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ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 23 (1) , NEW DELHI Versus SH. RAVI GOYAL

2017 (4) TMI 914 - ITAT DELHI

Unaccounted production and scrap out of alleged undisclosed imports - Held that:- The actual imports, as verified from the bills of entry produced by the assessee were reproduced in the impugned order in the tabulation form. Therefore, it was found that the actual shortage out of tin imported on the basis of licenses issued for 8118.706 MT works out to only 2.754 MT, which is undoubtedly negligible. The difference of 59.025 MT earlier arrived at is mainly relatable to the import of 20.620 MT on .....

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order of the Addl. DG of Foreign Trade dated 20.10.1994. Therefore, the addition made of unaccounted production and scrap out of alleged undisclosed imports, entirely on the basis of the seized Form A, was accordingly found to be without basis, and was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issues in dispute and accordingly, we dismiss the ground nos. (i) & (ii) raised by the Revenue. - Additio .....

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est free advance could have been advanced. The Assessing Officer has not proven the utilization of the interest bearing funds in making the interest free advances. In the body of the order, the disallowance of interest is stated to be as discussed in Assessment Year 1993-94 at page No. 14 to 15. Hence, the observation of the Assessing Officer cannot be said to be based on facts or on verification of the utilization of borrowed funds. No disallowance of interest paid to the bank is justified with .....

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. F.R. Meena, Sr. DR For The Assessee : None ORDER PER H.S. SIDHU : JM The Revenue has filed these Appeals against the separate impugned Orders all dated 14.11.2011 passed by the Ld. CIT(A)-XXIII, New Delhi relevant to assessment years 1984-85, 1985-86, 1986-87, 1987-88 & 1989-90 respectively. Since the issues involved in these appeals are common and identical, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with a .....

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per seized Form A. ii) On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 11,00,064/- on account of scrap at 8% of total consumption of raw material as per seized Form A. iii) On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 84,600/- on account of interest relatable to interest free advance. iv) The appellant craves leave to add, alter or amend any of the grounds of appeal b .....

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y the then Dy. CIT, Special Range - I, Ghaziabad on 29.03.1996 at an income of ₹ 1,37,26,926/- Against this order, the assessee filed an appeal before the Ld. CIT(A), who vide his common order dated 30.03.1999 for Assessment Years 1984-85 to 1987- 88, and Assessment Year 1989-90, set aside the assessment, directing that the records seized by the Excise Department be examined, including Form A submitted to the Director General of Foreign Trade (DGFT), RG-23 register and import register, and .....

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and 1989-90, dated 18.07.2008, set aside all the assessments to the file of the Assessing Officer for his fresh adjudication after taking into consideration all the evidences and materials on record and the contention raised by the assessee. The Assessing Officer, after calling for various details and considering the replies filed by the assessee, made the same additions to the returned income as had been made in the earlier order dated 23.03.2001. In the order under section 143(3) r.w.s. 254, .....

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00/- iv) Clubbing of income of Smt. R. Mani Goel ₹ 93,434/- 4. Against the order of the AO, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 14.11.2011 has allowed the appeal of the assessee. 5. Aggrieved with the aforesaid order of the Ld. CIT(A), Revenue is in appeal before the Tribunal. 6. Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal and stated that the Ld. CIT(A) has wrongly deleted the additions. 7. The .....

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n for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records. 8. We have heard the Ld. DR and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) has ela .....

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of total income of ₹ 1,37,26,926/-. The Assessing Officer estimated the suppressed production of value of ₹ 5,63,22,462/- out of imported tin sheets consumed as per details in Form A submitted before the Jt. Chief Controller of Imports and Exports, and seized during the search by the Central Excise Department on 23.06.1988. A gross profit rate of 22.092% was applied on the suppressed production to arrive at income of ₹ 1,24,42,758/-. A separate addition of income of ₹ 11, .....

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ome Tax Department on 14.09.1994, no evidence was found to prove that unrecorded purchases either of imported or indigenous tin sheets or the consequent production and sale of undisclosed goods was carried out in the assessment years 1984-85 to 1987-88 and 1989-90. The appellant has all along contended that the figures of consumption and production provided by it in Form A were inflated in order to obtain import licenses for higher quantity of raw material. In the assessment order, the Assessing .....

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ssing Officer has obtained the copy of the seized Form A during the remand proceedings and also verified the actual quantity of import of raw material as per the licenses issued from the office of the DGFT during the period under consideration. As per the Form A, the raw material consumption between Assessment Year 1984-85 and 1987-88 was 20699 MT, whereas as per the order of the Add!. DG of FT, the quantity imported against the licenses was 9025 MT upto the Assessment Year 1992-93. In the appel .....

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s admitted that no independent documents are in the possession of the Department to prove that the appellant had actually imported the quantity of material mentioned in Form A. It is also admitted that the Assessing Officer during the course of the assessment proceedings completed on 29.03.1996 had verified from DGFT the figures of actual import by the appellant, which was also mentioned in the assessment order. The quantities-of consumption adopted by the Assessing Officer in the assessment ord .....

