TMI Blog2021 (11) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... is in consonance with the binding precedents of Jurisdictional High Court. Hence, we see no reason to depart from the rationale of the decision of the CIT(A) on reversal of additions under s.68 of the Act pertaining to A.Y. 2012-13 in question. Addition on account of low yield declared - HELD THAT:- AO has made discussions on mathematical calculations pertaining rolling material division, the additions have been made towards low yield in SMS Division. CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee. CIT(A) in our mind has analysed the factual matrix threadbare. Without repeating all the observations of the CIT(A), we find ourselves in complete agreement with the conclusion drawn by the CIT(A) - CIT(A) has objectively analyzed the factual situation and found complete absence of any adverse material against the assessee which can support t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason. With reference to excess stock on account of billets and slab cuttings and sponge iron, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity. It was noticed by the CIT(A) that the assessee has offered the income for taxation based on average rate for billets / slab cutting/ sponge iron as against uniform rate adopted by AO. The basis of rate adopted by AO was not assigned. Thus, having regard to the declarations already made by the assessee and in the absence of any definite basis in the action of AO, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the process of reasoning adopted by the CIT(A) and conclusion thereon. The revenue could not rebut the factual findings of the CIT(A). The order of the CIT(A) is self-explanatory and does not require any reiteration. We thus decline to interfere. - I.T.A. Nos. 250 to 255/RPR/2014 A/W. Cross Objection Nos. 36 to 41/RPR/2015 - - - Dated:- 25-10-2021 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prepaid tax while computing the tax demand. 5. As per its cross objections for the various assessment years in question spanning over A.Ys. 2006-07, 2008-09 to 2012-13, the assessee has assailed the order of CIT(A) on the point of jurisdiction and primarily raised a legal objection that the jurisdiction of the AO gets ousted under s.153A of the Act in so far as the addition/disallowances unconnected to the incriminating material in respect of unabated and concluded assessments concerning A.Ys. 2006-07 to 2009-10 are concerned. Additionally, the assessee has also simultaneously supported the action of the CIT(A) in reversing the additions/disallowances made by the AO while adjudicating on merits. 6. Briefly stated, the assessee is engaged in the manufacturing of re-rolled products such as heavy steel structural, joist, girder. It has two divisions namely Steel Melting Shop(SMS) and Rolling Mill Division(RMD). SMS division uses sponge iron, pig iron and melting scrap etc. as raw material to manufacture billets and blooms as its finished product. The RMD Divisions uses these billets and blooms as raw material to produce further re-rolled products such as heavy steel struct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in other assessment years also. 7. Aggrieved, the assessee preferred appeal before the CIT(A) challenging the aforesaid additions in all these years. 8. The assessee filed detailed submissions before the CIT(A) and the documentary evidences to substantiate its challenge on both issues; namely, (i) additions under s.68 of the Act on account of share application money (ii) additions on account of low yield of finished product. A legal objection was also raised on jurisdiction under S. 153A in respect of assessments remaining unabated and concluded prior to search. The CIT(A) took note of factual and legal submissions so made and found substance in the plea of the assessee on both issues involved on merits. However, the legal objections of the Assessee questioning jurisdiction under S. 153A was discarded. 9. The CIT(A) addressed the first issue on additions made by the AO under S.68 of the Act on merits in favour of the assessee for which the relevant operative para reads as under: 5. I have carefully gone through the assessment order and submissions of the appellant. As regards allegation of the A.O. regarding non-maintenance of Statutory Records, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory Records or registers or expressed their inability to produce the same or had admitted that no such records are being maintained. I find that on one hand, the A.O made the allegation, however, without bringing on records its basis and on the other hand, the A.O. did not also adhere to the appellant company s specific request to verify the statutory records that are being maintained by the appellant company, such an action of the A.O. has made the assessment order vitiated by one sided conclusion by the A.O. Neither from the assessment order nor from the statements recorded during search proceedings, it is emerging that there was any attempt to locate such statutory records. 5.2 The discharge or otherwise of the onus u/s 68 has been independently evaluated and examined. The appellant has submitted that Escorts Finvest Private Limited is a group company, the appellant has placed on record, copy of assessment order in the case of Escorts Finvest Private Limited for the assessment year 2006-07 and 2007-08. 5.3 It is seen that Escorts Finvest Private Limited was assessed u/s 143(3) and the ITO, Ward-1(4), Kolkata recorded a specific finding that the said company had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the share capital and reserves i.e. the net worth of the said company was duly accepted in scrutiny assessment proceedings and the said company had sufficient means to invest even prior to the period covered under present search proceedings, in the factual matrix of this case, I am convinced that the appellant has not only explained the source of receipt of share application / capital money, the appellant has also explained the source of source by placing on record assessment order in the case of its subscriber company namely Antariksh Commerce Private Limited. Furthermore, I find that the said investor company was in existence even prior to the period covered under the present search assessment proceedings, therefore, even assuming without accepting the contention of the A.O., no undisclosed income can be added in the present search assessment proceedings as the same are beyond the period covered under the present search assessment proceedings. 5.6 The appellant has submitted that Welfit Fasions Private Limited is a company, the appellant has placed on record, copy of assessment order in the case of Welfit Fasions Private Limited for the assessment year 2005-06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such evidence came on the surface as a result of search proceedings. The A.O has not rebutted the details of tangible net worth submitted by the appellant to demonstrate that the subscribers had sufficient means to invest in the share application/capital of the appellant company, I have perused the details of net worth of the subscribers with reference to the audited financial statements of the subscribers and found satisfactory. In this background, in my considered view, there is no scope and reason to take a contrary view than that taken by the then A.O without there being any documentary evidence against the appellant to demonstrate that the share application money was nothing but undisclosed income of the appellant. 