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TMI Blog2017 (4) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of GP rate of 22.92% applied on suppressed production of Rs. 5,63,22,462/- on the basis of consumption of total weight of raw material as per seized Form A. ii) On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 11,00,064/- on account of scrap at 8% of total consumption of raw material as per seized Form A. iii) On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 84,600/- on account of interest relatable to interest free advance. iv) The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal. 3. The brief facts of the case are that the assessee filed his return of income for the Assessment Year 1984-85 on 16.10.1985, disclosing a total income of Rs. 6,070/-. The Central Excise Department had conducted a search on 23.06.1988 at the premises of the assessee, wherein it was found that the assessee had suppressed consumption of tin sheets during various assessment years. An assessment under section 147 r.w.S. 143(3) was completed by the then Dy. CIT, Special Range - I, Ghaziabad on 29.03.1996 at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the additions. 7. The present Appeal came up before the Bench many times and most of the times the case was adjourned on the request of the Ld. DR and lastly on 16.01.2017 the hearing was adjourned for 05.04.2017 on the written request of the Ld. DR and Bench has granted last opportunity to the Ld. DR in the presence of Sh. S.K. Chaturvedi, CA/A.R. of the assessee. But today i.e. on 05.04.2017 neither the Assessee nor his authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records. 8. We have heard the Ld. DR and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) has elaborately discussed the Issue Nos. (i) to (iii) vide para no. 10 to 13.2 at pages no. 16 to 25 of the impugned order which reads as under:- "{10} I have carefully considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also verified the actual quantity of import of raw material as per the licenses issued from the office of the DGFT during the period under consideration. As per the Form A, the raw material consumption between Assessment Year 1984-85 and 1987-88 was 20699 MT, whereas as per the order of the Add!. DG of FT, the quantity imported against the licenses was 9025 MT upto the Assessment Year 1992-93. In the appellant's books of accounts, the quantity imported by the appellant upto Assessment Year 1989-90 is disclosed at 8059.975 MT. The quantity actually imported by the appellant during this period was 8118.706 MT, as verified by the Assessing Officer from DGFT. Hence, the total difference worked out by the Assessing Officer works out to 1130.015 MT, if the license wise difference is considered, and 59.025 MT if set off is allowed. In the remand report of the Assessing Officer dated 30.03.2011, it is admitted that no independent documents are in the possession of the Department to prove that the appellant had actually imported the quantity of material mentioned in Form A. It is also admitted that the Assessing Officer during the course of the assessment proceedings completed on 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire demand was based on application filed with the Director General of Foreign Trade for grant of import license for import of tin sheets. The Tribunal set aside the order of April, 1991 and sent the matter back for fresh adjudication after directing grant of personal hearing and putting the appellants to notice as to what they had to say on the figures arrived at by the Collector after verification and investigation of figures. 3. A fresh adjudication order was passed confirming the demand which was again challenged before the Tribunal. The Tribunal vide Final Order No. A/455/97-NB dated 1.7.97 once again remanded the case, directing the Commissioner to readjudicate the case after furnishing a copy of report of Additional Director General of Foreign Trade and copy of report of investigation, as already directed by the Tribunal in its first remand order. Once again, demand was confirmed by the Commissioner vide his order dated 31.7.2002 necessitating fresh appeal to the Tribunal which by Final Order No. 478/07 dated 16.8.2007 remanded the case to the adjudicating authority after noting that the Commissioner had not decided on the merits of the case and had not complied with the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After considering the import in 1991-92 of 57.467 MT, the figure of total import between Assessment Year 1984-85 and 1989-90 comes to 8058.283 MT, which is marginally less than the quantity of 8059.975 MT recorded in the appellant's books of accounts. The combined import of a total quantity of 8115.772 MT on the basis of licenses issued between 16.07.1984 and 17.12.1987, is supported by the bills of entry, as well as the order of the Addl. DG of Foreign Trade dated 20.10.1994. The addition made of unaccounted production and scrap out of alleged undisclosed imports, entirely on the basis of the seized Form A, is accordingly found to be without basis, and is deleted. {13} At Ground of Appeal No.6, the appellant has contested disallowance of part of interest on the borrowings from the Bank of Maharashtra. It is contended that the borrowed funds have not been utilized for the purpose of making non-interest bearing advances. In this connection, it was submitted that: "The Learned ACIT Circle 23(1) has erred both on facts and in law in making addition of Rs. 84,600/- on account of deemed interest @12% on advances given to Mr. Ravi Goyal for Rs. 7,05,OOO/-. The Learned ACIT Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s non-business advances as per details on page 128 already referred to above. This being the position, it cannot be held that the assessee had advanced interest bearing borrowing to the parties involved. We, therefore, are of the view that no addition on this account was called for. Thus, ground No. 14 is allowed." {13.2} The appellant has shown that as against the interest free advance of Rs. 