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ssing Officer had determined the undisclosed production solely on the basis of the declaration given in Form A, stating the total consumption of raw material therein. The Central Excise Authorities had also determined the undisclosed production on the basis of particulars given in Form A, submitted before the Jt. Chief Controller of Exports and Imports for obtaining import quota. The Hon'ble ITAT, while setting aside the assessments, took note of the order dated 16.08.2007 passed by the CEST .....

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spute reads as under:- "2. There is no running away from the fact that the assessee had presented a rosy picture of production of tin containers to import large quantity of raw material for the manufacture of their final product viz. tin sheets. When the demand was confirmed against them in April, 1991, the order was challenged and by Final Order No. A/323-326/97-NB dated 18.02.1997, the Tribunal accepted the contention of the assessee that the Commissioner had not granted opportunity of pe .....

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ice as to what they had to say on the figures arrived at by the Collector after verification and investigation of figures. 3. A fresh adjudication order was passed confirming the demand which was again challenged before the Tribunal. The Tribunal vide Final Order No. A/455/97-NB dated 1.7.97 once again remanded the case, directing the Commissioner to readjudicate the case after furnishing a copy of report of Additional Director General of Foreign Trade and copy of report of investigation, as alr .....

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nfirmed and direction of the Tribunal for furnishing copy of the investigation of figures of import and report of the Additional Director General of Foreign Trade has not been carried out. Since the adjudication order in this case continues to suffer from the vice of violation of principles of natural justice and since the Tribunal's order regarding furnishing of copies of report therein above specified has not been implemented, we grant the prayer for waiver of predeposit and stay recovery .....

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llant was issued licenses during the period of July 1984 to 1991-92 for import of only 9025 MT as against 20699 MT claimed by the appellant in the seized Form A. The Assessing Officer has obtained the actual figures of import by the appellant from the DGFT, which stands at 8118.706 MT. The appellant was required to tally each license obtained from DGFT with each bill of entry recorded in its books of account in order to justify its stand that no excess import had taken place. After verification, .....

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ported on the basis of licenses issued for 8118.706 MT works out to only 2.754 MT, which is undoubtedly negligible. The difference of 59.025 MT earlier arrived at is mainly relatable to the import of 20.620 MT on license no. 3079530, and of 36.847 MT on 11.09.1991 on license No. 2240176. After considering the import in 1991-92 of 57.467 MT, the figure of total import between Assessment Year 1984-85 and 1989-90 comes to 8058.283 MT, which is marginally less than the quantity of 8059.975 MT record .....

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e appellant has contested disallowance of part of interest on the borrowings from the Bank of Maharashtra. It is contended that the borrowed funds have not been utilized for the purpose of making non-interest bearing advances. In this connection, it was submitted that: "The Learned ACIT Circle 23(1) has erred both on facts and in law in making addition of ₹ 84,600/- on account of deemed interest @12% on advances given to Mr. Ravi Goyal for ₹ 7,05,OOO/-. The Learned ACIT Circle 2 .....

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e balance sheet. Hence addition of ₹ 84,600/- on account of deemed interest on advances given to Ravi Goyal is bad in law and likely to be deleted. The same view has been given by your predecessor in the case of the assessee for A.Y. 1992-93. Reliance may also placed in the case of Commissioner of Income Tax and Others vs Radico Khaitan Ltd. (2004) 274 ITR 354. In which The Allahabad High Court has held that the assessee company has sufficient funds other than the borrowed money for giving .....

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R 165 Dail Investments Ltd. Vs. Deputy Commissioner Of Income Tax 73 TTJ 22" {13.1} It is seen that this issue was the subject of appeal in Assessment Years 1991-92 and 1992-93. In the order for the Assessment Year 1992-93 of the CIT (A) XXIII dated 31.03.2011, this issue was held in favour of the appellant, after considering the order of the ITAT, Delhi for the Assessment Year 1991-92, wherein it was held:- "9.3 We have heard the learned representative of the parties, also gone throug .....

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bove. This being the position, it cannot be held that the assessee had advanced interest bearing borrowing to the parties involved. We, therefore, are of the view that no addition on this account was called for. Thus, ground No. 14 is allowed." {13.2} The appellant has shown that as against the interest free advance of ₹ 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of ₹ 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only .....

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e observation of the Assessing Officer cannot be said to be based on facts or on verification of the utilization of borrowed funds. No disallowance of interest paid to the bank is justified without rebuttal of the appellant's contention that the advances had been given from his own capital and internally generated funds. Hence, the addition made of ₹ 84,600/- on this account is deleted. 8.1 On perusing the above finding of the ld. CIT(A), with regard to ground no. 2 & 3 are concern .....

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ue of scrap at 8% of the total consumption of raw material as per the seized Form A. It is an undeniable fact that the seized Form A showing consumption of 20699 metric tonnes of tin sheets, is the primary evidence relied upon in the assessment orders of 29.03.1996 and 24.12.2009. No other supporting evidence of import of raw material or production of finished products in excess of that accounted for in the books is on record. Even during the subsequent search by the Income Tax Department on 14. .....

