TMI Blog2018 (2) TMI 1880X X X X Extracts X X X X X X X X Extracts X X X X ..... ear and subsequent years cannot be the basis for a decision in the years under challenge. The said fact at best can be a reason for arousing suspicion that all may not be correct in the facts of a particular assessee however the presumption that necessarily it must be a case where reopening can be said to be justified would require drawing of presumptions conjectures and surmises . In the facts of the present case admittedly no effort was made by the assessing officer to call for any record from the Central excise authority or look into any material before the formation of his belief . It is seen that infact whether anything was done for the formation of his belief itself is not evident. It is seen that from the date of receipt of the information up to the date of issuance of notice more than sufficient time was available to the assessing officer. In the facts for 2006-07 Assessment year as has been argued on behalf the assessee and we have noticed that this fact is not disputed by the Sr. DR that the information was already available to the assessing officer before the passing of the original order under section 143 (3). We note that on account of this fact the said action h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 3. That the Learned C.I.T. (A) wrongly upheld the impugned order u/s 147/143 (3) of the Income Tax Act, 1961 without considering various facts, explanations, evidences and material on record. 4. That the Learned C.I.T. (A) wrongly upheld addition by applying Gross Profit Rate on sales estimated by the Central Excise Authority, thereby making impugned addition of ₹ 77,77,645/-. 5. That the Learned C.I.T. (A) wrongly upheld estimation of turnover and Gross Profit after relying on the orders of the settlement commission for other years. 6. That the appellant craves leave to add, alter, amend Or withdraw any grounds of appeal 5. The relevant facts of the case are that the assessee in the year under consideration filed its return on 30/10/2005 declaring nil income which was thereafter processed and in the scrutiny assessment order under section 143 (3) dated 27/12/2007 the income was assessed at Rs. Nil. Subsequently 147 proceedings were initiated under section 147 by issuance of notice under section 148 on 24/02/2012 leading to the passing of the assessment order dated 28/03/2013 passed under section 147/143 (3). The correctne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. Addressing the assessment order it was his submission that the AO has blindly accepted as correct and true the half baked allegations in the form of information received as correct without even caring to independently apply his mind whether they are applicable to the assessee s case in the income tax proceedings. It was argued that he has blindly reproduced in the copy of the show cause notice u/s 148 the exact information received copy of which has been placed at paper book 1 to 4. Elaborating this argument it was submitted that the AO has alleged that the assessee is mainly manufacturing calcium carbonate ignoring the fact that the assessee s business was not only manufacturing calcium carbonate but even calcium power; lime ciliate etc. The case of the Central Excise Department had been built on duty evasion qua Calcium Carbonate which as per order of CESTAT turned out to be incorrect but the AO in the present proceedings on the receipt of the so called information atleast should have cared to consider the manufacturing activities of the assessee. Without even caring to look into the record of the assessee casually proceeded without any allegation of any impact on the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the order of the said authority it was submitted that the additions were not ultimately maintained . In this background referring to the record it was his submission that the Assessing Officer has blindly accepted the so-called receipt of information as correct and true and proceeded to reopen a closed and concluded assessment without caring to carry out any independent enquiry. It was his submission that the Central Excise Department has nowhere mentioned that any bill of sales or quantity of material sold was not recorded in the books of accounts of the assessee. There is no such allegation. The Central Excise Department has simply taken the quantity and value of the material supplied and applied the estimated rates of precipitated calcium carbonate to assess the difference in value of the sales on the basis of difference in description of items sold and nowhere it has been the allegation of the Excise Department that in the quantity sold there was any allegation of discrepancies. Referring to the records it was submitted that the Central excise authority collected information from the Punjab barrier regarding sale during the specific period and this fact would be evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso the assessee must necessarily be penalized by reopening his concluded assessments. It was his submission that this position taken by the CIT (A) is contrary to facts and record addresses the departmental mindset in upholding the Assessment Orders on some ground or the other. It was submitted that the order of the Settlement Commission was received on 22/06/2012 and the notice under section 148 was issued on 24/02/2012 thus the assumption of jurisdiction cannot be said to be justified on the ground as the event took place subsequently that is much after the issuance of notice under section 148 which was dated 24/02/2012 i.e; the order of the settlement commission at the cost of reiteration was passed much after the said date. In these circumstances on the basis of this fact the reopening could not be justified. 