AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 1228
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....the assessee submitted that as per the instructions of the assessee Ground Nos. 1 and 2 as well as Ground No. 11 are not pressed. As the Ground Nos. 1, 2 and 11 are not pressed, the same are dismissed as not pressed. 3. The common issue in both the appeals are the addition made by the Assessing Officer for alleged suppression of production/sales of Rs. 39,20,36,546/- and Rs. 40,75,72,486/- in the A.Ys. 2007-08 and 2008-09 respectively. So far as the A.Y. 2007-08 is concerned the above issue arises from Ground Nos. 3 to 6, 8 and in A.Y. 2008-09 the said issue arises from Ground Nos. 2, 3, 4 and 6. 4. The facts pertain to the above issue are as under. The assessee company is engaged in the manufacturing of MS Ingots/Billets. So far as A.Y. 2007-08 is concerned, the regular assessment of the assessee was completed u/s. 143(3) of the Act vide assessment order dated 31-12- 2009. As noted by the Assessing Officer the office of the Commissioner of Central Excise and Customs, Aurangabad (in short referred to as the CCE, Aurangabad) vide their letter dated 29-03-2010 informed the Assessing Officer that the assessee had indulged in manufacture of finished goods and removal of the same with....
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....e manufacturers admitted that they had supplied TMT bars to the brokers without paying excise duty and they confirmed the modus operandi as narrated by Shri Faruk Shaikh and Shri Pawan Garg. The Assessing Officer has noted that consequent to admission by the suppliers of unaccounted TMT bars, they also admitted that they had manufactured these TMT bars from raw material viz., Ingots and Billets from unaccounted receipt of raw material. As observed by the Assessing Officer the suppliers identified the Ingots/Billets from alleged unaccounted receipts of raw material. The Assessing Officer has given the names of the parties in Para No. 2.7 of the assessment order against whom the investigation was carried out by the Central Excise Authorities and the name of the assessee appears at Sl. No. 10 who had allegedly supplied Ingots/Billets to its sister concern Shri Om Rolling Mills Pvt. Ltd. to the extent of 288.500 MT. 4.3 On the basis of the investigation made by the Directorate General of Central Excise Intelligence (in short the "DGCEI") by initiating Searches against some brokers and sub-brokers the Central Excise Department issued Show Cause Notices to the assessee and other manufac....
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....ngots and Billets and we would like to reproduce of the same in the words of the Assessing Officer:- "4.2 Electricity is a major cost input in process of manufacture of ingots/billets and accounts for major share of expenses. Manufacturers are sanctioned load capacity on the basis of unit capacity. Unit capacity includes usage for furnace load and auxiliary load. Major load factor is on account of furnace. The Central Excise Department, Aurangabad has made a detailed study on electricity units consumed per metric tonne of production and made it the basis of their conclusion that the assessee has indulged in suppression of production. All mini steel plants have express feeders of 33KVA line which provides uninterrupted non-fluctuating power to the plants. Further consistency in power supply is maintained by use of power control panels. Consumption per metric tone of production in a small furnace will be marginally more than consumption in a large furnace. A 6 MT furnace will consume slightly more power than a 25 MT furnace per MT of production. However this more than offset by radiation losses which is less in a small furnace than a bigger furnace. This is because of the bigger siz....
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....y for per metric ton should not be adopted for the purpose of calculation of suppressed production as per the Commissioner of Central Excise and Customs, Aurangabad's SCN for the reason that, it is based on the technical analysis with expert opinion, detailed reasoning and data collected. In response to the same by and large the assessee has reiterated the stand taken before the Commissioner of Central Excise, Aurangabad which is not on the sound footings and the same had been rejected with elaborate reasoning and lucid justification. In view of the above as also the detailed comparative analysis of data prepared from the assessee's books of accounts, peer analysis and details furnished, it is apparent that, the rate of units of electricity per metric ton adopted by the honourable Commissioner of Central Excise and Customs, Aurangabad are very much reasonable fair and justified, I conclude that the rates for calculation of suppressed production in assessee's case adopted by Central Excise and Customs, Aurangabad are absolutely reasonable. The same is adopted accordingly for the purpose of calculation of unaccounted production of finished goods." 7. In the opinion of th....
