Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 421 - ITAT PUNE

2016 (5) TMI 421 - ITAT PUNE - TMI - Addition made on account of alleged suppression of production - rejection of books of account - GP rate application - Held that:- As during the year under consideration, neither investigation by the DGCEI nor any suppressed production has been detected and admitted by the assessee. Further, the assessee has not moved any petition before the Settlement Commission or any other Excise authorities. In the totality of the above said facts and circumstances and in .....

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 of production on account of electricity consumption. In the totality of the above said facts and circumstances, we delete addition made in the hands of assessee by the CIT(A) to the extent of 4% of the said alleged production. Accordingly, ground of appeal raised by the assessee against rejection of books of account and confirming the addition made on account of suppression of production by applying GP rate of 4% on the alleged production of sale are allowed. - Decided in favour of 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

Tax Act, 1961 (in short the Act ). The Revenue is also in appeal against the order of the CIT(A), Aurangabad, dated 28.10.2014 relating to assessment year 2011-12 against the order passed under section 143(3) of the Act. 2. All the appeals relating to the same assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The assessee in ITA No. 1884/PN/2014 has raised the following grounds of appeal :- 1. The learned CIT (Appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ly on the basis of action of Directorate General of Central Excise and Customs, for which the assessee had paid all taxes during the assessment of income for Assessment Year 2007-08. 4. The learned CIT (Appeals) further erred in confirming the alleged suppression of production merely on basis of monthly variations in consumption of electricity vis a vis production. 5. The learned CIT (Appeals) further erred in confirming suppression of sales of ₹ 1,65,53,281/- on the basis of the show caus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t company are correctly rejected u/s. 145 of the Income Tax Act, 1961 without any evidence or finding as to how the provisions of Section 145(3) are satisfied. 7. The learned CIT(Appeals) further erred in confirming the addition on account of Gross Profit @ 4% of ₹ 52,80,874/- on the alleged suppression of sale of ₹ 1,65,53,281/-. 8. The learned CIT(Appeals) further erred in not following the order of the Hon. Income Tax Appellate Tribunal in the case of M/s. SRJ Peety Steels Pvt. Lt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t that the assessee indulged in clandestine removal of goods without payment of taxes. 2. On the facts and in the circumstances of the case whether the CIT(A) was justified in not appreciating the fact that manufacturing and administrative expenses on the unaccounted production worked out in the appellate order had already been borne by the production shown in the books of accounts? 3. On the facts and in the circumstances of the case whether the CIT(A) was justified in not appreciating the fact .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Tax Appellate Tribunal, West Zonal Bench, Mumbai which has never reached to finality and still premature? (2) Under the facts and circumstances of the case the Learned CIT(A) erred in holding that the assessee has correctly pointed out that variation of electricity is on account of use of different quality of raw material and irregular supply of power when in fact there is no use of different quality of raw material and express feeder is available with the assessee which provides power without .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t year 2011-12. 7. The issue arising in all these three appeals is similar and we proceed to decide the present appeals after referring to the facts in ITA No.1884/PN/2014 i.e. appeal filed by the assessee and ITA No.2022/PN/2014 i.e. appeal filed by the Revenue. 8. Though the assessee has raised several grounds of appeal, but the same are against addition made on account of alleged suppression of production at ₹ 1,65,53,281/- on the basis of show cause notice received from Central Excise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l. CIT in ITA Nos.125 & 127/ PN/2012, relating to assessment years 2007-08 & 2008-09 i.e. appeals filed by the assessee and ITA Nos.430 & 431/PN/2012, relating to assessment years 2007-08 & 2008-09 i.e. appeals filed by the Revenue, the Tribunal had decided the similar issue vide consolidated order dated 15.07.2015 and thereafter, passed Corrigendum order dated 17.02.2016. 10. Briefly, in the facts of the case, the assessee was engaged in the business of manufacturing of MS TMT B .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icity unit consumption per MT of production came to 192 units and maximum came to 413 units. The Assessing Officer was of the view that there was abnormal deviation in electricity unit consumption per MT i.e. up to 221 units per MT, which indicated that in the books of account of assessee, the production was not disclosed correctly. Further, the Assessing Officer took note of the information received from Central Excise and Customs Department in assessment years 2006-07 and 2007-08, on the basis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dences relied upon by the Assessing Officer in the earlier years and information collected by the DGCEI and the statements recorded on 12.01.2007 by the DGCEI and the additional income offered by the assessee in the earlier years, the books of account of assessee were rejected and the suppressed production was estimated on the basis of adoption of consumption of 188 KWh/MT to be at 26787 MT. Since all the manufacturing and administrative expenses including electricity charges had already been pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#8377; 3,256/- per MT aggregating to ₹ 1,65,53,281/- which was held to be the income of assessee on account of suppressed production. Further, addition was made on account of working capital utilized for the above said suppressed production under section 69C of the Act at ₹ 43,46,955/-. 11. The CIT(A) with regard to addition made on account of suppressed production / sales of TMT Bars on the basis of electricity unit consumption held as under:- 7.2 I have carefully considered the fac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

admitted the said clandestine removal of goods in the statement recorded in investigation by DGCEl and also before the Settlement Commission of Customs and Excise Department and has paid the Excise Duty and the Settlement 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lied on by the appellant. The facts before the Hon'ble ITAT while deciding the said cases were different to some extent. In the said cases, clandestine removal of goods by the appellant and the admission of the appellant about the said fact of unaccounted transactions was not before the Hon'ble ITAT. Further, the detailed order of the Commissioner of Excise and the other facts brought on record by the A.O. in the assessment order was not before the Hon'ble ITAT, Pune while deciding 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

