PRICIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR vs. GROWMORE CERAMICS PVT LTD

C/TAXAP/599/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 599 of 2018 With R/TAX APPEAL NO. 600 of 2018 With R/TAX APPEAL NO. 601 of 2018 ========================================================== PRICIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR Versus GROWMORE CERAMICS PVT LTD ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 12/06/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These appeals arise out of common background. We may record facts from Tax Appeal No. 599 of 2018. Revenue has challenged the judgement of the Income Tax Appellate Tribunal dated 30.11.2017 raising following question for our consideration: “Whether the Appellate Tribunal has erred in law and on facts of the case in deleting the addition of Rs. 74,02,253/- made on ground of undervaluation of sales and Rs. 79,86,892/- on ground of estimated GP on ground of clandestine removal of goods?” Page 1 of 3

C/TAXAP/599/2018 ORDER 2. Respondent-assessee is engaged in manufacturing ceramic items. Investigation Wing of the Excise department had gathered material prima facie suggesting clandestine removal of manufactured goods by the assessee. A show-cause notice was therefore, issued by the Excise department on 14.02.2013 alleging that the assessee had sold goods worth Rs. 5.32 crores. On the basis of such show-cause notice, the Income Tax department reopened the assessment of the assessee for the assessment year 2006-07. Assessing Officer, on the basis of the show-cause notice, hold that there was clandestine removal of goods and added a sum of Rs. 79.86 lacs which was 15% of the valuation of the goods treating as the assessee's possible gross profit from such activity. 3. The Tribunal ultimately deleted the addition primarily on the ground that by virtue of the judgement of CESTAT, the excise show-cause notice was adjudicated in favour of the assessee. In other words, the Tribunal noted that CESTAT had deleted additions on excise side. The addition on the income tax side therefore cannot survive. 4. Having heard learned counsel for the Revenue, we find that quite apart from the fact that CESTAT had deleted the additions, the Assessing Officer in the present case had proceeded solely on the basis of show cause-notice. When the order of assessment was passed, it appears that there was no final adjudication by the Excise authority. The Assessing Page 2 of 3

C/TAXAP/599/2018 ORDER Officer could not have, as held by this Court in case of M/s. Futura Ceramics Pvt. Ltd vs. State of Gujarat reported in (2013) 40 Taxmann.com 404 (Guj) [SCA No. 6500/2012 dtd. 20.12.2012], taken the allegations in the show-cause notice as final conclusions and make additions without there being any further independent evidence or conclusions of the Assessing Officer. More so, in the present case, when the excise show- cause notice does not survive and as we are informed, even the judgement of the CESTAT has been upheld by the High Court, the reliance of the Assessing Officer on mere allegation of the show-cause notice was solely impermissible. 5. In the result, no question of law arises. Tax Appeals are dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI Page 3 of 3