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....tioned in para-5 above. On perusal of the same, it has been observed as under:- (1) The appellant has clandestinely removed MS ingots/billets and has evaded Excise Duty and has not accounted for the said sale of MS ingots/billets as is evident from the investigation and enquiries made by Director General of Central Excise Intelligence (DGCEI). (2) The appellant has also admitted the said clandestine removal of goods in the statement recorded in investigation by DGCEI and also before the Settlement Commission of Customs and Excise Department and has paid Excise Duty and the Settlement Commission has levied token penalty in respect of the said clandestine sale out of the books. (3) The Commissioner of Excise in his order and the A.O. have reasonably estimated, after considering various reports and studies in respect of electricity consumption required for producing MS ingots/billets, at 1026 electricity units per Metric Ton. (4) The A.O. has also pointed out that there is substantial variation in various months and in respect of various manufacturers of MS ingots/billets in electricity consumption required for the quantum of goods produced, which is abnormal. The A.O. has also no....
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....disclosed production sold before Hon'ble CESTAT. The Hon'ble Appellate Tribunal, West Zonal Bench has passed order dated 01/03/2011 on the said stay petition. In 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 ttroborative 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-the appellant are as under:- "(a) Cost of electricity and raw material shown to be 125% of selling price of ingots. (b) Sanctioned auxiliary load was only 7. 8% of the total sanctioned load but claimed to be 25% by appellant in statement; (c) Commissioner of Income Tax (Appeals)' confirmed net addition of Income of Rs. 23.5 lakhs on account of suppressed production of ingots for assessment years 2001-02 to 2006- 07. (d) Clandestine clearance for specific case admitted before Settlement Commission. Similar observations have been made by the Hon'ble Appellate Tribunal ....
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....ircumstances of this case whether the Assessing Officer was justified in making the addition of Rs. 39,20,36,546/- in the A.Y. 2007-08 and Rs. 40,75,72,486/- in the A.Y. 2008-09 on alleged suppression of production/sales 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. 10. The Ld. AR for the assessee opened his argument by submitting that both the assessments are based on the investigation made by the Central Excise Authorities as well as the adjudication order passed by the CCE, Aurangabad. He submits that there was a search and seizer action against the assessee u/s. 132(1) of the Act on 17-03-2006 and on the basis of search and seizure action assessment u/s. 153A for the A.Yrs. 2000-2001 to 2006-07 were framed. He submits that in the intensive search and seizure operation, it was very easy for the DI (Inv.) of the Revenue to verify the truthfulness of the charge now made against the assessee. He submits that so far as the assessments framed in consequence of the search and seizure action against the assessee....
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.... with the case of A.K. Alloys 17 ITR 424 (Chnd)(Trib.) and addition cannot be made mere by based on the technical opinion on the electricity consumption for production of Ingots/Billets per MT. Ld. AR placed his reliance on the following decisions:- i) ACIT vs. A.K. Alloys Pvt. Ltd. 17 ITR 424 (Chnd)(Trib.) ii) ACIT vs. Arora Alloys Ltd. 27 taxmann.com 140 iii) Vishal Paper Industries vs. JCIT 32 taxmann.com 247 iv) ACIT vs. Khambhatta Family Trust 62 TTJ 685 10.2 Referring to the petition filed by the assessee before the Settlement Commission (The Custom and Central Excise), he submits that some third party investigation was carried out by the Central Excise Department and as per the alleged admissions and statements of the brokers/sub-brokers that the assessee company has sold 288.500 MTs of Ingots/Billets to it's sister concern i.e. Om Rolling Mills Pvt. Ltd. The assessee decided to approach the Settlement Commission as a businessman to avoid harassment by Excise Authorities and admitted that to extent of 288.500 MTS the assessee has not paid excise duty and goods were removed. He referred to Page No. 212 of the P/B-1, where the copy of the order passed by the Custom an....
