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2015 (10) TMI 2316 - ITAT PUNE

2015 (10) TMI 2316 - ITAT PUNE - TMI - Addition made on account of suppressed production / sales of TMT bars on the basis of electricity unit consumption - CIT(A) quantifying the suppressed production @ 4% as against the addition made by the Assessing Officer on account of the total suppressed production, where the assessee was found to be indulging in clandestine removal of goods without payment of Excise duty - Held that:- No extrapolation of sales for 300 days can be made in the hands of the .....

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blish 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 whil .....

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s of the assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of material without payment of Excise duty and in those years in the absence of any evidence and / or any investigation or inquiry made by the Assessing Officer and where the Assessing Officer has failed to collect additional evidence, no addition can be made in the hands of the assessee, by way of extrapolation of sales for 300 days on account of any evidence found in any preceding .....

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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

One issue remaining to be adjudicated is non issue of notice under section 143(2) after issue of notice under section 148 of .....

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ecial Counsel for Department ORDER PER SUSHMA CHOWLA, JM: The Cross appeals filed by the assessee and the Revenue in the case of Shree Om Rolling Mills Pvt. Ltd. are against consolidated order of CIT(A), Aurangabad dated 30.12.2011 relating to assessment years 2007-08 and 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. Roopam Steel Rolling Mills and the Revenue have filed Cross appeals against the c .....

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he 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 ass .....

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). 3. The learned Commissioner of Income Tax (Appeals) further erred in confirming the alleged suppression of sales of ₹ 12052.258 MT @ Average Sale Price p.m.t. of ₹ 21269. 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. .....

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provisions of Section 145(3) are satisfied. 7. The learned Commissioner of Income Tax (Appeals) further erred in confirming the action of the Assessing Officer in making an addition on account of alleged suppression of sales without giving any show cause notice to the appellant company to explain the facts against the proposed huge addition on this account which is against the rules of natural justice. 8. The learned Commissioner of Income Tax (Appeals) further erred in confirming the addition .....

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11. The learned Commissioner of Income Tax (Appeals) further erred 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 com .....

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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 of the case, Shree Om Rolling Mills Pvt. Ltd., the assessee was engaged in the manufacture of TMT or CTD Bars. The assessee had filed return of income declaring total income of ₹ 4,30,800/-. Thereafter, the case was picked up for scrutiny and assessment .....

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quantifying the value of suppressed production or Excise duty evasion was on record. Further, information was received by the Assessing Officer that the assessee in another matter in connection with an action conducted by the Directorate General of Central Excise Intelligence (in short DGCEI ) confessed and admitted to clandestine removal of finished goods without Excise cover before the Excise authorities. The assessee made a petition before the Central Excise and Customs Settlement Commission .....

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received recorded reasons for reopening the assessment under section 147 and issued notice under section 148 of the Act. However, the assessee did not revise the return of income, but stated that the original return of income filed, may be treated as filed in response to the notice under section 148 of the Act. The assessee thereafter, revised its income by way of computation sheet on an income of ₹ 1,08,920/-, being 2% of sale value and taxes were paid accordingly. 8. The Assessing Offic .....

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ssessment 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 ha .....

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al of goods by manufacturers of TMT bars by manufacturers located at Jalna. The Assessing Officer also referred to the admission of Shri Umesh Modi before the Central Excise Authorities that he had acted as a sub-broker for Shri Anil D Lingade, Proprietor of Anil Traders, Jalna and Shri Mukesh Gupta, Proprietor of R.J. Steel Traders, Navi Mumbai, while sourcing TMT bars. As noted by the Assessing Officer the said Shri Anil D. Lingade admitted that he acted as a broker for the nine manufacturers .....

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the name of the another broker Shri Pawan Garg of Jalna was revealed. 4.2 In sum and substance all the above referred information was on the basis of the investigation carried out by the Central Excise Authorities and they removed the TMT bars without payment of the legitimate excise duty. The Assessing Officer has also discussed the modus operandi adopted by Shri Faruk Shaikh in Para No. 2.5 of the assessment order but that is also based on the investigation carried out by the DGCEI. The Assess .....

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aterial viz., Ingots and Billets from unaccounted receipt of raw material. As observed by the Assessing Officer the suppliers identified the Ingots/Billets from alleged unaccounted receipts of raw material. The Assessing Officer has 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 .....

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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 admitted that the raw material used in production of their finished products w .....

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revealed by the brokers. The assessee before us i.e. Shree Om Rolling Mills Pvt. Ltd., Jalna admitted to the manufacture of 285.220 MT of TMT bars, which were clandestinely removed without payment of Excise duty. The statement of the Authorized Representative of the assessee company i.e. Shri Surendra Peety was recorded on 23.12.2006, in which he admitted that the assessee was engaged in the manufacture of TMT bars of various sizes from Billets. He also admitted the unaccounted clearance of TMT .....

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enalty, interest and prosecution. The petition of the assessee was admitted and the duty was paid by the assessee. Further, penalty of ₹ 9,000/- was imposed by the Settlement Commission. 10. The Assessing Officer after going through the process of manufacture of CTD bars or TMT bars from ingots or billets by the Rolling Mills in para 6.1 observed that the variable electricity consumption is important in arriving at the actual production of TMT / CTD bars. The Assessing Officer referred to .....

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, 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 .....

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he adoption of the said rates became important in view of evasion of Excise duty by TMT bar manufacturers in Jalna cluster found by the DGCEI, which in turn, had been accepted by the manufacturers. 11. The Assessing Officer noted that the assessee had disclosed profit @ 2% of sales, which as per him were incorrect. In the facts of the assessee, the value of purchase amount was ₹ 47,75,600/- and the profit thereon was ₹ 6,70,155/- Since the assessee had already debited all expenses in .....

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2. The CIT(A) upheld the reopening of the assessment under section 147 of the Act. With regard to the addition made on account of suppressed production / sales of TMT bars on the basis of electricity unit consumption, the CIT(A) held as under:- 7.2 I have carefully considered the facts of the case and the rival contentions raised by the appellant in para 7.1 above and raised by the A.O. mentioned in para-5 above. On perusal of the same, it has been observed as under - (1) The appellant has cland .....

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ment Commission has levied token penalty in respect of the said clandestine sale out of the books. (3) The A.O. has reasonably estimated, after considering various reports and studies in-respect of electricity consumption required for producing TMT bars, at 188 electricity units per Metric Ton. The A.O. has reasonably considered the 25% allowance in respect of technology and machinery used in India by the appellant. (4) The A.O. has also pointed out that there is substantial variation in various .....

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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 ma .....

