2013 (1) TMI 737 - AT - Income Tax

Addition on account of illegal transportation of stones resulting into undisclosed sales - Held that - Issue of expenses under the head of transportation and labour charges for obtaining illegal stock was remitted to the file of AO for a fresh consideration in accordance with the appellate orders of the District Magistrate Nainital on this issue. Thus remit the issue to the file of AO to consider the same afresh after examining and considering the appellate orders of the higher authorities on this issue. The matter for adjudication is pending before the Divisional Commissioner Nainital. Both the authorities have totally relied upon the order of the DM Nainital. Since the same is pending before the DM Nainital the same cannot be said to be final and conclusive. Accordingly respectfully following the above precedent we remit the issue to the file of the Assessing Officer to consider the same afresh after examining the appellate orders of DM Nainital on this issue - Decided in favour of assessee for statistical purposes. Disallowance of compounding fees imposed by the govt. on illegal transportation of stones - Held that - As issue of allowance of compounding fee of 28, 21, 615/- was not raised before the authorities below and is being raised first before the tribunal. In our considered opinion this matter is related to the issue raised in appeal and we deem it appropriate to remit the file to the Assessing Officer since other issue has been remitted to him. Accordingly this issue is also remitted to the file of the Assessing Officer.- Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Addition of undisclosed sales and income due to illegal transportation of stones.
2. Disallowance of compounding fees imposed by the government on illegal transportation of stones.

Analysis:

Issue 1:
The case involved a survey conducted by various departments at the premises of the assessee, leading to the assessment of illegal transportation of stone grits. The District Magistrate (DM) passed an order determining the illegal transportation and imposed compounding fees. The Assessing Officer computed the undisclosed sales of stone grits based on the DM's findings, resulting in an addition to the income of the assessee. The Commissioner of Income Tax (Appeals) upheld the addition, stating that the DM's order was conclusive, and no fresh evidence was presented to challenge it. The Commissioner relied on the expertise of the forest department officials and the joint enquiry committee, affirming the addition made by the Assessing Officer. The Tribunal, considering a similar precedent, remitted the matter back to the Assessing Officer for further examination after the Divisional Commissioner's decision, granting the assessee an opportunity to be heard.

Issue 2:
Regarding the disallowance of compounding fees, the Tribunal noted that this issue was not raised before the lower authorities and was first presented at the tribunal level. Following a similar approach as in the previous issue, the Tribunal remitted this matter to the Assessing Officer for consideration, along with the other issues, emphasizing the need for a fresh examination based on the Divisional Commissioner's orders. Consequently, the appeal filed by the assessee was allowed for statistical purposes, and the case was remitted to the Assessing Officer for further assessment.

In conclusion, the judgment addressed the issues of undisclosed sales and income due to illegal transportation of stones and the disallowance of compounding fees, emphasizing the importance of reassessment based on the Divisional Commissioner's decisions. The Tribunal granted the assessee an opportunity to be heard and remitted the case back to the Assessing Officer for a fresh examination in line with legal precedents.