ABHISHEKH STEEL INDUSTRIES LTD., RAIPUR V. D.C.I.T. CENTRAL CRICLE, RAIPUR

CO 39/BIL/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3084 (ITAT-RAIPUR)
• Duration Of Justice: 6 year(s) 8 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Capital asset; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Tangible material; Valuation report; Accommodation entries; Documents seized; Set aside
• Section: 143(3); 153A; 133(6); 205; 195; 250; 201; 251; 207; 208; 264; 44AB; 43; 48; 73; 72; 13; 153; 145(3); 22; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ./ I.T.A. NOS. 250 TO 255/RPR/2014 A/W. CROSS OBJECTION NOS. 36 TO 41/RPR/2015 ( ASSESSMENT YEARS : 2006-07, 2008-09 TO 2012-13) THE DEPUTY COMMISSIONER OF INCOME-TAX (CENTRAL), AAYAKAR BHAWAN, CENTRAL REVENUE BUILDING, CIVIL LINES, RAIPUR (C.G.) / VS. M/S. ABHISHEK STEEL INDUSTRIES LTD. MAHAMAYA TOWER, 3 RD & 4 TH FLOOR, IN FRONT OF ANUPAM NAGAR, NEAR VARUN HONDA, G. E. ROAD, RAIPUR (CG) ./ ./PAN/GIR NO. : AAECA3704G ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) /REVENUE BY : SHRI P. K. MISHRA, CIT.DR / ASSESSEE BY : SHRI VEEKAAS S SHARMA, A.R. DATE OF HEARING 09/08/2021 ! / DATE OF PRONOUNCEMENT 25/10/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS ARE DIRECTED AT THE INSTANCE OF REVENUE IN RESPECT OF THE ASSESSEE CAPTIONED ABOVE, ARISING FROM THE COMMON AND COMBINED ORDERS OF THE COMMISSIONER OF INCOME T AX (APPEALS) [CIT(A)] FOR ALL ASSESSMENT YEARS. IN COUNTER, TH E ASSESSEE HAS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 - ALSO FILED CROSS OBJECTIONS IN ALL REVENUES APPEAL S. THE CAPTIONED APPEALS AND CROSS OBJECTIONS ARE TABULATED HEREUNDE R: ITA NOS. NAME OF ASSESSEE AY COMBINED ORDER OF CIT(A) DATED COMBINED ORDER OF AO DATED ASSESSMENT ORDER PASSED UNDER SECTION 250 TO 255 /RPR/14 A/W. CO NOS. 36 TO 41/RPR/2015 M/S. ABHISHEK STEEL INDUSTRIES LTD. 2006-07, 2008-09 TO 2012- 13 21.07.2014 -DO- 153A R.W.S. 143(3) OF THE ACT 2. THE ISSUES BEING COMMON, INTERLINKED AND SIMILAR AND ARISING FROM A COMMON ORDER OF CIT(A), ALL THE CAPTIONED RE VENUES APPEALS IN RESPECT OF THE CAPTIONED ASSESSEE HAVE B EEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. 3. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS SOME WHICH TRANSCENDS TO ALL THE ASSESSMENT YEARS IN APP EAL BEGINNING FROM A.Y. 2006-07 UPTO 2012-13. THE GROUNDS ARE THU S CLUBBED & CONSOLIDATED FOR VARIOUS YEARS FOR THE SAKE OF CONV ENIENCE OF ADJUDICATION. 4. AS PER ITS GROUNDS OF APPEAL, THE REVENUE HAS BR OADLY 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) CA RRIED OUT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT IN RE SPECT OF RECEIPT OF SHARE APPLICATION/SHARE CAPITAL; (2) ADDITIONS OF D IFFERENT 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; & ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 - (IV) TENABILITY OF ADJUSTMENT OF CASH SEIZED AMOUNT ING TO RS.3,05,000/- AS PREPAID TAX WHILE COMPUTING THE TA X DEMAND. 5. AS PER ITS CROSS OBJECTIONS FOR THE VARIOUS ASSE SSMENT YEARS IN QUESTION SPANNING OVER A.YS. 2006-07, 2008-09 TO 20 12-13, THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(A) ON THE P OINT OF JURISDICTION AND PRIMARILY RAISED A LEGAL OBJECTION THAT THE JURISDICTION OF THE AO GETS OUSTED UNDER S.153A OF THE ACT IN SO FAR AS THE ADDITION/DISALLOWANCES UNCONNECTED TO THE IN CRIMINATING MATERIAL IN RESPECT OF UNABATED AND CONCLUDED ASSES SMENTS CONCERNING A.YS. 2006-07 TO 2009-10 ARE CONCERNED. ADDITIONALLY, THE ASSESSEE HAS ALSO SIMULTANEOUSLY SUPPORTED THE ACTION OF THE CIT(A) IN REVERSING THE ADDITIONS/DISALLOWANCES MAD E BY THE AO WHILE ADJUDICATING ON MERITS. 6. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE M ANUFACTURING OF RE-ROLLED PRODUCTS SUCH AS HEAVY STEEL STRUCTURAL, JOIST, GIRDER. IT HAS TWO DIVISIONS NAMELY STEEL MELTING SHOP(SMS) AN D ROLLING MILL DIVISION(RMD). SMS DIVISION USES SPONGE IRON, PIG IRON AND MELTING SCRAP ETC. AS RAW MATERIAL TO MANUFACTURE B ILLETS AND BLOOMS AS ITS FINISHED PRODUCT. THE RMD DIVISIONS USES THE SE BILLETS AND BLOOMS AS RAW MATERIAL TO PRODUCE FURTHER RE-ROLLED PRODUCTS SUCH AS HEAVY STEEL STRUCTURAL ETC. THE BILLETS AND BLOOMS PRODUCED BY SMS DIVISION ARE MOSTLY UTILIZED IN CAPTIVE CONSUMPTION BY RMD DIVISION OF ITS OWN, BUT HOWEVER, AT TIMES, BILLETS AND BLOOMS PRODUCED BY IT ARE ALSO SOLD IN OPEN MARKET. 6.1 A SEARCH WAS CONDUCTED ON THE RESIDENTIAL/ BUSI NESS PREMISES OF THE ASSESSEE GROUP, NAMELY, MAHAMAYA GROUP ON 21 .06.2011 INCLUDING THE ASSESSEE HEREIN. A SUM OF RS.20,400/- WAS FOUND IN CASH IN MAIN OFFICE AT TATIBANDH, RAIPUR AND ANOTHE R RS.5,39,700/- ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 - WAS FOUND KEPT IN FACTORY PREMISES. A SUM OF RS.3, 05,000/- WAS SEIZED IN THE COURSE OF SEARCH. CONSEQUENT UPON SE ARCH, NOTICES UNDER S.153A OF THE ACT WERE ISSUED ON THE ASSESSEE . PURSUANT THERETO, THE ASSESSEE FILED RETURN OF INCOME UNDER S.153A OF THE ACT. THE ASSESSMENT WAS FRAMED UNDER S.143(3) R.W.S. 153 A OF THE ACT FOR A.YS. 2006-07 TO 2011-12, WHEREAS THE ASSESSMEN T FOR A.Y. 2012-13 WAS PASSED UNDER NORMAL PROVISIONS UNDER S. 143(3) OF THE ACT. A COMMON & COMBINED ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS FROM AY 2006-07 TO AY 2012-13 WAS PASSED HAVING REGARD TO COMMON ISSUES INVOLVED IN ALL THES E ASSESSMENT YEARS. 6.2 IN THE COURSE OF THE SEARCH ASSESSMENT NOTED AB OVE, THE AO INTER ALIA OBSERVED THAT CREDITS IN RESPECT OF SHARE APPLICAT ION 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 S ECTION 68 OF THE ACT TOWARDS SATISFACTORY EXPLANATION. IT WAS ESSENT IALLY OBSERVED THAT THE ASSESSEE HAS FAILED TO DISCHARGE ONUS TOWA RDS GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANTS (SUBSC RIBERS). THE AO SECONDLY OBSERVED THAT THE ASSESSEE HAS INDULGED IN SUPPRESSION OF YIELD OF BILLETS AND BLOOMS MANUFACTURE IN SMS DIVI SION QUA THE CONSUMPTION OF RAW MATERIAL SUCH AS SPONGE IRON, PI G IRON AND MELTING SCRAP ETC. AND HAS THUS INDULGED INTO UNACC OUNTED SALES IN THE ALL THESE YEARS UNDER APPEALS. THE BOOKS OF AC COUNTS WERE REJECTED AND ESTIMATED ADDITIONS WERE MADE ON ACCOU NT OF LOW YIELD AND CONSEQUENT ALLEGED SUPPRESSION OF PRODUCTION/ S ALES 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 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 - ADDITIONS TOWARDS LOW YIELDS WERE MADE IN OTHER ASS ESSMENT YEARS ALSO. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) CHALLENGING THE AFORESAID ADDITIONS IN ALL THESE YE ARS. 8. THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE T HE CIT(A) AND THE DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CHALL ENGE ON BOTH ISSUES; NAMELY, (I) ADDITIONS UNDER S.68 OF THE ACT ON ACCOUNT OF SHARE APPLICATION MONEY & (II) ADDITIONS ON ACCOUNT OF LOW YIELD OF FINISHED PRODUCT. A LEGAL OBJECTION WAS ALSO RAISED ON JURISDICTION UNDER S. 153A IN RESPECT OF ASSESSMENTS REMAINING U NABATED AND CONCLUDED PRIOR TO SEARCH. THE CIT(A) TOOK NOTE OF FACTUAL AND LEGAL SUBMISSIONS SO MADE AND FOUND SUBSTANCE IN THE PLEA OF THE ASSESSEE ON BOTH ISSUES INVOLVED ON MERITS. HOWEVER, THE LEG AL OBJECTIONS OF THE ASSESSEE QUESTIONING JURISDICTION UNDER S. 153A WAS DISCARDED. 9. THE CIT(A) ADDRESSED THE FIRST ISSUE ON ADDITION S MADE BY THE AO UNDER S.68 OF THE ACT ON MERITS IN FAVOUR OF THE ASSESSEE FOR WHICH THE RELEVANT OPERATIVE PARA READS AS UNDER: 5. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AND SUBMISSIONS OF THE APPELLANT. AS REGARDS ALLEGATION OF THE A.O. REGARDING NON-MAINTENANCE OF STATUTORY RECORDS, THE APPELLANT WAS ASKED TO FURNISH THE COPY OF STATEMENTS RECORDED DU RING THE COURSE OF PROCEEDINGS U/S 132, IT HAS BEEN SUBMITTED BY THE A PPELLANT THAT DURING THE COURSE OF APPELLATE PROCEEDINGS OF OTHER COMPAN IES COVERED IN THE MAHAMAYA GROUP OF CASES AND IN APPEAL BEFORE THE UN DERSIGNED, NAMELY (1) MAHAMAYA STEEL INDUSTRIES LIMITED, (2) DEVI IRON & POWER PRIVATE LIMITED AND (3) SHREE SHYAM SPONGE & POWER LIMITED AND (4) MAHALAXMI TECHNOCAST LIMITED, WERE ASKED TO FURNISH COPY OF STATEMENTS OF ALL THE PERSONS RECORDED BY THE SEARC H TEAM DURING THE PROCEEDINGS U/S 132. THE STATEMENTS WERE FURNISHED BY THE SAID COMPANIES. I HAVE CAREFULLY GONE THROUGH ALL THE ST ATEMENTS OF ALL THE PERSONS RECORDED DURING THE PROCEEDINGS U/S 132 ON 21/22.06.2011. FROM THE PERUSAL OF STATEMENT OF MR. RISHIKESH DIXI T, DIRECTOR OF THE APPELLANT COMPANY, IT IS SEEN THAT THE SEARCH TEAM DID NOT ASK ANY QUESTION FROM THE DIRECTOR REGARDING MAINTENANCE OR OTHERWISE OF SAID STATUTORY RECORDS, IN THIS BACKDROP, IT CANNOT BE S AID TO BE A FINDING OF ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 - THE INVESTIGATION WING. THE STATEMENTS OF OTHER PER SONS BELONGING TO THE AFORESAID COMPANIES ALSO DOES NOT, IN ANY WAY, LEAD TO AN INFERENCE THAT THE GROUP COMPANIES OR THE APPELLANT COMPANY D O NOT MAINTAIN STATUTORY RECORDS / 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 T HE 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 MA INTENANCE 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 R EGISTERS, THE A.O SIMPLY SEEMS TO HAVE FOUND IT CONVENIENT TO REMAIN SILENT AND SIT BACK AFTER MAKING THE ALLEGATION WITHOUT ANY PROPER BASI S. I DO FIND CONSIDERABLE FORCE IN THE SUBMISSIONS OF THE APPELL ANT THAT THE A.O. MERELY MADE THE ALLEGATION, HOWEVER, THE A.O. HAS N OT 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 A PPELLANT COMPANYS REPRESENTATIVE WITH REGARD TO MAINTENANCE OF STATUT ORY RECORDS AND THAT THE APPELLANT COMPANYS REPRESENTATIVE FAILED TO PR ODUCE THE STATUTORY RECORDS OR REGISTERS OR EXPRESSED THEIR INABILITY T O PRODUCE THE SAME OR HAD ADMITTED THAT NO SUCH RECORDS ARE BEING MAINTAI NED. I FIND THAT ON ONE HAND, THE A.O MADE THE ALLEGATION, HOWEVER, WIT HOUT BRINGING ON RECORDS ITS BASIS AND ON THE OTHER HAND, THE A.O. D ID NOT ALSO ADHERE TO THE APPELLANT COMPANYS SPECIFIC REQUEST TO VERIFY THE STATUTORY RECORDS THAT ARE BEING MAINTAINED BY THE APPELLANT COMPANY, SUCH AN ACTION OF THE A.O. HAS MADE THE ASSESSMENT ORDER VITIATED BY ONE SIDED CONCLUSION BY THE A.O. NEITHER FROM THE ASSESSMENT ORDER NOR FROM THE STATEMENTS RECORDED DURING SEARCH PROCEEDINGS, IT I S EMERGING THAT THERE WAS ANY ATTEMPT TO LOCATE SUCH STATUTORY RECO RDS. 5.2 THE DISCHARGE OR OTHERWISE OF THE ONUS U/S 68 H AS BEEN INDEPENDENTLY EVALUATED AND EXAMINED. THE APPELLANT HAS SUBMITTED THAT ESCORTS FINVEST PRIVATE LIMITED IS A GROUP COM PANY, THE APPELLANT HAS PLACED ON RECORD, COPY OF ASSESSMENT ORDER IN T HE CASE OF ESCORTS FINVEST PRIVATE LIMITED FOR THE ASSESSMENT YEAR 200 6-07 AND 2007-08. 5.3 IT IS SEEN THAT ESCORTS FINVEST PRIVATE LIMITED WAS ASSESSED U/S 143(3) AND THE ITO, WARD-1(4), KOLKATA RECORDED A S PECIFIC FINDING THAT THE SAID COMPANY HAD SHARE CAPITAL AND SHARE P REMIUM RESERVE OF RS.5,64,50,200/- AND RS.44,37,90,000/- AS ON 31.3.2 006 AND THAT THE ITO, WARD-1(4), KOLKATA HAD CONDUCTED ENQUIRIES WIT H THE VARIOUS SHAREHOLDERS OF ESCORTS FINVEST PRIVATE LIMITED BY ISSUING NOTICES U/S 133(6) AND VERIFYING THEIR RESPONSES. I FIND THAT I TO, WARD-1(4), KOLKATA WAS SATISFIED WITH THE GENUINENESS OF ADDIT ION TO SHARE CAPITAL AND RESERVES OF ESCORTS FINVEST PRIVATE LIMITED INA SMUCH AS NO ADVERSE INFERENCE WAS DRAWN BY ITO, WARD-1(4), KOLKATA WITH REGARD TO SAID ADDITION TO SHARE CAPITAL AND RESERVES OF ESCORTS F INVEST PRIVATE LIMITED. APART FROM THE AUDITED FINANCIAL STATEMENT S IN SUPPORT OF CREDIT WORTHINESS OF THE SAID COMPANY, I AM CONVINC ED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORT HINESS OF THE SAID COMPANY WHEN THE SAID COMPANY HAS BEEN DULY ASSESSE D AND THE SHARE CAPITAL AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NO T ONLY EXPLAINED THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 7 - SOURCE OF RECEIPT OF SHARE APPLICATION / CAPITAL MO NEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMP ANY NAMELY ESCORTS FINVEST PRIVATE LIMITED. FURTHERMORE, I FIND THAT T HE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD C OVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, THEREFORE, E VEN ASSUMING WITHOUT ACCEPTING THE CONTENTION OF THE A.O., NO UN DISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCE EDINGS AS THE SAME ARE BEYOND THE PERIOD COVERED UNDER THE PRESENT SEA RCH ASSESSMENT PROCEEDINGS. 5.4 THE APPELLANT HAS SUBMITTED THAT ANTARIKSH COM MERCE PRIVATE LIMITED IS A GROUP COMPANY, THE APPELLANT HAS PLACE D ON RECORD, COPY OF ASSESSMENT ORDER IN THE CASE OF ANTARIKSH COMMER CE PRIVATE LIMITED FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09. 5.5 IT IS SEEN THAT ANTARIKSH COMMERCE PRIVATE LIM ITED 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. APAR T FROM THE AUDITED FINANCIAL STATEMENTS IN SUPPORT OF CREDIT WORTHINES S OF THE SAID COMPANY, I AM CONVINCED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORTHINESS OF THE SAID COMPANY W HEN THE SAID COMPANY HAS BEEN DULY ASSESSED AND THE SHARE CAPITA L AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS AND THE SAID COMPANY HAD SUF FICIENT MEANS TO INVEST EVEN PRIOR TO THE PERIOD COVERED UNDER PRESE NT SEARCH PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NOT ONLY EXPLAINED THE SOURCE OF RECE IPT OF SHARE APPLICATION / CAPITAL MONEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMPANY NAMELY ANTARIKSH COMMERCE PRIVAT E 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 ACCEP TING THE CONTENTION OF THE A.O., NO UNDISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCEEDINGS AS THE SAME ARE BEYOND THE P ERIOD COVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS. 5.6 THE APPELLANT HAS SUBMITTED THAT WELFIT FASION S PRIVATE LIMITED IS A COMPANY, THE APPELLANT HAS PLACED ON RECORD, C OPY OF ASSESSMENT ORDER IN THE CASE OF WELFIT FASIONS PRIVATE LIMITED FOR THE ASSESSMENT YEAR 2005-06. 5.7 IT IS SEEN THAT WELFIT FASIONS PRIVATE LIMITED WAS ASSESSED U/S 143(3) AND THE ITO, WARD-2(4), KOLKATA RECORDED A S PECIFIC FINDING THAT THE SAID COMPANY HAD SHARE CAPITAL OF RS.53,50 ,000/- AND RESERVE AND SURPLUS OF RS.4,72,50,000/- AS ON 31.3.2005. I FIND THAT ITO, WARD- 2(4), KOLKATA WAS SATISFIED WITH THE GENUINENESS OF ADDITION TO SHARE CAPITAL AND RESERVES OF WELFIT FASIONS PRIVATE LIMI TED INASMUCH AS NO ADVERSE INFERENCE WAS DRAWN BY ITO, WARD-2(4), KOLK ATA WITH REGARD TO SAID ADDITION TO SHARE CAPITAL AND RESERVES OF WELF IT FASIONS PRIVATE LIMITED. APART FROM THE AUDITED FINANCIAL STATEMENT S IN SUPPORT OF CREDIT WORTHINESS OF THE SAID COMPANY, I AM CONVINC ED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORT HINESS OF THE SAID COMPANY WHEN THE SAID COMPANY HAS BEEN DULY ASSESSE D AND THE SHARE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 8 - CAPITAL AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NO T ONLY EXPLAINED THE SOURCE OF RECEIPT OF SHARE APPLICATION / CAPITAL MO NEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMP ANY NAMELY WELFIT FASIONS PRIVATE LIMITED. FURTHERMORE, I FIND THAT T HE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD C OVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, THEREFORE, E VEN ASSUMING WITHOUT ACCEPTING THE CONTENTION OF THE A.O., NO UN DISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCE EDINGS AS THE SAME ARE BEYOND THE PERIOD COVERED UNDER THE PRESENT SEA RCH 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 2008-0 9 WAS UNDER SCRUTINY ASSESSMENT U/S 143(3) AND IN THE SAID ASSE SSMENT PROCEEDINGS, THE ADDITION TO SHARE APPLICATION / SHARE CAPITAL W AS DULY ACCEPTED AS GENUINE. 5.9 IT IS SEEN THAT THE ADDITION TO SHARE APPLICATI ON AND CAPITAL WAS DULY ACCEPTED IN THE SCRUTINY ASSESSMENT PROCEEDING S, THE PRESENT ACTION OF THE A.O IS NOT CULMINATING FROM ANY SPECI FIC FINDING AGAINST THE APPELLANT THAT IT WAS A BENEFICIARY OF ANY RACK ET 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 APPE LLANT DID MAKE UNDISCLOSED INCOME AND SUCH EVIDENCE CAME ON THE SU RFACE AS A RESULT OF SEARCH PROCEEDINGS. THE A.O HAS NOT REBUTTED THE DETAILS OF TANGIBLE NET WORTH SUBMITTED BY THE APPELLANT TO DEMONSTRATE THAT THE SUBSCRIBERS HAD SUFFICIENT MEANS TO INVEST IN THE S HARE APPLICATION/CAPITAL OF THE APPELLANT COMPANY, I HAV E PERUSED THE DETAILS OF NET WORTH OF THE SUBSCRIBERS WITH REFERENCE TO T HE AUDITED FINANCIAL STATEMENTS OF THE SUBSCRIBERS AND FOUND SATISFACTOR Y. IN THIS BACKGROUND, IN MY CONSIDERED VIEW, THERE IS NO SCOP E AND REASON TO TAKE A CONTRARY VIEW THAN THAT TAKEN BY THE THEN A. O WITHOUT THERE BEING ANY DOCUMENTARY EVIDENCE AGAINST THE APPELLAN T TO DEMONSTRATE THAT THE SHARE APPLICATION MONEY WAS NOTHING BUT UN DISCLOSED INCOME OF THE APPELLANT. 5.10 FURTHERMORE, I AM IN AGREEMENT WITH THE SUBMIS SIONS OF THE APPELLANT THAT THE SAME A.O HAS ACCEPTED THE ADDITI ON TO PREFERENCE SHARE CAPITAL IN THE CASE OF MAHAMAYA STEEL INDUSTR IES LIMITED RECEIVED FROM ESCORTS FINVEST PRIVATE LIMITED & ANT ARIKSH COMMERCE PRIVATE LIMITED AND THEREFORE, THE IDENTITY AND CRE DITWORTHINESS OF ESCORTS FINVEST PRIVATE LIMITED & ANTARIKSH COMMERC E PRIVATE LIMITED WERE UNDISPUTEDLY ACCEPTED AND GENUINENESS OF ADDIT ION WAS ALSO DULY ACCEPTED, HENCE, THERE CANNOT BE ANY REASON TO TAKE A CONTRARY VIEW IN THE CASE OF APPELLANT. THE A.O CANNOT BE PERMITTED TO TAKE TWO DIVERGENT VIEWS ON SAME SET OF FACTS AND ON SAME SE T OF EVIDENCES, WHEN THE SAME A.O UNDISPUTEDLY ACCEPTED THE GENUINENESS OF ADDITION TO SHARE CAPITAL OF MAHAMAYA STEEL INDUSTRIES LIMITED, THERE WAS NO REASON FOR HIM TO TAKE A CONTRARY VIEW IN THE CASE OF THE APPELLANT. 5.11 IT IS AN UNDISPUTED FACT THAT THE NAMES, ADDRE SSES AND ASSESSMENT PARTICULARS OF THE INVESTORS, THEIR ACTIVE STATUS A S PER THE WEBSITE OF ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 9 - MINISTRY OF CORPORATE AFFAIRS AND BANK STATEMENT OF THE APPLICANTS HAD BEEN FURNISHED BY THE APPELLANT BEFORE THE AO. IT I S FURTHER OBSERVED THAT THE SHARE APPLICATION/CAPITAL MONEY HAS BEEN R ECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE INVESTORS MOST OF WH OM ARE COMPANIES AND IS DULY REFLECTED IN THE BANK ACCOUNT OF THE AP PELLANT. I HAVE PERUSED THE BANK STATEMENTS OF THE INVESTORS, THEIR AUDITED FINANCIAL STATEMENTS AND CONFIRMATION FOR MAKING SUCH INVESTM ENTS, WHICH CLEARLY ESTABLISHES THE FACTUM OF MAKING INVESTMENTS. THESE FACTS ARE CLEARLY ESTABLISHING THE IDENTITY OF THE INVESTORS AND THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. 5.12 IT IS OBSERVED FROM THE RECORDS AND ASSESSMENT ORDER THAT FOR THE PURPOSE OF MAKING ADDITION AS UNEXPLAINED CASH CRED ITS, THE AO HAS HEAVILY RELIED UPON THE JUDICIAL PRONOUNCEMENTS, HO WEVER, THE APPELLANT HAS MADE ELABORATE SUBMISSIONS DISTINGUIS HING THE FACTS, I AM CONVINCED WITH THE EXPLANATION OF THE APPELLANT THA T THE DECISIONS RELIED UPON BY THE A.O ARE NOT APPLICABLE IN THE FA CTS OF THE PRESENT CASE AS THERE IS NOTHING ON RECORD WHICH CAN INDICA TE 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 WA S IN FACT RECEIVED FROM THE APPELLANT AND INVESTORS MERELY ROUTED THE UNDISCLOSED INCOME OF THE APPELLANT THROUGH MONEY LAUNDERING PROCESS I N THE FORM OF SHARE APPLICATION MONEY. ON THE CONTRARY, THE A.O HIMSELF HAS STATED IN THE ASSESSMENT ORDER THAT THE INVESTORS HAVE SENT CONFI RMATORY LETTERS, I HAVE GONE THROUGH THE CONFIRMATORY LETTERS, IT IS S EEN THAT THE LETTERS WERE SENT THROUGH REGISTERED/SPEED POST WHICH CANNO T BE SAID TO BE UNAUTHENTIC MODE, SECONDLY, THE INVESTORS HAVE CONF IRMED HAVING MADE THE INVESTMENT BY WAY OF AFFIDAVITS WHICH ARE DULY NOTARIZED, THE INVESTORS HAVE ALSO FURNISHED THE COPIES OF SHARE A PPLICATION FORMS, THEIR AUDITED FINANCIAL STATEMENTS, ITR, BANK STATE MENT. IN THE BACKDROP OF THESE FACTS AND DOCUMENTARY EVIDENCES , IN MY CO NSIDERED OPINION, THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBER S HAS BEEN ESTABLISHED AND CANNOT BE DOUBTED, IT IS NOT JUSTIF IED ON THE PART OF THE A.O TO SIMPLY REJECT THE DOCUMENTARY EVIDENCES ON R ECORD AND TAKE AN ADVERSE VIEW AND CLOTHING THE CASE OF THE APPELLANT WITH THE JUDICIAL PRONOUNCEMENTS WHICH HAVE BEEN RENDERED ON ABSOLUTE LY DIFFERENT FACTS AND CIRCUMSTANCES. 