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TMI Blog2019 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) quashing the initiation of reassessment proceedings u/s.147 of the Income-tax Act, 1961 (hereinafter called 'the Act') and consequently declaring the assessment order null and void. 3. Briefly stated, the facts of the case are that the assessee is a company engaged in manufacturing of Petroleum Products. Return of income was filed declaring loss of Rs. 16,99,280/-, which was processed u/s.143(1) of the Act. The Assessing Officer (AO), thereafter issued notice u/s.148 by recording the reasons that the income of the assessee amounting to Rs. 79,58,760/- had escaped assessment. The assessment was completed determining total income at Rs. 1,57,45,840/- making addition, inter alia, of Rs. 79,58,760/-. The assessee assailed the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had made sales to the tune of Rs. 4,97,42,250/-. It is observed by the Sales Tax Department, that the above party is indulged in the sales of Petroleum Products which is actually sold in Maharashtra State. Thus, the finding of the Sales-tax Department revealed that the differential amount of salestax @16% has been evaded by the assessee and the same constitutes the undisclosed income in his hand, which works out to Rs. 79,58,760/-. It is also recorded by the Sales Tax Department that Naphtha is used for adulteration of Petrol and superior Kerosene Oil. After aggregation of paraffin is sold in the black market in cash. Therefore the differentials amount in the rates of Naphtha and petrol also constitutes undisclosed income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to an incentive of Rs. 98,03,704/-, a copy of which has been placed at pages 57 to 59 of the paper book. Certain conditions have been set out in the certificate itself. The first condition is that the certificate is valid for the period from 16-03-2000 to 15-10-2011. It, therefore, divulges that both the years under consideration are covered within the duration of the certificate. The second condition is that the holder of this certificate is entitled to claim exemption under the said entry only in respect of its sales and purchases relating to the eligible industrial unit. The third condition stipulates that: "Sales of goods manufactured at the said industrial unit by the holder of this certificate shall be free from whole of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Maharashtra. This has led to determination of amount of tax and interest under the Sales-tax Act liable to be paid by the assessee at Rs. 1.38 crore. It is further a matter of record that the first appeal of the assessee against such assessment order passed under the Sales-tax Act, got dismissed. The overall effect of the proceedings under the Sales-tax is that the assessee's version of having made sales outside Maharashtra has been repelled and it has been held that the assessee made sales within the State of Maharashtra. Reason for the claim made by the assessee and its rejection by the Sales-tax authorities is that the amount of available incentive, for which the assessee could raise bills without charging any sales tax, standing at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of income, no reassessment can be initiated. On examining the facts of the instant case on the touchstone of section 147, it clearly transpires that though the assessee defrauded Sales-tax Department by claiming that the sales were made outside Maharashtra which were actually made within Maharashtra, but this defrauding is income-tax neutral. It is not the case of the Revenue that the assessee, in fact, collected sales-tax @15.5% (or 16% as stated by the AO) but offered a lower amount at 4% or in other words pocketed the differential of 11.5% (15.5% - 4%). The ld. AR contended that under the Scheme, the assessee was not entitled to recover any amount of Sales-tax but was authorized to sell its goods without charging any Sales-tax so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee showing sales made in Maharashtra as inter-State sales, we are satisfied that the ld. CIT(A) was justified in quashing initiation of reassessment proceedings. We, therefore, accord our imprimatur to the view canvassed by the ld. CIT(A). 8. As the initiation of reassessment proceedings is held to be invalid, the sequitur is that the proceedings flowing therefrom should automatically stand cancelled including the additions so made by the AO. In the light of our decision on the above ground, there is no need to dispose off the grounds taken on merits. A.Y. 2004-05 : 9. It is an agreed position that the facts and circumstances of the instant year are mutatis mutandis similar to those for the A.Y. 2003-04. For this year also, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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