ACIT, SONEPAT vs. M/S HARYANA STEEL & ALLOYS LTD., SONEPAT

ORDER PER H.S. SIDHU : JM

The Revenue has filed these Appeals against the common impugned Order dated 30.11.2015 of the Ld. CIT(A), Rohtak relevant to assessment years 2004-05 to 2006-07. Since the issues involved in these appeals are common and identical, except the difference in figure, hence, the same were heard together and are being disposed of by this common order for the sake of convenience, by dealing with (AY 2004-05).

“1. The CIT(A) has erred in law and facts in deleting the addition of Rs. 2,34,58,802/- for the AY 2004-05 without any verification and reason for accepting the plea taken by the assessee. The above said addition was made on the basis of show cause notice issued by Central Excise Department alleging removal of goods without payment of duty under the cover of trading invoices of various dummy, non-existent parties. G.P. rate of 5.77% has rightly been applied being the peak rate shown by the assessee.

2. That the appellant craves for permission to add, delete or amend the ground of appeal

before or at the time of hearing of appeal.

In response to this notice letter dated 03.05.2011 and 23.5.2011 were received in this office seeking adjournment of the case and the case was adjourned accordingly. Further on 13.06.2011, the Authorized Representative attended and requested for supplying of the reasons recorded u/s 147 of the I.T. Act. The copy of reasons recorded was provided to the AR of the assessee. The AR of the assessee stated that return filed originally be treated as return filed in response to notice u/s 148 of the I.T. Act. Notices under section 143(2) and 142(1) of the Income Act, 1961 were issued and served upon the assessee within the stipulated time, in response to which the AR of the assessee attended the proceedings and submitted the requisite details/information/ documents from time to time. During the assessment proceedings the assessee informed that the winding up order of the company had been passed and stay application had also been dismissed by the Court. During the assessment proceedings, the assessee filed a copy of the Show Cause Notice issued by the Central Excise Department alleging removal of goods without payment of duty under the cover of trading invoices of various dummy / non-existent parties as per Annexure-H of the show cause notice and the same was accepted by the Custom and Central Excise Settlement Commission in its order. After that assessee filed a Civil Writ Petition No. 11052 of 2009 with the Hon’ble Delhi High Court which is still pending for decision against the order of the Settlement Commission. The assessee company is engaged in manufacturing and trading of stainless steel and other alloy steel, billets rolled products etc. and has shown the GP rate @4.57 for year ending 2002; @0.76 year ending 2003; @5.77 for year ending 2004 and @5.35 for year ending 2005. Therefore, the AO GP rate of @5.77% being the highest rate, has been applied to the assessee on total unaccounted sales and accordingly, addition of Rs. 2,34,58,802/- has been made to the declared income of the assessee vide order dated 22.12.2011 passed u/s. 143(3)/147 of the I.T. Act, 1961. Against the aforesaid assessment order, assessee appealed before the Ld. CIT(A), Rohtak, who vide his common impugned order dated 30.11.2015 has partly allowed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal.

So without considering assessee’s past history and subsequent history and applying GP rate straightway to turnover to compute extra profits is purely an adhoc and hypothetical exercise against the economic conditions of assessee’s business. We further find that no independent enquiry and corroboration made by the AO in respect of the findings of the Excise authorities. Taking a holistic view of the entire conspectus of the matter, we are of the opinion that the AO has erred in making adhoc and arbitrary additions to the assessee’s trading results, which was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue.

6.1 Following the consistent view as taken by us in Assessment Year 2004-05, as aforesaid, the identical grounds raised by the Revenue in respect of assessment years 2005-06 & 2006-07 are also rejected.

dismissed.

Order pronounced in the Open Court on 14/11/2017.