TaxTMI 
TaxTMI 
2014 (10) TMI 890
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.....A. No. 230 of 2003 is filed by the Department. 2. For the sake of convenience, the parties are referred to as the Revenue and the assessee. 3. The assessee is a company undertaking the activity of manufacture of Alloy Metals. It has also a sister concern, by name, M/s. Srinivasa Ferro Alloys Ltd. (SFAL). Each company is an independent assessee. 4. A search was conducted in the premises of SFAL, on September 27, 1996. The managing director for both the companies is said to be the same individual. During the course of search, his statement was recorded. According to the Revenue, the discrepancy between the undisclosed income and unexplained one, to the extent of Rs. 1.03 crores was noticed. Proceedings were initiated under Chapter X....
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....epresenting the alleged unexplained share capital. The order of assessment in respect of other items was upheld. While the Department felt aggrieved by the said deletion, the assessee is of the view that the order of assessment ought to have been set aside, in its entirety. 7. Sri S. R. Ashok, learned senior counsel for the Revenue, submits that the search of the premises of the said concern has yielded valuable information, and on the basis of the same, the block assessment order was passed, duly giving opportunity to the assessee. He contends that the findings arrived at by the Assessing Officer were based on the material that was seized in the course of search and on comparison of the same with the RG- I register maintained under the ....
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...., any incriminating material or unexplained wealth or bullion, is discovered, the Act provides for passing of an order of block assessment, covering a period of 10 years, preceding the date of search. The manner in which the assessment must be made in such cases is provided for in Chapter XIV-B of the Act. The statement recorded under section 132(4) of the Act also assumes significance in this behalf. 10. In the instant case, the assessee is a manufacturer of manganese alloys. several registers are maintained and a typical procedure is followed for manufacture of the alloys of the relevant description. The finished product is subject to levy of excise duty. For all industries, that undertake the activity of processing or manufacturing me....
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....of the exercise may not be accurate. Just a Superintendent of Central Excise Department, cannot be expected to verify the correctness of the Income-tax returns, submitted by a manufacturer, it is not at all safe for any Income-tax Officer to undertake verification of the records referable to the Department of Central Excise. Unfortunately, this is what exactly has happened in the instant case. A perusal of the order of assessment discloses that the Assessing Officer did not feel any inhibition to express his views on a matter, which does not genuinely fall in his purview. In a way, he has undertaken certain activity, which a Superintendent of Excise Department would have hesitated. For instance, in paragraph 3.7 of the order, the following ....
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....as within reasonable limits. It may be mentioned here that the burning loss of 56.33 per cent. the A3/24 register. The production processes for the production of manganese based alloys are same in the case of the assessee company and M/s. SFAL. There is no reason why the burning loss should be higher in the case of the assessee. Therefore, the objection of the assessee for the adoption of the same standard of burning loss as in the case of its sister company does not hold good. The higher claim of burning loss is on account of the fact that the assessee has carried out unaccounted production which is also evidenced by the existence of excess stocks of finished products as discussed above. In the background of the above discussion, the un....
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.... conclusions that the undisclosed income on account of the improper disclosure, or suppression of the production for various assessment years is Rs. 1,22,86,712. Even the expenditure incurred for purchase of raw materials became the subject matter of extensive discussion, without indicating as to how the purchase of raw material can have any impact upon the income of an assessee, that too, of a manufacturing company. In the order of assessment, which runs into 31 closely typed pages, such instances are galore. 14. Obviously, to analyse and understand the approach of the Assessing Officer, the Tribunal discussed the matter at length. The order passed by it runs into 48 pages. At more places than one, it was pointed out that the stock avai....