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2015 (10) TMI 2316

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..... e said clandestine removal of material without payment of Excise duty does not establish the case of the Revenue that the said figures of additional production should be utilized for extrapolating the sales in the hands of the assessee for the entire year. Admittedly, the assessee had offered additional income on the said clandestine removal of material without payment of Excise duty, which is to be added as income in the hands of the assessee. The learned Authorized Representative for the assessee fairly admitted that in case the said additional income has not been added while computing the income in the hands of the assessee for the respective years, the same may be directed to be added in the hands of the respective assessee in respective years. Accordingly, we direct the Assessing Officer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of .....

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..... e consolidated order of CIT(A), Aurangabad dated 30.12.2011 relating to assessment years 2006-07 to 2008-09 against the order passed under section 143(3) r.w.s. 147 and 143(3) of the Income-tax Act, 1961 respectively. Further, the assessee M/s. Shivshakti Re-Rolling Mills Pvt. Ltd. and the Revenue have filed Cross appeals against the consolidated order of CIT(A), Aurangabad dated 04.01.2012 relating to assessment years 2006-07 to 2007-08 against the order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 respectively. 2. This bunch of appeals relating to different assessees on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts and issues in ITA No.125/PN/2012 and ITA No.430/PN/2012 to adjudicate the issues. 3. Reference is also made to facts in ITA Nos.211 to 213/PN/2012 and ITA Nos.432 to 434/PN/2012 for adjudicating the issue. 4. In ITA No.125/PN/2012, the assessee has raised the following common grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) erred in confirming the re-opening of the assessment u/s. 147 of the Income .....

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..... rred in not following the order of the Hon. Income Tax Appellate Tribunal in the case of appellant company for assessment years 2000- 01 to 2006-07 reported in 137 TTJ (Pune) 627, wherein the similar addition was deleted. 12. The appellant company craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing. 5. In ITA No.430/PN/2012, the Revenue has raised the following common grounds of appeal:- 1. Whether on the facts and in the circumstances of the case the CIT(A) was justified in quantifying the suppressed production @ 4% even after accepting the fact that the assessee indulged in clandestine removal of goods without payment of taxes. 2. On the facts and in the circumstances of the case whether the CIT(A) was justified in not appreciating the fact that manufacturing and administrative expenses on the unaccounted production worked out in the appellate order had already been borne by the production shown in the books of accounts? 3. The order of the AO be restored and that of the CIT(A) be vacated. 4. The appellant craves leave to add, amend or alter any grounds of appeal. 6. Briefly, in the facts .....

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..... lling Mills Pvt. Ltd., manufacturers of Thermo Mechanically Twisted (TMT) bars. We find that similar action of DGCEI was referred to by the Tribunal in the related case of the assessee i.e. in M/s. SRJ Peety Steels Pvt. Ltd. Vs. the Additional CIT in ITA Nos.123 124/PN/2012 and in Cross appeals filed by the Revenue in ITA Nos.435 436/PN/2012 relating to assessment years 2007-08 and 2008-09 and vide order dated 16.01.2015, the factual aspects of the intelligence report of the DGCEI have been referred to by the Tribunal, which are the basis for carrying on the investigation in the hands of the assessee before us. In view of identical intelligence report being relied upon as in the case of sister concern, for the sake of brevity, we refer to the factual aspects of the case as noted by the Tribunal, which read as under:- 4.1 The Assessing Officer has observed that intelligence was gathered by the DGCEI, Zonal Unit, Mumbai, in the case of Shri Salasar Ispat (Pvt.) Limited and MITC Rolling Mills (Pvt.) Ltd., manufacturers of Thermo Mechanically Twisted (TMT) Bars, that they were involved in clandestine clearance of finished products through a broker, Shri Umesh Modi, Mumbai. As n .....

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..... given the names of the parties in Para No. 2.7 of the assessment order against whom the investigation was carried out by the Central Excise Authorities and the name of the assessee appears at Sl. No. 10 who had allegedly supplied Ingots/Billets to its sister concern Shri Om Rolling Mills Pvt. Ltd. to the extent of 288.500 MT. 4.3 On the basis of the investigation made by the Directorate General of Central Excise Intelligence (in short the DGCEI ) by initiating Searches against some brokers and sub-brokers the Central Excise Department issued Show Cause Notices to the assessee and other manufactures whose names were revealed during investigation for evasion of excise duty. The assessee admitted to clandestine removal of finished products to extent of 288.50 MT without payment of excise duty. The Assessing Officer has observed that the assessee had made a petition before the Central Excise and Customs Settlement Commission ( herein after referred to as the Settlement Commission) for waiver of penalty, interest and immunity from the prosecution. The said petition was admitted and disposed off by the Settlement Commission. As noted by the Assessing Officer the assessee also admitt .....

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..... ermex Quenching technology which is the latest technology in offer in India. Since the ingots and billets used in production conform to the standards for producing Fe-415, Fe-500 and Fe-550 grade of TMT as per Indian Standards issued by the BIS, there is no reason to suspect that the inherent qualities of the billets and ingots used will not be according to standard specification. The Assessing Officer thus, after allowing an allowance of 25% over and above the US cost observed that the range of electricity consumption would be in the range of 169 KWh/MT to 206 KWh/MT i.e. average of 188KWh/MT. The Assessing Officer noted the consumption of various manufacturers in Jalna cluster during the previous years relevant to assessment years 2006-07 to 2008-09 and was of the view that the average rate of electricity consumption according to international standards after giving handicap of 25% was 188KWh/MT and the average minimum consumption in the peer group during the three years was 191 KWh/MT. Therefore, he adopted the electricity consumption in steel bar rolling mill at 188KWh/MT or the consumption of the assessee, if lower. As per the Assessing Officer, the adoption of the said rates .....

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..... lant. (4) The A.O. has also pointed out that there is substantial variation in various months and in respect of various manufacturers of TMT bars in electricity consumption required for the quantum of goods produced, which is abnormal. (5) The decision in the case of ACIT Vs, SRJ Peety Steels Pvt.Ltd. / Shree Om Rolling Mills Pvt. Ltd. (2011) 137 TTJ 627 (Pune) has been relied on by the appellant. The facts before the Hon'ble ITAT while deciding the said cases were different to some extent. In the said cases, clandestine removal of goods by the appellant and the admission of the appellant about the said fact of unaccounted transactions was not before the Hon'ble ITAT. Further, the detailed order of the Commissioner of Excise and the other facts brought on record by the A.O. in the assessment order was not before the Hon'ble ITAT, Pune while deciding the above referred cases. Further in the said cases action u/s 132 was conducted and the appellant was assessed u/s 153A of the Act and hence addition in respect of completed assessments in such cases could be made only on the basis of material found in search action. In view.of the above facts, the reliance placed by .....

