Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Mahaveer Steel Re-Rolling Mills Versus The Asst. Commissioner of Income Tax, Circle-2, Aurangabad and vice-versa

Addition on account of profit arising on the suppressed sales - calculation by estimating the production on the basis of alleged electricity consumption - rejection of books of account - Held that:- In the cross appeals filed by the assessee and the Revenue, we hold that there is no merit in the order of Assessing Officer in rejecting the books of account under section 145 of the Act. Consequently, the ground of appeal No.3 raised by the assessee is allowed. Further we also delete the addition m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER For the Appellant : Shri Nikhil Pathak For the Respondent : Shri Rajesh Damor ORDER PER SUSHMA CHOWLA, JM: All the cross appeals filed by the assessee and Revenue are against the consolidated order of CIT(A), Aurangabad, dated 30.04.2012, relating to assessment years 2004-05 to 2008-09 against orders passed under section 143(3) r.w.s. 147 & 144A of the Income Tax Act, 1961. 2. This bunch of appeals relating to the same as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y please be cancelled. 2. The learned CIT (A) has not appreciated that the notice issued by the learned Assessing Officer u/s 148 of the Income Tax Act, 1961 is bad in law and the same may please be quashed and entire assessment order based on the said notice may please be quashed. 3. The learned Commissioner of Income Tax (Appeal) failed to appreciate that, the assessing officer erred in rejecting the books of accounts u/s 145(1) of the Income Tax Act, 1961 and it is prayed that profit arrived .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

artment in their search, no incrementing document or stock was found to the excise department, only on the basis of electricity consumption Clandestine sales are calculated by excise department and as such the addition made by the A.O. is not legally sustainable. 6. Ultimately if the addition made by the A.O. on suppressed sales of TMT Bars is not legally sustainable then there will be no cause for addition under the head working capital requirement. 7. Appellant craves to add, alter, amend, del .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

her the CIT(A) was justified in not appreciating the fact that manufacturing and administrative expenses on the unaccounted production worked out in the appellate order had already been borne by the production shown in the books of accounts? 3. Whether On the facts and in the circumstances of the case whether the CIT(A) was justified in allowing assessee's appeal especially when the facts of the case are squarely covered by the decision of Hon'ble Court in the case of Bhagwati Ispat Pvt. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment years 2004-05 and 2008-09 is against the estimation of gross profit on suppressed sales, which in turn, were calculated by estimating the production on the basis of alleged electricity consumption. Another issue raised by the assessee is against the re-opening of assessment under section 147/148 of the Act. 6. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeals is squarely covered by the order of Tribunal in rel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rom the Central Excise & Customs Authorities and on the basis of consumption of electricity units observed that against 1026 units consumed, there was production of one ingot and applying the selling price for each year, the undisclosed sales were computed and the same were added as undisclosed income of the assessee. In addition the Assessing Officer also added the initial capital required in each year. The CIT(A) on the other hand, upheld the working of excess production as correct, but he .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were utilized for production of 1 TMT Bar and worked out the undisclosed sales and also made addition on account of working capital adjustment. The CIT(A) further held that since ingot was the raw material for TMT, so benefit of addition on account of TMT is to be allowed to the assessee. 7. Our attention was drawn to the order of CIT(A), wherein at page 23, the CIT(A) had tabulated the details and had allowed the benefit of suppressed production of ingot given and where the production was extra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

account of working capital adjustment. 8. In the appeal filed by the Revenue, the learned Authorized Representative for the assessee contended that the Revenue was aggrieved by the application of rate of 4% and also against the deletion of working capital adjustment. The learned Authorized Representative for the assessee placed on record the copy of order of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and pointed out that the assessee was one of the party before the CESTAT and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

