TaxTMI 
TaxTMI 
2024 (12) TMI 894
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....CIT u/s 263 is bad in law and liable to be quashed. It is submitted that it to be held so now. 1.02 On the facts and circumstances of your appellant's case as well as in law, the ld. Pr. CIT has wrongly assumed jurisdiction u/s 263 of the Act in respect of Value Added Tax (VAT) of Rs. 45,07,004/- involved in purchases of SS Scrap which your appellant had never claimed as expense. Ld. Pr. CIT also erred in not appreciating the fact that the ld. AO has dropped the proceedings u/s 154 of the Act after verifying the details and information and explanations submitted by your appellant. 1.03 On the facts and circumstances of your appellant's case as well as in law, the ld. Pr. CIT has wrongly set-aside the order passed by ld. AO in totality and directed to make fresh assessment though the order passed u/s 143(3) r.w.s. 147 of the Act by the ld. AO is found erroneous in respect of one aspect only. 2.00 Your appellant craves leave to add, alter and / or amend the grounds herein above raised." 3. The brief facts of the case are that in the case of M/s. Panchmahal Steel Ltd., the assessee filed its return of income for the assessment year 2010-11, declaring a loss of Rs. 9,68,63,129/-....
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....cipal CIT held that failure to investigate relevant aspects of the financials rendered the assessment order erroneous and prejudicial to the revenue's interests. Ultimately, Principal CIT held that due to the lack of comprehensive inquiry and the erroneous nature of the original assessment, the order under Section 143(3) of the Act was liable to be set aside. The Assessing Officer was instructed to conduct a fresh assessment, ensuring all relevant elements were duly considered and that the assessee was provided a reasonable opportunity to present their case. 4. In appeal before us, the assessee submitted that the entire controversy and basis of proceedings initiated under Section 263 of the Act, against the assessee centered around a show cause notice dated August 28, 2014, from the Central Excise Directorate indicating that the assessee had claimed Cenvat credit of Rs. 4,37,07,420/-, which was disallowed. The Counsel for the assessee submitted that now the entire controversy relating to proceedings initiated by the Central Excise Directorate in the assessee's own case has been decided in favour of the assessee by CESTAT, Ahmedabad in Excise Appeal No. 10523 of 2016 -DB vide o....
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....action or that the statements did not correctly bring out the factual matrix involved, leading to the evidentiary value of the oral evidences to be diminished. In certain occasions, the contradicting stand taken by some witnesses in first retracting their statements and then during the course of later proceedings stating that they mistakenly retracted it, leading to strong suspicion on the genuineness of the manner in which the statements were recording and entire investigation was done. 6.8 Just as the above case of SS scrap, even in case of MS scrap, there is no allegation or proof of flow back of amounts by anyone to the Appellant as well. There is no evidence of procurement of domestic scrap in cash from open market as well. There is no evidence of sale of duty paid scrap by Dealers in question, to any third party in cash as well. The factum of duty paid goods being cleared by manufacturers and receipt of proper invoice by the Appellant are not in dispute as well. 6.9 The 9078 MT of MS scrap was procured by the dealers and as involved in the present case, if domestic scrap was procured locally to substitute this, not a single supplier for domestic scrap (which presumably wa....
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....ents. That he had said goods to second stage dealers such as M/s. Sree Vishnu Steels and M/s. Lakshmi Traders, Department has heavily relied upon the statement of ShriK. Veluswamy of M/s. Sree Vishnu Steels and Shri V. Aananthan of M/s. Lakshmi Traders contending that these two have stated that Shri Periakaruppan had sent only invoices without goods. However, Shri A.Periakaruppan, denied the statement of thesetwo persons and categorically reiterated that he had sent the goods (HR coils and HR sheets) only along with cenvat invoices after having cut them to size as per the requirement of the customers. We find however that while the lower appellate authority in para 4.4 of the impugned order has taken note of the statement of ShriA.Periakaruppan, however, the assertions given by that person has been brushed aside on the ground that it was just an argument after a long time gap to counter the version made earlier. It is also relevant to note that the said Shri K. Velusamy had, through his statement dt. 18.11.2006 read with his cross examination on 07.08.2008, retracted his admissions made earlier. Shri K. Velusamy had stated that officers had visited premises four times earlier and t....
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....d that was taken in the earlier proceeding and further why statements of A.Periakaruppan have not been relied upon or made part of the SCN. At this juncture, it would be worthwhile to reproduce para-3 of CESTAT Final Order No.946-947/2005 dt. 06,07.2005 in the earlier proceedings as under: "3. The immediate question before me is whether M/s.SR/L are entitled to avail Modvat credit on the cuttings of plates, sheets etc. Supplied by SCPL It is not in dispute that these are cuttings of plates, sheets etc. falling under heading 72.08. The Revenue has no case that the thickness of the plates, sheets etc. was reduced in the activity of cutting. Obviously, the cutting process resulted in reduction of area only. Though thickness is a parameter relevant to classification of these goods under Chapter 72 of the CETA Schedule, area is irrelevant. Sheets, plates etc. Classifiable under heading 7208 are so classifiable in reduced area also. Hence the cuttings supplied by SCPL to SRIL cannot be treated differently from the sheets, plates etc. From which they were cut. In selling the cuttings to M/s. SKIL, SCPL were only dealing in sheets, plates etc. hence the cuttings were correctly declared b....