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were not present in the said cases. (6) The contention of the appellant that the books of accounts are regularly maintained and audited cannot be accepted in view of the clandestine removal of goods and the unaccounted purchases and sales admitted by the appellant and also in view of various reasons mentioned by the A.O. in the assessment order. 7.3 In view of the above facts, observations and discussion and also in view of various reasons mentioned by the A.O. in the assessment order, I am of .....

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view that only GP in respect of unaccounted sales has to be added in the hands of the assessee, in turn, relying on the ratio laid down by the Tribunal in ACIT Vs. SRJ Peety Steels Pvt. Ltd./Shree Om Rolling Mills Pvt. Ltd. (2011) 137 TTJ 627 (Pune), wherein it was held that the gross profit in respect of undisclosed production sold could only be taxed. However, in view of the admission of clandestine removal of goods and unaccounted purchase of raw materials and sale of finished goods admitted .....

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r, 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, w .....

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pra). 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 made on account of suppressed production, the learned Authorized Representative for the assessee pointed out that for the assessment year 2007- 08, the assessee had declared the additional income of ₹ 1,08,920/- because of the declaration of alleged removal of goods without paying taxes before the Sett .....

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Authorized Representative for the assessee stated that where the technology was not developed and even the working were not developed, since the manufacturing in Jalna was an unorganized sector and consequently, the consumption of electricity was more and could not be based on US standards. It was further pointed out by the learned Authorized Representative for the assessee that in assessment year 2008-09, no evidence was found of clandestine removal of goods and further, the assessee had not a .....

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Peety Steels Pvt. Ltd. (supra) on the ground that the Revenue was filing Miscellaneous Application against the order of Tribunal for rectification of the said order. It was further stated by the Ld. Special AR in the written Note that the appeal may be decided on its own facts without being influenced by the observations / assumptions in the impugned decision in the case of SRJ Peety Steels Pvt. Ltd. (supra). The Ld. special AR pointed out that there was no merit in the stand of the assessee th .....

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ant 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 .....

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ke the addition on account of clandestine removal of goods without payment of Excise duty. He further stated that there is no concept of buying peace in such circumstances. He further submitted that where the Excise Department had accepted the declaration given by the assessee and no further addition / enhancement was made by the Excise Department, but the Assessing Officer can extrapolate if suppression is found for part of the year. Even he can go backward or forward to make the aforesaid addi .....

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ed by the Ld. special AR during the course of hearing in the case of the present assessee and its comparison with the written submissions filed during the appellate proceedings in SRJ Peety Steels Pvt. Ltd. (supra), we find that the issues raised and the case laws referred to by the Ld. special AR, even the language of the submissions in both the cases is absolutely identical. The Tribunal while adjudicating the issue in the case of SRJ Peety Steels Pvt. Ltd. (supra) has referred to the argument .....

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on of the Assessing Officer in respect of the suppression of the production and clandestine removal of goods by the assessee and there is no merits in the contention of the assessee company that 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, da .....

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2,620/- 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 before the Assessing Officer in the assessment proceedings. The Assessing Officer has made the reference of .....

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said confession till this day has not been retracted, hence, the assessee cannot argue that the entire addition towards the suppression of production and sale is on basis of arithmetical calculation of the electricity consumption. He argues that it is a well settled law that an admission is a good piece of evidence and the same binds the maker of the admission unless it is successfully retracted. He relied on the decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. .....

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Ld. Spl. AR referred to Page No. 218 of Paper Book No. 1 filed by the assessee company where the copy of the order passed by Settlement Commission is placed and he submits that there is a categorical observation by the Settlement Commission that the assessee was indulged along with the other companies, individually and collectively for evasion of duties. He placed his heavy reliance on the said observation of the Settlement Commission and submits that the assessee has not challenged the order of .....

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its 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 th .....

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the following decisions: i. Commissioner of Sales Tax Vs. H.M. Esufali H.M. Abdulai 90 ITR 271. (SC). ii. Ambika Prasad Thakur and others Vs. Maharaj Kumar Kamal Singh and others 1966 AIR 605 (SC) iii. CIT Vs. Dr. M.K.E. Memon 248 ITR 310 (BOM) iv. CIT Vs. Hotel Mariya 332 ITR 537 (Kerala) 11.2 Ld. Spl. AR for the Revenue submits that there was erratic consumption of electric power as compared with the production declared by the assessee company. He referred to Page Nos.207 to 211 of Paper Book .....

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Member and submits that as per the observation of the Ld. Technical Member this assessee and other companies were involved in the fraud by evading excise duty. He argues that the assessee company has not disputed the adverse observation of the Ld. Technical Member of the CESTAT even before the Hon'ble Bench in the course of hearing of the present appeals. He submits that the electricity constitutes is a major cost of production i.e. 29.67 % and the Assessing Officer has rightly calculated th .....

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xcise, Cochin 2002- TIOL-547-SC-CX in support of his argument that if there is an admission of suppression of turnover then consumption of electricity can form the basis of estimation of suppression. He submits that it is a well settled law that in case of concealment of income direct evidence is seldom available and the case has to be decided on theory of preponderance of probability. In support of this argument he relied on the following precedents: i. Sumati Dayal Vs. CIT 214 ITR 801 (SC). ii .....

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tion 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 electr .....

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proceedings suo moto. iii. The Customs & Central Excise Settlement Commission, Mumbai has taken a categorical note of clandestine removal of goods by the assessee company. iv. The assessee company has not given any plausible explanation as to why and for what reasons the consumption of electricity in subsequent years has fallen down and has attained the level of consumption as estimated by the learned Assessing Officer. 11.5 He submits that the books of account are not showing the correct s .....

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t in the case of CIT Vs. Sun Engineering Works Pvt. Ltd. 198 ITR 297 (SC) in support of his contention that the entire judgment is to be considered and we cannot confine to a particular observation. He submits that the SLP filed by the Revenue before the Hon ble Supreme Court in the case of R.A. Castings (supra) challenging the decision of the Hon'ble Allahabad High Court was summarily dismissed but summary dismissal of the SLP does not lay down any law nor it is a binding precedent. He refe .....

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STAT 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 cland .....

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ee 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 for the Revenue further submits that the assessee is bound to maintain the record of the electricity consumption in Form No. G-7 as admittedly the assessee comes into the HT consumer. The Ld. Spl. AR filed the copy of the circular issued by the MSEB being Departmental Circular No. 484 and submits that it is binding on the assessee and the asse .....

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n the facts of the present case, the only distinction is that this is the case of a rolling mill, whereas the case of SRJ Peety Steels Pvt. Ltd. (supra) was case of furnace company. The persons running furnace company were manufacturing ingots and billets, which in turn, were utilized by the rolling mills for the manufacture of TMT bars. Both the SRJ Peety Steels Pvt. Ltd. and assessee before us i.e. Shree Om Rolling Mills Pvt. Ltd. are sister concern and it is admitted position that ingots / bi .....