ts as in the said cases the clandestine removal of goods was not proved and admitted as in the case of the appellant. Further, the reasons for estimating the production on the basis of electricity units consumed were not present in the said cases. (6) The appellant has not maintained information in form No.G-7, which is compulsory, showing daily consumption of power in units. (7) The facts of the decisions relied on by the appellant are different and ratio laid down by the said decisions 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

this order, the Hon ble Appellate Tribunal has observed that the facts of the case including R.A. Castings relied on by the applicants cannot be followed as precedent as in the said case no corroborative evidence was found by the Bench. The Hon ble Appellate Tribunal has further observed that the crucial evidentiary findings have been noted in the cases of the applicants including the appellant. The said findings in the case of SRJ Peety Steels Pvt. Ltd. manufacturing TMT bars are as under:- (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

en made by the Hon ble Appellate Tribunal in the case of other manufacturers (including the appellant). The Hon ble CESTAT has also taken support of decision of Hon ble Madras High Court in the case of Alagappa Cement Pvt. Ltd. Vs. CEGAT & CCE, Trichy (20100TIOL-770-HC-MAD-CS) and held that the Revenue cannot be faulted for demanding duty on the steel ingots which could have been manufactured by consuming excess quantity of electricity. The Hon ble Appellate Tribunal has held in concluding p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench order dated 01/03/2011 in the case of the appellant and others, I hold that there is suppression of sale and profit in the years under appeal and hence the profit declared by the appellant cannot be accepted without making further addition on account of profit on suppressed sale. 12. Both the assessee and the Revenue are in appeal against the order of CIT(A). 13. We have heard the rival contentions and perused the record. 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

d production and the application of GP rate of 4% on such suppressed production and third is the working capital required for investment in such suppressed production. We find that similar issue of addition on account suppressed production on account of erratic consumption of electricity arose before the Tribunal in the case of SRJ Peety Steel Pvt. Ltd. (supra). Though both the parties have raised their arguments in favour of/against the order of the Tribunal in SRJ Peety Steel Pvt. Ltd. (supra) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Special AR and on comparison of the said written Note with the written Note dated 05.11.2014 filed by him before the Tribunal in the case of M/s. SRJ Peety Steels Pvt. Ltd., (supra) which is a sister concern of Shree Om Rolling Mills Pvt. Ltd., we find that the same are identical. We called for appeal folder of M/s. SRJ Peety Steels Pvt. Ltd. (supra) and found that the arguments raised by the Ld. Special AR in the case of the present assessee before us were repeated by the Ld. Special AR. Thou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d out by Shree Om Rolling Mills Pvt. Ltd. by using ingots / billets. In the case of M/s. SRJ Peety Steels Pvt. Ltd. (supra), there was an order of Central Excise Commissioner, Aurangabad in relation to suppression of production on account of erratic consumption of electricity. The assessee filed an appeal against the said order of CCE, Aurangabad before the CESTAT and the Third Member of CESTAT deleted the addition made in the hands of respective furnace cases. However, in the case of the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ls i.e. in the hands of the assessee before us was of the view that because of erratic consumption of electricity, in turn, relying on the data of consumption of electricity as per US standards, came to the conclusion that there was suppression of production by the TMT Bars manufacturers in Jalna cluster on the ground of variance in consumption of electricity versus production. The Assessing Officer also referred to the data collected in the cases of furnace owners i.e. M/s. SRJ Peety Steels Pvt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee therein by CCE, Aurangabad and vide order dated 16.01.2015 held that since the order of the CCE, Aurangabad has been overruled by the Third Member of CESTAT, there was no basis for addition in the hands of the assessee. The other aspects of the issue that the assessee therein had made the petition before Settlement Commission in respect of clandestine removal of material without payment of Excise duty, was also considered by the Tribunal and in the absence of any inquiry / investigation .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

addition is warranted in the hands of the assessee. The issue before the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. was summarized under para 9, which reads as under:- 9. At this stage we are not considering the appeals filed by the Revenue for the reason that those appeals are against the finding of the Ld. CIT(A) that the entire value of alleged suppressed production/sales of Ingots and Billets cannot be treated as income of the assessee and some reasonable percentage of the gross profit 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

les and; (ii) Whether the Assessing Officer was justified in holding that the books of account of the assessee does not give the correct picture of the state of affairs and hence, those books of account needs to be rejected. 57. After considering the submissions of the assessee in paras 10 to 10.5 at pages 12 to 16 and also summarizing the submissions of the Ld. Special AR in paras 11 to 11.6 at pag es 16 to 22 and the rejoinder of the assessee in paras 12 to 12.1 at pages 22 to 24 of the order, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