5.13 THE APPELLANT HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS AND CORRELATED THE FACTS IN THOSE DECISIONS WITH TH E FACTS IN THE CASE OF THE APPELLANT. I AM CONVINCED THAT THE DECISIONS RE LIED UPON BY THE APPELLANT ARE CERTAINLY APPLICABLE IN THE CASE OF T HE APPELLANT AS THE FACTS ARE NOT ONLY SIMILAR BUT IDENTICAL. THE APPEL LANT HAS ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT AND JURISDICTIONAL HIGH COURT WHICH CANNOT BE IGNORED. THE A.O HAS REF ERRED TO THE NOTICES ISSUED UNDER SECTION 133(6) WHICH HAVE BEEN RETURNED UN-SERVED IN SOME OF THE CASES. IT IS SEEN THAT IN THE SUBSEQ UENT PARAGRAPH, THE A.O HIMSELF HAS GIVEN THE PARTICULARS OF RECEIPT OF REPLIES FROM THE INVESTORS, THEREFORE, IN MY CONSIDERED VIEW, NO ADV ERSE INFERENCE CAN BE DRAWN AGAINST THE APPELLANT FOR MERE NON SERVICE OF NOTICES INITIALLY, I HAVE CAREFULLY PERUSED THE EXPLANATION SUBMITTED BY THE APPELLANT IN RESPECT OF CASES WHERE THE NOTICES REMAINED UNSERVE D, THE SUBMISSIONS OF THE APPELLANT ARE FOUND TO BE CONVINCING. IT IS FURTHER OBSERVED THAT NO FURTHER ENQUIRY OR INVESTIGATION HAS BEEN CONDUC TED BY THE AO TO ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 0 - CORROBORATE OR SUPPORT THE CONCLUSIONS DRAWN IN THE ASSESSMENT ORDER SO AS TO ASSESS THE SHARE CAPITAL MONEY AS THE UNDI SCLOSED INCOME OF THE APPELLANT COMPANY. IN MY CONSIDERED OPINION, AP ART FROM DRAWING PRESUMPTIONS, THE AO HAS NOT BROUGHT ANY CLINCHING MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE SAID SHARE CAP ITAL MONEY BELONGS TO THE APPELLANT SINCE NO NEXUS HAS BEEN ESTABLISHE D THAT THE MONEY FOR AUGMENTING THE INVESTMENT IN THE BUSINESS HAS FLOWN FROM APPELLANTS OWN MONEY WHICH IS AN ESSENTIAL PRE-REQUISITE FOR M AKING ADDITION IN SUCH CASES. I AM CONVINCED THAT THE CASE OF THE APP ELLANT IS SQUARELY COVERED BY THE THE DECISIONS RENDERED BY THE HONBL E APEX COURT IN THE CASE OF THE CIT VS. LOVELY EXPORTS (P) LTD. REPORTE D IN 216 CTR 195 AND THE JURISDICTIONAL HIGH COURT VIZ. THE CHHATTIS GARH 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 EFFE CTIVELY DEMONSTRATED AND BROUGHT ON TO THE RECORD BY THE A.O. THE SUBMIS SIONS OF THE AO THAT THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF LOVELY EXPORTS (P) LIMITED WAS RENDERED IN THE LIGHT OF DI FFERENT FACTS INASMUCH AS THE SAID JUDGEMENT WAS RENDERED BY THE HONBLE SUPREME COURT IN THE CONTEXT OF PUBLIC ISSUE, IS DEVOID OF MERIT BECAUSE THE DECISION WAS RENDERED BY THE HONBLE 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 TH E INVESTMENTS MADE BY THE SHARE APPLICANTS WERE DULY REFLECTED IN THE AUD ITED FINANCIAL STATEMENTS OF THE CORPORATE INVESTORS. IT IS A SETT LED 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 DOCU MENTARY EVIDENCES ADDUCED BY THE APPELLANT SUCH AS CONFIRMA TION FROM THE SHARE APPLICANTS, THEIR PAN, CERTIFICATE OF INCORPORATION OF SUBSCRIBER COMPANIES, RECORDS OF THE REGISTRARS OF COMPANIES ( ROC) GENERATED FROM THE WEBSITE, AFFIDAVITS FILED IN SUPPORT OF TH E FACT OF ADVANCING SHARE APPLICATIONS MONIES ETC. THE SUBSCRIPTION FOR THE SHARES WERE RECEIVED THROUGH CHEQUES. THE INVESTOR-COMPANIES WE RE ACTIVE AS PER THE WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS AN D THEY WERE DULY REGISTERED WITH ROC. THOSE COMPANIES WERE ALSO HAVI NG THEIR INCOME TAX PAN NUMBERS AND REGULARLY FILED RETURNS OF INCO ME. NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO S HOW THAT THE AFFIDAVITS FILED BY THE DIRECTORS OF THE INVESTOR- COMPANIES WERE NOT GENUINE. NO ENQUIRIES WERE CONDUCTED ABOUT THE CONT ENTS OF THE AFFIDAVITS. THE A.O DID NOT MAKE ANY ATTEMPT TO DIS CREDIT THE AFFIDAVITS. THE RESULT IS THAT THE CONTENTS OF THE AFFIDAVITS H AVE NOT BEEN DISPROVED. IT ALSO SHOWS THAT THE PARTIES (DEPONENTS) WERE PRE SENT AT THE GIVEN ADDRESSES AGAINST WHOM ACTION COULD HAVE BEEN TAKEN . NO MATERIAL WAS BROUGHT ON RECORD BY THE A.O INDEPENDENTLY OF THE I NFORMATION RECEIVED, IF ANY, FROM THE INVESTIGATION WING OF TH E INCOME TAX DEPARTMENT TO SHOW THAT THE MONIES REPRESENTED THE APPELLANT'S UNDISCLOSED INCOME. 5.15 THE HONBLE SUPREME COURT IN CIT VS. LOVELY EX PORT, 216 ITR 198 SC AND THE DELHI HIGH COURT IN DIVINE LEASING A ND FINANCE LIMITED, (2008) 299 ITR 268 HAVE HELD THAT IN THE C ASE OF MONEY RECEIVED TOWARDS SHARE CAPITAL ONLY THE IDENTITY OF THE SHARE HOLDERS NEEDS TO BE PROVED AND ONCE THAT IS ESTABLISHED AND IT IS ALSO SHOWN ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 1 - THAT THE MONEY DID IN FACT COME FROM THEM, IT IS NO T FOR THE ASSESSEE TO PROVE AS TO HOW THE SHARE APPLICANTS CAME TO BE IN POSSESSION OF THE MONEY. IN THE LIGHT OF THE ABOVE DISCUSSION, I AM I NCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLA NT TO SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE APPLICATION MO NEY RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE SAME WERE NOT ACC OMMODATION ENTRIES. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE A.O. WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY T HE APPELLANT AS ITS UNDISCLOSED INCOME. 5.16 THE CASE OF THE APPELLANT FINDS SUPPORT FROM T HE DECISION IN: 1. CIT VS. KAMDHENU STEEL & ALLOYS LIMITED & ORS. ( 2012) 68 DTR (DEL) 38. 2. IN THE CASE OF COMMISSIONER 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. WIN STRAL PETROCHEMICALS (P.) LTD. [2011] 10 TAXMANN.COM 137 (DELHI) 5. IN THE CASE OF COMMISSIONER OF INCOME-TAX V. ARU NANANDA TEXTILES (P.) LTD. [2011] 15 TAXMANN.COM 226 (KAR.) , 6. IN THE CASE OF COMMISSIONER OF INCOME-TAX V. CRE ATIVE 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 2 07/18 TAXMANN.COM 217 (DELHI). HOWEVER, ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) I FIN D THAT THE FACTS ARE CLEARLY DISTINGUISHABLE. IN FACT, IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) ITSELF THE HONBLE DELHI HIGH COURT HAS OBS ERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA), AS UNDER:- 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND AP PRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERS TOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHA RE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE CO MPANY UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFR AID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESE NT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSE SSEE AND ALSO ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 2 - ESTABLISHES THE LINK BETWEEN SELF-CONFESSED 'ACCOMM ODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSE SSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIE S THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT O NE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE A SSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT B Y THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROV IDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SH OWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE - MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, T HE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION O F WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AND CRED ITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRAN SACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE O R MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJE CT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY IN TO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. 5.18 THE CASE OF THE APPELLANT ALSO FINDS SUPPORT F ROM THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (A) COMMISSIONER OF INCOME-TAX-III V. NAMASTEY CHEM ICALS (P.) LTD. [2013] 33 TAXMANN.COM 271 (GUJARAT); (B) COMMISSIONER OF INCOME TAX V. KUBER PLORITECH L TD. [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. COMMISSION ER 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 MARKE TING (P.) LTD. [2008] 173 TAXMAN 41 (DELHI) (H) ASSISTANT COMMISSIONER OF INCOME-TAX V. MANSARO VAR URBAN CO-OPERATIVE BANK LTD. [2009] 124 TTJ 269(LUCKNOW); (I) COMMISSIONER OF INCOME-TAX IV V. EMPIRE BUILDT ECH (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 CAPIT AL LTD. [2012] 18 TAXMANN.COM 350 (GUJ.); (L) COMMISSIONER OF INCOME-TAX V. JAY DEE SECURITIE S & FINANCE LTD. [2013] 32 TAXMANN.COM 91 (ALLAHABAD); ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 3 - (M) COMMISSIONER OF INCOME-TAX, DELHI-II V. KINETIC CAPITAL FINANCE LTD. [2011] 14 TAXMANN.COM 150 (DELHI); (N) COMMISSIONER OF INCOME-TAX V. VLS FOODS (P.) LT D. [2011] 15 TAXMANN.COM 225 (DELHI); (O) COMMISSIONER OF INCOME-TAX V. AMBUJA GINNING PR ESSING AND OIL CO. (P.) LTD. [2011] 15 TAXMANN.COM 273 (GU J.); (P) COMMISSIONER OF INCOME-TAX V. ROCK FORT METAL & MINERALS LTD. [2011] 198 TAXMAN 497 (DELHI); (Q) COMMISSIONER OF INCOME-TAX V. SIRI RAM SYAL HYD RO POWER (P.) LTD.[2011] 196 TAXMAN 441(DELHI); (R) COMMISSIONER OF INCOME-TAX V. ORBITAL COMMUNICA TION (P.) LTD. [2010] 327 ITR 560 (DELHI); (S) COMMISSIONER OF INCOME-TAX-I V. HIMATSU BIMET L TD. [2011] 12 TAXMANN.COM 87 (GUJ.); (T) COMMISSIONER OF INCOME-TAX - I, JAIPUR V. A.L. LALPURIA CONSTRUCTION (P.) LTD. [2013] 32 TAXMANN.COM 384 (RAJASTHAN); (U) LUMINANT INVESTMENTS (P.) LTD. V. DEPUTY COMMIS SIONER OF INCOME-TAX, CENTRAL CIRCLE 40, MUMBAI [2014] 42 TAXMANN.COM 14 (MUMBAI - TRIB.); 5.19 I AM CONVINCED THAT THE APPELLANT HAS BEEN ABL E TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS AS ALSO THE GENUINENESS OF THE TRANSACTIONS. IN MY CONSIDERED OPINION, THE RATIO OF THE AFORESAID JUDGEMENTS OF THE HONBLE SUPREME COURT IN LOVELY E XPORTS AND THAT OF JURISDICTIONAL HIGH COURT ARE CERTAINLY BINDING IN NATURE ON ALL THE REVENUE AUTHORITIES AND COURTS ETC. AND FURTHER, TH E JUDGEMENT OF THE JURISDICTIONAL HIGH COURT AS WELL AS THAT OF THE HO NBLE SUPREME COURT IN LOVELY EXPORTS HAS BEEN RENDERED ON IDENTICAL FA CTS. HENCE, IT IS IMPERMISSIBLE TO DEVIATE FROM THE RATIO LAID DOWN T HEREIN AND AGAINST THE LAW OF JUDICIAL PRECEDENTS. I AM CONVINCED THAT THE ACTION OF THE A.O IN MAKING THE ADDITION IN RESPECT OF EVEN THOSE SUMS WHICH WERE REFUNDED IS ILLEGAL AS THE SAME IS CLEARLY BEYOND T HE PURVIEW OF SECTION 68. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE RATIO OF THE BINDING JUDGEMENTS, THE ADDITION OF SHARE APPLICATI ON/CAPITAL MONEY OF RS.13,65,00,000/- AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 IS UNCALLED FOR AND HENCE, DELETED. THE APPELLANT GETS RELIEF OF RS. 13,65,00,000 /- AS TABULATED BELOW: A.Y. AMOUNT (RS.) 2006-07 8,80,00,000.00 2009-10 1,05,00,000.00 2012-13 3,80,00,000.00 10. AS REGARDS SECOND ISSUE PERTAINING TO LOW YIELD AND ALLEGED SUPPRESSION OF PRODUCTION AND UNACCOUNTED SALES, TH E CIT(A) TOOK NOTE OF THE NUANCES OF FACTUAL MATRIX AND LEGAL SUB MISSIONS PLACED BEFORE HIM BY THE ASSESSEE TOWARDS UNTENABILITY OF ADDITIONS AND PASSED A DETAILED COMMON AND COMBINED ORDER ON THE ISSUE COVERING ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 4 - ALL THE ASSESSMENT YEARS NOTED ABOVE. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) ON LOW YIELD IS ALSO EXT RACTED HEREUNDER FOR EASY REFERENCE: 9. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSIONS OF THE APPELLANT. THE SEARCH OPERATION U/S 132 HAD TAKEN PLACE IN THE PREMISES OF THE APPELLANT INCLUDING RE SIDENTIAL PREMISES OF THE DIRECTORS. THE A.O HAD ISSUED SHOW CAUSE NOTICE CUM QUERY LETTER INTER ALIA ASKING THE APPELLANT TO SHOW CAUSE WHY A DDITION 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 AL LEGED UNACCOUNTED SALES BASED ON UNACCOUNTED PRODUCTION B Y 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 DI SCUSSION ON HIS MATHEMATICAL CALCULATION PERTAINING TO ROLLING MILL DIVISION, HOWEVER, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE A.O H AS NOT DRAWN ANY ADVERSE INFERENCE AS REGARDS ROLLING MILL DIVISION NOR DID THE A.O. FIND YIELD OF ROLLING MILL DIVISION TO BE LOWER, TH E A.O. HAS FAILED TO EXPLAIN THE RELEVANCE AND SIGNIFICANCE OF THESE MAT HEMATICAL CALCULATIONS PERTAINING TO ROLLING MILL DIVISION. T HE A.O HAS REPRODUCED VARIOUS MATHEMATICAL CALCULATIONS AND TA BLES CONTAINING DATA OF CONSUMPTION OF POWER, SPONGE IRON, PRODUCTI ON, AVERAGE CONSUMPTION, HIGHEST AND LOWEST CONSUMPTION ETC. TH E A.O ULTIMATELY ZEROED DOWN TO THE ISSUE OF YIELD DECLARED BY THE A PPELLANT IN SMS DIVISION. THE A.O HAS FAILED TO ESTABLISH THE NEXUS BETWEEN THE MATHEMATICAL CALCULATIONS OF HIGHEST AND LOWEST CON SUMPTION OF POWER, RAW MATERIAL ETC WITH YIELD OF 89% ADOPTED BY THE A .O. THE A.O HAS MERELY STATED THAT THE SMS DIVISION SHOWS YIELD WHI CH IS QUITE LOW AS COMPARED TO THE YIELD BEING SHOWN BY OTHER MANUFACT URERS OF CG, HOWEVER, WHEREFROM THE A.O DERIVED THIS FIGURE OF 8 9% IS BEST KNOWN TO THE A.O ONLY. THE UNDERSIGNED MADE AN ATTEMPT TO WO RK OUT THE AVERAGE YIELD IN THE INDUSTRY BASED ON DATA AVAILABLE FROM THE DEPARTMENT ITSELF. 9.3 THE APPELLANT HAS SUBMITTED THAT DESPITE REPEAT ED REQUESTS MADE BEFORE THE A.O, THE BASIS OF ADOPTING YIELD IN THE CASE OF SMS DIVISION AT 89% WAS NOT PROVIDED. WITH A VIEW TO MAKE THE CO MPARISON OF YIELD DECLARED BY OTHER ASSESSEES ENGAGED IN SIMILAR LINE OF BUSINESS, INFORMATION REGARDING YIELD WAS SOUGHT FROM THE OFF ICE OF DCIT-1(2), RAIPUR VIDE LETTERED DATED 22.04.2014. THE INFORMAT ION WAS RECEIVED FROM THE OFFICE OF DCIT-1(2), RAIPUR VIDE LETTER DA TED 25.04.2014. 9.4 THE YIELD DECLARED BY THE APPELLANT AND INFORM ATION REGARDING YIELD DECLARED BY OTHER ASSESSEES, AS RECEIVED FROM THE DCIT-1(2), RAIPUR, WAS COMPARED WITH REFERENCE TO THE UNIFORM AND STANDARD YIELD ADOPTED BY THE A.O. THE RESULTS OF THE COMPARISON S O MADE ARE AS UNDER:- ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 5 - SL NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. YIELD(%) BENCHMARK TAKEN BY AO YIELD (%) OF APPELLANT A.Y. 2008-09 1 SHRI NAKODA ISPAT LTD. 2007-08 79.78 89.00 88.24 2 SADGURU ISPAT PVT. LTD. 2007-08 77.36 89.00 88.24 3 RASHMI SPONGE IRON AND POWER INDUSTRIES LTD. 2007-08 77.88 89.00 88.24 4 JAGDAMBA SPONGE PVT. LTD. 2007-08 73.06 89.00 88.24 5 SUPER IRON AND STEEL PVT. LTD. 2007-08 83.91 89.00 88.24 ARITHMETICAL MEAN OF YIELD 83.40 89.00 85.80 A.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 STEEL PVT. LTD. 2009-10 86.50 89.00 84.05 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 6 - 8 STEEL ABRASIVE INDUSTRIES LTD. 2009-10 85.00 89.00 84.05 9 COSMOS CASTINGS INDIA LTD. 2009-10 84.10 89.00 84.05 10 NARMADA IRON AND STEEL PVT. LTD. 2009-10 83.11 89.00 84.05 11 INDUS SMELTERS LTD. 2009-10 81.96 89.00 84.05 ARITHMETICAL MEAN OF YIELD 82.75 89.00 84.05 A.Y. 2011-12 1 STEEL ABRASIVE INDUSTRIES LTD. 2010-11 74.00 89.00 83.94 2 COSMOS CASTINGS INDIA LTD. 2010-11 81.00 89.00 83.94 3 SUPER IRON AND STEEL PVT. LTD. 2010-11 86.78 89.00 83.94 4 SHILPY STEEL PVT. LTD. 2010-11 79.64 89.00 83.94 5 SOUTHERN ISPAT AND ENERGY LTD. 2010-11 77.38 89.00 83.94 6 NARMADA IRON AND STEEL PVT. LTD. 2010-11 85.02 89.00 83.94 7 NANDAN STEEL AND POWER LTD. 2010-11 83.84 89.00 83.94 8 INDUS SMELTERS LTD. 2010-11 83.11 89.00 83.94 AARITHMETICAL MEAN OF YIELD 81.35 89.00 83.94 THE AVERAGE YIELD OF THE INDUSTRY WAS CALCULATED AS UNDER: SL NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. TOTAL PRODUC TION TOTAL CONSUMPTI ON YIELD( %) YIELD (%) OF APPELL ANT 1 RASHMI SPONGE IRON AND POWER INDUSTRIES LTD. 2007-08 12889. 73 17239.33 74.77 2 SADGURU ISPAT PVT. LTD. 2007-08 8662.6 0 11229.44 77.14 AVERAGE YIELD FOR FY 2007-08 21552. 33 28468.77 75.71 88.24 3 COSMOS CASTINGS INDIA LTD. 2008-09 51070. 60 61099.31 83.59 4 SUPER IRON AND STEEL PVT. LTD. 2008-09 46688. 02 55152.00 84.65 5 SHRI NAKODA ISPAT LTD. 2008-09 22011. 00 27431.94 80.24 6 NANDAN STEEL AND POWER LTD. 2008-09 46140. 10 55259.96 83.50 AVERAGE YIELD FOR FY 2008-09 165909 .71 198943.21 83.40 85.80 7 COSMOS CASTINGS INDIA LTD. 2009-10 50585. 93 60148.65 84.10 8 ISHWAR ISPAT PVT. LTD. 2009-10 10114. 13 11892.71 85.04 9 JAGDAMBA SPONGE PVT. LTD. 2009-10 13780. 42 17076.24 80.70 10 NANDAN STEEL AND POWER LTD. 2009-10 59042. 30 70259.19 84.03 11 SHRI NAKODA ISPAT LTD. 2009-10 359.40 464.30 77. 41 12 SADGURU ISPAT PVT. LTD. 2009-10 12838. 16534.90 7 7.65 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 7 - 60 13 SHRI RUPANADHAM STEEL PVT. LTD. 2009-10 16963. 05 19461.97 87.16 14 SUPER IRON AND STEEL PVT. LTD. 2009-10 8933.3 7 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 2267.9 5 2635.39 86.06 18 SOUTHERN ISPAT AND ENERGY LTD. 2010-11 3657.2 3 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 TH E SAME YEAR IS NOT UNIFORM, CONVERSELY, EVERY ASSESSEE DECLARED DIFFER ENT YIELD. (B) THE YIELD DECLARED BY SAME ASSESSEE IN DIFFEREN T YEARS IS ALSO NOT UNIFORM, FOR INSTANCE, YIELD ACHIEVED BY SADGURU IS PAT PVT. LTD. IN A.Y 2009-10 AND 2010-11 WAS 81.35% AND 77.01% RESPECTIVELY. (C) NOT EVEN A SINGLE COMPARABLE INSTANCE WAS FOUND DECLARING YIELD OF 89%. (D) THE ARITHMETICAL MEAN OF YIELD DECLARED BY OTHE R ASSESSEES WAS COMPUTED ON THE BASIS OF DATA AVAILABLE WITHIN THE DEPARTMENT. HOWEVER, THE YIELD DECLARED BY THE APPELLANT IN DIF FERENT YEARS WAS FOUND TO BE MORE THAN THE ARITHMETICAL MEAN OF THE YIELD DECLARED BY THE OTHER ASSESSEES. (E) FROM THE TABLE ABOVE, WHEREIN AVERAGE YIELD OF THE INDUSTRY HAS BEEN COMPUTED BASED ON DATA RECEIVED FROM DCIT-1(2) , RAIPUR, IT IS SEEN THAT THE YIELD ACHIEVED BY THE APPELLANT IN FINANCIAL YEAR 2007-08, 2008-09, 2009-10 AND 2010-11 IS MORE THAN THE AVERAGE INDUSTRY YIELD. IN VIEW OF AFORESAID FINDINGS, THE ACTION OF THE A. O IN ADOPTING UNIFORM AND STANDARD YIELD OF 89% APPEARS TO BE UNREASONABL E. 9.5 THEREAFTER, WITH A VIEW TO MAKE COMPARISON OF F INANCIAL RESULTS OF THE APPELLANT WITH OTHER ASSESSEES ENGAGED IN SI MILAR LINE OF BUSINESS, LETTER WAS ISSUED TO DCIT-1(2), RAIPUR ON 28.04.2014. THE DESIRED DOCUMENTS WERE RECEIVED FROM THE DCIT-1(2), RAIPUR VIDE LETTER DATED 26TH MAY, 2014. 9.6 I HAVE CAREFULLY GONE THROUGH THE TAX AUDIT RE PORTS, AUDITED FINANCIAL STATEMENTS AND ASSESSMENT ORDERS PASSED BY THE DCIT-1(2), RAIPUR IN THE CASE OF OTHER ASSESSEES REFERRED SUPR A. FROM THE PERUSAL OF SAID ASSESSMENT ORDERS, IT WAS GATHERED THAT NO ADVERSE INFERENCE WAS DRAWN IN THE CASE OF THOSE ASSESSEES THAT WERE ASSESSED IN THE PAST IN THE OFFICE OF DCIT-1(2), RAIPUR ON THE ISSUE OF LOWER YIELD, AND IN ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 8 - FACT DECLARED LESS YIELD THAN THAT DECLARED BY THE APPELLANT. IN NONE OF THE COMPARABLE CASE RECEIVED FROM DCIT-1(2), RAIPUR , SUCH STANDARD YIELD OF 89% WAS ADOPTED DESPITE OF THE FACT THAT A LL THE COMPARABLE CASES DECLARED YIELD MUCH LESS THAN 89% AND EVEN LE SS THAN THAT DECLARED BY THE APPELLANT. 9.7 I HAVE CAREFULLY ANALYZED THE FINANCIAL RESULTS OF THE APPELLANT AND A COMPARISON OF GP AND NP RATE WAS DRAWN BETWEE N GP AND NP RATE DECLARED BY THE APPELLANT AND THE COMPARABLE C ASES RECEIVED FROM DCIT-1(2), RAIPUR. THE RESULT OF THE COMPARISON IS AS UNDER: SL NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. TURNOVER (RS. IN LACS.) GP (%) NP (%) YIELD (%) TURNOV ER OF APPELL ANT (RS. IN LACS) GP (%) OF APPEL LANT NP (%) OF APPEL LANT YIELD (%) OF APPEL LANT 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 0.65 77.01 27051. 26 3.15 0.74 84.05 10 SHRI RUPANADHAM STEEL PVT. LTD. 2009- 10 3714.08 4.02 0.48 86.19 27051. 26 3.15 0.74 84.05 11 SUPER IRON AND STEEL PVT. LTD. 2009- 10 8354.82 2.46 0.51 86.50 27051. 26 3.15 0.74 84.05 AVERAGE YIELD FOR FY 2009- 10 83.69 12 SHILPY STEEL PVT. LTD. 2010- 11 4838.52 5.18 0.70 79.64 29332. 56 2.93 0.70 83.94 13 NANDAN STEEL AND POWER LTD. 2010- 11 23150.01 4.90 1.10 83.84 29332. 56 2.93 0.70 83.94 14 SUPER IRON AND STEEL PVT. LTD. 2010- 11 9805.49 2.11 0.78 86.78 29332. 56 2.93 0.70 83.94 15 SOUTHERN ISPAT AND ENERGY LTD. 2010- 11 1379.95 25.36 - 14.55 77.38 29332. 56 2.93 0.70 83.94 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 1 9 - 16 INDUS SMELTERS LTD. 2010- 11 5531.88 3.82 1.04 83.11 29332. 