TaxTMI 
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2021 (11) TMI 708
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....The issues being common, interlinked and similar and arising from a common order of CIT(A), all the captioned Revenues' appeals in respect of the captioned assessee have been heard together and are being disposed of by this common order. 3. The Revenue has raised several grounds in its appeals some which transcends to all the assessment years in appeal beginning from A.Y. 2006-07 upto 2012-13. The grounds are thus clubbed & consolidated for various years for the sake of convenience of adjudication. 4. As per its grounds of appeal, the Revenue has broadly challenged the relief granted by the CIT(A) on four counts; (1) additions of Rs. 8,80,00,000/- (A.Y. 2006-07), Rs. 1,05,00,000/- (A.Y. 2009-10) & Rs. 3,80,00,000/- (A.Y. 2012-13) carried out under the provisions of Section 68 of the Act in respect of receipt of share application/share capital; (2) additions of different amounts on account of suppression of yield and unaccounted productions/sales in each assessment year from A.Ys. 2006-07, 2008-09 to 2012-13; (3) additions of Rs. 85,70,724/- on account of excess stock of finished goods/ raw material in A.Y. 2012-13; & (iv) tenability of adjustment of cash seized amounting to Rs. 3....
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....t credits in respect of share application money to the tune of Rs. 8,80,00,000/- (A.Y. 2006-07), Rs. 1,05,00,000/- (A.Y. 2009-10) & Rs. 3,80,00,000/- (A.Y. 2012-13) in the books does not satisfy the requirements of Section 68 of the Act towards satisfactory explanation. It was essentially observed that the assessee has failed to discharge onus towards genuineness and creditworthiness of the share applicants (subscribers). The AO secondly observed that the assessee has indulged in suppression of yield of billets and blooms manufacture in SMS Division qua the consumption of raw material such as sponge iron, pig iron and melting scrap etc. and has thus indulged into unaccounted sales in the all these years under appeals. The books of accounts were rejected and estimated additions were made on account of low yield and consequent alleged suppression of production/ sales of varied amounts were made after comparison of actual yield with a benchmark yield of 89% assumed by the AO. Thus, an addition of Rs. 78,71,592/- was made on account of difference in production while framing the assessment order for AY 2006-07. Similar additions towards low yields were made in other assessment years als....
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....ords / Registers. It is also seen that the appellant company had made specific request before the A.O. vide its letter submitted on 14.03.2014 and 18.03.2014 to dispel the doubts of the A.O. regarding non-maintenance of statutory records and registers. From the assessment order, it appears that the A.O. did not take any cognizance of the assertion made by the appellant regarding maintenance of Statutory Records and registers in accordance with the provisions of Companies Act and without verifying the verifiable facts regarding maintenance or otherwise of Statutory records and registers, the A.O simply seems to have found it convenient to remain silent and sit back after making the allegation without any proper basis. I do find considerable force in the submissions of the appellant that the A.O. merely made the allegation, however, the A.O. has not brought on record any basis for such allegation. It is not the case of the A.O. that the search team had asked a specific query to the appellant company's representative with regard to maintenance of statutory records and that the appellant company's representative failed to produce the Statutory Records or registers or expressed their in....
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....ny namely Escorts Finvest Private Limited. Furthermore, I find that the said investor company was in existence even prior to the period covered under the present search assessment proceedings, therefore, even assuming without accepting the contention of the A.O., no undisclosed income can be added in the present search assessment proceedings as the same are beyond the period covered under the present search assessment proceedings. 5.4 The appellant has submitted that Antariksh Commerce Private Limited is a group company, the appellant has placed on record, copy of assessment order in the case of Antariksh Commerce Private Limited for the assessment year 2005-06 and 2008-09. 5.5 It is seen that Antariksh Commerce Private Limited was assessed u/s 143(3) r.w.s 147 and even as on 31.3.2005, the said company had share capital and reserves of Rs. 23.62 crores. Apart from the audited financial statements in support of credit worthiness of the said company, I am convinced that no adverse view can be taken regarding identity or credit worthiness of the said company when the said company has been duly assessed and the share capital and reserves i.e. the net worth of the said company was ....
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....hat the said investor company was in existence even prior to the period covered under the present search assessment proceedings, therefore, even assuming without accepting the contention of the A.O., no undisclosed income can be added in the present search assessment proceedings as the same are beyond the period covered under the present search assessment proceedings. 5.8 It is also seen that the appellant was assessed in the past and case of assessment year 2006-07, 2007-08 and 2008-09 was under scrutiny assessment u/s 143(3) and in the said assessment proceedings, the addition to share application / share capital was duly accepted as genuine. 5.9 It is seen that the addition to share application and capital was duly accepted in the scrutiny assessment proceedings, the present action of the A.O is not culminating from any specific finding against the appellant that it was a beneficiary of any racket which has been unearthed as a result of search proceedings nor has the A.O brought on record any other evidence to indicate that the appellant did make undisclosed income and such evidence came on the surface as a result of search proceedings. The A.O has not rebutted the details o....
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....plained cash credits, the AO has heavily relied upon the judicial pronouncements, however, the appellant has made elaborate submissions distinguishing the facts, I am convinced with the explanation of the appellant that the decisions relied upon by the A.O are not applicable in the facts of the present case as there is nothing on record which can indicate that the receipt of share application money was by way of accommodation entries only. It is also not the case of the A.O that the investors have accepted by way of statement that the sums paid to the appellant was in fact received from the appellant and investors merely routed the undisclosed income of the appellant through money laundering process in the form of share application money. On the contrary, the A.O himself has stated in the assessment order that the investors have sent confirmatory letters, I have gone through the confirmatory letters, it is seen that the letters were sent through registered/speed post which cannot be said to be unauthentic mode, secondly, the investors have confirmed having made the investment by way of affidavits which are duly notarized, the investors have also furnished the copies of share applic....
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....d the jurisdictional High Court viz. the Chhattisgarh High Court in the case of the ACIT vs. Venkateshwar Ispat (P) Ltd. reported in 319 ITR 393 for the reason that the facts in such cases are entirely same, particularly, when no differentiation could be effectively demonstrated and brought on to the record by the A.O. The submissions of the AO that the decision of the Hon'ble Supreme Court in the case of Lovely Exports (P) Limited was rendered in the light of different facts inasmuch as the said judgement was rendered by the Hon'ble Supreme Court in the context of public issue, is devoid of merit because the decision was rendered by the Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd. which is a Private Limited Company and which cannot bring public issue of shares. I find that the investments made by the share applicants were duly reflected in the audited financial statements of the corporate investors. It is a settled principle of law that reason for suspicion, however grave it may be, cannot be a basis for holding adversity against appellant. 5.14 The Assessing Officer has disregarded the documentary evidences adduced by the appellant such as confirmation from the ....