u/s. 143(3) of the Act on 31-12-2009. While completing the assessment u/s. 143(3) of the Act, in the opinion of the Assessing Officer the electricity consumption shown by the assessee was at higher side as compared to the quantum of production declared by the assessee. The Assessing Officer, therefore, made the addition on the basis of the alleged suppression of the production/sales by the assessee as in his opinion the assessee should have declared or shown more production of the Ingot/Billets. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2007 -08 the Assessing Officer gave reference of the communication and order of the CCE Aurangabad received from the Central Excise office at Aurangabad. 14. The Assessing Officer has also referred to one matter in respect of the action conducted by DGCE (Intelligence) against the few brokers and sub-brokers who were involved in the trading into the Ingot/Billets and TMT Bars. The Assessing Officer also referred to the petition filed by the assessee before the Central Excise and Custom Settlemen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tax Dept. on 17-03-2006 and in consequence of the search and seizure action u/s. 132(1) the assessments of the assessee have been framed u/s. 153A r.w.s. 143(3) for the A.Ys. 2000-01 to 2006-07. It is also pertinent to note that during the course of search and seizure operation no incriminating evidence was found suggesting that the assessee has suppressed the production as compared to the consumption of the electricity. No excess stock of finished goods was also found. We also put on record tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessments in consequence of search and seizure action u/s. 132(1) of the Act were completed. 15. It is also to be taken note of the fact that even for the A.Ys. 2007-08 and 2008-09, no independent investigation or any enquiry is made by the Assessing Officer or any other Income Tax Authorities. In the assessment order the Assessing Officer has placed his reliance only on the information received from the Central Excise Authorities and the proceeding before the Settlement Commission of Centr .....

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 factory on weighment slips only and no excise duty was paid and they were involved in providing fake trading bills and challans which accompanied the vehicles carrying those consignments. As per the modus operandi adopted by the brokers they used to recover the said fake trading bills and challans after the goods reached their destination. As noted by the Assessing Officer those brokers/sub-brokers also admitted that the entire evidence was destroyed by them and they used to get the commiss .....

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 based in Jalna and the assessee is one of them. As per the investigation done by the Central Excise Authorities, the assessee who is manufacturing of Ingots/Billets supplied 288.500 MT. to Shri Om Rolling Mills Pvt. Ltd. which is engaged in the manufacturing of TMT Bars. The Assessing Officer also referred to a statement of Shri Surendra S. Peety, Managing Director of the assessee recorded on 12-01-2007, by the DGCEI who allegedly admitted that the goods supplied to Shri Om Rolling Mills 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

led by the assessee was accepted without any further addition or objection filed by the Central Excise Authorities. The Settlement Commission levied the penalty of ₹ 8,000/-. 16. The Assessing Officer also has in detail discussed the process involved in the manufacturing of Ingots as well as Billets in the assessment order. At this stage we are not concerned with the said discussion which is in Para No. 4.1 of the assessment order. The Assessing Officer in his discussion for arriving at 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

which is on the Electric Induction Furnace and as per the said article the power consumption in Induction Furnace is between 650 to 820 units per MT depending upon the input charge used. The Assessing Officer also referred to the Technical report of the IIT, which states that electricity requirement for manufacturing 1 MT of M.S. Ingots where melting scrap is used as an input, varies from 555 to 754 units and where Sponge Iron is used as an input, the electricity requirement varies from 815 to 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uction of finished goods (Para No. 4.3 of the assessment order). 17. The Assessing Officer also rejected the books of account of the assessee u/s. 145(3) of the Income-tax Act by giving the reason that the assessee has not given the true and correct picture. The Assessing Officer adopted the suppression of production determined by the CCE, Aurangabad as per his adjudication order and held that the assessee has suppressed the production and accordingly, worked the suppressed production of the A.Y .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-09 is concerned no adjustment was made in the A.Y. 2008-09 as it was the regular assessment u/s. 143(3) of the Act. Even though in the A.Y. 2008 -09, the Assessing Officer has observed that the information received from the Central Excise Authority is not relevant, but finally the assessment order is framed on the basis of the order passed by the Commissioner of Central Excise and Custom, Aurangabad as per the value determined in the adjudication order for the purpose of levy of excise duty ad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CE, Aurangabad on the basis of erratic consumption of electricity. The basis of the order of CCE, Aurangabad was the report of Dr. N.K. Batra, Professor of IIT, Kanpur. The Third Member of CESTAT in group of cases of furnace owners held that the order of CCE, Aurangabad was not sustainable and had to be cancelled in turn, relying on the ratio laid down in R.A. Casting (supra). The relevant finding of the Tribunal in turn, incorporating the order of Third Member of CESTAT in paras 19 to 19.4, whi .....

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 P/B-I. The CCE, Aurangabad has observed that during the scrutiny of electricity bills, it was noticed that the substantial amount of expenditure has incurred by the assessee towards the cost of power consumption (Primary input). He has further observed that from the scrutiny of the various records, the cost of production is much more than cost of sale value, leaving no room for other major expenses like stores, wages, salaries, cost of maintenance etc. The Ld. Commissioner has referred to 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

MT of MS Ingots varies from 1454 to 1856 units. 19.1 He relying on the Technical report of IIT, Kanpur the Ld. Commissioner observed that on calculating the production of M.S. Ingot/Billets on the basis of consumption of 1026 units (Maximum Limit) of electricity for per MT of MS Ingots produced, it is noticed that there is a huge difference in the actual/normal production and the recorded figures in the assessee s records. The Ld. CCE accordingly, observed that the assessee has willfully suppre .....

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 also gave the data of production from April, 2003 to March, 2008 in his order. He has also recorded the objections of the assessee company. It appears that the assesse demanded the cross examination of Dr. N.K. Batra, Professor of IIT, Kanpur which opinion was heavily relied on by the CCE, Aurangabad. The Ld. Commissioner observed that the said Dr. N.K. Batra was no more and hence, his cross examination was not possible. He has also discussed and referred to the different decis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore the CESTAT by filing the appeal u/s. 35B(a) of the Central Excise Act, 1944. There was a difference of the opinion between the Ld. Members of the CESTAT, i.e. Ld. Vice -President and Ld. Technical Member and the matter was referred to the Ld. Third Member to resolve the following differences: a. Whether in view of the discussion in Para 1 to 31 and in view of the decision of the Tribunal in the case of R.A. Castings Pvt. Ltd. (supra) the impugned orders are to be set aside and the appeal al .....