56 2.93 0.70 83.94 17 COSMOS CASTINGS INDIA LTD. 2010- 11 14554.30 3.51 0.20 81.00 29332. 56 2.93 0.70 83.94 18 NARMADA IRON AND STEEL PVT. LTD. 2010- 11 7064.62 1.72 0.40 85.02 29332. 56 2.93 0.70 83.94 19 STEEL ABRASIVE INDUSTRIES LTD. 2010- 11 6732.23 -9.59 - 11.41 74.00 29332. 56 2.93 0.70 83.94 AVERAGE YIELD FOR FY 2010- 11 81.71 NOTE : IN THE ABOVE COMPARATIVE TABLE FOR COMPARISON OF GP AND NP, FOLLOWING COMPANIES HAVE NOT BEEN CONSIDERED AS THE FIGURES ARE NOT COMPARABLE DUE TO THE REASONS MENTIONED FOR EAC H CASE:- SHRI NAKODA ISPAT LIMITED-F.Y 2008-09 AND 2009-10 SHRI NAKODA ISPAT LIMITED IS DERIVING ITS MAJOR INC OME FROM POWER DIVISION I.E. SALE OF ELECTRICITY TO CSEB AND OTHER PARTIES, IT IS ALSO CAPTIVELY CONSUMING ELECTRICITY AND DERI VING INCOME FROM SALE OF CARBON CREDITS, ALL THESE FACTS HAVE B EEN NOTED FROM THE FINDING IN THE ASSESSMENT ORDER PASSED IN THE C ASE OF SAID COMPANY, HENCE, EXCLUDED WHILE MAKING COMPARISON. RASHMI SPONGE IRON AND POWER INDUSTRIES LIMITED-FY 2007-08 RASHMI SPONGE IRON AND POWER INDUSTRIES LTD. IS DER IVING ITS INCOME FROM MANUFACTURING AND TRADING OF STEEL ITEM S AND POWER GENERATION. FURTHER, OUT OF TOTAL TURNOVER OF RS. 9 0.60 CRORES, RS. 3.55 CRORES IS DERIVED FROM POWER SALES TO CSEB , ALL THESE FACTS HAVE BEEN NOTED FROM THE FINDINGS IN THE ASSE SSMENT ORDER PASSED IN THE CASE OF SAID COMPANY, HENCE, EXCLUDED WHILE MAKING COMPARISON. 9.8 I HAVE CAREFULLY COMPARED THE FINANCIAL RESULT S OF THE APPELLANT COMPANY WITH THE FINANCIAL RESULTS OF OTHER COMPARA BLE CASES AS RECEIVED FROM DCIT-1(2), RAIPUR. AS IS SELF EXPLANA TORY 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 TH ERE IS NO DIRECT CO- RELATION BETWEEN GP RATE AND YIELD, FOR INSTANCE, T HE YIELD DECLARED BY SUPER IRON AND STEEL PRIVATE LIMITED IN FINANCIAL Y EAR 2009-10 IS 86.50% WHICH IS MARGINALLY, HIGHER THAN THE YIELD D ECLARED BY THE APPELLANT AT 84.05%, HOWEVER, THE GP RATE AND NP RA TE OF THE APPELLANT ARE FOUND TO BE MUCH BETTER I.E. 3.15% AND 0.74% RE SPECTIVELY IN COMPARISON TO 2.46% AND 0.51% RESPECTIVELY DECLARED BY SUPER IRON AND STEEL PRIVATE LIMITED. SIMILARLY, IT IS OBSERVE D 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 DEC LARED BY SHILPY STEEL PRIVATE LIMITED AT 79.64% IS MUCH LOWER THAN THE YI ELD DECLARED BY THE APPELLANT AT 83.94%. I AM IN AGREEMENT WITH THE SUBMISSIONS OF THE APPEL LANT THAT THE VARIATION IN CONSUMPTION/YIELD IS BOUND TO TAKE PLA CE AS RAW MATERIAL ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 0 - OF SMS DIVISION IS SPONGE IRON, WHICH IN TURN IS PR ODUCED FROM IRON ORE, COAL AND DOLOMITE AND IRON ORE WHICH IS ESSENT IALLY A MINERAL DIFFERS IN IRON CONTENT AS OBTAINED FROM THE MINES, CONVERSELY, BEING MINERAL, THE QUALITY OF ORE AND COAL CANNOT BE EXPE CTED TO BE UNIFORM. I DO FIND CONSIDERABLE FORCE IN THE SUBMISSIONS OF TH E APPELLANT THAT THE QUALITY/GRADE OF SPONGE IRON IS REFERRED IN TERMS O F METALLIZATION RATE AND SPONGE IRON OF DIFFERENT METALLIZATION RATE CAN NOT BE EXPECTED TO GIVE UNIFORM YIELD, FURTHERMORE, IT IS A MATTER OF COMMON KNOWLEDGE THAT THE QUALITY AND QUANTITY OF OUTPUT VARIES WITH THE QUALITY AND COMPOSITION OF INPUTS. IT NEEDS NO REITERATION THAT AT A GIVEN POINT OF TIME, RATE OF SPONGE IRON WILL VARY DEPENDING UPON THE METALLIZATION RATE AND SIMILARLY, RATE OF IRON ORE WILL VARY WITH THE VARIATION IN IRON CONTENT IN IRON ORE. THEREFORE, IN MY CONSIDERED VI EW, YIELD CANNOT BE SAID TO BE SOLE DECISIVE FACTOR WHILE ASSESSING THE RELIABILITY OF BOOKS OF ACCOUNT. IN OTHER WORDS, MERELY LOW YIELD CANNOT LEAD TO AN IRREVOCABLE PRESUMPTION THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE UNRELIABLE AND REASONABLE PROFIT CANNOT BE DEDUCED THEREFROM. IN MY CONSIDERED VIEW, IF A PERSON USES LOW GRADE OF RAW MATERIAL WHICH WILL GIVE LOW YIELD, YET HE MAY MAKE HANDSOME PROFIT IF HE IS ABLE TO BUY RAW MATERIAL AT COMPETITIVE RATES, IN SUCH A SITUAT ION, IT CANNOT BE SAID THAT THE BOOKS OF ACCOUNTS ARE NOT RELIABLE MERELY DUE TO LOW YIELD. DICTATION GP 9.9 IT IS A MATTER ON RECORD THAT THE APPELLANT HAS MAINTAINED QUANTITATIVE RECORDS OF RAW MATERIAL CONSUMED AND F INISHED PRODUCT PRODUCED. THE BOOKS OF ACCOUNTS WERE SUBJECTED TO T AX AUDIT AS WELL AS AUDIT UNDER COMPANY LAW WHICH WERE PRODUCED BEFORE THE A.O. TOGETHER WITH BILLS AND VOUCHERS AND THE SAME WERE EXAMINED BY TEST CHECK. THE APPELLANT HAS FURNISHED THE COPIES OF EX CISE RETURNS FILED BY THE APPELLANT ON MONTHLY BASIS IN FORM ER-1 FOR FIN ISHED GOODS AND IN FORM ER-6 FOR RAW MATERIALS, THE SAME ARE PLACED IN PAPER BOOK. I HAD CAREFULLY ANALYZED VARIOUS COLUMNS AND DETAILS FURN ISHED BY THE APPELLANT ON MONTHLY BASIS TO THE CENTRAL EXCISE DE PARTMENT. IT IS GATHERED 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, Q UANTITY CLEARED, CLOSING STOCK, ASSESSABLE VALUE, TYPE OF CLEARANCE, EXCISE DUTY PAYABLE ETC. IN FORM ER-6, THE APPELLANT FURNISHED THE DETA ILS ON MONTHLY BASIS VIZ. DESCRIPTION OF PRINCIPAL INPUTS, QUANTITY CODE , OPENING BALANCE, RECEIPT, TAKEN FOR USE IN THE MANUFACTURE OF DUTIAB LE AND EXEMPTED FINISHED GOODS, REMOVED AS SUCH FOR EXPORT OR FOR H OME 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 ACKNOWLEDGE D AND BEARS THE SEAL AND SIGNATURE OF THE CENTRAL EXCISE AUTHORITY. THE APPELLANT WAS ASKED TO PRODUCE THE EXCISE RECORDS MAINTAINED ON D AILY BASIS. THE APPELLANT DID PRODUCE THE EXCISE RECORDS IN FORM-IV AND RG-1 FOR RAW MATERIAL AND FINISHED GOODS RESPECTIVELY FOR ALL TH E YEARS UNDER CONSIDERATION. ON TEST CHECK OF EXCISE RECORDS MAIN TAINED ON DAILY BASIS WITH THE FIGURES OF PRODUCTION, CONSUMPTION O F RAW MATERIAL AND CLOSING STOCK OF FINISHED GOODS AND RAW MATERIAL SH OWN IN FORM-ER-1 AND ER-6, IT WAS FOUND THAT THE SAME ARE TALLYING A ND THUS, WERE FOUND TO BE SATISFACTORY. THE ENTRIES IN THE EXCISE RECOR DS FOR MATERIAL ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 1 - INWARDS WAS CROSS CHECKED WITH REFERENCE TO PURCHAS E BILLS AND ON TEST CHECK, THE SAME WAS FOUND TO BE SATISFACTORY AND NO INFIRMITY WAS OBSERVED. THE QUANTITY OF FINISHED GOODS CLEARED WA S ALSO VERIFIED WITH THE SALES INVOICE/CHALLAN ISSUED BY THE APPELLANT A ND THE SAME WAS FOUND TO BE SATISFACTORY. FROM THE DETAILS FURNISHE D BY THE APPELLANT IN FORM ER-6, THE DATA FOR CALCULATION OF PERCENTAGE O F YIELD AND BURNING LOSS IS READILY AVAILABLE. 9.11 THE APPELLANT WAS ASKED TO SUBMIT COPIES OF S EIZED DOCUMENTS AND REPLY / EXPLANATION OF THE APPELLANT THEREON. THE E XPLANATION GIVEN BY THE APPELLANT ON SEIZED DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O. WAS CROSS CHECKED WITH REFERENCE TO THE SEIZED DOCUMENTS, EXCISE RECORDS, BOOKS OF ACCOUNT AND BILL AND VOUCHERS AND THE SAME WAS FOUND TO BE SATISFACTORY. 9.12 ON PAGE NO.14 OF THE ASSESSMENT ORDER, THE A.O . HAS REFERRED TO THE DIFFERENCE IN INVENTORY, HOWEVER, IT IS SEEN TH AT THE EXCESS STOCK OF BLOOMS/BILLETS AND END CUTTINGS WAS LESS THAN 10% O F THE TOTAL STOCK AS PER BOOKS OF ACCOUNTS OF THE APPELLANT. IF THE APPE LLANT WAS ACTUALLY SUPPRESSING THE YIELD AS ALLEGED BY THE A.O, IN ALL PROBABILITIES, THE DIFFERENCE IN STOCK OF BLOOMS AND BILLETS MUST HAVE BEEN VERY WIDE AND IT CANNOT BE JUST A SHEER COINCIDENCE THAT, THE SEA RCH TEAM DID NOT COME ACROSS ANY INCRIMINATING DOCUMENT; THAT NO STRIKING DISCREPANCY WAS OBSERVED IN STOCK/INVENTORY. 9.13 THE FINDINGS OF THE A.O AT PARA 9.7 ON PAGE NO .28 OF THE ASSESSMENT ORDER ARE DISCUSSED HEREUNDER:- (1) REGARDING STOCK, AS STATED SUPRA, THE DIFFERENC E IN STOCK OF BLOOMS/BILLETS AND END CUTTINGS WAS LESS THAN 10% O F THE TOTAL STOCK AS PER BOOKS OF ACCOUNTS OF THE APPELLANT. (2) REGARDING CAPACITY UTILIZATION, THE ALLEGATION OF THE A.O THAT THE ACTUAL PRODUCTION IS MUCH LESS THAN THE INSTALLED C APACITY HAS BEEN NEGATED BY THE APPELLANT BY PLACING ON RECORD ACTUAL PRODUCTION DATA I.E. QUANTITATIVE INFORMATION WITH REFERENCE TO WEIGHTED INSTALLED CAPACITY BASED ON ACTUAL NUMBER OF DAYS DURING WHICH THE PRODUCTION PROCESS WAS GOING ON. O N THE MATTER OF CAPACITY UTILIZATION, I DO FIND THAT THE ASSUMPT ION OF THE A.O THAT THE FACTORY WILL REMAIN IN OPERATION FOR 365 D AYS IS QUITE HYPOTHETICAL AS THE A.O. HAS COMPLETELY IGNORED THE FACT THAT THERE WOULD BE WEEKLY OFFS / HOLIDAYS APART FROM NA TIONAL HOLIDAYS AND ROUTINE MAINTENANCE. I AM CONVINCED WI TH THE EXPLANATION TENDERED BY THE APPELLANT REGARDING CAP ACITY UTILIZATION AND IN VIEW THEREOF, I AM OF THE CONSID ERED OPINION THAT THE CAPACITY UTILIZATION CANNOT BE SAID TO BE LOWER AS PRESUMED BY THE A.O. ON THE BASIS OF INCORRECT INTE RPRETATION OF FACTS. (3) REGARDING UNIFORM METHODOLOGY FOR MEASUREMENT O F 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 IGNORIN G THE YIELD, GP AND NP RATE DECLARED BY THE APPELLANT BASED ON A UDITED ACCOUNT. THIS ISSUE REGARDING ESTIMATION HAS BEEN DISCUSSED IN DETAIL IN THE SUBSEQUENT PARAS. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 2 - (4) REGARDING VARIATION IN CONSUMPTION OF SPONGE IR ON, POWER IN THE SMS DIVISION, IN MY CONSIDERED VIEW, THE SAME MAY L AY FOUNDATION FOR RAISING SUSPICION, HOWEVER, AT THE S AME TIME, IT IS SETTLED PRINCIPLE OF LAW THAT SUSPICION, HOWSOEVER GRAVE IT MAY BE, CANNOT TAKE PLACE OF THE EVIDENCE. ON AN INDEPE NDENT APPRECIATION OF REASONS EXPLAINED BY THE APPELLANT FOR VARIATION IN YIELD I.E. FOR VARIATION IN CONSUMPTION OF SPONG E IRON AND POWER IN SMS DIVISION, I FIND THE EXPLANATION OF TH E APPELLANT TO BE CONVINCING, PARTICULARLY, WHEN THE APPELLANT HAS BROUGHT ON RECORD CERTIFICATE FROM REGISTERED VALUER WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO.261 OF VOLUME 8 OF THE PAPER BOOK IN THE CASE OF THE APPELLANT. THE A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO DISBELIEVE THE CERTIFICATE OF REGISTERED VALUER WHO IS DULY AP PROVED U/S 34AB OF THE WEALTH TAX ACT, 1957 VIDE ORDER DATED 06.07.201 1. AS PER THE SAID CERTIFICATE OF THE REGISTERED VALUER, THE AVERAGE Y IELD IN SMS DIVISION FOR MANUFACTURING OF BLOOMS AND BILLETS USING SPONG E IRON AS RAW MATERIAL MAY VARY FROM 80 TO 86% AND THE POWER CONS UMPTION FOR PRODUCTION OF BLOOMS AND BILLETS IN SMS DIVISION MA Y VARY FROM 800 TO 1500 KW FOR PRODUCTION OF EACH MT OF BLOOMS AND BIL LETS. THE QUANTITATIVE DETAILS OF CONSUMPTION OF SPONGE IRON AND POWER WERE FOUND TO BE WITHIN THE REASONABLE RANGE AS CERTIFIE D BY THE REGISTERED VALUER. 9.14 THE RECORDING OF REASONS BY THE AO IS A COND ITION PRECEDENT FOR ANY BELIEF OF THE A.O, HOWEVER, IN THE INSTANT CASE, THE A.O HAS NOT STATED ANY REASON FOR HIS INFERENCE REGARDING STAND ARDIZED YIELD OF 89% IN THE SMS DIVISION. REASON MUST BE RECORDED BY THE AO THAT ANY UNDISCLOSED INCOME BELONGS TO THE APPELLANT. THE MA TERIAL ITSELF SHOULD NOT BE VAGUE, INDEFINITE, DISTINCT OR REMOTE. IF TH ERE IS NO RATIONAL OR INTANGIBLE NEXUS BETWEEN THE MATERIAL AND THE SATIS FACTION THAT A PERSON HAS UNDISCLOSED INCOME, THE CONCLUSION WOULD NOT DESERVE ACCEPTATION. THEN THE SATISFACTION IS VITIATED. 9.15 IN THE INSTANT CASE, THE A.O HAS COMPLETELY FA ILED TO RECORD THE REASONS BASED ON MATERIAL AVAILABLE AS THE A.O HAS NOT REFERRED TO EVEN A SINGLE SEIZED DOCUMENT WHICH COULD BE REGARDED AS INCRIMINATING DOCUMENT AND USED AS AN EVIDENCE TO EVEN REMOTELY S UPPORT THE CONCLUSION OF THE A.O. THE A.O SEEMS TO HAVE BLOWN OUT OF PROPORTION MERELY ON THE BASIS OF MATHEMATICAL AND MECHANICAL CALCULATIONS. THE A.O HAS LAID TOO MUCH EMPHASIS ON STATISTICS, THOSE STATISTICS WHICH CANNOT BE SAID TO HAVE BEEN GATHERED AS A RESULT OF SEARCH ONLY. THE STATISTICS RELIED UPON BY THE A.O ARE THOSE WHICH A RE QUITE ROUTINELY CALLED FOR EVEN DURING THE REGULAR ASSESSMENT PROCE EDINGS U/S 143(3). THE A.O HAS NOT STATED WHAT ACCORDING TO HIM SHOULD HAVE BEEN THE AVERAGE CONSUMPTION OF POWER, SPONGE IRON ETC. ANOT HER FACT NOTICED IS THAT THE CASE OF THE APPELLANT WAS UNDER SCRUTINY A SSESSMENT FOR THREE CONSECUTIVE YEARS I.E. IN A.Y 2006-07, 2007-08 AND 2008-09 WHERE REGULAR ASSESSMENTS WERE MADE UNDER SCRUTINY AND TH E 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 OR DER DATED 28.12.2010. ACCORDING TO THE INFORMATION RECEIVED F ROM DCIT-1(2), RAIPUR, THE SAID ASSESSEE COMPANY NAMELY SATGURU IS PAT PRIVATE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 3 - LIMITED HAD DECLARED / ACHIEVED YIELD OF 77.01% AND THE SAID COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF INGO TS. THE SAID YIELD PERCENTAGE WAS CROSS CHECKED WITH REFERENCE TO THE TAX AUDIT REPORT AND FINANCIAL STATEMENTS OF THE SAID ASSESSEE COMPA NY. EVEN IF DUE CONSIDERATION IS GIVEN FOR DIFFERENCE IN YIELD OWIN G TO DIFFERENCE IN PRODUCT I.E. INGOTS AND BLOOMS/BILLETS, STEEL, THER E 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 CASE. 9.16 FINISHED GOODS ARE STRUCTURAL ITEMS AND BLOOM/ BILLETS ARE INTERMEDIARY PRODUCTS WHICH ARE CONSUMED INDIGENOUS LY. EVEN IF FOR THE TIME BEING CONTENTION OF THE A.O THAT THE APPELLANT HAS SUPPRESSED THE YIELD OF SMS DIVISION AND INDULGED INTO UNACCOUNTED SALES IS ACCEPTED, PREPONDERANCE OF PROBABILITIES DO NOT SUGGEST THIS FOR THE REASON THAT THE FINISHED PRODUCT OF THE APPELLANT IS NOT BLOOM/ BILLETS, IF THE APPELLANT STARTS TO SELL ITS INTERMEDIARY PRODUCT, IT MAY HAVE TO BUY THE SAME FOR ITS ROLLING MILL DIVISION AND THE IDEA OF BACKWARD INTEGRATION IN THE FORM OF SMS DIVISION GETS DEFEATED, THE BUSI NESS SENSE IS ALSO NOT SUGGESTING WHAT HAS BEEN SUSPECTED AND INFERRED BY THE A.O. 9.17 FROM PAGE NO.26 TO PAGE NO.27 OF THE ASSESSMEN T ORDER, THE A.O. HAS REPRODUCED THE EXTRACT OF THE STATEMENTS RECORD ED DURING THE COURSE OF SEARCH OF THE FOLLOWING PERSONS:- (A) SHRI SHIVMAN SHUKLA (B) SHRI RAJESH SINGH (C) SHRI ANIL SINGH (D) SHRI VIRENDRA PARGHANIA FROM THE AFORESAID STATEMENTS, THE A.O. HAS MADE AN ATTEMPT TO EMPHASIZE THAT THERE IS ABSENCE OF UNIFORM/SCIENTIF IC METHODOLOGY FOR MEASUREMENT OF INPUT OF RAW MATERIAL, SECONDLY, IT APPEARS TO THE A.O THAT THERE IS MODUS OPERANDI TO DESTROY THE PRIMARY DATA REGARDING THE ACTUAL PRODUCTION 9.18 I HAVE CAREFULLY PERUSED THE STATEMENT OF SHRI SHIVMAN SHUKLA, SHIFT INCHARGE OF THE APPELLANT COMPANY RECORDED DU RING THE COURSE OF PROCEEDINGS U/S 132 ON 22.06.2011. IN RESPONSE TO Q UESTION NO.11, I FIND THAT SHRI SHIVMAN SHUKLA HAS GIVEN CATEGORICAL STATEMENT THAT THE YIELD IN SMS DIVISION IS 80% AND 20% IS WASTE MATER IAL, IN MY CONSIDERED VIEW, THE SAID STATEMENT OF SHIFT INCHAR GE CANNOT BE SAID TO BE AN AFTERTHOUGHT AS THE SAME WAS RECORDED DURING THE CURSE OF SEARCH PROCEEDINGS ITSELF. FURTHER, IN RESPONSE TO QUESTIO N NO. 5 AND 9, IT IS SEEN THAT MR. SHIVAMAN SHUKLA HAS STATED THAT THE I NPUT IS MEASURED ON THE WEIGHBRIDGE AND THEREAFTER, THE RAW MATERIAL IS UNLOADED NEAR THE FURNACE, IN MY CONSIDERED VIEW, THE CAPTURING OF DA TA REGARDING INPUT I.E. RAW MATERIAL AND ITS METHODOLOGY CANNOT BE SAI D TO BE ERRONEOUS. 9.19 I HAVE CAREFULLY PERUSED THE STATEMENT OF SHRI ANIL SINGH, PRODUCTION SUPERVISOR INCHARGE OF THE APPELLANT COM PANY RECORDED DURING THE COURSE OF PROCEEDINGS U/S 132 ON 21/22.0 6.2011. I FIND THAT IT HAS BEEN CLEARLY STATED BY SHRI ANIL SINGH IN RE PONSE TO QUESTION NO.2 OF THE STATEMENT RECORDED ON 22.06.2011 THAT THE DE TAILS OF HOURLY PRODUCTION ARE RECORDED BY HIM ON A PAPER AND THE S AME IS HANDED OVER FOR BEING ENTERED IN THE COMPUTER SYSTEM. IN MY CON SIDERED VIEW, NO FAULT CAN BE FOUND NOR THERE IS ANY SCOPE FOR DRAWI NG ANY ADVERSE INFERENCE FOR THE REASON THAT HOURLY PRODUCTION DET AILS ARE GIVEN FOR ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 4 - BEING ENTERED IN THE COMPUTER SYSTEM, SECONDLY, I A LSO 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 I N RESPONSE TO QUESTION NO.4 THE SAID PERSON HAS EXPLAIN HIS JOB P ROFILE INVOLVING MAINTENANCE OF RECORD RELATING TO INWARD AND OUTWAR D OF PRODUCTION MATERIAL AND WORK RELATING TO WEIGH BRIDGE AND DOCU MENTATION 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 AN D EVERY VEHICLE COMING AND GOING OVER THE WEIGHBRIDGE INSTALLED WIT HIN THE FACTORY PREMISES OF THE APPELLANT AND THEREAFTER, THE SAID PERSON FEEDS THE DATA IN COMPUTER SYSTEM WHICH IS CONNECTED WITH THE COMP UTER SYSTEM INSTALLED AT THE HEAD OFFICE, RAIPUR, I AM INCLINED TO ACCEPT THAT DATA RELATING TO EACH AND EVERY VEHICLE PASSING THROUGH THE WEIGHBRIDGE IS CAPTURED IN THE COMPUTER SYSTEM, IT IS NOT THE CASE OF THE A.O. NOR THE INVESTIGATION WING THAT THE WEIGHBRIDGE AND COMPUTE R SYSTEM PROVIDE FACILITIES / FLEXIBILITY TO WEIGH GOODS WITHOUT COR RESPONDING ENTRY IN THE COMPUTER SYSTEM OR THE WEIGHBRIDGE, MEANING THEREBY , THAT THE ENTRIES FOR INWARD AND OUTWARD MOVEMENT OF THE GOODS ARE BO UND TO GET CAPTURED. AS A MATTER OF FACT, NEITHER THE A.O. NOR THE INVESTIGATION WING HAS POINTED OUT EVEN AN SINGLE ENTRY IN THE PR INTOUT / DATA IN THE COMPUTER SYSTEM WHICH WAS NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY. IT IS ALSO SEEN THAT THE SAID PERSON CLEARLY STATED THAT THE DATA REGARDING PRODUCTION R ECEIVED FROM THE PRODUCTION DEPARTMENT ARE ENTERED IN THE COMPUTER S YSTEM ON DAILY BASIS. 9.21 HAD THERE BEEN SCIENTIFIC METHODOLOGY IN PLACE FOR MEASUREMENT OF INPUTS, IN MY CONSIDERED VIEW, IT IS ONLY THE AC CURACY LEVEL OF STATISTICS WHICH WILL INCREASE, HOWEVER, IT IS HARD TO BELIEVE THAT MERELY DUE TO SCIENTIFIC METHODOLOGY FOR MEASUREMENT OF IN PUTS, THE YIELD OF THE APPELLANT WILL ALSO INCREASE, THE IMAGINATION O F THE A.O IS TOO FAR FETCHED AND DEVOID OF LOGIC. I FIND NO MERIT IN THE ALLEGATION OF THE A.O THAT ABSENCE OF SCIENTIFIC METHODOLOGY FOR MEASUREM ENT OF INPUTS IS LEADING TO AN INFERENCE THAT THE APPELLANT HAS SUPP RESSED THE YIELD. I HAVE ALSO CAREFULLY PERUSED THE STATEMENT OF SHRI R ISHIKESH DIXIT RECORDED ON 21.6.2011 AS REGARDS COMMON ALLEGATION IN CASE OF ALL THE FOUR MANUFACTURING COMPANIES I.E. SISTER CONCERNS O F MAHAMAYA GROUP THAT THE GROUP IS FOLLOWING THE SYSTEM OF DESTROYIN G THE INITIAL DOCUMENT I.E. THE LOOSE SLIP IN WHICH QUANTITY OF PRODUCTION AND CONSUMPTION IS RECORDED. FROM THE STATEMENT OF SHRI RISHIKESH DIXI T, IT IS GATHERED THAT IT WAS STATED IN CLEAR TERMS THAT THE QUANTITY RECO RDED IN THE LOOSE SLIPS TALLIES WITH THE QUANTITY RECORDED IN THE REGULAR B OOKS OF ACCOUNTS, EXCISE RECORDS AND EXCISE RETURNS; THAT AS THE EXCI SE RETURN IS BEING FILED ON MONTHLY BASIS, THEREFORE, AFTER FILING OF EXCISE RETURN SUCH LOOSE PAPERS BECOME REDUNDANT AND THAT IS THE REASO N SAID LOOSE PAPERS ARE DESTROYED, AT THIS JUNCTURE, I FIND THAT NEITHE R IN THE SHOW CAUSE NOTICE NOR IN THE ASSESSMENT ORDER THERE IS ANY WHI SPER OF ANY SUCH LOOSE PAPER WHICH BEARS THE FIGURES OF PRODUCTION A ND WHICH THE APPELLANT FAILED TO RECONCILE WITH THE ENTRIES IN T HE REGULAR BOOKS OF ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 5 - 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 STA TEMENT. 9.22 IN THE CASE OF ACIT VS. M/S. BALAJEE STRUCTURA LS (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 YIEL D. HOWEVER, THE A.O. HAS NOT CONSIDERED THE SAME AND MERELY MEN TIONED 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 A RE CLOSELY MONITORED BY THE EXCISE DEPARTMENT WHO HAS ACCEPTED THE SAME AND WHEN THE DEPARTMENT HAS NO OTHER MATERIAL TO PR OVE THAT THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS IN DULGED IN UNACCOUNTED SALES AND SINCE THE ASSESSEE HAS ALREAD Y DISCLOSED AN AMOUNT OF RS.396.60 LACS ON ACCOUNT OF STOCK AND DEBTORS FOR THE ASSESSMENT YEAR 2008-09, THEREFORE, IN VIEW OF THE OFFICE NOTE BY THE A.O. REPRODUCED EARLIER, NO ADDITION, IN OUR OPINION IS CALLED FOR.' IN THAT CASE, THE ASSESSMENT YEAR INVOLVED WAS 2005 -06 AND THE ASSESSEE HAD OFFERED ADDITIONAL INCOME IN ASSESSMEN T YEAR 2008-09. HOWEVER, RATIO OF THE PRINCIPLES DECIDED THAT (I) W HEN THE A.O. HAS NOT CONSIDERED THE ASSESSEE'S EXPLANATION BY MERELY MEN TIONING THAT IT IS NOT FOUND TO BE ACCEPTABLE AND (II) WHEN EXCISE DEP ARTMENT HAS ACCEPTED THE YIELD AND WHEN THE DEPARTMENT HAS NO O THER MATERIAL TO PROVE THAT THE ASSESSEE HAS INDULGED IN UNACCOUNTED SALES NO ADDITION IS CALLED FOR, ARE SQUARELY APPLICABLE IN THIS CASE . 