2018 (9) TMI 1393 - HC - Income Tax

Addition of suppressed sale - additions of income made on the basis of SCN issued under the Central Excise - assessee contended that - Proceedings under cenrtal excise could not be finalized - Held that - We noticed that previously such an issue had come up for consideration before this Court in THE PRINCIPAL COMMISSIONER OF INCOME TAX RAJKOT-3 VERSUS VRUNDAVAN CERAMICS PVT. LTD. 2018 (5) TMI 1274 - GUJARAT HIGH COURT as held AO cannot be expected to defer completion of assessment awaiting final order of adjudication in excise proceedings at the risk of his assessment getting time barred. Even otherwise, in a given case, the material that may be brought on record in excise proceedings may be different from that which may form part of the assessment proceedings though the both may, to some extent, be common. In addition to confronting the assessee with the contents of the show-cause notice issued by the Excise department, the Assessing Officer has done little else. By merely producing the copies of the statements of the witnesses accompanying the show-cause notices, such statements and the veracity thereof does not get automatically established. AO merely cosmetically gave an opportunity to the assessee to meet with such allegations, virtually, shifting the burden of proving the evasion of duty that had taken place on the assessee. - Decided against revenue

Summary

Issues:
1. Challenge to judgment of the Income Tax Appellate Tribunal regarding re-assessment for AY 2005-2006.
2. Consideration of previous judgments related to similar issues.
3. Determination of whether the Assessing Officer's actions were justified in the re-assessment process.
4. Analysis of the impact of excise proceedings on the assessment process.
5. Dismissal of Tax Appeals based on the above considerations.

Analysis:
1. The High Court dealt with a group of appeals challenging the judgment of the Income Tax Appellate Tribunal regarding the re-assessment for the assessment year 2005-2006. The Tribunal had made additions to the assessee's return based on materials suggesting evasion of excise duty. However, the Tribunal later deleted these additions, leading to the Revenue filing an appeal.

2. The Court considered a previous judgment in a similar matter where the Court had dismissed appeals by the Department. The Court differentiated the present case from the previous one, emphasizing that the Assessing Officer in the current case did not solely rely on a show-cause notice from the Excise Department but also elicited the assessee's response. The Court highlighted the importance of further verification beyond the show-cause notice for a valid reassessment.

3. The Court addressed the contention that the Assessing Officer should have awaited the finalization of excise proceedings before passing the final assessment order. The Court rejected this argument, noting that excise adjudication proceedings do not have time-barring provisions like the Income Tax Act. The Assessing Officer's actions in putting the assessee on notice and considering their response were deemed sufficient for framing the assessment.

4. The Court emphasized that the Assessing Officer cannot delay the assessment process indefinitely waiting for the final outcome of excise proceedings, as the two processes have different timelines and requirements. The material gathered in excise proceedings may differ from that in assessment proceedings, and the assessment cannot be held hostage to the excise proceedings' conclusion.

5. Ultimately, the Court dismissed the Tax Appeals based on the above considerations, affirming the Tribunal's decision to delete the additions made during re-assessment. The Court's analysis focused on the procedural correctness of the Assessing Officer's actions and the distinction between excise proceedings and income tax assessment processes.