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....Centre 58 SOT 90 v. Sanjeev R. Arora vs. ACIT 29 taxmann.com 287 vi. M/s. Bedrock Ltd. vs. DCIT dated 25-07-2012 vii. Amiti Software Technologies Pvt. Ltd. vs. ITO dated 07-02-2014 viii. ADIT (E) vs. Vodithala Education Society 39 taxmann.com 100 10.5 He pleaded for allowing the grounds taken by the assessee and deleting the entire addition made by the Assessing Officer and on principles confirmed by the Ld. CIT(A). 11. The Ld. Spl. AR for the Revenue opened his argument by submitting that there is an evidence in possession of the Assessing Officer in respect of the suppression of the production and clandestine removal of goods by the assessee and there is no merits in the contention of the assessee company that the Assessing Officer has simply relied upon the hypothetical calculations of production merely on the basis of consumption of electricity. He referred to the assessment order and submits that in Para No. 3.1 the Assessing Officer has observed that the confessional statement of Shri Surendra S. Petty, dated 12-01-2007 who is the Managing Director of the assessee company, before the DGCEI on clandestine removal goods and sale of 285 MT of ingots to Shree Om Rolling Mil....
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....here the copy of the order passed by Settlement Commission is placed and he submits that there is a categorical observation by the Settlement Commission that the assessee was indulged along with the other companies, individually and collectively for evasion of duties. He placed his heavy reliance on the said observation of the Settlement Commission and submits that the assessee has not challenged the order of the Settlement Commission before any superior forum when the adverse finding has been given against the assessee. He submits that assessee has repeatedly harped that solely with a view to buy peace of mind and avoid litigation, they have approached the Customs and Central Excise Settlement Commission, Mumbai and therefore no adverse inference can be drawn against them. In an application filed before the Settlement Commission it is mentioned that the assessee admits the duty liability. He submits that there is no question of suo moto admitting clandestine removal of goods without payment of excise duty by the assessee company before the Excise Authorities but there was conclusive evidence against them as per the investigation made by the DGCEI. He placed his reliance on the dec....
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....increase in the production. He relied on the decision of the Hon'ble Supreme Court in the case of Melton India vs. The Commissioner Trade Tax U.P.. He also placed his reliance of the decision of the Hon'ble' Supreme Court in the case of Triveni Rubber and Plastics vs. Collector of Central Excise, Cochin in support of his argument that if there is an admission of suppression of turnover then consumption of electricity can form the basis of estimation of suppression. He submits that it is a well settled law that in case of concealment of income direct evidence is seldom available and the case has to be decided on theory of preponderance of probability. In support of this argument he relied on the following precedents:- i. Sumati Dayal vs. CIT 214 ITR 801 (SC). ii. Collector of Customs Madras and others vs. D. Bhoormull. 11.3 He argues that on the doctrine of preponderance of probability the action of the Assessing Officer to estimate suppression of the sales on the basis of the electricity consumption has to be upheld. 11.4 Ld. Spl. AR submits that the assessee company has vehemently argued that in the case of R.A. Castings Pvt. Ltd. 237 E.L.T. 674 (Tri.-Del.) it is h....
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.... the decision of the Hon'ble Allahabad High Court was summarily dismissed but summary dismissal of the SLP does not lay down any law nor it is a binding precedent. He referred to the decision of the Ld. Third Member of the CESTAT, Mumbai in the appeal of the assessee company being No.1319/09/Mum and submits that the Ld. Third Member has held that estimation of alleged suppressed turnover on the basis of mere consumption of electricity was impermissible and the order of the CCE, Aurangabad was cancelled. He submits that the decision of the Third Member is not binding on the Hon'ble Bench while deciding the present appeals for the reason that the decision of CESTAT does not have any binding force on ITAT which is constituted under the Income Tax Act. Both the tribunals are constituted under different enactments and discharge their functions independently under respective enactment. However, the decision of one Tribunal may have persuasive value for other Tribunal in certain cases where issues are identical. 11.6 Ld. Spl. AR for the Revenue vehemently argues that the Hon'ble Third Member of the CESTAT has not considered the evidence about the clandestine removal of goods ....