round of appeal No.3 against the rejection of books of account and reliance was placed on the ratio laid down by the Hon ble Madhya Pradesh High Court in Bhagwati Ispat Pvt. Ltd. Vs. CCA, Bhopal. The learned Departmental Representative for the Revenue further pointed out that the ground of appeal No.4 raised by the Revenue is against the deletion of addition made on account of working capital required for purchase of raw material and day-to-day production activities. 10. In rejoinder, the learne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nufacturing of M.S. Ingots, Runner and Rizers, Angles, CTD bars, Channels, etc. Information was received by the Assessing Officer from the office of the Commissioner of Central Excise and Customs, Aurangabad vide letter dated 01.04.2010 that on the basis of information of raw-material purchases, production, clearances, value of clearances, duty paid, electricity consumption, they established that the assessee had indulged in the suppression of production and clandestine removal of finished produ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rave;vis production, input, out ratio, consumption of raw material was taken into consideration and shortage in reporting of production and duty payable thereon, was worked out from year to year as tabulated hereunder:- Financial Year Total Electricity Units consumed Production as per IIT Standard considering 1026 Elc, units per MT Actual production shown by the Assessee Difference in production Total Value Basic Excise Duty 2003-04 16202636 15792.043 12413.739 3378.304 47252336 7436659 2004-05 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stoms, Aurangabad. Vide order dated 26.08.2009, the Commissioner of Central Excise and Customs, Aurangabad held the assessee to have indulged in suppression of production and clearance of goods without payment of duty. The assessee was found to have willfully suppressed the fact from the rawmaterial stage to the clearance of goods and it was observed that the assessee had manipulated the records. Therefore, the assessee was found to be liable to pay duty as demanded along with interest and was a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed to the assessee. The Assessing Officer after elaborating upon the modus operandi of manufacturing of ingots / billets by the assessee and after taking note of the information received from the Central Excise & Customs Department, Aurangabad and also after considering the explanation filed by the assessee i.e. with regard to the unit consumption of electricity / MT ingots, issued further show cause notice to the assessee, under which it was alleged that the minimum electricity consumption .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Central Excise and Customs Authorities in the cases of steel mills / re-rolling mills, situated at Jalna. 14. The main plea of the assessee before the Assessing Officer was that all the electricity consumed had not been used in production of ingots and elaborate submissions were made by the assessee, which were rejected by the Assessing Officer and also reliance was placed on the ratio laid down by laid down by the Hon ble Madhya Pradesh High Court in Bhagwati Ispat Pvt. Ltd. Vs. CCA, Bhopal ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssing Officer in rejecting the books of account and also upheld the order of Assessing Officer in working out estimated income and also upheld the order of Assessing Officer in holding that there was suppression of production / sales of MS ingots / billets and TMT Bars on the basis of electricity unit consumption. However, the CIT(A) observed that the Assessing Officer was not justified in treating the amount of sale consideration after reducing only the cost of raw material required for alleged .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3 2006-07 29,58,155 4,49,978 - 34,08,133 2007-08 38,58,404 - 38,58,404 2008-09 43,48,665 - 43,48,665 16. Further, the Assessing Officer had also made addition on account of working capital required for suppressed production, however, the CIT(A) reduced the addition made by the Assessing Officer after considering the facts and circumstances of the case in assessment year 2004-05. As against addition made by the Assessing Officer of ₹ 85,01,949/-, the addition to the extent of ₹ 4,76,5 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

4% to work out the addition in the hands of the assessee as against the total suppressed sales being added in the hands of the assessee by the Assessing Officer. The next issue raised by the Revenue is against the deletion of addition made on account of working capital required for the alleged production. 19. The ground of appeal No.1 raised by assessee is general. 20. The ground of appeal No.2 raised by the assessee in all the captioned appeals is against the re-opening of assessment under sec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