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es in the bunch of present appeals, wherein certain cases of clandestine removal of material were found, which were admitted both before the Excise and IT authorities. The second set of cases are where certain cases of clandestine removal of material were found, but were admitted only before the Excise authorities and not before the Income-tax authorities and the third set of cases where no clandestine removal of goods were found and there was no admission before the Excise and IT authorities. T .....

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ity. 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 .....

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adjournment letter. 21. In rejoinder, the learned Authorized Representative for the assessee started his arguments. However, the Ld. special AR walked out from the Court Room. The learned Authorized Representative for the assessee filed written submissions in reply to the submissions filed by the Ld. special AR, in the presence of learned CIT-DR Mrs. M.S. Verma and learned Addl.CIT-DR Shri Rajesh Damor. Along with the said appeals, other appeals were also taken up for hearing and were heard on .....

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filed and accepted by the Settlement Commission, that the same was not made to buy peace of mind, is not correct as in the said letter itself it was mentioned that in response to the show cause notice and to buy peace of mind, the alleged Excise duty of ₹ 8,88,747/- had been paid by the assessee. It was further pointed out by him that the said letter speaks of the sequences of events and in para 4 of the said letter, the assessee had submitted that there was no evidence of clandestine rem .....

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goods by Shri Surendra Peety. Before the Assessing Officer, the contention of the assessee was that the admission was made to give quietus to prolonged 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 .....

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ppressed 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 filed against the said order. It was pointed out by him that filing of Miscellaneous Application against the order of Tribunal does not debar the order to .....

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t was pointed out by the learned Authorized Representative for the assessee that the confessional statement was made before DGCEI while there was no such confessional statement of Shri Surendra Peety recorded by the Assessing Officer or CIT(A) during the course of assessment proceedings. Even after the receipt of information from Central Excise, the Department had not carried out any investigation and there was no material on record for suppressed production and its sales. Reliance placed on Pul .....

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ctions in whole life before and after the settlement. 24. The learned Authorized Representative for the assessee objected to the issue No.3 raised by the Ld. special AR that whether the Assessing Officer / CIT(A) was justified in extrapolating figures of suppressed sales. The case of the Ld. special AR was that if suppressed production was found for part of a period, the same could be utilized for estimation of suppressed production for the entire period and reliance was placed on number of deci .....

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ficer 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 a .....

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cuments revealed that for part of the year, there were some unaccounted sales, on which basis, the Assessing Officer assumed the unaccounted sales for the entire year. The Hon ble Delhi High Court held that the assumption of Assessing Officer may have been valid if he had found some discrepancy in the books of account or if the search had been conducted after the accounting year and the books of account had brought out some discrepancies. The learned Authorized Representative for the assessee po .....

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ed Representative for the assessee stated that the various reasons for erratic consumption of power were already explained to the Excise Department and the Assessing Officer. Further, the learned Authorized Representative for the assessee distinguished the reliances placed upon by the Ld. special AR on series of decisions including the decision of Hon ble Supreme Court in Melton India Vs. CIT in Civil Appeal No.373 of 2007, order dated 31.01.2007, Triveni Rubber and Plastics Vs. Collector of Cen .....

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without payment of duty, for which the assessee had gone to the Settlement Commission. The said fact was not relevant for assuming that there was clandestine removal of goods from its factory in the same year or subsequent years. In the absence of any evidence produced by the Revenue for purchase of raw materials, payment for purchases, sale of 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. .....

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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 Commis .....

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in the absence of any evidence other than sale of 285 MT as collected by Excise authorities, no addition could be made by estimating the suppressed production or its sale and there was no question of quantifying the profit @ 4% on suppressed production. It was vehemently stated by him that the ratio of Third Member of CESTAT is binding on the Tribunal or not was the next issue raised by the Ld. special AR. The assessee submitted that since this was the case of rolling mills, where there is no o .....

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on the basis of facts collected and finding given by the Assessing Officer and on the basis of finding given by the CIT(A). Reference was made to the parawise findings of the assessment order and the order of CIT(A) and it was pointed out by him that from both these orders, it was clear that they have relied on the admission made by assessee of 288.50 MT of TMT bars removed without payment of Excise duty, for which settlement petition was filed and on the basis of consumption of electricity. Reg .....

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mption. 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 t .....

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see further pointed out that the Hon ble Bombay High Court in assessee s own case relating to assessment year 2006-07 had dismissed the appeal of the Revenue against the additions made on the basis of electricity consumption vis-à-vis assessee s appeal against adoption of sale of two days for working out the sale of 300 days and application on GP. The Hon ble Bombay High Court did not decide the issue, but dismissed the appeal of the assessee. The learned Authorized Representative for the .....

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xcise authorities i.e. the information received from the DGCEI, against which the assessee had filed petition before the Settlement Commission, which in turn had accepted the surrender made by the assessee. It was further pointed out by him that in assessment year 2008-09, the assessment has been completed under section 143(3) of the Act and there is no issue of reopening of assessment and also there is no admission of clandestine removable of goods. ITA Nos.211 to 213/PN/2012, A.Ys. 2006-07 to .....

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cate the issue raised in the present bunch of appeals by referring to the facts in ITA No.211/PN/2012, wherein the assessee has raised the following 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 Tax Act. 2. The learned Commissioner of Income Tax (Appeals) further erred in not taking cognizance of the fact that reasons for re-opening of the assessment were not supplied to the appellant company, .....

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alna 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 In .....

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Tax (Appeals) further erred in confirming the addition on account of Gross Profit @ 4% on the alleged suppression of sale of ₹ 35,47,80,518/-. 9. The learned Commissioner of Income Tax (Appeals) further erred in estimating undisclosed investments for undisclosed production of ₹ 34,11,351/-. 10. The learned Commissioner of Income Tax (Appeals) further erred in not holding that the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 is void and not valid in law as the same has .....

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time of hearing. 31. The Revenue in ITA No.432/PN/2012 has raised following 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 ex .....

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of the Act are not pressed in assessment year 2006-07 and in assessment year 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 de .....

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. 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 the book profits and consequent excess production, which is not reflected in the books of account. It was further pointed out by the Ld. Authorized Representative for the assessee that though working capital required for investmen .....

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rther, the CIT(A) vide para 8.6 had made addition on account of the working capital required for investment under section 69C of the Act at ₹ 34,11,351/-. It was further pointed out by the Ld. Authorized Representative for the assessee that in assessment years 2007-08 and 2008-09 there was no addition made in the hands of the assessee under section 69C of the Act. It was further pointed out by the Ld. Authorized Representative for the assessee that it had declared undisclosed sales in its .....