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....ner of Income-tax v. HLT Finance (P.) Ltd. [2011] 12 taxmann.com 247 (Delhi) 3. In the case of Commissioner of Income-tax-IV v. Dwarkadhish Investment (P.) Ltd. [2010] 194 TAXMAN 43 (DELHI) 4. In the case of Commissioner of Income-tax v. Winstral Petrochemicals (P.) Ltd. [2011] 10 taxmann.com 137 (Delhi) 5. In the case of Commissioner of Income-tax v. Arunananda Textiles (P.) Ltd. [2011] 15 taxmann.com 226 (Kar.), 6. In the case of Commissioner of Income-tax v. Creative World Telefilms Ltd. [2011] 15 taxmann.com 183 (Bom.) 5.17 The A.O has relied upon the decision in CIT v. Nova Promoters & Finlease (P) Ltd. [2012] 342 ITR 169/206 Taxman 207/18 taxmann.com 217 (Delhi). However, on going through the said decision in Nova Promoters & Finlease (P) Ltd. (supra) I find that the facts are clearly distinguishable. In fact, in Nova Promoters & Finlease (P) Ltd. (supra) itself the Hon'ble Delhi High Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under:- "The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such ....
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....missioner of Income-tax-III v. Namastey Chemicals (P.) Ltd. [2013] 33 taxmann.com 271 (Gujarat); (b) Commissioner of Income Tax v. Kuber Ploritech Ltd. [2010] 2 DTLONLINE 136 (DELHI); (c) Commissioner of Income-tax v. Tania Investments (P.) Ltd. IT Appeal No. 15 OF 2009, High Court of Mumbai; (d) Bhav Shakti Steel Mines (P.) Ltd. v. Commissioner of Income-tax [2009] 179 TAXMAN 25 (DELHI); (e) Commissioner of Income-tax v. Samir Bio-Tech (P.) Ltd. [2010] 325 ITR 294 (DELHI) (f) Commissioner of Income-tax-I v. Micro Melt (P.) Ltd. [2009] 177 TAXMAN 35 (GUJ.) (g) Commissioner of Income-tax-V v. Real Time Marketing (P.) Ltd. [2008] 173 TAXMAN 41 (DELHI) (h) Assistant Commissioner of Income-tax v. Mansarovar Urban Co-Operative Bank Ltd. [2009] 124 TTJ 269(LUCKNOW); (i) Commissioner of Income-tax -IV v. Empire Buildtech (P.) Ltd. [2014] 43 taxmann.com 269 (Delhi); (j) Commissioner of Income-tax v. Mulberry Silk International Ltd. [2012] 19 taxmann.com 31 (Kar.); (k) Commissioner of Income-tax-III v. Nilchem Capital Ltd. [2012] 18 taxmann.com 350 (Guj.); (l) Commissioner of Income-tax v. Jay Dee Securities & Finance Ltd. [2013] 32 taxmann.com 91 (Allahabad); (m) Comm....
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....bmissions placed before him by the assessee towards untenability of additions and passed a detailed common and combined order on the issue covering all the assessment years noted above. The relevant operative para of the order of the CIT(A) on low yield is also extracted hereunder for easy reference: "9. I have carefully gone through the assessment order and submissions of the appellant. The search operation u/s 132 had taken place in the premises of the appellant including residential premises of the directors. The A.O had issued show cause notice cum query letter inter alia asking the appellant to show cause why addition should not be made as the yield declared by the appellant was less than 89% from Steel Melting Shop (SMS) Division. 9.2 The A.O has made the addition on account of alleged unaccounted sales based on unaccounted production by estimating the production at 89% in SMS Divison. I find that from page no.22 to page no.26 of the assessment order, the A.O. has made discussion on his mathematical calculation pertaining to Rolling Mill Division, however, it is seen from the assessment order that the A.O has not drawn any adverse inference as regards Rolling Mill Divisio....
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.....Y. 2009-10 1 Nandan Steel and Power Ltd. 2008-09 83.44 89.00 85.80 2 Shri Nakoda Ispat Ltd. 2008-09 79.50 89.00 85.80 3 Sadguru Ispat Pvt. Ltd. 2008-09 81.35 89.00 85.80 4 Rashmi Sponge Iron and Power Industries Ltd. 2008-09 84.79 89.00 85.80 5 Shri Rupanadham Steel Pvt. Ltd. 2008-09 85.06 89.00 85.80 6 Super Iron and Steel Pvt. Ltd. 2008-09 84.65 89.00 85.80 7 Steel Abrasive Industries Ltd. 2008-09 84.89 89.00 85.80 8 Cosmos Castings India Ltd. 2008-09 83.15 89.00 85.80 9 Narmada Iron and Steel Pvt. Ltd. 2008-09 83.81 89.00 85.80 Arithmetical Mean of Yield 83.40 89.00 85.80 A.Y. 2010-11 1 Nandan Steel and Power Ltd. 2009-10 84.59 89.00 84.05 2 Shri Nakoda Ispat Ltd. 2009-10 78.62 89.00 84.05 3 Sadguru Ispat Pvt. Ltd. 2009-10 77.01 89.00 84.05 4 Jagdamba Sponge Pvt. Ltd. 2009-10 79.74 89.00 84.05 5 Ishwar Ispat Pvt. Ltd. 2009-10 83.48 89.00 84.05 6 Shri Rupanadham Steel Pvt. Ltd. 2009-10 86.19 89.00 84.05 7 Super Iron and ....