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..... ver, no addition was made in the hands of the assessee because of the addition on account of estimated GP rate in the preceding year i.e. assessment year 2006-07. The CIT(A) upheld the rejection of books of account under section 145 of the Act. 14. Both the assessee and the Revenue are in appeal against the aforesaid order of CIT(A). 15. The learned Authorized Representative for the assessee at the outset said that the grounds of appeal No.1, 2 and 10 were not pressed in assessment year 2007-08, which were against the reopening of assessment under section 147 of the Act and non-issue of notice under section 143(2) of the Act, after reopening the assessment under section 147 of the Act. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeals of the assessee and the Revenue are covered by the order of Tribunal in the case of sister concern i.e. SRJ Peety Steels Pvt. Ltd. (supra) and Cross appeals filed by the Revenue (supra). In assessment year 2008-09, the assessment was completed under section 143(3) of the Act and there were no issues with regard to reopening of the assessment. In respect of the addition m .....

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..... sales by the assessee. Our attention was drawn to the written submissions filed by the assessee dated 13.12.2010 before the Assessing Officer, in which the assessee had offered an income of ₹ 1,08,920/- being GP @ 2% on suppressed sales of ₹ 54,45,755/-. The Ld. special AR pointed out that where the assessee had admitted suppression of sales before the Assessing Officer, this being important finding of the fact, which had remained unchallenged, in the absence of any retraction of the said confession, it was an important piece of evidence against the assessee. Therefore, the contention of the assessee that the Assessing Officer had merely relied upon the statement given before the Central Excise authorities was mis-leading and factually incorrect, where evidence of clandestine removal and suppression of income is found for part of the year, then the Assessing Officer can estimate the additional income for whole of the year. For this, the methodology of suppression can be looked into, was the plea of the Ld. special AR. It was fairly admitted by him that the Excise authority had added in the hands of the assessee only to the extent of evidence found. He further pleaded .....

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..... the Assessing Officer has simply relied upon the hypothetical calculations of production merely on the basis of consumption of electricity. He referred to the assessment order and submits that in Para No. 3.1 the Assessing Officer has observed that the confessional statement of Shri Surendra S. Petty, dated 12-01- 2007 who is the Managing Director of the assessee company, before the DGCEI on clandestine removal goods and sale of 285 MT of ingots to Shree Om Rolling Mills without payment of excise duty and he also admitted that the said sales were made against cash. During the assessment proceedings, in their joint written submissions dated 13-12-2010 filed before the Assessing Officer by the assessee company and Shree Om Rolling Mills Pvt. Ltd. the assessee company offered income of ₹ 6,72,620/- i.e. G.P. @ 3% on suppressed Sales of ₹ 47,75,600/- + ₹ 5,29,350/- towards peak purchases. He submits that Shree OM Rolling Mills Pvt. Ltd. which is a sister concern of the assessee Company, offered Profit of ₹ 1,08,920/- on the impugned suppressed sales. He argues that the assessee itself has admitted the fact of clandestine removal of goods and sale of the same be .....

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..... ssion, Mumbai and therefore no adverse inference can be drawn against them. In an application filed before the Settlement Commission it is mentioned that the assessee admits the duty liability. He submits that there is no question of suo moto admitting clandestine removal of goods without payment of excise duty by the assessee company before the Excise Authorities but there was conclusive evidence against them as per the investigation made by the DGCEI. He placed his reliance on the decision of the Hon'ble Supreme Court in the case of Mak Data P. Ltd. Vs. CIT 358 ITR 593 (SC). He submits that the proceedings before the Settlement Commission as well as the confession by the assessee are the good pieces of evidence which are also basis for arriving at the conclusion that the assessee was indulged into clandestine removal of the goods without payment of the excise duty and suppression of the sales. He submits that it is well settled law that if suppression for part of the period is found then suppression can be estimated for the rest of the year. Presumption u/s. 114 of the Indian Evidence Act can be relied upon in estimating the suppressed income. On this proposition he relied on .....

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..... lity. In support of this argument he relied on the following precedents: i. Sumati Dayal Vs. CIT 214 ITR 801 (SC). ii. Collector of Customs Madras and others Vs. D. Bhoormull 2002- TIOL-253-SC-CUS. 11.3 He argues that on the doctrine of preponderance of probability the action of the Assessing Officer to estimate suppression of the sales on the basis of the electricity consumption has to be upheld. 11.4 Ld. Spl. AR submits that the assessee company has vehemently argued that in the case of R.A. Castings Pvt. Ltd. 237 E.L.T. 674 (Tri. Del.) it is held that the suppressed production worked out solely on consumption of electricity cannot be sustained. It was further argued that the aforesaid decision of the CESTAT was affirmed by the Hon'ble Allahabad High Court and SLP filed by the Revenue to the Supreme Court was dismissed. He argues that the said decision is not helpful to the assessee for the following reasons: i. In the said decision there was not even an iota of evidence showing the suppression of production by the said companies and the suppression was estimated merely on the basis of electricity consumption relying on the report of Late Dr. N.K. Batra, Prof .....

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..... s for the reason that the decision of CESTAT does not have any binding force on ITAT which is constituted under the Income Tax Act. Both the tribunals are constituted under different enactments and discharge their functions independently under respective enactment. However, the decision of one Tribunal may have persuasive value for other Tribunal in certain cases where issues are identical. 11.6 Ld. Spl. AR for the Revenue vehemently argues that the Hon'ble Third Member of the CESTAT has not considered the evidence about the clandestine removal of goods and the duty paid on the same which matter was settled before the Settlement Commission. Ld. Spl. AR for the Revenue vehemently argues that it is crystal clear that the Hon'ble Third Member of the CESTAT had proceeded only to decide whether the evidence of higher electricity consumption proves suppression of production. There is no justification to rely on the decision in the case of R.A. Castings (supra). He argues that there is conclusive evidence against the assessee by way of admission and the petition filed by the assessee before the Settlement Commission and hence, these evidences cannot be discarded. Ld. Spl. AR fo .....