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tlement Commission. However, the Assessing Officer had made the addition in the hands of the assessee on the basis of US standard. With regard to the plank of arguments as to extrapolation of sales on the basis of suppressed sales found for part of the period by the Excise Department, the Ld. Authorized Representative for the assessee pointed out that after passing of the order by the Settlement Commission on 12.12.2007, the Excise Commissioner has passed order in the case of Furnace company dat .....

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rits 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 file .....

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ement petition before the Excise Authority. Once the assessee had paid the excise duty on whatever evidence was found for sale of goods out of books by the Excise Department and had also offered additional income on the basis of Gross Profit on the aforesaid suppressed sales, there is no question of any further addition. It was further pointed out by the assessee that in similar cases the assessee therein had declared additional income on account of sale of goods out of books for subsequent year .....

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s made by the Income Tax Department. Therefore, the Department has no iota of evidence in their hands in respect of suppressed production and sale other than the evidence collected by the Excise Department in some of the years. Further, reference was made to the order of the Third Member of CESTAT in SRJ Peety Steel Pvt. Ltd. (supra) vide para 2.3 of the order for the allegation of suppressed sale and production there should be tangible and direct evidences available with the Department as under .....

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y of vehicle/truck in the factory premises, loading of goods therein, security gate records, transporters documents, such as L.R.s, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by 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 i .....

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(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 case of Shree Om Rolling Mills, the Ld. Departmental Representative .....

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d. Authorized Representative for the assessee pointed out that in the case of Rolling Mills i.e. in the case of the assessee before us, where there is no order of Commissioner of Central Excise, the Department has relied on the order of settlement petition filed before Central Excise Settlement Commission and the order passed by the Settlement Commission, which were based on Furnace cases and it was not justified to rely on the same. Further, the Department has relied on the consumption of elect .....

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ence has been found by the Income Tax Department for production and sale of goods out of books of account. Further, the Excise Department had not taken any cognizance of evidence of two days sale found by the Income Tax Department in assessment year 2006-07. In this regard, reliance was placed on the order of the CESTAT Bangalore decision in Ravi Foods Pvt. Ltd. vs. CCE, Hyderabad dated 22.12.2010, wherein it was held that certain documents were found by the Income Tax Department pursuant to sea .....

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nnot 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 b .....

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. (supra) decided on 16.01.2015 is not to be applied as it had not considered the material facts and evidences on record about the clandestine removal of finished products. As per the Ld. Special AR, the said decision falls into the category of sub silentio and thus looses its binding effect. He referred to the relevant pages from the book Salmond on Jurisprudence, XII addition. Further, reliance was placed on the ratio laid down by the Hon ble Supreme Court in S. Shanmugavel Nadar vs. State of .....

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en any cogent and relevant reasons in support of his said decision but had simply relied upon general propositions without considering the peculiar facts of the case. The Ld. Special AR stressed that no question of allowability of additional electricity expenditure outside the books of account for production of suppressed sale arises and similar is the case with other manufacturing expenses. The statement of the assessee that the raw material required for production of suppressed turnover was pu .....

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e Ld. Special AR by way of written submissions has proposed that where for the relevant year the excise duty was 16% and sales tax was 4%, and since the assessee had retained 50% of excise duty and sales tax, the percentage of GP works out to more than 42% and hence the reasonable GP should be estimated @ 40% of suppressed sales. In alternate submissions made by the Ld. Special AR for extrapolation on the ratio laid down by the Tribunal in the case of M/s. SRJ Peety Steel Pvt. Ltd. (supra), it w .....

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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 o .....

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emoval of goods without payment of excise duty and the name of the assessee was in the said list of persons. The Ld. Special AR repeated the argument that the assessee claims that it had filed the petition before the Settlement Commission in order to buy peace of mind, but in the petition there was no mention of peace of mind. Our attention was drawn to the order of the Settlement Commission wherein it was observed by the Bench that the Bench could not ignore the evasion of duty and penalty of & .....

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tion of the Assessing Officer. It was admitted by the Ld. Special AR that the Commissioner of Excise can issue the show-cause notice vis-à-vis the concrete evidence found and only to that extent this show-cause notice could be issued to the present assessee. But under the Income Tax Act the code is separate and independent wherein the Assessing Officer has power to work out the extrapolation on the basis of evidence found, there should be difference of opinion on its working and in the ca .....

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ut his argument was for 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 additiona .....

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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, there is no merit in estimation of GP at 4%. In conclusion, he stated that the suppression estimated in the hands of the assessee at reasonable basis or extrapolation of 300 days and GP of 4% adopted on that basis. He also stated that where there was no evidence of suppression of sal .....

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that was the only evidence available before the Assessing Officer against the assessee. It was pointed out by the Ld. Authorized Representative for the assessee that the assessee had cooperated with the Excise Commissioner by coming forward to pay the differential duty and by not pressing the legal stand in the spirit of settlement and where the Revenue has not challenged the settlement order of the Settlement Commission, there is no merit in any further addition in the hands of the assessee. He .....

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the extrapolation of income was made in the hands of SRJ Peety Steel Pvt. Ltd. (supra). However, in the case of the present assessee there was no search by the Income Tax Department. Further, no papers were found in possession of the assessee by the Income Tax Department to assume the suppression of sales. The documents found in the search conducted by the Excise Authority could not be relied upon for making the addition. Reliance in this regard was placed on the decision of the CESTAT in Ravi .....

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rent 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 proceeding .....

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then 05.05.2015 at the request of the Special AR. On 05.05.2015, the Counsel for the assessee opened his arguments which were replied to by Special AR for the Revenue. On 05.05.2015 itself, the Special AR filed written submissions alongwith compilation of case laws and the matter was adjourned to 07.05.2015 for further hearing. On 07.05.2015, the case was taken up in the pre-lunch hour and was argued at length by the Special AR for the Revenue. The Counsel for the assessee strongly opposed the .....

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certain petitions before the Hon ble President/Vice President, ITAT, Mumbai and therefore the matter should be adjourned for three weeks. However, the nature and contents of the petition contemplated was not made known. The Special AR for the Revenue was asked to continue his arguments by the Bench, but he referred to his adjournment letter. 47. The Counsel for the assessee started his argument. However, the Special AR for the Revenue walked off from the Court Room. The Counsel for the assessee .....

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30 & 431/PN/2012 along with ITA No.1525/PN/2012, ITA No.1476/PN/2012, ITA Nos.179 to 182/PN/2012, ITA Nos.656 to 659/PN/2012, ITA No.1084/PN/2012, ITA No.1468/PN/2012, ITA No.1558/PN/2012, ITA No.1629/PN/2012, 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 .....

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ring 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. Verma, CIT-DR & Shri Rajesh Damor were present for the Department. 50. Though the assess .....