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 of Central Excise and Custom, Aurangabad was not sustainable and has to be cancelled. The operative part of the order of the Third Member is as under: 20. It is also seen that the Hon'ble Vice President correctly opined that the judgment in R.A. Casting (supra) is squarely applicable in the facts of the instant appeals. In R.A, Casting the electricity consumption was 2072 to 2443 units per MT, which is higher than the average electricity consumption in the instant appeals. 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

duction Furnace Association, New Delhi (Mr. Varshney); (v). 1000 to 1800 units per Ton or even higher, as per Letters dated 18.3.2008 and 25.4.2008 of same Mr. R.P. Varshney [All India Induction Furnaces Association] informing that his Article prepared in 1989-90 was for Concast Steel making [thus not for Induction Furnace], (vi). 620 to 690 units/MT as per Letter dated 22,6.2008 from Electrotherm, (vii). Letter dated 9.8.2008 of Electrotherm to a client suggesting reasons which lead to high pow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

WH/T as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India; (iii). 1427 KWH/T as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv). 650 units to 820 units/MT as per the Executive Director, All India Induction Furnace Associ ation, New Delhi (Mr. Varshney); (v). 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.LT. 1147, 20.3 After perusal of these reports, Tribunal opined that wide variation .....

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 department had proved that at that time power consumption was actually higher than that reported in Dr. Batra's report. 20.4 It is also seen that the allegations levelled in R,A, Casting (supra) were mainly- (i). Inordinately high electricity consumption without any explanation, (ii). Sale of Ingots at a huge loss over last 4-5 years, which was economically and commercially not possible, (iii). generation of fictitious profits in the balance sheets by depositing huge amount of cash with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

statutory records; (ii). Utilization of such raw material for clandestine manufacture of finished goods; (iii). Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, .discrepancy in the stock of raw materials and final products; (iv). Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, securi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g that the Revenue, not having conducted any experiment whatsoever, cannot be permitted to justify the demands .raised. Similar is the fact situation in the instant appeals, 20.5 The evidence as per Revenue in the instant appeals area). High electricity consumption without any explanation, b). Sale of Ingots at loss, which was economically and commercially not possible, c). Discrepancies in financial accounts in some cases and/or any proceedings under Income Tax, d). Claim of higher Auxiliary lo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hers and that too on different dates to adopt-the test results as the basis to arrive at a norm, which can be adopted for future. It was further held that- "23. The Tribunal has consistently taken the view that wherever electricity consumption alone is adopted as the basis to raise demands, the order of the lower authorities have been held to be unsustainable in law and set aside* and the Revenue had been directed to carry out experiments in different factories on different dates to arrive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

presumptions cannot, therefore, be sustained nor could be justified both on facts and in law. 24. The law is well settled that in every case of alleged clandestine removal, the onus is on the Revenue to prove what it alleges with positive and concrete evidence. In the absence of any positive evidence brought by the Revenue to discharge its onus, the impugned order cannot be sustained." 20.8 In the present appeals, none of the so called other evidences referred in the impugned Orders prove .....

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 installed in the factory of present appellants were in sound condition as compared to R.A. Casting (supra), however I neither could find any material in support of this argument, nor any such finding in the Orders impugned in the appeals. The Revenue sought to rely on an order passed by Tribunal in GuIabchand Silk Mills Pvt. Ltd., V/s. CCE, Hyderabad-II, 2005 (184) ELT 263, however the same was also considered in R.A. Casting (supra). It has been contention of the department that the Departmen .....

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 of probabilities. However, it cannot be merely on the basis of presumptions and assumptions, Regarding the claim of the Revenue that subsequent to passing of impugned Orders the power consumption for manufacturing one MT of Ingots has reduced in factories of all the appellants, I am of the view that it cannot be-.a" basis to sustain the findings in the impugned Orders by assuming that there could not be any reason for lower consumption of electricity during the subsequent period. I also 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

ason to discard the report and in any event the letter of Mr. R.P. Varshney suggesting that electric consumption in induction furnace can be upto 1800 units per MT is also on record. Since, varying reports are on record, the ratio of R.A. Casting (sura) is squarely applicable. 23. Revenue, also relied On the judgment of the Hon'ble Supreme Court in the case of Melton India V/s. The Commissioner Trade Tax, U.P, - 2007-TIOL-14-SC-CT, the judgment of the Hon'ble Gujarat High Court in the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d 2002-03.This was followed by the Sales Tax Tribunal in the order cited by Revenue. In the case of Rajmoti Industries, facts of the case are that for the assessment year 2005-06, the Assessing Officer rejected the books of accounts of the assessee and made various additions, not only for the reason of unexplained wide fluctuations in the productivity as compared to that in A.Y. 2004 -05, but also because the assessee therein had not recorded the work-inprogress in the books of accounts. I am 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

rmull (supar), Gulabchand Silk Mills (supra), as also Hans Casting (supra). In A.K. Alloys, 2012 (275) E.L.T. 232 (Tri. - Del.) the Tribunal followed the decision of R.A. Casting (supra) and allowed the appeal, as the demand was based mainly on the evidence of power consumption without any evidence of clandestine removal. 25. I therefore concur with the findings of the Hon'ble Vice President and in my opinion, the judgment in R.A. Casting (supra) would be squarely applicable in the facts 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

