G.A. Brahma Deva, Member (J)
1. Facts of the case in brief are that on the basis of checking from the Income-tax department in the factory premises of the appellants on 19.01.1995 and 20.01.1995, an excess of 2.746 MT of MS rounds and shortage of 5.422 MT of M.S. Angles, 11.243 MT of M.S. Gate channels and 0.305 MT of MS Section was detected. According to the department the appellants on their own desposited the duty involved thereon under protest. Accordingly, the offence case was booked by the department for the total shortage of 16.990 MT finished goods and excess quantity of 2.746 MT of MS Round was seized. Show cause notice was issued. Show cause notice was duly answered by the party denying the charges. It was the contention of the party that shortage and excess in stock has been arbitrarily and unjustifiably determined by the Income-tax authorities without carrying out prescribed weighment and ascertained the stock on their own estimate to which they had been forced to agree and sign under threats and coercion; that they vide their letter dated 22.01.1995 had drawn the attention of the high Income-tax authorities towards the manner and method of conducting the verification of stock of finished goods and towards the harassing and threats which the party had given to them as well as the circumstances under which the partner of their firm had to sign the stock inventory.
2. Arguing for the Revenue Shri B.L. Jain, ld. Consultant submitted that entire case made out based upon the inventory list prepared by the Income-tax authorities on 19.01.1995 and 20.01.1995. Since the Income-tax authorities have adopted the coercive and threatening method in obtaining the signature of the party to the stock verification, aggrieved by the said action the party has challenged the proceedings before the Commissioner, Income-tax. Commissioner, Income-tax Deptt. has accepted the contention of the party and set aside the action initiated by the Income-tax authorities. This position has been properly analysed by the Commissioner (Appeals) in the impugned order in para five. He drew my attention to the relevant para which reads as under :-
“5. I have examined the case carefully. I find that the adjudicating authority while deciding the case has relied upon the inventory list prepared by the Income-tax authorities on 19.01.1995/20-1-1995 and according to appellant, the Income-tax authorities adopted coercive and threatening attitude through the checking and they made a visual guess and estimated the weight. In this regard, I find that the Commissioner, Income-tax (Appeals), Agra vide his order dated 01.03.1998 in appeal No. CIT(A)2/ACR/CIR-I/Jhansi/4/98-99 has observed that “A perusal of the submission and letter filed before the A.O. shows that the request of the appellant to get actual weighment was not acceded to and A.O. has also taken the ADI’s report as sacrosant without verifying the contents of the letter or of the appellant’s assertions” on the basis of above observation, he has ordered that “The addition is ordered to be deleted as the same represent estimate of the stock made without any sound basis”. In view of the above findings it is evident that the excess and shortage found in the stock by the Income-tax authorities was only an estimate of stock made without any sound basis and therefore any findings on the basis of said physical verification report prepared by the Income-tax authorities is unjustified and as such is liable to be set aside. As such I do not agree with the findings of the adjudicating authority. Demanding duty, ordering confiscation and imposing penalty on shortage and excess in finished goods on the basis of uncorroborative and unconfirmed inventory list is not legal and justified”.
3. Heard Shri Y.R. Kilania, ld. JDR for the Revenue who reiterated the grounds taken by the department.
4. On a careful consideration of the submissions made by both sides and in the facts and circumstances there is no justification to demand the duty based upon the inventory list prepared by the Income-tax authorities since that inventory statement itself has been set aside by the higher authority in the Income-tax department. In the facts and circumstances, I do not find any infirmity in the impugned order and accordingly, appeal is dismissed.