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.... Rupanadham Steel Pvt. Ltd. 2009-10 16963.05 19461.97 87.16 14 Super Iron and Steel Pvt. Ltd. 2009-10 8933.37 10420.18 85.73 Average Yield for FY 2009-10 172617.20 206258.14 83.69 84.05 15 Shilpy Steel Pvt. Ltd. 2010-11 5201.6 0 6766.43 76.87 16 Nandan Steel and Power Ltd. 2010-11 57047.40 68656.64 83.09 17 Super Iron and Steel Pvt. Ltd. 2010-11 2267.95 2635.39 86.06 18 Southern Ispat and Energy Ltd. 2010-11 3657.23 4726.30 77.38 19 Indus Smelters Ltd. 2010-11 21882.95 26329.20 83.11 20 Cosmos Castings India Ltd. 2010-11 36152.30 44636.06 80.99 21 Narmada Iron and Steel Pvt. Ltd. 2010-11 28481.54 32666.16 87.19 22 Steel Abrasive Industries Ltd. 2010-11 21862.27 29651.47 73.73 Average Yield for FY 2010-11 176553.22 216067.64 81.71 83.94 The aforesaid Table leads to following inferences: (a) The Yield declared by different assessees in the same year is not uniform, conversely, every assessee declared different yield. (b) The yield declared by same asses....
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....f Appellant NP (%) of Appellant Yield (%) of Appellant 1 Sadguru Ispat Pvt. Ltd. 2007-08 2522.35 4.36 0.46 77.36 20300.95 3.74 1.45 88.24 Average Yield for FY 2007-08 75.71 2 Cosmos Castings India Ltd. 2008-09 16178.83 1.53 0.01 83.15 28713. 41 3.28 0.81 85.80 3 Super Iron and Steel Pvt. Ltd. 2008-09 11655.76 1.98 1.42 84.65 28713.41 3.28 0.81 85.80 4 Nandan Steel and Power Ltd. 2008-09 17530.02 4.86 1.22 83.44 28713.41 3.28 0.81 85.80 Average Yield for FY 2008-09 83.40 5 Cosmos Castings India Ltd. 2009-10 12529.82 3.76 0.30 84.10 27051.26 3.15 0.74 84.05 6 Ishwar Ispat Pvt. Ltd. 2009-10 11245.93 -0.21 -2.04 83.48 27051.26 3.15 0.74 84.05 7 Jagdamba Sponge Pvt. Ltd. 2009-10 3078.91 3.77 0.83 79.74 27051.26 3.15 0.74 84.05 8 Nandan Steel and Power Ltd. 2009-10 17280.99 5.57 1.43 84.59 27051.26 3.15 0.74 84.05 9 Sadguru Ispat Pvt. Ltd. 2009-10 2807.04 3.60 0.....
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....e, excluded while making comparison. 9.8 I have carefully compared the financial results of the appellant company with the financial results of other comparable cases as received from DCIT-1(2), Raipur. As is self explanatory from the details tabulated above, in my considered view, the financial results declared by the appellant are found to be better in comparison to most of the comparable instances in terms of GP rate as well as NP rate and even in terms of yield. It is also observed that there is no direct corelation between GP rate and yield, for instance, the yield declared by Super Iron and Steel Private Limited in financial year 2009-10 is 86.50% which is marginally, higher than the yield declared by the appellant at 84.05%, however, the GP rate and NP rate of the appellant are found to be much better i.e. 3.15% and 0.74% respectively in comparison to 2.46% and 0.51% respectively declared by Super Iron and Steel Private Limited. Similarly, it is observed that the GP rate declared by Shilpy Steel Private Limited was 5.18% in financial year 2010-11 as against 2.93% declared by the appellant company, however, at the same time it is also seen that the yield declared by Shilpy ....
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....ered that in Form ER-1, the appellant has given the details on monthly basis viz. Chapter heading, Description of goods, Unit of quantity, Opening balance, Quantity manufactured, Quantity cleared, Closing stock, Assessable value, Type of clearance, Excise duty payable etc. In Form ER-6, the appellant furnished the details on monthly basis viz. Description of principal inputs, Quantity code, Opening balance, Receipt, Taken for use in the manufacture of dutiable and exempted finished goods, Removed as such for export or for home consumption, Closing balance, Finished goods manufactured out of input, Quantity code of finished goods, Quantity of finished goods manufactured. 9.10 It is seen that the excise returns in Form ER-1 and ER-6 filed by the appellant on monthly basis are duly acknowledged and bears the seal and signature of the Central Excise Authority. The appellant was asked to produce the excise records maintained on daily basis. The appellant did produce the excise records in Form-IV and RG-1 for raw material and finished goods respectively for all the years under consideration. On test check of excise records maintained on daily basis with the figures of production, consu....
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.... A.O that the factory will remain in operation for 365 days is quite hypothetical as the A.O. has completely ignored the fact that there would be weekly offs / holidays apart from national holidays and routine maintenance. I am convinced with the explanation tendered by the appellant regarding capacity utilization and in view thereof, I am of the considered opinion that the capacity utilization cannot be said to be lower as presumed by the A.O. on the basis of incorrect interpretation of facts. (3) Regarding uniform methodology for measurement of inputs, in my considered view, the same is not fatal and that per se is not sufficient to reject the books of accounts and this fact cannot be given undue significance in isolation while ignoring the yield, GP and NP rate declared by the appellant based on audited account. This issue regarding "estimation" has been discussed in detail in the subsequent paras. (4) Regarding variation in consumption of sponge iron, power in the SMS Division, in my considered view, the same may lay foundation for raising suspicion, however, at the same time, it is settled principle of law that suspicion, howsoever grave it may be, cannot take place of the....
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....43(3). The A.O has not stated what according to him should have been the average consumption of power, sponge iron etc. Another fact noticed is that the case of the appellant was under scrutiny assessment for three consecutive years i.e. in A.Y 2006-07, 2007-08 and 2008-09 where regular assessments were made under scrutiny and the yield was shown by the appellant was not disputed. I find that the same A.O had completed the assessment u/s 143(3) in the case of Satguru Ispat Private Limited for Assessment year 2008-09 vide order dated 28.12.2010. According to the information received from DCIT-1(2), Raipur, the said assessee company namely Satguru Ispat Private Limited had declared / achieved yield of 77.01% and the said company is engaged in the business of manufacturing of Ingots. The said yield percentage was cross checked with reference to the Tax Audit Report and financial statements of the said assessee company. Even if due consideration is given for difference in yield owing to difference in product i.e. Ingots and Blooms/Billets, Steel, there is a sea gap between yield percentage of 77.01% accepted by the same A.O, as against yield of 89% applied by the A.O. in the instant ca....