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....e litigation as the provisions of Central Excise Act are very harsh. Ld. AR referred to the order of the Settlement Commission and submits that it is a common summary order including the assessee and other companies and production of 288.50 MTs admitted before the Settlement Commission was also offered for tax in the Income-tax proceedings. Ld. AR submits that Ld. Spl. AR for the Revenue placed his heavy reliance on the dissenting order of Ld. Technical Member of the CESTAT when it is principle of law that only the order passed by majority opinion is a order of the Court or Tribunal and is binding and in the present case by the majority decision of the CESTAT, the order of the Ld. Commissioner of Central Excise and Custom, Aurangabad was knocked down. He argues that the entire case of the Department is based on the so called technical opinion of Dr. Batra who was the Professor of IIT, Kanpur but the said report was never made available to the assessee company. He argues that the technical report by Dr. Batra lack the sanctity as it is not clear that under what condition and in which place and factory the study was conducted. 12.1 He argues that nothing is there on record to make s....
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....eged evasion of excise duty, the Assessing Officer initiated the re-assessment proceedings for A.Y. 2007-08 against the assessee company u/s. 147 of the Act. In reasons recorded by the Assessing Officer while issuing the notice to the assessee company u/s. 147 for A.Y. 2007-08 the Assessing 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 Settlement Commission, Mumbai Bench, Mumbai for waiver of penalty, interest and for getting immunity from a prosecution. The Assessing Officer proceeded to decide the alleged suppression of production by the assessee admittedly which was based on the information received from Central Excise Authority as well as the adjudication Order of the CCE, Aurangabad. It is pertinent to note here that in this case that there was a search and seiz....
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....eir 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 commission of Rs. 100/- per MT. The Assessing Officer has discussed the information gathered by the DGCEI, Zonal Unit, Mumbai in Para Nos. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 and 2.7 of the assessment order. So far as action against the brokers and sub-brokers are concerned the Central Excise Authority issued show cause to the assessee as well as the other manufacturers who were involved in clearing the excisable goods without payment of duty. All the manufacturers of the Ingots/Billets and TMT Bars were based in Jalna and the 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. Ltd. i.e. Ingots/ Billets, were remo....
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....me for the purpose of calculation of alleged unaccounted production 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. 2007-08 as under:- A.Y. Suppressed Production M.T. Rate per M.T. Rs. Assessable Value of Suppressed Production Rs. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. In the A.Y. 2007-08, the Assessing Officer gave the set off of Rs. 8,44,01,504/- which was in respect of the addition made by the Assessing Officer while completing the assessment u/s. 143(3) of the Act in the order dated 31-12-2008 and made the net addition of Rs. 30,76,35,042/-. So far as A.Y. 2008-09 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....
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....ity 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 suppressed the figures of production of Billets/MS Ingots in their records with an intent to evade payment of Central Excise Duty and, have involved themselves in the clandestine removal of final products. He also referred to the show cause notice issued by the DGCEI to the assessee which matter was ultimately settled by the assessee company in the Settlement Commission. The Ld. Commissioner also referred to non-maintenance of the proper electricity consumption record more particularly in Form G-7. The 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 ....
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....per MT as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv). 650 to 820 units/MT as per Article of the Executive Director, All India Induction Furnace Association, 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 powerconsumption, and another Letter dated 5.4.2008 of Electrotherm agreeing-., with .the views of Induction Furnace "Association and informing that it is very difficult to define any range of power consumption. 20.2 As against this, in para 20 of the Order, the Tribunal in R.A. Casting (supra) considered different electricity consumption figures for production of 1 MT of MS Ingots, reported in following different reports:- (i). 555 to 1046 (KWH/T) as per Dr. Batra's report; (ii). 1800 KWH/T as per the report by Joint Plant Com....
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.... 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 allowed for want of evidence relating to the above points, with further finding 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 are:- a). 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 load, e). Past case settled before Settlement Commission, 20.7 So far as the proceedings already settled are concerned....