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at the additional production may have originated from high seas purchases, or purchases from the domestic market. However, no such evidence was found during the search. The order dated 20.10.1994 of the Addl. Director General of Foreign Trade, holding that the allegation of mis-utilization of imported material had been found to be unsubstantiated, and that material imported against the licenses was properly accounted for, cannot be brushed aside. Moreover, the Assessing Officer has obtained the .....

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antity imported by the appellant upto Assessment Year 1989-90 is disclosed at 8059.975 MT. The quantity actually imported by the appellant during this period was 8118.706 MT, as verified by the Assessing Officer from DGFT. Hence, the total difference worked out by the Assessing Officer works out to 1130.015 MT, if the license wise difference is considered, and 59.025 MT if set off is allowed. In the remand report of the Assessing Officer dated 30.03.2011, it is admitted that no independent docum .....

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and also taken by the Central Excise Department in their orders dated 4.11.1997 and 20.05.2009 are based entirely on the figures provided by the appellant in Form A, which is essentially an application for import license, in which the applicant declares details of previous import and consumption. In the order of the ITAT, Delhi, dated 18.07.2008, setting aside the earlier assessment proceedings of the five concerned assessment years, it was held that the Assessing Officer had determined the und .....

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regard to undisclosed production. The Hon'ble CESTAT in the various orders passed on 18.02.1997, 01.07.1999 and 10.09.2007, has taken adverse note of the failure of the Central Excise Department to consider the report of investigation carried out from the Customs and DGFT office in respect of actual import of raw material. The most recent order of the CESTAT, Principal Bench, New Delhi dated 30.09.2011, granting stay on recovery of amounts in dispute reads as under:- "2. There is no run .....

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er on the aspect of verification of figures of quantity of tin sheets imported by the assessee and the contention of the appellant that the entire demand was based on application filed with the Director General of Foreign Trade for grant of import license for import of tin sheets. The Tribunal set aside the order of April, 1991 and sent the matter back for fresh adjudication after directing grant of personal hearing and putting the appellants to notice as to what they had to say on the figures a .....

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nd order. Once again, demand was confirmed by the Commissioner vide his order dated 31.7.2002 necessitating fresh appeal to the Tribunal which by Final Order No. 478/07 dated 16.8.2007 remanded the case to the adjudicating authority after noting that the Commissioner had not decided on the merits of the case and had not complied with the direction given in the remand order. 4. Now we come to the present impugned order where the demand has been re-confirmed and direction of the Tribunal for furni .....

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e appeal." 8.2 We further note that the assessment order is based solely on the figures of consumption of raw material submitted by the assessee in Form A for obtaining import licenses, but is not supported by any other material evidence showing higher import/purchase/ production, than is available in the books of accounts. The DGFT order relied upon by the assessee categorically holds that the appellant was issued licenses during the period of July 1984 to 1991-92 for import of only 9025 M .....

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.1987 works out to 8115.772 MT as against 8118.706 MT as per the DGFT. The difference of 1130.015 MT worked out by the Assessing Officer pertains to license Nos. 3079530, 2240176, 2240923, 2241059, 2241060, 2246544 and 2247084. The actual imports, as verified from the bills of entry produced by the assessee were reproduced in the impugned order in the tabulation form. Therefore, it was found that the actual shortage out of tin imported on the basis of licenses issued for 8118.706 MT works out to .....

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a total quantity of 8115.772 MT on the basis of licenses issued between 16.07.1984 and 17.12.1987, is supported by the bills of entry, as well as the order of the Addl. DG of Foreign Trade dated 20.10.1994. Therefore, the addition made of unaccounted production and scrap out of alleged undisclosed imports, entirely on the basis of the seized Form A, was accordingly found to be without basis, and was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we u .....

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oninterest bearing advances. We observed that it was the contention before the Ld. CIT(A) that ACIT Circle 23(1) has erred both on facts and in law in making addition of ₹ 84,600/- on account of deemed interest @12% on advances given to Mr. Ravi Goyal for ₹ 7,05,OOO/-. It was also submitted that the ACIT Circle 23(1) has not tried to appreciate the assessee's submission that the above advances has not been given from interest bearing fund rather from internal generated fund. Also .....

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been given by the then Ld. CIT(A) in the case of the assessee for A.Y. 1992-93. Reliance was also placed in the case of Commissioner of Income Tax and Others vs Radico Khaitan Ltd. (2004) 274 ITR 354 in which the Allahabad High Court has held that the assessee company has sufficient funds other than the borrowed money for giving the amount in question as loan to its sister concern, which finding has not been specifically challenged in the present appeal, we are of the considered opinion that th .....

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1991-92 and 1992-93. In the order for the Assessment Year 1992-93 of the CIT(A)-XXIII dated 31.03.2011, this issue was held in favour of the assessee, after considering the order of the ITAT, Delhi for the Assessment Year 1991-92, wherein it was held:- "9.3 We have heard the learned representative of the parties, also gone through the relevant record and perused the paper book. While the assessee is showing interest income of ₹ 22,98,869/-, he claimed an expenditure of ₹ 17,87,8 .....

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