Anand Omprakash Pahade v. The Income Tax Officer, Ward – 1 (3), Jalna
[Citation -2016-LL-1018-70]

Citation 2016-LL-1018-70
Appellant Name Anand Omprakash Pahade
Respondent Name The Income Tax Officer, Ward – 1 (3), Jalna
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 18/10/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags consumption of electricity • settlement commission • suppression of sales • additional evidence • excise department • additional income • suppressed sales • raw material • excise duty • g.p. rate
Bot Summary: In the entirety of the above said facts and circumstances, we hold that no extrapolation of sales for 300 days can be made in the hands of the assessee on the basis of the evidence found for clandestine removal of material without payment of Excise duty for few days, which in turn, has been admitted by the assessee by way of filing petition before the Settlement Commission, which in turn, has also been accepted by the Settlement Commission. Merely because the Settlement Commission accepted the claim of the assessee of additional Excise duty payable on the said clandestine removal of material without payment of Excise duty does not establish the case of the Revenue that the said figures of additional production should be utilized for extrapolating the sales in the hands of the assessee for the entire year. The learned Authorized Representative for the assessee fairly admitted that in case the said additional income has not been added while computing the income in the hands of the assessee for the respective years, the same may be directed to be added in the hands of the respective assessee in respective years. Accordingly, we direct the Assessing Officer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. Further, no addition can be made in the hands of the assessee, where no petition has been filed by the assessee before the Settlement Commission in any of the respective years or before the Excise authorities. 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 direct the Assessing Off icer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee.


IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM ITA No. 1887/PN/2014 Assessment Year: 2010-11 Shri Anand Omprakash Pahade M/s. Adinath Steel Re-Rolling Mills, Plot No.A-28/05, Addl. MIDC, Aurangabad Road, Jalna - 431203 Appellant PAN: LSPP4628A Vs. Income Tax Officer, Ward 1 (3), Jalna Respondent Appellant by : None (Adjournment refused) Respondent by : Shri Anil Kumar Chaware Date of Hearing : 18.10.2016 Date of Pronouncement: 18.10.2016 ORDER PER SUSHMA CHOWLA, JM: This appeal filed by assessee is against order of CIT(A), Aurangabad, dated 25.08.2014 relating to assessment year 2010-11 against order passed under section 143(3) of Income Tax Act, 1961 (in short Act ). 2. assessee has raised following grounds of appeal :- 1. learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming alleged suppression of sales to tune of Rs.12,17,11,260/ - and confirming addition to extent of Rs.48,68,460/-. 2 ITA No.1887/PN/2014 Shri Anand Omprakash Pahade 2. learned CIT(A) further erred in confirming alleged suppression of sales merely on presumption and assumption basis and without evidence of purchase of raw material or sales of finished goods out of books. 3. learned CIT (A) further erred in confirming alleged suppression of products on grounds of monthly variation in consumption of electricity vis-a-vis production. 4. learned CIT (A) further erred in confirming action of Assessing Officer in holding that books of accounts of appellant company are correctly rejected u/s 145 of Income Tax Act without any evidence or findings as how provision of Sec.145(3) are satisfied. 5. learned CIT (A) further erred in confirming action of Assessing Officer in making addition on account of alleged suppression of sales without giving any show cause notice to appellant to explain facts against proposed huge addition on this account which is against rules of natural justice. 6. learned CIT (A) further erred in not following order of Hon. ITAT, Pune in case of ACIT Vs. M/s SR J Peety Pvt Ltd. (2011) 137 TT J (Pune) 627, ITAT, Pune as well as Delhi Excise Tribunal Order in case of R.A. Casting Pvt. Ltd. wherein addition made on account of unit consumption on presumption basis was deleted. 3. appeal of assessee was fixed for hearing, against which assessee moved application for adjournment. However, none was present on date of hearing. adjournment moved by assessee is refused, since issue is squarely covered by orders of Tribunal in assessee s own case in earlier years. 4. Briefly, in facts of case, assessee was engaged in manufacturing of TMT bars. Intelligence information was gathered by DGCEI in case of certain concerns engaged in manufacture of TMT bars that they were involved in clandestine removal of finished goods without payment of Excise duty. Search was conducted on 18.12.2006 on basis of said investigation and information received. Assessing Officer carried out proceedings against assessee in earlier years. In some of cases of manufacture of TMT bars, manufacturing units had declared that they had clandestinely removed goods without payment of Excise duty. Assessing Officer further considered 3 ITA No.1887/PN/2014 Shri Anand Omprakash Pahade electrical consumption and was of view that 188 electricity units were required for manufacturing one MT of TMT bars. Assessing Officer in view thereof, rejected books of account and worked out addition on account of profit on suppressed sales from year to year. matter travelled to Tribunal in years in which investigation was carried out by Excise authority and issue was decided in bunch of appeals. assessee had also filed appeal relating to assessment year 2009-10 and same was decided by Tribunal vide consolidated order in ITA No .1292/PN/2012, relating to assessment year 2009-10 with lead order in Bhagyalaxmi Steel Alloys Pvt. Ltd. Vs. ACIT, vide order dated 15.07.2015. 5. assessee is aggrieved by order of CIT(A) in confirming alleged suppression of sales to tune of Rs.12,17,11,260/- and confirming addition to extent of Rs.48,68,460/-. assessee is also in appeal against rejection of books of account under section 145 of Act and making of addition on account of alleged suppression of sales. 6. On perusal of record, we find that in case of assessee, there was no enquiry or search or investigation by Excise Department, under which any case of suppressed production was detected and / or clandestine removal of goods without payment of Excise duty was made by Excise Department. assessee had not moved any petition before any authority of Excise or Income Tax authority admitting any clandestine removal of goods without payment of Excise duty. sole basis for addition in hands of assessee was erratic consumption of electric units. Assessing Officer on basis of addition made in case of various other units had made addition in hands of assessee on account of estimation of profit on suppressed production, which in turn, was based on consumption of electricity. 