M/s Unimac (India) Ltd, Delhi v. ACIT, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA VICE PRESIDENT AND SHRI GEORGE MATHAN JUDICIAL MEMBER IT(SS)A.NO.74/DEL/2008 (BLOCK PERIOD : 1.4.1995 TO 20.12.2001) ACIT CENTRAL CIRCLE 14 VS. M/S. UNIMAC INDIA LI MITED NEW DELHI. G-3/98 SECTOR 15 ROHINI NEW DELHI. (PAN : AAACU0862B) CO NO.80/DEL/2009 (IN IT(SS)A.NO.74/DEL/2008) (BLOCK PERIOD : 1.4.1995 TO 20.12.2001) M/S. UNIMAC INDIA LIMITED VS. ACIT CENTRAL CIRCL E 14 G-3/98 SECTOR 15 ROHINI NEW DELHI. NEW DELHI. (PAN : AAACU0862B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN CA REVENUE BY : SHRI V.K. TIWARI CIT DR O R D E R PER G.E. VEERABHADRAPPA VP : THE REVENUES APPEAL AND THE ASSESSEES CROSS OBJE CTION ARISE OUT OF THE ORDER DATED 27.3.2008 OF THE COMMISSIONER OF IN COME-TAX (APPEALS)- 2 XIII NEW DELHI INVOLVING THE BLOCK ASSESSMENT FOR THE BLOCK PERIOD 1.4.1995 TO 20.12.2001. 2. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE EXPORT OF ENGINEERING GOODS OFFICE WARES LEATHER GOODS MER CHANDISER AND COMMISSION AGENCY. A SEARCH ACTION U/S 132 WAS CON DUCTED BY THE DEPARTMENT JOINTLY WITH ECONOMIC OFFENCE WING OF TH E CBI MUMBAI/NEW DELHI ON 20.12.2001. THE COMPANY BELONGS TO ONE GR OUP KNOWN AS RASTOGI GROUP. THE INFORMATION PROVIDED BY THE CBI ALLEGED THAT DURING THE PERIOD 1995-96 THE RASTOGI BROTHERS THROUGH THEIR 14 COMP ANIES MADE BOGUS EXPORTS. THE BICYCLE PARTS WERE EXPORTS BY THESE C OMPANIES AT EXORBITANTLY OVER-INVOICED FOB (FREE ON BOARD) EXPORT VALUES. A S PER SECTION 76(1)(B) OF CUSTOMS ACT THEY WERE NOT ENTITLED TO CLAIM DUT Y DRAWBACK SINCE THE DUTY DRAWBACK CLAIMED BY THEM WAS IN EXCESS OF PREV AILING MARKET VALUE OF THE EXPORTED BICYCLE PARTS. TO OVERCOME THE HURDLE IMPOSED BY SECTION 76(1)(B) OF CUSTOMS ACT SUCH EXPORTER COMPANIES DE CLARED FALSE PREVAILING MARKET VALUE ON THE EXPORT DOCUMENTS WHICH WAS SHOW N AS ALMOST EQUAL TO THE VALUE SHOWN IN EXPORT INVOICES. ON BEING NOTIC ED AND POINTED OUT BY MUMBAI CUSTOMS THE EXPORTS WERE SHIFTED FROM MUMBA I TO CHENNAI. AT CHENNAI CUSTOMS THE CONSIGNMENTS OF M/S. GULISHTA IMPEX LIMITED M/S. SOBATPUR IMPEX (INDIA) LIMITED AND M/S. UNIMAC INDI A LIMITED WERE 3 INTERCEPTED BY DRI (DIRECTORATE OF REVENUE INTELLIG ENCE) ON19.1.1996. SUBSEQUENT ENQUIRIES BY DRI REVEALED THAT CONSIGNME NTS WERE HEAVILY OVER- INVOICED AS WELL AS MISDECLARED. BASED ON THE RESU LT OF CHENNAI DRI ENQUIRY AT DELHI WAS ALSO INITIATED WHICH REVEALED THAT 34 SHIPPING BILLS OF M/S. GULISHTA IMPEX LIMITED M/S. SOBATPUR IMPEX (I NDIA) LIMITED AND M/S. UNIMAC INDIA LIMITED INVOICED AROUND RS. 9 CRORES F ROM INDIA. THE IMPORTER WAS SHOWN AS ONE M/S. CAPILA PLUS IN MOSCO W. ON THIS EXPORT DUTY DRAWBACK OF RS.1.67 CRORES APPROXIMATELY WAS R ECEIVED BY THESE THREE EXPORTER COMPANIES. HOWEVER INVESTIGATION IN RUSS IA REVEALED THAT THE SAID CONSIGNMENT WAS CLEARED IN MOSCOW BY M/S. INTERTECH ON THE BASIS OF FORGED IMPORT INVOICES PURPORTEDLY ISSUED BY M/S. RAJ RANI EXPORTS DELHI AND SHOWING VALUE OF THE SAME CONSIGNMENT ONLY AT RS.6. 