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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 ..... ition 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. Addition on account of interest relatable to interest free advance - Held that:- the asssessee has shown that as against the interest free advance of ₹ 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of ₹ 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only ₹ 4,05,000/-, which is out of capital of ₹ 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 1984-85 on 16.10.1985, disclosing a total income of ₹ 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 income of ₹ 1,37,26,926/- Against this order, the assessee filed an appeal before the Ld. CIT(A), who vide his common order dated 30.03.1999 for Assessment Years 1984-85 to 1987- 88, and Assessment Year 1989-90, set aside the assessment, directing that the records seized by the Excise Department be examined, including Form A submitted to the Director General of Foreign Trade (DGFT), RG-23 register and import register, and also the assessee s submissions regarding sale of agricultural' appliances. The set aside assessment was completed under section 144 r.w.s. 250 of the Act on 23.03.2001 at the same income of ₹ 1,37,26,926/-. The CIT(A)-XXIII, dismissed the appeal of the appellant, primarily on the ground that the assessee was adopting d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication 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 the appellant's submissions, the reports of the Assessing Officer and the appellate history of this case. The order in appeal, being the order under section 143(3) r.w.s. 254, dated 24.12.2009, is in sum and substance, identical to the order under section 143(3) r.w.s. 250 dated 29.03.1996, arriving at the same assessment of total income of ₹ 1,37,26,926/-. The Assessing Officer estimated the suppressed production of value of ₹ 5,63,22,462/- out of imported tin sheets consumed as per details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment 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 verified from DGFT the figures of actual import by the appellant, which was also mentioned in the assessment order. The quantities-of consumption adopted by the Assessing Officer in the assessment orders dated 29.03.1996 and 24.12.2009, and also taken by the Central Excise Department in their orders dated 4.11.1997 and 20.05.2009 are based entirely on the figures provided by the appellant in Form A, which is essentially an application for import license, in which the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 remand order. 4. Now we come to the present impugned order where the demand has been re-confirmed and direction of the Tribunal for furnishing copy of the investigation of figures of import and report of the Additional Director General of Foreign Trade has not been carried out. Since the adjudication order in this case continues to suffer from the vice of violation of principles of natural justice and since the Tribunal's order regarding furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 84,600/- on account of deemed interest @12% on advances given to Mr. Ravi Goyal for ₹ 7,05,OOO/-. The Learned ACIT Circle 23(1) has not tried to appreciate the assessee's submission that the above advances has not been given from interest bearing fund rather from internal generated fund. It is further submitted that in the balance sheet there is a debit balance of ₹ 7,05,000/- to Mr. Ravi Goyal with a corresponding Credit balance of ₹ 3,OO,OOO/-. Hence the net interest free advance is ₹ 4,05,000/- only which has been financed by Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st free advance of ₹ 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of ₹ 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only ₹ 4,05,000/-, which is out of capital of ₹ 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 of interest paid to the bank is justified without rebuttal of the appellant's contention that the advances had been given from his own capital and internally generated funds. Hence, the addition made of ₹ 84,600/- on this account is deleted. 8.1 On perusing the above finding of the ld. CIT(A), with regard to ground no. 2 3 are concerned, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses 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 verified from DGFT the figures of actual import by the appellant, which was also mentioned in the assessment order. The quantities-of consumption adopted by the Assessing Officer in the assessment orders dated 29.03.1996 and 24.12.2009, and also taken by the Central Excise Department in their orders dated 4.11.1997 and 20.05.2009 are based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 remand order. 4. Now we come to the present impugned order where the demand has been re-confirmed and direction of the Tribunal for furnishing copy of the investigation of figures of import and report of the Additional Director General of Foreign Trade has not been carried out. Since the adjudication order in this case continues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 for the purpose of making noninterest bearing advances. We observed that it was the contention before the Ld. CIT(A) that ACIT Circle 23(1) has erred both on facts and in law in making addition of ₹ 84,600/- on account of deemed interest @12% on advances given to Mr. Ravi Goyal for ₹ 7,05,OOO/-. It was also s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ₹ 7,05,000/- to Shri Ravi Goyal, the balance sheet shows a credit balance of ₹ 3,00,000/- in the name of Shri Ravi Goyal. Hence, the interest free advance is only ₹ 4,05,000/-, which is out of capital of ₹ 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 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 15. Hence, the observation of the Assessing Officer canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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