investigation carried out by the Central Excise and Customs Authorities that the person was involved in suppression of production on the basis of electricity consumption and removal of goods without payment of legitimate Excise duty. The Tribunal had elaborately considered the allegations of the Central Excise and Customs Authorities and the investigation carried out in the case of the assessee and had also considered the order of Third Member of CESTAT passed in bunch of cases dated 30.07.2014 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed. The relevant findings of the Tribunal are as under:- 19. In sum and substance in both the assessment years the Assessing Officer has determined alleged suppression of the production/sales as determined the Commissioner of Central Excise and Custom, Aurangabad on the basis of power consumption. The copy of the adjudication order passed by the Commissioner of Central Excise and Custom and Service Tax, Aurangabad dated 28-08-2009 (in short referred to as the CCE ) in the case of the assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ld. Commissioner has referred to the study conducted by the Indian Institute 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 consumptio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat the assessee has willfully suppressed the figures of production 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 non-maintenance of the proper electricity consumption rec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed and referred to the different decisions of the Tribunal. The Ld. Commissioner 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are to be set aside and the appeal allowed. b. Whether in view of the discussion in Para 32 to 68 above and in view of the Hon'ble Supreme Court s judgment in the case of Triveni Rubber & Plastics (supra) and this Tribunal s decision in the case of Rattan Steels Works (supra), Nagpal Steel (supra) and Hans Castings Pvt. Ltd. (supra), the impugned order are to be upheld and all the appeals dismissed. 19.3 The Ld. Third Member of the CESTAT concurred with the finding of the Hon'ble Vic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

consumption in the instant appeals. 20.1 The Commissioner in the orders 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

esting reasons which lead to high power- consumption, and another Letter 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Tribunal opined that wide variations in the consumption electricity have been reported for the manufacture of one MT of steel ingot&, and that this renders the norm of 1046 units adopted by the Revenue as arbitrary. After this finding, which is upheld by the Hon'ble Allahabad High Court and even SLP has been dismissed, there was no reason for the Commissioner in the instant cases to consider the norm of 1026 units allegedly as per report of Dr. Batra, for arriving at deemed production. M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

depositing huge amount of cash with the stock brokers and receiving 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s, loading of goods therein, security gate records, transporters' 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x, d). Claim of higher Auxiliary load, e). Past case settled before 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ories on different dates to arrive at the average to be adopted as a norm, which can be followed thereafter and the Revenue in the present case not having conducted any experiment whatsoever cannot be permitted to justify the demands raised. It will be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for future. The impugned dem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erred in the impugned Orders prove clandestine clearance. The primary 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 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the department that the Department is not required to prove its case 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 estab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing the subsequent period. I also agree with the finding of the Hon'ble Vice President that in. any event, this additional material is also only of power consumption. 22. In written submissions of Revenue, it has also been contended that Report of JPC suggesting electricity consumption upto 1800 its PMT was for electric arc furnace and not induction- furnace. However, the appellant has contended that productivity in. electric arc furnace is higher than induction furnace. In any event, in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

'ble Gujarat High Court in the case of Rajmoti Industries V/s. Joint 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 s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ess in the books of accounts. I am therefore of the opinion that these 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 considerin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

squarely applicable in the facts of the instant case in all the appeals. 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