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..... Alloys Pvt. Ltd. In all the cases, assessments were completed under section 143(3) r.w.s. 148 of the Act by the Assessing Officer on account of clandestine removal of goods and erratic consumption of electricity, as evidenced by books of account estimated quantum of production and sales. He further pleaded that whenever clandestine removal of material was found, suppressed turnover could be estimated on account of erratic consumption of electricity. Referring to the order of Tribunal in the case of SRJ Peety Steels Pvt. Ltd. (supra) relating to assessment year 2006-07, it was pointed out that the Tribunal vide decision reported in 137 TTJ 627 (Pune) has held that no addition is warranted in the assessment years prior to search under section 153A of the Act. However, in respect of the search year, addition only of the undisclosed income was made in the hands of the assessee. 20. The proceedings in the case continued up to lunch hour and thereafter, both the parties agreed to the hearing post lunch hour. However, the Ld. special AR furnished a letter under his signature stating that the Principal CIT, Aurangabad was contemplating to file certain petitions before the President / V .....

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..... nged litigation which would have ensued in the process with the Excise Department . The company was always aware that carrying on litigation is not in the best interest of the company. The learned Authorized Representative for the assessee further submitted that the additional income was offered on the basis of rough sheets found from the brokers and on the basis of which, the assessee made a petition to the Settlement Commission for removal of goods for 288.50 MT and paid Excise duty, interest and token penalty. Further contention of the learned Authorized Representative for the assessee by way of written submissions is that the Assessing Officer does not have any evidence for suppressed production and even after this letter and settlement petition, the Assessing Officer has not investigated or brought any material on record proving the suppressed production and its sale out of books. The learned Authorized Representative for the assessee strongly objected to the objections of the Ld. special AR that no reliance should be placed on the order of Tribunal in SRJ Peety Steels Pvt. Ltd. (supra) and on the plea that Miscellaneous Application under section 254(2) of the Act has been fil .....

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..... ed by the assessee was not material. Further, the CESTAT in the case of M/s. SRJ Peety Steels Pvt. Ltd. in para 19 had observed that this aspect was already considered by CCE, which is at para 19 of his order. He further submitted that where the Assessing Officer has no material in his hands regarding suppressed production and its sale and he had merely relied on the order of Settlement Commission as mentioned in para 4, there was no merit in any such addition. The learned Authorized Representative for the assessee then drew distinction on the reliance placed upon by the Ld. special AR on various decisions, which have been considered by the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra). Further, the learned Authorized Representative for the assessee placed heavy reliance on the ratio laid down by Hon ble Bombay High Court in CIT Vs. C.J. Shah and Co. (2000) 246 ITR 671 (Bom) for the proposition that where the loose sheets indicated undisclosed sales for three months, the addition could not be made for the entire block period on the basis of loose sheets. Further, reliance was placed on the ratio laid down by the Hon ble Delhi High Court in CIT Vs. Anand Kumar Deepak Kumar (20 .....

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..... clandestine goods, mode of payment, transportation, etc., which in turn have been dealt in by the Third Member in the case of M/s. SRJ Peety Steels Pvt. Ltd. and in the absence of any surrounding circumstances available, the rule of human probability could not be applied. Further, the decisions relied upon by the Ld. special AR have been considered by the Third Member of CESTAT and Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. and the addition made in the hands of assessee has been deleted and hence, there is no merit in the reliance placed upon by the Ld. special AR. 26. Coming to the objections of the Ld. special AR whether the ratio of Hon ble CESTAT in the case of R.A. Castings Pvt. Ltd. (supra) is applicable to the present case, the learned Authorized Representative for the assessee at the outset submitted that this was the case of Rolling mills, where there is no order of Commissioner of Central Excise and CESTAT and hence, the said proposition is not to be applied. It was pointed out by the learned Authorized Representative for the assessee that other than the quantity which was offered by the assessee before the Settlement Commission and as well as offered as income to tax .....

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..... suppression of production on the basis of electricity consumption. The learned Authorized Representative for the assessee relied on the decision of M/s. SRJ Peety Steels Pvt. Ltd. (supra) and on series of other decisions which have been considered by the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra). Regarding rejection of books of account, merely on the basis of higher consumption of electricity, it was pointed out by the learned Authorized Representative for the assessee that the same was not justified as the Assessing Officer has not recorded the satisfaction against the correctness or completeness of the books of account of the assessee or whether the method of accounting has not been regularly followed by the assessee. In the absence of defects having been pointed out by both the Assessing Officer and CIT(A) in the books of account, except electricity consumption, there was no merit in the rejection of books of account. Reliance was placed on series of decisions in this regard. 28. The learned Authorized Representative for the assessee further pointed out that the Hon ble Bombay High Court in assessee s own case relating to assessment year 2006-07 had dismissed the ap .....

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..... he assessment nor at the stage of appellate proceedings before the Id. C.I.T. (Appeals). 3. The learned Commissioner of Income Tax (Appeals) further erred in confirming the alleged suppression of sales of ₹ 35,47,80,518/-. 4. The learned Commissioner of Income Tax (Appeals) further erred in confirming the alleged suppression of sales merely on the basis of the consumption of electricity as per U.S. Standard and evasion of excise duty by TMT Bars manufacturers in Jalna cluster found by Director General of Central Excise and Customs. 5. The learned Commissioner of Income Tax (Appeals) further erred in confirming the alleged suppression of production on the grounds of monthly variation in consumption pattern of electricity vis-a-vis production. 6. The learned Commissioner of Income Tax (Appeals) further erred in confirming the action of the Assessing Officer in holding that the books of accounts of the appellant firm are correctly rejected u/s 145 of the Income Tax Act without any evidence or finding as to how the provisions of Section 145(3) are satisfied. 7. The learned Commissioner of Income Tax (Appeals) further erred in confirming the action of the Assessing .....

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..... r 2007-08, grounds of appeal No.1, 2 and 9 are not pressed. 33. The Ld. Authorized Representative for the assessee further submitted a synopsis of his arguments and a note on non adoption of suppressed sales for part of the period for extrapolating for the full year and other years. The Ld. Departmental Representative for the Revenue furnished written arguments and also additional submissions about non-applicability of decision of the Tribunal in SRJ Peety Steel Pvt. Ltd. (supra). The contention of the assessee before us was that the facts of the present case are similar to the facts as in Shree Om Rolling Mills and even the assessment order passed by the Assessing Officer was on the same line as passed in Shree Om Rolling Mills. The Ld. Authorized Representative for the assessee further submitted that assessee had filed settlement petition before the Settlement Commission in assessment years 2006-07 and 2007-08. The Ld. Authorized Representative for the assessee thereafter took us through the order of the Assessing Officer wherein he had quantified the consumption of electricity on US standard and by adopting the average sale price and average cost of raw material worked out th .....

