TaxTMI 
TaxTMI 
2022 (1) TMI 681
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....r.w.s. of the I.T. Act, 1961 and the CIT(A) confirmed the addition ignoring judicial pronouncement's including jurisdictional High Court decision and the same may be held as bad in law and quashed." 2. Briefly stated, the assessee company which is engaged in the business of manufacturing of pan masala containing tobacco (chewing tobacco) and also trading in tobacco had as on 04.04.2012 filed its belated return of income for A.Y. 2011-12, declaring a loss of (Rs. 3,02,72,830/-). The return of income filed by the assesse company was processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. 3. During the course of assessment proceedings the A.O called upon the assessee to furnish its day-to-day item wise details of purchases, consumption, finished goods and shortage in terms of quantity and value including point wise consumption. Although the assessee furnished the annual consumption and production details, comparative statement of its actual production vis-à-vis manufacturing as per its licensed installed capacity a/w the copies of the excise related documents, copies of excise return, cons....
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....nstalled capacity of the machines at the assessee's premises worked out its suppressed production at 3,44,85,310 gutkha pouches, as under: Sr. No. Month Excise duty Determine No.of Machine s Installed capacity Actual production Difference 1. 16-10-2000 3562000 4+1 9360000 7043190 2316810 2. Nov. 2010 6900000 4+1 18720000 17209200 1510800 3. Dec.2010 6900000 4+1 18720000 14897340 3822660 4. Jan. 2011 6900000 4+1 18720000 15543030 3176970 5. Feb. 2011 2500000 2 7488000 404430 7083570 6. Mar. 2011 17650000 15 56160000 47697500 16574500 7. 17.03. 2011 6250000 5 8112000 Total 81762000 137280000 102794690 34485310 Quantifying the value of the suppressed production, the A.O taking the value @ Rs. 1/- per pouch determined the same at an amount of Rs. 3,44,85,310/-. Apart from that, the A.O taking cognizance of the fact that the assessee had delayed the deposit of employees provident fund contributions of Rs. 9,18,996/- i.e had deposite....
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....only confirmed the addition of the suppressed production of Rs. 3,44,85,310/- that was made by the A.O while framing the assessment for the year under consideration i.e A.Y 2011-12, but also directed the A.O to take appropriate remedial action in the hands of the assessee qua the corresponding unexplained investment that would have been made by it towards purchase of raw materials for facilitating its unaccounted production in the said year, which as per the information gathered by him from the Sales Tax Department, he was of the view would had been channelized to facilitate the unaccounted sales of Rs. 12,67,70,182/- of M/s Sanket Industries Ltd. (supra). As regards the disallowance of the employee's contributions towards Provident Fund that was deposited by the assessee company beyond the specified due date as contemplated in the Provident Fund Act, the CIT(A) concurred with the view taken by the A.O that the delay in deposit of the said amount would trigger the disallowance of the same u/s 2(24)(x) r.w.s 36(1)(va) of the Act. Backed by his aforesaid observations the CIT(A) upheld the additions/ disallowances made by the A.O a/w further directions for taking appropriate remedial ....
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....e assessee about the same, and had only subsequent thereto came to his notice when the annual maintenance of the premises was being carried out, in our considered view justifies the delay involved in filing of the present appeal by the assessee company. We, thus, condone the delay of 237 days involved in filing of the present appeal by the assessee appellant before us. 8. Before us the learned D.R. Shri Mahesh Jasani had relied on the orders of the lower authorities. It was submitted by the learned D.R that though the assessee was given sufficient opportunity by both the lower authorities to dispel the adverse inferences that were sought to be drawn on the basis of the material that was gathered in the course of the respective proceedings, which irrefutably evidenced suppressed production and unexplained investment towards purchases of raw material etc. by the assessee, however, the assessee company had failed to place on record any material which would have proved to the contrary. Backed by his aforesaid contention, it was submitted by the ld. D.R that the CIT(A) had proved to the hilt the suppressed production of the assessee that was channelized into the unaccounted sales of ....
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....e authorities reveals that though the assessee as per the mandate of Sec. 3A of the Central Excise Act, 1944 r.w Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, had during the year paid a substantial amount of excise duty that was fixed per machine, but against that it had reflected substantially low production in its books of accounts. Backed by the aforesaid fact, we find substance in the view arrived at by the lower authorities that it was beyond comprehension that the assessee in the absence of commensurate production would have by any stretch of prudence continued paying substantial amount of excise duty. In fact, the ledger accounts of the various purchases of packing material and raw material that were filed by the assessee in the course of the assessment proceedings in itself raises serious doubts as regards its book results. Observations of the CIT(A) as regards the aforesaid serious infirmities qua the purchase of raw material and packing items, either of which was not found to be commensurate to the production of pan masala and pouches by the assessee company during the year, are for the sake of clarity culled out as under : ....
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....ts suppressed production may not be estimated, but the assessee failed to come forth with any explanation even in the course of the appellate proceedings. On a perusal of the facts emerging from the orders of the lower authorities, viz. that the assessee had failed to furnish the requisite details as were called for by the A.O; had failed to produce its books of accounts as well as the purchase bills, delivery challans etc. in the course of the assessment proceedings; the purchases of raw material and packing material was in no way commensurate to the production of pan masala and gutkha by the assessee company; the purchases of the raw material and packing items was lopsided and majority of the purchases of both the items were carried out at the fag end of the year i.e in the month of March, 2011; that though the assessee had paid fixed excise duty in respect of all the machines yet there was production much below the installed capacity of machines etc., were some of the manifold factors that did not inspire any confidence as regards the veracity of the book results of the assessee with the A.O, , for which reason he had rejected the books of accounts of the assessee company u/s 14....
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.... forth any such explanation that as to why no adverse inferences qua its disclosed production may not be drawn. Be that as it may, as observed by us hereinabove, we are in agreement with the view taken by the lower authorities that as the disclosed production of the assessee company suffered from serious infirmities, therefore, the lower authorities had rightly taken recourse to estimation of the same. As the assessee company was being subjected to levy of excise duty on the basis of the production capacity of its machines, therefore, the lower authorities in our considered view had rightly adopted the production as per the installed capacity of the machines that was taken as a basis by the Central Excise Authorities, as a yardstick for computing the shortfall/suppressed production of the assessee company. At this stage, we may herein observe, that the lower authorities had rightly observed that it was beyond comprehension that the assessee would have continued paying substantial amount of excise duty, despite the fact that it did not have commensurate production. We, thus, are of the considered view that the lower authorities had rightly worked out the suppressed production of the....