The Jaipur bench of Income Tax Appellate Tribunal (ITAT) while quashing the addition made by the assessing officer based on information by the Director of Revenue Intelligence (DRI), held that Officers of DRI are not proper officers for the purpose of Section 28 of Customs Act, 1962.
Ajey Malik,appeared for assessee and P.C. Parwal, appeared for the revenue.
The above decision was arised from the following set of facts-Assessing Officer (AO) received information from DRI that assessee Sonal Jain imported paper cup machines from China and evaded custom duty by undervaluation of these machines by 50% of actual transaction value before the Indian Customs.
These were sold in the domestic market by undervaluing them and the balance amount was collected in cash from domestic customers.
On information by the DRI, AO issued a show cause notice The AO provided the information as received from DRI to the assessee and issued a Show cause notice which was replied by the assessee to the AO.
The DRI informed the AO that adjudicating authority had confirmed demand against the assessee and imposed a penalty.
The AO held that assessee imported paper cup machines from Chinaby undervaluing them and the balance amount was paid by Hawala and thus the assessee sold machines to domestic customers by undervaluing them and the balance amount was taken in cash from the domestic customers.
Thereafter, the assessing officer made addition as undisclosed income in the hands of the assessee for the year under consideration.
When a question of demand of differential duty levying onImported paper cup machines arised an appeal before CESTAT.Who decided the case in favor of the assessee.
While considering the submissions, the CESTAT held that “officers of DRI are not proper officers for the purposes of Section 28 of Customs Act and hence show because notice issued, lacks jurisdiction”.
Relating to the issue assesee filed an appeal before CIT(A). The CIT(A) confirmed the decision of CESTAT. Without satisfying the order, the revenue filed appeal before the ITAT.
Considering the submissions and orders made by the CESTAT and CIT(A), the division bench of the tribunal observed that“CIT(A) respectfully followed the order of the CESTAT and deleted the addition made by the AO and we also concur with the findings of the CIT(A) which has merit”.
Therefore, the bench of Sandeep Gosain (Judicial member) and Rathod Kalesh Jayantbhai (Accountant member) dismissed the appeal of the revenue.
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