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....actory 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 Department is not required to prove its case to its mathematical precision, by relying on judgment of the Hon'ble Supreme Court in the case of D. Bhoormull-1983 (13) ELT 1546 (SC), relied upon by the Commissioner as well as the Hon'ble Member (Technical). It is seen that even this judgment was considered in R.A. Casting (supra), 21. There can be no dispute on the fact that in adjudication proceedings, the charge of clandestine removal is definitely to be established on the basis of preponderance 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 M....
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....e impugned Order. In none of these cases any theoretical repot was relied for arriving at deemed production. 24. Further, in Sarvana Alloys Steels Pvt Ltd, 2011- (274) ELT 248 (Tri-Bang.) similar order based on power consumption was held unsustainable and the appeal was allowed after considering inter alia the judgments in D. Bhoormull (supar), Gulabchand Silk 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 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 investigati....
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....er. (3) Omitted (4) The President or any other member of the Appellate Tribunal authorized in this behalf by the President may, sitting singly, dispose of any case 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 duty involved; or (c) the amount of fine or penalty involved, does not exceed ten lakhs rupees. (5) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority; but if the members are equally divided, they shall state the point or points on which they differ and make a reference to the President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other members of the....
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....rdingly. 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." 21. Though the Ld. Spl. AR has referred to and relied on the different judgments of the Hon'ble Supreme Court more particularly on the binding nature of the 'admission' of any person-Sec. 17, Sec. 106 and Sec. 115 of the Indian Evidence Act etc. but the fact remains that in the case of the present assessee no independent investigation is made by the Revenue but the entire assessments are framed on the basis of the information received from the Central Excise Department as well as the adjudication order 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 and 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 appell....
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....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. 139(1) of the Act accompanied by all requisite 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 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 s....
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....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 and treated the production in that month as the correct production and then proceeded to arrive at his production figure by multiplying the production in the books by the ratio of production to the electricity consumption for the month in which electricity consumption was minimum. The method of computing the so-called suppressed production is not justified in absence of sound basis for same. 36. The consumption of the electricity for the manufacture of mild steel ingots/billets depends on various factors like quality of raw material which is the major input, voltage of the supply, power interruptions, mechanical and electrical breakdowns and the chemical composition of the liquid metal which has to be finally cast into ingots/billets. ....
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....rse of search, no incriminating material was found relating to the said years, which could have been added in the proceedings u/s. 153A. The details regarding the consumption of electricity for the production for each of the year under consideration was placed before the Authorities in the Director's Report of each year. The same has not been disputed by the Revenue. The Tax Audit Report also contains 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 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 o....
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....gh power connection supported by evidence was made on a particular date and that resulted in higher amount of production. It was further observed by the Customs, Excise and 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 and 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 and Service Tax Appellate Tribunal further considered the retraction statement of the Director of the assessee company and vide para 6 held as under:- "6. We would have certainly come to the rescue of Revenue had the statement been recorded in a manner known to law and cogent evidence had been brought to record to prove output cleared clandestinely. No cogent evidence is on record to show either suppression of purchase of input or clandestine removal of goods in fool proof manner known to law for which, it can be painfully said that the adjudication has no legs to....
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....ged the order of Ld. CIT(A) before the Tribunal. It was held that there was no justification to support the said addition and the Revenue's appeal was dismissed. In the light of our above discussion, we are of the opinion that the additions made by the Assessing Officer and confirmed by Ld. CIT(A) in both the assessment years based on the order passed by the CCE, Aurangabad as well as on the basis of consumption of the electricity used in manufacturing of Ingots/Billets are not sustainable. We, accordingly, delete the additions made towards the alleged suppression of production and sales at entirety and allow the Ground Nos. 3, 4, 5, 6 and 8 in the A.Y. 2007-08 and Ground Nos. 2,3,4 and 6 in the A.Y. 2008-09. 27. The next issue is the rejection of books of account by the Assessing Officer in both the assessment years. We find that the only reason for rejection of the books of account was the alleged suppression of production/sales and which was determined on the basis of the adjudication order passed by the CCE, 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....