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..... the assessee in one instance had approached the Settlement Commission and admitted evasion of offence of an identical nature. The Third Member of CESTAT at page 13 of his order had considered the aspect of proceedings, which were settled by accepting the argument, that each has to be treated as a separate case based on its own merits and also referred to para 19 of the order of the Excise Commissioner. It was further pointed out by the Ld. Authorized Representative for the assessee that the Tribunal in SRJ Peety Steel Pvt. Ltd. (supra) had considered the findings of CCE and CESTAT in para 20.1 of the order and decided the issue and the said parity of reasoning is squarely applicable to the facts of the present case. 35. The Ld. Authorized Representative for the assessee further submitted that where the assessee had filed a settlement petition for a particular quantity only before the Excise Settlement Commission and where the Department has not produced any evidence in respect of more quantity of suppressed sales than the quantity declared by the assessee and where the Settlement Commission had not rejected the petition of the assessee nor had come up for settlement of more quan .....

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..... the consignees; e. Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. 36. The Ld. Authorized Representative for the assessee further pointed out that the addition if any in the hands of the assessee should be made on the basis material found in the possession of the assessee and/or any inquiry or investigation carried out by the Income Tax Department and in the absence of the same, there is no merit in any extrapolation of income in the hands of the assessee. Reliance in this regard was placed upon the ratio laid down in the following decisions :- (i) Chhattisgarh Steel Casting (P) Ltd. vs. ACIT, 8 DTR (Bilaspur) 14; (ii) Anjaneya Brick Works vs. CIT, 74 TTJ 921 (Bangalore-ITAT); (iii) C.J. Shah Co., 246 ITR 671 (Bom.); and, (iv) Anand Kumar Deepak Kumar, 294 ITR 497 (Delhi). 37. The Ld. Authorized Representative for the assessee stressed that once the decisions for a particular issue are available under the Income Tax Act, there is no merit in relying on any decision under any other Act. The Ld. Authorized Representative for the assessee further pointed out that while arguing the c .....

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..... the excise demand on the ground that as the Central Excise Department were not able to find any corroborative evidence of clandestine manufacture of goods and therefore it cannot be said that there was clandestine removal of goods. The copy of the said decision reported in 2011 (266) E.L.T. 399 (Tri.-Bang.) was filed on record. It was contention of the Ld. Authorized Representative for the assessee that on same analogy the evidence found by the Excise Department in respect of sale of goods for a particular quantity for a particular period could not be relied upon as evidence in the Income Tax Department. The Ld. Authorized Representative for the assessee concluded by stating that the issue in the present case is to be decided on the basis of findings of Assessing Officer and then the CIT(A) and the Tribunal cannot travel beyond and while passing the order the Tribunal cannot proceed on any other basis. 39. The Ld. Special AR, in reply, stated that the submissions filed in Shree Om Rolling Mills be treated as notes filed in the present appeal also. The first point raised by the Ld. Special AR was that the decision of the Tribunal in SRJ Peety Steel Pvt. Ltd. (supra) decided on 16 .....

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..... n by the Tribunal in the case of M/s. SRJ Peety Steel Pvt. Ltd. (supra), it was further pointed out by him in the written notes the Assessing Officer had calculated the suppression of sales on the basis consumption in electricity and if the Tribunal was of the opinion that the said method evolved by the Assessing Officer was not appropriate, then the suppression could be estimated for 300 days on the basis of suppression found for few days. 40. Replying to the submissions made by the Ld. Authorized Representative for the assessee that no iota of evidence was found by the Department in order to extrapolate the sales for whole of the years, the Ld. Special AR stated that when there is evidence before the Excise Department and even before the Income Tax Department, then such excercise could be carried out in the hands of the assessee. He stressed that it was not the case of the assessee that there was no suppression of sale. On the other hand, assessee has submitted revised computation of income on the basis of the petition filed before the Settlement Commission or the Excise Authority. In view thereof, where two evidences were available before the Assessing Officer i.e. the statem .....

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..... or the bunch of appeals. Further, he pointed out that the Third Member of CESTAT in SRJ Peety Steel Pvt. Ltd. (supra) took a view on the basis of electricity consumption but there could be other circumstances on which addition could be made in the hands of the assessee. In case, there were two reasons and where the Assessing Officer had two evidences i.e. admission before the Excise Authority and admission before the Income Tax Department on account of admission of additional income and in the absence of any plausible explanation filed before the Assessing Officer, the Assessing Officer had worked on the direct evidence on the statement of the assessee and circumstantial evidence of electricity consumption and the addition was warranted. 43. The Ld. Special AR thereafter referred to the series of decisions referred to while arguing the appeal in Shree Om Rolling Mills Pvt. Ltd.. Further, reliance was placed on the ratio laid down by the Hon ble Supreme Court in S. Shanmugavel Nadar vs. State of Tamil Nadu (supra), wherein there was an identical proposition addressed by the Hon ble Apex Court. He further stressed that where all the expenses were booked in the books of account, th .....

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..... d be assessed in the hands of the assessee and where the same is not declared then the same is to be added in the hands of the assessee. Further, the Ld. Authorized Representative for the assessee pointed out that the reliance of Ld. Special AR on the ratio laid down by the Hon ble Supreme Court in S. Shanmugavel Nadar vs. State of Tamil Nadu (supra) is misplaced as same is on different facts and our attention was drawn to the pages 660 to 665 of the judgement in this regard. 45. We have heard the rival submissions of the parties and perused the record. Ld. AR for the assessee filed argument synopsis and Ld. Spl. AR for the Revenue also has filed notes of his argument which are placed on record. We have also considered all the precedents and decisions relied on by both the Parties. 46. Before addressing the issue on merits, we would like to make a mention of the proceedings before the Bench of the present cases listed before us, which were made vide order sheet entry dated 07.05.2015. The present appeals were fixed for hearing initially on 10.03.2015 and were adjourned at the request of the Special AR for the Revenue as he was not ready to argue the appeals. The reasons state .....

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..... 12, ITA No.1516/PN/2012 and ITA No.1638/PN/2012 were heard. All the other appeals are adjourned to 08.05.2015 as part heard. 48. On 08.05.2015, on calling of the matters, we find that the Special AR for the Revenue is not present in the Court and there is no intimation about his absence in the bunch of matters, which are listed for hearing. The CIT-DR was present and was asked to explain his absence. In reply she stated that she had no intimation. In view of continued defiance of the Special AR in yesterday s hearing and his non-appearance in today s hearing, conduct of the Special AR is to be taken note of. The CIT-DR was informed in the Bench as to why costs should not be imposed on the Department for his continued defiance and for interrupting proceedings of the Bench. The hearing is to continue in the listed matters as annexed on 13.05.2015 as part-heard. 49. On 13.05.2015, Shri J.P. Bairagra was present for the assessee and Shri Sunil Ganoo, Ld. Special AR, Smt. M.S. Verma, CIT-DR Shri Rajesh Damor were present for the Department. The matter was finally heard on 14.05.2015 when Shri J.P. Bairagra present for the assessee and Shri Sunil Ganoo, Ld. Special AR, Smt. M.S. .....