9.23 SIMILARLY IN THE CASE OF ACIT VS. M/S. SUPER I RON & STEEL PVT. LTD., WHICH IS ONE OF THE COMPARABLE CASES CITED AB OVE, IN ITA NO.139 TO 141/ BLPR/2010, THE JURISDICTIONAL BENCH OF HON' BLE ITAT HAD AN OCCASION TO DECIDE SIMILAR ISSUE AND THE HON'BLE TR IBUNAL HAS OBSERVED AS UNDER:- '6. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIAL ON RECORD WE FIND THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF MANUFACTURING OF MS INGOTS WITH SPONGE IRON AS THE MAIN RAW MATERIAL. ACCORDING TO THE AO THERE WAS NO BASIC DO CUMENT REGARDING CONSUMPTION OF RAW MATERIAL AND PRODUCTIO N OF FINISHED GOODS WERE MAINTAINED BY THE ASSESSEE IN T HE FACTORY PREMISES. THE AO FOUND THAT THERE IS NO SYSTEM IN P LACE FOR KEEPING RECORD OF CONSUMPTION OF RAW MATERIAL AND P RODUCTION OF FINISHED GOODS, IT IS APPARENT THAT THE UNACCOUNTED PRODUCTION IS EVIDENCED FROM VARIATION IN UNITS OF ELECTRICITY CO NSUMED PER MT OF FINISHED GOODS SO AO MADE THE ADDITION IN QUESTI ON. THE STAND OF THE ASSESSEE WAS THAT IT IS MAINTAINING REGULAR BOOKS OF ACCOUNT ALONG WITH ALL THE SUPPORTING BILLS AND VOU CHERS. THE ASSESSEE SUBMITTED THAT THE VARIATION IN CONSUMPTIO N OF ELECTRICITY HAS BEEN EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AO HAS NOT MADE ANY ADVERSE COM MENT ON THE SAME. ACCORDING TO THE ASSESSEE THE YIELD IN TH IS A. Y IS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 6 - BETTER IN COMPARISON TO THE PRECEDING ASSESSMENT YE ARS WHICH WAS ALSO COVERED BY SCRUTINY ASSESSMENT UNDER SECTI ON 143(3) OF THE ACT. THE ADDITION IN QUESTION IS NOT BASED ON S UCH 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 DELET ED BY REASONED FINDING, WE UPHOLD THE SAME.' 9.24 THE LOW YIELD IN COMPARISON TO THE BENCHMARK A DOPTED BY THE A.O BASIS WHEREOF IS STILL IN THE DARK AND HASNT C OME 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 N OT HAVE BEEN A GROUND TO REJECT THE ACCOUNTS INVOKING SECTION 145( 3) OF THE ACT. THE VARIATION IN YIELD AND CONSUMPTION OF POWER ETC COU LD 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 W AS SHOWN IN THE ACCOUNTS BOOKS ON THE STRENGTH OF DOCUMENTARY EVIDE NCE. 9.25 IT IS SEEN THAT THE A.O HAS NOT POINTED OUT AN Y SUPPRESSION OF PRODUCTION BASED ON ANY COGENT AND INCRIMINATING MA TERIAL AGAINST THE APPELLANT. MATERIAL SHOWING FINANCIAL NEXUS CAN ONL Y BE A VALID BASIS FOR HOLDING SUSPICION OR MAKING THE ADDITION. UNFOR TUNATELY NOT A SINGLE DOCUMENT SHOWING ANY FINANCIAL DEALINGS BY T HE APPELLANT HAS BEEN REFERRED TO EITHER IN THE ASSESSMENT ORDER, OR EVEN DURING THE COURSE OF HEARING, DESPITE THE LIBERTY GRANTED VIDE THIS OFFICE LETTERS ON 28.04.2014 AND 16.05.2014. AN ORDER BASED ON UNCONF IRMED OR UNCORROBORATED BELIEF OF SUSPICION; EVEN THOUGH THE SUSPICION RESTS ON THE HIGH PEDESTAL OF BONA FIDES CANNOT STAND THE SC RUTINY OF LAW. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE REVEAL THAT THE A.O JUST BRUSHED ASIDE THE OBJECTIONS/SUBMISSIONS AND CONTEN TIONS RAISED BY THE APPELLANT AND EVIDENCES PLACED ON RECORD. THE A.O H AS MADE MECHANICAL ADDITION OF THE DIFFERENCE BETWEEN THE U NACCOUNTED PRODUCTION/SALES WORKED OUT ON THE BASIS OF 89% YIE LD SUSPECTED BY THE A.O THAT MUST HAVE BEEN ACHIEVED BY THE APPELLANT. THE ASSESSMENT ORDER CONCLUSIVELY INDICATES THAT THE ADDITION HAS BEEN MADE OUT OF SOME LURKING SUSPICION BASED EITHER ON RUMOURS OR O N SOMETHING LESS SERIOUS THAN THAT. 9.26 THE A.O HAS MERELY REFERRED TO VARIATIONS BASE D ON MATHEMATICAL CALCULATIONS VIZ_ VARIATION IN POWER, SPONGE IRON ( RAW MATERIAL OF SMS DIVISION FOR MANUFACTURING OF BLOOMS AND BILLETS), VARIATION IN CONSUMPTION OF FURNACE OIL IN ROLLING MILL DIVISION , THIS MAY WELL BE THE BASIS OF SUSPICION, HOWEVER, THESE CANNOT PER S E CONSTITUTE THE BASIS OF THE ADDITION, THOUGH IT CAN VERY WELL BE A START ING POINT FOR FURTHER INVESTIGATION. IN LALCHAND BHAGAT AMBICA RAM VS. CIT: (1959) 37 ITR 288 , THE SUPREME COURT DISAPPROVED THE PRACTICE OF MAK ING ADDITIONS IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES OR BY TAKING NOTE OF THE 'NOTORIOUS PRACTICE' PREVAILING IN TRADE CIRCLES. 9.27 THE SIGNIFICANCE OF TANGIBLE EVIDENCE HAS BE EN EMPHASIZED IN VARIOUS JUDICIAL PRONOUNCEMENTS. HAVING TEST CHECKE D THE SEIZED DOCUMENTS WITH REFERENCE TO SUBMISSIONS OF THE APPE LLANT AND BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS, HAVING GONE THROUGH ALL THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 7 - STATEMENTS RECORDED DURING THE SEARCH PROCEEDINGS, HAVING ANALYSED THE RESULTS OF ENQUIRY CONDUCTED REGARDING YIELD, I AM CONVINCED THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE A.O NOR HAS THE A.O BROUGHT ANY SUCH EVIDENCE ON RECORD TO CORROBORATE HIS SUSPICIO N. THE CASE OF THE APPELLANT FINDS SUPPORT FROM THE DECISION IN INCOME TAX OFFICER VS. W.D. ESTATE P. LTD. (1993) 46 TTJ (BOM) 143 : 45 IT D 473. 9.28 SIMILAR RATIO WAS LAID DOWN BY THE HONBLE HIG H 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 DURIN G THE COURSE OF SEARCH. THE SIGNIFICANCE OF TANGIBLE DISPROPORTIONA TE 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 HONBLE ITAT, DELHI A BENCH AS C IRCUMSTANTIAL EVIDENCE. 9.31 THE HONBLE SUPREME COURT HAD PUT AN EMBARGO O N THE LEEWAY I.E. FLEXIBILITY OF ASSESSING OFFICERS IN DHAKESWAR I COTTON MILLS LTD. VS. COMMISSIONER OF INCOME TAX (1954) 26 ITR 775 (SC). THE SIGNIFICANCE OF CONSIDERING THE EVIDENCES IN FAVOUR AND AGAINST THE ASSESSEE WAS EMPHASIZED BY THE HONBLE SUPREME COURT IN OMAR SAL AY MOHAMED SAIT VS. COMMISSIONER OF INCOME TAX (1959) 37 ITR 1 51 (SC). 9.32 UNDISPUTEDLY, THE APPELLANT DID FURNISH EXPLA NATION ON ALL THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, THE E XPLANATION OF THE APPELLANT WAS TEST CHECKED WITH REFERENCE TO THE SE IZED MATERIAL, BOOKS OF ACCOUNTS, BILLS/INVOICES AND OTHER EVIDENCES PLA CED ON RECORD AND THE EXPLANATION WAS FOUND TO BE SATISFACTORY AND IT IS ALSO A MATTER ON RECORD THAT THE A.O HAS ALSO NOT POINTED OUT ANY IN FIRMITY IN THE EXPLANATION OF THE APPELLANT AND NOR DID THE A.O BR ING ON RECORD ANY DOCUMENTARY EVIDENCE OR REASONING TO NEGATE THE SUBMISSIONS/EXPLANATION OF THE APPELLANT. IT IS ALS O AN UNDISPUTED FACT THAT IN THE CASE OF THE APPELLANT NEITHER ANY DIARY OR LOOSE PAPER WAS FOUND WHICH INDICATES THAT THE APPELLANT DID INDULG E INTO UNACCOUNTED SALES AND EARNED SUCH HEFTY AMOUNT OF INCOME. THE F ACTS IN THE CASE OF THE APPELLANT ARE MUCH BETTER THAN THE FACTS BEFORE THE HONBLE HIGH COURT OF GUJARAT IN COMMISSIONER OF INCOME TAX VS. MAULIKKUMAR K. SHAH (2008) 307 ITR 137 (GUJ). 9.33 I FIND THAT EVEN NON MAINTENANCE OF STOCK REGISTER IS NOT FATAL AS HELD IN COMMISSIONER OF INCOME TAX VS. JACKSONS HOUSE (2010) 39 DTR (DEL) 212 : (2011) 198 TAXMAN 385. 11.35 . SIMILAR VIEW WAS TAKEN IN M. DURAI RAJ VS. COMMISSIONER OF INCOME TA X (1972) 83 ITR 484 (KER). ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 8 - 9.34 ON THE MATTER OF RECORDING THE CONSUMPTION OF RAW MATERIAL GOING IN TO FURNACE AND QUANTITY OF PRODUCTION COMI NG OUT FROM FURNACE, IN MY CONSIDERED OPINION, THE MERE FACT OF ESTIMATION CANNOT BE MADE THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS SO LONG AS THE FINANCIAL RESULTS ARE NOT STRIKINGLY LOWER THAN THE INDUSTRY AVERAGE OR THAT THE RESULTS ARE NOT SUPPORTED BY BILLS/VOUCHER S OR THAT THE QUANTITATIVE DETAILS HAVE NOT BEEN MAINTAINED PROPE RLY. IN POLISETTI SUBBARAIDU & CO. VS. COMMISSIONER OF INCOME TAX SOURCE : (1968) 69 ITR 738 (AP). ANOTHER DECISION WHEREIN IT WAS HELD THAT NON MAINT ENANCE OF DAILY STOCK REGISTER PER SE IS NOT SUFFICIENT TO RE JECT THE BOOKS OF ACCOUNTS AS IT IS NOT MANDATED BY LAW IS THE DECISI ON OF THE HONBLE HIGH COURT OF DELHI IN COMMISSIONER OF INCOME TAX V S. SMT. POONAM RANI (2010) 326 ITR 223. FROM THE RATIO OF THE AFOR ESAID DECISION, IT IS ALSO QUITE CLEAR THAT THE COURTS HAVE TAKEN JUDICIA L NOTE OF THE ESTIMATION I.E. RECORDING OF FINANCIAL TRANSACTIO NS WITH CERTAIN DEGREE OF ESTIMATION IN THE BOOKS OF ACCOUNTS. DRAW ING REFERENCE FROM THE AFORESAID DECISION, IN MY CONSIDERED VIEW, MERE LY BECAUSE CERTAIN TRANSACTIONS ARE RECORDED ON THE BASIS OF ESTIMATIO N 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 HONBLE HIGH COURT OF DELHI LAID STRESS UP ON THE MATERIAL AND EVIDENCES AND BRUSHED ASIDE ADVERSITIES HELD ME RELY 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 HA S TO BRING ON RECORD SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS OF THE APP ELLANT AS A RESULT OF WHICH REASONABLE PROFITS CANNOT BE DEDUCED. THE A. O EXAMINED THE AUDITED BOOKS OF ACCOUNT BUT HAD NOT POINTED OUT AN Y SPECIFIC DISCREPANCY NOR HAS HE DETECTED ANY SUPPRESSION IN SALES OR INFLATION IN PURCHASES/EXPENSES. NO EVIDENCE WHATSOEVER WAS BRO UGHT ON RECORD TO PROVE THAT, THE APPELLANT, IN FACT, EARNED MORE THA N THAT RETURNED AS PER THE BOOKS OF ACCOUNT KEPT IN THE REGULAR COURSE OF BUSINESS. THE ASSESSMENT ORDER IS EVIDENCE TO THE FACT THAT THERE WAS NO SPECIFIC FINDING GIVEN BY THE A.O TO THE EFFECT THAT THE MET HOD EMPLOYED BY THE APPELLANT WAS SUCH THAT CORRECT PROFITS COULD NOT B E DEDUCED THERE FROM. THE A.O. HAS NOT COME ACROSS ANY MATERIAL DE FECT IN ACCOUNTS SO AS TO HOLD THAT ANY PROFIT HAS BEEN SUPPRESSED. IT IS ALSO NOT THE CASE OF THE A.O THAT THE APPELLANT HAS NOT FOLLOWED THE MER CANTILE SYSTEM OF ACCOUNTING. IT IS ALSO NOT THE CASE OF THE A.O THAT THE APPELLANT HAS NOT FOLLOWED ANY PARTICULAR ACCOUNTING STANDARDS WHICH ARE NOTIFIED BY THE CENTRAL GOVERNMENT. IT IS ALSO NOT IN DISPUTE THAT THE APPELLANT HAS MAINTAINED BOOKS OF ACCOUNT REGULARLY AND THESE ARE DULY AUDITED U/S 44AB OF THE I.T. ACT AND THE QUANTITATIVE DETAILS W ERE PREPARED AND WERE DULY AUDITED. IF THE STOCK REGISTER WAS NOT M AINTAINED BY THE APPELLANT, THAT MAY PUT THE A.O ON GUARD AGAINST TH E FALSITY OF THE RETURN MADE BY THE APPELLANT AND PERSUADE HIM TO CA REFULLY SCRUTINIZE THE ACCOUNT BOOKS OF THE APPELLANT. THE LOW YIELD I N COMPARISON TO THE BENCHMARK ADOPTED BY THE A.O, IN THE ABSENCE OF ANY MATERIAL POINTING ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 2 9 - TOWARDS FALSEHOOD OF THE ACCOUNT BOOKS, COULD NOT B Y ITSELF BE A GROUND TO REJECT THE ACCOUNT BOOKS U/S 145(3) OF THE I.T. ACT, 1961 MUCH LESS A GROUND TO MAKE ESTIMATED ADDITION. I FIND THAT THER E IS NO DISPUTE WITH REGARD TO THE FACT THAT THE APPELLANT HAS MAINTAINE D QUANTITATIVE DETAILS. IN THE CASE OF CIT VS. SMT POONAM RANI 326 ITR 223 (DELHI) IT WAS HELD THAT WHERE AN ADDITION WAS MADE BECAUSE OF MERE FALL IN GROSS PROFIT WITHOUT ANY DEFECT IN THE ACCOUNTS EXCEPT FO R THE ABSENCE OF STOCK REGISTER- DELETION OF ADDITION WAS UPHELD BY THE HI GH COURT. THE APPELLANTS CASE FINDS SUPPORT FROM THE FOLLOWING D ECISIONS: A) ASHOK REFRACTORIES PVT LTD. VS. CIT (2005) 148 T AXMAN 635 (CAL.). B) ITO V. BOTHRA INTERNATIONAL [2008] 117 TTJ (JD.) 672 C) DELHI SECURITIES PRINTERS V. DY. CIT [2007] 15 S OT 353 (DELHI) CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , AS ALSO DECISIONS RELIED UPON BY THE APPELLANT AND THOSE CITED ABOVE, I AM OF THE VIEW THAT THERE WAS NO FINDING TO THE EXTENT THAT THE AC COUNTS WERE NOT CORRECT AND COMPLETE OR THAT THE A.O WAS OF THE OPI NION THAT THE INCOME COULD NOT BE DEDUCED FROM THE ACCOUNTS MAINTAINED B Y THE APPELLANT. 9.37 THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECOR D 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 SHOU LD BE BASED ON COGENT FACTS AND THERE SHOULD BE NO VINDICTIVENESS OR ARBITRARINESS IN PASSING THE ASSESSMENT ORDER. THE ESTIMATED ADDITIO NS MADE BY THE A.O. DO NOT BEAR ANY RELATIONSHIP WITH THE SPECIFIC DEFE CTS IN BOOKS OF ACCOUNTS AND THE A.O. CANNOT BE PERMITTED TO MAKE A RBITRARY ADDITION. 9.38 THE CORE THING TO BE SEEN IS THE EVIDENCE FOUN D WHICH WILL BE THE BASIS FOR MAKING THE ASSESSMENT. COMING TO THE FACT S OF THE CASE, THE AO ESTIMATED THE UNACCOUNTED PRODUCTION AND SALES B ASED ON BENCHMARK YIELD OF 89% IN CASE OF SMS DIVISION. THE ENTIRE ESTIMATED SUPPRESSED SALE HAS BEEN TREATED AS PROFIT. I AM CO NVINCED THAT THE DETERMINATION OF UNDISCLOSED INCOME IN THIS CASE IS MERELY ON THE BASIS OF PRESUMPTION AND ON AN ESTIMATE BASIS. SEARCH ASS ESSMENT HAS TO BE FRAMED ON THE BASIS OF SOME MATERIAL, WHICH IN THIS CASE IS RAW MATERIAL CONSUMED IN SMS DIVISION FOR MANUFACTURING OF BLOOM S AND BILLETS IN FURNACE. NO OTHER MATERIALS OR ASSET DETAILS WERE F OUND DURING THE COURSE OF SEARCH. 9.39 THE QUESTION OF BEST JUDGMENT IS RULED OUT AND THEREFORE THE APPLICATION OF ANY FORMULA FOR ESTIMATING INCOME DO ES NOT ARISE. IN THE INSTANT CASE, SEARCH HAD UNDERTAKEN FROM 21ST JUNE, 2011 TO 22ND JUNE, 2011. THE STATEMENTS OF VARIOUS PERSONS ASSOCIATED WITH THE APPELLANT COMPANY AND MAHAMAYA GROUP WERE RECORDED AND IN THO SE STATEMENTS, NO INCRIMINATING MATERIAL WAS THERE WHICH COULD BE TERMED AS EVIDENCE ON THE BASIS OF WHICH THE UNDISCLOSED INCOME COULD BE COMPUTED. CERTAIN DOCUMENTS WERE SEIZED, BUT THERE WAS NOTHIN G IN THOSE MATERIALS RELATING TO SALES WHICH COULD ESTABLISH T HAT APPELLANT HAD UNDISCLOSED INCOME. THEREFORE, IN MY CONSIDERED VIE W, IT IS UNREASONABLE TO ESTIMATE THE SUPPRESSED SALES ON TH E BASIS OF ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 0 - UNDISCLOSED YIELD. IT CANNOT BE SAID THAT THERE IS ALWAYS STANDARDIZED YIELD DURING THE SEARCH PERIOD. 9.40 AS A MATTER OF FACT THE SEARCH TEAM COULD NOT COME ACROSS ANY EVIDENCE OF UNACCOUNTED SALES, IN MY CONSIDERED OPI NION, HAD THERE BEEN ANY UNACCOUNTED SALES, THE SAME WOULD HAVE BEE N DETECTED BY THE SEARCH TEAM. THE CASE OF THE APPELLANT ALSO FINDS S UPPORT FROM THE DECISION OF THE JURISDICTIONAL TRIBUNAL I.E. ITAT, BILASPUR BENCH IN CHHATTISGARH STEEL CASTING (P) LTD. VS. ASSISTANT C OMMISSIONER OF INCOME TAX (2008) 8 DTR (BILASPUR) (TRIB) 14. 9.41 THE SIGNIFICANCE OF TANGIBLE EVIDENCE IS INDIC ATIVE FROM THE FACT THAT IN COMMISSIONER OF INCOME TAX VS. VISHAL RUBBER PRODUC TS (2003) 264 ITR 542 (P&H) : (2004) 136 TAXMAN 151 DE SPITE BALANCE SHEET HAVING BEEN FOUND FROM THE PREMISES SEARCHED, NO ADDITION WAS SUSTAINED IN THE ABSENCE OF TANGIBLE EVIDENCE. 9.42 ON THE CONTRARY, THE APPELLANT HAD PROVIDED AL L THE REQUISITE DETAILS REGARDING ITS PRODUCTION ACTIVITY. THE ITEM S OF RAW MATERIAL PURCHASED ARE EXCISABLE PRODUCTS, THE QUANTITY OF R AW MATERIAL PURCHASED AS MENTIONED IN EXCISABLE AND COMMERCIAL INVOICE WAS TEST CHECKED WITH THE ENTRIES IN THE EXCISE RECORD FOR R AW MATERIAL I.E. RG- 1 AND THE SAME WAS FOUND TO BE IN ORDER. THE QUANTI TY APPEARING IN THE EXCISE REGISTERS WAS CROSS CHECKED WITH THE ENTRIES IN THE EXCISE RETURNS AND THE SAME WAS FOUND TO BE IN ORDER AND T ALLYING WITH THE EXCISE RECORDS. THE INVENTORY APPEARING IN THE EXCI SE RECORDS AND EXCISE RETURNS WAS FOUND TO BE THE SAME AS IN FINAN CIAL RECORDS I.E. THE BOOKS OF ACCOUNTS AND AUDITED FINANCIAL STATEMENTS. UNDISPUTEDLY, THE PRODUCTION WAS METICULOUSLY ROUTED THROUGH THE APPE LLANTS DAILY PRODUCTION REGISTER/ EXCISE RECORDS. THE ENTRIES TH EREIN 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 S UPPRESSED YIELD. VARIOUS SUBMISSIONS REGARDING REASONS FOR VARIATION IN CONSUMPTION OF POWER, FURNACE OIL, YIELD ETC WERE DULY FURNISHED B Y 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 HONBLE HIGH COURT HAD UPHELD THE DELETIO N OF ADDITION AND IT LEADS TO AN IRRESISTIBLE CONCLUSION THAT THERE C ANNOT BE ANY REJECTION OF BOOKS OF ACCOUNTS MERELY BECAUSE THE YIELD DECLA RED BY THE ASSESSEE IS LOWER IN COMPARISON TO OTHER ASSESSEES ENGAGED I N SIMILAR LINE OF BUSINESS. 9.44 THE NOTORIETY THAT APPELLANT SUPPRESSED THE YI ELD WOULD BE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT SHOULD NOT BE HELD TO HAVE INDULGED IN SUCH ILLEGAL PRACTICES WITHOUT ANY EVIDENCE. THE MERE POSSIBILITY OF THE APPELLANT GETTING HIGHER YI ELD WOULD BE A MATTER ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 1 - OF PURE CONJECTURE. COMMISSIONER OF AGRICULTURAL INCOME TAX VS. M.J. CHERIAN (1979) 117 ITR 371 (KER) 9.45 I FIND NO MERIT IN THE ACTION OF THE A.O IN RE JECTING THE BOOKS OF ACCOUNTS MERELY DUE TO THE REASON THAT THE YIELD AC HIEVED BY THE APPELLANT IS LESS THAN THE YIELD PERCENTAGE I.E. 89 % WHICH HAS NOT BEEN ACHIEVED EVEN BY OTHER ASSESSEES ENGAGED IN SIMILAR LINE OF BUSINESS, THE A.O HAS NOT BROUGHT ON RECORD THE MANNER IN WHI CH HE WORKED OUT THE YIELD OF 89% IN SMS DIVISION. THE A.O HAS NO EV IDENCE IN HIS POSSESSION TO INDICATE THAT THE QUALITY OF RAW MATE RIAL USED BY THE APPELLANT IN ALL THESE 7 YEARS WAS UNIFORM AND STAN DARDIZED ONE. THE HONBLE MADRAS HIGH COURT TOOK JUDICIAL NOTE OF SUC H FACTS IN C. ARUMUGASWAMI NADAR VS. COMMISSIONER OF INCOME TAX (1961) 42 ITR 237 (MAD). 9.46 THE FACTS IN THE CASE OF THE APPELLANT ARE AKIN TO THE FACTS BEFORE THE HONBLE HIGH COURT OF ASSAM IN HARAKCHAND ARAKCHAND RADHAKISAN VS. COMMISSIONER OF INCOME TAX (1962) 46 ITR 196 (ASSAM). THE HONBLE HIGH COURT OF DELHI HAS LAID D OWN CERTAIN PRINCIPLES ON REJECTION OF BOOKS OF ACCOUNTS IN COMMISSIONER OF INCOME TAX VS. PARADISE HOLIDAYS (2010) 48 DTR (DEL) 349 : (2010) 325 ITR 13. 9.47 IN SUKHADIA JAMNADAS MAGANLAL VS. INCOME TAX OFFICER (2008) 13 DTR (GUJ) 149, THE HONBLE HIGH COURT OF GUJARAT ELABORATELY CONSIDERED THE VARIOUS QUESTION S AND ISSUES AND ULTIMATELY DECIDED THE QUESTION IN FAVOUR OF THE AS SESSEE, IDENTICAL ISSUES AND QUESTIONS ARE PRESENT IN THE INSTANT CAS E. 9.48 UNDISPUTEDLY, THE CASE OF THE APPELLANT WAS UN DER SCRUTINY ASSESSMENT FOR THREE CONSECUTIVE YEARS I.E. IN A.Y 2006-07, 2007-08 AND 2008-09. IT IS SELF EVIDENT FROM THE ABOVE REFERRED ASSESSMENT ORDERS U/S 143(3) THAT THE BOOKS OF ACCOUNTS OF THE APPELL ANT WERE ACCEPTED IN ALL THESE YEARS AND YIELD DECLARED BY THE APPELLANT WAS ALSO ACCEPTED. EVEN DURING THE SURVEY PROCEEDINGS, NO INCRIMINATIN G DOCUMENT WAS FOUND WHICH IS EVIDENT FROM THE FACT THAT NO ADDITI ON WAS MADE IN THE SCRUTINY ASSESSMENT, FOR THE YEAR IN WHICH SURVEY P ROCEEDINGS 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 HONBLE HIGH COURT OF GUJARAT. 9.49 THE HONBLE 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 CO MPARISON OF THE PERCENTAGE OF LOSSES IN A PARTICULAR YEAR, IT IS NO T POSSIBLE TO SAY WITH ANY REASONABLE CERTAINTY THAT THE INCREASE IN THE P ERCENTAGE 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 ADDITIO N HAS BEEN MADE ON THE BASIS OF ALLEGED SUPPRESSION OF YIELD/ UNACCOUN TED PRODUCTION. EXCEPT MAKING COMPARISON OF YIELD ACHIEVED BY THE A PPELLANT WITH A.OS OWN STANDARDIZED YIELD PERCENTAGE OF 89%, THE A.O HAS NOT BROUGHT ON RECORD ANY EVIDENCE, GIVEN THE FACT THAT THE PRESENT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 2 - PROCEEDINGS ARE CULMINATING FROM THE SEARCH PROCEED INGS, AS A MATTER OF FACT THE SEARCH TEAM COULD NOT COME ACROSS EVEN A SINGLE DOCUMENT WHICH EVEN INDICATES OF APPELLANTS INDULGENCE INTO ANY SUCH SUPPRESSION OF YIELD OR UNACCOUNTED SALES. IT IS NO T THE CASE OF THE A.O THAT THE BUYERS OF ALLEGED UNACCOUNTED SALES HAVE G IVEN THE STATEMENTS AGAINST THE APPELLANT, NOR ANY EMPLOYEE UTTERED ANY SUCH THING. 9.51 WHETHER MERE VARIATION IN YIELD CAN EVEN BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNTS WAS DECIDED BY THE H ONBLE HIGH COURT OF JAMMU & KASHMIR IN INTERNATIONAL FOREST CO. VS. COMMISSIONER OF INCOME TAX 1975 CTR (J&K) 88 : (1975) 101 ITR 721 (J&K). WHERE AO HAD FAILED TO BRING ON RECORD ANY COGENT M ATERIAL TO SHOW QUANTUM OF SALES OF ASSESSEE OUT OF BOOKS OF ACCOUN TS, THEN ADDITION MADE BY REVENUE ON ESTIMATED BASIS WAS NOT JUSTIFIE D, THIS WAS HELD IN COMMISSIONER OF INCOME TAX VS. MAHAN MARBLES (P) LT D. BY HONBLE HIGH COURT OF RAJASTHAN VIDE ORDER DATED 9T H JANUARY, 2013 (2013) 354 ITR 238 (RAJ). 