DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -1,, AURANGABAD vs. NILESH STEEL & ALLOYS PVT LTD., JALNA

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ITSSA 99/PUN/2022Status: HeardITAT Pune09 February 2023AY 2008-096 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the orders of the CIT(A) for all three assessment years, dismissing the Revenue's appeals. For AY 2008-09, the Tribunal noted that the AO's entire basis for suppressed production was electricity consumption, and no evidence of suppressed production, excess stock, or unrecorded sale/purchase bills was found during the search. The Tribunal found that the AO had made similar additions for AYs 2004-05 and 2009-10, which were deleted by the Tribunal in a prior order (ITA Nos. 1636 and 1637/PUN/2012 dated 30-11-2015). The learned DR conceded that the facts for the current year were similar. Respectfully following the precedent, the deletion of addition was upheld. For AY 2009-10, the Tribunal followed its decision for AY 2008-09 and upheld the deletion of both additions, noting that the working capital addition was consequential. For AY 2010-11, the Tribunal again found the factual scenario similar to earlier years and upheld the deletion of the Section 40A(3) addition, as it was consequential to the suppressed production addition. The ratio decidendi is that additions based solely on electricity consumption for suppressed production, without corroborative evidence found during search, are unsustainable, especially when similar additions have been deleted in prior years.

What were the facts?

The Revenue filed appeals against three separate orders of the CIT(A), Pune-12, for assessment years 2008-09 to 2010-11. The assessee, M/s. Nilesh Steel & Alloys Pvt. Ltd., is engaged in manufacturing MS billets and MS melting/MS rolls. For AY 2008-09, the Assessing Officer (AO) made an addition of Rs.11,32,21,946/- on account of suppressed production, estimated based on electricity consumption. This addition was deleted by the CIT(A). For AY 2009-10, the AO made additions of Rs.4.64 crore for suppressed production and Rs.58,12,720/- for working capital for suppressed production, both deleted by the CIT(A). For AY 2010-11, the AO made an addition under Section 40A(3) based on presumed cash purchases for suppressed production, which was also deleted by the CIT(A). The assessee did not appear before the Tribunal.

What were the issues?

1. Whether the deletion of the addition of Rs.11,32,21,946/- made by the AO on account of suppressed production, estimated on the basis of electricity consumption, for AY 2008-09, was justified. 2. Whether the deletion of additions of Rs.4.64 crore for suppressed production and Rs.58,12,720/- for working capital for suppressed production for AY 2009-10, was justified. 3. Whether the deletion of the addition made under Section 40A(3) for AY 2010-11, which was consequential to the addition of suppressed production, was justified. Assessee's contentions: Not recorded as the assessee did not appear. Revenue's contentions: The Revenue argued that the AO's additions were justified based on suppressed production estimated from electricity consumption. For AY 2009-10, the Revenue contended that the working capital addition was a logical consequence of suppressed production. For AY 2010-11, the Revenue argued that the addition under Section 40A(3) was correctly made due to presumed cash purchases for suppressed production.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 148,Section 143(3),Section 147,Section 132,Section 153A,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH, ‘A’ PUNE

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Respondent: Shri Keyur Patel

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील थी / The Appellant; 1. 2. प्रत्यथी / The Respondent 3. The CIT(A)-12, Pune 4. The Pr. CIT( Central), Nagpur 5. DR, ITAT, ‘A’ Bench, Pune 6. ग र्ड फ ईल / Guard file.

आदेशानुसार/ BY ORDER,

// True Copy // Senior Private Secretary आयकर अपीलीय अदधकरण ,पुणे / ITAT, Pune

6 IT(SS)A Nos.99 to 101/PUN/2022 M/s. Nilesh Steel & Alloys Pvt. Ltd.,

Date 1. Draft dictated on 09-02-2023 Sr.PS 2. Draft placed before author 09-02-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *

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