5.10 Furthermore, I am in agreement with the submissions of the appellant that the same A.O has accepted the addition to Preference Share Capital in the case of Mahamaya Steel Industries Limited received from Escorts Finvest Private Limited Antariksh Commerce Private Limited and therefore, the identity and creditworthiness of Escorts Finvest Private Limited Antariksh Commerce Private Limited were undisputedly accepted and genuineness of addition was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the investment by way of affidavits which are duly notarized, the investors have also furnished the copies of share application forms, their audited financial statements, ITR, bank statement. In the backdrop of these facts and documentary evidences , in my considered opinion, the identity and creditworthiness of the subscribers has been established and cannot be doubted, it is not justified on the part of the A.O to simply reject the documentary evidences on record and take an adverse view and clothing the case of the appellant with the judicial pronouncements which have been rendered on absolutely different facts and circumstances. 5.13 The appellant has relied upon various judicial pronouncements and correlated the facts in those decisions with the facts in the case of the appellant. I am convinced that the decisions relied upon by the appellant are certainly applicable in the case of the appellant as the facts are not only similar but identical. The appellant has also relied upon the decision of the Hon ble Supreme Court and jurisdictional High Court which cannot be ignored. The A.O has referred to the notices issued under section 133(6) which have been returned un-serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 5.14 The Assessing Officer has disregarded the documentary evidences adduced by the appellant such as confirmation from the share applicants, their PAN, certificate of incorporation of subscriber companies, records of the Registrars of Companies (ROC) generated from the website, affidavits filed in support of the fact of advancing share applications monies etc. The subscription for the shares were received through cheques. The Investor-companies were active as per the website of the Ministry of Corporate Affairs and they were duly registered with ROC. Those companies were also having their income tax PAN numbers and regularly filed returns of income. No material was brought on record by the Assessing Officer to show that the affidavits filed by the Directors of the investor- companies were not genuine. No enquiries were conducted about the contents of the affidavits. The A.O did not make any attempt to discredit the affidavits. The result is that the contents of the affidavits have not been disproved. It also shows that the parties (deponents) were present at the given addresses against whom action could have been taken. No material was brought on record by the A.O indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed accommodation entry providers , whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inappl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 31 (Kar.); (k) Commissioner of Income-tax-III v. Nilchem Capital Ltd. [2012] 18 taxmann.com 350 (Guj.); (l) Commissioner of Income-tax v. Jay Dee Securities Finance Ltd. [2013] 32 taxmann.com 91 (Allahabad); (m) Commissioner of Income-tax, Delhi-II v. Kinetic Capital Finance Ltd. [2011] 14 taxmann.com 150 (Delhi); (n) Commissioner of Income-tax v. VLS Foods (P.) Ltd. [2011] 15 taxmann.com 225 (Delhi); (o) Commissioner of Income-tax v. Ambuja Ginning Pressing and Oil Co. (P.) Ltd. [2011] 15 taxmann.com 273 (Guj.); (p) Commissioner of Income-tax v. Rock Fort Metal Minerals Ltd. [2011] 198 TAXMAN 497 (Delhi); (q) Commissioner of Income-tax v. Siri Ram Syal Hydro Power (P.) Ltd.[2011] 196 TAXMAN 441(Delhi); (r) Commissioner of Income-tax v. Orbital Communication (P.) Ltd. [2010] 327 ITR 560 (DELHI); (s) Commissioner of Income-tax-I v. Himatsu Bimet Ltd. [2011] 12 taxmann.com 87 (Guj.); (t) Commissioner of Income-tax - I, Jaipur v. A.L. Lalpuria Construction (P.) Ltd. [2013] 32 taxmann.com 384 (Rajasthan); (u) Luminant Investments (P.) Ltd. v. Deputy Commissioner of Income-tax, Central Circle 40, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s less than 89% from Steel Melting Shop (SMS) Division. 9.2 The A.O has made the addition on account of alleged unaccounted sales based on unaccounted production by estimating the production at 89% in SMS Divison. I find that from page no.22 to page no.26 of the assessment order, the A.O. has made discussion on his mathematical calculation pertaining to Rolling Mill Division, however, it is seen from the assessment order that the A.O has not drawn any adverse inference as regards Rolling Mill Division nor did the A.O. find yield of Rolling Mill Division to be lower, the A.O. has failed to explain the relevance and significance of these mathematical calculations pertaining to Rolling Mill Division. The A.O has reproduced various mathematical calculations and tables containing data of consumption of power, sponge iron, production, average consumption, highest and lowest consumption etc. The A.O ultimately zeroed down to the issue of yield declared by the appellant in SMS Division. The A.O has failed to establish the nexus between the mathematical calculations of highest and lowest consumption of power, raw material etc with Yield of 89% adopted by the A.O. The A.O has merely s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88.24 Arithmetical Mean of Yield 83.40 89.00 85.80 A.Y. 2009-10 1 Nandan Steel and Power Ltd. 2008-09 83.44 89.00 85.80 2 Shri Nakoda Ispat Ltd. 2008-09 79.50 89.00 85.80 3 Sadguru Ispat Pvt. Ltd. 2008-09 81.35 89.00 85.80 4 Rashmi Sponge Iron and Power Industries Ltd. 2008-09 84.79 89.00 85.80 5 Shri Rupanadham Steel Pvt. Ltd. 2008-09 85.06 89.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries Ltd. 2009-10 85.00 89.00 84.05 9 Cosmos Castings India Ltd. 2009-10 84.10 89.00 84.05 10 Narmada Iron and Steel Pvt. Ltd. 2009-10 83.11 89.00 84.05 11 Indus Smelters Ltd. 2009-10 81.96 89.00 84.05 Arithmetical Mean of Yield 82.75 89.00 84.05 A.Y. 2011-12 1 Steel Abrasive Industries Ltd. 2010-11 74.00 89.00 83.94 2 Cosmos Cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cosmos Castings India Ltd. 2008-09 51070.60 61099.31 83.59 4 Super Iron and Steel Pvt. Ltd. 2008-09 46688.02 55152.00 84.65 5 Shri Nakoda Ispat Ltd. 2008-09 22011.00 27431.94 80.24 6 Nandan Steel and Power Ltd. 2008-09 46140.10 55259.96 83.50 Average Yield for FY 2008-09 165909.71 198943.21 83.40 85.80 7 Cosmos Castings India Ltd. 2009-10 50585.93 60148.65 84.