M/s Lucia Overseas Pvt. Ltd.,, Delhi v. ACIT, New Delhi

CO 152/DEL/2009 | misc
Pronouncement Date: 09-02-2010 | Result: Dismissed

Appeal Details

RSA Number 15220123 RSA 2009
Assessee PAN AAACL1067H
Bench Delhi
Appeal Number CO 152/DEL/2009
Duration Of Justice 7 month(s) 17 day(s)
Appellant M/s Lucia Overseas Pvt. Ltd.,, Delhi
Respondent ACIT, New Delhi
Appeal Type Cross Objection
Pronouncement Date 09-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 09-02-2010
Date Of Final Hearing 09-02-2010
Next Hearing Date 09-02-2010
Assessment Year misc
Appeal Filed On 22-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHMIM YAHYA ACCOUNTANT MEMBER IT(SS) NO. 76/DEL/2008 BLOCK PERIOD: 01.04.1995 TO 20.12.2001 ACIT CENTRAL CIRCLE 14 NEW DELHI VS. M/S. LUCIA OVERSEAS (P) LTD. G-3/98 SECTOR 15 ROHINI NEW DELHI PAN : AAACL 1067 H C.O. NO. 152/DEL/2009 BLOCK PERIOD: 01.04.1995 TO 20.12.2001 M/S. LUCIA OVERSEAS (P) LTD. G-3/98 SECTOR 15 ROHINI NEW DELHI VS. ACIT CENTRAL CIRCLE 14 NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SMT. KAVITA BHATNAGAR CIT ASSESSEE BY : SHRI VED JAIN CA O R D E R PER: C.L. SETHI J.M. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 2 7.03.2008 PASSED BY THE LD. CIT(A) IN THE MATTER OF A BLOCK ASSESSME NT U/S. 158BC OF THE INCOME TAX ACT 1961 (THE ACT) MADE BY THE AO FOR THE BLOCK PERIOD FROM 01.04.1995 TO 20.12.2001. 2. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE REVE NUE ARE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 2 OF 16 AND ON FACTS IN DELETING THE ADDITION OF RS. 17 01 22 793/- MADE BY THE AO U/S. 69A OF THE INCOM E TAX ACT 1961. 2(I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN TREATING THE EXPORT BUSINESS AS GEN UINE. 2(II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ALL EXPORT DOCUMENTS A ND OTHER EVIDENCES PLACED ON RECORD CONCLUSIVELY PROVE THAT THE EXPORTS HAVE ACTUALLY BEEN UNDERTAKEN BY T HE ASSESSEE. 2(III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE TRANSACTIONS OF TH E ASSESSEE CANNOT BE HELD TO BE HAWALA TRANSACTIONS. 2(IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE EXPORT UNDERTAKEN BY THE RASTOGI GROUP OF COMPANIES WAS GENUINE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW DEDUCTION U/S. 80HHC OF RS. 3 48 16 042/- AS CLAIMED BY THE ASSESS EE. 4. THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 3. FROM THE AFORESAID GROUNDS OF APPEAL IT IS SEEN THAT FOLLOWING ISSUES HAVE BEEN RAISED:- (I) REGARDING ADDITION OF RS. 17 01 22 793/- MADE B Y THE AO U/S. 69A OF THE ACT. (II) REGARDING DEDUCTION U/S. 80HC OF RS. 3 48 16 0 42/-. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED:- IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 3 OF 16 THE ASSESSEE IS ENGAGED IN EXPORT OF ENGINEERING GO ODS OFFICE WARES LEATHER GOODS MERCHANDISER AND COMMISSION A GENCY FOR NON FERROUS METAL DURING THE BLOCK PERIOD 01.04.1995 UP TO 20.12.2001. A SEARCH U/S. 132 HAD BEEN CONDUCTED BY THE DEPARTMEN T JOINTLY WITH ECONOMIC OFFENCES WING OF CBI MUMBAI/NEW DELHI ON 20.12.2001 IN PURSUANCE TO WHICH THE AO FRAMED THE IMPUGNED BLOCK ASSESSMENT ORDER. DURING THE COURSE OF BLOCK ASSESSMENT OF SH. SUNIL