mpanies and the assessee and other companies came forward before the Settlement Commission and paid the excise duty. Hence, the investigation of the DGCEI made against the brokers and sub-brokers referred by the Assessing Officer was also before the Ld. Commissioner, Aurangabad. On perusal of the assessment orders it is clear that both the assessments are merely based on the alleged suppression of the production by estimating certain consumption of electricity i.e. 1026 Units for manufacturing o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment orders passed by the Assessing Officer and confirmed by the Ld. CIT(A) approving the estimated alleged suppression of the production/sales have no legal legs to stand. 59. The Tribunal thereafter, dealt with the arguments of Ld. Special AR that even the minority decision of Ld. Technical Member of CESTAT was a legal order. This plea of the Ld. Special AR was rejected by the Tribunal in view of the decision of Third Member of the CESTAT. 60. Another objection raised by the Ld. Special AR was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

also referred to the order of the Settlement Commission, Mumbai passed in the case of the assessee and other companies. It is true that the assessee approached the Settlement Commission when on the basis of investigation made by the DGCEI against some of the brokers and sub-brokers dealing in the Ingots/Billets and TMT Bars show cause notice was issued to the assessee company and matter was settled. Ld. CCE, Aurangabad in his order has taken in to consideration said matter while determining 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

accordingly. The argument of the assessee is accepted. No reliance has been placed on evidence relied upon in central excise proceedings. The findings in this case are based only on material and evidence that have been brought on record in the instant case. 61. The Tribunal thereafter, noted another aspect of the issue that no independent investigation was made by the Revenue, but the entire assessment was framed on the basis of information received from the Central Excise Department as well 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

with the decisions relied upon by the Ld. Special AR, which are in the context of admission of the Director in the course of investigation made by the DGCEI. 62. The second issue of maintaining of Form No.G-7 in respect of electricity consumption, was also before the CESTAT and the Tribunal overruled the arguments of the Ld. Special AR and upheld the arguments of learned Authorized Representative for the assessee that the order of CESTAT had to be applied. The relevant para of the Tribunal orde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ll 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, M umbai 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 assessee files an appeal challenging an order of the lower authority before the higher appellate authority then the entire order gets merg .....

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 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 argued to point out how the order of the CESTAT, Mumbai Bench, Mumbai is not correct. The CESTAT is a higher appellate forum under the Cu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act on 17.03.2006 against M/s. SRJ Peety Steels Pvt. Ltd. and the assessment framed under section 153A r.w.s. 143(3) of the Act. The assessee therein i.e. M/s. SRJ Peety Steels Pvt. Ltd. had filed an appeal before the Tribunal and the order of the Tribu nal is reported in 137 TTJ (Pune) 627. The Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) referred to the observations of Tribunal in earlier proceedings relating to assessment years 2000-01 to 2006-07 under section 153A r.w.s 143(3) of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he case of assessee and other companies by the Hon ble Bombay High Court and there were observations on the estimation of production based on the consumption of electricity. The Tribunal while deciding the appeal of M/s. SRJ Peety Steels Pvt. Ltd. in this regard observed as under:- 22. We have already mentioned here-in-above that in the case of the assesse, the search and seizure operation was carried out u/s. 132(1) of the Income-tax Act on 17-03-2006 and accordingly the assessment orders for 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

led income in the case of the assessee. The Assessing Officer took 1,600 Units as consumption per MT which was a lowest as shown by the assessee. The Assessing Officer, accordingly, worked out the alleged suppressed production and made the addition in all the years while completing the assessments. In sum and substance the Assessing Officer had simply taken the lowest electricity consumption for a month in a whole year and accordingly worked out the total production as per his formula and 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

quisite documents and proceeding under s. 143(1) of the Act stood completed. During the course of search no incriminating materials were found relating to aforesaid years which could have been added back in the proceedings under s. 153A. The details regarding the consumption of electricity for the production for each of the year under consideration was very well placed before the authorities below in the director s report of each year. The same has not been disputed by the Revenue. The tax audit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

4354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 32. The matter of fluctuating consumption of electricity can by no means be said to be a finding of search since all details regarding electricity vis-a-vis production were before the Department. If the Department had any doubts regarding the same, it could have been raised during the regular assessments and not in the assessment proceedings und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

articulars of subject-matters were already on record. The returns have already been accepted and no assessment as such could be said to be pending on the date of initiation of search and abated in light of the provisions of s. 153A. 34. Without prejudice to above, with regard to invoking the provisions of s. 145 of the Act, according to which in case the AO is not satisfied about the correctness or completeness of accounts of the assessee or where no method of accounting provided in sub-s. (1) o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5. Without prejudice to above, we find that having rejected the books of accounts of the assessee company for all the years under consideration, the AO devised a statistical formula on the basis of electricity consumption that was applied uniformly in order to work out certain production and resultant concealed income for each year under consideration. The AO could not substitute the same by cogent reasoning. He has simply taken the lowest electricity consumption for a month in the whole year an .....

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 like quality of raw material which is the major input, voltage of the supply, power interruptions, mechanical and electrical breakdowns and the chemical composition of the liquid metal which has to be finally cast into ingots/billets. The AO failed to appreciate these facts and did not attempt to establish a direct nexus between the production and electricity consumed for the manufacture of round/TMT bars and arrived at a conclusion that there is an excess consumption of electricity resu .....

