M.A. No. 17/PN/2015 (Arising out of ITA Nos. 123, 124/PN/2012) and Arising out of ITA Nos. 435, 436/PN/2012, (Assessment Year: 2007-2008;2008-2009). Case: The Addl. Commissioner of Income Tax, Range-1 Vs Peety Steels Pvt. Ltd. and Ors.. ITAT (Income Tax Appellate Tribunal)
| Case Number | M.A. No. 17/PN/2015 (Arising out of ITA Nos. 123, 124/PN/2012) and Arising out of ITA Nos. 435, 436/PN/2012, (Assessment Year: 2007-2008;2008-2009) |
| Counsel | For Appellant: Sunil Ganoo, Special Counsel and For Respondents: J.P. Bairagra |
| Judges | Sushma Chowla, Member (J) and R.K. Panda, Member (A) |
| Issue | Income Tax Act, 1961 - Sections 145(3), 148, 153A, 154, 254, 254(2), 271(1)(c), 37, 43A; Indian Evidence Act, 1872 - Sections 106, 114, 115, 143(3), 148, 17 |
| Judgement Date | July 15, 2015 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
Sushma Chowla, Member (J), (ITAT Pune 'A' Bench)
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The captioned Miscellaneous Application relating to assessment years 2007-08 & 2008-09 has been filed by the Department against the order of Tribunal dated 16.01.2015 under section 254(2) of the Income Tax Act, 1961, which reads as under:-
Miscellaneous Application No. 17/PN/2015
This Miscellaneous application is filed by the I.T. Department who is the Respondent in ITA Nos. 123 & 124/PN/2012 and appellant in ITA Nos. 435 & 436/PN/2012 hereinabove referred.
The Hon. Members were pleased to allow the appeals of the appellant assessee bearing Nos. 123 & 124/PN/2012 and were pleased to dismiss the appeals of the department in ITA Nos. 435 & 436/PN/2012 vide order dt. 16/01/2015 for the reasons as fully set out in the impugned order.
With due respect to the Hon. Members, the Respondent Revenue most respectfully submits that the said order passed by the Hon. Bench suffers from following serious mistakes of facts and law which are apparent from the records, and have caused serious prejudice and injustice to the Respondent Revenue:
Erroneous assumption of material facts
The Respondent revenue submits that its special counsel Mr. Sunil Ganoo, upon conclusion of the hearing of the matters, with the permission of the Hon. Bench has filed Notes of arguments on 05/11/2014 and the Hon. Members have taken note of the same vide Para No. 13 on Page No. 24 of the impugned order.
During the course of hearing, the Respondent Revenue filed on 27/10/2014 the copies of decisions on which the Respondent Revenue wanted to place reliance and also filed copies of certain decisions as per the directions of the Hon. Bench.
On Page No. 1 of Notes of arguments, the Respondent Revenue has framed the following Issues:
Issue No. 1
Whether there was any evidence/material [other than erratic consumption of electricity units] In possession of learned Assessing Officer/C.I.T.[A] to hold that the appellant assessee has suppressed Its Sales/production?
Vide Page Nos. 1 to 5 [Para Nos. 1 to 16] of Notes of arguments all the material facts pertaining to the aforesaid issue together with the legal arguments were submitted.
The Hon. Bench vide Para No. 11 on Page No. 16 to Para No. 11.1 on Page No. 18 of the impugned order was pleased to reproduce basic main factual points argued and brought to the notice of the Hon. Bench by the Respondent Revenue. In order to avoid the repetition, the same are not reproduced herein and the Respondent Revenue may please be permitted to refer the same at the time of hearing of this Petition.
Suffice it to mention that during the course of assessment proceedings, the learned Assessing Officer vide Page No. 6 Para No. 3.1 of his reassessment order for the A.Y. 2007-08 has observed about the confessional statement dt. 12/01/2007 given by Shri Surendra S. Peety Managing Director of the assessee company before the DGCEI about removal and sale of around 275 MT of ingots clandestinely to Shree OM Rolling Mills without payment of excise duty and had received the cash against the said sales.
It is further pertinent to note that during reassessment proceedings, in their joint written submissions dt. 13/12/2010 filed before the learned Assessing Officer by the assessee company and Shree Om Rolling Mills Pvt. Ltd., [which are sister concerns] the assessee company offered income of Rs. 6,72,620.00 [Rs. 1,43,270.00 being G.P. @ 3% on suppressed Sales of Rs. 47,75,600.00 plus Rs. 5,29,350.00 for peak purchases] on account of the impugned suppressed Sales as per Computation Sheet regarding additional income. Similarly Shree OM Rolling Mills Pvt. Ltd. offered Profit of Rs. 1,08,920.00 on the impugned suppressed sales. Thus the fact of suppression of sales has been admitted by the assessee company before the learned Assessing Officer.