MONGIA WHO WAS SEPARATELY ASSESSED BY ANOTHER OFFICER HE GAVE A S TATEMENT ON OATH AND THE SAME HAS BEEN USED AGAINST THE APPELLANT WITHOU T PROVIDING ANY OPPORTUNITY TO CROSS EXAMINE HIM. SIMILARLY THE IN FORMATION DERIVED BY THE AO FROM MR. K.G. BAWEJA AND SH. ATUL JAIN HAS B EEN USED AGAINST THE APPELLANT WITHOUT PROVIDING ANY OPPORTUNITY TO IT. BASED ON ABOVE THE AO ASSUMED THAT NO EXPORT HAS BEEN MADE THOUGH; THE DETAILS OF EXPORT HAVE BEEN DULY FURNISHED ALONG WITH THE BLOC K RETURN. THE WORKING OUT OF 1/3 RD PEAK FOR ARRIVING AT UNDISCLOSED INCOME OF RS. 17 01 22 793/- U/S. 69A AS WELL AS THE NON-ALLOWANC E OF DEDUCTION CLAIMED U/S. 80HHC HAS BEEN DONE WITHOUT ANY BASIS. 5. THE CIT(A) III NEW DELHI WITH WHOM THE JURIS DICTION OF THE ASSESSEES APPEAL EARLIER VESTED SOUGHT A REMAND R EPORT U/S. 250(4) OF I.T. ACT 1961 THROUGH OFFICE LETTER F. NO. CIT(A) II I/RR/2004-05/439 DATED 10.08.2004. THE AO SUBMITTED REMAND REPORT D ATED 06.12.2004 IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 4 OF 16 AND THEREAFTER REQUESTED TO SUBMIT A REPORT ON FEW OF THE DOCUMENTS FILED DURING THE COURSE OF THE APPELLATE PROCEEDINGS. BU T TILL DECEMBER 2007 NO RESPONSE HAS BEEN RECEIVED FROM THE AO. DURING THE MONTH OF JANUARY 2008 THE LD. CIT(A) HAD A MEETING WITH SH . ASHOK MITTAL ADDL. CIT CENTRAL RANGE 6 NEW DELHI AND DISCUSSED THE ISSUE OF SUBMISSION OF PENDING REMAND REPORT BY 15.02.2008. IN THE MEA N TIME THE LD. COUNSEL OF THE ASSESSEE FILED A LETTER DATED 15.02 .2008 INTIMATING THAT THE HONBLE SUPREME COURT PASSED AN ORDER DATED 05.04.2 006 WHEREBY THE APPELLATE ORDER OF COMMISSION OF CUSTOMS MUMBAI H AD BEEN ACCEPTED AND THE ORDER OF THE CUSTOMS TRIBUNAL (CEGAT) WAS S ET ASIDE AND REMITTED BACK TO CEGAT WITH DIRECTIONS TO PASS A SP EAKING ORDER AFTER CONSIDERING EVIDENCE ON RECORD. THEREAFTER CESTAT MUMBAI (CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL MUMBAI) PASSED A FINAL ORDER NO. A/900 TO 902/WZB/2006-C1 (CSTB) DAT ED 19.09.2006 IN APPEAL NO. C/341 343 AND 339/98 CONFIRMING THE EXP ORTS UNDERTAKEN BY THE VARIOUS ENTITIES. AGAINST CESTAT ORDER COMMIS SIONER OF CUSTOMS (EXPORT) FURTHER FILED AN APPEAL BEFORE HONBLE SUP REME COURT OF INDIA AND THE APEX COURT HAS GIVEN FINAL VERDICT ON 07.09 .2007 WHEREIN THE DELAY IN FILING THE APPEAL WAS CONDONED AND THE APE X COURT DISMISSED THE CIVIL APPEAL FILED BY THE CUSTOMS DEPARTMENT. A RE QUEST WAS MADE BY THE LD. COUNSEL FOR THE ASSESSEE TO ADMIT THE DOCU MENTS PERTAINING TO THE IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 5 OF 16 ORDERS DATED 05.04.2006 AND 07.09.2007 OF HONBLE S UPREME COURT OF INDIA FINAL ORDER OF CESTAT DATED 19.09.2006 AS AD DITIONAL EVIDENCES U/R 46A OF THE I.T. RULES 1962. THE AO I.E. DCIT CENTRAL CIRCLE 4 NEW DELHI HAS BEEN SENT A LETTER BEARING NO. F. NO. CIT/(A)-XIII/2007- 08/504 DATED 20.02.2008 FOR THE COMMENTS ON ADMISSI ON OF ADDITIONAL EVIDENCES UNDER I.T. RULES. THE AO RESPONDED BACK THROUGH LETTER BEARING NO. ACIT/CC-14/2007-08/520 DATED 28.02.2008 AS PER WHICH THE AO STATED THAT THE ASSESSMENT U/S. 158BC IS BASED O N MATERIAL FACTS WHICH HAS BEEN ELABORATELY DISCUSSED IN THE ORDER. THE ISSUE HAS ALSO BEEN