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, rejection of books for these years purely on the ground that there has been divergence in the consumption of electricity and application of s. 144 is not at all justified. Accordingly additions have rightly been deleted in asst. yrs. 2000-01 to 2005-06 in both the cases. 23. It is clear from the order of the Tribunal in assessee s own case in the search and seizure matter as it is held that the consumption of electricity for the manufacturing of mild steel ingots/billets depends on various fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

High Court and there are categorical observations of their Lordships on the estimation of the production based on the consumption of the electricity which are as under: 4. In that regard, the Tribunal as also the Commissioner of Income Tax (Appeals) have concurrently found that the search was initiated on 17/03/2006 in the residential and business premises of SRJ Peety Steels Pvt. Ltd. Prior to the search, the returns of the income for the assessment year 2000-01 to 2005-06 had already been fil .....

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 Tax Audit Report also contains the unit production of each year, which was accepted year after year along with returns and no query was raised by the Revenue. The finding of fact dated 31/03/2008 in the order passed by the Income Tax Appellate Tribunal refers to a detailed chart. The matter of fluctuating electricity, therefore, was held to be one, and since details were made available to the Department, which could have been raised during the course of regular assessment and not u/s. 153A o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eral factors which have to be taken into consideration and while arriving at a conclusion with regard to the alleged production calculated on the basis of electricity consumption. Rejection of books for these years only on the ground that there has been divergence in the consumption of electricity, therefore, was held not justified. 24. Ld. Spl. AR for the Revenue argues that the said observations are made in the context of the assessment framed in consequence of search and seizure operation. We .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

one by the Revenue which are immediate next assessment years after the search and seizure operation against the assessee company and hence, in our opinion above findings and observation of the Tribunal as well as the Hon'ble High Court are also important to decide the present appeals more particularly on the additions based on consumption of electricity. 65. The Tribunal vide para 24 took note of the fact that in assessment years 2007-08 and 2008-09, no investigation was done by the Revenue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tirety. The relevant observations of the Tribunal are as under:- 25. In the case of ACIT Vs. A.K. Alloys (P) Ltd. (supra) in which the additions were made by the A.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 & Ser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

date and that resulted in higher amount of production. It was further observed by the Customs, Excise & Service Tax Appellate Tribunal vide para 4.2 that So far as the production quantum is concerned, there is also no evidence on record to show that the authorities intervened lawfully recording the output in the presence of witness. The Customs, Excise & Service Tax Appellate Tribunal held that therefore, a hypothetical case appears to have been made by Revenue in excessive exercise of 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

ut or clandestine removal of goods in fool proof manner known to law for which, it can be painfully said that the adjudication has no legs to stand. Both the appeals 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 repo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(supra) in the appeal filed by the assessee and its Director has categorically held that no cogent evidence has been brought on record to prove that the output had 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 o .....

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) suppressed its production and; b) it made sale of its unaccounted production, outside the books of account. Upholding the order of the CIT (Appeals) we dismiss 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) allow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g of Ingots/Billets are not sustainable. We, accordingly, delete the additions made towards the alleged suppression of production and sales at entirety and allow the Ground Nos. 3, 4, 5, 6 & 8 in the A.Y. 2007 -08 and Ground Nos. 2,3,4 & 6 in the A.Y. 2008 -09. 66. The Tribunal thereafter, held that there was no merit in the rejection of books of account and application of gross profit to determine the income in the hands of the assessee. The Tribunal also gave a finding that since the 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

cation order passed by the CCE, Aurangabad as well as the consumption of the electricity used in the manufacturing of the Ingots/Billets relying on the technical opinion of Dr. Batra, IIT, Kanpur. No othe r reasons are given by the Assessing Officer. We have already held that the Assessing Officer was not justified in making the additions towards alleged suppression of production/sales. We, therefore, hold that the rejection of the books of account on above reason cannot be upheld. We, according .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me infructuous. 29. In Ground No. 10, the assessee has raised the objection for making the addition of ₹ 37,69,582/-. The said addition is made by the Ld. CIT(A). He has observed that there is an element of the undisclosed investment in respect of the undisclosed turnover 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 ₹ 39,20,36,5 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

round No. 10 taken by the assessee. 67. The Tribunal also dismissed the appeal of the Revenue against the estimation of gross profit by the CIT(A) observing as under:- 31. We have heard the parties. The main grievance of the Revenue is against the estimation of GP by Ld. CIT(A). We have already allowed the grounds taken by the assessee on the alleged suppression of the production/sales. As the assessee has succeeded on the basic additions, the grounds taken by the Revenue do not survive as the e .....

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 of electricity as per US standard. However, the Ld. Special AR stressed that the issue raised in the present appeal was at variance. Vide his written submissions, he has raised identical grounds of appeal and had elaborately took us through various submissions and has relied on different case laws. The contention of the Ld. Special AR is sheer waste of process of law, wherein the submissions made before the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) have been verbatim repeated in 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

basis of the report of one Dr. Batra with regard to electric consumption and the Third Member of CESTAT had deleted the aforesaid addition made under the Excise law. However, in the case of assessee before us, there is no order of CCE, Aurangabad or of CESTAT and the Assessing Officer worked out the addition on the basis of erratic consumption of electricity vis-à-vis the consumption as per US standards after giving benefit of 25%. Following the same line of reasoning as in the order of 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