4 ITA No.1887/PN/2014 Shri Anand Omprakash Pahade 7. We find that similar issue of estimation on account of erratic consumption of electricity arose before Tribunal in bunch of appeals. Tribunal 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 issue at length vide paras 54 to 87 and vide paras 88 and 89, Tribunal had deleted addition on both counts i.e. addition made on account of suppressed production and alleged investment in purchases, which read as under:- 88. In entirety of above said facts and circumstances, we hold that no extrapolation of sales for 300 days can be made in hands of assessee on basis of evidence found for clandestine removal of material without payment of Excise duty for few days, which in turn, has been admitted by assessee by way of filing petition before Settlement Commission, which in turn, has also been accepted by Settlement Commission. Merely because Settlement Commission accepted claim of assessee of additional Excise duty payable on said clandestine removal of material without payment of Excise duty does not establish case of Revenue that said figures of additional production should be utilized for extrapolating sales in hands of assessee for entire year. Admittedly, assessee had offered additional income on said clandestine removal of material without payment of Excise duty, which is to be added as income in hands of assessee. learned Authorized Representative for assessee fairly admitted that in case said additional income has not been added while computing income in hands of assessee for respective years, same may be directed to be added in hands of respective assessee in respective years. Accordingly, we direct Assessing Officer to verify from records for respective years and include additional income on account of such admitted clandestine removal of material without payment of Excise duty, by assessee either before Settlement Commission or before Excise authorities, in hands of assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of material without payment of Excise duty and in those years in absence of any evidence and / or any investigation or inquiry made by Assessing Officer and where Assessing Officer has failed to collect additional evidence, no addition can be made in hands of assessee, by way of extrapolation of sales for 300 days on account of any evidence found in any preceding or succeeding years. Further, no addition can be made in hands of assessee, where no petition has been filed by assessee before Settlement Commission in any of respective years or before Excise authorities. 89. Since we have deleted addition in hands of assessee on both accounts i.e. addition made on account of erratic consumption of electricity and addition proposed on basis of evidence found for part of year of clandestine removal of material without payment of Excise duty, next addition made in hands of assessee i.e. alleged investment in purchases for effecting such sales which goods have been clandestinely removed, is not sustainable. Accordingly, we hold that no addition can be made in hands of assessee on account of alleged investment in purchases under section 69C of Act. 5 ITA No.1887/PN/2014 Shri Anand Omprakash Pahade 8. Thereafter, Corrigendum order was passed by Tribunal substituting para 88 of Tribunal vide order dated 17.02.2016 and it was held as under:- 3. On perusal of record, we find that by error, findings of Tribunal in para 88 with special reference to from line 17 to 22, needs correction to extent that additional income to be added in hands of assessee is equivalent to profits on suppressed production @ 4% or actual GP rate declared by assessee whichever was higher. In view thereof, we pass this corrigendum order and para 88 i.e. from line 17 to 22 would now be substituted by following para. 88. Admittedly, assessee had offered additional income on said clandestine removal of material without payment of Excise duty, which is to be added as income in hands of assessee. learned Authorized Representative for assessee fairly admitted that in case said additional income has not been added while computing income in hands of assessee for respective years, same may be directed to be added in hands of respective assessee in respective years. Accordingly, we direct Assessing Off icer to verify from records for respective years and include additional income on account of such admitted clandestine removal of material without payment of Excise duty, by assessee either before Settlement Commission or before Excise authorities, in hands of assessee. Accordingly, we direct Assessing Officer to verify from records for respective years and include in hands of assessee, additional income @ 4% or actual G.P. rate declared by assessee for that year, whichever is higher, on value of such admitted clandestine removal of material without payment of Excise duty, by assessee before Excise authorities. Thus, assessee is directed to file requisite details of proceedings before Excise authorities, before Assessing Officer in order to compute additional income in hands of assessee in respective years. 9. issue arising before us identical to issue before Tribunal in Shree Om Rolling Mills Pvt. Ltd. Vs. Addl. CIT (supra). Further, during year under consideration, neither investigation by DGCEI nor any suppressed production has been detected and admitted by assessee. Further, assessee has not moved any petition before Settlement Commission or any other Excise authorities. In totality of above said facts and circumstances and in absence of any evidence collected by Assessing Officer of alleged removal of goods without payment of Excise duty, merely on basis of estimation of alleged suppressed production in case of other concerns of Jalna, there is no merit in making any addition in hands of assessee. Further, Tribunal in series of cases with lead order in Shree Om Rolling Mills Pvt. Ltd. Vs. 6 ITA No.1887/PN/2014 Shri Anand Omprakash Pahade Addl. CIT (supra) in assessment years 2006-07 and 2007-08 vide order dated 15.07.2015 has deleted addition made in hands of assessee on account of alleged suppression of production. Accordingly, ground of appeal raised by assessee against rejection of books of account and confirming addition made on account of suppression of production by applying GP rate of 4% on alleged production of sale are allowed. In view thereof, appeal of assessee is allowed. 10. In result, appeal of assessee is allowed. Order pronounced in open Court on this 18th day of October, 2016. Sd/- Sd/- (ANIL CHATURVEDI ) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 18th October, 2016. GCVSR Copy of Order is forwarded to : 1. Appellant; 2. Respondent; 3. CIT(A), Aurangabad; 4. CIT, Aurangabad; 5. DR , ITAT, Pune ; 6. Guard file. BY ORDER, //True Copy // Sr. Private Secretary ITAT, Pune Anand Omprakash Pahade v. Income Tax Officer, Ward – 1 (3), Jalna
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