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....ement recorded on 22.06.2011 that the details of hourly production are recorded by him on a paper and the same is handed over for being entered in the computer system. In my considered view, no fault can be found nor there is any scope for drawing any adverse inference for the reason that hourly production details are given for being entered in the computer system, secondly, I also find that Mr. Anil Singh is Incharge of Rolling Mill division and not SMS Division, in my considered view, as the A.O has not pointed out any fallacy in the case of Rolling Mill Division, the reliance placed by the A.O on the statement of Shri Anil Singh is clearly misplaced. 9.20 I have carefully perused the statement of Shri Virendra Parghania, Clerk of the appellant company recorded during the course of proceedings u/s 132 on 22.06.2011. I find that in response to Question no.4 the said person has explain his job profile involving maintenance of record relating to inward and outward of production material and work relating to weigh bridge and documentation relating thereto. I find that in response to question no.5, the said person did state that he keeps printout i.e. record of each and every vehicl....
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....pers become redundant and that is the reason said loose papers are destroyed, at this juncture, I find that neither in the show cause notice nor in the assessment order there is any whisper of any such loose paper which bears the figures of production and which the appellant failed to reconcile with the entries in the regular books of accounts and Excise Records/Returns. In the absence of any specific instance having been brought on record by the A.O, I am constrained to construe the allegation of the A.O as mere bald statement. 9.22 In the case of ACIT Vs. M/s. Balajee Structurals (I) Pvt. Ltd. (supra), the jurisdictional Bench Hon'ble ITAT had an occasion to decide identical issue and the Hon'ble Tribunal has observed as under:- "........We find the assessee in his submissions before the A.O. had explained the reasons for variation in the yield. However, the A.O. has not considered the same and merely mentioned that the explanation given by the assessee is not found to be acceptable. We find merit in the submission of the Ld. Counsel for the assessee that when the production results are closely monitored by the Excise Department who has accepted the same and when the ....
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....e addition in question is not based on such material and the addition has been made only on presumptions and surmises and is not justified. The AO has also not made out any comparable cases. In such situation the addition in question made by AO is not justified same were rightly deleted by reasoned finding, we uphold the same." 9.24 The low yield in comparison to the benchmark adopted by the A.O basis whereof is still in the dark and hasn't come on the surface, in the absence any cogent reasons could not, by itself, have been a ground to hold that proper income of the appellant cannot be deduced from the accounts maintained by it and consequently, could not have been a ground to reject the accounts invoking section 145(3) of the Act. The variation in yield and consumption of power etc could be for various reasons. There is no finding by the A.O that actual quantity of finished goods sold by the appellant was more than what it was shown in the accounts books on the strength of documentary evidence. 9.25 It is seen that the A.O has not pointed out any suppression of production based on any cogent and incriminating material against the appellant. Material showing financial nexus c....
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....143 : 45 ITD 473. 9.28 Similar ratio was laid down by the Hon'ble High Court of Delhi in Commissioner of Income Tax Vs. Discovery Estates Pvt. Ltd. vide order dated 18th February, 2013 (2013) 356 ITR 159 (Delhi). 9.29 I do find considerable force in the submission of the appellant that no unrecorded asset/investment was found during the course of search. The significance of tangible disproportionate asset having been found as a result of search was emphasized in Mangilal Rameshwarlal Soni (HUF) Vs. Assistant Commissioner Of Income Tax (2004) 83 TTJ (Jd) 770 : (2004) 4 SOT 680 (Jd). 9.30 I find that no unrecorded asset or investment was found during the course of search with which undisclosed income of such magnitude could be correlated i.e. deployment of undisclosed income. This factor was given due cognizance in Bansal Strips (P) Ltd. & Ors. vs. Assistant Commissioner of Income Tax (2006) 100 TTJ (Del) 665 : (2006) 99 ITD 177 (Del) by the Hon'ble ITAT, DELHI 'A' BENCH as circumstantial evidence. 9.31 The Hon'ble Supreme Court had put an embargo on the leeway i.e. flexibility of Assessing Officers in Dhakeswari Cotton Mills Ltd. Vs. Commissioner of Income Tax (1954) 26 ITR ....
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.... Courts have taken judicial note of the "estimation" i.e. recording of financial transactions with certain degree of estimation in the books of accounts. Drawing reference from the aforesaid decision, in my considered view, merely because certain transactions are recorded on the basis of estimation will not make the accounts liable for rejection u/s 145, particularly when the estimation is not strikingly high or low either in comparison to past trend or comparable cases, incidentally, none of these facts are prevailing in the case of the appellant. 9.35 The Hon'ble High Court of Delhi laid stress upon the material and evidences and brushed aside adversities held merely on the basis of suspicion and conjectures in Commissioner of Income Tax Vs. Ram Pistons & Rings Ltd. vide order dated 16th February 2012 (2012) 80 CCH 055 Del HC. 9.36 It is settled principle of law that the A.O has to bring on record specific defect in the books of accounts of the appellant as a result of which reasonable profits cannot be deduced. The A.O examined the audited books of account but had not pointed out any specific discrepancy nor has he detected any suppression in sales or inflation in purchases/....
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.... that the income could not be deduced from the accounts maintained by the appellant. 9.37 The A.O. has not brought any material on record to disbelieve the book result shown by the appellant. If there is no suppression of material facts, the authority cannot embark upon a speculative assessment of notional profits. The assessment should be based on cogent facts and there should be no vindictiveness or arbitrariness in passing the assessment order. The estimated additions made by the A.O. do not bear any relationship with the specific defects in books of accounts and the A.O. cannot be permitted to make arbitrary addition. 9.38 The core thing to be seen is the evidence found which will be the basis for making the assessment. Coming to the facts of the case, the AO estimated the unaccounted production and sales based on benchmark yield of 89% in case of SMS Division. The entire estimated suppressed sale has been treated as profit. I am convinced that the determination of undisclosed income in this case is merely on the basis of presumption and on an estimate basis. Search assessment has to be framed on the basis of some material, which in this case is raw material consumed in SMS....