DISCUSSED IN DETAILS IN THE REMAND REPORT DATE D 06.12.2004. REGARDING THE ORDERS PASSED BY THE CUSTOM TRIBUNAL (CESTAT) AND THE ORDERS PASSED BY THE HONBLE SUPREME COURT THE AO HAD NOT OFFERED ANY SPECIFIC COMMENTS AND ONLY STATED THAT THESE ARE TH E SUBSEQUENT DEVELOPMENTS AFTER PASSING THE BLOCK ASSESSMENT ORD ER. 6. THE AOS LETTER DATED 28.02.2008 WITH REGARD TO THE ADMISSION OF ADDITIONAL EVIDENCE U/R 46A HAS BEEN SENT TO THE AP PELLANT WHO FILED A REJOINDER ON 07.03.2008 THROUGH ITS AR. ALL THESE REPORTS/REJOINDERS HAVE BEEN TAKEN INTO CONSIDERATION BY THE CIT(A) WHILE D ECIDING THE APPEAL. 7. THE ASSESSMENT ORDER WAS PERUSED BY THE LD. CIT( A). THE AO STATED THAT THE APPELLANT COMPANY BELONGED TO RASTO GI GROUP WHERE THE DEPARTMENT CONDUCTED SEARCH ALONG WITH THE EOW OF C BI MUMBAI & IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 6 OF 16 NEW DELHI ON THE BASIS THAT THIS GROUP INDULGED IN BOGUS EXPORTS/OVER- INVOICING OF THE EXPORTS WITH A VIEW TO DEFRAUD THE STATE EXCHEQUER. BRIEF DETAILS REGARDING BOGUS EXPORT BY RASTOGI GRO UP AS SUBMITTED BY THE AO ARE AS UNDER:- THE INFORMATION PROVIDED BY THE CBI ALLEGED THAT DURING THE PERIOD 1995-96 THE RASTOGI BROTHERS THRO UGH THEIR 14 COMPANIES MADE BOGUS EXPORTERS. THE BICYC LE PARTS WERE EXPORTED BY THESE COMPANIES AT EXORBITAN TLY OVER INVOICED FOB (FREE ON BOARD) EXPORT VALUES. A S PER THE PROVISIONS OF SECTION 76(1)(B) OF THE CUSTOMS A CT THEY ARE NOT ENTITLED TO CLAIM DUTY DRAWBACK SINCE THE DUTY DRAWBACK CLAIMED BY THEM WAS IN EXCESS OF THE PREVA ILING MARKET VALUE OF THE EXPORTED BICYCLE PARTS. TO OVE RCOME THE HURDLE IMPOSED BY SECTION 76(1)(B) OF CUSTOMS A CT SUCH EXPORTER COMPANIES ALSO DECLARED FALSE PREVAIL ING MARKET VALUE ON THE EXPORT DOCUMENTS WHICH WAS SHOW N AS ALMOST EQUAL TO THE VALUE SHOWN IN THE EXPORT INVOI CES. ON BEING NOTICED AND POINTED OUT BY MUMBAI CUSTOMS TH E EXPORTS WERE SHIFTED FROM MUMBAI TO CHENNAI. AT CH ENNAI CUSTOMS THE CONSIGNMENT OF M/S. GULISHTA IMPEX LTD M/S. SOBATPUR IMPEX (INDIA) LTD. AND M/S. UNIMAC INDIA L TD. WERE INTERCEPTED BY DRI (DIRECTORATE OF REVENUE INTELLIGENCE) ON 19.01.1996. SUBSEQUENT ENQUIRIES BY DRI REVEALED THAT CONSIGNMENTS WERE HEAVILY OVER INVOIC ED AS WELL AS MIS-DECLARED. BASED ON THE RESULT OF CHENN AI DRI ENQUIRY AT DELHI WAS ALSO INITIATED WHICH REVEALED THAT 34 SHIPPING BILLS OF M/S. GULISHTA IMPEX LTD. M/S. SO BATPUR IMPEX (INDIA) LTD. AND M/S. UNIMAC INDIA LTD. INVOI CED AT AROUND RS. 9.0 CRORE FROM INDIA. THE IMPORTER WAS SHOWN AS ONE M/S. CAPILA PLUS IN MOSCOW. ON THIS EXPORT DUTY DRAWBACK OF RS. 1.67 CRORE APPROX. WAS RECEIVED BY THE THREE EXPORTER COMPANIES. HOWEVER INVESTIGATION IN RUSSIA REVEALED THAT THE SAID CONSIGNMENT WAS CLEARED IN M OSCOW BY M/S. INTERTECH ON THE BASIS OF FORGED IMPORT INV OICES PURPORTEDLY ISSUED BY M/S. RAJ RANI EXPORTS DELHI AND SHOWING VALUE OF THE SAME CONSIGNMENT ONLY AT RS. 6 .75 LAC (APPROX.). THE REMITTANCES AGAINST THE SAID IM PORT BY M/S. INTERTECH WERE REPORTEDLY SENT TO UNITED KINGD OM. IT IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 7 OF 16 WAS REVEALED THAT EXPORT PROCEEDS RECEIVED BY THESE THREE COMPANIES WERE MERELY TRANSFER OF FUNDS FROM RUSSIA TO INDIA IN THE GUISE OF EXPORT PROCEEDS. 