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4726.30 77.38 19 Indus Smelters Ltd. 2010-11 21882.95 26329.20 83.11 20 Cosmos Castings India Ltd. 2010-11 36152.30 44636.06 80.99 21 Narmada Iron and Steel Pvt. Ltd. 2010-11 28481.54 32666.16 87.19 22 Steel Abrasive Industries Ltd. 2010-11 21862.27 29651.47 73.73 Average Yield for FY 2010-11 176553.22 216067.64 81.71 83.94 The aforesaid Table leads to following inferences: (a) The Yield declared by differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl No. Name of Comparable assessee assessed in Circle 1(2), Raipur F.Y. Turnover (Rs. In Lacs.) GP (%) NP (%) Yield (%) Turnover of Appellant (Rs. In Lacs) GP (%) of Appellant NP (%) of Appellant Yield (%) of Appellant 1 Sadguru Ispat Pvt. Ltd. 2007-08 2522.35 4.36 0.46 77.36 20300.95 3.74 1.45 88.24 Average Yield for FY 2007-08 75.71 2 Cosmos Castings India Ltd. 2008-09 16178.83 1.53 0.01 83.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77.01 27051.26 3.15 0.74 84.05 10 Shri Rupanadham Steel Pvt. Ltd. 2009-10 3714.08 4.02 0.48 86.19 27051.26 3.15 0.74 84.05 11 Super Iron and Steel Pvt. Ltd. 2009-10 8354.82 2.46 0.51 86.50 27051.26 3.15 0.74 84.05 Average Yield for FY 2009-10 83.69 12 Shilpy Steel Pvt. Ltd. 2010-11 4838.52 5.18 0.70 79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81.71 Note: In the above comparative table for comparison of GP and NP, following companies have not been considered as the figures are not comparable due to the reasons mentioned for each case:- Shri Nakoda Ispat Limited-F.Y 2008-09 and 2009-10 Shri Nakoda Ispat Limited is deriving its major income from power division i.e. sale of electricity to CSEB and other parties, it is also captively consuming electricity and deriving income from sale of carbon credits, all these facts have been noted from the finding in the assessment order passed in the case of said company, hence, excluded while making comparison. Rashmi Sponge Iron and Power Industries Limited-FY 2007-08 Rashmi Sponge Iron and Power Industries Ltd. is deriving its income from manufacturing and trading of steel items and Power generation. Further, out of total Turnover of ₹ 90.60 crores, ₹ 3.55 crores is derived from Power Sales to CSEB, all these facts have been noted from the findings in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said to be sole decisive factor while assessing the reliability of books of account. In other words, merely low yield cannot lead to an irrevocable presumption that the books of accounts of the appellant are unreliable and reasonable profit cannot be deduced therefrom. In my considered view, if a person uses low grade of raw material which will give low yield, yet he may make handsome profit if he is able to buy raw material at competitive rates, in such a situation, it cannot be said that the books of accounts are not reliable merely due to low yield. Dictation GP 9.9 It is a matter on record that the appellant has maintained quantitative records of raw material consumed and finished product produced. The books of accounts were subjected to tax audit as well as audit under Company Law which were produced before the A.O. together with bills and vouchers and the same were examined by test check. The appellant has furnished the copies of excise returns filed by the appellant on monthly basis in Form ER-1 for finished goods and in Form ER-6 for raw materials, the same are placed in paper book. I had carefully analyzed various columns and details furnished by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. has referred to the difference in inventory, however, it is seen that the excess stock of blooms/billets and end cuttings was less than 10% of the total stock as per books of accounts of the appellant. If the appellant was actually suppressing the yield as alleged by the A.O, in all probabilities, the difference in stock of blooms and billets must have been very wide and it cannot be just a sheer coincidence that, the search team did not come across any incriminating document; that no striking discrepancy was observed in stock/inventory. 9.13 The findings of the A.O at Para 9.7 on Page no.28 of the assessment order are discussed hereunder:- (1) Regarding stock, as stated supra, the difference in stock of blooms/billets and end cuttings was less than 10% of the total stock as per books of accounts of the appellant. (2) Regarding capacity utilization, the allegation of the A.O that the actual production is much less than the installed capacity has been negated by the appellant by placing on record actual production data i.e. quantitative information with reference to weighted installed capacity based on actual number of days during which the production proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he registered valuer. 9.14 The recording of reasons by the AO is a condition precedent for any belief of the A.O, however, in the instant case, the A.O has not stated any reason for his inference regarding standardized yield of 89% in the SMS division. Reason must be recorded by the AO that any undisclosed income belongs to the appellant. The material itself should not be vague, indefinite, distinct or remote. If there is no rational or intangible nexus between the material and the satisfaction that a person has undisclosed income , the conclusion would not deserve acceptation. Then the satisfaction is vitiated. 9.15 In the instant case, the A.O has completely failed to record the reasons based on material available as the A.O has not referred to even a single seized document which could be regarded as incriminating document and used as an evidence to even remotely support the conclusion of the A.O. The A.O seems to have blown out of proportion merely on the basis of mathematical and mechanical calculations. The A.O has laid too much emphasis on statistics, those statistics which cannot be said to have been gathered as a result of search only. The statistics relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phasize that there is absence of uniform/scientific methodology for measurement of input of raw material, secondly, it appears to the A.O that there is modus operandi to destroy the primary data regarding the actual production 9.18 I have carefully perused the statement of Shri Shivman Shukla, Shift Incharge of the appellant company recorded during the course of proceedings u/s 132 on 22.06.2011. In response to question no.11, I find that Shri Shivman Shukla has given categorical statement that the yield in SMS Division is 80% and 20% is waste material, in my considered view, the said statement of Shift Incharge cannot be said to be an afterthought as the same was recorded during the curse of search proceedings itself. Further, in response to question No. 5 and 9, it is seen that Mr. Shivaman Shukla has stated that the input is measured on the weighbridge and thereafter, the raw material is unloaded near the Furnace, in my considered view, the capturing of data regarding input i.e. raw material and its methodology cannot be said to be erroneous. 9.19 I have carefully perused the statement of Shri Anil Singh, Production Supervisor Incharge of the appellant company reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the Production Department are entered in the computer system on daily basis. 