A. Castings was considered by the CESTAT and found not relevant to the present case.

4. Erroneous Interpretation of the Decision in Assessee's Own Case Reported in 137 TTJ 627 (Pune):
The Revenue contended that the Tribunal misinterpreted the decision in the assessee's own case reported in 137 TTJ 627 (Pune), which pertained to assessments under section 153A of the Act, whereas the present case involved reassessment proceedings. The Tribunal, however, observed that the assessments were based on the CCE, Aurangabad's order, which was set aside by the CESTAT, and no independent investigation was conducted by the Revenue. The Tribunal concluded that the decision in the assessee's own case was not applicable to the present case.

5. Maintainability of the Present Petition:
The Revenue argued that the present petition was maintainable as it demonstrated mistakes of facts and law apparent from the record. The Tribunal, however, found that the Revenue's arguments amounted to re-arguing the appeal, which is beyond the scope of section 254(2) of the Act. The Tribunal held that the issues raised by the Revenue were considered and decided in the original order, and no mistake apparent from the record was established. The Tribunal dismissed the Miscellaneous Application as not maintainable.

Conclusion:
The Tribunal dismissed the Miscellaneous Application filed by the Revenue, holding that the arguments raised amounted to re-arguing the appeal and no mistake apparent from the record was established. The Tribunal found that the issues raised by the Revenue were considered and decided in the original order, and the assessments had no legal standing after the CESTAT's decision.

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