8. AS PER THE AO INVESTIGATION HAVE REVEALED THAT ALL EXPORT COMPANIES HAVE BEEN UNDER THE DIRECT OR INDIRECT CO NTROL OF SHRI RAVINDER RASTOGI SHRI VIRENDRA RASTOGI AND SHRI SUBHASH CHA ND RASTOGI AND THEIR CLOSE RELATIVES AND FRIENDS. THE AO FURTHER HELD T HAT:- A. NO PURCHASE OF GOODS CLAIMED TO HAVE BEEN EXPORT ED WERE EVER MADE AS THE SUPPLIERS WERE FOUND TO BE NON-EX ISTING. HOWEVER THE PAYMENTS FOR THE ALLEGED PURCHASES ARE SHOWN TO HAVE BEEN MADE BY THE COMPANIES TO SUCH SUPPLIER S BY CHEQUES WHICH WERE ENCASHED AND REALIZED FROM THE BANK DOCUMENTS OF THE PURPORTED SUPPLIERS. B. THAT THE APPELLANT HAS ALSO NOT MANUFACTURED ANY OF THE GOODS CLAIMED TO HAVE BEEN EXPORTED. C. THAT THE DRAWBACK WAS CLAIMED ON ALLEGED BOGUS E XPORTS. D. THAT THE CUSTOM DEPARTMENT HAS FILED A SPECIAL L EAVE PETITION BEFORE THE HONBLE SUPREME COURT WHICH HA S BEEN ADMITTED. E. THAT THE APPELLANT HAS CLAIMED DEDUCTION U/S. 80 HHC ON BOGUS EXPORTS AND SUBSEQUENTLY HAS CHEATED THE GOVT . OF IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 8 OF 16 INDIA ON CLAIM OF DUTY DRAWBACK. THEREFORE EXPORT PROCEEDS ARE NOTHING BUT THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE AND SHALL BE BROUGHT TO TAX U/S. 69A OF DRAWBACK CLAIM RECEIVED IN LIEU OF THE EXPORT SHALL ALSO BE TREATED AS INCOME OF THE APPELLANT DURING THE PERIO D. THE MAIN OBJECTIVE OF THIS IS TWO FOLD: (I) CLAIMING DUTY DRAWBACK AND THUS CHEATING THE CE NTRAL GOVT. AND; (II) TO CONVERT THEIR UNACCOUNTED MONEY IN INDIA IN TO EXPORT PROCEEDS. 9. WITH ABOVE REMARKS THE AO DETERMINED TOTAL UNDI SCLOSED INCOME OF RS. 20 49 38 835/- OUT OF WHICH RS. 17 01 22 793 /- PERTAINED TO UNDISCLOSED MONEY U/S. 69A AND RS. 3 48 16 042/- PE RTAINED TO DISALLOWANCE U/S. 80HHC OF THE ACT. 10. ON AN APPEAL THE CIT(A) DELETED THE ADDITION B Y OBSERVING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEAR NED AR. REMAND REPORTS AND THE REJOINDERS FILED BY THE APPELLATE COMPANY HAVE BEEN CONSIDERED. TAKING INTO THE TOTA LITY OF FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE OPINION THAT THE CASE OF THE APPELLANT COMPANY STANDS ON MUCH STRONGER FOOTI NG. THE FINDING OF THE AO IN THE PRESENT CASE IS MERELY BAS ED ON INVESTIGATION CARRIED OUT BY THE CBI AND DRI AND TH AT TOO IN THE CASE OF M/S. UNIMAC INDIA LTD. M/S. SOBAT INDIA LT D. AND M/S. GULISHTA IMPEX LTD. THE AUTHORITY WHICH SUPERVISES THE EXPORT IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 9 OF 16 I.E. THE CUSTOM DEPARTMENT HAVE LOST THEIR CASE BEF ORE THEIR OWN TRIBUNAL I.E. CESTAT AND THE ORDER OF THE CESTAT HA S BEEN UPHELD BY THE APEX COURT IN A JUDGMENT DATED 07-09 .2007. BESIDES I DO NOT SEE JUSTICIABLE GROUNDS ON THE BA SIS OF WHICH THE ADDITIONS MADE BY THE AO CAN BE SUSTAINED. NO REFE RENCE HAS BEEN MADE BY THE AO TO ANY OF THE SEARCH MATERIAL & /OR THE INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND IN VIEW OF THE SAME IT IS DIFFICULT TO AGREE TO THE V IEW POINTS OF THE AO IN MAKING ADDITION OF RS. 17 01 22 793/- U/S. 69 A OF THE ACT. IN NUTSHELL MY DECISION IS BASED UPON THE FOLLOWIN G REASONING:- A) FOR