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asion of Excise duty by the manufacturers of TMT bars in Jalna cluster found by Director General of Central Excise and Customs; and working out the addition by applying GP rate of 4% on the alleged suppression of sales, after rejecting the books of account under section 145 of the Act. d) Addition made on account of investment in purchases relating to suppression of sale. 51. The Revenue on the other hand, is in appeal against the order of CIT(A) on the following grounds:- a) In quantifying the .....

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ative for the assessee and the Ld. special AR were heard along with written submissions, Notes filed by them and the compilation of case laws relied upon by the respective Authorized Representatives. It may be put on record that the issues raised by the different assessees before us are relatable to the addition made on account of alleged suppression of production and evasion of duty on account of erratic consumption of electricity. 53. Now, we are coming to the merits of the issue raised before .....

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ere 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 .....

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to the decision of the Tribunal and then meet with the respective objections of both the authorized representatives. 55. While arguing the appeals in the lead case of Shree Om Rolling Mills Pvt. Ltd. on 05.05.2015, the Ld. Special AR filed written Note and made elaborate submissions and took us through the page to page of Note and also relied on series of case laws. He continued his arguments in the pre-lunch hour on 07.05.2015. On the perusal of the written Note filed by the Ld. Special AR and .....

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e learned Authorized Representative for the assessee was that the issue raised in the present appeal was identical to the issue before the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra). However, the Ld. Special AR stressed that the issue was at variance and made elaborate submissions. It may be put on record that M/s. SRJ Peety Steels Pvt. Ltd. (supra) is a case of furnace, which is engaged in the manufacture of ingots / billets, whereas manufacturing of TMT bars is carried out by Shree Om .....

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re is no order of CCE, Aurangabad and there is no order of CESTAT. In some of the years, the owners of Rolling Mills on the basis of certain information gathered by the DGCEI had moved a petition before the Settlement Commission and offered additional income, which was accepted by the Settlement Commission in entirety. In some cases, such offer of additional income was before the Excise authorities, who in turn, accepted the same. The Assessing Officer in the case of Rolling Mills i.e. in the ha .....

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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 .....

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ected by the Assessing Officer, the Tribunal held that there was no merit in any addition in the hands of the assessee in assessment year 2007-08. Further, in assessment year 2008-09, there was no admission of any clandestine removal of material without payment of Excise duty before the Settlement Commission and in the absence of any other inquiry or investigation being carried out by the Assessing Officer or any other evidence being brought on record, the Tribunal held that no addition is warra .....

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d. CIT(A), accordingly, directed the Assessing Officer to adopt gross profit @ 4% on the value of alleged suppressed production/sales and accordingly, partly sustained the additions. Now, we first decide the core issue in this case - (i) On the facts and circumstances of this case whether the Assessing Officer was justified in making the addition of ₹ 39,20,36,546/- in the A.Y. 2007-08 and ₹ 40,75,72,486/- in the A.Y. 2008-09 on alleged suppression of production/sales and; (ii) Wheth .....

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ed 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 .....

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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 the value of alleged suppressed production and alleged evasion of excise duty, the Assessing Officer initiated the re-assessment proceedings for A.Y. 2007-08 against the assessee company u/s. 147 of the Act. In reasons recorded by the Assessing Officer while issuing the notice to the assessee company u/s. 147 for A.Y. 2007-08 the Assessing O .....

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h, Mumbai for waiver of penalty, interest and for getting immunity from a prosecution. The Assessing Officer proceeded to decide the alleged suppression of production by the assessee admittedly which was based on the information received from Central Excise Authority as well as the adjudication Order of the CCE, Aurangabad. It is pertinent to note here that in this case that there was a search and seizure action against the assessee and its group companies by the Incometax Dept. on 17-03-2006 an .....

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the Assessing Officer in consequence of search and seizure action against the assessee u/s. 153A r.w.s. 143(3) have reached the Hon'ble jurisdictional High Court. We will later refer to the decision of the Tribunal as well as Hon'ble High Court and certain important observations made in respect of the assessment framed by the Assessing Officer. It is also to be taken note that the A.Ys. 2007-08 and 2008-09 before us are immediately next assessment years after the assessments in conseque .....

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mbai. 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 .....

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T. The Assessing Officer has discussed the information gathered by the DGCEI, Zonal Unit, Mumbai in Para Nos. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 of the assessment order. So far as action against the brokers and sub-brokers are concerned the Central Excise Authority issued show cause to the assessee as well as the other manufacturers who were involved in clearing the excisable goods without payment of duty. All the manufacturers of the Ingots/Billets and TMT Bars were based in Jalna and the a .....

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were removed clandestinely without payment of excise duty and the said material was to extent of 275 MTs. The sale price was received in cash from Shri Om Rolling Mills Pvt. Ltd. and hence, there was no accounting. The assessee admitted the said charge of the Central Excise Authorities i.e. DGCEI and approached the Settlement Commission and paid the excise duty to the extent of ₹ 7,79,313/- for clearing the goods without payment of excise duty. The declaration filed by the assessee was ac .....

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red to the consumption of the electricity shown by the assessee the production was much more lower, has given the examples or reference of some other manufacturers 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 I .....

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fficer, 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 very much reasonable, fair and justified and he adopted the same for the purpose of calculation of alleged unaccounted production of finished goods ( .....

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uppressed Production M.T. Rate per M.T. Rs. Assessable Value of Suppressed Production Rs. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. In the A.Y. 2007-08, the Assessing Officer gave the set off of ₹ 8,44,01,504/- which was in respect of the addition made by the Assessing Officer while completing the assessment u/s. 143(3) of the Act in the order dated 31-12-2008 and made the net addition of ₹ 30,76,35,042/-. So far as A.Y. 2008-09 is concerned no adjustm .....

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sumption. In the computation for the A.Y. 2008-09 the Assessing Officer made the mistakes by mentioning Rs. (-) 1,91,62,000/- as per the order u/s. 143(3) when in fact the said figure is as per the return of income filed by the assessee for the A.Y. 2008-09. 58. After analyzing the submissions of the assessee, the Tribunal noted that in both the years before it, the Assessing Officer had determined the alleged suppression of production / sales as determined by the CCE, Aurangabad on the basis of .....

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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 ha .....

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nstitute of Technology (IIT), Kanpur and has observed that as per the said Technical Opinion Report the consumption of electricity for manufacture of one metric ton of steel ingots varies between 555 to 1026 electricity units depending upon the thermal efficiency, electricity efficiency and nature of mix of raw material. As observed by the Ld. CCE in the case of the assessee as per their electricity bills, the average consumption of electricity for manufacture of 1 MT of MS Ingots varies from 14 .....