9.52 IT IS NOT THE CASE OF THE A.O THAT THE STOCK R ECORDS AND INVENTORY OF THE APPELLANT OR THE QUANTITY OF PRODUCTION AND SALES DECLARED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS WAS NOT ACCEPTED BY THE OTHER REVENUE AUTHORITIES SUCH AS SALES TAX DEPARTMENT OR THE EXCISE DEPARTMENT. THE CASE OF APPELLANT FINDS SUPPORT FRO M THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN COMMISSIONER OF IN COME TAX VS. SANJAY OIL CAKE INDUSTRIES (2005) 197 CTR (GUJ) 520 : (2005) 149 TAXMAN 190: 9.53 I AM CONVINCED WITH THE REASONS FOR VARIATION IN POWER CONSUMED IN COMPARISON TO THE PRODUCTION IN DIFFERENT PERIOD S WHICH COULD BE ON ACCOUNT OF FURNACE CONDITION, QUALITY OF RAW MATERI AL USED, LABOUR PRODUCTIVITY, INCOMING VOLTAGE, BREAKDOWN TIME, ETC . DUE TO THE ABOVE REASONS, MONTHLY CONSUMPTION OF POWER MAY VARY. UND ISPUTEDLY, THE STATISTICS OF POWER CONSUMPTION AND PRODUCTION AND THE SIMILAR VARIATION EXISTED EVEN DURING THE COURSE OF ASSESSM ENT PROCEEDINGS U/S 143(3), BUT NO ADVERSE INFERENCE HAD BEEN DRAWN IN THOSE ASSESSMENT PROCEEDINGS U/S 143(3). IT IS GATHERED THAT THE APP ELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND SALES/PURCHASES ARE VE RIFIABLE AND VOUCHED, RECORDED AND SUPPORTED BY RAW MATERIAL CON SUMPTION REGISTER AND FINISHED GOODS REGISTER AND WAS ALSO SUBJECTED TO EXCISE DUTY AND ITS PRODUCTION DECLARED FOR THE INSTANT YEARS HAD D ULY BEEN ACCEPTED BY THE EXCISE DEPARTMENT AFTER VERIFICATION. THE CASE OF THE APPELLANT CERTAINLY FINDS SUPPORT FROM THE DECISION IN THE CA SE OF N. RAJA PULLAIAH VS. 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 C ONSTRUED AS REASONABLE GROUND FOR REJECTING THE BOOKS OF ACCOUN TS AND ESTIMATION OF INCOME. IN PONDY METAL & ROLLING MILLS (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX ITAT, DELHI B BENCH (2 007) 107 TTJ (DEL) 336. THE CASE OF THE APPELLANT FINDS SUPPORT FROM THE DE CISION IN THE CASE OF MAHABIR PRASAD JAGDISH PRASAD VS. CST 27 STC 337 (A LL) AND ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 3 - DECISION OF THE HONBLE 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 SUPPRE SSED SALES AND INCOME HAS BEEN ALLOWED EVEN IN THOSE CASES WHERE I NSTANCES OF SUPPRESSION OF SALES HAS BEEN FOUND ON THE BASIS OF INCRIMINATING MATERIAL EXCEPT FOR THE PERIOD FOR WHICH SUPPRESSIO N HAS BEEN UNEARTHED BASED ON COGENT AND DOCUMENTARY EVIDENCE, UNDISPUTEDLY, IN THE CASE OF THE APPELLANT, NOTHING INCRIMINATING HA S BEEN FOUND, THEREFORE, AS HELD IN DEPUTY COMMISSIONER OF INCOME TAX VS. ROYAL MARWAR TOBACCO PRODUCT (P) LTD. (2009) 120 TTJ (AH D) 387 : (2008) 16 DTR 129. 9.56 MERE VARIATION IN POWER CANNOT BE A GROUND FOR HOLD ING ADVERSITY WAS HELD IN INCOME TAX OFFICER VS. PRAGAT I FASHIONS VIDE ORDER DATED 12TH FEBRUARY, 2010 (2011) 12 ITR 444 ( AHD)(TRIB). 9.57 UNDER SIMILAR FACTS, THE HONBLE ITAT CHANDIGA RH BENCH IN ASSISTANT COMMISSIONER OF INCOME TAX VS. A.K. ALLOY S P. LTD. VIDE ORDER DATED 29TH FEBRUARY, 2012 (2012) 17 ITR (TRIB ) 424 (CHANDIGARH) HAS DECIDED IN FAVOUR OF ASSESSEE. THE EXTRAPOLATION OF FIGURES FOR ESTIMATION OF INCOME HAS BEEN HELD TO B E UNSUSTAINABLE IN EVERGREEN BAR & RESTAURANT VS. ADDITIONAL COMMISSIO NER OF INCOME TAX (2008) 6 DTR (MUMBAI)(TRIB) 56. 9.58 IN MY CONSIDERED VIEW, THERE WAS NO GROUND FOR THE A.O TO REJECT THE BOOKS OF ACCOUNTS OF THE APPELLANT U/S 145, HOW EVER, EVEN IF IT IS ASSUMED THAT THERE WAS SUFFICIENT GROUND FOR REJECT ING THE BOOKS OF ACCOUNTS, THE ASSESSMENT HAD TO BE MADE TO THE BEST OF HIS JUDGEMENT. AS TO HOW THE BEST JUDGMENT ASSESSMENT SHOULD BE MA DE, THE LEADING DECISION ON THE POINT IS THE ONE RENDERED BY THE PR IVY COUNCIL IN CIT VS. LAXMI NARAIN BADRIDAS (1937) 5 ITR 170 (PC) : T C11R. 192, REVERSING LAXMI NARAIN BADRIDAS VS. CIT (1934) 2 IT R 246 (NAG) : TC11R.201 AND APPROVING ABDUL BAREE CHOWDHURY VS. C IT (1932) 5 ITC 352 (RANG). IN THIS DECISION RENDERED UNDER THE PROVISIONS OF THE 1922 ACT, IT WAS OBSERVED : HE (THE ASSESSING AUTHORITY) MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT IN THE MATTER. HE MUST MAKE WHAT HE HONEST LY BELIEVES TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST, THEIR LORDSHIPS THINK, BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEES CIRCUMSTANCES, AND HIS OWN KNOWLEDGE OF PREVIOUS RE TURNS BY AND ASSESSMENTS OF THE ASSESSEE, AND ALL OTHER MATERIAL S WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ES TIMATE; AND THOUGH THERE MUST NECESSARILY BE GUESS-WORK IN THE MATTER, IT MUST BE HONEST GUESS-WORK. THESE OBSERVATIONS RECEIVED THE IMPRIMATUR OF THE SUPREME COURT IN STATE OF KERALA VS. C. VELUKUTTY ( 1966) 60 ITR 239 (SC) IN THE FOLLOWING WORDS : THE PRIVY COUNCIL, W HILE RECOGNIZING THAT AN ASSESSMENT MADE BY AN OFFICER TO THE BEST O F HIS JUDGMENT INVOLVED SOME GUESS-WORK, EMPHASIZED THAT HE MUST E XERCISE HIS JUDGMENT AFTER TAKING INTO CONSIDERATION THE RELEVA NT MATERIAL. IDENTICAL OBSERVATIONS MADE BY THE JUDICIAL COMMITT EE IN SETH GURMUKH SINGH VS. CIT (1992) 194 ITR 507 (ALL) : TC1R.357 W ERE APPROVED BY THE SUPREME IN DHAKESWARI COTTON MILLS LTD. VS. CIT (1994) 117 CTR (GAU) 179 : (1994) 205 ITR 45 (GAU) : TC1R.508. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 4 - 9.59 AS EMPHASIZED BY THE SUPREME COURT IN STATE OF KERA LA VS. C. VELUKUTTY (1966) 60 ITR 239 (SC) THOUGH THERE IS AN ELEMENT OF GUESS-WORK IN BEST JUDGMENT ASSESSMENT, IT SHOULD N OT 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. MA HARAJA 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 AU THORITIES TO MAKE AN ARBITRARY ORDER. THE POWER OF LEVY ASSESSMENT ON TH E BASIS OF BEST JUDGMENT IS NOT AN ARBITRARY POWER; IT IS AN ASSESS MENT 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 EX ERCISED UNDER THE SWEET WILL AND PLEASURE OF CONCERNED AUTHORITIES. THE BASIS OF ESTIMATE OR THE BASIS OF COMPUTATION SHOULD BE DISC LOSED BY THE ASSESSING AUTHORITY, OR OTHERWISE THE BEST JUDGMENT ASSESSMENT MAY BE QUASHED. IN ANAND RICE & OIL MILLS VS. CIT (1977) 108 ITR 3 72 (CAL) : TC11R.254 HUGE ADDITIONS WERE MADE BY THE ITO ON TH E GROUND THAT THE ASSESSEE HAD INFLATED THE PURCHASE PRICES OF GOODS AND A MAJOR PORTION OF THE ADDITION WAS SUSTAINED BY THE TRIBUNAL WITHO UT FURNISHING ANY BASIS OF ITS OWN ESTIMATE. THE CALCUTTA HIGH COURT HELD THAT THE ORDER OF THE TRIBUNAL BEING ARBITRARY, THE SAME COULD NOT BE SUSTAINED. IN GANGA PRASAD SHARMA VS. CIT (1981) 132 ITR 87 (MP) : TC11R.285 THE MADHYA PRADESH HIGH COURT EMPHASIZED THAT WHILE MAK ING A BEST JUDGMENT ASSESSMENT, THE BASIS OF COMPUTATION SHOUL D BE DISCLOSED BY THE ITO. IN CIT VS. RANICHERRA TEA CO. LTD. (1994) 207 ITR 979 (CAL) : TC11PS.3, THE ITO REJECTED THE LOSS RETURN AND DETERMINED THE LOSS AT NIL ON DEFAULT OF ASSESSEE TO PRODUCE BOOKS OF ACCO UNT. NO BASIS FOR COMPUTATION WAS DISCLOSED BY THE ITO. IT WAS HELD B Y THE CALCUTTA HIGH COURT THAT THE ITO ACTED ILLEGALLY. AS ASSESSMENT HAS TO BE COMPLETED ON THE BASIS OF RECORDS AND MATERIAL AVAI LABLE BEFORE THE AO AND PERSONAL KNOWLEDGE AND EXCITEMENT ON EVENTS AND EXTRANEOUS FACTS SHOULD NOT LEAD THE AO TO A STATE OF AFFAIRS WHERE THE SALIENT/PRIMARY/DIRECT EVIDENCES ARE OVERLOOKED AND SHOULD NOT INFLUENCE THE AO FOR RESORTING TO ADHOC ADDITIONS/D ISALLOWANCES. IF GENERAL/CASUAL/ROUTINE OBSERVATIONS OF THE AO ARE T O BE CONSIDERED AS MATERIAL EVIDENCE FOR THE PURPOSE OF FRAMING AN ASS ESSMENT, THE AO SHALL HAVE BLANKET AND ARBITRARY POWERS TO DISPOSE OF THE SCRUTINY ASSESSMENTS ACCORDING TO HIS WHIMS AND FANCIES WHIC H IS NOT THE SPIRIT OF THE CIRCULARS ISSUED BY THE BOARD ON SCRUTINY AS SESSMENT. AN ASSESSMENT CANNOT BE MADE ARBITRARILY AND IN ORDER THAT AN ASSESSMENT CAN BE SUSTAINED, IT MUST HAVE NEXUS TO THE MATERIA L ON RECORD. (CIT V. MAHESH CHAND [1983] 199 ITR 247, 249 (ALL.). IT IS THE SETTLED POSITION THAT, THOUGH THE AO HAS VERY WIDE POWERS AND IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, THERE IS ONE OVER-RIDING RESTRICTION ON HIS JUDGEMENT AND THAT IS, THAT, HE MUST ACT HONESTLY AND DILIGENTLY ON THE MATERIAL, HOWSOEVER, INADEQUATE I T WAS, AND NOT VINDICTIVELY, CAPRICIOUSLY OR ARBITRARILY. PROBABI LITY CANNOT BE CONSTRUED AS MATERIAL EVIDENCE TO FORM AN OPINION B Y THE AO TO CONCLUDE AN ASSESSMENT AND FOR DRAWING ADVERSE INFE RENCE 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 INV ARIABLY BE PROVED TO HAVE BEEN THE CORRECT QUANTUM OF INCOME EARNED BY T HE APPELLANT DURING THE RELEVANT PREVIOUS YEAR AND THE ONE PRESU MED TO HAVE BEEN ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 5 - EARNED. THE PRESUMPTIONS AND HYPOTHETICAL ESTIMATIO NS AND OBSERVATIONS MADE BY THE A.O. FOR MAKING THE IMPUGN ED ESTIMATED ADDITION, WERE EXTRANEOUS, IRRELEVANT AND OPPOSED T O THE FACTS OBTAINING FROM THE RECORD. THE FATE OF THE APPELLAN T COULD NOT BE DECIDED BY THE A.O. ON MERE SURMISES OR PROBABILITI ES (NORTHERN BENGAL JUTE MILLS TRADING CO. LTD. V. CIT (1968) 70 ITR 40 7 (CAL). THE MERE EXISTENCE OF REASONS FOR SUSPICION WOULD NOT TANTAM OUNT 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 T O BE BASELESS AND WITHOUT ANY EVIDENCE, HENCE, THE REJECTION OF BOOKS OF ACCOUNTS IS HELD TO BE INVALID AND ADDITION MADE BY THE A.O ON ACCOUNT OF ALLEGED SUPPRESSION OF YIELD IS DELETED. THE APPELLANT GETS RELIEF OF RS. 40,22,75,484 /- AS TABULATED BELOW: A.Y. AMOUNT (RS.) 2006-07 78,71,592.00 2008-09 1,27,21,890.00 2009-10 7,36,32,462.00 2010-11 11,68,88,700.00 2011-12 12,81,75,540.00 2012-13 6,29,85,300.00 11. AS NOTED EARLIER, WHILE ADJUDICATING THE ISSUES INVOLVED IN FAVOUR OF THE ASSESSEE ON FACTUAL MATRIX, THE LEGAL OBJECTION OF THE ASSESSEE ON POINT OF JURISDICTION UNDER S. 153A FOR MAKING ADDITIONS CONCERNING AY 2006-07 TO 2009-10 WAS SEEN WITH DISFAVOUR AND DECIDED AGAINST THE ASSESSEE BY THE C IT(A). 12. THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED TO THE ASSESSEE ON MERITS BY THE CIT(A) ON BOTH THE ISSUES OF (I) A DDITIONS UNDER S.68 OF THE ACT TOWARDS SHARE APPLICATION MONEY; & (II) SUPPRESSION OF PRODUCTION BASED ON LOWER YIELD AND CORRESPONDIN G UNRECORDED SALES IN ALL THE CAPTIONED APPEALS. THE REVENUE HAS ALSO RAISED OBJECTION TO THE RELIEF GRANTED BY THE CIT(A) ON AC COUNT OF EXCESS STOCK AND RELIEF GRANTED TOWARDS ADJUSTMENT OF CASH SEIZED AGAINST TAX DEMAND IN AY 2012-13 WHICH SHALL BE DEALT WITH AT APPROPRIATE PLACE IN SUCCEEDING PARAGRAPHS. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 6 - 13. THE ASSESSEE, ON THE OTHER HAND, HAS FILED CROS S OBJECTIONS CHALLENGING THE VERY LEGITIMACY OF ADDITIONS/ DISAL LOWANCES DEHORS ANY REFERENCE TO INCRIMINATING DOCUMENTS IN UNABATE D ASSESSMENTS I.E. AY 2006-07 TO AY 2009-10. 14. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEA RNED CIT-DR FOR THE REVENUE, AT THE OUTSET, STRONGLY RELIED UPO N THE FACTUAL MATRIX DISCUSSED IN ASSESSMENT ORDERS IN QUESTION. AS REGARDS LEGAL OBJECTION OF THE ASSESSEE, IT IS THE CASE OF THE RE VENUE THAT DISCOVERY OF ANY INCRIMINATING DOCUMENT IS NOT A CO NDITION PRECEDENT TO MAKE ASSESSMENT UNDER S.153A OF THE AC T. IT WAS THUS CONTENDED THAT THE AO AND THE CIT(A) RIGHTLY OBSERV ED THAT THE ISSUE OF WARRANT OF SEARCH AND SEIZURE UNDER S.132 OF THE ACT SUFFICIENTLY EMPOWERS THE AO TO INITIATE THE PROCEE DINGS UNDER S.153A OF THE ACT AND TO MAKE ALL CONSEQUENT ADDITIONS/DISALLOWANCES REGARDLESS OF PRESENCE OF I NCRIMINATING DOCUMENTS OR OTHERWISE. IT WAS SUBMITTED THAT THE O NLY CONDITION FOR INITIATION OF PROCEEDINGS UNDER S.153A OF THE ACT I S OCCURRENCE OF A VALID SEARCH UNDER S.132 OF THE ACT. IT WAS REITER ATED THAT SECTION 153A OF THE ACT DOES NOT PROVIDE THAT ASSESSMENT/RE -ASSESSMENT SHOULD BE BASED ON INCRIMINATING MATERIAL ALONE A ND 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 UP ON 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 L OW YIELDS, IT WAS CONTENDED THAT THE ASSESSEE HAS FAILED TO PROVIDE S ATISFACTORY EXPLANATION FOR LOWER YIELD QUA THE INDUSTRY STANDA RD AS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 7 - DEMONSTRATED BY THE AO IN ITS ORDER. THE FINDINGS O F THE CIT(A) FOR REVERSAL OF ADDITIONS WERE THUS ASSAILED ON MERITS. 15. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSE E, TO BEGIN WITH, ADVERTED TO THE LEGAL OBJECTION AND POINTED O UT THAT THE A.YS. 2006-07 TO 2009-10 STOOD CONCLUDED AND COMPLETED PR IOR TO INITIATION OF SEARCH ON 21.06.2011 AND CONTENDED TH AT IN THE LIGHT OF THE LAW EXPOUNDED BY THE PLETHORA OF JUDICIAL PRECE DENTS OF DIFFERENT HIGH COURTS, IN THE ABSENCE OF ANY INCRIM INATING MATERIAL FOUND IN THE COURSE OF SEARCH QUA THE ADDITIONS/DISALLOWANCES MADE, THE ACTION OF AO IS DEVOID OF LEGITIMACY WITHOUT SH OWING ITS CONNECTION TO THE INCRIMINATING MATERIAL FOUND IN T HE COURSE OF SEARCH. IT WAS, HOWEVER, FAIRLY CONCEDED THAT THE A SSESSMENTS FOR A.YS. 2010-11 TO A.Y. 2012-13 WERE PENDING AT THE T IME OF SEARCH IN TERMS OF 2 ND PROVISO TO S. 153A AND HENCE, NORMAL ASSESSMENTS UNDER S.153A R.W.S. 143(3) OF THE ACT WOULD BE PERM ISSIBLE AS PER THE SCHEMATIC INTERPRETATION OF THE LAW GOVERNING S EARCH ASSESSMENTS. 15.1 TURNING TO THE FACTS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SEARCH AND SEIZURE OPERATION UNDER S.132(1) OF THE ACT WAS CARRIED OUT ON THE RESIDENTIAL AND BUSINESS PREMISES OF VARIOUS COMPANIES AND ITS DIRECTORS ON 21.06.2011. HOWEVER, SIGNIFICANTLY, NO SEARCH ACTION WAS CARRIED OUT AT THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WHERE THE SHARE CERT IFICATES, RELEVANT STATUTORY RECORDS ARE KEPT AS REQUIRED IN LAW. NO A DVERSE INFORMATION IN RELATION TO SHARE APPLICANTS WERE FO UND IN THE COURSE OF SEARCH. IT WAS FURTHER ASSERTED THAT NO DOCUMENT RELATING TO VARIOUS ASSESSMENT YEARS IN QUESTION WERE EITHER FO UND OR SEIZED WHICH CAN BE BRANDED TO BE INCRIMINATING IN NATURE INDICATING PRESENCE OF ANY UNDISCLOSED INCOME. THE CASH FOUND IN SEARCH WAS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 8 - MEAGER HAVING REGARD TO THE SCALE OF OPERATIONS. TH E DOCUMENTS FOUND AND SEIZED WERE OF ROUTINE NATURE MAINTAINED IN THE ORDINARY COURSE OF BUSINESS WHICH NATURALLY WILL BE FOUND IN THE BUSINESS PREMISES. THE DOCUMENTS FOUND RELATES TO THE ENTRI ES ALREADY MADE IN THE BOOKS. HENCE, THE ASSESSMENTS FOR AYS 2006- 07 TO 2009-10 WHICH STOOD CONCLUDED AND REMAINED UNABATED IS BARR ED BY PRINCIPLES OF FINALITY AND COULD NOT BE DISTURBED B Y THE AO IN THE ABSENCE OF THE INCRIMINATING MATERIAL. 15.2 TO BUTTRESS THE LEGAL POSITION THAT PRESENCE O F INCRIMINATING MATERIAL DISCOVERED IN THE COURSE OF SEARCH AS A SINE QUA NON FOR ADDITIONS/DISALLOWANCES IN RESPECT OF UNABATED ASSE SSMENT, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION RENDERED IN THE CASE OF KABUL CHAWLA (2016) 380 ITR 573 (DEL); PR.CIT VS. MEETA GUTGUTIA (2018) 96 TAXMANN.COM 468 (SC) AND A SERIES OF DECISIONS IN LARGE NUMBERS GOVERNING THE FIELD. IN THE LIGHT OF JUDICIAL VIEW, IT WAS THUS ASSERTED THAT IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H, 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 CONCLUDE D 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 THA T IN UNABATED SEARCH ASSESSMENTS, NO ADDITION IS PERMISSIBLE MERELY ON T HE BASIS OF RE- APPRECIATION OF REGULAR BOOKS, ACCOUNTS AND DOCUMEN TS MAINTAINED BY THE ASSESSEE IN ORDINARY COURSE. THE LD. COUNSEL THUS SUBMITTED THAT ALL ADDITIONS/ DISALLOWANCES MADE IN THE IMPUG NED ASSESSMENTS COVERING AY 2006-07 TO 2009-10 IS ABSOLUTELY WITHOU T ANY LEGAL FOUNDATION AND DESERVES TO BE QUASHED AT THE THRESH OLD WITHOUT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 3 9 - GOING IN MERITS. SOME OF THE OTHER PRECEDENTS IN TH IS 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 L TD, ITA NOS. 236 TO 242/RPR/2014, ITAT RAIPUR BENCH; (C) MINDA INDUSTRIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, (2018) 53 CCH 0287 DELTRIB; (D) ASSTT. COMMISSIONER OF INCOME TAX 1(2), RAIPU R VS. MARUTI CLEAN COAL & POWER LTD., ITA.NO:187/RAIPUR/2014& ITA.NO:95/RAIPUR/2012, ITAT RAIPUR BENCH; (E) DCIT, RAIPUR VS R. R. ENERGY LTD, ITA NOS.22 5 TO 231/RPR/2014, ITAT RAIPUR BENCH; (F) BEST INFRASTRUCTURE (INDIA) PVT. LTD. &ORS. V S. ACIT, (2016) 47 CCH 0159, ITAT DELHI BENCH; (G) MOON BEVERAGES LTD. &ANR VS. ACIT, (2018) 53 C CH 0120, ITAT DELHI BENCH; (H) CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY, (2017) 156 DTK 0161 SC; (I) ACIT & ANR. VS. MADHURI SUNIL KOTECHA &ANR, ( 2016) 55 CCH 0187, ITAT PUNE BENCH; (J) TRILOK CHAND CHAUDHARY VS. ACIT, (2019) 56 CC H 0435, ITAT DELHI BENCH; (K) COMMISSIONER OF INCOME TAX VS. DEEPAK KUMAR A GRAWAL & ORS., (2017) 398ITR586(BOM); (L) PCIT CENTAL-3 VS. ANAND KUMAR JAIN, TS-105-HC-2 021(DEL); (M) PRINCIPAL COMMISSIONER OF INCOME TAX VS. DIPA K JASHVANTLAL PANCHAL,(2017) 397 ITR 153 (GUJ); (N) RAJAT MINERALS (P) LTD. VS. DCIT (2020) 114 TA XMANN.COM 536 (RANCHI) 15.3 ON MERITS, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT IT IS A MATTER OF RECORD THAT ASSESSEE HAS FILED SE VERAL DOCUMENTARY EVIDENCES OF SUBSCRIBERS BEFORE THE AO TO SUPPORT T HE NATURE AND SOURCE OF SHARE APPLICATION MONEY: (A) PAN, ADDRESS, NAME (B) COI, MOA, AOA (C) AUDITED FINANCIAL STATEMENT (D) INCOME TAX RETURN (E) BANK STATEMENT (F) SHARE APPLICATION FORM (G) PAYMENT RECEIVED THROUGH BANKING CHANNEL (H) DETAILS OF PAYMENT RECEIVED 15.4 MOVING FURTHER, THE LEARNED COUNSEL FOR THE AS SESSEE ADVERTED TO PAGE NOS. 339 & 340 OF VOLUME 5 OF PAPER BOOK AN D SUBMITTED ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 0 - THAT THE ASSESSEE HAS MADE SEVERAL PRO-ACTIVE REQUE STS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS SOME OF WHICH ARE NOTED HEREUNDER AS REFERRED; (A) TO PROVIDE THE ASSESSEE COMPANY WITH THE COPY OF ALL THE LETTERS SENT BY THE LD. AO TO THE INVESTORS /SHARE APPLICAN TS REGARDING INVESTMENT MADE IN THE SHARES OF ASSESSEE COMPANY. (B) THE ASSESSEE COMPANY MAY KINDLY BE APPRAISED WI TH THE CASES I.E. THE NAME OF THE COMPANY ON WHOM LETTER SENT BY THE LD. AO REMAINED UN-SERVED. (C) THE ASSESSEE COMPANY MAY KINDLY BE MADE KNOWN WITH THE REASON COMMUNICATED BY THE POSTAL DEPARTMENT BEHIND NON-SE RVICE OF THE LETTERS SENT BY THE LD. AO. (D) THE ASSESSEE COMPANY MAY KINDLY BE CONFRONTED 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 WI TH 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. 2 006-07, A.Y. 2007-08 & 2008-09 PRIOR TO SEARCH AND THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY HAD ALREADY BEEN EXAMINED BY SEVE RAL ROUNDS OF QUESTIONNAIRES IN THE SCRUTINY ASSESSMENT CARRIED O UT UNDER S.143(3) OF THE ACT. IT WAS AFTER DUE VERIFICATION OF FACTU AL ASPECTS, THE NATURE AND SOURCE OF SHARE APPLICATION MONEY WAS FO UND SATISFACTORY BY THE AO. 15.6 AS REGARDS THE ALLEGED LOWER YIELD AND ALLEGED UNACCOUNTED PRODUCTION AND SALES, IT WAS POINTED OUT THAT THE I SSUE WAS THOROUGHLY EXAMINED IN THE REGULAR ASSESSMENT AS CA N BE SEEN FROM THE ASSESSMENT ORDERS PASSED UNDER S.143(3) OF THE ACT. IT WAS BROADLY SUBMITTED THAT WHILE THE YIELD OF THE ASSES SEE IS COMPARABLE TO ITS PEERS, THE PERCENTAGE OF YIELD DECLARED IS I N SYNC WITH QUALITY OF INPUT. THE AO IN THE ORIGINAL ASSESSMENT HAS MAD E AVERMENTS TO THE EFFECT THAT THE YIELD HAS BEEN LOOKED INTO. BEF ORE US, THE LEARNED COUNSEL MAINLY RELIED UPON AN EXTENSIVE & OBJECTIVE ANALYSIS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 1 - CARRIED OUT BY THE CIT(A) WHICH IS CLAIMED TO BE SE LF EXPLANATORY. IT WAS THUS SUBMITTED THAT NO INTERFERENCE THEREWITH I S CALLED FOR ON MERITS. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIALS PLACED ON RECORD AND REFERRED TO IN TERMS OF RULE18(6) OF THE INCOME TAX (APPELLATE TRIBUNAL), R ULES 1963. 16.1 BEFORE WE DEAL WITH ADDITIONS ON MERITS, IT WI LL BE DESIRABLE TO ADJUDICATE THE PERTINENT LEGAL OBJECTION OF OVERWHE LMING NATURE RAISED ON BEHALF OF THE ASSESSEE WHICH GOES TO THE ROOT OF THE MATTER AND AFFECTS THE VERY FOUNDATION OF ADDITIONS / DISA LLOWANCES IN DISPUTE. THE LEGAL QUESTION THAT ARISES AS PER CROS S OBJECTION IS WHETHER WHILE MAKING ASSESSMENT UNDER S.153A OF THE ACT, THE REVENUE IS ENTITLED TO INTERFERE WITH AN ALREADY CO NCLUDED (AND NOT ABATED) ASSESSMENT PASSED EITHER UNDER S.143(1) OF THE ACT OR UNDER S.143(3) OF THE ACT AND NOT PENDING AT THE TIME OF SEARCH, IN THE ABSENCE OF INCRIMINATING DOCUMENTS UNEARTHED AS A R ESULT OF SEARCH?. AS A COROLLARY, THE SCOPE AND AMBIT OF ASS ESSMENT PROCEEDINGS IN SEARCH CASES UNDER S.153A OF THE ACT IS PUT UNDER SCANNER. 