ion raised by the Ld. Special AR before us during the course of hearing of the bunch of appeals was that it had moved Miscellaneous Application against the order of Tribunal dated 16.01.2015 and the hearing of the present appeals be kept in abeyance. After hearing the appeals in the present bunch of appeals, the Miscellaneous Application filed by the Revenue in M/s. SRJ Peety Steels Pvt. Ltd. (supra) was also fixed for hearing and the same was heard on 19.06.2015. We have by an order of even dat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pra) also stands dismissed. 71. Further, the Tribunal in the case of ano ther Rolling Mills i.e. Mahaveer Steel Re-Rolling Mills Vs. ACIT in ITA Nos.1072 to 1076/PN/2012 and ACIT Vs. Mahaveer Steel Re-Rolling Mills in ITA Nos.1446 to 1450/PN/2012, relating to assessment years 2004-05 to 2008-09 vide order dated 05.03.2015 had applied the ratio laid down by the Tribunal in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and held that the addition made towards alleged suppressed production and sales on 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

conjuncture and surmises and the same cannot be accepted. We hereby delete the same. 72. Another aspect of the issue in relation to the addition on account of suppressed production, raised before us is that where the Assessing Officer had evidence of clandestine removal of material without payment of Excise duty, the addition could be upheld in the hands of the assessee by extrapolating the sales for period of 300 days. The Ld. Special AR for the said proposition relied on the decision of the 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

claration of clandestine removal of material without payment of Excise duty was on account of search and seizure proceedings conducted by DGCEI on certain brokers and sub-brokers. Consequent thereto, Shri SRJ Peety, person in-charge of Shree Om Rolling Mills Pvt. Ltd. admitted to the said clandestine removal of material without payment of Excise duty and approached the Settlement Commission for payment of Excise duty on the said amount. The Settlement Commission accepted the petition of the asse .....

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. The Assessing Officer on the other hand, was of the view that the assessee had not correctly disclosed the production of TMT Bars. The basis for such assumption was the electricity consumption, for which the Assessing Officer placed reliance on the results of electricity consumption under US standards against which, handicap of 25% was given. The Assessing Officer applying the formula worked out the suppressed production and sales in the hands of the assessee. We in the paras hereinabove have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee. He stressed that even where the evidence of clandestine removal of material without payment of Excise duty and suppression of income was found for the part of the year, then the Assessing Officer can estimate the additional income for whole of the year. Merely because the Assessing Officer had adopted another methodology of suppression, the addition in the hands of the assessee could be sustained on the basis of extrapolation of sales for 300 days, in view of the admission of the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

epted by the Settlement Commission in toto. The Ld. Special AR objected to the plea of assessee that declaration was to buy peace of mind, but we find no merit in the same, since the object of moving petition before the Settlement Commission is to settle the dispute. In cases where any settlement petition is moved by the claimants, the authorities have the power to re-visit the offer made by the claimant and where any adverse material is available against the person making the offer, then the fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In cases where the petition is accepted in the hands of the assessee by the Settlement Commission, then no further addition can be made in the hands of the assessee on account of alleged clandestine removal of material without payment of Excise duty or suppressed sales for the balance period, in the absence of any evidence found against the assessee for the balance period. 74. Another aspect of the issue is that though the factum of the assessee filing the petition before the Settlement Commissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

75. The Ld. Special AR vehemently relied on the ratio laid down by the Tribunal in assessee s own case reported in 137 TTJ (Pune) 627, which in turn has been approved by the Hon ble Bombay High Court. It may be pointed out that the facts of the case before the Tribunal in assessment year 2006-07 are at variance. The addition in the hands of the assessee was made on the basis of search and seizure action carried out by the Income-tax Department and the documents found during the course of search .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted against the assessee, merely because the addition was made in the hands of the assessee in a preceding year, we find no merit in the submissions of the assessee that following the same ratio, extrapolation of sales for the assessment year 2007-08 should be made in the hands of the assessee, in view of the settlement petition by the assessee before the Settlement Commission. The perusal of the assessment order and the order of CIT(A) reflects no such basis was adopted for making the addition .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oresaid addition, which we in the paras hereinabove had already deleted. The Ld. Special AR pointed out that the said action of the Assessing Officer was one of the methodologies for working out the additional income of the assessee. We find no merit in the stand of the Ld. Special AR since no investigation or inquiry was carried out by the Assessing Officer and merely on the basis of petition filed before the Settlement Commission, which in turn has been accepted, no further addition can be mad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ded to the Central Excise Department pursuant to which, order levying additional Excise duty was passed by the Excise Commissioner. However, the Tribunal cancelled the Excise demand on the ground that there was no corroborative evidence of clandestine removal of material without payment of Excise duty was found from the possession of the assessee by the Excise authorities. 77. Following the same analogy of reasoning, where the evidence of clandestine removal of material without payment of Excise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

record establishing suppressed production and / or its sale outside the books of account. 78. The Ld. Special AR time and again stressed that the assessee had made admission before the Assessing Officer and this was the evidence available with the Assessing Officer. The alleged admission before the Assessing Officer was only by way of the additional income offered by the assessee, which was relatable to the clandestine removal of material without payment of Excise duty admitted before the DGCEI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sing Officer and CIT(A) and the Tribunal cannot traverse beyond the orders of Assessing Officer and CIT(A). Admittedly, the parties can raise an additional plea before the Tribunal justifying the addition. However, the said plea has to be decided keeping in mind the facts of the case. Though both the Assessing Officer and CIT(A) had not made the addition in the hands of the assessee on the basis of petition filed before the Settlement Commission, but had adopted the erratic consumption of electr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t before the Excise Department was an important piece of evidence. We are in agreement with the said proposition laid down by the Hon ble Supreme Court in Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another (supra), but the statement made before any of the authorities is limited to the amounts surrendered vide the said settlement and no inference could be drawn against the assessee for extrapolating the same for full year and for the balance year and in other years, other than 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