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..... ction 147 and also non-service of notice under section 143(2) after recording of reasons under section 147 of the Act. However, in some cases, the assessment has been completed under section 143(3) of the Act and there are no issues against re-opening of the assessment. The Ld. Authorized Representative for the assessee in the present bunch of appeals relating to Shree Om Rolling Mills at the outset stated that the grounds of appeal Nos.1, 2 and 10 in relation to re-opening of the assessment under section 147 and non-supply of reasons for re-opening under section 147 of the Act, are not pressed. Hence the same are dismissed as not pressed. 54. The next issue is the working of the suppressed production and the application of GP rate of 4% on such suppressed production and third is the working capital required for investment in such suppressed production. We find that similar issue of addition on account suppressed production on account of erratic consumption of electricity arose before the Tribunal in the case of SRJ Peety Steel Pvt. Ltd. (supra). Though both the parties have raised their arguments in favour of/against the order of the Tribunal in SRJ Peety Steel Pvt. Ltd. (supra .....

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..... the Excise authorities, who in turn, accepted the same. The Assessing Officer in the case of Rolling Mills i.e. in the hands of the assessee before us was of the view that because of erratic consumption of electricity, in turn, relying on the data of consumption of electricity as per US standards, came to the conclusion that there was suppression of production by the TMT Bars manufacturers in Jalna cluster on the ground of variance in consumption of electricity versus production. The Assessing Officer also referred to the data collected in the cases of furnace owners i.e. M/s. SRJ Peety Steels Pvt. Ltd. and others and relying on the addition made in the hands of M/s. SRJ Peety Steels Pvt. Ltd. (supra), in turn, on the basis of the order of CCE, Aurangabad, made additions in the hands of present set of assesses before us. 56. The Tribunal had elaborately considered all the aspects of addition in the hands of the furnace owners i.e. M/s. SRJ Peety Steels Pvt. Ltd., on the basis of erratic consumption of electricity, which in turn, was the basis for making the additions in the hands of the assessee therein by CCE, Aurangabad and vide order dated 16.01.2015 held that since the order .....

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..... o 24 of the order, the Tribunal observed as under:- 13. We have heard the rival submissions of the parties and perused the record. Ld. AR for the assessee filed argument synopsis and Ld. Spl. AR for the Revenue also has filed notes of his argument on 05-11-2014 which are placed on record. We have also considered all the precedents and decisions relied on by both the Parties. The assessee is manufacturer of Ingots/Billets. So far as A.Y. 2007-08 is concerned the original assessment of the assessee was completed u/s. 143(3) of the Act on 31-12-2009. While completing the assessment u/s. 143(3) of the Act, in the opinion of the Assessing Officer the electricity consumption shown by the assessee was at higher side as compared to the quantum of production declared by the assessee. The Assessing Officer, therefore, made the addition on the basis of the alleged suppression of the production/sales by the assessee as in his opinion the assessee should have declared or shown more production of the Ingot/Billets. Subsequently, on the basis of the information received from the office of the CCE, Aurangabad vide their letter dated 29-03-2010 as well as adjudication order of CCE quantifying t .....

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..... were completed. 15. It is also to be taken note of the fact that even for the A.Ys. 2007-08 and 2008-09, no independent investigation or any enquiry is made by the Assessing Officer or any other Income Tax Authorities. In the assessment order the Assessing Officer has placed his reliance only on the information received from the Central Excise Authorities and the proceeding before the Settlement Commission of Central Excise Custom, Mumbai. The investigation was carried out by Central Excise Authorities i.e. DGCEI, against few brokers/sub-brokers and those brokers gave the names of many companies who are in the manufacturing of Ingot/Billets and TMT Bars. As per the statement given before the Central Excise Authorities by those brokers as well as sub-brokers namely Shri Umesh Modi, Mumbai, Shri Anil D Lingade, Shri Mukesh Gupta it was admitted that they were involved in clearing the consignments from the factory on weighment slips only and no excise duty was paid and they were involved in providing fake trading bills and challans which accompanied the vehicles carrying those consignments. As per the modus operandi adopted by the brokers they used to recover the said fake tradi .....

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..... turers against whom action taken by the Central Excise authorities. As observed by the Assessing Officer as per an article written by Shri R.P. Varshney, Executive Director, All India Induction Furnaces Association, New Delhi on Electric Steel Making technology in the 21st Century which is available on the internet which is on the Electric Induction Furnace and as per the said article the power consumption in Induction Furnace is between 650 to 820 units per MT depending upon the input charge used. The Assessing Officer also referred to the Technical report of the IIT, which states that electricity requirement for manufacturing 1 MT of M.S. Ingots where melting scrap is used as an input, varies from 555 to 754 units and where Sponge Iron is used as an input, the electricity requirement varies from 815 to 1046 units. The Assessing Officer, therefore, came to the conclusion that the assessment framed by the Commissioner of Central Excise and Custom, Aurangabad in respect of the alleged suppression of production after considering the electricity consumption declared by the assessee and the production rate of units of electricity per metric ton adopted by the CCE, Aurangabad are ve .....

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..... on of electricity. The basis of the order of CCE, Aurangabad was the report of Dr. N.K. Batra, Professor of IIT, Kanpur. The Third Member of CESTAT in group of cases of furnace owners held that the order of CCE, Aurangabad was not sustainable and had to be cancelled in turn, relying on the ratio laid down in R.A. Casting (supra). The relevant finding of the Tribunal in turn, incorporating the order of Third Member of CESTAT in paras 19 to 19.4, which read as under:- 19. In sum and substance in both the assessment years the Assessing Officer has determined alleged suppression of the production/sales as determined the Commissioner of Central Excise and Custom, Aurangabad on the basis of power consumption. The copy of the adjudication order passed by the Commissioner of Central Excise and Custom and Service Tax, Aurangabad dated 28-08-2009 (in short referred to as the CCE ) in the case of the assessee is placed at Page Nos. 122 to 174 of the P/B-I. The CCE, Aurangabad has observed that during the scrutiny of electricity bills, it was noticed that the substantial amount of expenditure has incurred by the assessee towards the cost of power consumption (Primary input). He has furthe .....