16.2 IN THE FIRST APPEAL, THE CIT(A) DISMISSED THE LEGAL GROUND OF JURISDICTION BY OBSERVING AS UNDER: 16. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. WHERE A SEARCH HAS BE EN INITIATED U/S 132 OF THE ACT, THE A.O. IS ENTITLED TO ISSUE NOTICE FO R SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH SEARCH HAS BEEN INITIATED. AS SUCH, THE ASSESSMENT FOR THOSE SIX ASSESSMENT YEARS STANDS REOPENED. ONCE THE ASSESSMENT IS REOPENED, THE A.O. HAS FULL POWERS TO ASSESS THE INCOME WHICH HAS ESCAPED, WHETHER FOUND AS A RESULT OF SEARCH OR OTHERWISE. ACCORDINGLY, THE ADDITIONS MADE BY THE A .O ARE WITHIN THE POWERS ASSIGNED TO HIM U/S 153A AND FOR THIS REASON , THIS GROUND OF APPEAL IS HEREBY DISMISSED . ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 2 - 16.3 WE HAVE EXAMINED THE LEGAL OBJECTION ON JURISD ICTION TO MAKE ADDITIONS INDEPENDENT OF INCRIMINATING MATERIAL FOU ND IN THE COURSE OF SEARCH. THE ISSUE IS NO LONGER RES INTEGRA AND ANSWERED IN FAVOUR OF THE ASSESSEE BY LARGE NUMBER OF JUDICIAL PRECEDE NTS. AS CONSISTENTLY ECHOED BY THE HONBLE COURTS OF DIFFER ENT JURISDICTION, THE SCOPE OF SEARCH ASSESSMENTS UNDER S.153A OF THE ACT IN RESPECT OF CONCLUDED AND UNABATED ASSESSMENTS IS NARROWER I N 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 HONBLE DELHI HIGH COURT REFERRED TO THE JUDGME NT IN THE CASE OF CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL); PR.CIT VS. SAUMYA CONSTRUCTIONS PVT. LTD. (2016) 38 7 ITR 529 (GUJ); PRINCIPAL COMMISSIONER OF INCOME TAX-1 VS. D EVANGI ALIAS RUPA 2017-TIOL-319-HC-AHM-IT; CIT VS. IBC KNOWLEDGE PARK PVT. LTD. (2016) 385 ITR 346 (KAR); PR. CIT-2 VS. S ALASAR 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 HONBLE 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 HONBLE DELHI HIGH COURT MADE AN EXHAUSTIVE REFERENCE TO THE DECI SIONS NOTED ABOVE AND HELD THAT INVOCATION OF SECTION 153A OF T HE ACT TO REOPEN CONCLUDED ASSESSMENTS OF EARLIER ASSESSMENT YEARS W AS NOT PERMISSIBLE IN THE ABSENCE OF INCRIMINATING MATERIA L FOUND DURING SEARCH QUA EACH SUCH UNABATED ASSESSMENT YEARS. EVENTUALLY, THE HONBLE DELHI HIGH COURT IN MEETA GUTGUTIA (SUPRA) HELD THAT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 3 - ADDITIONS BASED ON APPRECIATION OF FACTS DEHORS INCRIMINATING MATERIAL ARE NOT SUSTAINABLE IN LAW. THE SLP OF TH E REVENUE AGAINST THE AFORESAID DECISION OF THE HONBLE DELHI HIGH CO URT WAS DISMISSED BY THE HONBLE SUPREME COURT IN PR.CIT VS. MEETA GUTGUTIA (2018) 96 TAXMANN.COM 468 (SC). . 16.3.2 SIMILAR VIEW THAT NO ADDITIONS COULD BE MADE ON THE BASIS OF MATERIAL COLLECTED AFTER SEARCH AND IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND OR SEIZED DURING SEARC H HAS BEEN ENDORSED BY THE HONBLE GUJARAT HIGH COURT IN PR.CIT VS. SUNRISE FINLEASE (P.) LTD. (2018) 89 TAXMANN.COM 1 (GUJ.). 16.3.3 THE HONBLE GUJARAT HIGH COURT IN PR.CIT VS. SAUMYA CONSTRUCTIONS PVT. LTD. (2016) 387 ITR 529 (GUJ) ALSO DECLINED TO AGREE WITH THE PLEA ON BEHALF OF THE REVENUE THAT T HE NEW PROCEDURE PROVIDED UNDER S.153A OF THE ACT IS DIFFERENT FROM EARLIER PROCEDURE PROVIDED UNDER S.158BC R.W.S. 158BB OF THE ACT AND CONSEQUENTLY, THE PLEA OF THE REVENUE THAT THERE IS NO CONDITION IN SECTION 153A OF THE ACT THAT ADDITIONS SHOULD BE MADE STRICTLY O N THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF SEARCH WAS NOT APPROVED. THE HONBLE GUJARAT HIGH COURT ANALYZED THE POSITION OF LAW AND TOOK NOTE OF SEVERAL JUDICIAL PRECEDENTS AND CONCLUDED T HAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER S.153A OF THE ACT ONLY ON THE BASI S OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS ETC. THE HONBLE GUJARAT H IGH COURT NOTED THAT THE TRIGGER POINT FOR EXERCISE OF POWERS UNDER S.153A OF THE ACT IS A VALID SEARCH UNDER S.132 OF THE ACT OR A REQUI SITION UNDER S.132A OF THE ACT. ONCE A SEARCH OR REQUISITION IS MADE, THE MANDATE IS CAST UPON THE AO TO ISSUE NOTICE UNDER S .153A OF THE ACT AND COMPLETE THE ASSESSMENT OF 6 ASSESSMENT YEARS. THE HONBLE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 4 - GUJARAT HIGH COURT TOOK NOTE OF THE FACT THAT OBJEC T OF SCHEME LEGISLATED FOR ASSESSMENT IN SEARCH CASES IS TO BRI NG TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND IN THE COURSE OF OR PURSUANT TO SEARCH OR REQUISITION AND THEREFORE ADDITIONS/DISAL LOWANCES MUST BE LINKED WITH SEARCH/REQUISITION. IT WAS NOTED BY TH E HONBLE 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 20 07 JUDGMENT DATED 14.07.2016; CIT VS. CONTINENTAL WAREHOUSING CORPORA TION (2015) 374 ITR 645 (BOM.); PR.CIT VS. DESAI CONSTRU CTION PVT. LTD. 387 ITR 552 (GUJ.); GURINDER SINGH BABA 386 ITR 483 (BOM); & CIT VS. DEEPAK KUMAR AGARWAL (2017) 398 ITR 586 (BO M.). 16.3.5 THE HONBLE 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 HONBLE DELHI HIGH COURT THA T ENTIRE CASE AGAINST THE ASSESSEE WAS BASED ON WHAT WAS FOUND DU RING THE SEARCH OF THE PREMISES OF OTHER PARTIES AND THUS, IT IS AP PARENT ON THE FACE OF IT THAT NOTICE TO ASSESSEE UNDER S.153A OF THE A CT WAS MISCONCEIVED SINCE THE SO-CALLED INCRIMINATING MATE RIAL WAS NOT FOUND DURING THE SEARCH OF ASSESSEES PREMISES. 16.3.6 ON THE CONSPECTUS OF AFORESAID JUDGMENTS OF DIFFERENT COURTS, THE POSITION OF LAW IS LOUD AND CLEAR THAT ADDITIONS/DISALLOWANCES UNDER S.153A OF THE ACT TOW ARDS UNABATED ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 5 - ASSESSMENTS ARE PERMISSIBLE ONLY WHERE INCRIMINATIN G MATERIALS ARE FOUND IN SEARCH SHOWING UNACCOUNTED INCOME. 16.4 IN SUMMATION, IN THE LIGHT OF THE AFORESAID OV ERWHELMING LEGAL PRECEDENTS AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, DELHI HIGH COURT & GUJARAT HIGH COURT AS ALSO VARIOUS BEN CHES OF TRIBUNAL, THE CORRECT LEGAL POSITION IN RESPECT OF THE ASSESSMENTS UNDER S.153A OF THE ACT MAY BE SUMMARIZED AS FOLLOW S: (I) THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT IS LIMI TED TO THE INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AND NO FURTHER IN SO FAR AS UNABATED ASSESSMENTS ARE CONCERNED; & (II) U NLESS THERE IS INCRIMINATING MATERIAL QUA EACH ASSESSMENT YEARS TO WHICH ADDITIONS ARE SOUGHT TO BE MADE IN RESPECT OF CONCLUDED ASSES SMENTS, THE ASSESSMENT UNDER S.153A OF THE ACT BY MAKING ADDITIONS/DISALLOWANCES WOULD BE VITIATED IN LAW. 16.5 AS DISCUSSED IN LENGTH, THE ISSUE HAS BEEN DYN AMIC AND A MATTER OF LEGAL INTERPRETATION. WE ARE GOVERNED BY THE SCHEMATIC INTERPRETATION GIVEN TO PROVISIONS OF SECTION 153A OF THE ACT BY DIFFERENT HONBLE COURTS. IN THE LIGHT OF JUDICIAL FIAT READING DOWN THE SCOPE AND SPECTRUM OF ASSESSMENT UNDER S.153A O F THE ACT IN NARROWER COMPASS, THE POSITION OF LAW IS EXPLICITLY CLEAR. IN THE ABSENCE OF ANY CONNECTION WITH THE INCRIMINATING MA TERIAL UNEARTHED IN SEARCH PROCEEDINGS OF ASSESSEE, ADDITIONS / DISA LLOWANCES IN RESPECT OF CONCLUDED ASSESSMENT I.E. AYS. 2006-07 T O 2009-10 IN INSTANT APPEALS, ARE NOT PERMISSIBLE IN LAW. THE BU RDEN OF PROOF TOWARDS EXISTENCE OF UNDISCLOSED INCOME DISCOVERED AS A RESULT OF SEARCH IS ON THE REVENUE. NO EVIDENCE HAS BEEN REF ERRED TO BY AO OR BROUGHT ON RECORD AS CLAIMED TO BE FOUND AT SEAR CH OF ASSESSEE TO SUGGEST EXISTENCE OF UNDISCLOSED INCOME AS PERCEIVE D BY THE AO. THE REVENUE HAS FAILED TO REBUT THE FACTUAL ASSERTI ONS MADE ON ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 6 - BEHALF OF THE ASSESSEE TOWARDS NON-DISCOVERY OF INC RIMINATING MATERIAL AT THE TIME OF DRASTIC ACTION OF SEARCH ON ASSESSEE AND REFERENCE THERETO IN ASSESSMENT ORDER. THERE IS NOT HING ON RECORD THAT INFORMATION CONTAINED IN SEIZED DOCUMENTS AS P ER LIST OF INVENTORY, WERE NOT RECORDED OR REFLECTED IN THE BO OKS OF ACCOUNTS. HENCE, THE ACTION OF THE AO TOWARDS MAKING ADDITION S 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 W ITHOUT DISCHARGING THE BURDEN TO SHOW PRESENCE OF ANY INCR IMINATING MATERIAL OR EVIDENCE DEDUCED AS A RESULT OF SEARCH IN SO FAR AS COMPLETED ASSESSMENTS ARE CONCERNED. ADDITIONS/DIS ALLOWANCES MADE IN ASSESSMENTS FRAMED UNDER S.153A OF THE ACT IN RESPECT OF CAPTIONED ASSESSEE PERTAINING TO AYS. 2006-07 TO 20 09-10 ARE THUS REQUIRED TO BE STRUCK DOWN ON THIS SCORE ITSELF. H OWEVER, THE ASSESSMENTS/RE-ASSESSMENTS PENDING ON THE DATE OF S EARCH I.E. AY 2010-11 TO 2012-13 WHICH STOOD ABATED BY OPERATION OF LAW WILL CONTINUE TO BE GOVERNED BY ORDINARY POWERS OF ASSES SMENT 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 DOCUM ENTS ARE BAD IN LAW AND THUS REQUIRES TO BE STRUCK DOWN FOR AY 2006 -07 TO 2009-10. 18. NOTWITHSTANDING AND WITHOUT PREJUDICE, FOR THE SAKE OF COMPLETENESS, WE SHALL NOW ADVERT TO THE CORRECTNES S OF VARIOUS ADDITIONS MADE IN A.YS. 2006-07, 2008-09 TO 2012-13 ON MERITS. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 7 - 19. AS NOTED EARLIER, THE AO HAS INVOKED SECTION 68 OF THE ACT AND MADE ADDITIONS ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN A.Y. 2006-07 & 2009-10 AS UNEXPL AINED CASH CREDIT. THE CIT(A), HOWEVER, AFTER TAKING NOTE OF OBSERVATIONS MADE IN THE ASSESSMENT ORDER AND ORAL & WRITTEN SUB MISSIONS MADE ON BEHALF OF THE ASSESSEE, FOUND MERIT IN THE PLEA OF THE ASSESSEE AND REVERSED THE ADDITIONS SO MADE. 19.1 THE CIT(A) HAS SUCCINCTLY ANALYZED THE ISSUE. THE DETAILED FINDINGS OF THE CIT(A) DEALING WITH THE ISSUE HAS B EEN REPRODUCED IN THE PRECEDING PARAGRAPH 9 OF THIS ORDER. 19.2 ON PERUSAL OF THE ORDER OF THE CIT(A), IT IS N OTICED THAT CIT(A) HAS RECORDED A FINDING ON FACT THAT ADDITION S ON ACCOUNT OF SHARE APPLICATION MONEY HAS BEEN MADE WITHOUT ANY R EFERENCE TO THE INCRIMINATING MATERIAL DETECTED IN THE COURSE OF SE ARCH. THE CIT(A) HAS RECORDED SOME NOTICEABLE OBSERVATIONS ON THE IS SUE OF SHARE APPLICATION MONEY IN A.Y. 2006-07 & 2009-10 AS SUMM ARIZED HEREUNDER: 'THE A.O. DID NOT PAY ANY HEED TO THE REQUESTS SEEK ING SUPPLY OF RESULTS OF INQUIRY CONDUCTED IF ANY FOR ARRIVING AT SUCH CO NCLUSIONS. FURTHERMORE, THE LD. ARS POINTED OUT THAT ASSESSMEN TS IN THE CASE OF PROMOTERS/DIRECTORS AND FAMILY MEMBERS WERE MADE IN MOST OF THE CASES BUT NO SUCH VIEW EVEN TO SUPPORT HIS OWN PASSING RE MARKS WAS OFFERED. DETAILED EXPLANATIONS WERE SUBMITTED WITH RESPECT T O THE LOOSE PAPERS SEIZED AND NOT EVEN A SINGLE DOCUMENT OUT OF IT REL ATE TO OR SUGGEST THAT ANY UNDISCLOSED INCOME OF THESE PERSONS HAS BEEN RO UTED BACK IN THE FORM OF SHARE APPLICATION MONEY. (PARA 4.4 ON PAGE NO.9) THE PRESENT ACTION OF THE A. O IS NOT CULMINATING F ROM ANY SPECIFIC FINDING AGAINST THE APPELLANT THAT IT WAS A BENEFIC IARY OF ANY RACKET WHICH HAS BEEN UNEARTHED AS A RESULT OF SEARCH PROC EEDINGS NOR HAS THE A. O BROUGHT ON RECORD ANY OTHER EVIDENCE TO INDICA TE THAT THE APPELLANT DID MAKE UNDISCLOSED INCOME AND SUCH EVID ENCE CAME ON THE SURFACE AS A RESULT OF SEARCH PROCEEDINGS. IN THIS BACKGROUND, IN MY CONSIDERED VIEW, THERE IS NO SCOPE AND REASON TO TAKE A CONTRARY VIEW THAN THAT TAKEN BY T HE THEN A.O WITHOUT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 8 - THERE BEING ANY DOCUMENTARY EVIDENCE AGAINST THE AP PELLANT TO DEMONSTRATE THAT THE SHARE APPLICATION MONEY WAS NO THING BUT UNDISCLOSED INCOME OF THE APPELLANT. (PARA 5.9 ON PAGE NO. 15 & 16) IN MY CONSIDERED OPINION, APART FROM DRAWING PRESUM PTIONS, THE AO HAS NOT BROUGHT ANY CLINCHING MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE SAID SHARE CAPITAL MONEY BELONGS TO THE AP PELLANT SINCE NO NEXUS HAS BEEN ESTABLISHED THAT THE MONEY FOR AUGME NTING 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 INDEPE NDENTLY OF THE INFORMATION RECEIVED, IF ANY, FROM THE INVESTIGATIO N 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) REPRO DUCED IN PRECEDING PARA, THE CIT(A) HAS ALSO ANALYZED AND DE LINEATED 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 SATISFA CTORILY DISCHARGED BY THE ASSESSEE. THE CIT(A) HAS EXAMINED THE FACTUAL MATRIX IN RELATION TO EACH AND EVERY SUBSCRIBER IND IVIDUALLY, AS EXTRACTED IN PARA 9 OF THIS ORDER, AND FOUND THAT T HE SUBSCRIBERS WERE DULY ASSESSED AND PAYMENTS HAVE COME THROUGH BANKIN G CHANNELS. IT WAS FURTHER FOUND THAT THE TANGIBLE NET WORTH OF THE SUBSCRIBERS COMPANY IS SUFFICIENTLY ENOUGH TO MEET THE CRITERIA OF CREDITWORTHINESS AS UNDERSTOOD IN ORDINARY PARLANCE . THE BANK STATEMENTS, AUDITED FINANCIAL STATEMENT AND CONFIRM ATIONS WERE ANALYZED. THE SOURCE OF INVESTMENT WAS THUS FOUND T O BE EXPLAINED SATISFACTORILY IN THE FACTS OF THE CASE. IT WAS FUR THER NOTED THAT THE CREDIT FOR SHARE APPLICATION MONEY WAS ACCEPTED IN THE REGULAR ASSESSMENT UNDER S.143(3) OF THE ACT CONCERNING A.Y . 2006-07 PRIOR TO SEARCH AFTER MAKING DUE ENQUIRIES. THE SUBSCRIBE R CO. NAMELY ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 4 9 - ANTARIKSH COMMERCE PVT. LTD. AND ESCORT FINVEST PVT . LTD. WERE FOUND TO BE GROUP COMPANIES. THE SHARE APPLICATION MONEY RS. 200 LAKHS RECEIVED FROM GROUP CO. NAMELY DEVI IRON & PO WER LTD. WAS REFUNDED IN A.Y. 2009-10 THROUGH BANKING CHANNEL. T HE ASSESSMENTS OF THE SUBSCRIBER COMPANIES CARRIED OUT UNDER S. 14 3(3) /S. 143(3) R.W.S. 147 WERE NOTED. A PERTINENT OBSERVATION WAS MADE THAT THE SAME AO IN THE CASE OF OTHER GROUP CONCERN (MAHAMAY A STEEL INDUSTRIES LTD.) ACCEPTED THE CREDITWORTHINESS OF T HE INVESTOR COMPANY NAMELY ESCORTS FINVEST PVT. LTD. FOR SUBS CRIPTION IN PREF. SHARE CAPITAL. THE CIT(A) ESSENTIALLY NOTED THAT A SUBSTANTIAL PART OF APPLICATION MONEY HAS BEEN RECEIVED FROM GROUP C OS. AND A PART OF IT ALSO STOOD EVENTUALLY RETURNED. THE ADVERSE I NFERENCE DRAWN BY THE AO WAS FOUND BY THE CIT(A) TO BE UNSUBSTANTIATE D AND IN THE REALM OF SUSPICION, SURMISES AND CONJECTURES. ON LE GAL POSITION, THE CIT(A) HAS REFERRED TO LARGE NUMBER OF JUDICIAL PRO NOUNCEMENTS. WITHOUT REITERATING THE DIFFERENT FACETS ANALYZED B Y THE CIT(A), WE FIND COMPLETE FORCE IN HIS VIEW. AFTER DETAILED AND OBJECTION SCRUTINY OF FACTUAL & LEGAL POSITION, THE CIT(A) SE T ASIDE AND REVERSED THE ADDITIONS CARRIED OUT WITHOUT ANY IOTA OF INCRIMINATING MATERIAL TO SUPPORT THE ALLEGATION OF ACCOMMODATION ENTRIES IN THE ABATED AS WELL AS UNABATED SEARCH ASSESSMENTS. THE ORDER OF THE CIT(A) ON MERITS IS SELF SPEAKING AND DOES NOT NEED ANY REITERATION. WE COMPLETELY ENDORSE THE ACTION OF THE CIT(A) ACTI ON ON MERITS WITHOUT DEMUR . THE OBJECTION OF THE REVENUE IS, IN OUR VIEW, UNSUBSTANTIATED AND DEHORS THE TELL-TALE EVIDENCES 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 APPE AL CONCERNING ADDITIONS UNDER S. 68 IN A.Y. 2006-07 & 2009-10 ARE DISMISSED ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 0 - WHEREAS THE CROSS OBJECTION OF THE ASSESSEE ON THE LEGAL POINT OF LACK OF JURISDICTION UNDER S.153A OF THE ACT IS ALL OWED. 21. WE NOW ADVERT TO ADDITIONS OF RS.3,80,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS UNDER S.68 OF T HE ACT CONCERNING A.Y. 2012-13 WHICH IS REVERSED BY THE CI T(A). 22. THE LEARNED DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO SA TISFACTORILY EXPLAIN THE NATURE AND SOURCE OF RECEIPTS OF SHARE APPLICATION MONEY OF RS.3,80,00,000/- RECEIVED FROM ESCORTS FINVEST P VT. 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 THE REFORE, THE AO WAS ENTITLED TO ASSESS THE INCOME UNDER S.68 OF THE ACT WITHOUT THE CONSTRAINTS OF TECHNICALITY OF S. 153A IN RESPE CT OF COMPLETED ASSESSMENTS. THE LEARNED DR, THEREAFTER, MADE REFER ENCE TO THE DECISION OF THE HONBLE SUPREME COURT IN PCIT VS. NRA IRON & STEEL P. LTD. 412 ITR 161(SC) AND CONTENDED THAT THE ADDITIONS UNDER S.68 OF THE ACT WAS JUSTIFIED IN THE INSTANT CASE WHERE THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE NATUR E AND SOURCE OF CREDIT AND HAS FAILED TO DISCHARGE THE ONUS WHICH L AY UPON THE ASSESSEE. 23. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSE E, AT THE OUTSET, SUBMITTED THAT THE ASSESSEE RECEIVED THE AMOUNT IN QUESTION FROM A GROUP COMPANY, NAMELY, ESCORTS FINVEST PVT. LTD., W HICH IS REGULARLY ASSESSED TO TAX AND CARRIES SUBSTANTIAL N ET WORTH. A NOTICE UNDER S.133(6) OF THE ACT WAS ISSUED BY THE AO TO T HE POTENTIAL SUBSCRIBER AND IN RESPONSE, THE AFORESAID POTENTIAL SUBSCRIBER HAD CONFIRMED THE FACT OF ADVANCING SHARE APPLICATION M ONEY TO THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 1 - ASSESSEE. THIS APART, ALL THESE RELEVANT DOCUMENTS , SUCH AS, SHARE APPLICATION FORM, CERTIFICATE OF REGISTRATION FROM THE REGISTRAR OF THE COMPANIES, PAN CARD & INCOME TAX RETURN OF THE APPL ICANT TOGETHER WITH AUDITED FINANCIAL ACCOUNTS, BANK STAT EMENTS, MEMORANDUM OF ASSOCIATION OF THE SHARE APPLICANT WA S ALSO PROVIDED. IT WAS FURTHER POINTED OUT BY WAY OF A S TATEMENT ON BAR THAT THE MONEY SO RECEIVED WAS ULTIMATELY RETURNED AND REPAID TO THE SUBSCRIBER IN THE SUBSEQUENT ASSESSMENT YEARS AS TH E PROPOSED SUBSCRIPTION IN THE ASSESSEES COMPANY DID NOT FRUC TIFY. TO DEFEND THE STANCE OF THE ASSESSEE AND THE ORDER OF THE CIT (A), THE ASSESSEE HAD MADE WIDE RANGING SUBMISSIONS WHICH WE SHALL DE AL WITH APPROPRIATELY IN THE SUBSEQUENT PARAGRAPHS. 24. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS ON THE ADDITIONS UNDER S.68 OF THE ACT CONCERNING A.Y. 201 2-13. WE HAVE ALSO PERUSED THE ASSESSMENT ORDER, THE FIRST APPELL ATE ORDER PASSED BY THE CIT(A) AND RELEVANT MATERIALS PLACED BY WAY OF PAPER BOOK AND THE CASE LAWS RELIED UPON. TO BEGIN WITH, WE OB SERVE THAT IN RESPONSE TO THE QUERY LETTER DATED 19.09.2013 ISSUE D BY THE AO, THE ASSESSEE HAD FURNISHED THE RELEVANT DETAILS WITH RE FERENCE TO THE SHARE APPLICANT, NAMELY, ESCORTS FINVEST PVT. LTD. (EFPL), WHICH IS STATED TO A GROUP COMPANY. COPY OF ASSESSMENT ORDER UNDER S.143(3) OF THE ACT, THE BANK STATEMENT, AUDITED FINANCIAL S TATEMENTS OF PROPOSED SUBSCRIBER WERE PLACED ON RECORD. THE AO A LSO MADE ENQUIRIES WITH THE SUBSCRIBER UNDER S.133(6) OF THE ACT. AS POINTED OUT ON BEHALF OF THE ASSESSEE, THE SUBSCRIPTION WAS TAKEN FROM THE SAID SUBSCRIBERS IN A.Y. 2006-07 AS WELL WHERE DETA ILED ENQUIRY WAS UNDERTAKEN IN THE NORMAL ASSESSMENT. THE BONAFIDE S 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 MAD E INVESTMENT IN ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 2 - THE PREFERENCE SHARE CAPITAL OF GROUP COMPANY NAMEL Y MAHAMAYA STEEL INDUSTRIES LIMITED (MSIL) AND THE SEARCH ASSE SSMENT OF MSIL WAS ALSO COMPLETED SIMULTANEOUSLY BY THE SAME AO WH EREIN NO ADVERSE INFERENCE WAS DRAWN IN RESPECT OF PREFERENC E RAISED BY THE MSIL FROM THE AFORESAID APPLICANT. AS REGARDS THE C REDITWORTHINESS, 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 CONFIR MED THE ACT OF PROPOSED INVESTMENTS IN THE ASSESSEE COMPANY AS NOT ED EARLIER. THE SHARE APPLICANT ALSO OFFERED FOR PERSONAL APPEARANC E BEFORE THE AO AND TO GIVE STATEMENT ON OATH BEFORE THE AO WHICH R EQUEST HOWEVER WAS NOT ACTED UPON BY AO. THIS APART, AN AFFIDAVIT WAS FILED BY THE SUBSCRIBER STATING FACTUM OF INVESTMENT. IN SHORT, IT IS ASSERTED THAT THE PRIMARY ONUS WAS DISCHARGED TO EXPLAIN THE NATU RE AND SOURCE OF THE MONEY RECEIVED. FURTHER, IT IS CONTENDED THAT N O LEGAL OBLIGATION IS PRESCRIBED UPON ASSESSEE IN LAW TO PROVE THE SO URCE OF SOURCE OF SUCH RECEIPTS IN VIEW OF THE PROSPECTIVE INSERTION OF PROVISO TO S.68 OF THE ACT FROM AY 2013-14 FOISTING SUCH OBLIGATION S. A REFERENCE HAS BEEN MADE TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. 