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of Billets/MS Ingots in their records with an intent to evade payment of Central Excise Duty and, have involved themselves in the clandestine removal of final products. He also referred to the show cause notice issued by the DGCEI to the assessee which matter was ultimately settled by the assessee company in the Settlement Commission. The Ld. Commissioner also referred to nonmaintenance of the proper electricity consumption record more particularly in Form G-7. The Ld. Commissioner also gave the .....

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ommissioner also relied on the investigation made by the DGCEI and show cause notice issued to the assessee 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 a .....

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e 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 be upheld and all the appeals dismissed. 19.3 The Ld. Third Member of the CESTAT concurred with the finding of the Hon'ble Vice-President that the order passed by Ld. Commissioner of Central Exc .....

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ers impugned in the instant appeals was having the following reports and clarifications for his consideration- (i). 555 to 1046 units PMT as per Dr. Batra's report; (ii). 1800 units PMT as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India; (iii). 1427 units per MT as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv). 650 to 820 units/MT as per Article of the Executive Director, All India Induction Furnace Association, Ne .....

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tter dated 5.4.2008 of Electrotherm agreeing-., with .the views of Induction Furnace "Association and informing that it is very difficult to define any range of power consumption. 20.2 As against this, in para 20 of the Order, the Tribunal in R.A. Casting (supra) considered different electricity consumption figures for production of 1 MT of MS Ingots, reported in following different reports- (i). 555 to 1046 (KWH/T) as per Dr. Batra's report; (ii). 1800 KWH/T as per the report by Joint .....

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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 a .....

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cheques of profits against the cash so deposited, (iv). Claim of High Auxiliary load of about 35%, However the Tribunal in categorical terms held that no demand can be upheld based on electricity consumption as such because the clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to- (i). Receipt of raw material inside the factory premises, and non-accounting thereof in the statutory records; (ii). Utiliza .....

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; documents, such as L.Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees; (v). Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal, 20.5 However, since no such evidences were brought on record, the Appeal of R.A. Casting was allowed for want of evidence relating to the above points, with further finding that the Revenue, not having co .....

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Settlement Commission, 20.7 So far as the proceedings already settled are concerned, the Commissioner is hot relying on the same and the findings of the Commissioner, as recorded earlier, have not been challenged 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 da .....

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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 future. The impugned demand based merely on assumptions and presumptions cannot, therefore, .....

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y evidence of department is admittedly excess electricity consumption based on benchmark adopted allegedly-'from report of Dr. Batra, which was already held to be arbitrary by Hon'ble Tribunal in RA casting (supra). Thus, in my opinion the primary evidence relied in the impugned Order is itself inadmissible, and no other evidence in the instant case proves clandestine production and clearance to sustain, the demand, It is contended by Revenue that furnaces installed in the factory of pre .....

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se to its mathematical precision, by relying on judgment of the Hon'ble Supreme Court in the case of D. Bhoormull - 1983 (13) ELT 1546 (SC), relied upon by the Commissioner as well as the Hon'ble Member (Technical). It is seen that even this judgment was considered in R.A. Casting (supra), 21. There can be no dispute on the fact that in adjudication proceedings, the charge of clandestine removal is definitely to be established on the basis of preponderance of probabilities. However, it c .....

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#39;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 .....

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oint Commissioner of Income Tax, 2014-TIOL-203-HC-AHM-IT, and an unreported order dtd. 28/9/2010 of Andhra Pradesh Sales Tax Tribunal (Visakhapatnam Bench) in the case of Venkata Raimana Stone Crushers Company V/s. State of Andhra Pradesh. In the case of Melton India (supra), for the norm, of power consumption, actual electricity consumption of the assessment year 2000- 01 was taken as 'norm' and the same was applied in subsequent assessment years 2001-02 and 2002-03.This was followed by .....

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ese cases, apart from being under Statutes other than Central Excise Act, do not any manner help in sustaining the findings recorded in the impugned Order. In none of these cases any theoretical repot was relied for arriving at deemed production. 24. Further, in Sarvana Alloys Steels Pvt Ltd, 2011- (274) ELT 248 (Tri-Bang.) similar order based on power consumption was held unsustainable and the appeal was allowed after considering inter alia the judgments in D. Bhoormull (supar), Gulabchand Silk .....

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peals. 19.4 The common order was passed by the CESTAT on 30-07-2006 as per the majority opinion allowing the appeals filed by the assessee and other appellant companies. The copy of the majority order is placed at Page Nos. 5 and 6 of the P/B - VI. It is pertinent to note here that the Ld. Commissioner has also considered the investigation made by the DGCEI against some brokers and in consequence the show cause notices (SCN) were issued to the assessee and other companies and the assessee and ot .....

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oreover, 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 Assessi .....

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ettlement Commission passed in the case of set of companies. The Tribunal noted that the CCE, Aurangabad in its order had taken into consideration the said material while determining the value of alleged suppressed production and had made observations vide para 19. The relevant observations of the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) were as under:- 20.1 ………the Ld. Technical Member of the CESTAT. The Ld. Spl. AR for the Revenue also referred to the order of th .....

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production and has observed as under: 19. There are other instances of central excise violations detected by other agencies where the assessee was found to be involved. In one instance that assessee had approached the Settlement Commission, admitted the evasion offence of an identical nature and had obtained immunity from criminal proceedings. The assessee has however argued that each case has to be treated as a separate case based on its own merit and dealt with accordingly. The argument of the .....

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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 .....

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e 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 and Sec. 115 of the Indian Evidence Act etc. but the fact remains that in the case of the present assessee no independent investigation is made by the Revenue but the entire assessments are framed on the basis of the information received from the Central Excise Department as well as the adjudication order pas .....

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ppellate forum which in the present case is CESTAT. Moreover, investigation by DGCEI and proceeding before the Settlement Commission has also been considered by the CCE, Aurangabad in his adjudication order. The said order was subject matter before the CESTAT and said order has been set aside. Hence, we do not consider it necessary to deal with decisions relied on by Ld. Spl AR of the Revenue which are in context of admission of the Director of the assessee in the course of investigation made by .....

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Act 1944 and we cannot sit as revisionary authority or make any observation whether that order is right or wrong. 63. The Tribunal held that CESTAT was an appellate forum under the Customs Act, 1962 and Central Excise Act, 1954 and the Tribunal (Income-tax) could not act as revisionary authority or make any observation whether that order was right or wrong. 64. The Tribunal further referred to search and seizure operations carried out under section 132(1) of the Act on 17.03.2006 against M/s. SR .....

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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 compan .....