THE GENUINENESS OF EXPORTS UNDERTAKEN THE APPELLANT HAS TO FULFILL MULTIFARIOUS PROCEDURES AT DIFFERENT LEVEL OF GOVERNMENT. IN ADDITION THE RBI ALSO MONITORS THE EXPORT DONE BY THE EXPORTERS OF INDIA AND SEES THAT PROCEEDS ARE REALIZED IN TIME. ALL EXPORT DOCUMENTS AND OTHER EVIDENCES PLACED ON RECORD CONCLUSIVELY PROVE THAT THE EXPORTS HAVE ACTUALLY BEEN UNDERTAKEN BY THE APPELLANT. B) ON CRITICAL ANALYSIS OF DOCUMENTS AVAILABLE ON RECORD COPIES OF WHICH ARE ALSO SUBMITTED BEFORE ME IN MY CONSIDERED OPINION THE INFERENCE DRAWN BY THE AO THAT TRANSACTIONS IN QUESTIONS ARE HAWALA TRANSACTION CANNOT BE ACCEPTED. THE APPELLANT ON RECORD HAS BROUGHT VARIOUS EVIDENCES IN SUPPORT OF ITS CLAIM. ALL THESE EVIDENCES IN MY OPINION GO TO PROVE THAT EXPORTS UNDER CONSIDERATION ARE GENUINE AND THE ADVERSE REMARK MADE BY THE AO BEING CONTRARY TO EVIDENCE PLACED ON RECORD ARE BOTH INCORRECT AND UNFOUNDED. C) THE INCOME TAX LAW REQUIRES THE AUTHORITIES PROPOSING AND ADDITION UNDER SECTION 69A OR FOR THAT MATTER UNDER ANY SECTION OF THE ACT TO RECORD INDEPENDENT FINDINGS TO THAT EFFECT. PROVISIONS OF CHAPTER XIV-B ARE SPECIAL PROVISIONS AND ARE INTENDED TO TAX THE UNDISCLOSED INCOME FOUND AS A RESULT OF SEARCH. AO HAS NOT BROUGHT OUT OR REFERRED TO ANY DOCUMENT OR EVIDENCE FOUND AS A RESULT OF SEARCH FOR WHICH ADDITION HAS BEEN MADE. AO HERSELF/HIMSELF IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORTS STATED AND ADMITTED THAT IT IS AN ALLEGATION MADE BY THE CBI AND FURTHER IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 10 OF 16 MADE REFERENCE TO THE INFORMATION PROVIDED BY THE CBI. IN THE ABSENCE OF ANY INDEPENDENT FINDINGS/ENQUIRIES CONDUCTED BY THE AO NO ADDITION UNDER SECTION 69A COULD HAVE VALIDLY BEEN MADE. D) AT THE TIME OF FINALIZATION OF BLOCK ASSESSMENT FOR ALL THE 14 RASTOGI GROUP COMPANIES DURING THE MONTH OF DECEMBER 2003 CIVIL APPEAL NO. 2134- 2136 OF 2001 FILED BY THE COMMISSIONER OF CUSTOMS MUMBAI AND SPECIAL LEAVE PETITION OF CBI WAS PENDING IN THE SUPREME COURT OF INDIA. ON 5-4-206 THE HONBLE APEX COURT ALLOWED THE APPEAL OF CUSTOMS AND THE ORDER OF THE CUSTOM TRIBUNAL (CEGAT) WAS SET ASIDE AND THE CASE WAS REMITTED BACK TO CEGAT FOR PASSING A SPEAKING ORDER AFTER CONSIDERING THE EVIDENCES ON RECORD. IN PURSUANCE THERETO CESTAT MUMBAI (CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL) PASSED FINAL ORDER ON 19.09.2006 DECIDING THAT THERE IS NO LEGAL INFIRMITY IN THE EXPORTS UNDERTAKEN BY THE RASTOGI GROUPS OF COMPANIES AND DOES NOT WARRANT ANY INTERFERENCE. CUSTOMS AGAIN MOVED THE APEX COURT AND IN A JUDGMENT DATED 07-09.2007 THE SUPREME COURT DISMISSED THE APPEAL FILED BY THE COMMISSIONER OF CUSTOMS (EXPORT) MUMBAI. HENCE NOT ONLY THE EXPORTS BUT ALSO PAYMENT OF DRAWBACK TO THE RASTOGI GROUP OF COMPANIES HAVE BEEN FOUND CORRECT. E) THE AO HAS NOT PROVED ANY OF THE ALLEGATIONS AS MENTIONED IN PARA 7.6 OF THIS ORDER AND HENCE IT IS DIFFICULT TO SUSTAIN AOS VIEW POINTS. F) THAT ONCE EXPORT ARE FOUND TO BE GENUINE I DO NOT SEE ANY REASON AND THE BASIS ON WHICH THE PURCHASES CAN BE TAKEN AS BOGUS. IT IS TRUE THAT HERE CANNOT BE ANY SALES WITHOUT PURCHASES. THE APPELLANT IS HAVING 