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..... and how the assessee approached the Settlement Commission and admitted the evasion and paid the excise duty and obtained immunity from criminal proceedings. The Ld. Commissioner confirmed the demand raised in the show cause notice and also levied the penalty to the extent of ₹ 33,07,22,069/-. 19.2 The said order of the Ld. Commissioner was challenged before the CESTAT by filing the appeal u/s. 35B(a) of the Central Excise Act, 1944. There was a difference of the opinion between the Ld. Members of the CESTAT, i.e. Ld. Vice- President and Ld. Technical Member and the matter was referred to the Ld. Third Member to resolve the following differences: a. Whether in view of the discussion in Para 1 to 31 and in view of the decision of the Tribunal in the case of R.A. Castings Pvt. Ltd. (supra) the impugned orders are to be set aside and the appeal allowed. b. Whether in view of the discussion in Para 32 to 68 above and in view of the Hon'ble Supreme Court s judgment in the case of Triveni Rubber Plastics (supra) and this Tribunal s decision in the case of Rattan Steels Works (supra), Nagpal Steel (supra) and Hans Castings Pvt. Ltd. (supra), the impugned order are to b .....

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..... 06; (iv). 650 units to 820 units/MT as per the Executive Director, All India Induction Furnace Association, New Delhi (Mr. Varshney); (v). 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.LT. 1147, 20.3 After perusal of these reports, Tribunal opined that wide variations in the consumption electricity have been reported for the manufacture of one MT of steel ingot , and that this renders the norm of 1046 units adopted by the Revenue as arbitrary. After this finding, which is upheld by the Hon'ble Allahabad High Court and even SLP has been dismissed, there was no reason for the Commissioner in the instant cases to consider the norm of 1026 units allegedly as per report of Dr. Batra, for arriving at deemed production. Moreover, the trial run conducted by the department had proved that at that time power consumption was actually higher than that reported in Dr. Batra's report. 20.4 It is also seen that the allegations levelled in R,A, Casting (supra) were mainly- (i). Inordinately high electricity consumption without any explanation, (ii). Sale of Ingots at a huge loss over last 4-5 years, which was economically and commerc .....

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..... nged by the Revenue. All these other allegations were also levelled in R.A. Casting (supra). It was further observed in R.A, Casting (supra) that it would be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt-the test results as the basis to arrive at a norm, which can be adopted for future. It was further held that- 23. The Tribunal has consistently taken the view that wherever electricity consumption alone is adopted as the basis to raise demands, the order of the lower authorities have been held to be unsustainable in law and set aside* and the Revenue had been directed to carry out experiments in different factories on different dates to arrive at the average to be adopted as a norm, which can be followed thereafter and the Revenue in the present case not having conducted any experiment whatsoever cannot be permitted to justify the demands raised. It will be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for fu .....

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..... e findings in the impugned Orders by assuming that there could not be any reason for lower consumption of electricity during the subsequent period. I also agree with the finding of the Hon'ble Vice President that in. any event, this additional material is also only of power consumption. 22. In written submissions of Revenue, it has also been contended that Report of JPC suggesting electricity consumption upto 1800 its PMT was for electric arc furnace and not induction- furnace. However, the appellant has contended that productivity in. electric arc furnace is higher than induction furnace. In any event, in the Impugned Orders, there is no such reason to discard the report and in any event the letter of Mr. R.P. Varshney suggesting that electric consumption in induction furnace can be upto 1800 units per MT is also on record. Since, varying reports are on record, the ratio of R.A. Casting (sura) is squarely applicable. 23. Revenue, also relied On the judgment of the Hon'ble Supreme Court in the case of Melton India V/s. The Commissioner Trade Tax, U.P, - 2007-TIOL-14-SC-CT, the judgment of the Hon'ble Gujarat High Court in the case of Rajmoti Industries V/s. Joint .....

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..... nce the show cause notices (SCN) were issued to the assessee and other companies and the assessee and other companies came forward before the Settlement Commission and paid the excise duty. Hence, the investigation of the DGCEI made against the brokers and sub-brokers referred by the Assessing Officer was also before the Ld. Commissioner, Aurangabad. On perusal of the assessment orders it is clear that both the assessments are merely based on the alleged suppression of the production by estimating certain consumption of electricity i.e. 1026 Units for manufacturing of 1 MT of Ingots and Billets. Moreover, even if in the A.Y. 2008-09, the Assessing Officer has observed that the information received from the Central Excise Authorities has no bearing in the said order but on the perusal of the said order, it is seen that entire order is copy of order passed for the A.Y. 2007-08. As vary basis of the assessment order i.e. the order of the Commissioner of Central Excise (CCE), Aurangabad has been set aside and cancelled by the CESTAT, in our opinion the assessment orders passed by the Assessing Officer and confirmed by the Ld. CIT(A) approving the estimated alleged suppression of the pr .....

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..... by the CCE, Aurangabad, which in turn, had been cancelled by the Third Member of CESTAT. The Tribunal thus, held that the foundation for assessment does not exist. It was also noted by the Tribunal in para 21 that the investigation by the DGCEI and proceedings before the Settlement Commission were considered by the CCE in its adjudication order, which in turn, was the subject matter of CESTAT and the said order has been set-aside, hence, it was not necessary to deal with the decisions relied upon by the Ld. Special AR, which are in the context of admission of the Director in the course of investigation made by the DGCEI. 62. The second issue of maintaining of Form No.G-7 in respect of electricity consumption, was also before the CESTAT and the Tribunal overruled the arguments of the Ld. Special AR and upheld the arguments of learned Authorized Representative for the assessee that the order of CESTAT had to be applied. The relevant para of the Tribunal order reads as under:- 21. Though the Ld. Spl. AR has referred to and relied on the different judgments of the Hon'ble Supreme Court more particularly on the binding nature of the admission of any person-Sec. 17, Sec. 106 .....

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..... the Act. The assessee therein i.e. M/s. SRJ Peety Steels Pvt. Ltd. had filed an appeal before the Tribunal and the order of the Tribunal is reported in 137 TTJ (Pune) 627. The Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) referred to the observations of Tribunal in earlier proceedings relating to assessment years 2000-01 to 2006-07 under section 153A r.w.s 143(3) of the Act and held that in the said case of search and seizure, it was also held that the consumption of electricity for the manufacture of mild steel, ingots / billets depending on various factors and there was no justification to charge the assessee that it had suppressed the production and indulged into unaccounted production. The order of the Tribunal was challenged by the Department before the Hon ble Bombay High Court and the Revenue s appeal was dismissed by common order dated 10.02.2014 in the case of assessee and other companies by the Hon ble Bombay High Court and there were observations on the estimation of production based on the consumption of electricity. The Tribunal while deciding the appeal of M/s. SRJ Peety Steels Pvt. Ltd. in this regard observed as under:- 22. We have already mentioned here-i .....