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med u/s. 153A r.w.s. 143(3) of the Act. The Assessing Officer rejected the books of account of the assessee for the A.Ys. 2000-01 to 2006-07 and one of the reasons was that alleged suppressed production which was computed on the basis of consumption of the electricity. The Assessing Officer devised a formula on the basis of electricity consumption and the same was applied uniformly in order to work out certain alleged suppressed production and resultant concealed income in the case of the assess .....

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the alleged concealed income. There are certain important observations and findings of the Tribunal which are as under: 31. In the present case, the search was initiated on 17th March, 2006 in the residential and business premises of SRJ Peety Group, Jalna covering the premises of the assessee company as well. Prior to the search, the returns of income for the asst. yrs. 2000-01 to 2005-06 had already been filed under s. 139(1) of the Act accompanied by all requisite documents and proceeding und .....

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uction of each year which were accepted year after year along with the returns and no query was ever raised by the Department. The following chart shows the year-wise production 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 3162384 .....

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incriminating was found in the course of search relating to any of these assessment years, the assessments for such years could not be disturbed on this ground. 33. In view of above factual and legal position we find that the additions in question in asst. yrs. 2000-01 to 2005-06 are not corresponding to the seized material found during the course of search. The relevant IT returns for said years were filed prior to the search in normal course disclosing the particulars of subject-matters were a .....

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nder sub-s. (2), have not been regularly followed by the assessee, the AO may make an assessment in the manner provided in s. 144. Sec. 145 gives the power to AO to reject the books in certain circumstances after considering the following aspects: (a) Whether the assessee has regularly employed a method of accounting? (b) Whether the annual profits can be properly deduced from the method employed? (c) Whether the accounts maintained are correct and complete? 35. Without prejudice to above, we fi .....

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th as the correct production and then proceeded to arrive at his production figure by multiplying the production in the books by the ratio of production to the electricity consumption for the 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 .....

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lleging 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 assessments of the assessee company from the asst. yrs. 2000-01 to 2005-06. Therefore, rejection of books for these year .....

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to charge the assessee that the assessee has suppressed the production and indulged into unaccounted production. The order of the Tribunal was challenged by the Department before the Hon'ble High Court of Bombay Bench at Aurangabad by filing the appeal u/s. 260A of the Income-tax Act, being Tax Appeal No. 30 of 2011. The Revenue s appeal was dismissed vide common Judgment dated 10-02-2014, in the case of the assessee and other companies by the Hon'ble High Court and there are categorica .....

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es by all requisite documents and proceedings. The scrutiny was thus completed. During the course of search, no incriminating material was found relating to the said years, which could have been added in the proceedings u/s. 153A. The details regarding the consumption of electricity for the production for each of the year under consideration was placed before the Authorities in the Director s Report of each year. The same has not been disputed by the Revenue. The Tax Audit Report also contains t .....

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ng 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 .....

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ment of the Ld. Spl AR for the reason that even if the assessments are framed in consequence of the search and seizure operation but the important fact remains that nothing was found during the course of search except few loose sheets found in the residence of the Director to make out a case against the assessee for alleged suppression of production or sales. It is also to be taken note of the fact that in A.Ys. 2007-08 and 2008-09, no investigation has been done by the Revenue which are immedia .....

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ons in the immediately preceding year, wherein during the course of search, certain loose sheets were found in the residence of the Director to make out case against the assessee for alleged suppression of production / sales. The Tribunal while deciding the appeal in M/s. SRJ Peety Steels Pvt. Ltd, in turn, relying on the ratio laid down by coordinate Bench of the Tribunal, deleted the addition made on account of alleged suppression of production / sales in entirety. The relevant observations of .....

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ncipal Bench at New Delhi (supra). The copy of the order of the Customs, Excise & Service Tax Appellate Tribunal is placed on record by the learned A.R. for the assessee. The Customs, Excise & Service Tax Appellate Tribunal after considering the factual aspects of the case, the quantum of production, the consumption of electricity observed that there is nothing on record to show that high power connection supported by evidence was made on a particular date and that resulted in higher amo .....

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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 i .....

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The basis for the addition in the present case was the investigation report of the Central Excise Department and the suppression in production calculated by the said Investigating Team. The Assessing Officer had completely based its addition on the aforesaid report of the Investigating Team and had also show caused the assessee to establish its point in view of the said report of the Investigating Team. The Customs, Excise & Service Tax Appellate Tribunal (supra) in the appeal filed by the a .....

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eged suppression in production and also alleged investment in purchase of raw material. In view thereof, we hold that no addition on account of profit on the sale of unaccounted production or on account of unexplained investment merits to be made in the hands of the assessee. We are also in agreement with the observations of CIT (Appeals) in deleting the aforesaid addition as no independent evidence has been brought on record to establish that the assessee had, a) suppressed its production and; .....

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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 sustaina .....

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ssee 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 issue is the rejection of books of account by the Assessing Officer in both the assessment years. We find that the only reason for rejection of the books of account was the alleged suppression of production/sales and which was determined on the basis of the adjudication order passed by the CCE, Aurang .....

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-08 and Ground No. 5 in the A.Y. 2008-09. 28. The next issue is the percentage of the gross profit estimated by the Ld. CIT(A) on the alleged suppressed sales and said issue arises from Ground No. 9 in the A.Y. 2007-08 and Ground No. 7 in the A.Y. 2008-09 are on. As the assessee has succeeded on the main grounds as entire additions made by the Assessing Officer are deleted, the Ground No. 9 in the A.Y. 2007-08 and Ground No. 7 in the A.Y. 2008-09 become infructuous. 29. In Ground No. 10, the ass .....

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duction out of books, therefore, worked out ₹ 37,69,582/-. In fact, the said addition is made by the Ld. CIT(A) as he has confirmed the alleged suppression of production/sales as held by the Assessing Officer. As the assessee has succeeded in getting the relief by deleting the entire additions towards alleged suppression of production and sales, hence, this addition does not survive and said addition is also deleted. We, accordingly, allow the Ground No. 10 taken by the assessee. 67. The T .....

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sment 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. Howeve .....

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i.e. Shree Om Rolling Mills Pvt. Ltd. 69. We find that the Assessing Officer in the present case before us had made the addition on account of erratic consumption of electricity based on the consumption of electricity as per US standards. The Assessing Officer had not adopted the US standards in entirety, but had allowed a credit of 25% and work the addition. The addition in the hands of sister concern M/s. SRJ Peety Steels Pvt. Ltd. was made on the basis of the report of one Dr. Batra with reg .....

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nd no merit in the addition made in the hands of the assessee on surmises. Both the learned Authorized Representative for the assessee and Ld. Special AR by way of written submissions has raised identical arguments as in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and since the Tribunal has already decided the issue in M/s. SRJ Peety Steels Pvt. Ltd. (supra), the ratio of the said decision is applicable to the facts of the present case. 70. Another objection raised by the Ld. Special AR before us du .....