7.5 Dehorse the said fact also it was submitted merely because the assessee went before the Settlement Commission on the basis of whatever advise it may have received at the relevant point of time considering whatever facts were available however merely on this ground the reopening cannot be justified. It was his submission that there may have been any number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Reliance was also placed upon the decision of the jurisdictional High Court in the case of ACIT vs. Bharat Bhushan (2015) 377 ITR 189 (P H) copy of which had also been placed at pages 98-102 of the paper book for the proposition that merely because the assessee was being prosecuted for keeping sugar beyond the permissible limit and was trading in the same by carrying out sale and purchase it would not entitled the assessing officer to add the value of the sugar to his undisclosed income on the basis of conjectures. Reliance was also placed upon the decision of the jurisdictional High Court in the case of Arora Alloys Ltd 12/2015/60 Taxmann.com 67 (P H) for the proposition that once the Central excise Department had deleted the addition of excise duty as a result of the order of the CESTAT the occasion to make an addition on the allegations of clandestine manufacture even where statement of a Director was on record could not be made. 7.6 Inviting attention to the paper book consisting of case law relied upon. It was his submission that these decisions are heavily relied upon and although for the sake of not wasting the valuable time of the Court specific reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts are fully identical and SLP against this judgement of the Hon ble Delhi High Court has been dismissed by the Supreme Court vide order dated 11/9/20/06/2017 as would be evident from 2017 TIOL- 253- SC- IT. Addressing the order of the CESTAT which has been filed as an additional evidence though it is available in the public domain it was her submission that the assessee is under a mistaken belief that it would be of any help to the assessee. Since written submissions were filed and relied upon for ready reference the relevant extract of the written submissions is reproduced hereunder: 2. With regard to the additional evidence in form of CESTAT order submitted by the assessee, it is submitted that the reliance placed by the assessee on this order to get relief is misplaced. In this order clandestine removal to goods resulting in unaccounted sales has not been disputed / doubted. What is disputed is that whether the goods removed clandestinely are duty free goods or taxable goods. CESTAT has held the goods removed clandestinely are duty free goods such as quick lime, lime stone powder, calcite etc and not precipitated calcium carbonate (PCC) which chargeable to duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company were being sold. It was also discovered by the Excise Authority during the search that invoicing/billing of the goods manufactured and sold was grossly under valued. The assessee company as per record was engaged in mainly Manufacturing of Calcium Carbonate. However, the manufactured goods while being sold as per the Excise Authority were being represented/shown in the bills as Calcite Powder, Lime Powder or-Quick Lime Powder, which involved comparatively very low value as against value of Calcium Carbonate and thus the value shown in the bills was considered to be very less. On the basis of information called for the period October, 2002 to June, 2007 from the check post, Department of Excise and Taxation and also from the record found from the factory premises, residence of sales representative Sh. Vinod Khullar based at Delhi and also at the business premises of transporter through which the goods was transported, the Central Excise Authorities had worked out the unaccounted turnover of the assessee s company as following:- 10.1 On the basis of these sale values the Commissioner, Central Excise passed order dated 05-03-2009. This informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Khullar/Varun Khullar and others. 10. Regarding the demand of ₹ 45,21,421/-, which has been confirmed on the basis of documents/notebook recovered from Mukul Kumar, Lab Assistant. Shri Mukul Kumar was maintaining diary for different products and therefore, it cannot be stated that it was only for precipitated calcium carbonate and there is no corroborative evidence to support that charge, 11. Regarding the demand of ₹ 9,58,622, which has been confirmed on the basis of blank GR's recovered from premises of M/s.Satnam Transport Co. The quantity and commodity @ 12 MT of calcium carbonate per GR has been arbitrarily taken as GR does not contain any particulars, therefore, the said demand is not sustainable. 12. Regarding the demand of Rs.l,06,41,860/-, which has been confirmed on account of under valuation by considering the goods cleared as precipitated calcium carbonate, in absence of any evidence to substantiate the said assertions. There were no incriminating documents in regard to undervaluation recovered during the search of appellant premises. 13. With regard to the demand of ₹ 78,26,500/-, it is submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of clandestine manufacture and clearance of precipitated calcium carbonate in the guise of lime stone powder, calcite, quick lime to evade payment of duty. 10.3 The decision arrived at on considering the allegations and evidences relied upon by the Central Excise Authority has been arrived at in the following speaking finding of CESTAT: 16. Heard both sides and considered the submissions. 