9.21 Had there been scientific methodology in place for measurement of inputs, in my considered view, it is only the accuracy level of statistics which will increase, however, it is hard to believe that merely due to scientific methodology for measurement of inputs, the yield of the appellant will also increase, the imagination of the A.O is too far fetched and devoid of logic. I find no merit in the allegation of the A.O that absence of scientific methodology for measurement of inputs is leading to an inference that the appellant has suppressed the yield. I have also carefully perused the statement of Shri Rishikesh Dixit recorded on 21.6.2011 as regards common allegation in case of all the four manufacturing companies i.e. sister concerns of Mahamaya Group that the group is following the system of destroying the initial document i.e. the loose slip in which quantity of production and consumption is recorded. From the statement of Shri Rishikesh Dixit, it is gathered that it was stated in clear terms that the quantity recorded in the loose slips tallies with the quantity recorded in the regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e comparable cases cited above, in ITA No.139 to 141/ BLPR/2010, the jurisdictional Bench of Hon'ble ITAT had an occasion to decide similar issue and the Hon'ble Tribunal has observed as under:- 6. After hearing the rival submissions and perusing the material on record we find that the assessee is engaged in the business of manufacturing of MS Ingots with Sponge Iron as the main raw material. According to the AO there was no basic document regarding consumption of raw material and production of finished goods were maintained by the assessee in the factory premises. The AO found that there is no system in place for keeping record of consumption of raw material and production of finished goods, it is apparent that the unaccounted production is evidenced from variation in units of electricity consumed per MT of finished goods so AO made the addition in question. The stand of the assessee was that it is maintaining regular books of account along with all the supporting bills and vouchers. The assessee submitted that the variation in consumption of electricity has been explained during the course of assessment proceedings and the AO has not made any adverse comment on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed either on rumours or on something less serious than that. 9.26 The A.O has merely referred to variations based on mathematical calculations viz_ Variation in power, sponge iron (raw material of SMS Division for manufacturing of Blooms and Billets), variation in consumption of furnace oil in Rolling Mill Division, this may well be the basis of suspicion, however, these cannot per se constitute the basis of the addition, though it can very well be a starting point for further investigation. In Lalchand Bhagat Ambica Ram vs. CIT: (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessment on mere suspicion and surmises or by taking note of the notorious practice prevailing in trade circles. 9.27 The significance of tangible evidence has been emphasized in various judicial pronouncements. Having test checked the seized documents with reference to submissions of the appellant and books of accounts along with bills and vouchers, having gone through all the statements recorded during the search proceedings, having analysed the results of enquiry conducted regarding yield, I am convinced that there was no tangible material befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted sales and earned such hefty amount of income. The facts in the case of the appellant are much better than the facts before the Hon ble HIGH COURT OF GUJARAT in Commissioner of Income Tax Vs. Maulikkumar K. Shah (2008) 307 ITR 137 (Guj). 9.33 I find that even non maintenance of stock register is not fatal as held in Commissioner Of Income Tax Vs. Jacksons House (2010) 39 DTR (Del) 212 : (2011) 198 TAXMAN 385. 11.35 . Similar view was taken in M. Durai Raj Vs. Commissioner Of Income Tax (1972) 83 ITR 484 (KER). 9.34 On the matter of recording the consumption of raw material going in to furnace and quantity of production coming out from furnace, in my considered opinion, the mere fact of estimation cannot be made the basis of rejection of books of accounts so long as the financial results are not strikingly lower than the industry average or that the results are not supported by bills/vouchers or that the quantitative details have not been maintained properly. In Polisetti Subbaraidu Co. Vs. Commissioner Of Income Tax SOURCE : (1968) 69 ITR 738 (AP). Another decision wherein it was held that non maintenance of daily stock register per se is not sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itative details were prepared and were duly audited. If the stock register was not maintained by the appellant, that may put the A.O on guard against the falsity of the return made by the appellant and persuade him to carefully scrutinize the account books of the appellant. The low yield in comparison to the benchmark adopted by the A.O, in the absence of any material pointing towards falsehood of the account books, could not by itself be a ground to reject the account books u/s 145(3) of the I.T. Act, 1961 much less a ground to make estimated addition. I find that there is no dispute with regard to the fact that the appellant has maintained quantitative details. In the case of CIT vs. Smt Poonam Rani 326 ITR 223 (Delhi) it was held that where an addition was made because of mere fall in gross profit without any defect in the accounts except for the absence of stock register- deletion of addition was upheld by the High Court. The appellant s case finds support from the following decisions: a) Ashok Refractories Pvt Ltd. Vs. CIT (2005) 148 Taxman 635 (Cal.). b) ITO v. Bothra International [2008] 117 TTJ (Jd.) 672 c) Delhi Securities Printers v. Dy. CIT [2007] 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that there is always standardized yield during the search period. 9.40 As a matter of fact the Search Team could not come across any evidence of unaccounted sales, in my considered opinion, had there been any unaccounted sales, the same would have been detected by the Search Team. The case of the appellant also finds support from the decision of the jurisdictional Tribunal i.e. ITAT, BILASPUR BENCH in Chhattisgarh Steel Casting (P) Ltd. Vs. Assistant Commissioner of Income Tax (2008) 8 DTR (Bilaspur) (Trib) 14. 9.41 The significance of tangible evidence is indicative from the fact that in Commissioner of Income Tax Vs. Vishal Rubber Products (2003) 264 ITR 542 (P H) : (2004) 136 TAXMAN 151 despite Balance Sheet having been found from the premises searched, no addition was sustained in the absence of tangible evidence. 9.42 On the contrary, the appellant had provided all the requisite details regarding its production activity. The items of raw material purchased are excisable products, the quantity of raw material purchased as mentioned in Excisable and Commercial Invoice was test checked with the entries in the Excise Record for raw material i.e. RG1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch he worked out the yield of 89% in SMS division. The A.O has no evidence in his possession to indicate that the quality of raw material used by the appellant in all these 7 years was uniform and standardized one. The Hon ble Madras High Court took judicial note of such facts in C. ARUMUGASWAMI NADAR vs. COMMISSIONER OF INCOME TAX (1961) 42 ITR 237 (MAD). 