75 LACS APPROXIMATELY. ACCORDING TO THE ASSESSING OFFICER THE EXPORT PROC EEDS RECEIVED BY THESE THREE COMPANIES WERE MERELY TRANSFER OF FUNDS FROM RUSSIA TO INDIA IN THE GUISE OF EXPORT PROCEEDS. ON THESE FINDINGS OF THE CUSTOMS AUTHORITIES IN THE AFORESAID PROCEEDINGS THE DISPUTED ADDITIONS WERE MADE. 3. THE FINDINGS OF THE ASSESSING OFFICER IN SUM AND SUBSTANCE WERE MERELY BASED ON INVESTIGATIONS CARRIED ON BY THE CB I AND DRI. THE AUTHORITY WHO INVESTIGATED THE EXPORTS I.E. CUSTO MS DEPARTMENT HAVE LOST A CASE BEFORE THEIR OWN TRIBUNAL (CESTAT) AND THE CUS TOMS DEPARTMENT 4 CARRIED THE MATTER BEFORE THE SUPREME COURT AND IN A JUDGMENT DATED 7.9.2007 THE HON'BLE SUPREME COURT UPHELD THE ORDE R OF CESTAT MEANING THEREBY THE DISPUTED ADDITIONS HAVE NO LEGS TO STAN D. WHEN AN IDENTICAL ISSUE CAME UP BEFORE THE ITAT IN ASSESSMENT YEAR 20 01-02 IN ITA NO.1912/DEL/2008 WHERE THE REGULAR ASSESSMENT WAS M ADE BASED ON THE SAME FINDINGS OUTSIDE THE BLOCK PERIOD AND THE TRIB UNAL HAS REACHED A CONCLUSION THAT BY VIRTUE OF THE DECISION OF SUPREM E COURT IN THE CASE OF ENTITIES BELONGING TO RASTOGI GROUP THERE IS NO DO UBT ABOUT THE GENUINENESS OF THE EXPORT MADE BY THE COMPANIES AS A CONSEQUENC E THEREOF THE TRIBUNAL CAME TO A VIEW THAT SINCE THE SALES ARE NOT IN QUES TION THE CORRESPONDING PURCHASES CANNOT BE SUBJECT TO ANY DOUBT. THEREFOR E THE FIRST ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 69A ON THE GROUND THAT CERTAIN UNDISCLOSED MONEY WAS IN CIRCUL ATION AS A SOURCE TO EXPLAIN THE NON-EXISTING PURCHASES. ALL THESE FIND INGS IN OUR VIEW AND IN THE LIGHT OF THE SUPREME COURT DECISION (SUPRA) AS RIGHTLY POINTED OUT BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR ASS ESSMENT YEAR 2001-02 THE IMPUGNED ADDITION CANNOT BE SUSTAINED. AS ALRE ADY STATED AS A RESULT OF THE ORDER OF APEX COURT (CITED SUPRA) THE ORDER OF THE CIT (APPEALS) ON THIS ISSUE REQUIRES NO INTERFERENCE. 5 4. THE SECOND ISSUE IN REVENUES APPEAL IS IN RESPE CT OF DENIAL OF DEDUCTION U/S 80HHC TO THE EXTENT OF RS.1 61 04 651 /- AS A CONSEQUENCE OF THE ABOVE DISCUSSION BY THE REVENUE AUTHORITIES. T HE ISSUE CAME FOR CONSIDERATION BEFORE THE ITAT IN THE ASSESSEES GRO UP CASE IN THE NAME OF M/S. R.B.G. NICKLE INDIA LIMITED IN IT(SS)A.NO.71/D EL/2008 AND CROSS OBJECTION NO.79/DEL/2009 AND THE TRIBUNAL UPHELD TH E ISSUE IN FAVOUR OF THE ASSESSEE MEANING THEREBY THAT THE DENIAL OF RELIEF U/S 80HHC WAS NOT JUSTIFIED. WE ACCORDINGLY UPHOLD HIS ORDER IN THE LIGHT OF THE DISCUSSION IN THE ORDER OF THE ITAT IN THE AFORESAID GROUP CASE. 5. THE ASSESSEE IN THE COURSE OF HEARING HAS POINTE D OUT THAT THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER OF THE CIT (APPEALS). ACCORDINGLY THE SAME HAS BECOME INFRUC TUOUS IN THE LIGHT OF THE ORDERS IN THE APPEAL AND THE SAME IS THEREFORE DI SMISSED. 6. IN THE RESULT BOTH THE APPEAL OF THE REVENUE AN D THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 2 ND DAY OF JANUARY 2010. SD/- SD/- (GEORGE MATHAN) (G.E. VEERABHADRAPPA) JUDICIAL MEMBER VICE PRESIDENT DATED THE 22 ND DAY OF JANUARY 2010 TS 6 COPY FORWARDED TO : 1. ASSESSEE 2. A.O. 3. CIT (A) 4. CIT 5. DR DEPUTY REGISTRAR ITAT DELHI BENCHES