17. We have heard both sides in detail and also verified the records placed before us. On the basis of records placed before us, we find that the demands have been confirmed against the appellant on the following grounds: Sr. No. Component of demand Amount (1) (2) (3) 1. Duty on account of clandestine clearances on the basis of checkpost details of Punjab Boarder Rs.2,50,70,800/- 2. Duty on account of clandestine clearances on the basis of ledgers No. 10/1 20/3 of Shri. Vinod Khullar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly stated as under: Each of the ten samples in the form of white fine powder. Each has the following constants- S. No. Lab. No. dt. Sample No. % of calcium carbonate Oil Absorption Bulk density Loss of ignition 1. C. Ex/CLD/Int/Misc/25 3/TPPL/6/6/0 7 98.1 22.0 1.4 44.2 2. C. Ex/CLD/Int/Misc/26 04/white 97.6 21.0 1.1 45.2 3. C. Ex/CLD/Int/Misc/27 03/yellow 98.2 25.0 1.2 45.8 4. C. Ex/CLD/Int/Misc/28 1/07-08 97.8 25.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch head is dealt as under:- (i) Duty on account of clandestine clearance on the basis of check post details of Punjab Border- We have examined the documents in details provided by the excise and taxation commissioner, Patiala wherein the description of goods is shown quick lime, lime powder, lime stone powder and calcite powder and nowhere the details show that it was precipitate-calcium carbonate. Apart from that, no effort has been made by the authorities below to ascertain the facts whether description of goods given in the details provided by the check post is incorrect, or, not and there is no such investigation. Therefore, in the absence of corroborative evidence, the demand cannot be confirmed against the appellant on account of clandestine clearance of precipitated calcium carbonate, therefore, the demand of ₹ 2,50,70,8007- is set aside. (ii) Duty of ₹ 1,03,69,193/- has been demanded on account of clandestine clearance of calcium carbonate on the basis ledger of Shri Vinod Khullar We have seen that the samples were drawn from the premises of Shri Vinoid Khullar and test report dated 29.11.2007 which is not conclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of under valuation is not sustainable. Consequently, the demand is set aside. (vi) The demand of ₹ 78,26,500/- We have seen that the appellant is manufacturing quick lime, lime powder, lime stone powder and calcite powder which are exempted goods and precipitated calcium carbonate is dutiable and availed exemption under Notification No.8/03. The SSI exemption denied to the appellant on the ground that during 2003-04, clearance already exceeded ₹ 3 crpre, Therefore, they are not entitled to SSI exemption. We have seen that on 28.7.2004, there was search conducted in the factory premises of the appellant, wherein the documents were verified with record to the manufacturing activity, statutory records and certain other records were resumed. Thereafter after completion of enquiry, no case was made against the appellant and' all. the documents resumed were also returned on 8.4.2005. In that circumstance, when search itself took placed in July, 2004 and the SSI exemption was granted to the appellant, SSI exemption availed by them cannot be denied to the appellant. It is also a fact on record that the appellant has not availed credit on the inputs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty are not imposable on M/s Kunal and penalties on various other co-appellants are not imposable. 10.4. In the aforementioned peculiar facts and circumstances as have been brought out hereinabove we find that the additions made by the assessing officer and sustained by the CIT(A) on facts admittedly was not justified. Since the whole case is built on the basis of the search carried out by the Central excise authority wherein as noted above the entire foundation having collapsed as a result of the findings arrived at by CESTAT we are of the view that in these peculiar facts and circumstances of the present case the additions cannot be sustained. The starting point in the facts of the present case admittedly it is seen is the presumption of the assessing officer that necessarily the assessee was entering into clandestine undisclosed transactions on the basis of which it was presumed that income has escaped assessment. It is noted that the whole focus and purpose of the central exercise authority was to see whether there was any duty evasion by the assessee who it was alleged had disclosed that it was manufacturing in its three concerns, quicklime, lime powder limeston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en argued on behalf the assessee and we have noticed that this fact is not disputed by the Ld. Sr. DR that the information was already available to the assessing officer before the passing of the original order under section 143 (3). We note that on account of this fact the said action has possibly not been defended as vehemently by the Revenue also. In these peculiar facts and circumstances of the case we find that the appeal of the assessee both on the assumption of jurisdiction as well as on merits has to be allowed. We have taken into consideration the decisions relied upon by the parties before the Bench even if specific reference to each of these decisions is not being made. Specific Reference may be made to the order of the ITAT in the case of M/s Arora alloys Ltd Vs. ITO in ITA No. 1048/Chd/2008 dated 24/06/2011. Copy of this decision has been placed at paper book pages 141 to 160. It has been submitted and we note that the said decision has been approved by the jurisdictional High Court in case of CIT Vs. Arora alloys Ltd (2015 60 taxmann.com 67 (Punjab and Haryana) copy of this decision has also been placed at paper book pages 103 to 108. Since the conclusion arrived at p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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