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TMI Blog2020 (1) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... unal, Rajkot under E Court at Ahmedabad dated 27th May, 2019 in the ITA No.420/Rjt/2018 for the A.Y.2010-11. 2. The Revenue has proposed the following question as the substantial question of law arising out of the impugned order passed by the Tribunal; Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal has erred in deleting the addition of ₹ 3,46,66,804/- on account of under invoicing of exports of iron ores? 3. The brief facts of the case are that the respondent-assessee is a Company engaged in the business of manufacturing of beneficiated bauxite trading of iron ore. The assessee had filed its return of income on 17th October, 2011, declaring total income at ₹ 8,58,585/- The return of income was processed under Section 143(1) of the Act. 4. It appears that the Union of India got information that certain companies have extracted excess minerals and ores from the mines situated in Odisha, Goa and Jharkhand etc. The Inquiry Commission of Justice M.B. Shah was appointed to find out extra exploitation of mines whereby extra minerals were being extracted by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cates that income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income. On the basis of method of accountancy followed by an Assessee than he can reject the book result and assess the income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. 17. In light of the above, if we peruse the record, then it would reveal that the Ld. AO has nowhere expressed his inability to deduce true income from the books of the assessee. He has not rejected the book results for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been raised by the AO against it. It is the duty of the AO to prove the prima facie that such a charge can be leveled against the assessee, only thereafter it can be called for disproving that. The AO assumed charge and thereafter put a negative burden upon the assessee to prove that it has not exported iron ores by under-invoicing. This cannot be enforced in law. It is the AO who has to first prove the factum of under-invoicing done by the assessee with the support of reliable evidence in law. With regard to the alleged report of Hon ble M.B.Shah Commission, it was contended that this report was challenged before the Hon ble Supreme Court by way of writ petition. Government of India and other law enforcement agencies took the stand that on the basis of this report they are not going to take any action, rather they will investigate the issue further. This stand of Solicitor General as well as Advocate General appearing for the State of Goa have been noted down by the Hon ble Supreme Court in the judgment, which is reflected in para 10. It is worth to take note of this finding as under: 10. Mr. Mohan Prasaran, learned Solicitor General for the Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission on the ground that the provisions of Sections 8B and 8C of the Commissions of Inquiry Act, 1952 and the principles of natural justice have not been complied with. At the same time, we cannot also direct prosecution of the mining lessees on the basis of the findings in the report of the Justice Shah Commission, if they have not been given the opportunity of being heard and to produce evidence in their defence and not allowed the right to cross-examine and the right to be represented by a legal practitioner before the Commission as provided in Sections 8B and 8C respectively of the Commissions of Inquiry Act, 1952. 20. In the light of the above, let us examine the report. Whether it can be used against the assessee and solely on the basis of it, it can be established that the assessee has under-invoiced its export. According to the Ld. counsel for the assessee, the methodology adopted by the Commission itself is improper and its comparison is misplaced. Under invoicing has been worked out qua the assessee at page no.236. Before that we would like to take note of three-four serial numbers in order to appreciate the error. We would like to make comparativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he importer rates applicable on 4.1.2010 were not according to the market conditions. There is no comparative price stated by the Commission on 4.1.2010. It is also important to note that value cannot be judged on one factor only. Price depends on many factors and terms of sale contract. It is also pertinent to observe that the assessee is a trader and not a miner. It has purchased goods from the open market and exported. It has exported a single shipment to world renowned large multi-national company and it is not a sister concern of the importer. The goods were sold at arms length. It has purchased royalty paid iron ore and evidence to this effect has been brought to our notice and available on page no.113 to 129 of the paper book. Therefore, we are of the view that report which has been termed by the Commission itself as tentative report could be setting the investigation machinery in motion. But it cannot be treated equivalent to a decree which is required to be executed as it is, more so, in the light of finding recorded by the Hon ble Supreme Court and the stand taken by the respective States. The AO has miserably failed to collect any evidence against the assessee demonstrat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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