TMI Blog2016 (7) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 8-7-2016 - MS. SUSHMA CHOWLA, JM For The Appellant : Smt. Deepa Khare For The Respondent : Shri Amit Dua ORDER PER SUSHMA CHOWLA, JM : This appeal filed by the assessee is against the order of CIT(A)-2, Nashik, dated 23.12.2014 relating to assessment year 2007-08 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1 . The learned CIT erred in law and on facts in making an enhancement of Rs . 29,00,225 /- on account of unexplained expenditure in purchases towards the clandestine sales of Steel Bars . 2 . The learned CIT ( A ) erred in law and on facts in confirming addition of Rs . 3,10,000 /- towards undisclosed purchase of steel bars and Rs . 36,785 /- towards gross profit . 3 . The learned CIT erred in law and on facts in not appreciating that the additions are made on the basis of search conducted by Central Excise Department and the assessments made under the Central Excise Act are under dispute . 4 . The learned CIT ( A ) failed in making an enhancement on the basis of state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income out of clandestine sale of goods, which works to ₹ 1,99,100/-, against which the assessee had already declared income of ₹ 1,62,315/-, hence the addition of ₹ 36,785/- was made to the total income of the assessee. Further, addition was made on account of undisclosed expenditure for purchase of raw material under section 69C of the Act at ₹ 3,10,000/-. Another addition made in the hands of assessee was for non deduction of tax at source under section 40(a)(ia) of the Act. 5. The CIT(A) after considering the written submissions of assessee which are reproduced under para 5 of the appellate order, was of the view that the Assessing Officer was not justified in limiting the additions to ₹ 36,785/- as undisclosed income and ₹ 3,10,000/- as unexplained expenditure under section 69C of the Act. He was of the view that the entire amount of ₹ 30,62,540/- less gross profit at 5.3% on undisclosed sale of TMT bars should be treated as unexplained expenditure under section 69C of the Act. Hence, show cause notice was issued to the assessee against enhancement of ₹ 25,53,440/- over and above the additions made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id concerns were estimated and Excise duties were charged thereon. The CESTAT, deleted the said additions made on some hypothetical basis of consumption of electricity and production of finished goods. However, the assessee in all the cases accepted its liability to pay Excise duty on the suppressed production of goods, which were clandestinely removed without payment of Excise duty. The Income Tax Authorities in the case of such persons had taken the said investigation as base for making addition in the hands of respective assessees. No further investigation was carried out by the Income Tax Department and the sole basis for making the addition was the investigation carried out by the Excise authorities. The Tribunal in series of cases took note of the facts and with lead order in Shree Om Rolling Mills Pvt. Ltd. Vs. Addl. CIT in ITA Nos.125 127/PN/2012 and cross appeals in ITA Nos.430 431/PN/2012, relating to assessment years 2007-08 2008-09 vide order dated 15.07.2015 had considered the issue at length vide paras 54 to 87 and vide paras 88 and 89, the Tribunal had deleted the addition on both counts i.e. addition made on account of suppressed production and alleged investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respective years or before the Excise authorities . 89 . Since we have deleted the addition in the hands of assessee on both accounts i . e . addition made on account of erratic consumption of electricity and addition proposed on the basis of evidence found for the part of the year of clandestine removal of material without payment of Excise duty, next addition made in the hands of the assessee i . e . alleged investment in the purchases for effecting such sales which goods have been clandestinely removed, is not sustainable . Accordingly, we hold that no addition can be made in the hands of the assessee on account of alleged investment in purchases under section 69C of the Act . 10. Thereafter, Corrigendum order was passed by the Tribunal substituting para 88 of the Tribunal vide order dated 17.02.2016 and it was held as under:- 3 . On perusal of the record, we find that by an error, the findings of the Tribunal in para 88 with special reference to from line 17 to 22, needs correction to the extent that the additional income to be added in the hands of the assessee is equivalent to profits on suppressed production @ 4 % or actual GP r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