9.46 The facts in the case of the appellant are akin to the facts before the Hon ble High Court of Assam in Harakchand Arakchand Radhakisan vs. Commissioner of Income Tax (1962) 46 ITR 196 (ASSAM). The Hon ble High Court of Delhi has laid down certain principles on rejection of books of accounts in Commissioner Of Income Tax Vs. Paradise Holidays (2010) 48 DTR (Del) 349 : (2010) 325 ITR 13. 9.47 In SUKHADIA JAMNADAS MAGANLAL vs. INCOME TAX OFFICER (2008) 13 DTR (Guj) 149, the Hon ble High Court of Gujarat elaborately considered the various questions and issues and ultimately decided the question in favour of the assessee, identical issues and questions are present in the instant case. 9.48 Undisputedly, the case of the appellant was under scrutiny assessment for three consecutive years i.e. in A.Y 2006-07, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, 2013 (2013) 354 ITR 238 (Raj). 9.52 It is not the case of the A.O that the stock records and inventory of the appellant or the quantity of production and sales declared by the appellant in its books of accounts was not accepted by the other Revenue Authorities such as Sales Tax Department or the Excise Department. The case of appellant finds support from the decision of Hon ble High Court of Gujarat in COMMISSIONER OF INCOME TAX vs. SANJAY OIL CAKE INDUSTRIES (2005) 197 CTR (Guj) 520 : (2005) 149 TAXMAN 190: 9.53 I am convinced with the reasons for variation in power consumed in comparison to the production in different periods which could be on account of furnace condition, quality of raw material used, labour productivity, incoming voltage, breakdown time, etc. Due to the above reasons, monthly consumption of power may vary. Undisputedly, the statistics of power consumption and production and the similar variation existed even during the course of assessment proceedings u/s 143(3), but no adverse inference had been drawn in those assessment proceedings u/s 143(3). It is gathered that the appellant has maintained regular books of account and sales/purchases are v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed that there was sufficient ground for rejecting the books of accounts, the assessment had to be made to the best of his judgement. As to how the best judgment assessment should be made, the leading decision on the point is the one rendered by the Privy Council in CIT vs. Laxmi Narain Badridas (1937) 5 ITR 170 (PC) : TC11R. 192, reversing Laxmi Narain Badridas vs. CIT (1934) 2 ITR 246 (Nag) : TC11R.201 and approving Abdul Baree Chowdhury vs. CIT (1932) 5 ITC 352 (Rang). In this decision rendered under the provisions of the 1922 Act, it was observed : He (the assessing authority) must not act dishonestly or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee s circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other materials which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994) 207 ITR 979 (Cal) : TC11PS.3, the ITO rejected the loss return and determined the loss at nil on default of assessee to produce books of account. No basis for computation was disclosed by the ITO. It was held by the Calcutta High Court that the ITO acted illegally. As assessment has to be completed on the basis of records and material available before the AO and personal knowledge and excitement on events and extraneous facts should not lead the AO to a State of affairs where the salient/primary/direct evidences are overlooked and should not influence the AO for resorting to adhoc additions/disallowances. If general/casual/routine observations of the AO are to be considered as material evidence for the purpose of framing an assessment, the AO shall have blanket and arbitrary powers to dispose of the scrutiny assessments according to his whims and fancies which is not the spirit of the circulars issued by the Board on scrutiny assessment. An assessment cannot be made arbitrarily and in order that an assessment can be sustained, it must have nexus to the material on record. (CIT v. Mahesh Chand [1983] 199 ITR 247, 249 (All.). It is the settled position that, though the AO has ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in favour of the assessee on factual matrix, the legal objection of the Assessee on point of jurisdiction under S. 153A for making additions concerning AY 2006-07 to 2009-10 was seen with disfavour and decided against the assessee by the CIT(A). 12. The Revenue is aggrieved by the relief granted to the assessee on merits by the CIT(A) on both the issues of (i) additions under s.68 of the Act towards share application money; (ii) suppression of production based on lower yield and corresponding unrecorded sales in all the captioned appeals. The revenue has also raised objection to the relief granted by the CIT(A) on account of excess stock and relief granted towards adjustment of cash seized against tax demand in AY 2012-13 which shall be dealt with at appropriate place in succeeding paragraphs. 13. The Assessee, on the other hand, has filed cross objections challenging the very legitimacy of additions/ disallowances dehors any reference to incriminating documents in unabated assessments i.e. AY 2006-07 to AY 2009-10. 14. When the matter was called for hearing, the learned CIT-DR for the Revenue, at the outset, strongly relied upon the factual matrix discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assessments under s.153A r.w.s. 143(3) of the Act would be permissible as per the schematic interpretation of the law governing search assessments. 15.1 Turning to the facts, the learned counsel for the assessee submitted that a search and seizure operation under s.132(1) of the Act was carried out on the residential and business premises of various companies and its Directors on 21.06.2011. However, significantly, no search action was carried out at the registered office of the assessee company where the share certificates, relevant statutory records are kept as required in law. No adverse information in relation to share applicants were found in the course of search. It was further asserted that no document relating to various assessment years in question were either found or seized which can be branded to be incriminating in nature indicating presence of any undisclosed income. The cash found in search was meager having regard to the scale of operations. The documents found and seized were of routine nature maintained in the ordinary course of business which naturally will be found in the business premises. The documents found relates to the entries already made in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2016) 47 CCH 0159, ITAT Delhi Bench; (g) Moon Beverages Ltd. Anr vs. ACIT, (2018) 53 CCH 0120, ITAT Delhi Bench; (h) CIT vs. Sinhgad Technical Education Society, (2017) 156 DTK 0161 SC; (i) ACIT Anr. vs. Madhuri Sunil Kotecha Anr, (2016) 55 CCH 0187, ITAT Pune Bench; (j) Trilok Chand Chaudhary Vs. ACIT, (2019) 56 CCH 0435, ITAT Delhi Bench; (k) Commissioner of Income Tax Vs. Deepak Kumar Agrawal Ors., (2017) 398 ITR 586(Bom); (l) PCIT Cental-3 Vs. Anand Kumar Jain, TS-105-HC-2021(Del); (m) Principal Commissioner of Income Tax Vs. Dipak Jashvantlal Panchal,(2017) 397 ITR 153 (Guj); (n) Rajat Minerals (P) Ltd. vs. DCIT (2020) 114 taxmann.com 536 (Ranchi) 15.3 On merits, the learned Counsel for the assessee submitted that it is a matter of record that assessee has filed several documentary evidences of subscribers before the AO to support the nature and source of share application money: (a) PAN, Address, Name (b) COI, MOA, AOA (C) Audited Financial Statement (d) Income Tax Return (e) Bank Statement (f) Share Application Form (g) Payment received through banking channe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. We have carefully considered the rival submissions and perused the materials placed on record and referred to in terms of Rule18(6) of the Income Tax (Appellate Tribunal), Rules 1963. 