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....e payment of duty considering that the major chunk of their final products of these appellants were exported. Appellants have stated that they have not benefited otherwise by taking any irregular credit as alleged by the department. The proviso to Section 11 A (1) would be attracted when there is suppression of facts with intent to evade payment of duty. The department has no case that appellants utilized the alleged wrongly availed credit to discharge duty liability. There is no evidence coming forth in this angle. The contention of the id. AR that the intention to evade payment of duty need not be proved lacks any legal basis. 13. It would be appropriate to draw inference from the Hon'ble Supreme Court in the case of Cosmic Dye Chemical Vs CCE Bombay -1995 (75) ELT 721 (SC) holding that it is not correct to say that there can be suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of proviso to Section 11A (l) of the Central Excise Act. The relevant paragraphs of above Supreme Court judgment are reproduced as under: "4. In short, the Tribunal was of the opinion that so far as fraud, suppression or mis-statement....
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..... This being so, the impugned orders are set aside. Assessee s appeals NO.E/390/2009, E/367/2009, E/368/2009, E/378/2009, E/219/2010, E/205/2010, E/206/201Q & E/216/2010 are allowed with consequential relief, if any, as per law. 16. For these very some reasons, no merit is found in the department appeals No.E/189/2010 &E/297/2010for which they are dismissed." 6.12 It was held in the case of Coimbtore Super Alloys (P) Ltd. 2019 (5) TMI 213 - CESTAT CHENNAI that: "5.2 Be that as it may, the allegation is that appellants had received only non-duty paid MS scrap but had taken cenvat credit based on invoices of all the dealers in which supply of actual duty paid inputs like CR, HR, CR sheets etc. had been indicated. These allegations have been concluded primarily based on the statement dated 07.11.2008 of one Shri G. Baskaran, Proprietor of Sri Amman Steels who voluntarily stated that actual goods supplied to appellants were nothing but locally procured non duty paid goods in respect of all the 37 invoices. The SCN also makes a reference to a statement dt. 13.3.2009 of Shri S. Murugappan, Proprietor of Sri Karpagam Steels who inter alia admitted that they had supplied "MS scrap to a....
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.... from all the dealers as MS scrap, whereas dealers had mentioned the description as per their purchase invoices. 5.7 It is not the allegation that appellants had only received "fake invoices" without having made any payment towards the amounts billed in such invoices. Per contra, id. Consultant has contended that the appellant had paid the supplier of raw material by way of cheque, including the excise duty element. 5.8 The id. Consultant has also raised a very pertinent argument that there is no allegation that materials supplied to the appellants had not suffered central excise duty. In the absence of any samples of the materials drawn at the time of search/investigation, there is no evidence to support the allegation that appellants had only received locally procured scrap instead of CR, HR, CR sheets etc. as indicated in the input invoices. We also find that no investigation hove been done at the dealer's end to ascertain whether they had in fact received the impugned duty paid materials from manufacturer suppliers like M/s.Abirami Industries, M/s.Skanda Engineering etc. There is also no investigation that has been done at the end of such manufacturer suppliers, to asce....
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....l input invoices that were fauna to have discrepancies. In this regard, we find from para 18 of the 010, that during the personal hearing held on 20.03.2011, the Consultant for the appellants had contended that the disputed credit worked out to only 10% and that there was no requirement on the part of appellants to take any erroneous credit. In our view, this averment has lot of implications. When the investigations have found discrepancies in only 10% of the invoices examined for o disputed period of 17 months between June 2005 and November 2006, that too on the basis of o sale statement which also has been subsequently denied by the person concerned, and in the absence of any samples of inputs drawn for corroboration, the allegation that appellants had received only locally procured scrap instead of CK, HR, CR sheets ere. in the input invoice, will not have any legs to stand upon 5.12 We further note that the Ld. Consultant has correctly relied on the ratio of Tribunal decision in a similar case involving disputed cenvat credits on supplies made by the same dealers, M/s.Amman Steels, in Ellen Industries and Others Vs CCE & SJ, where the Tribunal vide Final order No.40462-4464/2....
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.... 2, 1982, at an income of Rs. 18,82,700/-. Thereafter, under section 69A of the Income-tax Act, 1961, an addition of Rs. 20,99,440/- was made with reference to an unaccounted investment of 3,852 bags of raw nuts. Information about the existence of unaccounted possession of raw nuts was available from the State Bank of Travancore where the assessee had credit facilities on the pledge of the stock of raw nuts and in regard thereto there was an excess of 3,852 bags in the records of the bank. The assessee had shown 18,507 bags of raw nuts to the bank for enjoying credit facilities whereas it had shown 14,655 bags in the return of income, that is to say 3,852 bags less. During the pendency of these original proceedings, on April 24, 1979, there was a surprise raid by the Sales Tax Department, Intelligence Wing and it was found by the Sales Tax Department that 5,636 bags of nuts were received in the relevant period at the factory and godown belonging to the assessee. Hence, reassessment proceedings were started and penalty proceedings were also initiated. These were upheld by the Tribunal. On a reference the High Court held that in the sales tax proceedings it had been finally found tha....
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....ial which satisfactorily explained in a majority of cases the arrivals in these branches. Therefore, relevancy of the delivery notes in the context of the explanation of the assessee cannot be brushed aside lightly. The arrivals in the Ashramam godowns and Ayathil factory have been accepted by the sales tax authorities to have come from the head office purchases and represented the branch transactions. Therefore, it cannot be said that the assessee's explanation remained unsubstantiated." 29. In view of the above position it must be stated that the material was on the record of the proceedings and when we are required to deal with both the proceedings of assessment as well as levy of penalty it is next to impossible to see the situation in a blind-folded manner. The observations found quoted in the notice under Section 17(3) of the K.G.S.T. Act, 1963, stare penetratingly not only in the face of the record of the assessment proceedings but also justify its cancellation by the Tribunal. 30. Reading the five questions in Income-tax Reference No. 55 of 1991, in the light of our above discussion, the question to be answered would be only one and it would be as follows : "Wheth....