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..... vis-a-vis electricity consumption which has been placed before the authorities below along with the returns for each year: Asst. yr. Electricity consumption Production (MT) Yearly average consumption (units) 2000-01 24331059 18,524.239 1313 2001-02 25528565 17,010.558 1501 2002-03 31404354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 32. The matter of fluctuating consumption of electricity can by no means be said to be a finding of search since all details regarding electricity visa- vis production were before the Departme .....

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..... month in which electricity consumption was minimum. The method of computing the so-called suppressed production is not justified in absence of sound basis for same. 36. The consumption of the electricity for the manufacture of mild steel ingots/billets depends on various factors like quality of raw material which is the major input, voltage of the supply, power interruptions, mechanical and electrical breakdowns and the chemical composition of the liquid metal which has to be finally cast into ingots/billets. The AO failed to appreciate these facts and did not attempt to establish a direct nexus between the production and electricity consumed for the manufacture of round/TMT bars and arrived at a conclusion that there is an excess consumption of electricity resulting in suppressed production and alleging that the assessee company has indulged in unaccounted production. 37. None of the evidence collected as a result of search or detected during the course of assessment pertains to the asst. yrs. 2000-01 to 2005-06. It is an accepted fact that each year of the assessment is independent and evidences found relating to asst. yr. 2006-07 cannot have an adverse impact on the asses .....

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..... ctricity, therefore, was held to be one, and since details were made available to the Department, which could have been raised during the course of regular assessment and not u/s. 153A of the Act. The finding is that nothing incriminating was found in the course of search relating to these assessment years. The additions, therefore, were not corresponding to the seized material during the course of search. The relevant income tax returns, in normal course, are disclosing the particulars. They were already on record. The returns have been accepted. In such circumstances, the Tribunal, as also, the Commissioner of Income Tax (Appeals) have in their orders, held that there are several factors which have to be taken into consideration and while arriving at a conclusion with regard to the alleged production calculated on the basis of electricity consumption. Rejection of books for these years only on the ground that there has been divergence in the consumption of electricity, therefore, was held not justified. 24. Ld. Spl. AR for the Revenue argues that the said observations are made in the context of the assessment framed in consequence of search and seizure operation. We are not i .....

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..... rd to show that high power connection supported by evidence was made on a particular date and that resulted in higher amount of production. It was further observed by the Customs, Excise Service Tax Appellate Tribunal vide para 4.2 that So far as the production quantum is concerned, there is also no evidence on record to show that the authorities intervened lawfully recording the output in the presence of witness. The Customs, Excise Service Tax Appellate Tribunal held that therefore, a hypothetical case appears to have been made by Revenue in excessive exercise of its jurisdiction to the detriment of justice. The Customs, Excise Service Tax Appellate Tribunal further considered the retraction statement of the Director of the assessee company and vide para 6 held as under: 6. We would have certainly come to the rescue of Revenue had the statement been recorded in a manner known to law and cogent evidence had been brought to record to prove output cleared clandestinely. No cogent evidence is on record to show either suppression of purchase of input or clandestine removal of goods in fool proof manner known to law for which, it can be painfully said that the adjudication ha .....

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..... e challenged the order of Ld. CIT(A) before the Tribunal. It was held that there was no justification to support the said addition and the Revenue s appeal was dismissed. In the light of our above discussion, we are of the opinion that the additions made by the Assessing Officer and confirmed by Ld. CIT(A) in both the assessment years based on the order passed by the CCE, Aurangabad as well as on the basis of consumption of the electricity used in manufacturing of Ingots/Billets are not sustainable. We, accordingly, delete the additions made towards the alleged suppression of production and sales at entirety and allow the Ground Nos. 3, 4, 5, 6 8 in the A.Y. 2007-08 and Ground Nos. 2,3,4 6 in the A.Y. 2008-09. 66. The Tribunal thereafter, held that there was no merit in the rejection of books of account and application of gross profit to determine the income in the hands of the assessee. The Tribunal also gave a finding that since the additions made in the hands of the assessee have been deleted, there was no merit in any addition on account of undisclosed investment in respect of the undisclosed turnover. The Tribunal vide paras 27 to 29 held as under:- 27. The next is .....

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..... the CIT(A) observing as under:- 31. We have heard the parties. The main grievance of the Revenue is against the estimation of GP by Ld. CIT(A). We have already allowed the grounds taken by the assessee on the alleged suppression of the production/sales. As the assessee has succeeded on the basic additions, the grounds taken by the Revenue do not survive as the entire additions are deleted in both the assessment years by allowing the grounds taken by the assessee. Accordingly, all the grounds of the Revenue in both appeals are dismissed. 68. The plea of the learned Authorized Representative for the assessee before us was that the issue raised in the present appeal is squarely covered by the ratio laid down in M/s. SRJ Peety Steels Pvt. Ltd. (supra). Since the basis for addition was the consumption of electricity, though on different ground i.e. consumption of electricity as per US standard. However, the Ld. Special AR stressed that the issue raised in the present appeal was at variance. Vide his written submissions, he has raised identical grounds of appeal and had elaborately took us through various submissions and has relied on different case laws. The contention of the L .....

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..... is no merit in the said Miscellaneous Application filed by the Revenue and no remedy is available to the Revenue under section 254(2) of the Act. In view thereof, the next objection of the Ld. Special AR for not relying on the order of M/s. SRJ Peety Steels Pvt. Ltd. (supra) also stands dismissed. 71. Further, the Tribunal in the case of another Rolling Mills i.e. Mahaveer Steel Re-Rolling Mills Vs. ACIT in ITA Nos.1072 to 1076/PN/2012 and ACIT Vs. Mahaveer Steel Re-Rolling Mills in ITA Nos.1446 to 1450/PN/2012, relating to assessment years 2004-05 to 2008-09 vide order dated 05.03.2015 had applied the ratio laid down by the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and held that the addition made towards alleged suppressed production and sales on the basis of consumption of electricity was deleted. In our opinion, the addition made by the Assessing Officer by relying on the consumption of electricity under US standards, by no stretch of imagination, can be applied under Indian conditions, in the absence of any finding that the conditions for carrying out manufacturing activity in US and India were same. The benefit of 25% allowed is without any basis and has no legs .....