The learned Assessing Officer by placing reliance on the aforesaid written submissions dt. 13/12/2010 filed before him by the assessee company has vide Para 1.4 on Page 2 of the impugned assessment order for the A.Y. 2007-08 observed that the assessee company has offered profit of Rs. 6,72,620.00 on account of admission of suppressed production. The said admission of suppression of sales and unaccounted purchases was never retracted by the appellant assessee.
This fact is also admitted by the assessee company in Para No. 1 of Statement of Facts filed along with Form No. 35 filed before the learned C.I.T.[A]
In view of the aforesaid uncontroverted facts, there was evidence in possession of the learned Assessing Officer about the removal of material in clandestine manner by the appellant assessee amounting to suppressions of sales.
On this factual backdrop, it was argued by the Respondent revenue that it did not lie in the mouth of the appellant assessee that there was not an iota of evidence in possession of the Respondent department evidencing suppression of sales on the part of the appellant assessee.
The assessee company approached the Hon. Customs & Central Excise Settlement Commission Additional Bench Mumbai for waiver of penalty and immunity from prosecution for evading the excise duty on removal and sale of goods in clandestine manner as was detected by the Central Excise Department. The Hon. Settlement Commission vide first Para on Page No. 7 of its order [Please Refer Page No. 218 of Paper Book No. 1 filed by the assessee company] has observed that However, the Bench cannot ignore the fact that there was a concerted effort to evade the duties. The applicants all seem to be part of a widespread group individually and collectively involved in the aforesaid activity to evade the taxes. Therefore in spite of readiness to pay up the full duties and their cooperation before the Commission, the Commission is of the view the penalties cannot be waived in full though mitigating circumstances exist for partial immunities. This finding of the Hon. Commission has not been challenged by the assessee company before superior forum. Even before this Hon. Bench the assessee company has not stated that the said finding is erroneous. In the circumstances, the aforesaid finding of the Hon. Settlement Commission is a relevant fact which has been rightly taken note of by the learned Assessing Officer as well as the learned C.I.T.[A]
However the Hon. Bench instead of dispassionately analyzing all the aforesaid evidences has mistakenly overlooked the same by placing reliance on the Third Member decision of CESTAT in the case of the appellant which has not at all considered the above clinching evidences as the same were not in issue/ground before it. In fact the Hon. Third Member had clarified the scope of controversy involved in the matter as under:
The Hon. Third Member vide Page No. 13 of his order [Refer Page No. 19 of Paper Book No. 6 filed by the assessee company] has reproduced Para 19 from the order of the Hon. Commissioner Central Excise as under: 19 There are other instances of central excise violations detected by other agencies where the assessee was found to be involved. In one instance the assessee has approached Settlement Commission, admitted the evasion offence of an identical nature and had obtained immunity from criminal proceedings. The assessee has however argued that each case has to be treated as a separate case based on its own merits and dealt with accordingly. The argument of the assessee is accepted. No reliance has been placed on evidence relied upon in central excise proceedings. The findings in this case are based only on material and evidences that have been brought on record in the instant case.
The Hon. Third Member has further observed as I am therefore of the opinion that reliance placed by the Revenue on the evidence in earlier cases which are already settled, is totally misplaced, when these findings of commissioner are not even challenged by revenue.
Thus it is crystal clear that the Hon. Third Member has not considered the evidence about the clandestine removal of material and the duty levied on the same which issue was settled by the Hon. Settlement Commission. From the above observation it is crystal clear that the Hon. Third Member had proceeded only on the hypothetical evidence of electricity consumption. In the circumstances aforesaid, following the decision in the case of R.A. Castings the alleged suppressed sales estimated solely on electricity consumption was deleted.
In the present appeals both the lower authorities have considered the confessional admissions of the assessee company before the learned Assessing Officer as well as the Central Excise Authorities and also the fact that the assessee company has offered income on alleged suppressed sales and alleged unaccounted purchases. The confessional statements of the appellant assessee have not been withdrawn and are still in force.
In view of the aforesaid facts, the conclusion drawn by the Hon. Bench vide Para No. 21 on Page 41 of the impugned order that Moreover, as observed above the adjudication Order passed by the CCE, Aurangabad has been cancelled by the CESTAT, Mumbai by majority opinion and hence, foundation of assessments for A.Y. 2007-08 & 2008-09 do not exist is an outcome of erroneous assumption of facts resulting in to mistake of law and thus constitutes mistake apparent from records, which has caused serious prejudice and injustice to the Respondent Revenue and hence the same is requested to be corrected by passing the necessary rectification order.
The respondent revenue further respectfully submits that as a consequence of this mistake the Hon. Bench has further committed certain glaring mistakes of facts and law as hereinafter mentioned which need to be corrected:
Mistaken conclusion that the learned Assessing Officer has computed the suppressed turnover only on the basis of consumption of electricity and failure to consider the effect of admission of the appellant about the Suppression of sales
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