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of Rs. 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only Rs. 4,05,000/-, which is out of capital of Rs. 6,53,883/- as well as internal accrual. The balance sheet indicates that the appellant had sufficient funds from which the interest free advance could have been advanced. The Assessing Officer has not proven the utilization of the interest bearing funds in making the interest free advances. In the body of the order, the disallowance of interest is stated to be 'as discussed in Assessment Year 1993-94 at page No. 14 to is'. Hence, the observation of the Assessing Officer cannot be said to be based on facts or on verification of the utilization of borrowed funds. No disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verified the actual quantity of import of raw material as per the licenses issued from the office of the DGFT during the period under consideration. As per the Form A, the raw material consumption between Assessment Year 1984-85 and 1987-88 was 20699 MT, whereas as per the order of the Add!. DG of FT, the quantity imported against the licenses was 9025 MT upto the Assessment Year 1992-93. In the assessee's books of accounts, the quantity imported by the appellant upto Assessment Year 1989-90 is disclosed at 8059.975 MT. The quantity actually imported by the appellant during this period was 8118.706 MT, as verified by the Assessing Officer from DGFT. Hence, the total difference worked out by the Assessing Officer works out to 1130.015 MT, if the license wise difference is considered, and 59.025 MT if set off is allowed. In the remand report of the Assessing Officer dated 30.03.2011, it is admitted that no independent documents are in the possession of the Department to prove that the appellant had actually imported the quantity of material mentioned in Form A. It is also admitted that the Assessing Officer during the course of the assessment proceedings completed on 29.03.1996 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication filed with the Director General of Foreign Trade for grant of import license for import of tin sheets. The Tribunal set aside the order of April, 1991 and sent the matter back for fresh adjudication after directing grant of personal hearing and putting the appellants to notice as to what they had to say on the figures arrived at by the Collector after verification and investigation of figures. 3. A fresh adjudication order was passed confirming the demand which was again challenged before the Tribunal. The Tribunal vide Final Order No. A/455/97-NB dated 1.7.97 once again remanded the case, directing the Commissioner to readjudicate the case after furnishing a copy of report of Additional Director General of Foreign Trade and copy of report of investigation, as already directed by the Tribunal in its first remand order. Once again, demand was confirmed by the Commissioner vide his order dated 31.7.2002 necessitating fresh appeal to the Tribunal which by Final Order No. 478/07 dated 16.8.2007 remanded the case to the adjudicating authority after noting that the Commissioner had not decided on the merits of the case and had not complied with the direction given in the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .467 MT, the figure of total import between Assessment Year 1984-85 and 1989-90 comes to 8058.283 MT, which is marginally less than the quantity of 8059.975 MT recorded in the appellant's books of accounts. The combined import of a total quantity of 8115.772 MT on the basis of licenses issued between 16.07.1984 and 17.12.1987, is supported by the bills of entry, as well as the order of the Addl. DG of Foreign Trade dated 20.10.1994. Therefore, the addition made of unaccounted production and scrap out of alleged undisclosed imports, entirely on the basis of the seized Form A, was accordingly found to be without basis, and was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issues in dispute and accordingly, we dismiss the ground nos. (i) & (ii) raised by the Revenue. 8.3 With regard to ground no. (iii) relating to addition of Rs. 84,600/- on account of interest relatable to interest free advance is concerned, we find that the assessee has contested disallowance of part of interest on the borrowings from the Bank of Maharashtra. As per the Assessee the borrowed funds have not been utilized f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing interest income of Rs. 22,98,869/-, he claimed an expenditure of Rs. 17,87,839/-, out of which a sum of Rs. 17,05,334/- is entirely on loans raised from bank of Maharashtra including brought forward loss of Rs. 2,08,53,626/-. The assessee is also having interest free funds far exceeding the amount advanced to the parties alleged as non-business advances as per details on page 128 already referred to above. This being the position, it cannot be held that the assessee had advanced interest bearing borrowing to the parties involved. We, therefore, are of the view that no addition on this account was called for. Thus, ground No. 14 is allowed." 8.3.2 We further observed that the asssessee has shown that as against the interest free advance of Rs. 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of Rs. 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only Rs. 4,05,000/-, which is out of capital of Rs. 6,53,883/- as well as internal accrual. The balance sheet indicates that the assessee had sufficient funds from which the interest free advance could have been advanced. The Assessing Officer has not proven the utilization of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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