100% EXPORT AND THEREFORE THERE IS NO QUESTION OF RECORDING INCORRECT OR ENHANCED PURCHASES IN BOOKS OF ACCOUNTS. IN SUPPORT RELIANCE IS PLACED ON THE DECISION OF TRIBUNAL IN THE CASE OF BALAJI TEXTILE INDUSTRIES (P) LTD VS. THIRD ITO 49 ITD 177 (BOM) AND BANSAL STEEL ROLLING MILLS VS. ITO 92 TAXMAN IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 11 OF 16 (MAG) 314 (BOM). IN ORDER TO VERIFY THE PAYMENT MADE BY THE APPELLANT TO THE PARTIES FROM WHOM GOODS WERE PURCHASED THE AO HERSELF MADE INDEPENDENT ENQUIRIES WITH THE BANKERS OF THE APPELLANT COMPANY ISSUING SUMMON U/S. 131 WHO ALSO CONFIRMED THE CLEARANCE OF CHEQUES ISSUED BY THE APPELLANT TO THE VARIOUS PARTIES. THE AO ALSO OBTAINED DETAILS SUCH AS ACCOUNT OPENING FORMS ETC. OF THE RESPECTIVE PARTIES. IN SPITE OF EVIDENCE ON RECORD THE AO PREFERRED TO RELY UPON THE REPORT OF INSPECTORS TO HOLD THAT THE CONCERNS FORM WHOM THE PURCHASES HAVE BEEN MADE ARE NON-EXISTING AND THEREFORE THE PURCHASES WERE NOT GENUINE. THIS OFFICE ALSO HAS PROVIDED AMPLE OPPORTUNITY TO THE AO TO BRING ANY CONCRETE EVIDENCES ON RECORD TO JUSTIFY THE ADDITIONS MADE BUT EVERY TIME I DREW A BLANK AS THE AO HAS FAILED TO BRING ANY MATERIAL ON RECORD TO JUSTIFY THE CONTENTIONS ON THE BASIS OF WHICH TH E ADDITIONS HAVE BEEN MADE IN THE IMPUGNED ORDER. IN VIEW OF ABOVE I DIRECT THE AO TO DELETE THE ADDITIONS MADE U/S. 69A OF THE ACT. 11. HENCE THE DEPARTMENT IS IN APPEAL BEFORE US. 12. IN THE COURSE OF HEARING OF THIS APPEAL THE LD . COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT IDENTICAL ISSUE HAS B EEN DECIDED IN THE GROUP CASES BY THE TRIBUNAL IN ASSESSEES FAVOUR IN THE F OLLOWING DECISIONS:- I. VINDHYA INTERNATIONAL LTD. NO. 1912/DEL2008 AND IT(SS)A NO. 79/DEL/2008 DT. 26 TH AUGUST 2009. II. RBG NICKLE INDIA LTD. ITA NO. SS/71/DEL/2008 AN D C.O. NO. 79/DEL/2009 DT. 11 TH SEPTEMBER 2009 III. M/S. SUMANGAL OVERSEAS LTD. ITA NO. 82/DEL/200 8 & C.O. NO. 83/DEL/2009 IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 12 OF 16 IV. GULISHTA IND. LTD. 73/DEL/2008 & C.O. NO. 66/DE L/2009 DT. 17 TH OCTOBER 2009 V. ADITYA PRODUCTS ITA NO. 80/DEL/2008 & C.O. NO. 77/DEL/2009 DT. 27 TH NOVEMBER 2009 VI. H.M. IMPEX ITA NO. 75/DEL/2008 & C.O. NO. 105/D EL/2009 27 TH NOVEMBER 2009 VII. CENTURY 21 ST HITECH IND. LTD. ITA NO. 72/DEL/2008 & 76/DEL/2009 VIII. M/S. UNIMAC INDIA LTD. I.T.(SS) APPEAL NO. 74 /DEL/2008 & C.O. NO. 80/DEL/2009 DT.22 ND JANUARY 2010 IX. SWELL INTL. LTD. ITA NO. 70/DEL/2008 & 97/DEL/2 009 X. M/S. SOBAT INDIA PVT. LTD. I.T.(SS) APPEAL NO. 77/(DEL)/2008 & 96/DEL/2009. 13. IN THE CASE OF ACIT VS. SUMANGAL OVERSEAS LTD. (ITA NO.82/DEL/2008 AND C.O. NO. 83/DEL/2009) THE TRIBU NAL VIDE ORDER DATED 16.10.2009 HAS HELD AND OBSERVED AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 8. IN THE COURSE OF HEARING OF THIS APPEAL IT WAS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THA T IDENTICAL ADDITIONS BASED ON THE SAME SET OF FACTS ON THE BASIS OF THE SEARCH CONDUCTED BY INCOME TAX DEPARTM ENT JOINTLY WITH ECONOMIC OFFENCE WING CBI MUMBAI/NEW IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 13 OF 16 DELHI HAS BEEN DELETED BY THE CIT(A) AND THE