16.1 Before we deal with additions on merits, it will be desirable to adjudicate the pertinent legal objection of overwhelming nature raised on behalf of the assessee which goes to the root of the matter and affects the very foundation of additions / disallowances in dispute. The legal question that arises as per cross objection is whether while making assessment under s.153A of the Act, the Revenue is entitled to interfere with an already concluded (and not abated) assessment passed either under s.143(1) of the Act or under s.143(3) of the Act and not pending at the time of search, in the absence of incriminating documents unearthed as a result of search?. As a corollary, the scope and ambit of assessment proceedings in search cases under s.153A of the Act is put under scanner. 16.2 In the first appeal, the CIT(A) dismissed the legal ground of jurisdiction by observing as under: 16. I have carefully gone through the assessment order and submissions of the appellant. Where a searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Gutgutia (supra) held that additions based on appreciation of facts dehors incriminating material are not sustainable in law. The SLP of the Revenue against the aforesaid decision of the Hon ble Delhi High court was dismissed by the Hon ble Supreme Court in Pr.CIT vs. Meeta Gutgutia (2018) 96 taxmann.com 468 (SC). . 16.3.2 Similar view that no additions could be made on the basis of material collected after search and in the absence of any incriminating evidence found or seized during search has been endorsed by the Hon ble Gujarat High Court in Pr.CIT vs. Sunrise Finlease (P.) Ltd. (2018) 89 taxmann.com 1 (Guj.). 16.3.3 The Hon ble Gujarat High Court in Pr.CIT vs. Saumya Constructions Pvt. Ltd. (2016) 387 ITR 529 (Guj) also declined to agree with the plea on behalf of the Revenue that the new procedure provided under s.153A of the Act is different from earlier procedure provided under s.158BC r.w.s. 158BB of the Act and consequently, the plea of the Revenue that there is no condition in Section 153A of the Act that additions should be made strictly on the basis of evidence found during the course of search was not approved. The Hon ble Gujarat High Court analyzed the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re incriminating materials are found in search showing unaccounted income. 16.4 In summation, in the light of the aforesaid overwhelming legal precedents as laid down by the Hon ble Bombay High Court, Delhi High Court Gujarat High Court as also various benches of Tribunal, the correct legal position in respect of the assessments under s.153A of the Act may be summarized as follows: (i) the scope of assessment under s.153A of the Act is limited to the incriminating evidence found during the search and no further in so far as unabated assessments are concerned; (ii) unless there is incriminating material qua each assessment years to which additions are sought to be made in respect of concluded assessments, the assessment under s.153A of the Act by making additions/disallowances would be vitiated in law. 16.5 As discussed in length, the issue has been dynamic and a matter of legal interpretation. We are governed by the schematic interpretation given to provisions of Section 153A of the Act by different Hon ble Courts. In the light of judicial fiat reading down the scope and spectrum of assessment under s.153A of the Act in narrower compass, the position of law is explici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted earlier, the AO has invoked Section 68 of the Act and made additions on account of share application money received by the assessee in A.Y. 2006-07 2009-10 as unexplained cash credit. The CIT(A), however, after taking note of observations made in the assessment order and oral written submissions made on behalf of the assessee, found merit in the plea of the assessee and reversed the additions so made. 19.1 The CIT(A) has succinctly analyzed the issue. The detailed findings of the CIT(A) dealing with the issue has been reproduced in the preceding paragraph 9 of this order. 19.2 On perusal of the order of the CIT(A), it is noticed that CIT(A) has recorded a finding on fact that additions on account of share application money has been made without any reference to the incriminating material detected in the course of search. The CIT(A) has recorded some noticeable observations on the issue of share application money in A.Y. 2006-07 2009-10 as summarized hereunder: The A.O. did not pay any heed to the requests seeking supply of results of inquiry conducted if any for arriving at such conclusions. Furthermore, the Ld. ARs pointed out that assessments in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve come through banking channels. It was further found that the tangible net worth of the subscribers company is sufficiently enough to meet the criteria of creditworthiness as understood in ordinary parlance. The bank statements, audited financial statement and confirmations were analyzed. The source of investment was thus found to be explained satisfactorily in the facts of the case. It was further noted that the credit for share application money was accepted in the regular assessment under s.143(3) of the Act concerning A.Y. 2006-07 prior to search after making due enquiries. The subscriber co. namely Antariksh Commerce Pvt. Ltd. and Escort Finvest Pvt. Ltd. were found to be group companies. The share application money ₹ 200 Lakhs received from Group co. namely Devi Iron Power Ltd. was refunded in A.Y. 2009-10 through banking channel. The assessments of the subscriber companies carried out under S. 143(3) /S. 143(3) r.w.s. 147 were noted. A pertinent observation was made that the same AO in the case of other group concern (Mahamaya Steel Industries Ltd.) accepted the creditworthiness of the investor company namely Escorts Finvest Pvt. Ltd. for subscription in Pref. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case where the assessee has not satisfactorily explained the nature and source of credit and has failed to discharge the onus which lay upon the assessee. 