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....inancial records i.e. the books of accounts and Audited financial statements. Undisputedly, the production was meticulously routed through the appellant's daily production register/ Excise Records. The entries therein were definitely co-relatable to the entries in the stock register, enabling an easy stock tally, if one was so required. However, the AO did not deem it fit to carry out the exercise of tallying the stock as per these entries in the two types of books. He merely went by the alleged suppressed yield. Various submissions regarding reasons for variation in consumption of power, furnace oil, yield etc were duly furnished by the appellant. The appellant did furnish the comparable instances and also demonstrated with technical details of production. These copious evidences were wrongly ignored by the AO. Commissioner Of Income Tax Vs. Hindustan Tin Works Ltd. (2007) 291 ITR 290 (Del) : (2007) 164 TAXMAN 529 9.43 A careful reading of the decision in Commissioner of Income Tax Vs. R.K. Rice Mills (2009) 319 ITR 173 : (2009) 185 TAXMAN 107 (P&H) the Hon'ble High Court had upheld the deletion of addition and it leads to an irresistible conclusion that there cannot be any reje....
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.... made in the scrutiny assessment, for the year in which survey proceedings took place, on the basis of incriminating document. The case of appellant finds support form decision in Sukhadia Jamnadas Maganlal Vs. Income Tax Officer (2008) 13 DTR (Guj) 149, the Hon'ble High Court of Gujarat. 9.49 The Hon'ble High court of Bombay in R.B. Bansilal Abirchand Spinning & Weaving Mills Ltd.. Vs. Commissioner of Income Tax (1970) 75 ITR 260 (BOM) has held that "Merely by comparison of the percentage of losses in a particular year, it is not possible to say with any reasonable certainty that the increase in the percentage of loss must be attributable and must lead to a reasonable inference of suppression of production." 9.50 In the instant case also, the ultimate addition has been made on the basis of alleged suppression of yield/ unaccounted production. Except making comparison of yield achieved by the appellant with A.O's own standardized yield percentage of 89%, the A.O has not brought on record any evidence, given the fact that the present proceedings are culminating from the search proceedings, as a matter of fact the search team could not come across even a single document which eve....
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....Dy. CTO (1969) 73 ITR 224 (AP). 9.54 As regards variation in Power Consumption and for that matter variation in consumption of other raw material, it has been held that the mere variation in power consumption cannot be construed as reasonable ground for rejecting the books of accounts and estimation of income. In PONDY METAL & ROLLING MILLS (P) LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX ITAT, DELHI 'B' BENCH (2007) 107 TTJ (Del) 336. The case of the appellant finds support from the decision in the case of Mahabir Prasad Jagdish Prasad vs. CST 27 STC 337 (All) and decision of the Hon'ble High Court of Rajasthan in Kay Polyplast Ltd. vs. Additional Commissioner of Income Tax (2008) 9 DTR (Raj) 163. 9.55 I find that no margin for estimation of suppressed sales and income has been allowed even in those cases where instances of suppression of sales has been found on the basis of incriminating material except for the period for which suppression has been unearthed based on cogent and documentary evidence, undisputedly, in the case of the appellant, nothing incriminating has been found, therefore, as held in Deputy Commissioner Of Income Tax Vs. Royal Marwar Tobacco Product (P) Ltd. (....
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....material." Identical observations made by the Judicial Committee in Seth Gurmukh Singh vs. CIT (1992) 194 ITR 507 (All) : TC1R.357 were approved by the Supreme in Dhakeswari Cotton Mills Ltd. vs. CIT (1994) 117 CTR (Gau) 179 : (1994) 205 ITR 45 (Gau) : TC1R.508. 9.59 As emphasized by the Supreme Court in State of Kerala vs. C. Velukutty (1966) 60 ITR 239 (SC) though there is an element of guess-work in best judgment assessment, it should not be a wild one and should have a reasonable nexus to the available material and the circumstances of each case. Likewise, it has been laid down by the Supreme Court in the case of State of Orissa vs. Maharaja Shri B. P. Singh Deo (1970) 76 ITR 690 (SC) : TC11R.251 that "The mere fact that the material placed by the assessee before the assessing authorities is unreliable does not empower those authorities to make an arbitrary order. The power of levy assessment on the basis of best judgment is not an arbitrary power; it is an assessment on the basis of best judgment. In other words, that assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of concerned authorities." The ba....
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.... and for drawing adverse inference against the appellant unless there is evidence to substantiate such probable inference." Assessment has to be made based on the real income theory, i.e., income to be determined for taxation must invariably be proved to have been the correct quantum of income earned by the appellant during the relevant previous year and the one presumed to have been earned. The presumptions and hypothetical estimations and observations made by the A.O. for making the impugned estimated addition, were extraneous, irrelevant and opposed to the facts obtaining from the record. The fate of the appellant could not be decided by the A.O. on mere surmises or probabilities (Northern Bengal Jute Mills Trading Co. Ltd. v. CIT (1968) 70 ITR 407 (Cal). The mere existence of reasons for suspicion would not tantamount to evidence (Cal. HC in Narayan Chandra Baidya v. CIT (1951) 20 ITR 287 (Cal.). 9.60 It is indeed a case of frivolous addition with facts identical to the facts in the case of Bharti Airtel Limited vs. ACIT (ITAT Delhi). Looking to the facts and circumstances of the case as also decisions cited above, the addition made by the A.O is held to be baseless and witho....
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....on 153A of the Act does not provide that assessment/re-assessment should be based on 'incriminating material' alone and the AO is empowered to assess or re-assess the 'total income' of the six financial years covered under the search regardless of presence of incriminating material. On merits, it was pointed out that the assessee has failed to discharge the onus placed upon it to prove the creditworthiness and genuineness of the transaction of share application money and consequently, in the absence of satisfactory explanation towards nature and source of receipts, the AO has rightly invoked Section 68 of the Act. As regards low yields, it was contended that the assessee has failed to provide satisfactory explanation for lower yield qua the industry standard as demonstrated by the AO in its order. The findings of the CIT(A) for reversal of additions were thus assailed on merits. 15. Per contra, the learned Counsel for the assessee, to begin with, adverted to the legal objection and pointed out that the A.Ys. 2006-07 to 2009-10 stood concluded and completed prior to initiation of search on 21.06.2011 and contended that in the light of the law expounded by the plethora of judicial p....
