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2015 (3) TMI 1115 - ITAT PUNE

2015 (3) TMI 1115 - ITAT PUNE - TMI - 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. .....

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o 1450/PN/2012 - Dated:- 5-3-2015 - Ms 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 bu .....

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officer is bad in law and the same may 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 .....

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duct was established by the excise department 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. Appe .....

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in the circumstances of the case whether the CIT(A) was justified in not appreciating the fact that manufacturing and administrative expenses on the unaccounted production worked out in the appellate order had already been borne by the production shown in the books of accounts? 3. 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 Co .....

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assessee and the Revenue relating to 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 c .....

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on the basis of information received from 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 o .....

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sing Officer estimated that 188 units 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 gi .....

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as no merit in making any addition on 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 o .....

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hands of the assessee @ 4% and vide ground 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 ac .....

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ssee was engaged in the business of manufacturing 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 .....

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kes in electricity consumption vis-àvis 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. .....

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Commissioner of Central Excise and Customs, 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 .....

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under section 148 of the Act was issued 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 tha .....

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mption @1026 units/MT as adopted by the 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 Bhag .....

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5. The CIT(A) upheld the order of Assessing 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 cos .....

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2005-06 25,17,406 5,92,677 - 31,10,083 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 ad .....

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eal against the estimation of profit @ 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 .....

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eety Steels Pvt. Ltd. on the basis of 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 pass .....

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peal raised by the assessee were allowed. 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 th .....

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alaries, cost of maintenance etc. The 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 ele .....

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s. The Ld. CCE accordingly, observed that 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 .....

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was not possible. He has also discussed 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 ₹ 3 .....

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

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s higher than the average electricity 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). .....

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.2008 of Electrotherm to a client suggesting 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 rep .....

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

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ious profits in the balance sheets by 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 ra .....

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f vehicle/truck in the factory premises, 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 allow .....

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and/or any proceedings under Income Tax, 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 t .....

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

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e of the so called other evidences referred 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 .....

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ting (supra). It has been contention of 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 clandes .....

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

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TIOL-14-SC-CT, the judgment of the Hon'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 'n .....

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ein had not recorded the work-in-progress 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 t .....

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gment in R.A. Casting (supra) would be 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 consequ .....

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

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the Central Excise Act, 1944 provides 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 u .....

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ase which has been allotted to the Bench 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 .....

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r more of the other members of the Appellate 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 .....

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of the assessee company entire matter 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, Mumb .....

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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 assessee is accepted. No reli .....

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essee 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 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 l .....

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de. 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 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 .....

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d accordingly the assessment orders for 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 s .....

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production as per his formula and on 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 .....

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en disputed by the Revenue. The tax audit 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 .....

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and not in the assessment proceedings 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 .....

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od of accounting provided in sub-s. (1) 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 accoun .....

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sumption for a month in the whole year 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 .....

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

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teel ingots/billets depends on various 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 assess .....

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r 2000-01 to 2005-06 had already been 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 sa .....

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of regular assessment and not u/s. 153A of the Act. The finding is that nothing incriminating was found in the course of search relating to these assessment years. The additions, therefore, were not corresponding to the seized material during the course of search. The relevant income tax returns, in normal course, are disclosing the particulars. They were already on record. The returns have been accepted. In such circumstances, the Tribunal, as also, the Commissioner of Income Tax (Appeals) have .....

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uence of search and seizure operation. 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 .....

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.O. for alleged suppression of production 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 .....

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

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ls are therefore, allowed with consequential 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 .....

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been cleared clandestinely. Further it 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 additio .....

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the ground Nos.1 and 2 raised by the 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 additi .....

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e Ground Nos. 3, 4, 5, 6 & 8 in the A.Y. 2007-08 and Ground Nos. 2,3,4 & 6 in the A.Y. 2008- 09. 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 .....

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f account on above reason cannot be upheld. 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 .....

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No. 7 in the A.Y. 2008-09 become infructuous. ……. 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. .....

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r which is estimated as an average undisclosed 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 .....

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