80 TAXMANN.COM 272 (BOM.) IN THIS REGARD. BESIDES, WITHOUT PREJUDICE TO EVERY ATTEMPT MADE BEFORE THE AO TO PROVE THE BO NAFIDES TO THE HILT BEING A GROUP COMPANY, A REFERENCE WAS ALSO MA DE TO THE DECISION OF LOVELY EXPORTS PVT. LTD. 319 ITR 5 (SC) WHEREIN IT WAS HELD THAT IN THE CASE OF ALLEGED BOGUS SHARE HOLDER S, THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSM ENTS OF THE SUBSCRIBERS IN ACCORDANCE WITH LAW. RELIANCE WAS P LACED ON MULTIPLE DECISIONS INCLUDING THE BINDING PRECEDENT RENDERED BY THE HONBLE CHHATTISGARH HIGH COURT IN ACIT VS. VENKATESHWAR ISPAT (P) LTD. (2009) 319 ITR 393 B) & CIT VS. ABDUL AZIZ (2012) 251 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 3 - CTR (CHHATTISGARH) 58 AS REFERRED TO ORDER OF CIT(A) IN PARA 4.9 OF HIS ORDER. THE JURISDICTIONAL HIGH COURT, AS STATED , HAS ANSWERED THE ISSUE IN FAVOUR OF ASSESSEE IN SIMILAR FACT SITUATI ON. THE ASSESSEE FURTHER CONTENDED THAT NO ADDITIONS CAN BE MADE MER ELY ON THE BASIS OF SOME OBLIQUE PERCEPTION OF CULPABILITY TOWARDS R ECEIPT OF SHARE APPLICATION MONEY IN THE INSTANT CASE. THE MONEY HA S BEEN TAKEN FROM A GROUP CO. OF A VERY SOUND FINANCIAL STANDING , WHICH WAS ALSO RETURNED WITHOUT SUBSCRIPTION. IN CONTRAST, THE AO HAS FAILED TO BRING ANY POSITIVE EVIDENCE AGAINST THE ASSESSEE FO R ASSAILING THE BONAFIDES OF SHARE APPLICATION MONEY RECEIVED FROM A SISTER CONCERN HOLDING A VERY HIGH NET WORTH. A REFERENCE WAS ALSO MADE TO PCIT VS. HIMACHAL FIBERS LTD., REPORTED IN [2018] 98 TAX MANN.COM 172 (DELHI) TO SUBMIT THAT WHERE THE IDENTITY OF SHARE APPLICA NT WAS FULLY REVEALED AND THE AO DID NOT CONDUCT ANY ENQUI RY THEREON, HE WAS NOT JUSTIFIED IN RESTING HIS CONCLUSIONS ON SUR MISES. IT IS THUS THE CASE OF ASSESSEE THAT THE REVENUE IS NEITHER JU STIFIED ON FACTS NOR ON THE TOUCHSTONE OF LAW TO EMBARK UPON THE IMP UGNED ADDITIONS UNDER S.68 OF THE ACT. 24.1 WE INTER ALIA OBSERVE THAT THE CIT(A) HAS ELOQUENTLY EXAMINED AND WEIGHED ALL RELEVANT FACTS PECULIAR TO THE INSTANT CASE BY WAY OF A VERY SPEAKING ORDER. 24.2 ADVERTING TO THE RELIANCE PLACED ON JUDGMENTS RENDERED BY THE HONBLE SUPREME COURT IN NRA IRON AND STEEL PVT. LTD. (SUPRA) STRONGLY RELYING ON BY REVENUE, WE FIND THAT THE FA CTS IN THAT CASE WERE GROSS, WORSE AND PECULIAR AND HARDLY BEARS AN Y RESEMBLANCE WITH THE TELL-TALE FACTS OF THE SHARE APPLICANT HER EIN. IN THE PRESENT CASE, THE FACT OF PAYMENT RECEIVED FOR PROPOSED SHA RE SUBSCRIPTION IS FULLY SUBSTANTIATED BY BANK STATEMENT AND OTHER TAX RECORDS OF THE SUBSCRIBERS AND ALSO THE AFFIDAVIT AND CONFIRMATION LETTER OF THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 4 - SUBSCRIBER. THE VERACITY OF TRANSACTION WITH EFPL AND CAPACITY OF THE SUBSCRIBER WAS DULY ACCEPTED IN THE SEARCH ASSE SSMENT OF GROUP COMPANY MSIL BY THE SAME AO. IN NRA CASE, THE GROS S RECEIPT WAS FOUND TO BE A MEAGER SUM OF 7.33 LAKHS IN CONTR AST 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 PRES ENT ASSESSEE. THE BOOK VALUE OF INVESTEE COMPANY ITSELF STANDS AT 43. 50 PER SHARES. THE FINANCIAL DATA CLEARLY SUGGESTS THAT THE INVEST EE CARRIES A VERY SOUND FINANCIAL STATUS AND CAPACITY FOR SUCH INVEST MENTS. IN SUPPORT OF JUSTIFICATION FOR THE PROPOSED SHARE PREMIUM OF RS.90/- PER SHARE, IT IS CLAIMED ON BEHALF OF THE ASSESSEE, WITH THE H ELP OF CORRESPONDENCES, THAT ONE OF THE GROUP COMPANY, NAM ELY DEVI IRON & POWER PRIVATE LIMITED WAS PURSUING FOR MINING RIG HT BY WAY OF MINING LEASE OF IRON ORE MINES. SUCH RIGHT HAD THE POTENTIAL OF INCREASING PROFITABILITY OF ENTIRE GROUP MANIFOLD F OR THE REASON THAT IRON ORE IS THE BASIC RAW MATERIAL FOR PRODUCTION O F SPONGE IRON AND THEREAFTER USING THE SPONGE IRON IN ROLLING MILL DI VISIONS AFTER ITS CONVERSION IN BILLETS AND BLOOMS. THE SEAMLESS AVAI LABILITY AT A CHEAPER PRICE OF ITS MAIN RAW MATERIAL WOULD HAVE E NTIRELY CHANGED THE BUSINESS COMPLEXION. BESIDES, WHEREAS THE SHARE HOLDERS IN NRA DID NOT EXPRESS THEIR WILLINGNESS TO APPEAR BEFORE THE AO, THE SUBSCRIBER IN THE INSTANT CASE NOT ONLY CAME FORWAR D AND VOLUNTEERED ITS WILLINGNESS TO APPEAR BEFORE THE AO THROUGH DIRECTOR, AN AFFIDAVIT WAS ALSO FILED TO ASSERT THE FACTUM OF SHARE APPLICATION. NO FIELD ENQUIRIES WERE MADE BY THE A O IN THE INSTANT CASE, WHEREAS THE ADVERSE FINDINGS WERE GIVEN BY TH E AO IN NRA IRON AND STEEL PVT. LTD. CASE BASED ON CERTAIN ENQU IRIES. THE BANK STATEMENTS OF THE SUBSCRIBER WERE NOT PLACED BEFORE THE IN NRA NOR WERE ANY RESPONSE FROM THE SO-CALLED INVESTORS AVAI LABLE. THE FACTUAL POSITION IS TOTALLY CONTRARY IN THE PRESENT CASE. THUS, THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 5 - JUDGMENT RENDERED IN NRA STEEL, RENDERED IN OWN SET OF FACTS, WOULD NOT APPLY AS THE FACTS ARE POLES APART. 24.3 NOTICEABLY, DEEMING FICTION UNDER S.56(2)(VIIB ) OF THE ACT WHICH SEEKS TO REGULATE THE LAW ON EXCESSIVE PREMIU M HAS BEEN INSERTED FROM AY 2013-14 AND IS NOT RETROSPECTIVE I N EFFECT. THEREFORE, A NONEXISTENT LAW COULD NOT BE APPLIED I N THE INSTANT CASE ON SURMISES AND CONJECTURES AND MORE SO IN THE LIGH T OF OBSERVATIONS MADE BY THE HONBLE MADHYA PRADESH HIGH COURT IN TH E CASE OF PCIT VS. CHAIN HOUSE INTERNATIONAL (P.) LTD. (2018) 98 TAXMANN.COM 47 (MP). IT WAS OBSERVED THEREIN THAT THE ISSUE OF SHARE AT A PREMIUM IS A COMMERCIAL DECISION AND IT IS THE PREROGATIVE OF THE COMPANY TO DECIDE THE PREMIUM AM OUNT AND IT IS THE WISDOM OF THE SHAREHOLDER WHETHER THEY WANT TO SUBSCRIBE THE SHARES AT SUCH A PREMIUM OR NOT. IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT IT IS A MUTUAL DECISION BETWEEN BOT H THE COMPANIES AND WOULD NOT JUSTIFIABLY WARRANT THE ADDITIONS UND ER S.68 OF THE ACT WITHOUT ANY COGENT EVIDENCE TO THE CONTRARY. 24.4 AS STATED IN THE BAR BY THE LEARNED COUNSEL FO R THE ASSESSEE, THE AMOUNT SO RECEIVED FOR PROPOSED SHARE SUBSCRIPT ION FROM THE GROUP CO. I.E. EFPL WAS ALSO REPAID IN THE SUBSEQUE NT ASSESSMENT YEARS AND THUS AMOUNT KEPT IN CUSTODY TEMPORARILY I N A FIDUCIARY CAPACITY COULD NOT HAVE BEEN ADDED IN THE HANDS OF ASSESSEE BY RESORTING TO SECTION 68 OF THE ACT. A REFERENCE WA S 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 CONSIDER ATIONS AND THE QUESTION OF BONAFIDES OF RECEIPTS OF SHARE APPLICAT ION MONEY FADES ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 6 - INTO INSIGNIFICANCE WHERE THE AMOUNT SO RECEIVED ST ANDS REPAID AND RETURNED. 24.5 IN ESSENCE, THE FACTS IN THE INSTANCE ARE SPEA KING FOR ITSELF. WE ARE FULLY CONVINCED WITH THE PROCESS OF REASONIN G AND THE OBJECTIVE ANALYSIS BY THE CIT(A) AND CONCLUSION DER IVED THEREFROM. WE DO NOT INTEND TO REPEAT EACH AND EVERY OBSERVATI ONS. THE ACTION OF CIT(A) IS IN CONSONANCE WITH THE BINDING PRECEDE NTS OF JURISDICTIONAL HIGH COURT. HENCE, WE SEE NO REASON TO DEPART FROM THE RATIONALE OF THE DECISION OF THE CIT(A) ON REVE RSAL OF ADDITIONS UNDER S.68 OF THE ACT PERTAINING TO A.Y. 2012-13 IN QUESTION. WE THUS DECLINE TO INTERFERE. 25. IN THE RESULT, GROUND NOS. 1 & 2 FOR A.Y. 2006- 07 & 2009-10 AND 2012-13 CONCERNING ADDITIONS UNDER S.68 OF THE ACT IN THE REVENUES APPEAL ARE DISMISSED. THE CROSS OBJECTIO N OF THE ASSESSEE ON THE LEGAL POINT OF LACK OF JURISDICTION FOR A.Y. 2006-07 & 2009- 10 ARE ALLOWED. THE CROSS OBJECTIONS FOR A.Y. 2006 -07, 2009-10 & 2012-13 OF THE ASSESSEE ON MERITS SUPPORTING THE AC TION OF THE CIT(A) IS ALSO AFFIRMED AND ALLOWED ON THE ISSUE. 26. WE NOW ADVERT TO THE SECOND ISSUE CONCERNING AD DITIONS ON LOW YIELD IN VARIOUS ASSESSMENT YEARS IN QUESTION. 26.1 THE AO MADE AN ADDITION OF RS.1,05,81,079/- ON ACCOUNT OF LOW YIELD DECLARED BY THE ASSESSEE IN SMS DIVISION FOR A.Y. 2006- 07 AND SIMILAR ADDITIONS WERE ALSO CARRIED OUT ON T HE GROUND OF LOW YIELD IN OTHER ASSESSMENT YEARS IN QUESTION ALSO. I T IS THE CASE OF THE ASSESSEE THAT ALLEGATION OF THE AO IS TOTALLY MISCO NCEIVED & UNSUBSTANTIATED AND IS WHOLLY IN THE REALM OF SURMI SES AND CONJUNCTURES WITHOUT ANY IOTA OF EVIDENCE AGAINST T HE ASSESSEE. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 7 - 26.2 THE ASSESSEE HAS RAISED TWO FOLD SUBMISSIONS T O DEFEND HIS STANCE. ONE, IN THE ABSENCE OF INCRIMINATING MATERI AL, NO ADDITION IS PERMISSIBLE IN LAW ON ACCOUNT OF LOW YIELD AT LEAST IN THE UNABATED ASSESSMENTS FROM 2006-07 TO AY 2009-10 AND SECONDLY , YIELD AND BOOK RESULT DECLARED BY THE ASSESSEE IS CORROBORATE D BY THE UNDERLYING EVIDENCES AND ARE ALSO COMPARABLE WITH O THER MANUFACTURERS AS SCRUPULOUSLY EXAMINED BY THE CIT(A ). ON THE OTHER HAND, THE AO HAS NOT DISCHARGED THE BURDEN AS SOCIATED WITH REJECTION OF BOOKS WHICH LAY UPON HIM FOR MAKING AR TIFICIAL ESTIMATIONS. 26.3 ADVERTING TO LEGAL GROUND, THE ASSESSEE CONTEN DS ON THE SIMILAR LINES THAT NO INCRIMINATING MATERIAL WERE F OUND IN THE COURSE OF SEARCH OPERATIONS SHOWING ANY UNACCOUNTED PRODUC TION OR UNACCOUNTED SALES RESULTING FROM ALLEGED LOW YIELD ON PRODUCTION SHOWN IN THE BOOKS. NO DOCUMENTS OR SHEET SHOWING R ECORD OF ACTUAL PRODUCTION IN EXCESS OF WHAT IS RECORDED IN BOOKS W ERE FOUND IN THE COURSE OF SEARCH. IT WAS EMPHASIZED ON BEHALF OF TH E ASSESSEE THAT EACH AND EVERY SEIZED DOCUMENTS, LOOSE PAPERS FOUND IN THE COURSE OF SEARCH WAS EXPLAINED AND WERE NOT CASTING ANY AS PERSIONS ON THE CONDUCT OF THE ASSESSEE IN ANY MANNER. EVEN THOUGH, WHOLE OF THE PREMISES OF THE ASSESSEE WERE THOROUGHLY SEARCHED B Y THE SEARCH TEAM, NOT A SINGLE PIECE OF PAPER WAS UNEARTHED FRO M THE PREMISES OF THE ASSESSEE TO CORROBORATE AND SUPPORT THE ALLE GATION OF UNACCOUNTED PRODUCTION AND SALES. 26.4 ON FACTS, THE BROAD COUNTERS OF THE MULTIPLE C ONTENTIONS OF THE ASSESSEE ARE THAT EVEN IF IT IS MOMENTARILY ASSUMED THAT THE YIELD OF SMS DIVISION SHOWN BY THE ASSESSEE IS LESS THAN IND USTRIAL AVERAGE, IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL, THE A DVERSE INFERENCE REMAINS UNSUBSTANTIATED. EVEN IF IT IS MOMENTARILY ASSUMED THAT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 8 - PRODUCTION FACILITIES AND RESOURCES WERE NOT UTILIZ ED 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 D ESPITE REPEATED REQUESTS, THE AO COMPLETELY FAILED TO POINT OUT ANY SUPPRESSION OF PRODUCTION BASED ON ANY COGENT AND INCRIMINATING MA TERIAL IN HIS POSSESSION AGAINST THE ASSESSEE. THE ASSESSEE CONTE NDS THAT THE BASIS FOR ADOPTING BENCHMARK PRODUCTION OF 89% IN S MS DIVISION WAS NOT PROVIDED DESPITE REPEATED REQUESTS. THE CIT (A) IN PARA 9.4 HAS COMPARED AND ANALYZED THE YIELD OF THE OTHER CO MPANIES AND FOUND THE YIELD OF THE ASSESSEE COMPANY IS BETTER T HAN ITS PEERS AND THE YIELD OF OTHER COMPANIES ALSO VARIES FROM YEAR TO YEAR. ALSO THE ALLEGED LOW YIELD IN COMPARISON TO THE BENCHMARK AD OPTED BY THE AO COULD NOT BE THE BASIS TO REJECT THE BOOKS OF AC COUNTS UNDER S.145(3) OF THE ACT WITHOUT BRINGING ANY MATERIAL O N RECORD POINTING OUT TOWARDS FALSEHOOD IN THE ACCOUNTS. THE SEARCH T EAM COULD NOT COME ACROSS ANY UNACCOUNTED SALES AS RECORDED IN PA RA 9.12& 9.39 OF THE FIRST APPELLATE AUTHORITY. THE INVENTORY AP PEARING IN THE ELABORATE EXCISE RECORDS AND EXCISE RETURNS WERE AL SO FOUND TO BE MATCHING WITH THE FINANCIAL RECORDS AS OBSERVED IN PARA 9.9 & 9.10 OF THE FIRST APPELLATE ORDER. 27. WE NOTE THAT AFTER TAKING EXTENSIVE NOTE OF THE FACTS AND CIRCUMSTANCES OF THE CASE OBJECTIVELY, THE CIT(A) R IGHTLY FOUND LACK OF JUSTIFICATION IN THE ACTION OF THE AO IN REJECTI NG THE BOOKS OF ACCOUNTS MERELY OWING TO THE REASON THAT YIELD ACHI EVED BY THE ASSESSEE IS LESS THAN STANDARD YIELD PERCENTAGE I.E . 89% WHICH HAS NOT BEEN ACHIEVED EVEN BY OTHER ASSESSEE ENGAGED IN SIMILAR LINE OF BUSINESS. WHILE CONCLUDING IN FAVOUR OF THE ASSESS EE, THE CIT(A) ALSO OBSERVED THAT THE AO HAS NOT BROUGHT ON RECORD THE MANNER IN WHICH HE WORKED OUT THE STANDARD YIELD OF 89%. THE BASIS FOR ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 5 9 - DETERMINING STANDARD YIELD @ 89% OF INPUT WAS NOT G IVEN DESPITE REPEATED REQUEST BY THE ASSESSEE EITHER. 27.1 CONTEXTUALLY, WE OBSERVE THAT THE CIT(A) HAS C APSULATED THE FINDINGS OF THE AO AND REPRODUCED THE TABULATED STA TEMENT WHEREIN YEAR-WISE YIELD OF FINISHED GOODS IN SMS DIVISION ( BILLETS AND BLOOMS) SHOWN BY THE ASSESSEE WERE COMPARED WITH TH E AN INNOCUOUS STANDARD OF 89% SET BY THE AO. THE AO CON SEQUENTLY CALCULATED THE DIFFERENCE IN THE ACTUAL PRODUCTION VIS--VIS STANDARD PRODUCTION [YIELD OF 89% CONSIDERED AS STANDARD PRO DUCTION] AND COMPUTED THE VALUE OF DIFFERENCE IN ACTUAL PRODUCTI ON VERSUS STANDARD PRODUCTION AS UNACCOUNTED PRODUCTION/ SALE S IN RESPECTIVE ASSESSMENT YEARS. WE SIMILARLY OBSERVE THAT THE CI T(A) HAS ALSO RECORDED THE DETAILED SUBMISSIONS OF THE ASSESSEE F ILED IN ITS DEFENSE WHEREBY REASONS FOR JUSTIFICATION OF THE ACTUAL YIE LD GENERATED BY THE ASSESSEE WERE GIVEN. THE CIT(A) ALSO RECORDED T HE COMPARATIVE ANALYSIS OF THE YIELD OF THE ASSESSEE VIS A VIS VARIOUS OTHER COMPANIES WHO ARE ENGAGED IN PRODUCTION OF BILLETS AND BLOOMS AND OPERATING IN THE SAME FIELD IN THE STATE OF CHHATTI SGARH. BY THIS EXERCISE, THE ASSESSEE HAS ATTEMPTED TO SHOW THAT A CTUAL PRODUCTION SHOWN BY THE ASSESSEE IS EITHER HIGHER THAN ITS COM PETITORS OR QUITE COMPARABLE AND BRACKETED IN THE SAME RANGE. THE STA NDARD 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 NOTE D HEREUNDER: (I) THE AO HAS FAILED TO ESTABLISH THE NEXUS BETWEE N THE MATHEMATICAL CALCULATIONS OF HIGHEST AND LOWEST CON SUMPTION OF POWER, SPONGE IRON (RAW MATERIAL) ETC. WITH YIELD O F 89% ADOPTED BY THE AO. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 0 - (II) THE BASIS FOR ARRIVING AT THE STANDARD YIELD O F 89% HAS NOT BEEN DISCLOSED DESPITE REPEATED REQUESTS ON BEHALF OF THE ASSESSEE. THE CIT(A) HIMSELF ATTEMPTED TO WORK OUT THE AVERAG E YIELD IN THE INDUSTRY BASED ON DATA AVAILABLE FROM THE DEPARTMEN T BUT FAILED TO ARRIVE AT THIS SO CALLED STANDARD FIGURE OF 89%. (III) COMPARISON OF YIELD DECLARED BY THE OTHER ASS ESSEE ENGAGED IN THE SIMILAR LINE OF BUSINESS WAS CARRIED OUT AS TAB ULATED IN PARA 9.4 OF THE FIRST APPELLATE ORDER. ON THE BASIS OF SUCH COMPARISON, ARITHMETICAL MEAN OF YIELD STANDS AT 81.35% IN RESP ECT OF OTHER PARTIES VIS--VIS 83.94% SHOWN BY THE ASSESSEE. IT WAS ALSO FOUND BY THE CIT(A) THAT YIELD DECLARED BY THE DIFFERENT PARTIES IN THE SAME YEAR IS NOT UNIFORM AND EVERY PARTY HAS DECLAR ED A DIFFERENT YIELD. LIKEWISE, THERE IS A WIDE VARIATION IN THE YIELD OF ONE YEAR WITH ANOTHER YEAR IN OTHER CASES AS WELL. NOT EVEN A SINGLE COMPARABLE INSTANCE WAS FOUND DECLARING YIELD OF 89 % ADOPTED BY THE AO. THE YIELD ACHIEVED BY THE ASSESSEE IS GENE RALLY MORE THAN AVERAGE INDUSTRY YIELD. (IV) FINANCIAL RESULTS OF THE ASSESSEE AS WELL AS O THER PARTIES ENGAGED IN SIMILAR LINE OF BUSINESS WAS ALSO COMPAR ED AS DISCUSSED IN PARA 9.7 & PARA 9.8 OF THE ORDER. ON ANALYSIS O F FACTUAL DATA TABULATED IN THE FIRST APPELLATE ORDER, IT WAS OBSE RVED THAT THE GROSS PROFIT & NET PROFIT DECLARED BY THE ASSESSEE IS STR ONGER THAN ITS COMPETITORS DESPITE MARGINALLY LOWER YIELD AT SOME INSTANCES. IT WAS THUS NOTED BY THE CIT(A) THAT THE PERCENTAGE OF YIELD CANNOT BE SAID TO BE SOLE DECISIVE FACTOR WHILE ASSESSING REL IABILITY OF BOOKS OF ACCOUNTS AND MERELY LOW YIELD CANNOT LEAD TO AN IND EFEASIBLE PRESUMPTION THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE UNRELIABLE AND TRUE PROFIT EARNED BY THE ASSESSEE CANNOT BE DE DUCED THEREFROM. IN PARA 9.9 OF ITS ORDER, THE CIT(A) HAS MADE REFER ENCE TO THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 1 - ELABORATE EXCISE RECORDS MAINTAINED BY THE ASSESSEE AND THE RETURNS FILED WITH THE CENTRAL EXCISE AUTHORITY ON MONTHLY BASIS AND DAILY BASIS. ON ANALYSIS OF SUCH RECORDS, IT WAS FOUND T O BE TALLYING WITH THE FINANCIAL RECORDS. (V) THE CIT(A) ALSO TOOK COGNIZANCE OF THE FACT THA T CAPACITY UTILIZATION IN AN INDUSTRY DEPENDS ON NUMBER OF WOR KING DAYS AND IN THE CASE OF ASSESSEE WHERE THE PRODUCTION PROCESS F OR MANUFACTURING OF BILLETS AND BLOOMS NEED TO BE SHUT DOWN PERIODIC ALLY, THE PRODUCTION OPERATION CONSEQUENTLY HALTS AND EFFECT THE YIELD. THE CIT(A), THEREAFTER, OBSERVED (PARA 9.37) THAT NO IN FIRMITY IN THE DETAILS FURNISHED BY THE ASSESSEE HAS BEEN FOUND BY THE AO IN THIS REGARD AND AO HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD. (VI) THE STATEMENTS OF VARIOUS WITNESSES WERE ANALY ZED IN PARA 9.17 OF THE CIT(A) ORDER AND OBSERVED THAT THE ADVE RSE INFERENCES ON SUCH STATEMENT IS TOTALLY MISPLACED. (VII) THE AO HAS PROCEEDED TO ESTIMATE HIGHER YIELD ON THE BASIS OF MATHEMATICAL AND MECHANICAL CALCULATIONS. THE AO H AS LAID TOO MUCH EMPHASIS ON STATISTICS WHICH CANNOT BE SAID TO HAVE BEEN GATHERED AS A RESULT OF SEARCH ALONE. THE STATISTI CS RELIED UPON BY THE AO ARE THOSE WHICH ARE QUITE ROUTINELY CALLED F OR EVEN DURING THE REGULAR ASSESSMENT PROCEEDINGS UNDER S.143(3) O F 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 R ECORDED ON 21.06.2011, IT WAS GATHERED THAT THE AFORESAID DIRE CTOR STATED IN CLEAR TERMS THAT THE QUANTITY RECORDED IN THE LOOSE SLIPS TALLIES WITH THE QUANTITY RECORDED IN THE REGULAR BOOKS OF ACCOU NTS AND EXCISE RECORDS. THESE LOOSE SLIPS ARE DESTROYED AFTER IT BECOMES REDUNDANT ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 2 - WITH THE PASSAGE OF TIME. THE CIT(A) FURTHER OBSER VED THAT NEITHER IN THE SHOW CAUSE NOTICE NOR IN THE ASSESSMENT ORDE R, THERE IS ANY WHISPER OF ANY SUCH LOOSE PAPERS WHICH BEARS THE FI GURE OF PRODUCTION AND WHICH THE APPELLANT FAILED TO RECONC ILE WITH THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS AND EXCISE RECORDS/RETURNS. (IX) THE ALLEGED LOW YIELD IN COMPARISON TO BENCHMA RK OF 89% ADOPTED BY THE AO, THE BASIS WHEREOF IS STILL IN DA RK AND NOT KNOWN, CANNOT IN ITSELF PROVIDE A GROUND TO REJECT THE BOO KS OF ACCOUNTS WITHOUT SHOWING ANY DEFECT IN BOOKS BY TANGIBLE EVI DENCE. (X) THE AO HAS MERELY PROCEEDED ON THE BASIS OF SUS PICION AND CONJUNCTURES. IT IS TRITE THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF PROOF. (XI) THE CIT(A) IN PARA 9.22 ONWARDS ANALYZED THE D ECISION RENDERED BY THE CO-ORDINATE BENCH IN SIMILAR FACTUA L MATRIX TO FIND THAT ADDITION ON ACCOUNT OF LOW YIELD AS MADE BY TH E AO IS NOT SUSTAINABLE IN LAW IN THE ABSENCE OF TANGIBLE MATER IAL. 27.3 SIGNIFICANTLY, IN PARA 9.2 OF THE FIRST APPELL ATE ORDER, THE CIT(A) NOTED WHILE THE AO HAS MADE DISCUSSIONS ON M ATHEMATICAL CALCULATIONS PERTAINING ROLLING MATERIAL DIVISION, THE ADDITIONS HAVE BEEN MADE TOWARDS LOW YIELD IN SMS DIVISION. 27.4 IN CONCLUSION, THE CIT(A) OBSERVED THAT ASSESS EE HAS FURNISHED EXPLANATION ON ALL THE DOCUMENTS SEIZED D URING THE COURSE OF SEARCH AND THE EXPLANATION OF THE ASSESSEE WERE TEST CHECKED WITH REFERENCE TO SEIZED MATERIAL, BOOKS OF ACCOUNTS, BI LLS/INVOICES AND OTHER EVIDENCES AND FOUND TO BE SATISFACTORY. IT W AS FURTHER NOTED THAT THE AO HAS NOT POINTED OUT ANY INFIRMITY IN TH E EXPLANATION OF THE ASSESSEE. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 3 - 27.5 THE CIT(A) IN OUR MIND HAS ANALYSED THE FACTU AL MATRIX THREADBARE. WITHOUT REPEATING ALL THE OBSERVATIONS OF THE CIT(A), WE FIND OURSELVES IN COMPLETE AGREEMENT WITH THE CONCL USION DRAWN BY THE CIT(A). THE CIT(A) HAS OBJECTIVELY ANALYZED THE FACTUAL SITUATION AND FOUND COMPLETE ABSENCE OF ANY ADVERSE MATERIAL AGAINST THE ASSESSEE WHICH CAN SUPPORT THE ALLEGATI ON OF THE AO TOWARDS UNACCOUNTED PRODUCTION PRESUMED ON THE BASI S OF ALLEGED LOW YIELD DECLARED BY THE ASSESSEE. ON FACTS, THE CIT(A) HAS FOUND THAT THE YIELD DECLARED BY THE ASSESSEE IS NEITHER LOW NOR THE BOOK RESULTS COULD BE IMPEACHED BY SOME TANGIBLE MATERIA L TO INDULGE IN REJECTION OF BOOKS OF ACCOUNTS. WE SEE NO DISCERNIB LE ERROR WHATSOEVER IN THE PROCESS OF REASONING ADOPTED BY T HE CIT(A) WHILE REVERSING THE TOTALLY UNTENABLE ACTION OF THE AO BA SED ON EXTRANEOUS CONSIDERATIONS. 27.6 SIGNIFICANTLY, IT IS ALSO PERTINENT HERE TO NO TE THAT IDENTICAL ISSUE CROPPED IN THE CASE OF A GROUP CO. ( MAHAMAYA STEEL INDUSTRIES LTD.) IN THE SAME SEARCH AND ENGAGED IN THE SAME BU SINESS. THE STANDARD YIELD OF 89% ADOPTED IN THAT CASE WAS SET ASIDE BY THE CIT(A) AND BOOK RESULTS WERE ACCEPTED IN THE IDENTI CAL FACTUAL MATRIX. THE REVENUE CHALLENGED THE REVERSAL OF ADDI TIONS ON ACCOUNT OF LOWER YIELD. THE CO-ORDINATE BENCH IN DCIT VS. MAHAMAYA STEEL INDUSTRIES LTD. ITA NO. 232-235/ RPR/ 2014 ORDER DA TED 7/11/2019 IN STRIKINGLY SIMILAR FACTUAL MATRIX INVOLVING SAME ISSUE AND ARISING FROM SAME SEARCH, ENDORSED THE ORDER OF CIT(A) IN R ELATION 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 L ITTLE MERIT AND THUS UNSUSTAINABLE. WE, THUS, DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS SCORE. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 4 - 28. IN THE RESULT, GROUNDS RAISED BY THE REVENUE CH ALLENGING THE ACTION OF THE CIT(A) FOR REVERSAL OF ADDITIONS ON T HE 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 PROCEE DINGS, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DIFFERENCE IN STOCK FOUND AT THE TIME OF SEARCH VIS--VIS THE STOCK AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE. IN RESPONSE, THE ASSESSEE COMPANY DISPUTE D THE MEASUREMENT AND VALUATION OF STOCK. IT WAS SUBMITT ED THAT DEPARTMENTAL REGISTERED VALUER (DRV) HAS ESTIMATED THE STOCK OF SPONGE IRON BASED SIMPLY ON EYE MEASUREMENT AND PRO CEEDED TO ESTIMATE QUANTITY OF STOCK ON WRONG ASSUMPTION THAT ASSESSEE IS ENGAGED IN MANUFACTURING OF FINISHED PRODUCT NAMELY STRUCTURAL CHANNEL OF 25 METERS LENGTH. THE ASSESSEE ON THE OT HER HAND ASSERTS THAT THE CAPACITY AVAILABLE WITH THE ASSESSEE IS TO PRODUCE 23 METERS LENGTH AT MAXIMUM. THE DRV HAS THUS CALCULATED QUAN TITY BY ADOPTING MEASUREMENT AT 12.5 *2 METERS WHEREAS ACTU AL LENGTH IS 11.5* 2 METERS ( CUT INTO TWO PIECES FOR TRANSPORTA TION PURPOSES). THE DRV ESTIMATING EXCESS STOCK WAS CROSS EXAMINED BY THE ASSESSEE A READING OF CROSS UNRAVELS HIS LACK OF UN DERSTANDING ON THE SUBJECT. THE DRV HAS DRAWN BLANK ON MANY PERTIN ENT ASPECTS OF BUSINESS, THE STOCK OF WHICH HE SEEKS TO VALUE AND ASCERTAIN. DESPITE SUCH A WRONG ASSUMPTIONS IN LENGTH ETC. BY DRV, THE AO, HOWEVER, CONTINUED TO DISCREDIT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HIMSELF HAS NOT BEEN A BLE TO ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 5 - CONCLUSIVELY ESTABLISH THE CORRECTNESS OF VALUATION . THE AO ACCORDINGLY ADOPTED THE VALUATION DONE BY THE SEARC H TEAM AT THE TIME OF SEARCH AT THE MOST REASONABLE ESTIMATION OF STOCK. 29.2 THE CIT(A) TOOK NOTE OF THE RELEVANT FACTS P LACED BEFORE HIM BY THE ASSESSEE AND PASSED A DETAILED ORDER ON THE CONTROVERSY ON ACCOUNT OF EXCESS STOCK OF FINISHED GOODS/RAW MATER IAL. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) ALSO EXTR ACTED HEREUNDER: 13. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE A .O HAS MADE THE ADDITION OF RS.85,70,724/- MAINLY ON ACCOUNT OF ALL EGED EXCESS STOCK OF STRUCTURES/CHANNELS WORKED OUT ON THE BASIS OF QUAN TITY ASSESSMENT REPORT OF THE DEPARTMENTAL REGISTERED VALUER (DRV) NAMELY MR. MANISH PILLIWAR AS SUMMARIZED HEREUNDER: FIRSTLY, IT IS SEEN THAT THE A.O HIMSELF ADMITTED T HAT THE INVENTORY TAKEN BY THE VALUER AT THE TIME OF SEARCH HAS CERTAIN DEF ICIENCIES AND DISCREPANCIES, AS A COROLLARY, THE QUANTITY ASSESSM ENT REPORT OF THE DRV IS ALSO VITIATED AND HAS DEFICIENCIES, IT IS AL SO 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 CAUS E NOTICE CUM QUERY LETTER ISSUED BY THE A.O. THE APPELLANT HAD REQUEST ED FOR ALLOWING OPPORTUNITY TO CROSS EXAMINE THE DRV AND THE OPPORT UNITY WAS AFFORDED TO THE APPELLANT. THE APPELLANT WAS ASKED TO FURNIS H THE COPY OF STATEMENTS RECORDED DURING THE COURSE OF CROSS EXAM INATION OF THE DRV PRODUCT STOCK AS PER DRV (IN MT) STOCK AS PER BOOKS OF ACCOUNTS OF THE APPELLANT (IN MT) DIFFERENCE (IN MT) AMOUNT AS PER ASSESSMENT ORDER (IN RS.) AMOUNT OF INCOME SURRENDERED BY THE APPELLANT (IN RS.) ADDITIO N BY THE A.O (IN RS.) STRUCTURES / CHANNELS 2287.740 2022.628 265.112 84,83,584.00 0.0 0 84,83,5 84.00 RAW MATERIAL (ROLLING MILL) BILLETS AND SLAB CUTTINGS) 2068.730 1959.375 109.355 31,71,295.00 31,14,135.0 0 57,160. 00 RAW MATERIAL (CCM DN.) (SPONGE IRON) 1128.150 1006.730 121.420 24,89,110.00 24,59,130.0 0 29,980. 00 TOTAL 1,41,43,989. 00 55,73,265.0 0 85,70,7 24.00 ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 6 - NAMELY MR. MANISH PILLIWAR AND THE SAME WAS FURNISH ED BY THE APPELLANT. I HAVE CAREFULLY PERUSED THE STATEMENTS OF MR. MANISH PILLIWAR. I FIND THAT THE APPELLANT HAS RAISED A VE RY RELEVANT AND SERIOUS ISSUE REGARDING ELIGIBILITY AND COMPETENCE OF MR. MANISH PILLIWAR WHO IS REGISTERED AS A VALUER FOR VALUATIO N OF IMMOVABLE PROPERTIES. 13.2 I DO FIND CONSIDERABLE FORCE IN THE SUBMISS IONS OF THE APPELLANT THAT DIFFERENT SUB-RULES OF RULE 8A OF WEALTH TAX R ULE, 1957 ARE MUTUALLY EXCLUSIVE AND THERE IS NO OVERLAPPING, THE REFORE, THE QUANTITY ASSESSMENT OF MOVABLE ITEMS SUCH AS THE SPONGE IRON IN THE PRESENT CASE, CANNOT BE CARRIED OUT BY THE VALUER WHO IS RE GISTERED AS A VALUER FOR VALUATION OF IMMOVABLE PROPERTIES, IN OTHER WOR DS, A PERSON WHO IS REGISTERED AS A VALUER FOR VALUATION OF JEWELLERY C ANNOT BE ENGAGED FOR QUANTITY ASSESSMENT OF MOVABLE ITEMS OTHER THAN JEW ELLERY, SIMILARLY, THE DRV ENGAGED NAMELY SHRI MANISH PILLIWAR BEING V ALUER FOR IMMOVABLE PROPERTIES COULD NOT HAVE BEEN ENGAGED FO R VALUATION OF MOVABLE ITEMS SUCH AS THE ITEMS OF INVENTORY IN THE INSTANT CASE. HENCE, IN MY CONSIDERED VIEW, THE RELIANCE PLACED BY THE A .O ON THE SAID QUANTITY ASSESSMENT REPORT OF THE DRV, DESPITE HAVI NG ACCEPTED THE DEFICIENCIES IN THE QUANTITY ASSESSMENT REPORT, IS CLEARLY MISPLACED AND NOT SUSTAINABLE. THEREFORE, THE ADDITION MADE BY TH E A.O SOLELY ON THE BASIS OF SAID QUANTITY ASSESSMENT REPORT ALSO CANNO T BE SUSTAINED. ALTHOUGH, THE ADDITION MADE BY THE A.O IS LIABLE TO BE DELETED FOR THE REASONS ELABORATELY MENTIONED ABOVE, THE SUBMISSION S OF THE APPELLANT ON MERITS HAVE ALSO BEEN CONSIDERED. 13.3 IT IS SEEN THAT IN RESPONSE TO QUESTION NO.1 A ND 2 OF THE STATEMENT RECORDED ON 17.02.2014, THE SAID DRV ADMITTED THAT HE IS REGISTERED AS VALUER FOR VALUATION OF IMMOVABLE PROPERTIES AND HE POSSESSES QUALIFICATIONS PROVIDED IN RULE 8A(2) OF WEALTH TAX RULES 1957. IT IS ALSO SEEN THAT IN RESPONSE TO QUESTION NO.3 AND 5 O F THE STATEMENT RECORDED ON 17.02.2014 THE SAID DRV HAS STATED THAT THE WORK OF QUANTITY ASSESSMENT WAS CARRIED OUT AS PER THE COMP ETENCE AND QUALIFICATION MENTIONED IN RULE 8A(2)(II)(B)(B). TH E DRV DID STATE THAT HE PREPARED THE QUANTITY ASSESSMENT REPORT AS PER H IS QUALIFICATION MENTIONED IN RULE 8A(2)(II)(B)(B) OF WEALTH TAX RUL ES, 1957 WHICH PERTAINS TO QUANTITY SURVEYING IN BUILDING CONSTRUC TION. UNDISPUTEDLY, THE APPELLANT IS NOT ENGAGED IN ANY CONSTRUCTION WO RK. I DO FIND FORCE IN THE SUBMISSIONS OF THE APPELLANT THAT THE REPORT OF THE DRV IS VITIATED AS THE DRV APPLIED IRRELEVANT KNOWLEDGE WH ICH HAS NO NEXUS WITH THE BUSINESS OF THE APPELLANT AND PRODUCT UNDE R CONSIDERATION. 13.4 THE PRECISE SUBMISSIONS OF THE APPELLANT AS RE GARDS EXCESS QUANTITY OF STRUCTURES AND CHANNELS BEING A FINISHE D PRODUCT OF THE APPELLANT COMPANY I.E. OUTPUT OF ROLLING MILL DIVIS ION OF THE APPELLANT COMPANY TAKEN BY THE DRV WHILE QUANTIFYING THE STRU CTURES AND CHANNELS ARE AS UNDER:- (A) THE DVO HAS TAKEN LENGTH OF THE FINISHED PRODUC T 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 2 5 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 T HE DVO IN HIS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 7 - VALUATION REPORT AT 12.50 MTRS AS AGAINST 11.50 MTR S. THE SAID MISTAKE HAS RESULTED IN OVER VALUATION OF STOCK OF STRUCTUR ES/CHANNELS. (B) THE DVO HAD, IN HIS VALUATION REPORT, QUANTIFIE D 87.06 MT FOR ISMC-5000, THE APPELLANT HAS CLAIMED THAT IT HAS NE VER MANUFACTURED CHANNELS/STRUCTURES OF SAID DESCRIPTION AND SPECIFI CATION I.E. ISMC- 5000. THE SAID MISTAKE HAS ALSO RESULTED IN OVER QU ANTIFICATION OF STOCK BY THE DRV. (C) THE NET IMPACT OF AFORESAID MISTAKES IS THAT, T HE STOCK HAS BEEN EXCESSIVELY QUANTIFIED BY 251.030 MT. THE CORRECT F IGURE AFTER CORRECTION OF AFORESAID TWO MISTAKES IS 2036.71 MT, AS AGAINST THIS, THE QUANTITY OF FINISHED GOODS AS PER BOOKS OF ACCOUNTS AS ON THE DATE OF SEARCH WAS 2022.628 MT. IN THIS WAY, 14.082 MT (203 6.710 2022.628 MT) WAS EXCESSIVE IN COMPARISON TO BOOKS OF ACCOUNT S ON PHYSICAL VERIFICATION. THE APPELLANT HAS FURTHER CLAIMED THA T THE DIFFERENCE OF 14.082 MT IS NEGLIGIBLE AND THE SAME IS NOT EVEN 1% OF TOTAL STOCK. 13.5 I HAVE CAREFULLY PERUSED THE QUANTITY ASSESSME NT REPORT OF THE DRV, SUBMISSIONS OF THE APPELLANT, STATEMENT GIVEN BY THE DRV DURING CROSS EXAMINATION BY THE APPELLANT AND CERTIFICATE FROM ANOTHER REGISTERED VALUER. 13.6 IT IS SEEN THAT THE A.O. DID NOT ACCEPT THE SU BMISSIONS OF THE APPELLANT AS REGARDS EXCESS QUANTITY COMPUTED BY TH E DRV NAMELY SHRI MANISH PILLIWAR ON AN INCORRECT PRESUMPTION IN RESP ECT OF INVENTORY. I FIND THAT IN SUPPORT OF ITS CONTENTION REGARDING EX CESS QUANTIFICATION BY THE DRV UNDER A PRESUMPTION THAT THE APPELLANT IS M ANUFACTURING STRUCTURES AND CHANNELS OF 23 MTRS LENGTH (HALF BEI NG 11.50 METERS AS CLAIMED BY THE APPELLANT), THE APPELLANT HAS PLACED ON RECORD CERTIFICATE FROM THE REGISTERED VALUER NAMELY MR. S UNIL BHANDARI WHEREIN THE REGISTERED VALUER HAS CERTIFIED THAT TH E CHANNELS AND ANGLES MAY BE REROLLED UP TO 23 METERS LENGTH, AS A COROLL ARY, IN MY CONSIDERED VIEW, IT WOULD MEAN THAT THE APPELLANT C ANNOT MANUFACTURE STRUCTURES / CHANNELS OF 25 METERS LENGTH (HALF BEI NG 12.50 METERS AS TAKEN BY THE DRV) WHICH HAS BEEN WRONGLY PRESUMED BY THE DRV. 13.7 IN THIS REGARD, I ALSO FIND THAT THE APPELLANT HAD RAISED SPECIFIC QUESTIONS DURING CROSS EXAMINATION OF THE DRV NAMEL Y SHRI MANISH PILLIWAR, HOWEVER, THE DRV COULD NOT GIVE ANY SATIS FACTORY ANSWER AS REGARDS LENGTH UP TO WHICH CHANNELS / STRUCTURES CO ULD BE MANUFACTURED BY THE APPELLANT COMPANY. I FIND THAT IN RESPONSE T O QUESTION NO.14 OF THE STATEMENT RECORDED ON 17.02.2014, THE DRV ADMIT TED THAT HE DID NOT ENQUIRE ABOUT THE LENGTH OF VARIOUS PRODUCTS THE AP PELLANT COMPANY COULD MANUFACTURE. I ALSO FIND THAT IN RESPONSE TO QUESTION NO.15 OF THE SAID STATEMENT ON 17.02.2014, THE DRV ADMITTED THAT HE IS NOT AWARE OF THE CAPABILITIES OF THE APPELLANT COMPANY. I ALSO F IND THAT IN RESPONSE TO QUESTION NO.17, THE DRV ADMITTED THAT HE IS UNAB LE TO RECOLLECT THE MEASUREMENT PROCEDURE. IT IS ALSO SEEN THAT IN RESP ONSE 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 T HE APPELLANT ARE SUPPORTED BY A CERTIFICATE FROM A REGISTERED VALUER AND ADMISSION OF IGNORANCE BY THE DRV DURING CROSS EXAMINATION,, ALS O THE FACT THAT THE ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 8 - A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO REBU T EITHER THE SUBMISSIONS OF THE APPELLANT OR CERTIFICATE FROM RE GISTERED VALUER, IT WOULD BE INCORRECT TO HOLD THAT THE APPELLANT HAS N OT 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 Q UANTITY 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 QU ANTITY ASSESSMENT REPORT AGAINST ISMC-5000, IT IS SEEN THA T 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 WHEREIN THE REGISTERED VALUER HAS CERTIFIED VIDE CERTIFICATE DATED 18.08.2011 THAT TH E FINISHED PRODUCT I.E. CHANNELS/ANGLES MAY BE RE-ROLLED UP TO MAXIMUM ISMC -400. AS THE SAID CERTIFICATE OF THE REGISTERED VALUER IS DATED 18.08 .2011, THERE IS NO ROOM TO CONSTRUE THE SAME AS AN AFTERTHOUGHT ON THE PART OF THE APPELLANT. FURTHERMORE, THE CERTIFICATE WAS PLACED BEFORE THE A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVE R, THE A.O HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO DISBELIEVE THE CO NTENTS OF THE SAID CERTIFICATE OR REBUT THE CERTIFICATION DONE BY THE REGISTERED VALUER. I AM CONVINCED THAT THERE WAS A GROSS ERROR IN THE QUANT ITY ASSESSMENT REPORT AND THUS, 87.60 MT DESERVES TO BE EXCLUDED F ROM THE TOTAL QUANTITY ARRIVED AT BY THE DRV IN THE QUANTITY ASSE SSMENT REPORT. 13.10 THE TOTAL INVENTORY WAS RE-COMPUTED BY TAKING 23 METERS LENGTH AS THE BASE INSTEAD OF 25 METERS LENGTH AS ADOPTED BY THE DRV, THE RESULTS OF RE-COMPUTATION AFTER EXCLUDING QUANTITY AGAINST ISMC-5000 ARE EXTRACTED HEREUNDER:- 13.11 FROM THE ABOVE DETAILS, I FIND THAT THE CONTE NTION OF THE APPELLANT ARE CONVINCING AND THEREFORE, ADDITION MA DE BY THE A.O. CANNOT BE SUSTAINED. I AM IN AGREEMENT WITH THE SUB MISSIONS OF THE APPELLANT THAT AFTER CORRECTION OF THE AFORESAID MI STAKES, THE EXCESS QUANTITY OF STOCK AGAINST THAT APPEARING IN THE BOO KS OF ACCOUNTS WOULD BE NEARLY 14 MT ONLY WHICH IS QUITE NEGLIGIBLE AND NOT EVEN 1% OF THE TOTAL INVENTORY AS PER THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY. HENCE, THE ADDITION MADE BY THE A.O. AMOUNTING TO R S.84,83,584/- ON ACCOUNT OF IMPUGNED EXCESS STOCK OF STRUCTURES AND CHANNELS CANNOT BE SUSTAINED. AS REGARDS UNEXPLAINED INVESTMENT IN STOCK I.E. BIL LETS & SLAB CUTTINGS AND SPONGE IRON, IT IS SEEN THAT THE DISPUTE IS NOT WITH REGARD TO THE QUANTITY OF STOCK, THE DISPUTE IS WITH REGARD TO TH E VALUATION OF INVENTORY. IT IS SEEN THAT THE A.O HAS TAKEN THE VA LUE OF EXCESS STOCK OF BILLETS & SLAB CUTTINGS AT RS.31,71,295/- AND SPONG E IRON AT RS.24,89,110/- RESPECTIVELY, ON THE CONTRARY, THE A PPELLANT HAS TAKEN VALUE AT RS.31,14,135/- FOR BILLETS & SLAB CUTTINGS AND RS.24,59,130/- FOR SPONGE IRON. THUS, THE DISPUTE IS OVER DIFFEREN TIAL AMOUNT OF RS.57,160/- IN RESPECT OF BILLETS AND SLAB CUTTINGS AND RS.29,980/- IN RESPECT OF SPONGE IRON. I FIND THAT THE A.O HAS TAK EN THE UNIFORM RATE OF RS.29,000/- PER MT FOR BILLETS AND SLAB CUTTING 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 CONTR ARY, THE APPELLANT HAS COMPUTED THE VALUE OF INVESTMENT AT AN AVERAGE RATE OF RS.28,477.30 FOR BILLETS & SLAB CUTTINGS AND AVERAG E RATE OF ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 6 9 - RS.20,253/- FOR SPONGE IRON RESPECTIVELY. IN THIS R EGARD, I FIND THAT THE APPELLANT HAD REQUESTED THE A.O. TO PROVIDE THE BAS IS 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 T HE 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 IR ON. ON THE CONTRARY, THE APPELLANT HAS FURNISHED THE BASIS OF ADOPTING T HE 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 VALUATIO N ADOPTED BY THE APPELLANT BASED ON AUDITED ACCOUNT, I AM CONVINCED WITH THE DETAILS AND BASIS OF VALUATION FURNISHED BY THE APPELLANT B EFORE THE A.O, HENCE, IN THE ABSENCE OF ANY BASIS HAVING BEEN BROUGHT ON RECORD BY THE A.O NOR ANY REASON HAVING BEEN MENTIONED BY THE A.O FOR DISREGARDING THE VALUATION OF INVENTORY DONE BY THE APPELLANT, THE A DDITION OF RS.57,160/- AND RS.29,980/- CANNOT BE SUSTAINED. HE NCE, THE ADDITIONS ARE DELETED. THE APPELLANT GETS RELIEF OF RS. 85,70,724/- (RS.84 ,83,584 + RS.57,160 + RS.29,980) THE CIT(A) THUS, REVERSED THE ADDITIONS SO MADE ON ACCOUNT OF EXCESS STOCK AND ACCEPTED THE BOOK RESULTS. 29.3 THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A). 29.4 WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE ISS UE. EXCESS STOCK OF INVENTORY HAS BEEN ALLEGED ON ACCOUNT OF F INISHED PRODUCTS NAMELY STRUCTURALS/ CHANNELS. ON PERUSAL OF THE OR DERS OF THE LOWER AUTHORITIES, WE FIND THAT AO HIMSELF ADMITTED THAT INVENTORY TAKEN BY THE VALUER AT THE TIME OF SEARCH CARRIES CERTAIN DEFICIENCIES AND DISCREPANCIES. AS A COROLLARY, THE QUANTITY ASSESS MENT REPORT OF DRV IS VITIATED AND CARRIED DISCREPANCIES WHICH REM AINED UNDEFINED. THE SOLITARY BASIS OF ADDITIONS IS THE REPORT OF THE DRV BASED ON PURE ESTIMATIONS WHEREBY EXCESS STOCK HAS BEEN PRESUMED. IT IS FURTHER NOTICED THAT ON CROSS EXAMINATION OF DRV (MR. MANISH PILLIWAR) BY THE ASSESSEE, THE DRV HAS FALTERED IN DEFENDING ITS VALUATION REPORT. IT IS ALSO SEEN FROM THE PERUSAL OF THE ORDER OF THE CIT(A) THAT THE DRV APPOINTED FOR VALUATION OF STOC K WAS NOT EXPERT IN THE SPONGE IRON/ BILLETS AND BLOOMS, BUSI NESS ETC. AND WAS ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 7 0 - FOUND TO BE NOT COMPETENT TO CARRY OUT THE VALUATIO N IN QUESTION. IT IS ALSO NOTICED THAT DRV HIMSELF ACCEPTED THAT HE D OES NOT HAVE ANY KNOWLEDGE ABOUT THE ITEMS, SUCH AS, COAL, SPONGE IR ON AND THEIR DENSITY, LENGTH ETC. THE STATEMENT OF THE DRV WAS ALSO FOUND CONTRADICTORY BY THE CIT(A). THE FUNDAMENTAL DEVIAT ION IN THE STOCK IS ON ACCOUNT OF LENGTH OF CHANNELS ETC. FOR WHICH THE ASSESSEE POSSESS THE CAPACITY OF 23 METERS WHEREAS THE DRV P ROCEEDED ON ASSUMPTION OF 25 METERS. THIS RESULTED IN SERIOUS E RROR IN QUANTIFICATION OF FINISHED GOODS. THE CIT(A) TOOK C OGNIZANCE OF CERTIFICATE FROM REGISTERED VALUER FURNISHED BY THE ASSESSEE TO SUPPORT ITS STANCE. WE NOTICE THAT THE CIT(A) HAS ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE AFTER RECORDING TEL L-TALE FACTS, SUCH AS, DRV HAVING ADMITTED THAT NO SCIENTIFIC OR MECHA NICAL EQUIPMENT WAS USED BY HIM FOR THE PURPOSES OF VALUATION; NO P HYSICAL VERIFICATION WAS CARRIED OUT AT ALL ETC.. THE WHOLE QUANTIFICATION IS MADE ON A WRONG FOUNDATION OF LENGTH OF CHANNELS ET C. AFTER HAVING ANALYZED THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) HAS OBJECTIVELY CONCLUDED THAT ADDITION TO THE TOTAL IN COME ON ACCOUNT OF UNEXPLAINED INVESTMENT TOWARDS EXCESS STOCK ON A CCOUNT 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 REA SON. 29.5 WITH REFERENCE TO EXCESS STOCK ON ACCOUNT OF B ILLETS AND SLAB CUTTINGS AND SPONGE IRON, THE CIT(A) HAS OBSERVED T HAT THE DISPUTE REVOLVES AROUND THE RATE ADOPTED BY THE AO AND THER E IS NO DISPUTE REGARDING THE TOTAL QUANTITY. IT WAS NOTICED BY TH E 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. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 7 1 - THUS, HAVING REGARD TO THE DECLARATIONS ALREADY MAD E BY THE ASSESSEE AND IN THE ABSENCE OF ANY DEFINITE BASIS I N THE ACTION OF AO, NO FURTHER ADDITIONS WERE FOUND SUSTAINABLE IN THE ABSENCE OF ANY EVIDENCE OF ADVERSIAL NATURE. IN SUMMATION, WE SEE NO ERROR IN THE PROCESS OF REASONING ADOPTED BY THE CIT(A) AND CONCLUSION THEREON. THE REVENUE COULD NOT REBUT THE FACTUAL FI NDINGS OF THE CIT(A). THE ORDER OF THE CIT(A) IS SELF-EXPLANATORY AND DOES NOT REQUIRE ANY REITERATION. WE THUS DECLINE TO INTERF ERE. 30 IN THE RESULT, APPEAL OF THE REVENUE IS REQUIRED TO BE DISMISSED ON THIS COUNT. 31. THE FOURTH ISSUE CONCERNS TREATMENT OF CREDIT F OR CASH AMOUNTING TO RS.3,05,000/- SEIZED IN SEARCH AS PREP AID TAX WHILE COMPUTING THE DEMAND. 32. THE CIT(A) CONSIDERED THE SUBMISSIONS OF THE AS SESSEE IN ITS APPELLATE ORDER, HAS DEALT WITH THE ISSUE AS UNDER: 18. SUBMISSIONS OF THE APPELLANT : THE APPELLANT HAS SUBMITTED THAT THE A.O IS NOT JUS TIFIED IN NOT ALLOWING CREDIT FOR CASH SEIZED DURING THE COURSE O F SEARCH AS PREPAID TAX DESPITE SPECIFIC REQUEST HAVING BEEN MADE BY TH E APPELLANT IN THIS REGARD. HENCE, THE A.O MAY KINDLY BE DIRECTED TO AL LOW CREDIT OF SAME. 19. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSIONS OF THE APPELLANT. THE COMPUTATION OF TAX DOES NOT REFLECT ADJUSTMENT OF CASH SEIZED AGAINST THE TAX LIABILITY. IN VIEW OF THE DE CISION OF HONBLE TRIBUNAL IN THE CASE OF VIPUL D. DOSHI VS. CIT (200 1) 118, TAXMAN 30 (MUM)(MAG), THE A.O IS DIRECTED TO GIVE CREDIT AND RECOMPUTED TAX LIABILITY. THIS GROUND OF APPEAL IS ALLOWED . 33. IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH ON THE ISSUE, THE CIT(A) IN OUR MIND HAS RIGHTLY APPLIED T HE LAW AND ALLOWED ADJUSTMENT OF CASH SEIZED AGAINST THE TAX L IABILITY. WE SEE NO INFIRMITY IN THE DIRECTIONS SO GIVEN. HENCE, WE SEE NO REASON TO INTERFERE. ITA NOS. 250 TO 255/RPR/2014 A/W. CO NOS. 36 TO 41/RPR/2015 (M/S. ABHISHEK STEEL INDUSTRIES LTD. ) - 7 2 - 34. IN THE RESULT, THE GROUND NO. 7-8 OF THE REVENU ES APPEAL IN AY 2012-13 IS DISMISSED. 35. HENCE ALL THE CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. 36. THE QUESTION OF JURISDICTION RAISED BY THE ASSE SSEE IN RESPECT UNABATED ASSESSMENT YEARS IN SEARCH ASSESSMENT HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE AND THE FINDI NGS OF THE CIT(A) ARE SET ASIDE AND QUASHED. LIKEWISE, THE SUPPORTIVE PLEA OF THE ASSESSEE ON THE ORDER OF CIT(A) ON MERITS HAS ALSO BEEN AFFIRMED IN THE PRECEDING PARAGRAPHS. CONSEQUENTLY, THE CROSS O BJECTIONS OF ASSESSEE IN RESPECTIVE APPEALS OF REVENUE STANDS AL LOWED. 37. RESULTANTLY, ALL THE CAPTIONED REVENUE APPEALS ARE DISMISSED WHEREAS ALL THE CROSS OBJECTIONS OF THE ASSESSEE AR E ALLOWED. SD/- SD/- (PAWAN SINGH) (PRADIP KUM AR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- $. / REVENUE 2. / ASSESSEE &. '() * / CONCERNED CIT 4. *- / CIT (A) -. ./0 122()3 ()!3 / DR, ITAT, RAIPUR 4. 056 7 / GUARD FILE. BY ORDER 3 SR. PRIVATE SECRETARY ITAT 3 RAIPUR (ON TOUR) ORDER PRONOUNCE D ON 25 / 1 0/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(4) OF THE INCOME TAX (A PPELLATE TRIBUNAL) RULE, 1963.