ORDE R OF THE CIT(A) HAS BEEN UPHELD BY THE INCOME TAX APPELL ATE TRIBUNAL DELHI BENCHES I NEW DELHI IN THE CASE OF ACIT VS. VINDHYA INTERNATIONAL LTD. K-15A KAILASH COLONY NEW DELHI IN IT(SS) NO. 79/DEL/2008 BY OBSERVING AND HOLDING AS UNDER: WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE PARTIES AND ALSO PERUSED MATERIAL ON RECORD. WE FIND THAT THE BASIS FOR IMPUGNED ADDITION IS THAT THE ASSESSEE WAS TREATED AS BEING ENGAGED IN MAKING BOGUS EXPORT. HOWEVER THE HONBLE SUPREME COURT HAS CONFIRMED THE ORDER OF COMMISSIONER OF CUSTOMS/CEGAT WHEREBY IT HAS BEEN HELD THAT THE ASSESSEE WAS ENGAGED IN GENUINE EXPORTS. ONCE THE GENUINENESS OF EXPORTS IS NOT I N DOUBT THEN CORRESPONDING PURCHASES CANNOT BE TREATED AS BOGUS. ACCORDINGLY WE HOLD THAT THE ORDER OF LD. CIT(A) IN LAW. THUS BOTH THESE GROUNDS ARE DISMISSED. 9. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORD ER OF THE AO. 10. THE ASSESSEE COMPANY BELONGS TO RASTOGI GROUPS AND SEARCHES IN RASTOGI GROUPS COMPANIES WERE CONDUCTED AS JOINT OPERATION WITH THE ECONOMIC OFFE NCE WING CBI MUMBAI/NEW DELHI. THE INFORMATION PROVIDED BY THE CBI ALLEGED THAT DURING THE PERIOD 1995- 96 RASTOGI BROTHERS THROUGH THEIR COMPANY MADE BOG US EXPORTS. ON THE BASIS OF INFORMATION GIVEN BY TH E CBI THE AO HAS TREATED THE TOTAL TURNOVER OF RS.59 60 9 6 081/- DURING THE A.Y. 1996-97 AS UNDISCLOSED INCOME OF TH E ASSESSEE. HOWEVER ON AN APPEAL THE CIT(A) DELETED THE ADDITIONS IN THE LIGHT OF THE DECISION OF CESTAT W HICH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT THA T EXPORT SHOWN BY THE VARIOUS CONCERNS WERE NOT BOGUS . SIMILAR ADDITIONS WERE ALSO MADE IN THE CASE OF VIN DHYA INTERNATIONAL LTD. TREATING THE EXPORT BUSINESS AS BOGUS IN THE LIGHT OF THE INFORMATION PROVIDED BY THE CBI. SINCE THE HONBLE SUPREME COURT HAS CONFIRMED THE ORDER O F CESTAT WHEREBY IT HAS BEEN HELD THAT THE VARIOUS CONCERNED BELONGING TO THIS GROUP WERE ENGAGED IN GENUINE EXPORT AND SINCE IDENTICAL ADDITIONS HAS B EEN DELETED IN THE CASE OF VINDHYA INTERNATIONAL LTD W E DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 14 OF 16 CIT(A) IN DELETING THE ADDITIONS. THE VARIOUS REAS ON GIVEN BY THE CIT(A) IN DELETING THE ADDITIONS WHIC H HAVE BEEN REPRODUCED HEREIN ABOVE ARE FOUND TO BE JUSTI FIED PARTICULARLY IN THE LIGHT OF THE FACT THAT NO LEGAL INFIRMITY WAS ULTIMATELY FOUND IN THE EXPORT UNDERTAKEN BY TH E RASTOGI GROUPS OF COMPANIES AS PER THE DECISION OF CESTAT MUMBAI WHICH HAS BEEN UPHELD BY THE HONBL E SUPREME COURT VIDE ORDER DATED 07.09.2007. THUS T HE GROUND RAISED BY REVENUE IS REJECTED. THIS DECISIO N WOULD TAKE CARE OF THE VARIOUS OBJECTIONS RAISED BY THE REVENUE IN GROUND NO. 2(I) TO 2(IV) WHERE THE REVE NUE ALLEGED THAT THE CIT(A) HAS ERRED IN LAW AND ON FAC TS IN TREATING (I) THE EXPORT BUSINESS AS GENUINE (II) EXPORTS HAVE ACTUALLY BEEN UNDERTAKEN BY THE ASSESSEE (III ) THE TRANSACTION OF THE ASSESSEE CANNOT BE HELD HAWALA TRANSACTION AND (IV) EXPORT UNDERTAKEN BY THE RAST OGI GROUPS AND COMPANIES WAS GENUINE. THE CIT(A) HAS TAKEN THE AFORESAID VIEW IN THE LIGHT OF THE DECISI ON OF HONBLE SUPREME COURT UPHOLDING THE ORDER OF CESTAT WHEREIN EXPORT BUSINESS WAS FOUND TO BE GENUINE TH US THE GROUND 2(I) TO 2((IV) ARE ALSO REJECTED. 