TaxTMI 
TaxTMI 
2018 (2) TMI 1404
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....olkata-II Commissionerate / the Respondent No.1 to the petition. By the order impugned dated the 6th of February, 2017, the respondent No.1 (for short, only the order or, the said order), after quoting Section 14AA (supra) opined as follows :- "I am also inclined to go with observation of the Hon'ble High Court, Calcutta and I do believe that as per the available records, there were huge over utilization of credit by the notice in the later year than in the previous year and accordingly pass the following order. It is to mention here that after reorganization of Commissionerates, Central Excise documents in respect of the assesses working under the jurisdiction of Kol - II Commissionerate is audited by Audit -I Commissione....
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....that the revenue respondents/excise department are required to operate under two obligations, viz. to pass a reasoned order and, to discharge the principles of natural justice while exercising powers under Section 14AA (supra). The operative portion of the order dated 6th December, 2016 is reproduced below : - "In Berger Paints India Ltd. (supra) the provisions of Section 14AA of the Central Excise Act, 1944 were considered. The authorities were found - to have two obligations, that is, the obligation to pass a reasoned order and secondly, to adhere to the principles of natural justice to discharge while an authority seeks to exercise the powers under Section 14AA. In the present case, although the impugned order is a reasoned o....
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....h by statute and, by the order of Court dated 6th December, 2016 (supra), ought to have flagged his disagreement with the reasons furnished on behalf of the petitioner since, the reference to a special audit under Section 14AA is not the same as an audit simplicitor under Section 14A of the 1944 Act. The clear prescription for a reference under Section 14AA is for the respondent No.1 to believe, on a reasoned assessment of facts, that the manufacturer of excisable goods has avoided/utilised the credit of duty beyond normal limits or, by reason of fraud, collusion, wilful misstatement or suppression of fact. It is the emphatic contention of Ld. Counsel for the petitioner that the order impugned does not rise above or at least upto the thresh....
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....edit claimed/utilised, the petitioner/assessee company ought not to anticipate worst conclusions. Having heard the parties and considering the materials placed, this Court must respectfully notice the law on the point of reasons to believe as connected to revenue/fiscal statutes. Reference may be first made to the authority of 1976 (103) ITR 437 (SC), in the matter of Income-Tax Officer, I Ward, Distt. VI, Calcutta & Anr. vs. Lakhmani Mewal Das (Coram: HR Khanna and Hans Raj, JJ). The relevant observations are as follows:- "The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment ....
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....sion "reason to believe" in section 147 would mean case or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. What is required is "reason to believe" but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at that stage. Thi....