i.e. 1026 Units for manufacturing of 1 MT of Ingots and Billets. Moreover, even if in the A.Y. 2008-09, the Assessing Officer has observed that the information received from the Central Excise Authorities has no bearing in the said order but on the perusal of the said order, it is seen that entire order is copy of order passed for the A.Y. 2007-08. As vary basis of the assessment order i.e. the order of the Commissioner of Central Excise (CCE), Aurangabad has been set aside and cancelled by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the provisions of sub-sections (1), (2), (5) and (6) of section 129C of the Customs Act, 1962 (52 of 1962), shall apply to the Appellate Tribunal in the discharge of its functions under said Act as they apply to it in the discharge of its functions under the Customs Act, 1962. Hence, the procedure of the Appellate Tribunal i.e. CESTAT is regulated as provided in Sec. 129C of the Custom Act, 1962. The relevant provision of the Custom Act, 1962 reads as under: Sec. 129C. Procedure of Appellat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch of which he is a member where - (a) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under section 125; or (b) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (c) the amount of f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ellate Tribunal and such point or points shall be decided according to the opinion of the majority of these members of the Appellate Tribunal who have heard the case, including those who first heard it. (6) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of alleged suppression of production was referred to the Ld. Third Member of the CESTAT and not only any specific point and this position is clear from the questions or points referred to Ld. Third Member. We, therefore, reject the argument of the Ld. Spl. AR for the Revenue that we have to also consider the minority order of the Ld. Technical Member of the CESTAT. The Ld. Spl. AR for the Revenue also referred to the order of the Settlement Commission, Mumbai passed in the case of the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 assessee is accepted. No reliance has been placed on evidence relie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 passed by the Ld. Commissioner of Central Excise, Aurangabad. Moreover, as observed above the adjudication Order passed by the CCE, Aurangabad has been cancelled by the CESTAT, Mumbai by majority opinion and hence, foundation of assessments for A. Yrs. 2007-08 & 2008-09 do not exist. The law is also well settled that when the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sary 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 DGCEI more particularly under the Indian Evidence Act as those decisions are not relevant now though good for academic discussion. So far as maintaining of Form G-7 in respect of the electricity consumption, the said issue was also before the CESTAT while deciding the fate of order of the Ld. CCE, Aurangabad. Ld. AR vehemently .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r the A.Ys. 2000-01 to 2006-07 were framed 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 con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the basis of the formula he worked out 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dit report also contained the unit production 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 3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under s. 153A of the Act. When nothing 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) or accounting standards as notified under 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and treated the production in that month 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 vario .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

esulting in suppressed production and alleging that the assessee company has indulged in unaccounted production. 37. None of the evidence collected as a result of search or detected during the course of assessment pertains to the asst. yrs. 2000-01 to 2005-06. It is an accepted fact that each year of the assessment is independent and evidences found relating to asst. yr. 2006-07 cannot have an adverse impact on the assessments of the assessee company from the asst. yrs. 2000-01 to 2005-06. There .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

factors and there was no justification 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' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed u/s. 139(1) of the Act, accompanies 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 Revenu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A of the Act. The finding is that nothing incriminating was found in the course of search relating to these assessment years. The additions, therefore, were not corresponding to the seized material during the course of search. The relevant income tax returns, in normal course, are disclosing the particulars. They were already on record. The returns have been accepted. In such circumstances, the Tribunal, as also, the Commissioner of Income Tax (Appeals) have in their orders, held that there are .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

We are not inclined to accept the argument 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 bee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion and investment in purchase of raw material relying on information received from Central Excise (Ludhiana) and when matter reached before the Tribunal and it is held as under: 10. The assessee had filed an appeal against the order of CIT Customs & Excise, before the Customs, Excise & Service Tax Appellate Tribunal with principal 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed, there is also no evidence on record to show that the authorities intervened lawfully recording the output in the presence of witness. The Customs, Excise & Service Tax Appellate Tribunal held that therefore, a hypothetical case appears to have been made by Revenue in excessive exercise of its jurisdiction to the detriment of justice. The Customs, Excise & Service Tax Appellate Tribunal further considered the retraction statement of the Director of the assessee company and vide para 6 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ential relief, if any." 11. The Customs, Excise & Service Tax Appellate Tribunal categorically held that the electricity consumption could not be criteria to determine the output laid down in R.A. Castings, where the appeal of the Revenue was dismissed by the Hon'ble Apex Court as reported in 2011 (269) ELT A-108 (SC). 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has been held that there was no cogent evidence to show either suppression of purchase of input or removal of goods. In view of the aforesaid findings of the Customs, Excise & Service Tax Appellate Tribunal in assessee's own case there is no merit in any addition being made in the hands of the assessee on account of the alleged 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Revenue. 26. In the case of ACIT Vs. Arora Alloys Ltd. (supra) the addition was made on the basis of electricity consumption to produce 1 MT of Ingots. The confessional statement was also given by the Managing Director of the said company before the Central Excise Authorities. The Ld. CIT(A) allowed the assessee s appeal. The Revenue 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 dismis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e A.Y. 2007-08 and Ground Nos. 2,3,4 & 6 in the A.Y. 2008- 09. 23. The second issue considered by the Tribunal was against the rejection of books of account and the said ground of appeal was also allowed by the Tribunal holding 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