f unaccounted sales for part of the period during the course of search. The Assessing Officer on the said basis assumed unaccounted sales during the entire year, which was deleted by the CIT(A) and the Tribunal. The Hon ble Delhi High Court observed that assumption of Assessing Officer may have perhaps been valid if the search had been conducted after the accounting year and the books of account had brought some discrepancy. 83. Similar proposition has been laid down by the Hon ble Bombay High C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for which the assessee had filed a petition before the Settlement Commission and income on that account was declared by the assessee. The Tribunal held that no further addition could be made in the hands of the assessee for the balance period. The Tribunal further held that hypothetical calculation of turnover and estimation of gross profit merely on guess work and presumption was not sustainable in law. No details were available to the Assessing Officer to arrive at such figure or had there be .....

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 Tribunal distinguished the ratio laid down in CST Vs. H.M. Esufali H.M. Abdulali (supra). The Ld. Special AR relied on the said decision and in view of the decision of coordinate Bench on similar issue as before us, we find no merit in the reliance placed upon by the Ld. Special AR. 85. The Ld. Special AR during the course of arguments before the Tribunal in Miscellaneous Application filed in M/s. SRJ Peety Steels Pvt. Ltd. vide MA No.17/PN/2015 had raised the issue of extrapolation of sales 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

of suppressed sales was adjudicated by the Tribunal by observing as under:- 41. Before closing the issue, in the interest of justice, we would like to adjudicate the issue of extrapolation of suppressed sales on account of settlement petition made by the assessee. Admittedly, during the course of search and seizure operation on certain brokers, evidences of clandestine removal of material without payment of Excise duty, was found against the assessee. However, no search and seizure operation wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is for the financial year and is not restricted to the number of days for which it has offered. In other words, once a person makes a settlement petition for a particular year on account of the evidence found for part of the period and once the petition is accepted in the hands of the assessee, no further addition can be made on account of alleged clandestine removal of goods or suppressed sales, in the absence of evidence for the balance period. The above said ratios have been laid down in Cha .....

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 that what is to be assessed under the said Chapter is undisclosed income of the block period and not the total income or loss of the previous year required to be assessed under regular assessment under section 143(3) of the Act. The Hon ble Bombay High Court held that such regular assessment stands on a different footing in contrast to the exercise undertaken by the Assessing Officer under Chapter XIV-B, where the Assessing Officer had to assess only the undisclosed income. However, 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

placed as the addition in the hands of the assessee in that year was made on account of search and seizure operations carried out by the Income-tax Department, wherein sales outside books were found for few days. However, no independent investigation / inquiry by the Income-tax Department has been made before completing assessment proceedings against the assessee. Another aspect of the issue is that the petition before the Settlement Commission has been made by the assessee in assessment year 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessment proceedings, but the addition having been made on only on the issue of erratic consumption of electricity, which is the basis of order passed by CCE, Aurangabad, who was also in knowledge of the clandestine removal of material and the investigation carried out by the DGCEI and the petition before the Settlement Commission, even the Third Member of CESTAT was aware of all these proceedings, but since the settlement petition filed by the assessee had been accepted in toto by the Sett .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rn relying on the ratio laid down by the apex court in Sumati Dayal Vs. CIT (supra) and Collector of Customs Madras and others Vs. D. Bhoormull (supra), which was also relied upon by the Ld. Special AR in M/s. SRJ Peety Steels Pvt. Ltd. (supra) and the same had been considered by the Tribunal. During the course of hearing, the Ld. Special AR relied on series of other decisions, but the ratios laid down by the said judgments are distinguishable and not applicable to the facts of the present case. .....

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 filing petition before the Settlement Commission, which in turn, has also been accepted by the Settlement Commission. Merely because the Settlement Commission accepted the claim of the assessee of additional Excise duty payable on the said clandestine removal of material without payment of Excise duty does not establish the case of the Revenue that the said figures of additional production should be utilized for extrapolating the sales in the hands of the assessee for the entire year. Admitted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ingly, we direct the Assessing Officer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of material without payment of Excise duty and in those years 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

spective years or before the Excise authorities. 89. Since we have deleted the addition in the hands of assessee on both accounts i.e. addition made on account of erratic consumption of electricity and addition proposed on the basis of evidence found for the part of the year of clandestine removal of material without payment of Excise duty, next addition made in the hands of the assessee i.e. alleged investment in the purchases for effecting such sales which goods have been clandestinely removed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be added in the hands of the assessee is equivalent to profits on suppressed production @ 4% or actual GP rate declared by the assessee whichever was higher. In view thereof, we pass this corrigendum order and the para 88 i.e. from line 17 to 22 would now be substituted by following para. 88. …… 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 ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aterial without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. Accordingly, we direct the Assessing Officer to verify from the records for the respective years and include in the hands of assessee, the additional income @ 4% or actual G.P. rate declared by the assessee for that year, whichever is higher, on value of such admitted clandestine removal of material without payment of Excise duty, 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

d production has been detected and admitted by the assessee. Further, the assessee has not moved any petition before the Settlement Commission or any other Excise authorities. In the totality of the above said facts and circumstances and in the absence of any evidence collected by the Assessing Officer of alleged removal of goods without payment of Excise duty, merely on the basis of estimation of alleged suppressed production in the earlier years i.e. relating to assessment years 2006- 07 and 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| 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