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ed by the Revenue in M/s. SRJ Peety Steels Pvt. Ltd. (supra) after considering the submissions of both the Authorized Representatives. We have by an order of even date held that there 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 .....

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ted. 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 to stand. The addition made by the Assessing Officer is on pure estimates, conjuncture and surmises and the same cannot .....

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essment year 2006-07. The case of the Revenue before us was that where the assessee had admitted to clandestine removal of material without payment of Excise duty before the Settlement Commission for part of the period, then in view of the order of the Settlement Commission and also since the assessee had admitted to additional income on such account before the Assessing Officer, the sales for the entire year should be extrapolated. The basis for declaration of clandestine removal of material wi .....

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. The assessee before the Assessing Officer admitted that the additional income in respect of the said clandestine removal of material without payment of Excise duty, is to be added in the hands of the assessee. All this information was available before the Assessing Officer during the course of assessment proceedings, but no other investigation or inquiry was made by the Assessing Officer while completing the assessment in the hands of the assessee. The Assessing Officer on the other hand, was .....

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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 .....

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ent of Excise duty and suppression of income. 73. The evidence of clandestine removal of material without payment of Excise duty was detected by the Excise authorities during the course of search and seizure operation on certain brokers, however, no search and seizure operation was carried out against the assessee. In order to buy peace of mind, the assessee declared the said amount vide petition before the Settlement Commission, which has been accepted by the Settlement Commission in toto. The .....

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n the case of the assessee, offer of the assessee has been accepted for the financial year and the same cannot be said to be restricted to the number of days for which it was offered. The basis of any settlement is the offer made by the claimant and/or the evidence found against the person offering the settlement and where the evidence has been found for part of the year, such settlement being accepted is relatable to the year under consideration. In cases where the petition is accepted in the h .....

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ional income on such offer of settlement was offered by the assessee before the Assessing Officer, however, no further inquiry, investigation or action was taken by Assessing Officer in this regard. In the absence of the same, the issue raised in the present appeal is whether any extrapolation of sales for the balance year on the basis of evidence found for the part 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 .....

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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 add .....

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which the addition in the hands of the assessee made was on account of erratic consumption of electricity. Undoubtedly, both the aspects i.e. the petition made by the assessee before the Settlement Commission pursuant to search conducted by the DGCEI and also the other basis i.e. erratic consumption of electricity, were before the Assessing Officer. However, the Assessing Officer adopted the second issue in the hands of the assessee and made the aforesaid addition, which we in the paras hereinab .....

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any incriminating material found for the balance period. 76. Reliance in this regard is placed upon the ratio laid down in Ravi Foods Pvt. Ltd. Vs. CCE, Hyderabad (supra). In the facts of the said case, certain documents were found by the Income-tax Department pursuant to search and seizure action, which indicated clearance in sales, on the basis of which the additional income was added in the hands of the assessee. The said information was forwarded to the Central Excise Department pursuant to .....

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n 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 / .....

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ement Commission. No statement of Directors of the assessee company was recorded either by Assessing Officer or CIT(A) during the course of assessment proceeding. Accordingly, we find no merit in the reliance placed upon by the Ld. Special AR in this regard. The addition at best is to be restricted to the additional income offered by the assessee. 79. In our considered opinion, the issue in hand is to be decided on the basis of findings of the Assessing Officer and CIT(A) and the Tribunal cannot .....

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judicated the alternate plea raised by the Ld. Special AR in this regard and dismissed the same. 80. Now, we come to the reliance placed upon by both the Authorized Representatives in support of individual proposition vis-à-vis the addition on account of extrapolation of sales for the period of 300 days. 81. The Ld. Special AR further relied on series of decisions under the Excise authorities for the proposition that the confessional statement before the Excise Department was an important .....

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In this regard, we find support from the ratio laid down by the Bangalore Bench of Tribunal in Anjaneya Brick Works vs. CIT (supra), wherein it has been held that mere existence of evidence of concealment in the next assessment year could not be the basis for estimating income in any other assessment years. 82. Further, before the Hon ble Delhi High Court in CIT Vs. Anand Kumar Deepak Kumar (supra), the issue was in relation to the evidence found of unaccounted sales for part of the period duri .....

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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 bef .....

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ve been detected by the Central Excise authority during their search operations. Therefore, the addition made by the Assessing Officer is purely based on guess work, presumption and surmises and not on the basis of any material found during the course of search operation carried out by the Central Excise authorities. Such addition based on hypothetical calculation of turnover and estimation of GP on presumption and surmises were not sustainable. The Tribunal distinguished the ratio laid down in .....

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ted to clandestine removal of material without payment of Excise duty and thereafter, filing a petition before the Settlement Commission. 86. The plea of the Revenue raised in the Miscellaneous Application was rejected as no such plea was taken by the Department during the appellate proceedings before the Tribunal and was raised for the first time in the Miscellaneous Application. However, in the interest of justice, the said issue of extrapolation of suppressed sales was adjudicated by the Trib .....

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ssee claims that in order to buy peace of mind, it had declared the said amount by way of petition before the Settlement Commission. The 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 .....

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, 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-placed. The Hon ble Bombay High Court in the said decision considered the scope of assessment under Chapter XIV-B and held that what is to be assessed under the said .....

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apter XIV-B, the Assessing Officer cannot estimate the undisclosed income on an arbitrary basis. We find no merit in the plea raised by the Ld. Special AR in this regard as the facts of the said case are different from the facts of the present case. 42. Even on merits, the Revenue has no case against the assessee. The reliance placed upon by the Ld. Special AR on the ratio laid down in assessee s own case relating to assessment year 2006-07 is misplaced as the addition in the hands of the assess .....

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emoval of material without payment of Excise duty has been made for assessment year 2008-09. The assessee had offered the additional income on account of such clandestine removal of goods before the Assessing Officer for assessment year 2007-08 and the same was the reason for reopening the assessment under section 148 of the Act. Once a particular fact was available with the Assessing Officer, which was taken note of and considered by him during the assessment proceedings, but the addition havin .....

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ade 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 co .....

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s were relied upon by the Ld. Special AR in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and same have already been considered. 88. In the entirety of the above said facts and circumstances, we hold that no extrapolation of sales for 300 days can be made in the hands of the assessee on the basis of the evidence found for clandestine removal of material without payment of Excise duty for few days, which in turn, has been admitted by the assessee by way of filing petition before the Settlement Commissi .....

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n 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 .....

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ion or inquiry made by the Assessing Officer and where the Assessing Officer has failed to collect additional evidence, no addition can be made in the hands of the assessee, by way of extrapolation of sales for 300 days on account of any evidence found in any preceding or succeeding years. Further, no addition can be made in the 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. .....

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