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..... icap of 25% was given. The Assessing Officer applying the formula worked out the suppressed production and sales in the hands of the assessee. We in the paras hereinabove have already adjudicated the issue that no addition on account of suppressed production / sales on account of such formula could be made in the hands of the assessee. The Ld. Special AR on the other hand, stressed that where the Assessing Officer had the information of alleged clandestine removal of material without payment of Excise duty and also because of the admission of the assessee before the Assessing Officer, the sales for the period of 300 days should be extrapolated in the hands of the assessee. He stressed that even where the evidence of clandestine removal of material without payment of Excise duty and suppression of income was found for the part of the year, then the Assessing Officer can estimate the additional income for whole of the year. Merely because the Assessing Officer had adopted another methodology of suppression, the addition in the hands of the assessee could be sustained on the basis of extrapolation of sales for 300 days, in view of the admission of the assessee of clandestine removal o .....

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..... of the year is justified or not. The answer, in our opinion, has to be in negative. 75. The Ld. Special AR vehemently relied on the ratio laid down by the Tribunal in assessee s own case reported in 137 TTJ (Pune) 627, which in turn has been approved by the Hon ble Bombay High Court. It may be pointed out that the facts of the case before the Tribunal in assessment year 2006-07 are at variance. The addition in the hands of the assessee was made on the basis of search and seizure action carried out by the Income-tax Department and the documents found during the course of search, which were admitted by the assessee to reflect suppression of sales. On the basis of aforesaid documents, the income for the year was extrapolated, which order of the Tribunal was approved by the Hon ble Bombay High Court. However, for the year under consideration, there was no search and seizure operation carried out by the Income-tax Department against the assessee and also no investigation or inquiry was made by the Assessing Officer, as stated earlier. In the absence of any evidence collected against the assessee, merely because the addition was made in the hands of the assessee in a preceding year, .....

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..... has been found by the Excise Department, in respect of sale of goods for a particular quantity and for a particular period, the same could not be relied upon as evidence, while extrapolating the sales and the additional income thereon in the hands of the assessee during the Income-tax proceedings. The Assessing Officer does not have any evidence for suppressed production and even after the order of Settlement Commission, the Assessing Officer had not investigated or brought any material on record establishing suppressed production and / or its sale outside the books of account. 78. The Ld. Special AR time and again stressed that the assessee had made admission before the Assessing Officer and this was the evidence available with the Assessing Officer. The alleged admission before the Assessing Officer was only by way of the additional income offered by the assessee, which was relatable to the clandestine removal of material without payment of Excise duty admitted before the DGCEI and offered by way of petition before the Settlement Commission. No statement of Directors of the assessee company was recorded either by Assessing Officer or CIT(A) during the course of assessment proc .....

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..... the said basis assumed unaccounted sales during the entire year, which was deleted by the CIT(A) and the Tribunal. The Hon ble Delhi High Court observed that assumption of Assessing Officer may have perhaps been valid if the search had been conducted after the accounting year and the books of account had brought some discrepancy. 83. Similar proposition has been laid down by the Hon ble Bombay High Court in CIT Vs. C.J. Shah and Co. (supra). 84. Further, the Bilaspur Bench of the Tribunal in Chattisgarh Steel Casting Pvt. Ltd. V. ACIT (supra) decided similar issue of the information available with the Central Excise Department, wherein unaccounted sales was estimated for 56 days and the Assessing Officer estimated the sales for the remaining period. The addition was deleted in the hands of the assessee and was restricted to the income declared by the assessee on the basis of papers seized, for which the assessee had filed a petition before the Settlement Commission and income on that account was declared by the assessee. The Tribunal held that no further addition could be made in the hands of the assessee for the balance period. The Tribunal further held that hypothetical cal .....

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..... he said offer made by the assessee was accepted in toto. It may be noted that the Excise authorities have the power to re-visit the offer made by the assessee, in case, any adverse material is available against the person making the offer. It may also be noted that the Settlement accepted in the hands of the assessee is for the financial year and is not restricted to the number of days for which it has offered. In other words, once a person makes a settlement petition for a particular year on account of the evidence found for part of the period and once the petition is accepted in the hands of the assessee, no further addition can be made on account of alleged clandestine removal of goods or suppressed sales, in the absence of evidence for the balance period. The above said ratios have been laid down in Chattisgarh Steel Casting Pvt. Ltd. V. ACIT (supra), Hon ble Bombay High Court in CIT Vs. C.J. Shah Co. (supra), Hon ble Delhi High Court in CIT Vs. Anand Kumar Deepak Kumar (supra). The Ld. Special AR had placed reliance on the decision of Hon ble Bombay High Court in CIT Vs. Dr.M.K.E. Memon (supra) while arguing the issue No.2 i.e. estimation of suppressed production is mis-plac .....

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..... CEI and the petition before the Settlement Commission, even the Third Member of CESTAT was aware of all these proceedings, but since the settlement petition filed by the assessee had been accepted in toto by the Settlement Commission, no further addition could be made in the hands of the assessee on this ground, in the absence of any inquiry or investigation by the Assessing Officer. Accordingly, the reliance placed upon by the Ld. Special AR in assessee s own case reported in 137 TTJ 627 [Pune] is mis-placed and there is no merit in the arguments of the Ld. Special AR in this regard. 87. Another plea raised by the Ld. Special AR was that income could be estimated/ taxed on the theory of preponderance, in turn relying on the ratio laid down by the apex court in Sumati Dayal Vs. CIT (supra) and Collector of Customs Madras and others Vs. D. Bhoormull (supra), which was also relied upon by the Ld. Special AR in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and the same had been considered by the Tribunal. During the course of hearing, the Ld. Special AR relied on series of other decisions, but the ratios laid down by the said judgments are distinguishable and not applicable to the facts .....

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..... he hands of the assessee, where no petition has been filed by the assessee before the Settlement Commission in any of the respective years or before the Excise authorities. 89. Since we have deleted the addition in the hands of assessee on both accounts i.e. addition made on account of erratic consumption of electricity and addition proposed on the basis of evidence found for the part of the year of clandestine removal of material without payment of Excise duty, next addition made in the hands of the assessee i.e. alleged investment in the purchases for effecting such sales which goods have been clandestinely removed, is not sustainable. Accordingly, we hold that no addition can be made in the hands of the assessee on account of alleged investment in purchases under section 69C of the Act. 90. One issue remaining to be adjudicated is non issue of notice under section 143(2) after issue of notice under section 148 of the Act. In view of our order in deleting the addition on account of suppressed production/sales, the said issue is dismissed as academic. 91. In view of our deleting the addition in the hands of the assessee the grounds of appeal raised by the Revenue i.e. aga .....

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