23. Per contra, the learned counsel for the assessee, at the outset, submitted that the assessee received the amount in question from a group company, namely, Escorts Finvest Pvt. Ltd., which is regularly assessed to tax and carries substantial net worth. A notice under s.133(6) of the Act was issued by the AO to the potential subscriber and in response, the aforesaid potential subscriber had confirmed the fact of advancing share application money to the assessee. This apart, all these relevant documents, such as, share application form, certificate of registration from the Registrar of the companies, PAN card Income Tax Return of the applicant together with audited financial accounts, bank statements, memorandum of association of the share applicant was also provided. It was further pointed out by way of a statement on bar that the money so received was ultimately returned and repaid to the subscriber in the subsequent assessment years as the proposed subscription in the assessee s company did not fructify. To def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contended that no legal obligation is prescribed upon assessee in law to prove the source of source of such receipts in view of the prospective insertion of proviso to s.68 of the Act from AY 2013-14 foisting such obligations. A reference has been made to the decision of the Hon ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. 80 taxmann.com 272 (Bom.) in this regard. Besides, without prejudice to every attempt made before the AO to prove the bonafides to the hilt being a group company, a reference was also made to the decision of Lovely Exports Pvt. Ltd. 319 ITR 5 (SC) wherein it was held that in the case of alleged bogus share holders, the department is free to proceed to reopen the individual assessments of the subscribers in accordance with law. Reliance was placed on multiple decisions including the binding precedent rendered by the Hon ble Chhattisgarh High Court in ACIT Vs. Venkateshwar Ispat (P) Ltd. (2009) 319 ITR 393 b) CIT vs. Abdul Aziz (2012) 251 CTR (Chhattisgarh) 58 as referred to order of CIT(A) in para 4.9 of his order. The Jurisdictional High Court, as stated, has answered the issue in favour of assessee in similar fact situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 90/- per share, it is claimed on behalf of the assessee, with the help of correspondences, that one of the group company, namely Devi Iron Power Private Limited was pursuing for mining right by way of mining lease of iron ore mines. Such right had the potential of increasing profitability of entire group manifold for the reason that iron ore is the basic raw material for production of sponge iron and thereafter using the sponge iron in Rolling Mill Divisions after its conversion in billets and blooms. The seamless availability at a cheaper price of its main raw material would have entirely changed the business complexion. Besides, whereas the shareholders in NRA did not express their willingness to appear before the AO, the subscriber in the instant case not only came forward and volunteered its willingness to appear before the AO through Director, an affidavit was also filed to assert the factum of share application. No field enquiries were made by the AO in the instant case, whereas the adverse findings were given by the AO in NRA Iron and Steel Pvt. Ltd. case based on certain enquiries. The bank statements of the subscriber were not placed before the in NRA nor were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) on reversal of additions under s.68 of the Act pertaining to A.Y. 2012-13 in question. We thus decline to interfere. 25. In the result, Ground Nos. 1 2 for A.Y. 2006-07 2009-10 and 2012-13 concerning additions under s.68 of the Act in the Revenue s appeal are dismissed. The cross objection of the assessee on the legal point of lack of jurisdiction for A.Y. 2006-07 2009- 10 are allowed. The cross objections for A.Y. 2006-07, 2009-10 2012-13 of the assessee on merits supporting the action of the CIT(A) is also affirmed and allowed on the issue. 26. We now advert to the second issue concerning additions on low yield in various assessment years in question. 26.1 The AO made an addition of ₹ 1,05,81,079/- on account of low yield declared by the Assessee in SMS division for A.Y. 2006- 07 and similar additions were also carried out on the ground of low yield in other assessment years in question also. It is the case of the assessee that allegation of the AO is totally misconceived unsubstantiated and is wholly in the realm of surmises and conjunctures without any iota of evidence against the assessee. 26.2 The Assessee has raised two fold submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and found the yield of the Assessee company is better than its peers and the yield of other companies also varies from year to year. Also the alleged low yield in comparison to the benchmark adopted by the AO could not be the basis to reject the books of accounts under s.145(3) of the Act without bringing any material on record pointing out towards falsehood in the accounts. The search team could not come across any unaccounted sales as recorded in para 9.12 9.39 of the first appellate authority. The inventory appearing in the elaborate excise records and excise returns were also found to be matching with the financial records as observed in para 9.9 9.10 of the first appellate order. 27. We note that after taking extensive note of the facts and circumstances of the case objectively, the CIT(A) rightly found lack of justification in the action of the AO in rejecting the books of accounts merely owing to the reason that yield achieved by the assessee is less than standard yield percentage i.e. 89% which has not been achieved even by other assessee engaged in similar line of business. While concluding in favour of the assessee, the CIT(A) also observed that the AO has not bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of other parties vis- -vis 83.94% shown by the assessee. It was also found by the CIT(A) that yield declared by the different parties in the same year is not uniform and every party has declared a different yield. Likewise, there is a wide variation in the yield of one year with another year in other cases as well. Not even a single comparable instance was found declaring yield of 89% adopted by the AO. The yield achieved by the assessee is generally more than average industry yield. (iv) Financial results of the assessee as well as other parties engaged in similar line of business was also compared as discussed in para 9.7 para 9.8 of the order. On analysis of factual data tabulated in the first appellate order, it was observed that the gross profit net profit declared by the assessee is stronger than its competitors despite marginally lower yield at some instances. It was thus noted by the CIT(A) that the percentage of yield cannot be said to be sole decisive factor while assessing reliability of books of accounts and merely low yield cannot lead to an indefeasible presumption that books of accounts of the assessee are unreliable and true profit earned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing any defect in books by tangible evidence. (x) The AO has merely proceeded on the basis of suspicion and conjunctures. It is trite that suspicion howsoever strong cannot take place of proof. (xi) The CIT(A) in para 9.22 onwards analyzed the decision rendered by the co-ordinate bench in similar factual matrix to find that addition on account of low yield as made by the AO is not sustainable in law in the absence of tangible material. 27.3 Significantly, in para 9.2 of the first appellate order, the CIT(A) noted while the AO has made discussions on mathematical calculations pertaining rolling material division, the additions have been made towards low yield in SMS Division. 