held. We, accordingly, allow Ground No. 7 in the A.Y. 2007-08 and Ground No. 5 in the A.Y. 2008-09. 24. The Tribunal further held that the issue raised against the percentage of the gross profit estimated on the alleged suppressed sales applied by the CIT(A) is to be allowed in the hands of the assessee as the entire addition made by the Assessing Officer was deleted. Simultaneously, the grounds of appeal raised by the Revenue against the estimation of gross profit made by the CIT(A) were also d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctuous. ……. 31. We have heard the parties. The main grievance of the Revenue is against the estimation of GP by Ld. CIT(A). We have already allowed the grounds taken by the assessee on the alleged suppression of the production/sales. As the assessee has succeeded on the basic additions, the grounds taken by the Revenue do not survive as the entire additions are deleted in both the assessment years by allowing the grounds taken by the assessee. Accordingly, all the grounds of the Re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

isclosed turnover of the half period of the earlier year under appeal. The Ld. CIT(A) has observed that the undisclosed sale for the earliest year under appeal are of ₹ 39,20,36,546/- and the said investment required for production 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Forum: Construction of single unit bungalow

Forum: Duty Drawback & Input Credit - under GST

Forum: Credit on Repair of Company Car & Its Insurance

Article: SIMPLIFIED E-WAY BILL UNDER GST

Article: SERVICES UNDER REVERSE CHARGE UNDER GST REGIME

Forum: Excise duty credit on finished stock at additional place of business.

Highlight: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017 - Notification

Highlight: Companies (Acceptance of Deposits) Second Amendment Rules, 2017 - Notification

Highlight: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg. - Circular

Highlight: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 - Public Notice

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Circular: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20

Notification: Companies (Acceptance of Deposits) Second Amendment Rules, 2017

Notification: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017

Forum: Trans1 return

News: Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

Circular: Promote the officers of the Indian Revenue Service (Customs and Central Excise) to the grade of Principal commissioner of customs, GST & CX

Circular: Allocate the charges amongst the Members of the Central Board of Excise and Customs

Circular: Strategy for audits in 2017-18 consequent to GST - Audit by Central Excise and service Department to continue for the accounting year 2016-17 and for the past period

Circular: Appoint the IRS (C&CE) officers as Principal Commissioner (Revision Application) and ex-officio Additional Secretary

Circular: Time limit for filing intimation for composition levy under Rule 3(1) of the CGST Rules, 2017 extended to 16-8-2017

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

Circular: C.B.E. & C. Advisory on Customs related matters on introduction of Goods and Services Tax regime

Circular: List of Reduced Tax Liabilities under GST regime in comparison to present combined Indirect Tax rates

Circular: Works Contract for construction of Flats, Complex — Builders to pass on GST benefit to buyer otherwise anti-profiteering provisions of Section 171 of GST Act to apply

Circular: Clarification regarding applicability of section 16 of the IGST Act, 2017, relating to zero rated supply for the purpose of Compensation Cess on exports – Regarding.

Circular: Clarification on Inter-state movement of various modes of conveyance, carrying goods or passengers or for repairs and maintenance- regarding

News: RBI Reference Rate for US $

Highlight: Addition u/s 23(1)(a) - deemed rent - once the property is let out and at any point of time this remained vacant during the same cannot be brought to tax under the head House properties income.

News: Haryana constitutes screening committee on anti-profiteering

Highlight: Valuation of imported goods - it is necessary to re-examine the matter of both license agreement as well as supply contract simultaneously, to see if the enhanced royalty was in the guise of adjustment of the price of components.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

Highlight: Cenvat credit availed on Club Membership for the Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Jaitley asks biz not to wait till last day to file GST returns

Circular: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg.

Article: 20 Things You must know about E Way Bills in GST Law

Article: ‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version