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2018 (3) TMI 472 - AT - Income TaxExcess production of sponge iron - clandestine removal of excessively produced sponge iron - Held that:- In the facts and circumstances of the case, we note that other than some documents the AO had no other evidence/material to suggest that the assessee’s Karakolha in Orissa steel plant was using iron ore which had Fe content more than 65%, without doing so, the allegation of suppression of production of sponge iron is merely on the basis of suspicion, surmises and conjectures which cannot stand scrutiny in the eyes of law, when the assessee was able to place on record the Laboratory Report which certified that the assessee’s plant at Karakolha, Orissa used iron ore which had Fe content between 62.79% to 63.23%. The veracity of the Laboratory Report have not been challenged or found to be invalid by the Department. In such a scenario, without finding defect in the books of account or without finding fault with the Laboratory Report that certified the Fe content of the iron ore used by the assessee at Karakolha, Orissa for production of the sponge iron, the allegation of suppression of production of sponge iron cannot stand. There can be no universal and uniformly acceptable standard for consumption of iron ore for production of sponge iron. It has to be appreciated that the various other factors like quality, composition of raw materials, operating conditions etc which contribute to the yield ratio. From the discussions stated above, we note that the yield ratio can vary from plant to plant and even differ from year to year based on the capacity of the plant, the efficiency of the staff, maintenance of the plant, electricity consumption etc. Nothing has been brought on record by the AO directly/indirectly to show that there was clandestine removal of excessively produced sponge iron from its plant. We note that the AO has not found any defect in respect to the quantitative details furnished by the assessee which tallied with the books of account maintained by the assessee in its regular course of its business and without rejecting the books of account and that too as stipulated u/s. 145(3) of the Act, the AO ought not to have estimated the excess production of sponge iron. - Decided against revenue
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