27.4 In conclusion, the CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee. 27.5 The CIT(A) in our mind has analysed the factual matrix threadbare. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in stock found at the time of search vis- -vis the stock as per books of accounts of the assessee. In response, the assessee company disputed the measurement and valuation of stock. It was submitted that Departmental Registered Valuer (DRV) has estimated the stock of sponge iron based simply on eye measurement and proceeded to estimate quantity of stock on wrong assumption that assessee is engaged in manufacturing of finished product namely structural channel of 25 meters length. The Assessee on the other hand asserts that the capacity available with the Assessee is to produce 23 meters length at maximum. The DRV has thus calculated quantity by adopting measurement at 12.5 *2 meters whereas actual length is 11.5* 2 meters ( cut into two pieces for transportation purposes). The DRV estimating excess stock was cross examined by the assessee A reading of cross unravels his lack of understanding on the subject. The DRV has drawn blank on many pertinent aspects of business, the stock of which he seeks to value and ascertain. Despite such a wrong assumptions in length etc. by DRV, the AO, however, continued to discredit the submissions of the assessee on the ground that the assessee hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so vitiated and has deficiencies, it is also seen that the sole basis of addition is the Report of the DRV. It is seen that the appellant had made various submissions before the A.O during the course of assessment proceedings in response to the show cause notice cum query letter issued by the A.O. The appellant had requested for allowing opportunity to cross examine the DRV and the opportunity was afforded to the appellant. The appellant was asked to furnish the copy of statements recorded during the course of cross examination of the DRV namely Mr. Manish Pilliwar and the same was furnished by the appellant. I have carefully perused the statements of Mr. Manish Pilliwar. I find that the appellant has raised a very relevant and serious issue regarding eligibility and competence of Mr. Manish Pilliwar who is registered as a valuer for valuation of immovable properties. 13.2 I do find considerable force in the submissions of the appellant that different Sub-rules of Rule 8A of Wealth Tax Rule, 1957 are mutually exclusive and there is no overlapping, therefore, the quantity assessment of movable items such as the sponge iron in the present case, cannot be carried out by the Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one half of 25 meters length) ; that the DVO has taken the said length presuming that the appellant is engaged in manufacturing of channel/structures of 25 mtrs length, on the contrary, the appellant has claimed that it is manufacturing channels/structures of 23 mtrs length, in this way, the length of structures and channels has been wrongly taken by the DVO in his Valuation Report at 12.50 mtrs as against 11.50 mtrs. The said mistake has resulted in over valuation of stock of structures/channels. (b) The DVO had, in his Valuation Report, quantified 87.06 MT for ISMC-5000, the appellant has claimed that it has never manufactured channels/structures of said description and specification i.e. ISMC5000. The said mistake has also resulted in over quantification of stock by the DRV. (c) The net impact of aforesaid mistakes is that, the stock has been excessively quantified by 251.030 MT. The correct figure after correction of aforesaid two mistakes is 2036.71 MT, as against this, the quantity of finished goods as per books of accounts as on the date of search was 2022.628 MT. In this way, 14.082 MT (2036.710 2022.628 MT) was excessive in comparison to books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. has not brought on record any evidence to rebut either the submissions of the appellant or Certificate from Registered Valuer, it would be incorrect to hold that the appellant has not brought on record any evidence in support of its contentions. Hence, the addition made by the A.O cannot be sustained for the difference in quantity arising due to adoption of length at 12.50 Mtrs. Instead of 11.50 Mtrs. 13.9 As regards 87.06 MT taken by the DRV in the quantity assessment report against ISMC-5000, it is seen that the DRV admitted that there was a typographical error and ISMC-5000 should be read as ISMC-500. On the contrary, the appellant has placed on record certificate from the registered valuer wherein the registered valuer has certified vide certificate dated 18.08.2011 that the finished product i.e. channels/angles may be re-rolled up to maximum ISMC-400. As the said certificate of the registered valuer is dated 18.08.2011, there is no room to construe the same as an afterthought on the part of the appellant. Furthermore, the certificate was placed before the A.O during the course of assessment proceedings, however, the A.O has not brought on record any evidence to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had requested the A.O. to provide the basis on which the A.O. had arrived at the valuation mentioned in the show cause cum query letter for its rebuttal, however, it appears that the A.O. did not provide any basis for adopting uniform rate of ₹ 29,000/- per MT for Billets Slab cuttings and rate of ₹ 20,500/- for sponge iron. On the contrary, the appellant has furnished the basis of adopting the value at ₹ 31,14,135/- for Billets and Slab cuttings and ₹ 24,59,130/- for Sponge Iron based on audited accounts, the details were furnished before the A.O. I find that the A.O. has not rebutted the valuation adopted by the appellant based on audited account, I am convinced with the details and basis of valuation furnished by the appellant before the A.O, hence, in the absence of any basis having been brought on record by the A.O nor any reason having been mentioned by the A.O for disregarding the valuation of inventory done by the appellant, the addition of ₹ 57,160/- and ₹ 29,980/- cannot be sustained. Hence, the additions are deleted. The appellant gets relief of ₹ 85,70,724/- (₹ 84,83,584 + ₹ 57,160 + ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason. 29.5 With reference to excess stock on account of billets and slab cuttings and sponge iron, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity. It was noticed by the CIT(A) that the assessee has offered the income for taxation based on average rate for billets / slab cutting/ sponge iron as against uniform rate adopted by AO. The basis of rate adopted by AO was not assigned. Thus, having regard to the declarations already made by the assessee and in the absence of any definite basis in the action of AO, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the process of reasoning adopted by the CIT(A) and conclusion thereon. The revenue could not rebut the factual findings of the CIT(A). The order of the CIT(A) is self-explanatory and does not require any reiteration. We thus decline to interfere. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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