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| The Tax Publishers2020 TaxPub(DT) 1619 (Jp-Trib) : (2020) 185 ITD 0482 INCOME TAX ACT, 1961
Section 69
In the light of findings of CESTAT where whole demand relating to clandestine manufacture and clearance of finished goods had been set-side, the findings of the AO which were solely based on the proceedings under Central Excise therefore doesn't survive and the consequential addition made by him were thus, liable to be deleted.
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Income from undisclosed sources - Addition under section 69 - Alleged undisclosed production and its clearing as sale -
Assessee was engaged in manufacturing and trading of TMT bars. During the course of assessment proceedings, it came to the knowledge of the AO that the assessee-company was indulged in evasion of Central Excise duty by resorting to clandestine manufacture and clearance of finish goods. DGCEI conducted search operations at the assessee's factory premises and other premises of its associates. Commissioner Central Excise, adjudicated the case of the assessee and held that the assessee was indulged in evasion of Central Excise duty by resorting to clandestine manufacture and clearance of finished goods. Basis said information in possession of the AO under IT Act during the course of assessment proceedings, an exercise was carried out to identify the quantum of clandestine removal of goods during the period 1-4-2009 to 31-3-2010. In response, to notice the assessee filed its submissions. The submissions so filed were considered however, not found acceptable to the AO and he proceeded to make addition on account of undisclosed investment in stock and on account of profit on sales of undisclosed stock. CIT(A) had confirmed the order of AO. CESTAT passed the final Order, dated 20-10-2017 in Appeal No. A/57285-57299/2017-EX(DB), deleting the whole demand raised by the Excise department.Held: In light of findings of CESTAT where whole demand relating to clandestine manufacture and clearance of finished goods had been set-side, the findings of the AO which were solely based on the proceedings under Central Excise therefore doesn't survive and the consequential addition made by him were liable to be deleted. At the same time, the revenue would be at liberty to take action as per law where the matter so decided by the CESTAT was appealed against by the revenue and would be decided in its favour by the courts.
Followed:Order, dated 20-10-2017 passed by the CESTAT and Natani Rolling Mills Pvt. Ltd. v. ITO [CO No. 29 & 30/JP/2019 Arising Out of ITA No. 537 & 538/JP/2018, dt. 11-8-2019].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11 & 2011-12
IN THE ITAT, JAIPUR BENCH
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