TaxTMI 
TaxTMI 
2023 (3) TMI 771
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....was engaged in manufacturing of Re-rolled M.S. Bars. It has filed its return of income on 20.11.2008 and 29.09.2009 declaring total income of Rs.48,80,770/- and Rs.99,63,890/- in A.Y. 2008-09 and 2009-10 respectively. The returns were processed under section 143(1) of the Income Tax Act. Thereafter the ld. Assessing Officer had received an information from Additional Director General of Central Excise & Intelligence, demonstrating the fact the assessee has suppressed its sales and thereby avoided the payment of excise duty. Thus in A.Y. 2008-09, assessment was reopened by issuance of a notice under section 148 on 23.08.2010. In A.Y. 2009-10, case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued on 22.09.2010. The ld. Assessing Officer has passed the assessments under section 143(3) read with section 147 on 30.12.2011 in A.Y. 2008-09 and under section 143(3) on 30.12.2011 in A.Y. 2009-10. The ld. Assessing Officer has worked out undisclosed sales in both the years and thereafter applied gross profit rate and worked out the additions. The discussions made by the ld. Assessing Officer in A.Y. 2008- 09 read as under:- The assessee was ....
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.... times of the installed capacity is wholly misconceived. The rule of law is that presumption is always in favour of legality and not illegality. It would be wholly absurd to presume illegality of higher production in absence of any concrete and definite evidence/ material. (5) The whole basis for alleging unaccounted sale is being made on the basis of entries in photocopy of seized materials(page Nos. 9 to 51), the nature of which has been explained extensively in petitioner's reply dated 16/12/2011 and 27/12/2011. No other corroborative evidence/material has been relied upon and/or referred to and/or confronted with indicating such unaccounted sale. The Supreme Court in the case of CBI Vs V.C.Shukla & Others reported in (1998) 3 SCC 410 has examined the evidentiary value of entries in loose sheet, note pad, books of accounts, etc. and had come to the conclusion and (,a conspectus of the above decisions makes it evident that even correct and authentic entries in the books of accounts cannot without independent evidence of their trustworthiness, fix a liability upon a person." If the facts of the petitioner's case is tested on the anvil of the decision, of the Apex Court, no liabi....
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....r of Hon'ble Patna High Court dated 25/08/2009. Further, it has already been mentioned that when quantity of page no. 81 of this seized diary was compared with page no. 1 of earlier diary displaying date as 01.01.2009, year of dates/month mentioned in only DD/MM format deciphered. This diary is having running dates from 02.04.2007 to 1.0.03.2009. This diary contains data of production and sale of M/s Dina Mahabir Re-rollers Pvt. Ltd. as stated by Sri Shobhagmal Jain, accountant of the concern. Claim of the assessee regarding lower installed capacity of the manufacturing concern w.r.to unaccounted sale is also not acceptable as assesessee is also receiving materials from its sister concern M/s Dina Metals Ltd. as evident from seized papers and statement of Sanjay Kumar Sinha, Supervisor. The seized documents include four loose sheets relating to 21.03.09, 23.03.09 & 24.03.09 , which contains details of M.S. Ingots received in the factory of M/S Dina Mahabir Rerollers Pvt. Ltd., from M/s Dina Metals Ltd as well as details of dispatch/sale of TMT bars from the factory of the said M/S Dina Mahabir Rerollers Pvt. Ltd., on the aforesaid dates. It has been admitted by Shri Sanjay Kumar ....
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....d production and sale of TMT bars on large scale from 02.04.2007. The A.O. has rejected the books of account u/s 145 of the Income Tax Act and has worked out the sales at Rs.3,00,15,124/- and GP thereon at Rs. 3,79,19,183/- on the basis of the statement on oath of the employees on the material seized by Central Excise authorities. It has been contended by the assessee that (1) the seized material Spiral Note Book No. 23 starting from page 9 does not mention the year and it only mentions the date i.e. 02.04 and therefore the presumption of the year 2007 in respect of this spiral note book on the basis of Spiral Note Book No. 18 reflecting the date and year as of 01.01.2009 is misconceived, (2) the resemblance of data as of 01/01 at page no. 81 of note book 23 with page no. 1 of (2) note book 18'can lead to the inference that page 81 of note book no. 23 is on and from 01.01.2009 and not that it is on and from 02.04 ?007 as inferred by the A.O. (3) The AO has worked out the sales at 30015.124 MT as against the installed capacity of the plant 7000 MT per annum which was enhanced to 48000 MT per annum on and from 06.09.2008 with corresponding increase of electricity load fro....
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....tion of the assessee mainly by placing reliance on the statement of the two employees namely Sobhagmal Jain and Sanjay Kumar Sinha and by placing reliance on the preliminary investigation report of Additional Director, DGCEI, Jamshedpur indicating unaccounted production and its clandestine clearance. The A.O. has submitted a remand report dated 16.07.2015 and thereafter on 08.07.2020. The A.O. in its remand report has reiterated the stand taken in the assessment order. The A.O. has also forwarded the statement of the two employees recorded on 24.05.2017. During the remand proceedings, the A.O. has examined the two employees and has recorded their statement on 24.05.2017. The A.O. has not doubted the averments made by the two employees explaining the circumstances in which their tements were obtained. Further, no doubt has been expressed by the A.O. in the nand report as to the explanation offered by the two employees in respect of '-nture and purpose of entries in the seized material. The admitted fact on record is that the installed capacity of the assessee during the period was 7000 MT per annum which was enhanced to 48000 MT w.e.f. 06.09.2008. It is highly improbable t....
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.... the nature and purpose of entries therein. The bare perusal of seized material wherein only quantity of various items have been noted supports the explanation given by the two employees as to nature and purpose of the entries therein in their statement dated 2.4.05.2017 and further disproves the inference drawn by the A.O. of unaccounted production and its sale. Further, the A.O. has rejected the books of accounts merely by placing reliance on the statements of the employees recorded by Central Excise authorities and without pointing out any concrete and/or specific instance of unaccounted production/ sale and/or inflation of expenditure. In view of the above, the A.O. is not justified in rejecting the books of the appellant and in estimating the sales and adding the GP thereon amounting to Rs.3,79,19,183/-. Accordingly/the addition of Rs.3,79,19,183/- is hereby deleted". 7. The reasoning in A.Y. 2009-10 are identical. The ld. D.R. relied upon the order of the ld. Assessing Officer, whereas on the other hand, ld. Ld. Counsel for the assessee relied upon the orders of ld. CIT(Appeals) in both the years. 8. We have duly considered the rival contentions and gone through the recor....