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....g material found in the course of search, the action of the AO to make additions is a complete non-starter. The time limit for issuance of notice under s.143(2) of the Act is either expired at the time of search or the assessments were concluded under section 143(3), as the case may be, and hence could not be disturbed for making additions of regular & routine nature merely on account of search. The ld Counsel reiterated that in the light of judicial precedents, the legal position is crystal clear that in unabated search assessments, no addition is permissible merely on the basis of re appreciation of regular books, accounts and documents maintained by the assessee in ordinary course. The ld. Counsel thus submitted that all additions/ disallowances made in the impugned assessments covering AY 2006-07 to 2009-10 is absolutely without any legal foundation and deserves to be quashed at the threshold without going in merits. Some of the other precedents in this regard as cited is noted hereunder: (a) Rawal Das Jaswani Vs. Assistant Commissioner of Income Tax, ITA No. 87/Blpr/2009, ITAT Raipur Bench; (b) DCIT Vs. R. K. Transport & Constructions Pvt Ltd, ITA Nos. 236 to 242/RPR/2014,....
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....ted with the enquiry conducted by the Ld. AO regarding yield of assessee company and basis of inference of 89% in SMS Division. (e) The assessee company may also be confronted with the enquiry conducted by the Ld. AO regarding addition to share application /share capital. " 15.5 It was next pointed out that assessment of the assessee was duly completed under s.143(3) of the Act for A.Y. 2006-07, A.Y. 2007-08 & 2008-09 prior to search and the issue of receipt of share application money had already been examined by several rounds of questionnaires in the scrutiny assessment carried out under s.143(3) of the Act. It was after due verification of factual aspects, the nature and source of share application money was found satisfactory by the AO. 15.6 As regards the alleged lower yield and alleged unaccounted production and sales, it was pointed out that the issue was thoroughly examined in the regular assessment as can be seen from the assessment orders passed under s.143(3) of the Act. It was broadly submitted that while the yield of the Assessee is comparable to its peers, the percentage of yield declared is in sync with quality of input. The AO in the original assessment has made....
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....A of the Act in respect of concluded and unabated assessments is narrower in its sweep and restricts the right of the AO to examine the issue emanating from some incriminating material. 16.3.1 We shall first refer to the decision of Hon'ble Delhi High court in the case of Pr.CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Del). The Hon'ble Delhi High Court referred to the judgment in the case of CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del); Pr.CIT vs. Saumya Constructions Pvt. Ltd. (2016) 387 ITR 529 (Guj); Principal Commissioner of Income Tax-1 vs. Devangi alias Rupa 2017-TIOL-319-HC-AHM-IT; CIT vs. IBC Knowledge Park Pvt. Ltd. (2016) 385 ITR 346 (Kar); Pr. CIT-2 vs. Salasar Stock Broking Ltd. 2016-TIOL-2099-HC-KOL-IT and CIT vs. Gurinder Singh Bawa (2016) 386 ITR 483 (Bom), Reference is also made to another two decisions of Hon'ble Delhi Court in Pr. CIT vs. Mahesh Kumar Gupta 2016-TIOL-2994-HC-Del and the decision dated 7th February, 2017 in ITA Nos. 61/2017 and 62/2017 in the Pr. Commissioner of Income Tax-9 vs. Ram Avtar Verma where the decision in Kabul Chawla (supra) was followed. The Hon'ble Delhi High Court made an exhaustive reference to the decisions noted above and held th....
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.... with search/requisition. It was noted by the Hon'ble Court that additions made on the basis of some materials collected by the AO much subsequent to the search is not permissible. 16.3.4 Similar view has been expressed in catena of decisions viz; Pr.CIT vs. Deepak J. Panchal (Guj) 397 ITR 153 (Guj); Chetnaben J. shah vs. ITO Tax Appeal No. 1437 of 2007 judgment dated 14.07.2016; CIT vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom.); Pr.CIT vs. Desai Construction Pvt. Ltd. 387 ITR 552 (Guj.); Gurinder Singh Baba 386 ITR 483 (Bom); & CIT vs. Deepak Kumar Agarwal (2017) 398 ITR 586 (Bom.). 16.3.5 The Hon'ble Delhi High Court in Pr.CIT vs. Subhash Khattar ITA No. 60/2017 judgment dated 25.07.2017 also held against the Revenue in similar circumstances where search did not result in discovery of any incriminating material qua the assessee. It was observed by the Hon'ble Delhi High Court that entire case against the assessee was based on what was found during the search of the premises of other parties and thus, it is apparent on the face of it that notice to assessee under s.153A of the Act was misconceived since the so-called incriminating material was not found durin....
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....towards making additions in respect of concluded assessments towards undisclosed income is contrary to the judicial dicta. Accordingly, we are of the view that various additions/disallowances made by the AO are clearly beyond the scope of authority vested under s.153A of the Act without discharging the burden to show presence of any incriminating material or evidence deduced as a result of search in so far as completed assessments are concerned. Additions/disallowances made in assessments framed under s.153A of the Act in respect of captioned assessee pertaining to AYs. 2006-07 to 2009-10 are thus required to be struck down on this score itself. However, the assessments/re-assessments pending on the date of search i.e. AY 2010-11 to 2012-13 which stood abated by operation of law will continue to be governed by ordinary powers of assessment under s.153A of the Act in accordance with law. 17. The legal ground of jurisdiction raised by the Assessee as per the cross objections, is thus allowed in respect of AY 2006-07 to 2009-10. The additions / disallownces made under S. 68 and towards low yields etc. without showing incriminating documents are bad in law and thus requires to be stru....
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....st the appellant to demonstrate that the share application money was nothing but undisclosed income of the appellant. (Para 5.9 on page No. 15 & 16) In my considered opinion, apart from drawing presumptions, the AO has not brought any clinching material or evidence on record to prove that the said share capital money belongs to the appellant since no nexus has been established that the money for augmenting the investment in the business has flown from appellant's own money. (Para 5.13 on page No. 18) No material was brought on record by the A.O independently of the information received, if any, from the investigation wing of the Income Tax Department to show that the monies represented the appellant's undisclosed income. " (Para 5.14 on page No. 19) 19.3. Apart from the factual position on absence of any incriminating material as noted by the CIT(A) reproduced in preceding para, the CIT(A) has also analyzed and delineated the facts and circumstances in proper perspective while dealing on merits of additions. The CIT(A) found that primary onus placed upon the assessee under s.68 of the Act was satisfactorily discharged by the assessee. The CIT(A) has examined the fac....
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....s and hence not sustainable. We thus decline to interfere with the view expressed by the CIT(A). 20. In the result, Ground no. 1 & 2 of revenue appeal concerning additions under S. 68 in A.Y. 2006-07 & 2009-10 are dismissed whereas the cross objection of the assessee on the legal point of lack of jurisdiction under s.153A of the Act is allowed. 21. We now advert to additions of Rs. 3,80,00,000/- made on account of unexplained cash credits under s.68 of the Act concerning A.Y. 2012-13 which is reversed by the CIT(A). 22. The learned DR for the Revenue relied upon the order of the AO and submitted that the assessee has failed to satisfactorily explain the nature and source of receipts of share application money of Rs. 3,80,00,000/- received from Escorts Finvest Pvt. Ltd. and therefore, the addition was rightly made by the AO in terms of provisions of Section 68 of the Act. It was further pointed out that the impugned AY 2012-13 is open and pending and therefore, the AO was entitled to assess the income under s.68 of the Act without the constraints of technicality of S. 153A in respect of completed assessments. The learned DR, thereafter, made reference to the decision of the Hon'b....
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....6-07 as well where detailed enquiry was undertaken in the normal assessment. The bonafides of share subscriptions were accepted by the AO while passing the order under s.143(3) of the Act. As further pointed out on behalf of the assessee, the said proposed subscriber had also made investment in the preference share capital of group company namely Mahamaya Steel Industries Limited (MSIL) and the search assessment of MSIL was also completed simultaneously by the same AO wherein no adverse inference was drawn in respect of preference raised by the MSIL from the aforesaid applicant. As regards the creditworthiness, it was pointed out that net worth of EFPL as on 31.03.2012 stands at Rs. 51.77 Crores. Similar net worth in the vicinity of Rs. 50 Crores or thereabout is enjoyed by the subscriber at least from F.Y. 2006- 07 onwards. The proposed subscriber has also confirmed the act of proposed investments in the assessee company as noted earlier. The share applicant also offered for personal appearance before the AO and to give statement on oath before the AO which request however was not acted upon by AO. This apart, an affidavit was filed by the subscriber stating factum of investment. ....
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.... peculiar to the instant case by way of a very speaking order. 24.2 Adverting to the reliance placed on judgments rendered by the Hon'ble Supreme Court in NRA Iron and Steel Pvt. Ltd. (supra) strongly relying on by Revenue, we find that the facts in that case were gross, worse and peculiar and hardly bears any resemblance with the tell-tale facts of the share applicant herein. In the present case, the fact of payment received for proposed share subscription is fully substantiated by bank statement and other tax records of the subscribers and also the affidavit and confirmation letter of the subscriber. The veracity of transaction with EFPL and capacity of the subscriber was duly accepted in the search assessment of group company MSIL by the same AO. In NRA case, the gross receipt was found to be a meager sum of 7.33 Lakhs in contrast to Rs. 233.94 Crores in the case of the assessee herein. Similarly, the returned income in NRA Iron and Steel Pvt. Ltd. at Rs. 7.01 Lakhs in contrast to Rs. 227.66 Lakhs in the case of the present assessee. The book value of investee company itself stands at 43.50 per shares. The financial data clearly suggests that the investee carries a very sound f....
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....the additions under s.68 of the Act without any cogent evidence to the contrary. 24.4 As stated in the bar by the learned counsel for the assessee, the amount so received for proposed share subscription from the group co. i.e. EFPL was also repaid in the subsequent assessment years and thus amount kept in custody temporarily in a fiduciary capacity could not have been added in the hands of assessee by resorting to Section 68 of the Act. A reference was made to the judicial precedents, namely, CIT vs. Karaj Singh (2011) 203 Taxman 218 (P&H); Smt. Panna Devi Chowdhary vs CIT (1994) 208 ITR 849 (Bom.) & many more decisions for the proposition that the factum of repayment transgresses all other considerations and the question of bonafides of receipts of share application money fades into insignificance where the amount so received stands repaid and returned. 24.5 In essence, the facts in the instance are speaking for itself. We are fully convinced with the process of reasoning and the objective analysis by the CIT(A) and conclusion derived therefrom. We do not intend to repeat each and every observations. The action of CIT(A) is in consonance with the binding precedents of Jurisdicti....
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....onduct of the assessee in any manner. Even though, whole of the premises of the assessee were thoroughly searched by the search team, not a single piece of paper was unearthed from the premises of the assessee to corroborate and support the allegation of unaccounted production and sales. 26.4 On facts, the broad counters of the multiple contentions of the assessee are that even if it is momentarily assumed that the yield of SMS division shown by the assessee is less than industrial average, in the absence of any corroborative material, the adverse inference remains unsubstantiated. Even if it is momentarily assumed that production facilities and resources were not utilized optimally or efficiently, this by itself will not entitle the AO to allege unaccounted production by presuming higher yield by some mathematical calculations. It was submitted that despite repeated requests, the AO completely failed to point out any suppression of production based on any cogent and incriminating material in his possession against the assessee. The Assessee contends that the basis for adopting benchmark production of 89% in SMS division was not provided despite repeated requests. The CIT(A) in pa....
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....duction of billets and blooms and operating in the same field in the state of Chhattisgarh. By this exercise, the assessee has attempted to show that actual production shown by the assessee is either higher than its competitors or quite comparable and bracketed in the same range. The standard yield presumed by the AO was thus sought to be demolished on facts. 27.2 To summarise, while agreeing with the plea of the Assessee, the CIT(A) has made wide ranging observations noted hereunder: (i) The AO has failed to establish the nexus between the mathematical calculations of highest and lowest consumption of power, sponge iron (raw material) etc. with yield of 89% adopted by the AO. (ii) The basis for arriving at the standard yield of 89% has not been disclosed despite repeated requests on behalf of the assessee. The CIT(A) himself attempted to work out the average yield in the industry based on data available from the department but failed to arrive at this so called standard figure of 89%. (iii) Comparison of yield declared by the other assessee engaged in the similar line of business was carried out as tabulated in para 9.4 of the first appellate order. On the basis of such com....
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.... laid too much emphasis on statistics which cannot be said to have been gathered as a result of search alone. The statistics relied upon by the AO are those which are quite routinely called for even during the regular assessment proceedings under s.143(3) of the Act. The AO has not stated what according to him should have been the average consumption of coal iron ore etc. (viii) From the statement of Shri Rishikesh Dixit recorded on 21.06.2011, it was gathered that the aforesaid Director stated in clear terms that the quantity recorded in the loose slips tallies with the quantity recorded in the regular books of accounts and excise records. These loose slips are destroyed after it becomes redundant with the passage of time. The CIT(A) further observed that neither in the show cause notice nor in the assessment order, there is any whisper of any such loose papers which bears the figure of production and which the appellant failed to reconcile with the entries in the regular books of accounts and excise records/returns. (ix) The alleged low yield in comparison to benchmark of 89% adopted by the AO, the basis whereof is still in dark and not known, cannot in itself provide a groun....
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....unt of lower yield. The Co-ordinate bench in DCIT vs. Mahamaya Steel Industries Ltd. ITA No. 232-235/ RPR/ 2014 order dated 7/11/2019 in strikingly similar factual matrix involving same issue and arising from same search, endorsed the order of CIT(A) in relation to AY 2009-10-2013 and struck down the additions made by AO. Hence, the issue, in any case, is not res integra any more in the light of decision of the co-ordinate bench. 27.7 Whatever way we see, case of the revenue has little merit and thus unsustainable. We, thus, decline to interfere with the order of the CIT(A) on this score. 28. In the result, grounds raised by the Revenue challenging the action of the CIT(A) for reversal of additions on the grounds of suppression of yield and unaccounted production and sales are dismissed in AYs. 2006-07 to A.Y. 2012-13 in appeal. 29. Third issue in the combined appeals relates to additions of Rs. 85,70,724/- in AY 2012-13 [ITA No. 255/RPR/2014 -AY 2012-13 Revenue appeal] on account of excess stock of finished goods/ raw material stated to be discovered during the search. 29.1 The AO observed that during post search proceedings, the assessee was required to explain the difference....
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....material (Rolling Mill) Billets and Slab cuttings) 2068.730 1959.375 109.355 31,71,295.00 31,14,135.00 57,160. 00 Raw Material (CCM DN.) (Sponge Iron) 1128.150 1006.730 121.420 24,89,110.00 24,59,130.00 29,980.00 Total 1,41,43,989.00 55,73,265.00 85,70,724.00 Firstly, it is seen that the A.O himself admitted that the inventory taken by the Valuer at the time of search has certain deficiencies and discrepancies, as a corollary, the Quantity Assessment Report of the DRV is also vitiated and has deficiencies, it is also seen that the sole basis of addition is the Report of the DRV. It is seen that the appellant had made various submissions before the A.O during the course of assessment proceedings in response to the show cause notice cum query letter issued by the A.O. The appellant had requested for allowing opportunity to cross examine the DRV and the opportunity was afforded to the appellant. The appellant was asked to furnish the copy of statements recorded during the course of cross examination of the DRV namely Mr. Manish Pilliwar and the same was furnished by the appellant. I have carefully perused the statements of Mr. M....
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....DRV applied irrelevant knowledge which has no nexus with the business of the appellant and product under consideration. 13.4 The precise submissions of the appellant as regards excess quantity of structures and channels being a finished product of the appellant company i.e. output of Rolling Mill Division of the appellant company taken by the DRV while quantifying the structures and channels are as under:- (a) The DVO has taken length of the finished product namely structures/channel at 12.50 meters (being one half of 25 meters length) ; that the DVO has taken the said length presuming that the appellant is engaged in manufacturing of channel/structures of 25 mtrs length, on the contrary, the appellant has claimed that it is manufacturing channels/structures of 23 mtrs length, in this way, the length of structures and channels has been wrongly taken by the DVO in his Valuation Report at 12.50 mtrs as against 11.50 mtrs. The said mistake has resulted in over valuation of stock of structures/channels. (b) The DVO had, in his Valuation Report, quantified 87.06 MT for ISMC-5000, the appellant has claimed that it has never manufactured channels/structures of said description and s....
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....ilities of the appellant company. I also find that in response to question no.17, the DRV admitted that he is unable to recollect the measurement procedure. It is also seen that in response to question no.27, the DRV admitted that no physical weighment was carried out at all. 13.8 Considering the fact that the submissions of the appellant are supported by a Certificate from a registered valuer and admission of ignorance by the DRV during cross examination,, also the fact that the A.O. has not brought on record any evidence to rebut either the submissions of the appellant or Certificate from Registered Valuer, it would be incorrect to hold that the appellant has not brought on record any evidence in support of its contentions. Hence, the addition made by the A.O cannot be sustained for the difference in quantity arising due to adoption of length at 12.50 Mtrs. Instead of 11.50 Mtrs. 13.9 As regards 87.06 MT taken by the DRV in the quantity assessment report against ISMC-5000, it is seen that the DRV admitted that there was a typographical error and ISMC-5000 should be read as ISMC-500. On the contrary, the appellant has placed on record certificate from the registered valuer whe....
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....ting for arriving at the amount of unexplained investment in Billets & Slab cuttings and uniform rate of Rs. 20,500/- per MT for arriving at the amount of unexplained investment in Sponge Iron, on the contrary, the appellant has computed the value of investment at an average rate of Rs. 28,477.30 for Billets & Slab cuttings and average rate of Rs. 20,253/- for Sponge Iron respectively. In this regard, I find that the appellant had requested the A.O. to provide the basis on which the A.O. had arrived at the valuation mentioned in the show cause cum query letter for its rebuttal, however, it appears that the A.O. did not provide any basis for adopting uniform rate of Rs. 29,000/- per MT for Billets & Slab cuttings and rate of Rs. 20,500/- for sponge iron. On the contrary, the appellant has furnished the basis of adopting the value at Rs. 31,14,135/- for Billets and Slab cuttings and Rs. 24,59,130/- for Sponge Iron based on audited accounts, the details were furnished before the A.O. I find that the A.O. has not rebutted the valuation adopted by the appellant based on audited account, I am convinced with the details and basis of valuation furnished by the appellant before the A.O, h....
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....s carried out at all etc.. The whole quantification is made on a wrong foundation of length of channels etc. After having analyzed the facts and circumstances of the case, the CIT(A) has objectively concluded that addition to the total income on account of unexplained investment towards excess stock on account of structures and channels is without any sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason. 29.5 With reference to excess stock on account of billets and slab cuttings and sponge iron, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity. It was noticed by the CIT(A) that the assessee has offered the income for taxation based on average rate for billets / slab cutting/ sponge iron as against uniform rate adopted by AO. The basis of rate adopted by AO was not assigned. Thus, having regard to the declarations already made by the assessee and in the absence of any definite basis in the action of AO, no further additions were found ....