AO finds assessee involved in unaccounted sales without payment of excise duty

Last updated: 22 September 2021

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The Income Tax Appellate Tribunal Pune Bench dismissed an appeal by the Revenue. The Assessing Officer (AO) had found the assessee involved in clandestine removal of goods without paying excise duty, leading to an addition of over Rs. 5 crore for unaccounted sales. However, the CIT(A) restricted this addition to 4% of the sales value, following previous tribunal orders. The Revenue appealed this restriction, but the Tribunal upheld the CIT(A)'s decision.

Court :
ITAT Pune

Brief :
This appeal by the Revenue is directed against the order passed by the ld. CIT(A)-1, Aurangabad on 10-01-2018 in relation to the assessment year 2011-12.

Citation :
ITA No.586/PUN/2018

IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH, ‘A’ PUNE
BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND
SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER

ITA No.586/PUN/2018

Assessment Year : 2011-12

ACIT, Jalna Circle,
Jalna

M/s.Saptashrungi Alloys Pvt.
Ltd.,
Plot No.C-3/1,
Addl. MIDC Area,
Jalna – 431 203
PAN : AAICS2970E

Assessee by None
Revenue by Shri A.M. Mahadevan Krishnan
Date of hearing 13-09-2021
Date of pronouncement 13-09-2021

ORDER

The only issued raised herein is against restricting the addition by the CIT(A) on account of suppressed production from Rs.5,05,56,718 to Rs.22,54,480.

2. Briefly stated, the facts of the case are that the assessee is engaged in manufacturing of MS billets from Sponge Iron and MS scrap. Thereafter, the Pr. CIT, vide his order u/s.263 dated 31- 03-2016, held the assessment order to be erroneous and prejudicial to the interest of the revenue. The AO, in the consequential proceedings, found that the assessee was involved in clandestine removal of goods without payment of excise duty to the tune of Rs.58,05,287 on the value of goods amounting to Rs.5,63,62,005/. After deducting such amount of excise duty paid by the assessee, the AO made an addition of Rs.5,05,56,718/- on account of unaccounted sales. The ld. CIT(A), relying on the Pune Tribunal orders in M/s. Rajuri Steel Pvt. Ltd. and M/s. Meta Rolls & Commodities Pvt. Ltd., held that the addition should be made only for the profit element embedded in such sales and not the entire amount of sales. Taking cognizance of the Tribunal view in identical circumstances, he restricted the addition to 4% of such sales. Aggrieved thereby, theRevenue has approached the Tribunal.

3.In the result, the appeal is dismissed.
Order pronounced in the Open Court on 13th September, 2021.

Please find attached the enclosed file for the full judgement

FAQ :

The appeal concerned the restriction of an addition made by the Assessing Officer on account of suppressed production and unaccounted sales, where excise duty was not paid.

The AO found that the assessee was involved in clandestine removal of goods without payment of excise duty, amounting to Rs. 58,05,287 on goods valued at Rs. 5,63,62,005. An addition of Rs. 5,05,56,718 was made for unaccounted sales.

The CIT(A) restricted the addition to 4% of the unaccounted sales value, based on previous Pune Tribunal orders, arguing that only the profit element should be added, not the entire sales amount.

The Revenue was aggrieved by the CIT(A)'s decision to restrict the addition from Rs. 5,05,56,718 to Rs. 22,54,480 (4% of sales).

The Income Tax Appellate Tribunal dismissed the appeal filed by the Revenue, upholding the CIT(A)'s order.