11. GROUND NO. 3 IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW DEDUCTION U/S. 80HHC OF RS. 23 65 03 189/- AS CLAIMED BY THE ASSESSEE. 12. THE ASSESSEES CLAIM OF DEDUCTION U/S. 80HHC WA S DISALLOWED CONSEQUENTIAL TO THE AOS FINDING THAT E XPORT BUSINESS OF THE ASSESSEE WAS NOT GENUINE. THE CIT( A) HAS DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80HHC AS PE R PROVISIONS OF LAW IN VIEW OF HIS FINDING THAT THE E XPORTS UNDERTAKEN BY THE ASSESSEE ARE GENUINE AS PER HIS DECISION IN RESPECT OF THE ADDITION OF RS.59 60 96 081/- BEING EXPORT PROCEEDS RECEIVED BY THE ASSESSEE FROM EXPORT BUSINESS. THUS THIS GROUND IS CONSEQUENTIA L TO THE GROUND NO. 1 & 2 DECIDED ABOVE. CONSEQUENT TO OUR DECISION WITH REGARD TO THE GROUND NO. 1 & 2 WE UP HOLD THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO ALL OW THE DEDUCTION U/S. 80HHC AS PER LAW WHEN IT WAS HELD TH AT THE EXPORT BUSINESS OF THE ASSESSEE WAS GENUINE. T HUS THIS GROUND NO. 3 IS REJECTED. IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 15 OF 16 13. AT THIS STAGE IT IS WORTH WHILE TO MENTION THA T ON THIS ISSUE THE TRIBUNAL HAS UPHOLD THE ORDER OF TH E CIT(A) IN THE CASE OF ANOTHER ASSESSEE M/S. VINDHYA INTERNATIONAL LTD BELONGING TO THE SAME GROUP WHER E THE TRIBUNAL HAS OBSERVED AND HOLD AS UNDER:- 13. IN GROUND NO. 3 THE REVENUE IS AGGRIEVED BY ALLOWANCE OF DEDUCTION U/S. 80HHC. THE FACTS HAVE ALREADY BEEN NARRATED AND THE ISSUE RAISED IN THIS GROUND IS CONNECTED WITH EARLIER GROUNDS. BOTH THE PARTIES HAVE REITERATED THE SAME CONTENTIONS. SINCE THE EXPORTS HAVE BEEN FOUND TO BE GENUINE THEN DEDUCTION U/S. 80 HHC CANNOT BE DENIED. ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. 14. IN THE LIGHT OF THE DISCUSSION MADE ABOVE ALL THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 15. IN THE LIGHT OF THE VIEW WE HAVE TAKEN ABOVE IN RESPECT OF GROUNDS RAISED BY THE REVENUE AS A RESUL T OF WHICH ADDITIONS MADE BY THE AO STAND DELETED THE C ROSS OBJECTIONS OF ASSESSEE FILED ON CERTAIN TECHNICAL G ROUNDS SHALL STAND DISMISSED AS INFRUCTUOUS. 14. AN IDENTICAL VIEW HAS BEEN TAKEN IN ALL OTHER A PPEALS LISTED ABOVE IN PARA 12 OF THIS ORDER. 15. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF T HE TRIBUNAL DECIDED IN ASSESSEES FAVOUR ON IDENTICAL FACTS AND CIRCUMS TANCES OF THE CASE WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) AND THEREFORE THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 16. IN THE LIGHT OF THE VIEW WE HAVE TAKEN ABLE IN RESPECT OF THE GROUNDS RAISED BY THE REVENUE AS A RESULT OF WHICH ADDITION MADE BY THE AO STAND DELETED THE CROSS OBJECTIONS OF THE ASSES SEE FILED ON SOME IT(SS) NO. 76/DEL/2008 C.O. NO. 152/DEL/2009 PAGE 16 OF 16 TECHNICAL GROUNDS SHALL STAND DISMISSED AS INFRUCTU OUS AS SO ACCEPTED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING. 17. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED. 18. THIS DECISION WAS PRONOUNCED IN THE OPEN COUR T ON 9 TH FEBRUARY 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 09 TH FEBRUARY 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR