Shri OM Rolling Mills P Ltd, Jalna V. AD CIT R-1, Aurangabad

ITA 127/PUN/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93953 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL GANOO SPECIAL
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Search and seizure; Principle of natural justice; Additional evidence; Cost of acquisition; Difference of opinion; Retraction
• Section: 69C; 40A(3); 143(3); 153A; 260A; 145; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , ' # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, A M . / ITA NOS.125 & 127/PN/2012 ASSESSMENT YEARS: 2007-08 & 2008-09 SHREE OM ROLLING MILLS PVT. LTD., D-51/2, ADDL. MIDC AREA, JALNA 431203 . / APPELLANT PAN: AAACT6141J VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . RESPONDENT ITA NOS.430 & 431/PN/2012 ASSESSMENT YEARS: 2007-08 & 2008-09 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . / APPELLANT VS. SHREE OM ROLLING MILLS PVT. LTD., D-51/2, ADDL. MIDC AREA, JALNA 431203 . RESPONDENT PAN: AAACT6141J ITA NOS.211 TO 213/PN/2012 ASSESSMENT YEARS: 2006-07 TO 2008-09 ROOPAM STEEL ROLLING MILLS, C-53, ADDL. MIDC AREA, JALNA 431203 . / APPELLANT PAN: AABFR7873D VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . RESPONDENT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 2 ITA NOS.432 TO 434/PN/2012 ASSESSMENT YEARS: 2006-07 TO 2008-09 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . / APPELLANT VS. ROOPAM STEEL ROLLING MILLS, C-53, ADDL. MIDC AREA, JALNA 431203 . RESPONDENT PAN: AABFR7873D ITA NOS.140 & 141/PN/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 SHIVSHAKTI RE-ROLLING MILLS PVT. LTD., C-57, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA 431 203. PAN: AAICS1136J . / APPELLANT VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE -1, AURANGABAD. . RESPONDENT ITA NOS.629 & 630/PN/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 THE INCOME TAX OFFICER, WARD 1(3), JALNA. . / APPELLANT VS. SHIVSHAKTI RE-ROLLING MILLS PVT. LTD., C-57, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA 431 203. PAN: AAICS1136J . RESPONDENT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 3 ASSESSEE BY : SHRI J.P. BAIRAGRA REVENUE BY : SHRI SUNIL GANOO, SPECIAL COUNSEL FOR DEPARTMENT DATE OF HEARING : 07.05.2015 / 14.05.2015 / DATE OF PRONOUNCEMENT: 15.07.2015 $ / ORDER PER SUSHMA CHOWLA, JM: THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REV ENUE IN THE CASE OF SHREE OM ROLLING MILLS PVT. LTD. ARE AGAINST CONSOL IDATED ORDER OF CIT(A), AURANGABAD DATED 30.12.2011 RELATING TO ASSESSMENT YEARS 2007-08 AND 2008- 09 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R. W.S. 147 AND 143(3) OF THE INCOME-TAX ACT, 1961 RESPECTIVELY. FURTHER, THE AS SESSEE M/S. ROOPAM STEEL ROLLING MILLS AND THE REVENUE HAVE FILED CROSS APPE ALS AGAINST THE CONSOLIDATED ORDER OF CIT(A), AURANGABAD DATED 30.12.2011 RELATI NG TO ASSESSMENT YEARS 2006-07 TO 2008-09 AGAINST THE ORDER PASSED UNDER S ECTION 143(3) R.W.S. 147 AND 143(3) OF THE INCOME-TAX ACT, 1961 RESPECTIVELY . FURTHER, THE ASSESSEE M/S. SHIVSHAKTI RE-ROLLING MILLS PVT. LTD. AND THE REVEN UE HAVE FILED CROSS APPEALS AGAINST THE CONSOLIDATED ORDER OF CIT(A), AURANGABA D DATED 04.01.2012 RELATING TO ASSESSMENT YEARS 2006-07 TO 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 RESPE CTIVELY. 2. THIS BUNCH OF APPEALS RELATING TO DIFFERENT ASSE SSEES ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING M ADE TO THE FACTS AND ISSUES IN ITA NO.125/PN/2012 AND ITA NO.430/PN/2012 TO ADJ UDICATE THE ISSUES. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 4 3. REFERENCE IS ALSO MADE TO FACTS IN ITA NOS.211 T O 213/PN/2012 AND ITA NOS.432 TO 434/PN/2012 FOR ADJUDICATING THE ISSUE. 4. IN ITA NO.125/PN/2012, THE ASSESSEE HAS RAISED T HE FOLLOWING COMMON GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE IN COME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT REASONS FOR RE-OPENING OF THE ASSESSMENT WERE NOT SUPPLIED TO THE APPELLANT COMPA NY, NEITHER ON RE-OPENING OF THE ASSESSMENT NOR AT THE STAGE OF AP PELLATE PROCEEDINGS BEFORE THE LD. C . I . T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS.1 2052.258 MT @ AVERAGE SALE PRICE P.M.T. OF RS.21269 . 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON THE BASIS OF THE CONSUMPTION OF ELECTRICITY AS PER U.S. STANDARD AND EVASION OF EXCISE DUTY BY TMT BARS MANUFACTURERS IN JALNA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON THE GROUNDS OF MONTHLY VARIATION IN CONSUMPTION PATTERN OF ELECTRICITY VIS --VIS PRODUCTION . 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN H OLDING THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY ARE CORR ECTLY REJECTED U/S. 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR F INDING AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIV I NG ANY SHOW CAUSE NOTICE TO THE APPELLANT COMPANY TO EXPLAIN TH E FACTS AGAINST THE PROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGA INST THE RULES OF NATURAL JUSTICE. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROFIT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS.2,82,26,388/-. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ESTIMATING UNDISCLOSED INVESTMENTS FOR UNDISCLOSED PRODUCTION OF RS.24,64,802/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FURTHER ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 5 R.W.S . 147 IS VOID AND NOT VALID IN LAW AS THE SAME HAS BE EN PASSED WITHOUT ISSUE OF NOTICE U/S.143(2) OF THE I . T. ACT . 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX APPE LLATE TRIBUNAL IN THE CASE OF APPELLANT COMPANY FOR ASSESSMENT YEARS 2000 - 01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHERE IN THE SIMILA R ADDITION WAS DELETED. 12. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER O R AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER , AT THE TIME OF HEARING. 5. IN ITA NO.430/PN/2012, THE REVENUE HAS RAISED TH E FOLLOWING COMMON GROUNDS OF APPEAL:- 1. WHE T HER ON TH E FACTS A ND I N T HE CIRCUM ST A N CES OF THE CASE THE CI T (A ) WA S J UST I FIED IN QUA N T IF Y ING THE S U P P RE SS E D PR ODUCTION @ 4 % EVEN A FT E R ACCEPTING THE FAC T TH A T T HE ASS ESS EE IN DU L GED IN CLANDESTINE REMOVAL OF GOOD S WITHO UT PAYMEN T OF T A X ES. 2. ON THE FACTS AN D IN TH E CIRC U MST AN C ES O F T H E C AS E WHETHER THE CI T (A) WA S J US TI F I E D IN NO T APP R E CI A TI N G TH E F A CT T H A T M A NUFA C T UR I NG AND ADM INIST R ATIVE EXPENSES ON TH E UNACC OUNTED PROD UC T IO N W O RKED OUT I N THE APPE L LAT E O RDER HAD ALREAD Y B EEN B O R NE BY TH E PROD UCTI O N S H OWN I N THE BOOK S O F ACCO UNT S ? 3. T HE OR D E R O F TH E A O B E RES TO R ED A ND T HA T O F T H E CIT( A) BE VACATED. 4. THE APPELLANT C R A VES LE A VE TO AD D, A M E ND OR A LTER A NY GROUNDS O F APPEA L . 6. BRIEFLY, IN THE FACTS OF THE CASE, SHREE OM ROLL ING MILLS PVT. LTD., THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF TMT OR C TD BARS. THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME O F RS.4,30,800/-. THEREAFTER, THE CASE WAS PICKED UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 31.12.2009 AT ASSESSED INCOME OF RS.2,86,57,188/-, WHICH INCLUDED AN ADDITION OF RS.2,82,26,388/-. TH E ASSESSING OFFICER RECEIVED INFORMATION FROM THE OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD (CEC) VIDE LETTER DATED 29.03.2010 THAT THE ASSESSEE HAD INDULGED IN MANUFACTURE OF FINISHED GOODS AND REMOVAL THEREO F WITHOUT PAYING EXCISE DUTY. THE ASSESSING OFFICER FURTHER ALLEGES THAT THE ADJU DICATION ORDER OF CEC QUANTIFYING THE VALUE OF SUPPRESSED PRODUCTION OR E XCISE DUTY EVASION WAS ON RECORD. FURTHER, INFORMATION WAS RECEIVED BY THE A SSESSING OFFICER THAT THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 6 ASSESSEE IN ANOTHER MATTER IN CONNECTION WITH AN AC TION CONDUCTED BY THE DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE (IN SHORT DGCEI) CONFESSED AND ADMITTED TO CLANDESTINE REMOVAL OF FINISHED GOO DS WITHOUT EXCISE COVER BEFORE THE EXCISE AUTHORITIES. THE ASSESSEE MADE A PETITION BEFORE THE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISSION FOR WAIVER OF PENALTY, INTEREST AND PROSECUTION. THE SAID PETITION WAS ADMITTED AND DI SPOSED OF. THE ASSESSEE HAD MADE THE PAYMENT OF EXCISE DUTY EVADED IN ACCORDANC E WITH THE NOTICES ISSUED BY DGCEI. THE ASSESSEE ALSO ADMITTED THAT THE RAW MATERIAL USED IN THE PRODUCTION OF THE FINISHED PRODUCTS WAS OBTAINED IN CASH, FOR WHICH NO RECORDS WERE MAINTAINED. SIMILARLY, RECEIPTS ON SALE OF FI NISHED PRODUCTS WERE ALSO IN CASH AND NOT ACCOUNTED FOR. 7. THE ASSESSING OFFICER, IN VIEW OF THE INFORMATIO N RECEIVED RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. HOWEVER, THE ASSESSE E DID NOT REVISE THE RETURN OF INCOME, BUT STATED THAT THE ORIGINAL RETURN OF INCO ME FILED, MAY BE TREATED AS FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE THEREAFTER, REVISED ITS INCOME BY WAY OF COMPUTATION SHEET ON A N INCOME OF RS.1,08,920/-, BEING 2% OF SALE VALUE AND TAXES WERE PAID ACCORDIN GLY. 8. THE ASSESSING OFFICER OBSERVED THAT INTELLIGENCE WAS GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN THE CASE OF SHRI SALAS AR ISPAT PVT. LTD. AND MITC ROLLING MILLS PVT. LTD., MANUFACTURERS OF THERMO ME CHANICALLY TWISTED (TMT) BARS. WE FIND THAT SIMILAR ACTION OF DGCEI WAS REF ERRED TO BY THE TRIBUNAL IN THE RELATED CASE OF THE ASSESSEE I.E. IN M/S. SRJ PEETY STEELS PVT. LTD. VS. THE ADDITIONAL CIT IN ITA NOS.123 & 124/PN/2012 AND IN CROSS APPEALS FILED BY THE REVENUE IN ITA NOS.435 & 436/PN/2012 RELATING TO AS SESSMENT YEARS 2007-08 ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 7 AND 2008-09 AND VIDE ORDER DATED 16.01.2015, THE FA CTUAL ASPECTS OF THE INTELLIGENCE REPORT OF THE DGCEI HAVE BEEN REFERRED TO BY THE TRIBUNAL, WHICH ARE THE BASIS FOR CARRYING ON THE INVESTIGATION IN THE HANDS OF THE ASSESSEE BEFORE US. IN VIEW OF IDENTICAL INTELLIGENCE REPORT BEING RELI ED UPON AS IN THE CASE OF SISTER CONCERN, FOR THE SAKE OF BREVITY, WE REFER TO THE F ACTUAL ASPECTS OF THE CASE AS NOTED BY THE TRIBUNAL, WHICH READ AS UNDER:- 4.1 THE ASSESSING OFFICER HAS OBSERVED THAT INTELL IGENCE WAS GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI, IN THE CASE OF SHRI SALA SAR ISPAT (PVT.) LIMITED AND MITC ROLLING MILLS (PVT.) LTD., MANUFACTURERS OF TH ERMO MECHANICALLY TWISTED (TMT) BARS, THAT THEY WERE INVOLVED IN CLANDESTINE CLEARANCE OF FINISHED PRODUCTS THROUGH A BROKER, SHRI UMESH MODI, MUMBAI. AS NOTE D BY THE ASSESSING OFFICER SEARCHES WERE CONDUCTED BY THE DGCEI ON 18-12-2006 AND VARIOUS INCRIMINATING DOCUMENTS WERE RECOVERED WHICH INDICATED CLANDESTIN E REMOVAL OF GOODS BY MANUFACTURERS OF TMT BARS BY MANUFACTURERS LOCATED AT JALNA. THE ASSESSING OFFICER ALSO REFERRED TO THE ADMISSION OF SHRI UMES H MODI BEFORE THE CENTRAL EXCISE AUTHORITIES THAT HE HAD ACTED AS A SUB-BROKE R FOR SHRI ANIL D LINGADE, PROPRIETOR OF ANIL TRADERS, JALNA AND SHRI MUKESH G UPTA, PROPRIETOR OF R.J. STEEL TRADERS, NAVI MUMBAI, WHILE SOURCING TMT BARS. AS NOTED BY THE ASSESSING OFFICER THE SAID SHRI ANIL D. LINGADE ADMITTED THAT HE ACTED AS A BROKER FOR THE NINE MANUFACTURERS FROM JALNA WHICH DETAILS ARE GIV EN IN PARA NO. 2.2 OF THE ASSESSMENT ORDER. THEN THE ASSESSING OFFICER HAS D ISCUSSED THE MODUS OPERANDI ADOPTED BY SHRI ANIL LINGADE IN PARA NO. 2 .3 OF THE ASSESSMENT ORDER BUT AS THE NAME OF THE ASSESSEE IS NOT THERE IN NIN E LISTED PARTIES, HENCE, WE DO NOT CONSIDER IT NECESSARY TO GO IN THE DETAILS OF T HE SAME. THE ASSESSING OFFICER HAS ALSO REFERRED TO ACTION TAKEN BY THE CENTRAL EX CISE AUTHORITIES AGAINST ONE SHRI FARUK SHAIKH, WHO WAS ALSO A BROKER FROM WHOM THE NAME OF THE ANOTHER BROKER SHRI PAWAN GARG OF JALNA WAS REVEALED. 4.2 IN SUM AND SUBSTANCE ALL THE ABOVE REFERRED INF ORMATION WAS ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THE CENTRAL EXC ISE AUTHORITIES AND THEY REMOVED THE TMT BARS WITHOUT PAYMENT OF THE LEGITIM ATE EXCISE DUTY. THE ASSESSING OFFICER HAS ALSO DISCUSSED THE MODUS OPER ANDI ADOPTED BY SHRI FARUK SHAIKH IN PARA NO. 2.5 OF THE ASSESSMENT ORDER BUT THAT IS ALSO BASED ON THE INVESTIGATION CARRIED OUT BY THE DGCEI. THE ASSESS ING OFFICER ALSO REFERRED TO THE INVESTIGATION MADE BY DGCEI AND OBSERVED THAT T HE MANUFACTURERS OF THE TMT BARS WERE CONFRONTED AND THE MANUFACTURERS ADMI TTED THAT THEY HAD SUPPLIED TMT BARS TO THE BROKERS WITHOUT PAYING EXC ISE DUTY AND THEY CONFIRMED THE MODUS OPERANDI AS NARRATED BY SHRI FARUK SHAIKH AND SHRI PAWAN GARG. THE ASSESSING OFFICER HAS NOTED THAT CONSEQUENT TO ADMISSION BY THE SUPPLIERS OF UNACCOUNTED TMT BARS, THEY ALSO ADMITTED THAT TH EY HAD MANUFACTURED THESE TMT BARS FROM RAW MATERIAL VIZ., INGOTS AND BILLETS FROM UNACCOUNTED RECEIPT OF RAW MATERIAL. AS OBSERVED BY THE ASSESSING OFFICER THE SUPPLIERS IDENTIFIED THE INGOTS/BILLETS FROM ALLEGED UNACCOUNTED RECEIPTS OF RAW MATERIAL. THE ASSESSING OFFICER HAS GIVEN THE NAMES OF THE PARTIES IN PARA NO. 2.7 OF THE ASSESSMENT ORDER AGAINST WHOM THE INVESTIGATION WAS CARRIED OU T BY THE CENTRAL EXCISE AUTHORITIES AND THE NAME OF THE ASSESSEE APPEARS AT SL. NO. 10 WHO HAD ALLEGEDLY SUPPLIED INGOTS/BILLETS TO ITS SISTER CON CERN SHRI OM ROLLING MILLS PVT. LTD. TO THE EXTENT OF 288.500 MT. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 8 4.3 ON THE BASIS OF THE INVESTIGATION MADE BY THE D IRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE (IN SHORT THE DGCEI) BY INITIATING SEARCHES AGAINST SOME BROKERS AND SUB-BROKERS THE CENTRAL EXCISE DEP ARTMENT ISSUED SHOW CAUSE NOTICES TO THE ASSESSEE AND OTHER MANUFACTURE S WHOSE NAMES WERE REVEALED DURING INVESTIGATION FOR EVASION OF EXCISE DUTY. THE ASSESSEE ADMITTED TO CLANDESTINE REMOVAL OF FINISHED PRODUCTS TO EXTE NT OF 288.50 MT WITHOUT PAYMENT OF EXCISE DUTY. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD MADE A PETITION BEFORE THE CENTRAL EXCISE AND C USTOMS SETTLEMENT COMMISSION ( HEREIN AFTER REFERRED TO AS THE SETTLE MENT COMMISSION) FOR WAIVER OF PENALTY, INTEREST AND IMMUNITY FROM THE PROSECUT ION. THE SAID PETITION WAS ADMITTED AND DISPOSED OFF BY THE SETTLEMENT COMMISS ION. AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE ALSO ADMITTED THAT T HE RAW MATERIAL USED IN PRODUCTION OF THEIR FINISHED PRODUCTS WAS OBTAINED IN CASH FOR WHICH NO RECORDS WERE MAINTAINED. SIMILARLY, RECEIPTS ON SALE OF FI NISHED PRODUCTS I.E. 288.50 MT OF BILLETS/INGOTS, TOO WERE ALSO IN CASH AND NOT AC COUNTED FOR. 9. THE DGCEI HAD GATHERED THE INFORMATION VIS--VIS QUANTITY OF TMT BARS IN THE HANDS OF VARIOUS RE-ROLLING MILLS, WHICH WAS CO NFRONTED TO THE MANUFACTURERS OF TMT BARS, WHO IN TURN ADMITTED THAT THEY HAD SUP PLIED TMT BARS TO THE BROKERS WITHOUT PAYING EXCISE DUTY AND THEY ALSO CONFIRMED THE MODUS OPERANDI REVEALED BY THE BROKERS. THE ASSESSEE BEFORE US I.E. SHREE O M ROLLING MILLS PVT. LTD., JALNA ADMITTED TO THE MANUFACTURE OF 285.220 MT OF TMT BARS, WHICH WERE CLANDESTINELY REMOVED WITHOUT PAYMENT OF EXCISE DUT Y. THE STATEMENT OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COMPANY I .E. SHRI SURENDRA PEETY WAS RECORDED ON 23.12.2006, IN WHICH HE ADMITTED TH AT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF TMT BARS OF VARIOUS S IZES FROM BILLETS. HE ALSO ADMITTED THE UNACCOUNTED CLEARANCE OF TMT BARS, FOR WHICH NO RECORDS WERE MAINTAINED AND THE PAYMENTS WERE ALSO RECEIVED THRO UGH CASH. HE FURTHER ADMITTED TO HAVE CLEARED 271.855 MT THROUGH SHRI PA WAN GARG AND 13.365 MT OF TMT BAR ALSO THROUGH PAWAN GARG, WITHOUT PAYMENT OF EXCISE DUTY AND HE AGREED TO MAKE PAYMENT OF RS.16 LAKHS BEING THE EXC ISE DUTY ON CLANDESTINE SALES MADE BY HIM. THE ASSESSEE THEREAFTER, APPROA CHED THE CUSTOMS AND CENTRAL EXCISE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY AND GRANT OF IMMUNITY FROM THE PENALTY, INTEREST AND PROSECUTION . THE PETITION OF THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 9 ASSESSEE WAS ADMITTED AND THE DUTY WAS PAID BY THE ASSESSEE. FURTHER, PENALTY OF RS.9,000/- WAS IMPOSED BY THE SETTLEMENT COMMISS ION. 10. THE ASSESSING OFFICER AFTER GOING THROUGH THE P ROCESS OF MANUFACTURE OF CTD BARS OR TMT BARS FROM INGOTS OR BILLETS BY THE ROLLING MILLS IN PARA 6.1 OBSERVED THAT THE VARIABLE ELECTRICITY CONSUMPTION IS IMPORTANT IN ARRIVING AT THE ACTUAL PRODUCTION OF TMT / CTD BARS. THE ASSESSING OFFICER REFERRED TO THE DATA FOR ELECTRICITY CONSUMPTION FOR STEEL BAR MILLS IN USA, WHERE THE AVERAGE CONSUMPTION OF ELECTRICITY IN BAR MILLS WAS 132 1 65 KWH/TONNE AFTER ALLOWING FOR LOSSES AS IRRETRIEVABLE AND AS PER THE ASSESSING OFFICER, THE AVERAGE CONSUMPTION WAS 150 KWH/MT. THE ASSESSING OFFICER NOTED THAT THE ROLLING MILLS AT JALNA USE THERMEX QUENCHING TECHNOLOGY W HICH IS THE LATEST TECHNOLOGY IN OFFER IN INDIA. SINCE THE INGOTS AND BILLETS US ED IN PRODUCTION CONFORM TO THE STANDARDS FOR PRODUCING FE-415, FE-500 AND FE-550 G RADE OF TMT AS PER INDIAN STANDARDS ISSUED BY THE BIS, THERE IS NO REASON TO SUSPECT THAT THE INHERENT QUALITIES OF THE BILLETS AND INGOTS USED WILL NOT B E ACCORDING TO STANDARD SPECIFICATION. THE ASSESSING OFFICER THUS, AFTER ALLOWING AN ALL OWANCE OF 25% OVER AND ABOVE THE US COST OBSERVED THAT THE RANGE OF ELECTRICITY CONSUMPTION WOULD BE IN THE RANGE OF 169 KWH/MT TO 206 KWH/MT I .E. AVERAGE OF 188KWH/MT. THE ASSESSING OFFICER NOTED THE CONSUMP TION OF VARIOUS MANUFACTURERS IN JALNA CLUSTER DURING THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YEARS 2006-07 TO 2008-09 AND WAS OF THE VIEW THAT T HE AVERAGE RATE OF ELECTRICITY CONSUMPTION ACCORDING TO INTERNATIONAL STANDARDS AF TER GIVING HANDICAP OF 25% WAS 188KWH/MT AND THE AVERAGE MINIMUM CONSUMPTION I N THE PEER GROUP DURING THE THREE YEARS WAS 191 KWH/MT. THEREFORE, HE ADOPTED THE ELECTRICITY CONSUMPTION IN STEEL BAR ROLLING MILL AT 188KWH/MT OR THE CONSUMPTION OF THE ASSESSEE, IF LOWER. AS PER THE ASSESSING OFFICER, THE ADOPTION OF THE SAID RATES ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 10 BECAME IMPORTANT IN VIEW OF EVASION OF EXCISE DUTY BY TMT BAR MANUFACTURERS IN JALNA CLUSTER FOUND BY THE DGCEI, WHICH IN TURN, HA D BEEN ACCEPTED BY THE MANUFACTURERS. 11. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AD DISCLOSED PROFIT @ 2% OF SALES, WHICH AS PER HIM WERE INCORRECT. IN THE FACTS OF THE ASSESSEE, THE VALUE OF PURCHASE AMOUNT WAS RS.47,75,600/- AND THE PROFI T THEREON WAS RS.6,70,155/- SINCE THE ASSESSEE HAD ALREADY DEBITED ALL EXPENSES IN THE PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WAS NO OCCASION TO COMPUTE THE GROSS PROFIT, HENCE THE ENTIRE PROFIT O F RS.6,70,155/- WAS CONSIDERED AS INCOME OF THE ASSESSEE. HOWEVER, SINCE THE ADDI TION ON THIS ISSUE HAD BEEN MADE TO THE TUNE OF RS.2.82 CRORES IN THE ASSESSMEN T ORDER PASSED UNDER SECTION 143(3) ON 3012.2009, AS PER THE ASSESSING O FFICER IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR, NO FURTHER ADDITION WAS MA DE IN THE COMPUTATION SHEET. 12. THE CIT(A) UPHELD THE REOPENING OF THE ASSESSME NT UNDER SECTION 147 OF THE ACT. WITH REGARD TO THE ADDITION MADE ON ACCOU NT OF SUPPRESSED PRODUCTION / SALES OF TMT BARS ON THE BASIS OF ELECTRICITY UNIT CONSUMPTION, THE CIT(A) HELD AS UNDER:- 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE RIVAL CONTENTIONS RAISED BY THE APPELLANT IN PARA 7.1 ABOVE AND RAISE D BY THE A.O. MENTIONED IN PARA-5 ABOVE. ON PERUSAL OF THE SAME, IT HAS BEEN O BSERVED AS UNDER (1) THE APPELLANT HAS CLANDESTINELY REMOVED TMT BAR S AND HAS EVADED EXCISE DUTY AND HAS NOT ACCOUNTED FOR THE SAID PURCHASES O F RAW MATERIAL AND ALSO SALE OF TMT BARS AS IS EVIDENT FROM THE INVESTIGATION AN D ENQUIRIES MADE BY DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE (DGCEI). (2) THE APPELLANT HAS ALSO ADMITTED THE SAID CLANDE STINE REMOVAL OF GOODS IN THE STATEMENT RECORDED IN INVESTIGATION BY DGCEL AND AL SO BEFORE THE SETTLEMENT COMMISSION OF CUSTOMS AND EXCISE DEPARTMENT AND HAS PAID THE EXCISE DUTY AND THE SETTLEMENT COMMISSION HAS LEVIED TOKEN PENA LTY IN RESPECT OF THE SAID CLANDESTINE SALE OUT OF THE BOOKS. (3) THE A.O. HAS REASONABLY ESTIMATED, AFTER CONSID ERING VARIOUS REPORTS AND STUDIES IN - RESPECT OF ELECTRICITY CONSUMPTION REQUIRED FOR PRO DUCING TMT BARS , AT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 11 188 ELECTRICITY UNITS PER METRIC TON . THE A.O. HAS REASONABLY CONSIDERED THE 25% ALLOWANCE IN RESPECT OF TECHNOLOGY AND MACHINERY US ED IN INDIA BY THE APPELLANT. (4) THE A .O . HAS ALSO POINTED OUT THAT THERE IS SUBSTANTIAL VA RIATION IN VARIOUS MONTHS AND IN RESPECT OF VARIOUS MANUFACTURERS OF T MT BARS IN ELECTRICITY CONSUMPTION REQUIRED FOR THE QUANTUM OF GOODS PRODU CED, WHICH IS ABNORMAL. ( 5) THE DECISION IN THE CASE OF ACIT VS, SRJ PEETY S TEELS PVT.LTD . / SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE) H AS BEEN RELIED ON BY THE A PPELLANT. THE FACTS BEFORE THE HON'BLE ITAT WHILE D ECIDING THE SAID CASES WERE DIFFERENT TO SOME EXTENT. IN THE SAID CASES, CLANDE STINE REMOVAL OF GOODS BY THE APPELLANT AND THE ADMISSION OF THE APPELLANT ABOUT THE SAID FACT OF UNACCOUNTED TRANSACTIONS WAS NOT BEFORE THE HON'BLE ITAT. FURTH ER, THE DETAILED ORDER OF THE COMMISSIONER OF EXCISE AND THE OTHER FACTS BROUGHT ON RECORD BY THE A .O . IN THE ASSESSMENT ORDER WAS NOT BEFORE THE HON'BLE ITAT, P UNE WHILE DECIDING THE ABOVE REFERRED CASES. FURTHER IN THE SAID CASES ACT ION U/S 132 WAS CONDUCTED AND THE APPELLANT WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT OF COMPLETED ASSESSMENTS IN SUCH CASES COUL D BE MADE ONLY ON THE BASIS O F MATERIAL FOUND IN SEARCH ACTION . IN VIEW . OF THE ABOVE FACTS, THE RELIANCE P L ACED BY THE APPELLANT ON THE ABOVE REFERRED DECISIO N IS MISPLACED. FURTHER , THE OTHER DECISIONS RELIED ON BY THE APPELLAN T IN SUPPORT OF ITS ABOVE CONTENTION ARE ALSO DISTINGUISHABLE ON FACTS AS IN THE SAID CASES THE CLANDESTINE REMOVAL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT . FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BASIS OF ELECTRICITY UNITS CONSUMED WERE NOT PRESENT IN THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW O F THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PURCHASES AND SALES ADMIT TED BY THE APPELLANT AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A. O. IN THE ASSESSMENT ORDER. 7.3 IN VIEW OF THE ABOVE FACTS, OBSERVATIONS AND DI SCUSSION AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A.O. IN THE ASS ESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS JUSTIFIED IN ARRIV ING AT THE SUPPRESSED PRODUCTION/SALE OF TMT BARS ON THE BASIS OF ELECTRI CITY UNIT CONSUMPTION. THE FIRST ISSUE IS, THEREFORE, DECIDED AGAINST THE APPELLANT. 13. THE CIT(A) FURTHER ADDRESSED THE ISSUE OF QUANT IFICATION OF UNDISCLOSED INCOME BY REDUCING ONLY PURCHASE COST OF ALLEGED UN DISCLOSED SALES OR WHETHER THE GROSS PROFIT IS TO BE TAXED IN RESPECT OF THE S AID ALLEGED UNDISCLOSED SALES AND AT WHAT PERCENTAGE OF GP. THE CIT(A) WAS OF THE VI EW THAT ONLY GP IN RESPECT OF UNACCOUNTED SALES HAS TO BE ADDED IN THE HANDS OF T HE ASSESSEE, IN TURN, RELYING ON THE RATIO LAID DOWN BY THE TRIBUNAL IN ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TT J 627 (PUNE), WHEREIN IT WAS HELD THAT THE GROSS PROFIT IN RESPECT OF UNDISCLOSE D PRODUCTION SOLD COULD ONLY BE TAXED. HOWEVER, IN VIEW OF THE ADMISSION OF CLANDE STINE REMOVAL OF GOODS AND ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 12 UNACCOUNTED PURCHASE OF RAW MATERIALS AND SALE OF F INISHED GOODS ADMITTED BY THE ASSESSEE, THE GROSS PROFIT FOR MANUFACTURE OF T MT BARS WAS ESTIMATED AT THE RATE OF 4%. FURTHER, IT WAS HELD BY THE CIT(A) THA T WHERE THE ACTUAL GROSS PROFIT AS PER THE BOOKS OF ACCOUNT IN THE YEARS UNDER APPE AL WAS MORE THAN 4%, THE ACTUAL GROSS PROFIT RATE WAS TO BE ADOPTED AND DIRE CTIONS TO THAT EFFECT WERE GIVEN TO THE ASSESSING OFFICER. THE CIT(A) FURTHER ESTIM ATED THE UNDISCLOSED INVESTMENT IN RESPECT OF UNDISCLOSED TURNOVER AND W ORKED OUT THE ADDITION AT RS.24,64,802/-. HOWEVER, NO ADDITION WAS MADE IN T HE HANDS OF THE ASSESSEE BECAUSE OF THE ADDITION ON ACCOUNT OF ESTIMATED GP RATE IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2006-07. THE CIT(A) UPHELD TH E REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. 14. BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL AGAINST THE AFORESAID ORDER OF CIT(A). 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE AT THE OUTSET SAID THAT THE GROUNDS OF APPEAL NO.1, 2 AND 10 WERE NOT PRESSED IN ASSESSMENT YEAR 2007-08, WHICH WERE AGAINST THE REOPENING OF ASSESS MENT UNDER SECTION 147 OF THE ACT AND NON-ISSUE OF NOTICE UNDER SECTION 143(2 ) OF THE ACT, AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THE L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINT ED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEALS OF THE ASSESSEE AND THE REVENUE ARE COVERED BY THE ORDER OF TRIBUNAL IN THE CASE OF SISTER CONCERN I.E. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND CROSS APPEALS FILED BY THE REVENUE (SUPRA). IN ASSESSMENT YEAR 2008-09, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT AND THERE WERE NO ISSUES WITH REGARD TO REOPENING OF THE ASSESSMEN T. IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF SUPPRESSED PRODUCTION, THE LEARN ED AUTHORIZED ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 13 REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT FO R THE ASSESSMENT YEAR 2007- 08, THE ASSESSEE HAD DECLARED THE ADDITIONAL INCOME OF RS.1,08,920/- BECAUSE OF THE DECLARATION OF ALLEGED REMOVAL OF GOODS WITHOUT PAYING TAXES BEFORE THE SETTLEMENT COMMISSION. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSING OFFICER WANTED TO RELY ON THE US STANDARDS TO ESTIMATE THE AMOUNT OF CLANDESTINE REMOVAL OF THE GOODS IN THE HANDS OF THE ASSESSEE, BUT THEN HE WAS NOT SURE AND GAVE A BENEFIT OF 25%. THE CONCLUSION OF THE ASSESSING OFFICER WAS THAT THE CO NSUMPTION OF ELECTRICITY BY THE ASSESSEE IN THE MANUFACTURE OF TMT BARS WAS MORE TH AN THE LIMITS LAID DOWN UNDER US STANDARDS. THE LEARNED AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE STATED THAT WHERE THE TECHNOLOGY WAS NOT DEVELOPED AND EVEN THE WORKING WERE NOT DEVELOPED, SINCE THE MANUFACTURING IN JALNA WAS AN UNORGANIZED SECTOR AND CONSEQUENTLY, THE CONSUMPTION OF ELECTRICITY WAS MO RE AND COULD NOT BE BASED ON US STANDARDS. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IN ASSESSMENT YEAR 2008-09, NO EVIDENCE WAS FOUND OF CLANDESTINE REMOVAL OF GOODS AND FURTH ER, THE ASSESSEE HAD NOT APPROACHED THE SETTLEMENT COMMISSION. THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN MA HAVEER STEELS RE-ROLLING MILLS VS. ACIT & ANOTHER IN ITA NOS.1072 TO 1076/PN /2012 & ITA NOS.1446 TO 1450/PN/2012, RELATING TO ASSESSMENT YEARS 2004-05 TO 2008-09, ORDER DATED 05.03.2015. 16. THE LD. SPECIAL AR IN REPLY, FURNISHED A WRITTE N NOTE AND VEHEMENTLY STRESSED THAT THE ISSUE IN THE PRESENT APPEALS IS N OT COVERED BY THE DECISION OF TRIBUNAL IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (SUPRA) ON THE GROUND THAT THE REVENUE WAS FILING MISCELLANEOUS APPLICATION AGAINS T THE ORDER OF TRIBUNAL FOR RECTIFICATION OF THE SAID ORDER. IT WAS FURTHER ST ATED BY THE LD. SPECIAL AR IN THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 14 WRITTEN NOTE THAT THE APPEAL MAY BE DECIDED ON ITS OWN FACTS WITHOUT BEING INFLUENCED BY THE OBSERVATIONS / ASSUMPTIONS IN THE IMPUGNED DECISION IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (SUPRA). THE LD . SPECIAL AR POINTED OUT THAT THERE WAS NO MERIT IN THE STAND OF THE ASSESSEE THA T THERE WAS NO IOTA OF EVIDENCE IN POSSESSION OF THE ASSESSING OFFICER REG ARDING SUPPRESSION OF SALES BY THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE WR ITTEN SUBMISSIONS FILED BY THE ASSESSEE DATED 13.12.2010 BEFORE THE ASSESSING OFFI CER, IN WHICH THE ASSESSEE HAD OFFERED AN INCOME OF RS.1,08,920/- BEING GP @ 2 % ON SUPPRESSED SALES OF RS.54,45,755/-. THE LD. SPECIAL AR POINTED OUT THA T WHERE THE ASSESSEE HAD ADMITTED SUPPRESSION OF SALES BEFORE THE ASSESSING OFFICER, THIS BEING IMPORTANT FINDING OF THE FACT, WHICH HAD REMAINED UNCHALLENGE D, IN THE ABSENCE OF ANY RETRACTION OF THE SAID CONFESSION, IT WAS AN IMPORT ANT PIECE OF EVIDENCE AGAINST THE ASSESSEE. THEREFORE, THE CONTENTION OF THE ASSE SSEE THAT THE ASSESSING OFFICER HAD MERELY RELIED UPON THE STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITIES WAS MIS-LEADING AND FACTUALLY INCORRECT , WHERE EVIDENCE OF CLANDESTINE REMOVAL AND SUPPRESSION OF INCOME IS FO UND FOR PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE ADDITIONAL I NCOME FOR WHOLE OF THE YEAR. FOR THIS, THE METHODOLOGY OF SUPPRESSION CAN BE LOO KED INTO, WAS THE PLEA OF THE LD. SPECIAL AR. IT WAS FAIRLY ADMITTED BY HIM THAT THE EXCISE AUTHORITY HAD ADDED IN THE HANDS OF THE ASSESSEE ONLY TO THE EXTENT OF EVIDENCE FOUND. HE FURTHER PLEADED THAT SINCE BEFORE THE ASSESSING OFFICER, TH ERE WAS AN ADMISSION OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXC ISE DUTY AND WHERE THE ENTIRE EXPENSES HAD ALREADY BOOKED, THE ASSESSING O FFICER CAN MAKE THE ADDITION ON ACCOUNT OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY. HE FURTHER STATED THAT THERE IS NO CONCEPT O F BUYING PEACE IN SUCH CIRCUMSTANCES. HE FURTHER SUBMITTED THAT WHERE THE EXCISE DEPARTMENT HAD ACCEPTED THE DECLARATION GIVEN BY THE ASSESSEE AND NO FURTHER ADDITION / ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 15 ENHANCEMENT WAS MADE BY THE EXCISE DEPARTMENT, BUT THE ASSESSING OFFICER CAN EXTRAPOLATE IF SUPPRESSION IS FOUND FOR PART OF THE YEAR. EVEN HE CAN GO BACKWARD OR FORWARD TO MAKE THE AFORESAID ADDITION ON THE BASIS OF EVIDENCE FOUND OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYME NT OF EXCISE DUTY AND HE CAN EXTRAPOLATE AND COMPUTE THE SALES FOR THE YEAR. IT WAS VEHEMENTLY ARGUED BY HIM THAT THE DECISION IN SRJ PEETY STEELS PVT. L TD. (SUPRA) WAS NOT APPLICABLE AS THERE WAS AN EVIDENCE OF CLANDESTINE REMOVAL IN POSSESSION OF ASSESSING OFFICER. THE LD. SPECIAL AR HAS FURNISHED ON RECOR D WRITTEN NOTE EXPLAINING EACH OF THE ASPECTS OF THE ISSUE ELABORATELY. 17. ON PERUSAL OF THE WRITTEN NOTE FILED BY THE LD. SPECIAL AR DURING THE COURSE OF HEARING IN THE CASE OF THE PRESENT ASSESS EE AND ITS COMPARISON WITH THE WRITTEN SUBMISSIONS FILED DURING THE APPELLATE PROCEEDINGS IN SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND THAT THE ISSUES R AISED AND THE CASE LAWS REFERRED TO BY THE LD. SPECIAL AR, EVEN THE LANGUAGE OF THE SUBMISSIONS IN BOTH THE CASES IS ABSOLUTELY IDENTICAL. THE TRIBUNAL WHILE ADJUDI CATING THE ISSUE IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (SUPRA) HAS REFERRED TO THE ARGUMENTS PUT FORWARD BY THE LD. SPECIAL AR AND ALSO REFERRED TO THE CASE LA WS RELIED UPON BY THE LD. SPECIAL AR AND ALSO THE DISTINCTION DRAWN UPON BY H IM VIS--VIS RELIANCE OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN IN R.A. CASTINGS PVT. LTD. 237 E.L.T. 674 (TRI. DEL. ) IN PARA 11 AT PAGES 16 TO 22 OF THE ORDER DATED 16.01.2015, WHICH READ AS UNDER: - 11. THE LD. SPL. AR FOR THE REVENUE OPENED HIS ARG UMENT BY SUBMITTING THAT THERE IS AN EVIDENCE IN POSSESSION OF THE ASSESSING OFFICER IN RESPECT OF THE SUPPRESSION OF THE PRODUCTION AND CLANDESTINE REMOV AL OF GOODS BY THE ASSESSEE AND THERE IS NO MERITS IN THE CONTENTION OF THE ASS ESSEE COMPANY THAT THE ASSESSING OFFICER HAS SIMPLY RELIED UPON THE HYPOTH ETICAL CALCULATIONS OF PRODUCTION MERELY ON THE BASIS OF CONSUMPTION OF EL ECTRICITY. HE REFERRED TO THE ASSESSMENT ORDER AND SUBMITS THAT IN PARA NO. 3.1 T HE ASSESSING OFFICER HAS OBSERVED THAT THE CONFESSIONAL STATEMENT OF SHRI SU RENDRA S. PETTY, DATED 12-01- 2007 WHO IS THE MANAGING DIRECTOR OF THE ASSESSEE C OMPANY, BEFORE THE DGCEI ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 16 ON CLANDESTINE REMOVAL GOODS AND SALE OF 285 MT OF INGOTS TO SHREE OM ROLLING MILLS WITHOUT PAYMENT OF EXCISE DUTY AND HE ALSO AD MITTED THAT THE SAID SALES WERE MADE AGAINST CASH. DURING THE ASSESSMENT PROC EEDINGS, IN THEIR JOINT WRITTEN SUBMISSIONS DATED 13-12-2010 FILED BEFORE T HE ASSESSING OFFICER BY THE ASSESSEE COMPANY AND SHREE OM ROLLING MILLS PVT. LT D. THE ASSESSEE COMPANY OFFERED INCOME OF RS.6,72,620/- I.E. G.P. @ 3% ON S UPPRESSED SALES OF RS.47,75,600/- + RS.5,29,350/- TOWARDS PEAK PURCHAS ES. HE SUBMITS THAT SHREE OM ROLLING MILLS PVT. LTD. WHICH IS A SISTER CONCER N OF THE ASSESSEE COMPANY, OFFERED PROFIT OF RS.1,08,920/- ON THE IMPUGNED SUP PRESSED SALES. HE ARGUES THAT THE ASSESSEE ITSELF HAS ADMITTED THE FACT OF C LANDESTINE REMOVAL OF GOODS AND SALE OF THE SAME BEFORE THE ASSESSING OFFICER I N THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS MADE THE RE FERENCE OF THE SAID ADDITION IN THE ASSESSMENT ORDER MORE PARTICULARLY IN PARA N O. 1.4 BY OBSERVING THAT THE ASSESSEE COMPANY HAS OFFERED PROFIT OF RS.6,72,620/ - ON ACCOUNT OF ADMISSION OF SUPPRESSED PRODUCTION. THE ASSESSEE WAS ALSO INDUL GED INTO PURCHASES OF THE RAW MATERIAL IN CASH. HE SUBMITS THAT WHEN THE ASS ESSEE COMPANY HAS GIVEN A CONFESSION IN UNEQUIVOCAL MANNER IN RESPECT OF THE SUPPRESSION OF SALES NOT ONLY BEFORE THE CENTRAL EXCISE AUTHORITIES BUT ALSO BEFO RE THE ASSESSING OFFICER AND THE SAID CONFESSION TILL THIS DAY HAS NOT BEEN RETR ACTED, HENCE, THE ASSESSEE CANNOT ARGUE THAT THE ENTIRE ADDITION TOWARDS THE S UPPRESSION OF PRODUCTION AND SALE IS ON BASIS OF ARITHMETICAL CALCULATION OF THE ELECTRICITY CONSUMPTION. HE ARGUES THAT IT IS A WELL SETTLED LAW THAT AN ADMISS ION IS A GOOD PIECE OF EVIDENCE AND THE SAME BINDS THE MAKER OF THE ADMISSION UNLES S IT IS SUCCESSFULLY RETRACTED. HE RELIED ON THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KER ALA AND ANOTHER REPORTED IN 91 ITR 18 (SC). HE ARGUES THAT THE SAID ADMISSION OF THE ASSESSEE ON THE PRINCIPLE OF ESTOPPEL AS PER SECTION 115 OF THE IND IAN EVIDENCE ACT, 1872 IS ALSO BINDING ON THE ASSESSEE COMPANY. 11.1 LD. SPL. AR FOR THE REVENUE SUBMITS THAT THE A SSESSEE COMPANY APPROACHED THE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION, MUMBAI FOR WAIVER OF PENALTY AND IMMUNITY FROM PROSECUTION FOR EVADING THE EXCISE DUTY ON CLANDESTINE REMOVAL AND SALE OF GOODS. LD. SPL. AR REFERRED TO PAGE NO. 218 OF PAPER BOOK NO. 1 FILED BY THE ASSESSEE COMPANY WHER E THE COPY OF THE ORDER PASSED BY SETTLEMENT COMMISSION IS PLACED AND HE SU BMITS THAT THERE IS A CATEGORICAL OBSERVATION BY THE SETTLEMENT COMMISSIO N THAT THE ASSESSEE WAS INDULGED ALONG WITH THE OTHER COMPANIES, INDIVIDUAL LY AND COLLECTIVELY FOR EVASION OF DUTIES. HE PLACED HIS HEAVY RELIANCE ON THE SAI D OBSERVATION OF THE SETTLEMENT COMMISSION AND SUBMITS THAT THE ASSESSEE HAS NOT CH ALLENGED THE ORDER OF THE SETTLEMENT COMMISSION BEFORE ANY SUPERIOR FORUM WHE N THE ADVERSE FINDING HAS BEEN GIVEN AGAINST THE ASSESSEE. HE SUBMITS THAT A SSESSEE HAS REPEATEDLY HARPED THAT SOLELY WITH A VIEW TO BUY PEACE OF MIND AND AVOID LITIGATION, THEY HAVE APPROACHED THE CUSTOMS & CENTRAL EXCISE SETTLE MENT COMMISSION, MUMBAI AND THEREFORE NO ADVERSE INFERENCE CAN BE DR AWN AGAINST THEM. IN AN APPLICATION FILED BEFORE THE SETTLEMENT COMMISSION IT IS MENTIONED THAT THE ASSESSEE ADMITS THE DUTY LIABILITY. HE SUBMITS THA T THERE IS NO QUESTION OF SUO MOTO ADMITTING CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY BY THE ASSESSEE COMPANY BEFORE THE EXCISE AUTHORITIES BUT THERE WAS CONCLUSIVE EVIDENCE AGAINST THEM AS PER THE INVESTIGATION MADE BY THE DGCEI. HE PLACED HIS RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT 358 ITR 593 (SC). HE SUBMITS THAT THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION AS WELL AS THE CONFESSION BY THE ASSESSEE ARE THE GOOD PIECES OF EVIDENCE WHICH ARE ALSO BASIS FOR AR RIVING AT THE CONCLUSION THAT THE ASSESSEE WAS INDULGED INTO CLANDESTINE REMOVAL OF THE GOODS WITHOUT PAYMENT OF THE EXCISE DUTY AND SUPPRESSION OF THE S ALES. HE SUBMITS THAT IT IS WELL SETTLED LAW THAT IF SUPPRESSION FOR PART OF TH E PERIOD IS FOUND THEN SUPPRESSION CAN BE ESTIMATED FOR THE REST OF THE YE AR. PRESUMPTION U/S. 114 OF ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 17 THE INDIAN EVIDENCE ACT CAN BE RELIED UPON IN ESTIM ATING THE SUPPRESSED INCOME. ON THIS PROPOSITION HE RELIED ON THE FOLLOWING DECI SIONS: I. COMMISSIONER OF SALES TAX VS. H.M. ESUFALI H.M. ABDULAI 90 ITR 271. (SC). II. AMBIKA PRASAD THAKUR AND OTHERS VS. MAHARAJ KUM AR KAMAL SINGH AND OTHERS 1966 AIR 605 (SC) III. CIT VS. DR. M.K.E. MEMON 248 ITR 310 (BOM) IV. CIT VS. HOTEL MARIYA 332 ITR 537 (KERALA) 11.2 LD. SPL. AR FOR THE REVENUE SUBMITS THAT THERE WAS ERRATIC CONSUMPTION OF ELECTRIC POWER AS COMPARED WITH THE PRODUCTION D ECLARED BY THE ASSESSEE COMPANY. HE REFERRED TO PAGE NOS.207 TO 211 OF PA PER BOOK NO. 1 FILED BY THE ASSESSEE AND SUBMITS THAT THE ASSESSEE HAS SUBMITTE D THE STATEMENTS SHOWING MONTHLY CONSUMPTION OF ELECTRICITY UNITS VIS-A VIS PRODUCTION FOR THE PERIOD F.Y. 2004-05 TO F.Y. 2008-09. THE ASSESSEE HAS NOT EXPL AINED WHY THERE WAS UNUSUAL VARIATION IN CONSUMPTION OF ELECTRICITY, EV EN THOUGH THE ASSESSING OFFICER CALLED FOR EXPLANATION OF THE ASSESSEE COMPANY. HE REFERRED TO THE DECISION OF THE DIVISIONAL BENCH OF THE CESTAT MORE PARTICULARL Y THE DISSENTING ORDER OF LD. TECHNICAL MEMBER AND SUBMITS THAT AS PER THE OBSERV ATION OF THE LD. TECHNICAL MEMBER THIS ASSESSEE AND OTHER COMPANIES WERE INVOL VED IN THE FRAUD BY EVADING EXCISE DUTY. HE ARGUES THAT THE ASSESSEE C OMPANY HAS NOT DISPUTED THE ADVERSE OBSERVATION OF THE LD. TECHNICAL MEMBER OF THE CESTAT EVEN BEFORE THE HON'BLE BENCH IN THE COURSE OF HEARING OF THE P RESENT APPEALS. HE SUBMITS THAT THE ELECTRICITY CONSTITUTES IS A MAJOR COST OF PRODUCTION I.E. 29.67 % AND THE ASSESSING OFFICER HAS RIGHTLY CALCULATED THE SUPPRE SSED PRODUCTION ON THE BASIS OF ELECTRICITY CONSUMPTION. LD. SPL. AR ARGUES THAT THERE IS PRESUMPTION ON THE ISSUE THAT IF CONSUMPTION OF ELECTRICITY INCREASES, THERE IS ALSO INCREASE IN THE PRODUCTION. HE RELIED ON THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF MELTON INDIA VS. THE COMMISSIONER TRADE TAX U.P. 2007-TIOL-14-SC-CT. HE ALSO PLACED HIS RELIANCE OF THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF TRIVENI RUBBER AND PLASTICS VS. COLLECTOR OF CEN TRAL EXCISE, COCHIN 2002- TIOL-547-SC-CX IN SUPPORT OF HIS ARGUMENT THAT IF T HERE IS AN ADMISSION OF SUPPRESSION OF TURNOVER THEN CONSUMPTION OF ELECTRI CITY CAN FORM THE BASIS OF ESTIMATION OF SUPPRESSION. HE SUBMITS THAT IT IS A WELL SETTLED LAW THAT IN CASE OF CONCEALMENT OF INCOME DIRECT EVIDENCE IS SELDOM AVA ILABLE AND THE CASE HAS TO BE DECIDED ON THEORY OF PREPONDERANCE OF PROBABILIT Y. IN SUPPORT OF THIS ARGUMENT HE RELIED ON THE FOLLOWING PRECEDENTS: I. SUMATI DAYAL VS. CIT 214 ITR 801 (SC). II. COLLECTOR OF CUSTOMS MADRAS AND OTHER S VS. D. BHOORMULL 2002- TIOL-253-SC-CUS. 11.3 HE ARGUES THAT ON THE DOCTRINE OF PREPONDERANC E OF PROBABILITY THE ACTION OF THE ASSESSING OFFICER TO ESTIMATE SUPPRESSION OF THE SALES ON THE BASIS OF THE ELECTRICITY CONSUMPTION HAS TO BE UPHELD. 11.4 LD. SPL. AR SUBMITS THAT THE ASSESSEE COMPANY HAS VEHEMENTLY ARGUED THAT IN THE CASE OF R.A. CASTINGS PVT. LTD. 237 E.L .T. 674 (TRI. DEL.) IT IS HELD THAT THE SUPPRESSED PRODUCTION WORKED OUT SOLELY ON CONSUMPTION OF ELECTRICITY CANNOT BE SUSTAINED. IT WAS FURTHER ARGUED THAT THE AFORESAID DECISION OF THE CESTAT WAS AFFIRMED BY THE HON'BLE ALLAHABAD HIGH C OURT AND SLP FILED BY THE REVENUE TO THE SUPREME COURT WAS DISMISSED. HE ARG UES THAT THE SAID DECISION IS NOT HELPFUL TO THE ASSESSEE FOR THE FOLLOWING RE ASONS: I. IN THE SAID DECISION THERE WAS NOT EVEN AN IOTA OF EVIDENCE SHOWING THE SUPPRESSION OF PRODUCTION BY THE SAID COMPANIES AND THE SUPPRESSION WAS ESTIMATED MERELY ON THE BASIS OF ELECTRICITY CO NSUMPTION RELYING ON ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 18 THE REPORT OF LATE DR. N.K. BATRA, PROFESSOR OF IIT , KANPUR WHEREAS IN THE PRESENT CASE THERE IS A STRONG EVIDENCE AGAINST THE ASSESSEE IN THE FORM OF ADMISSION BY THE MANAGING DIRECTOR OF THE ASSES SEE COMPANY BEFORE CENTRAL EXCISE AUTHORITIES AS WELL AS BEFORE THE AS SESSING OFFICER IN RESPECT OF REMOVAL OF GOODS IN CLANDESTINE MANNER AND EVASION OF THE DUTIES. II. THE ASSESSEE COMPANY HAS OFFERED THE INCOME OF THE SUPPRESSED TURNOVER FOR TAXATION DURING REASSESSMENT PROCEEDIN GS SUO MOTO. III. THE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMIS SION, MUMBAI HAS TAKEN A CATEGORICAL NOTE OF CLANDESTINE REMOVAL OF GOODS BY THE ASSESSEE COMPANY. IV. THE ASSESSEE COMPANY HAS NOT GIVEN ANY PLAUSIBL E EXPLANATION AS TO WHY AND FOR WHAT REASONS THE CONSUMPTION OF ELECTRICITY IN SUBSEQUENT YEARS HAS FALLEN DOWN AND HAS ATTAINED THE LEVEL OF CONSU MPTION AS ESTIMATED BY THE LEARNED ASSESSING OFFICER. 11.5 HE SUBMITS THAT THE BOOKS OF ACCOUNT ARE NOT S HOWING THE CORRECT STATE OF AFFAIRS AND HENCE, THE ASSESSING OFFICER WAS JUSTIF IED IN REJECTING THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3 ) OF THE I.T. ACT. HE ARGUES THAT EVEN IF THERE WAS DIFFERENCE OF OPINION BETWEE N THE HONBLE MEMBERS OF CESTAT, MUMBAI IN WHICH THE LD. TECHNICAL MEMBER HA S DISSENTED AND EVEN THOUGH THE SAID DECISION IS A MINORITY DECISION, BU T IT HAS AN EVIDENTIAL VALUE AND THE SAME CANNOT BE REJECTED. HE PLACED HIS RELIANC E ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUN EN GINEERING WORKS PVT. LTD. 198 ITR 297 (SC) IN SUPPORT OF HIS CONTENTION THAT THE ENTIRE JUDGMENT IS TO BE CONSIDERED AND WE CANNOT CONFINE TO A PARTICULAR OB SERVATION. HE SUBMITS THAT THE SLP FILED BY THE REVENUE BEFORE THE HONBLE SUP REME COURT IN THE CASE OF R.A. CASTINGS (SUPRA) CHALLENGING THE DECISION OF T HE HON'BLE ALLAHABAD HIGH COURT WAS SUMMARILY DISMISSED BUT SUMMARY DISMISSAL OF THE SLP DOES NOT LAY DOWN ANY LAW NOR IT IS A BINDING PRECEDENT. HE REF ERRED TO THE DECISION OF THE LD. THIRD MEMBER OF THE CESTAT, MUMBAI IN THE APPEAL OF THE ASSESSEE COMPANY BEING NO.1319/09/MUM AND SUBMITS THAT THE LD. THIRD MEMBER HAS HELD THAT ESTIMATION OF ALLEGED SUPPRESSED TURNOVER ON THE BA SIS OF MERE CONSUMPTION OF ELECTRICITY WAS IMPERMISSIBLE AND THE ORDER OF THE CCE, AURANGABAD WAS CANCELLED. HE SUBMITS THAT THE DECISION OF THE THI RD MEMBER IS NOT BINDING ON THE HON'BLE BENCH WHILE DECIDING THE PRESENT APPEALS FO R THE REASON THAT THE DECISION OF CESTAT DOES NOT HAVE ANY BINDING FORCE ON ITAT W HICH IS CONSTITUTED UNDER THE INCOME TAX ACT. BOTH THE TRIBUNALS ARE CONSTITU TED UNDER DIFFERENT ENACTMENTS AND DISCHARGE THEIR FUNCTIONS INDEPENDENTLY UNDER R ESPECTIVE ENACTMENT. HOWEVER, THE DECISION OF ONE TRIBUNAL MAY HAVE PERS UASIVE VALUE FOR OTHER TRIBUNAL IN CERTAIN CASES WHERE ISSUES ARE IDENTICA L. 11.6 LD. SPL. AR FOR THE REVENUE VEHEMENTLY ARGUES THAT THE HON'BLE THIRD MEMBER OF THE CESTAT HAS NOT CONSIDERED THE EVIDENC E ABOUT THE CLANDESTINE REMOVAL OF GOODS AND THE DUTY PAID ON THE SAME WHIC H MATTER WAS SETTLED BEFORE THE SETTLEMENT COMMISSION. LD. SPL. AR FOR THE REV ENUE VEHEMENTLY ARGUES THAT IT IS CRYSTAL CLEAR THAT THE HON'BLE THIRD MEM BER OF THE CESTAT HAD PROCEEDED ONLY TO DECIDE WHETHER THE EVIDENCE OF HI GHER ELECTRICITY CONSUMPTION PROVES SUPPRESSION OF PRODUCTION. THERE IS NO JUST IFICATION TO RELY ON THE DECISION IN THE CASE OF R.A. CASTINGS (SUPRA). HE ARGUES TH AT THERE IS CONCLUSIVE EVIDENCE AGAINST THE ASSESSEE BY WAY OF ADMISSION AND THE PE TITION FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION AND HENCE, THESE E VIDENCES CANNOT BE DISCARDED. LD. SPL. AR FOR THE REVENUE FURTHER SUBM ITS THAT THE ASSESSEE IS BOUND TO MAINTAIN THE RECORD OF THE ELECTRICITY CON SUMPTION IN FORM NO. G-7 AS ADMITTEDLY THE ASSESSEE COMES INTO THE HT CONSUMER. THE LD. SPL. AR FILED THE COPY OF THE CIRCULAR ISSUED BY THE MSEB BEING DEPAR TMENTAL CIRCULAR NO. 484 AND SUBMITS THAT IT IS BINDING ON THE ASSESSEE AND THE ASSESSEE HAS TO SUBMIT THE SAME TO THE MSEB AUTHORITY. LD. SPL. AR SUBMITS THAT THE ASSESSEE HAS NOT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 19 AT ALL MAINTAINED ELECTRICITY CONSUMPTION RECORD IN FORM NO. G-7 AS THE ASSESSEE WAS NOT DESIRING TO COME CLEAN TO SHOW THE CORRECT ELECTRICITY CONSUMPTION. HE SUBMITS THAT THE ASSESSING OFFICER HAS TAKEN THE MA XIMUM LIMIT OF 1026 UNITS OF ELECTRICITY CONSUMPTION FOR PRODUCTION OF PER MT AN D NOT THE LOWER LIMIT AND IT CANNOT BE SAID THAT THE ASSESSING OFFICER WAS BIAS IN FRAMING THE ASSESSMENT. 18. IN THE FACTS OF THE PRESENT CASE, THE ONLY DIST INCTION IS THAT THIS IS THE CASE OF A ROLLING MILL, WHEREAS THE CASE OF SRJ PEETY ST EELS PVT. LTD. (SUPRA) WAS CASE OF FURNACE COMPANY. THE PERSONS RUNNING FURNACE CO MPANY WERE MANUFACTURING INGOTS AND BILLETS, WHICH IN TURN, WERE UTILIZED BY THE ROLLING MILLS FOR THE MANUFACTURE OF TMT BARS. BOTH THE SRJ PEETY STEELS PVT. LTD. AND ASSESSEE BEFORE US I.E. SHREE OM ROLLING MILLS PVT. LTD. ARE SISTER CONCERN AND IT IS ADMITTED POSITION THAT INGOTS / BILLETS WHICH ARE M ANUFACTURED BY M/S. SRJ PEETY STEELS PVT. LTD. ARE SOLD TO SHREE OM ROLLING MILLS PVT. LTD. THE TRIBUNAL WHILE DECIDING THE ISSUE IN THE FACTS OF SRJ PEETY STEELS PVT. LTD. (SUPRA) HAS REFERRED IN PARA 11 TO THE OFFER OF ADDITIONAL INCOME BY SHR EE OM ROLLING MILLS PVT. LTD., OF RS.1,08,920/- AND THE OFFER OF ADDITIONAL INCOME BY M/S. SRJ PEETY STEELS PVT. LTD. OF RS.6,72,620/-. 19. THE LD. SPECIAL AR WHILE CONCLUDING THE ISSUE S UBMITTED THAT THERE WERE THREE BASIC ISSUES IN THE BUNCH OF PRESENT APPEALS, WHEREIN CERTAIN CASES OF CLANDESTINE REMOVAL OF MATERIAL WERE FOUND, WHICH W ERE ADMITTED BOTH BEFORE THE EXCISE AND IT AUTHORITIES. THE SECOND SET OF CASES ARE WHERE CERTAIN CASES OF CLANDESTINE REMOVAL OF MATERIAL WERE FOUND, BUT WER E ADMITTED ONLY BEFORE THE EXCISE AUTHORITIES AND NOT BEFORE THE INCOME-TAX AU THORITIES AND THE THIRD SET OF CASES WHERE NO CLANDESTINE REMOVAL OF GOODS WERE FO UND AND THERE WAS NO ADMISSION BEFORE THE EXCISE AND IT AUTHORITIES. TH E THIRD CASE IS ONLY IN CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. IN ALL THE CASE S, ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) R.W.S. 148 OF THE AC T BY THE ASSESSING OFFICER ON ACCOUNT OF CLANDESTINE REMOVAL OF GOODS AND ERRATIC CONSUMPTION OF ELECTRICITY, ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 20 AS EVIDENCED BY BOOKS OF ACCOUNT ESTIMATED QUANTUM OF PRODUCTION AND SALES. HE FURTHER PLEADED THAT WHENEVER CLANDESTINE REMOVA L OF MATERIAL WAS FOUND, SUPPRESSED TURNOVER COULD BE ESTIMATED ON ACCOUNT O F ERRATIC CONSUMPTION OF ELECTRICITY. REFERRING TO THE ORDER OF TRIBUNAL IN THE CASE OF SRJ PEETY STEELS PVT. LTD. (SUPRA) RELATING TO ASSESSMENT YEAR 2006-07, I T WAS POINTED OUT THAT THE TRIBUNAL VIDE DECISION REPORTED IN 137 TTJ 627 (PUN E) HAS HELD THAT NO ADDITION IS WARRANTED IN THE ASSESSMENT YEARS PRIOR TO SEARC H UNDER SECTION 153A OF THE ACT. HOWEVER, IN RESPECT OF THE SEARCH YEAR, ADDIT ION ONLY OF THE UNDISCLOSED INCOME WAS MADE IN THE HANDS OF THE ASSESSEE. 20. THE PROCEEDINGS IN THE CASE CONTINUED UP TO LUN CH HOUR AND THEREAFTER, BOTH THE PARTIES AGREED TO THE HEARING POST LUNCH H OUR. HOWEVER, THE LD. SPECIAL AR FURNISHED A LETTER UNDER HIS SIGNATURE STATING T HAT THE PRINCIPAL CIT, AURANGABAD WAS CONTEMPLATING TO FILE CERTAIN PETITI ONS BEFORE THE PRESIDENT / VICE PRESIDENT, ITAT AND THEREFORE, THE MATTER COUL D BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PET ITIONS CONTEMPLATED WERE NOT MADE KNOWN. THE LD. SPECIAL AR WAS ASKED TO CONTIN UE ARGUMENTS BY THE BENCH, BUT HE REFERRED TO HIS ADJOURNMENT LETTER. 21. IN REJOINDER, THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE STARTED HIS ARGUMENTS. HOWEVER, THE LD. SPECIAL AR WALKED OUT FROM THE COURT ROOM. THE LEARNED AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE FILED WRITTEN SUBMISSIONS IN REPLY TO THE SUBMISSIONS FILED BY TH E LD. SPECIAL AR, IN THE PRESENCE OF LEARNED CIT-DR MRS. M.S. VERMA AND LEAR NED ADDL.CIT-DR SHRI RAJESH DAMOR. ALONG WITH THE SAID APPEALS, OTHER A PPEALS WERE ALSO TAKEN UP FOR HEARING AND WERE HEARD ON 07.05.2015 AND BALANC E APPEALS WERE ADJOURNED TO 08.05.2015 AND WERE HEARD THEREAFTER. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 21 22. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE IN REJOINDER SUBMITTED REPLY TO THE PARAWISE SUBMISSIONS OF THE LD. SPECIAL AR. IT WAS POINTED OUT BY HIM IN THE SAID SUBMISSIONS THAT THE ALLEGATION OF LD. SPECIAL AR VIS--VIS LETTER DATED 13.12.2010 SUBMITTED BY THE ASSESSEE TO THE ASSESSING OFFICER REGARDING ADDITIONAL INCOME DECLARED OF RS. 1,08,920/- ON THE BASIS OF SETTLEMENT PETITION FILED AND ACCEPTED BY THE SETTL EMENT COMMISSION, THAT THE SAME WAS NOT MADE TO BUY PEACE OF MIND, IS NOT CORR ECT AS IN THE SAID LETTER ITSELF IT WAS MENTIONED THAT IN RESPONSE TO THE SHOW CAUSE NOTICE AND TO BUY PEACE OF MIND, THE ALLEGED EXCISE DUTY OF RS.8,88,747/- HAD BEEN PAID BY THE ASSESSEE. IT WAS FURTHER POINTED OUT BY HIM THAT THE SAID LETTER SPEAKS OF THE SEQUENCES OF EVENTS AND IN PARA 4 OF THE SAID LETTER, THE ASSESS EE HAD SUBMITTED THAT THERE WAS NO EVIDENCE OF CLANDESTINE REMOVAL OF 285 MT AN D ALSO THERE WAS NO POSITIVE FINDING OF UNACCOUNTED CLEARANCE AND NO IN CRIMINATING DOCUMENTS WERE SEIZED FROM THE ALLEGED TRADER TO JUSTIFY THE CLAND ESTINE REMOVAL. THOUGH THE AUTHENTICITY OF THE INVOICE / BILL BOOK WAS SUSPECT ED AND FURTHER IN PARA 5, THE ASSESSEE ALLEGED THAT THOUGH SOME PAPERS WERE SEIZE D, BUT NOWHERE THE NAME OF THE ASSESSEE COMPANY WAS INDICATED WITH COGENT E VIDENCE. THESE WERE MERELY ROUGH NOTINGS AND A DECLARATION WAS MADE REG ARDING CLANDESTINE REMOVAL OF GOODS BY SHRI SURENDRA PEETY. BEFORE THE ASSESS ING OFFICER, THE CONTENTION OF THE ASSESSEE WAS THAT THE ADMISSION WAS MADE TO GIVE QUIETUS TO PROLONGED LITIGATION WHICH WOULD HAVE ENSUED IN THE PROCESS W ITH THE EXCISE DEPARTMENT. THE COMPANY WAS ALWAYS AWARE THAT CARRYING ON LITIG ATION IS NOT IN THE BEST INTEREST OF THE COMPANY . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ADDITIONAL INCO ME WAS OFFERED ON THE BASIS OF ROUGH SHEETS FOUND FROM THE BROKERS AND ON THE BASI S OF WHICH, THE ASSESSEE MADE A PETITION TO THE SETTLEMENT COMMISSION FOR RE MOVAL OF GOODS FOR 288.50 MT AND PAID EXCISE DUTY, INTEREST AND TOKEN PENALTY . FURTHER CONTENTION OF THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 22 LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BY WAY OF WRITTEN SUBMISSIONS IS THAT THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED PRODUCTION AND EVEN AFTER THIS LETTER AN D SETTLEMENT PETITION, THE ASSESSING OFFICER HAS NOT INVESTIGATED OR BROUGHT A NY MATERIAL ON RECORD PROVING THE SUPPRESSED PRODUCTION AND ITS SALE OUT OF BOOKS . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRONGLY OBJECTED T O THE OBJECTIONS OF THE LD. SPECIAL AR THAT NO RELIANCE SHOULD BE PLACED ON THE ORDER OF TRIBUNAL IN SRJ PEETY STEELS PVT. LTD. (SUPRA) AND ON THE PLEA THAT MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE ACT HAS BEEN FILED AGAI NST THE SAID ORDER. IT WAS POINTED OUT BY HIM THAT FILING OF MISCELLANEOUS APP LICATION AGAINST THE ORDER OF TRIBUNAL DOES NOT DEBAR THE ORDER TO BE FOLLOWED IN THE PRESENT SET OF CASES TILL THE SAME WAS RECTIFIED IN ANY MANNER, SINCE THE APP EALS WERE ON COMMON GROUNDS AND COMMON FACTS AND AT THE REQUEST OF THE DEPARTMENT, ALL THE APPEALS WERE CONSOLIDATED. 23. REGARDING ISSUE NO.2 RAISED BY THE LD. SPECIAL AR, WHEREIN HE HAD REFERRED TO THE ORDER OF ASSESSING OFFICER REGARDIN G CONFESSIONAL STATEMENT DATED 23.12.2006 GIVEN BY SHRI SURENDRA PEETY BEFORE THE DGCEI REGARDING REMOVAL AND SALE OF 275 MT OF TMT WITHOUT PAYMENT OF EXCISE DUTY, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE THAT THE CONFESSIONAL STATEMENT WAS MADE BEFORE DGCEI WHILE THERE WAS NO SUCH CONFESSIONAL STATEMENT OF SHRI SURENDRA PEETY RECORDED BY THE AS SESSING OFFICER OR CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN AFTER THE RECEIPT OF INFORMATION FROM CENTRAL EXCISE, THE DEPARTMENT HAD NOT CARRIED OUT ANY INVESTIGATION AND THERE WAS NO MATERIAL ON RECORD F OR SUPPRESSED PRODUCTION AND ITS SALES. RELIANCE PLACED ON PULLANGODE RUBBER PR ODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (1973) 91 ITR 18 (SC) FOR THE PR OPOSITION THAT CONFESSIONAL ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 23 STATEMENT BEFORE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE, IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT STATEMENT MADE BEFORE THE SETTLEMENT COMMISSION OF EXCISE DEPARTMENT OR INCOME-TAX OR ANY OTHER LAW IS LIMITED TO THAT PART ICULAR AMOUNT AND TRANSACTION AND NO INFERENCE COULD BE DRAWN THAT THE ASSESSEE W AS DOING THESE TRANSACTIONS IN WHOLE LIFE BEFORE AND AFTER THE SETTLEMENT. 24. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE OBJECTED TO THE ISSUE NO.3 RAISED BY THE LD. SPECIAL AR THAT WHETHE R THE ASSESSING OFFICER / CIT(A) WAS JUSTIFIED IN EXTRAPOLATING FIGURES OF SU PPRESSED SALES. THE CASE OF THE LD. SPECIAL AR WAS THAT IF SUPPRESSED PRODUCTION WA S FOUND FOR PART OF A PERIOD, THE SAME COULD BE UTILIZED FOR ESTIMATION OF SUPPRE SSED PRODUCTION FOR THE ENTIRE PERIOD AND RELIANCE WAS PLACED ON NUMBER OF DECISIO NS. IN REPLY, IT WAS STATED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE THAT EVEN THE EXCISE COMMISSIONER WHILE PASSING THE ORDER IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. IN PARA 19 HELD THAT THE SETTLEMENT PETITION F ILED BY THE ASSESSEE WAS NOT MATERIAL. FURTHER, THE CESTAT IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. IN PARA 19 HAD OBSERVED THAT THIS ASPECT WAS ALREADY C ONSIDERED BY CCE, WHICH IS AT PARA 19 OF HIS ORDER. HE FURTHER SUBMITTED THAT WHERE THE ASSESSING OFFICER HAS NO MATERIAL IN HIS HANDS REGARDING SUPPRESSED P RODUCTION AND ITS SALE AND HE HAD MERELY RELIED ON THE ORDER OF SETTLEMENT COM MISSION AS MENTIONED IN PARA 4, THERE WAS NO MERIT IN ANY SUCH ADDITION. T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEN DREW DISTINCTI ON ON THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR ON VARIOUS DECISIONS, WH ICH HAVE BEEN CONSIDERED BY THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SU PRA). FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED H EAVY RELIANCE ON THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN CIT VS. C .J. SHAH AND CO. (2000) ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 24 246 ITR 671 (BOM) FOR THE PROPOSITION THAT WHERE TH E LOOSE SHEETS INDICATED UNDISCLOSED SALES FOR THREE MONTHS, THE ADDITION CO ULD NOT BE MADE FOR THE ENTIRE BLOCK PERIOD ON THE BASIS OF LOOSE SHEETS. FURTHER , RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (2007) 294 ITR 497 (DELHI), WHERE PURSUANT TO SEARCH, SOME DOCUMENTS REVEALED THAT FOR PART OF THE YEAR, THERE WERE SOME UNACCOUNTED SALES, ON WHICH BASIS, THE ASSESSING OFFICER ASSUMED THE UNACCOUNTE D SALES FOR THE ENTIRE YEAR. THE HONBLE DELHI HIGH COURT HELD THAT THE ASSUMPTI ON OF ASSESSING OFFICER MAY HAVE BEEN VALID IF HE HAD FOUND SOME DISCREPANCY IN THE BOOKS OF ACCOUNT OR IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT OUT SOME DISCREPANCIES. THE LE ARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE CASE OF THE ASSESSEE, THE BOOKS OF ACCOUNT WERE EXAMINED BY THE ASSESSING OFF ICER AND IN THE ABSENCE OF ANY DISCREPANCIES, NO ADDITION IS WARRANTED. RELIA NCE WAS ALSO PLACED ON RATIO LAID DOWN IN CHHATTISGARH STEEL CASTING (P) LTD. VS . ACIT REPORTED IN 8 DTR 14 (BILASPUR). 25. WITH REGARD TO ISSUE NO.4 I.E. ADDITION ON ACCO UNT OF SUPPRESSED PRODUCTION WAS JUSTIFIED ON THE BASIS OF ELECTRICIT Y CONSUMPTION AND RELIANCE ON SEVERAL DECISIONS IN THIS REGARD, THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE STATED THAT THE VARIOUS REASONS FOR ERRATI C CONSUMPTION OF POWER WERE ALREADY EXPLAINED TO THE EXCISE DEPARTMENT AND THE ASSESSING OFFICER. FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE DISTINGUISHED THE RELIANCES PLACED UPON BY THE LD. SPECIAL AR ON SERI ES OF DECISIONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN MELTON INDIA V S. CIT IN CIVIL APPEAL NO.373 OF 2007, ORDER DATED 31.01.2007, TRIVENI RUB BER AND PLASTICS VS. COLLECTOR OF CENTRAL EXCISE, COCHIN IN CIVIL APPEAL NO.464 (NM) OF 1985, ORDER ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 25 DATED 30.03.1993, BASANT SINGH & ORS IN CIVIL APPEA LS NOS.19 & 20 OF 1963, ORDER DATED 02.08.1966, MAK DATA PVT. LTD. VS. CIT (2013) 358 ITR 593 (SC), SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC), ETC. THE CONTENTION OF THE ASSESSEE BEFORE US WAS THAT THE BOOKS OF ACCOUNT WE RE AUDITED AND ONLY FOR A LIMITED PERIOD, SOME EVIDENCE WAS FOUND AT THE PLAC E OF BROKER, I.E. THE ASSESSEE HAD SOLD SMALL QUANTITY OF GOODS FOR CASH AND WITHO UT PAYMENT OF DUTY, FOR WHICH THE ASSESSEE HAD GONE TO THE SETTLEMENT COMMISSION. THE SAID FACT WAS NOT RELEVANT FOR ASSUMING THAT THERE WAS CLANDESTINE RE MOVAL OF GOODS FROM ITS FACTORY IN THE SAME YEAR OR SUBSEQUENT YEARS. IN T HE ABSENCE OF ANY EVIDENCE PRODUCED BY THE REVENUE FOR PURCHASE OF RAW MATERIA LS, PAYMENT FOR PURCHASES, SALE OF CLANDESTINE GOODS, MODE OF PAYMENT, TRANSPO RTATION, ETC., WHICH IN TURN HAVE BEEN DEALT IN BY THE THIRD MEMBER IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. AND IN THE ABSENCE OF ANY SURROUNDING CIR CUMSTANCES AVAILABLE, THE RULE OF HUMAN PROBABILITY COULD NOT BE APPLIED. FURTHER , THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR HAVE BEEN CONSIDERED BY THE THIR D MEMBER OF CESTAT AND TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. AND THE ADDITION MADE IN THE HANDS OF ASSESSEE HAS BEEN DELETED AND HENCE, THERE IS NO ME RIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 26. COMING TO THE OBJECTIONS OF THE LD. SPECIAL AR WHETHER THE RATIO OF HONBLE CESTAT IN THE CASE OF R.A. CASTINGS PVT. LT D. (SUPRA) IS APPLICABLE TO THE PRESENT CASE, THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THIS WAS THE CASE OF ROLLING MILLS, WHERE THERE IS NO ORDER OF COMMISSIONER OF CENTRAL EXCISE AND CESTAT AND HENCE , THE SAID PROPOSITION IS NOT TO BE APPLIED. IT WAS POINTED OUT BY THE LEARN ED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT OTHER THAN THE QUANTITY WHICH WAS OFFERED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION AND AS WELL AS OFF ERED AS INCOME TO TAX I.E. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 26 GP ON THE SAME, THERE WAS NO EVIDENCE FOUND BY THE EXCISE DEPARTMENT OR THE IT DEPARTMENT FOR CLANDESTINE REMOVAL OF GOODS WITH OUT PAYMENT OF DUTY AND WHERE THE ADDITION FOR SUPPRESSED PRODUCTION WAS MA DE BY THE EXCISE DEPARTMENT ONLY ON THE BASIS OF ELECTRICITY CONSUMP TION, WHICH IN TURN, IS DELETED BY THE THIRD MEMBER OF CESTAT AND MERELY ON SUCH BA SIS, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY HIM THAT IN THE ABSENCE OF ANY EVIDENCE OTHER THAN SALE OF 285 MT A S COLLECTED BY EXCISE AUTHORITIES, NO ADDITION COULD BE MADE BY ESTIMATIN G THE SUPPRESSED PRODUCTION OR ITS SALE AND THERE WAS NO QUESTION OF QUANTIFYIN G THE PROFIT @ 4% ON SUPPRESSED PRODUCTION. IT WAS VEHEMENTLY STATED BY HIM THAT THE RATIO OF THIRD MEMBER OF CESTAT IS BINDING ON THE TRIBUNAL OR NOT WAS THE NEXT ISSUE RAISED BY THE LD. SPECIAL AR. THE ASSESSEE SUBMITTED THAT SINCE THIS WAS THE CASE OF ROLLING MILLS, WHERE THERE IS NO ORDER OF COMMISSIO NER OF CENTRAL EXCISE AND/OR CESTAT, HOWEVER, THE DECISION OF TRIBUNAL IN THE CA SE OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND RELEVANT FINDINGS, WHEREIN AL L DECISIONS OF HONBLE SUPREME COURT RELIED UPON BY THE LD. SPECIAL AR ARE DISCUSS ED, IS APPLICABLE. 27. ANOTHER PLEA RAISED BY THE LEARNED AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE WAS THAT THE LD. SPECIAL AR HAS ARGUED NUM BER OF THINGS WHICH ARE OUT OF CONTEXT. IT WAS POINTED OUT BY HIM THAT THE ISS UE HAS TO BE DECIDED ON THE BASIS OF FACTS COLLECTED AND FINDING GIVEN BY THE A SSESSING OFFICER AND ON THE BASIS OF FINDING GIVEN BY THE CIT(A). REFERENCE WA S MADE TO THE PARAWISE FINDINGS OF THE ASSESSMENT ORDER AND THE ORDER OF C IT(A) AND IT WAS POINTED OUT BY HIM THAT FROM BOTH THESE ORDERS, IT WAS CLEAR TH AT THEY HAVE RELIED ON THE ADMISSION MADE BY ASSESSEE OF 288.50 MT OF TMT BARS REMOVED WITHOUT PAYMENT OF EXCISE DUTY, FOR WHICH SETTLEMENT PETITI ON WAS FILED AND ON THE BASIS OF CONSUMPTION OF ELECTRICITY. REGARDING THE ADDIT ION ON THE BASIS OF SETTLEMENT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 27 PETITION, IT WAS SUBMITTED THAT THE ADDITION COULD BE MADE ONLY ON THE AMOUNT OF QUANTITY FOR WHICH THE ASSESSEE HAS FILED SETTLEMEN T PETITION AND IT COULD NOT BE EXTRAPOLATED FOR REMAINING PERIOD OF THE YEAR OR FO R EARLIER YEARS OR SUBSEQUENT YEARS. IN THIS REGARD, THE LEARNED AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE REFERRED TO THE VARIOUS DECISIONS RELIED UPON EARLI ER REGARDING ALLEGED SUPPRESSION OF PRODUCTION ON THE BASIS OF ELECTRICI TY CONSUMPTION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED O N THE DECISION OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND ON SERIES OF OTH ER DECISIONS WHICH HAVE BEEN CONSIDERED BY THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). REGARDING REJECTION OF BOOKS OF ACCOUNT, MERELY ON THE BASIS OF HIGHER CONSUMPTION OF ELECTRICITY, IT WAS POINTED OUT BY THE LEARNED AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE SAME WAS NOT JUSTIFIED AS THE ASS ESSING OFFICER HAS NOT RECORDED THE SATISFACTION AGAINST THE CORRECTNESS O R COMPLETENESS OF THE BOOKS OF ACCOUNT OF THE ASSESSEE OR WHETHER THE METHOD OF AC COUNTING HAS NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE. IN THE ABSENCE OF DEFECTS HAVING BEEN POINTED OUT BY BOTH THE ASSESSING OFFICER AND CIT(A ) IN THE BOOKS OF ACCOUNT, EXCEPT ELECTRICITY CONSUMPTION, THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT. RELIANCE WAS PLACED ON SERIES OF DECISION S IN THIS REGARD. 28. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE FURTHER POINTED OUT THAT THE HONBLE BOMBAY HIGH COURT IN ASSESSEE S OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 HAD DISMISSED THE APPEAL OF THE REVENUE AGAINST THE ADDITIONS MADE ON THE BASIS OF ELECTRICITY CONSUMPT ION VIS--VIS ASSESSEES APPEAL AGAINST ADOPTION OF SALE OF TWO DAYS FOR WOR KING OUT THE SALE OF 300 DAYS AND APPLICATION ON GP. THE HONBLE BOMBAY HIGH COU RT DID NOT DECIDE THE ISSUE, BUT DISMISSED THE APPEAL OF THE ASSESSEE. T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2006-07, ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 28 THERE WAS A SEARCH BY THE INCOME-TAX DEPARTMENT AND AT THE CONCLUSION OF WHICH EVIDENCE WAS COLLECTED AND EXTRAPOLATION OF SALE WA S WORKED OUT IN THE HANDS OF THE ASSESSEE. HOWEVER, IN THE PRESENT CASE BEFORE US, NO SUCH INVESTIGATION HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER OR ANY OF THE OTHER AUTHORITIES OF INCOME-TAX. THE ADDITION HAS BEEN MADE IN THE HAND S OF ASSESSEE BY THE ASSESSING OFFICER ON THE BASIS OF MATERIAL RECEIVED FROM EXCISE AUTHORITIES I.E. THE INFORMATION RECEIVED FROM THE DGCEI, AGAINST WH ICH THE ASSESSEE HAD FILED PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH IN TURN HAD ACCEPTED THE SURRENDER MADE BY THE ASSESSEE. IT WAS FURTHER POI NTED OUT BY HIM THAT IN ASSESSMENT YEAR 2008-09, THE ASSESSMENT HAS BEEN CO MPLETED UNDER SECTION 143(3) OF THE ACT AND THERE IS NO ISSUE OF REOPENIN G OF ASSESSMENT AND ALSO THERE IS NO ADMISSION OF CLANDESTINE REMOVABLE OF G OODS. ITA NOS.211 TO 213/PN/2012, A.YS. 2006-07 TO 2008-0 9 (BY ASSESSEE) : ITA NOS.432 TO 434/PN/2012, A.YS. 2006-07 TO 2008-0 9 (BY REVENUE) : 29. NOW, COMING TO THE FACTS IN CONNECTED CASE OF M /S ROOPAM STEEL ROLLING MILLS, WHEREIN ASSESSEE IS IN APPEAL AGAINST THE AS SESSMENT ORDERS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09. THE ORDERS PA SSED IN ASSESSMENT YEARS 2006-07 AND 2007-08 ARE UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WHEREAS THE ORDER PASSED IN ASSESSMENT YEAR 2008-09 IS UNDER SE CTION 143(3) OF THE ACT. 30. WE PROCEED TO ADJUDICATE THE ISSUE RAISED IN TH E PRESENT BUNCH OF APPEALS BY REFERRING TO THE FACTS IN ITA NO.211/PN/2012, WH EREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 14 7 OF THE INCOME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 29 IN NOT TAKING COGNIZANCE OF THE FACT THAT REASONS F OR RE-OPENING OF THE ASSESSMENT WERE NOT SUPPLIED TO THE APPELLANT COMPA NY, NEITHER ON RE-OPENING OF THE ASSESSMENT NOR AT THE STAGE OF AP PELLATE PROCEEDINGS BEFORE THE ID. C.I.T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS.3 5,47,80,518/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON THE BASIS OF THE CONSUMPTION OF ELECTRICITY AS PER U.S. STANDARD AND EVASION OF EXCISE DUTY BY TMT BARS MANUFACTURERS IN JALNA CLUS TER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON THE GROUNDS OF MONTHLY VARIATION IN CONSUMPTION PATTERN OF ELECTRICITY VIS-A-VIS PRODUCTION. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N HOLDING THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT FIRM ARE CORRECT LY REJECTED U/S 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR FINDI NG AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N MAKING AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIVING ANY SHOW CAUSE NOTICE TO THE APPELLANT FIRM TO EXPLAIN THE F ACTS AGAINST THE PROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGA INST THE RULES OF NATURAL JUSTICE. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROF IT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS.35,47,80,518/-. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN ESTIMATING UNDISCLOSED INVESTMENTS FOR UNDISCLOS ED PRODUCTION OF RS.34,11,351/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSI NG OFFICER U/S. 143(3) R.W.S. 147 IS VOID AND NOT VALID IN LAW AS THE SAME HAS BEEN PASSED WITHOUT ISSUE OF NOTICE U/S 143(2) OF THE I.T. ACT. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX A PPELLATE TRIBUNAL IN THE CASE OF M/S. SHREE OM ROLLING MILLS PVT. LTD. F OR ASSESSMENT YEARS 2000-01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHEREIN THE SIMILAR ADDITION WAS DELETED. 12. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER OR A MEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO O NE ANOTHER, AT THE TIME OF HEARING. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 30 31. THE REVENUE IN ITA NO.432/PN/2012 HAS RAISED FO LLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDESTINE REMO VAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUFAC TURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT I N THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODUCTION SHOWN IN THE B OOKS OF ACCOUNT? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY GROUNDS OF APPEAL. 32. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE AT THE OUTSET POINTED OUT THAT THE GROUND OF APPEAL NOS.1, 2 AND 10 AGAIN ST THE RE-OPENING OF THE ASSESSMENT AND NON-SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT ARE NOT PRESSED IN ASSESSMENT YEAR 2006-07 AND IN ASSESSMEN T YEAR 2007-08, GROUNDS OF APPEAL NO.1, 2 AND 9 ARE NOT PRESSED. 33. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER SUBMITTED A SYNOPSIS OF HIS ARGUMENTS AND A NOTE ON NON ADOPTIO N OF SUPPRESSED SALES FOR PART OF THE PERIOD FOR EXTRAPOLATING FOR THE FULL Y EAR AND OTHER YEARS. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURNISH ED WRITTEN ARGUMENTS AND ALSO ADDITIONAL SUBMISSIONS ABOUT NON-APPLICABILITY OF DECISION OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA). THE CONTENTION OF THE ASSESSEE BEFORE US WAS THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO T HE FACTS AS IN SHREE OM ROLLING MILLS AND EVEN THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER WAS ON THE SAME LINE AS PASSED IN SHREE OM ROLLING MILLS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED T HAT ASSESSEE HAD FILED SETTLEMENT PETITION BEFORE THE SETTLEMENT COMMISSIO N IN ASSESSMENT YEARS ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 31 2006-07 AND 2007-08. THE LD. AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE THEREAFTER TOOK US THROUGH THE ORDER OF THE ASSESSI NG OFFICER WHEREIN HE HAD QUANTIFIED THE CONSUMPTION OF ELECTRICITY ON US STA NDARD AND BY ADOPTING THE AVERAGE SALE PRICE AND AVERAGE COST OF RAW MATERIAL WORKED OUT THE BOOK PROFITS AND CONSEQUENT EXCESS PRODUCTION, WHICH IS NOT REFL ECTED IN THE BOOKS OF ACCOUNT. IT WAS FURTHER POINTED OUT BY THE LD. AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THOUGH WORKING CAPITAL REQUIRED FOR I NVESTMENT WAS QUANTIFIED BY THE ASSESSING OFFICER BUT NO ADDITION WAS MADE ON T HIS ACCOUNT. SIMILARLY, THE ASSESSING OFFICER HAD WORKED OUT THE DISALLOWANCE U NDER SECTION 40A(3) OF THE ACT BUT NO ADDITION WAS MADE ON THIS ACCOUNT. 34. IT WAS FURTHER POINTED OUT BY THE LD. AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE THAT THE CIT(A) VIDE PARA 7.3 HAD CONFIRME D THE QUANTUM OF SUPPRESSED PRODUCTION AND SALE THEREON AND BY APPLY ING A GP RATE OF 4%, HE HAD COMPUTED THE ADDITION IN THE HANDS OF THE ASSES SEE. FURTHER, THE CIT(A) VIDE PARA 8.6 HAD MADE ADDITION ON ACCOUNT OF THE W ORKING CAPITAL REQUIRED FOR INVESTMENT UNDER SECTION 69C OF THE ACT AT RS.34,11 ,351/-. IT WAS FURTHER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09 THERE WAS NO ADDITION MAD E IN THE HANDS OF THE ASSESSEE UNDER SECTION 69C OF THE ACT. IT WAS FURT HER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IT HAD DECLARED UNDISCLOSED SALES IN ITS SETTLEMENT PETITION FILED BEFORE THE S ETTLEMENT COMMISSION OF RS.21,74,229/- FOR ASSESSMENT YEAR 2006-07 AND RS.4 3,95,328/- FOR ASSESSMENT YEAR 2007-08. THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE FAIRLY POINTED OUT THAT THE GP RATE ON SUCH SUPPRESSED PRODUCTION AND SALE WAS NOT OFFERED TO TAX, HOWEVER, 4% GP RATE ON SUCH AMOUNT IS TO BE AD DED IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER CLARIFIED BY HIM THAT THE RE IS NO ORDER OF THE CENTRAL ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 32 EXCISE BUT THERE IS ONLY ORDER OF SETTLEMENT COMMIS SION. HOWEVER, THE ASSESSING OFFICER HAD MADE THE ADDITION IN THE HAND S OF THE ASSESSEE ON THE BASIS OF US STANDARD. WITH REGARD TO THE PLANK OF ARGUMENTS AS TO EXTRAPOLATION OF SALES ON THE BASIS OF SUPPRESSED SALES FOUND FOR PART OF THE PERIOD BY THE EXCISE DEPARTMENT, THE LD. AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE POINTED OUT THAT AFTER PASSING OF THE ORDER BY THE SETTLEME NT COMMISSION ON 12.12.2007, THE EXCISE COMMISSIONER HAS PASSED ORDER IN THE CAS E OF FURNACE COMPANY DATED 09.09.2009 AND IN RESPECT OF THE SAID SETTLEM ENT PETITION, THE EXCISE COMMISSIONER HAD OBSERVED IN PARA 19 IN THE CASE OF M/S. SRJ PEETY STEEL PVT. LTD. (SUPRA) THAT THE ASSESSEE IN ONE INSTANCE HAD APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED EVASION OF OFFENCE OF AN ID ENTICAL NATURE. THE THIRD MEMBER OF CESTAT AT PAGE 13 OF HIS ORDER HAD CONSID ERED THE ASPECT OF PROCEEDINGS, WHICH WERE SETTLED BY ACCEPTING THE AR GUMENT, THAT EACH HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERITS AND ALSO REFERRED TO PARA 19 OF THE ORDER OF THE EXCISE COMMISSIONER. IT WAS FU RTHER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA) HAD CONSIDERED THE FINDINGS OF CC E AND CESTAT IN PARA 20.1 OF THE ORDER AND DECIDED THE ISSUE AND THE SAID PARITY OF REASONING IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 35. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER SUBMITTED THAT WHERE THE ASSESSEE HAD FILED A SETTLEMENT PETITION FOR A PARTICULAR QUANTITY ONLY BEFORE THE EXCISE SETTLEMENT COMMISSION AND WHERE T HE DEPARTMENT HAS NOT PRODUCED ANY EVIDENCE IN RESPECT OF MORE QUANTITY O F SUPPRESSED SALES THAN THE QUANTITY DECLARED BY THE ASSESSEE AND WHERE THE SET TLEMENT COMMISSION HAD NOT REJECTED THE PETITION OF THE ASSESSEE NOR HAD C OME UP FOR SETTLEMENT OF MORE QUANTITY OF GOODS THAN THE DECLARED, THERE WAS NO Q UESTION OF EXTRAPOLATION OF ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 33 SALE BY THE INCOME TAX DEPARTMENT ON THE BASIS OF T HE SETTLEMENT PETITION BEFORE THE EXCISE AUTHORITY. ONCE THE ASSESSEE HAD PAID T HE EXCISE DUTY ON WHATEVER EVIDENCE WAS FOUND FOR SALE OF GOODS OUT OF BOOKS B Y THE EXCISE DEPARTMENT AND HAD ALSO OFFERED ADDITIONAL INCOME ON THE BASIS OF GROSS PROFIT ON THE AFORESAID SUPPRESSED SALES, THERE IS NO QUESTION OF ANY FURTH ER ADDITION. IT WAS FURTHER POINTED OUT BY THE ASSESSEE THAT IN SIMILAR CASES T HE ASSESSEE THEREIN HAD DECLARED ADDITIONAL INCOME ON ACCOUNT OF SALE OF GO ODS OUT OF BOOKS FOR SUBSEQUENT YEARS AND PAID THE EXCISE DUTY AS APPLIC ABLE AND ALSO DECLARED ADDITIONAL INCOME OF GROSS PROFIT ON THE SALE OF GO ODS NOT RECORDED IN BOOKS OF ACCOUNT, BUT HAD NOT GONE TO THE SETTLEMENT COMMISS ION. IT WAS VEHEMENTLY STATED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT SOME OF THE EVIDENCES WERE FOUND BY THE EXCISE DEPARTMENT, HOWE VER, THE INCOME TAX DEPARTMENT HAD NOT FOUND ANY EVIDENCE OF PRODUCTION AND SALE OUT OF BOOKS OF ACCOUNT AND ALSO NO INQUIRY OR INVESTIGATION ON THA T ISSUE WAS MADE BY THE INCOME TAX DEPARTMENT. THEREFORE, THE DEPARTMENT H AS NO IOTA OF EVIDENCE IN THEIR HANDS IN RESPECT OF SUPPRESSED PRODUCTION AND SALE OTHER THAN THE EVIDENCE COLLECTED BY THE EXCISE DEPARTMENT IN SOME OF THE Y EARS. FURTHER, REFERENCE WAS MADE TO THE ORDER OF THE THIRD MEMBER OF CESTAT IN SRJ PEETY STEEL PVT. LTD. (SUPRA) VIDE PARA 2.3 OF THE ORDER FOR THE ALLEGATI ON OF SUPPRESSED SALE AND PRODUCTION THERE SHOULD BE TANGIBLE AND DIRECT EVID ENCES AVAILABLE WITH THE DEPARTMENT AS UNDER :- A. RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREM ISES AND NON ACCOUNTING THEREOF IN THE STATUTORY RECORDS; B. UTILISATION OF SUCH RAW MATERIAL FOR CLANDESTINE MANUFACTURE OF FINISHED GOODS; C. MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOYED AND PAY MENT TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, DISCRE PANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 34 D. CLANDESTINE REMOVAL OF GOODS WITH REFERENCE TO E NTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOODS THEREIN, SEC URITY GATE RECORDS, TRANSPORTERS DOCUMENTS, SUCH AS L.R.S, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; E. AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT O F THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR AND ITS DISPOSAL. 36. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER POINTED OUT THAT THE ADDITION IF ANY IN THE HANDS OF THE ASSESS EE SHOULD BE MADE ON THE BASIS MATERIAL FOUND IN THE POSSESSION OF THE ASSESSEE AN D/OR ANY INQUIRY OR INVESTIGATION CARRIED OUT BY THE INCOME TAX DEPARTM ENT AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN ANY EXTRAPOLATION OF INCOME IN THE HANDS OF THE ASSESSEE. RELIANCE IN THIS REGARD WAS PLACED UPON THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS :- (I) CHHATTISGARH STEEL CASTING (P) LTD. VS. ACIT, 8 DTR (BILASPUR) 14; (II) ANJANEYA BRICK WORKS VS. CIT, 74 TTJ 921 (BAN GALORE-ITAT); (III) C.J. SHAH & CO., 246 ITR 671 (BOM.); AND, (IV) ANAND KUMAR DEEPAK KUMAR, 294 ITR 497 (DELHI) . 37. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE STRESSED THAT ONCE THE DECISIONS FOR A PARTICULAR ISSUE ARE AVAILABLE UNDER THE INCOME TAX ACT, THERE IS NO MERIT IN RELYING ON ANY DECISION UNDER ANY OT HER ACT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT WHILE ARGUING THE CASE OF SHREE OM ROLLING MILLS, THE LD. DEPARTMENTAL REP RESENTATIVE FOR THE REVENUE HAD RELIED ON THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS :- A. DR. M.K.E. MENON, 248 ITR 310 (BOM.); B. CIT VS. HOTEL MARIYA, 322 ITR 537 (KERALA); AND , C. CIT VS. CHETAN DAS LACHMAN DAS, 254 CTR 392 (DE LHI). ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 35 38. HE SUBMITTED THAT THE ABOVE-SAID RELIANCE IS NO T JUSTIFIED AND THE ISSUE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN C.J. SHAH & CO. (SUPRA) AND HONBLE DELHI HIGH COUR T IN ANAND KUMAR DEEPAK KUMAR (SUPRA). IN CONCLUSION, THE LD. AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE CASE OF ROLLING MI LLS I.E. IN THE CASE OF THE ASSESSEE BEFORE US, WHERE THERE IS NO ORDER OF COMM ISSIONER OF CENTRAL EXCISE, THE DEPARTMENT HAS RELIED ON THE ORDER OF SETTLEMEN T PETITION FILED BEFORE CENTRAL EXCISE SETTLEMENT COMMISSION AND THE ORDER PASSED B Y THE SETTLEMENT COMMISSION, WHICH WERE BASED ON FURNACE CASES AND I T WAS NOT JUSTIFIED TO RELY ON THE SAME. FURTHER, THE DEPARTMENT HAS RELIED ON THE CONSUMPTION OF ELECTRICITY ON THE BASIS OF US STANDARD WHICH IS AL SO NOT WARRANTED. IT WAS ALSO EXPLAINED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 HAD CONFIRMED T HE ADDITION OF GROSS PROFIT ON THE BASIS OF EVIDENCE FOUND IN SEARCH CONDUCTED BY THE INCOME TAX DEPARTMENT IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA) AND SHREE OM ROLLING MILLS PVT. LTD.. HOWEVER, IN THE SUBSEQUEN T YEARS I.E. ASSESSMENT YEARS 2007-08 TO 2009-10 AND ALSO IN OTHER CASES NO EVIDE NCE HAS BEEN FOUND BY THE INCOME TAX DEPARTMENT FOR PRODUCTION AND SALE OF GO ODS OUT OF BOOKS OF ACCOUNT. FURTHER, THE EXCISE DEPARTMENT HAD NOT TA KEN ANY COGNIZANCE OF EVIDENCE OF TWO DAYS SALE FOUND BY THE INCOME TAX D EPARTMENT IN ASSESSMENT YEAR 2006-07. IN THIS REGARD, RELIANCE WAS PLACED ON THE ORDER OF THE CESTAT BANGALORE DECISION IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD DATED 22.12.2010, WHEREIN IT WAS HELD THAT CERTAIN DOCUME NTS WERE FOUND BY THE INCOME TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZUR E ACTION WHICH INDICATED CLEARANCE AND SALES ON THE BASIS OF WHICH THE INCOM E TAX DEPARTMENT LEVIED TAXES ON ACCOUNT OF UNACCOUNTED SALES AND CLEARANCE ; THE SAID INFORMATION WAS SENT TO THE EXCISE DEPARTMENT AND ORDER WAS PASSED BY THE EXCISE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 36 COMMISSIONER FOR LEVY OF EXCISE DUTY ON THAT. THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT AS THE CENTRAL EXCISE DEP ARTMENT WERE NOT ABLE TO FIND ANY CORROBORATIVE EVIDENCE OF CLANDESTINE MANU FACTURE OF GOODS AND THEREFORE IT CANNOT BE SAID THAT THERE WAS CLANDEST INE REMOVAL OF GOODS. THE COPY OF THE SAID DECISION REPORTED IN 2011 (266) E. L.T. 399 (TRI.-BANG.) WAS FILED ON RECORD. IT WAS CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT ON SAME ANALOGY THE EVIDENCE FOUND BY THE EXCISE DEPARTMENT IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY FOR A PARTICULAR PERIOD COULD NOT BE RELIED UPON AS EVIDENCE IN THE INCOME TAX DEPART MENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONCLUDED BY STATIN G THAT THE ISSUE IN THE PRESENT CASE IS TO BE DECIDED ON THE BASIS OF FINDI NGS OF ASSESSING OFFICER AND THEN THE CIT(A) AND THE TRIBUNAL CANNOT TRAVEL BEYO ND AND WHILE PASSING THE ORDER THE TRIBUNAL CANNOT PROCEED ON ANY OTHER BASI S. 39. THE LD. SPECIAL AR, IN REPLY, STATED THAT THE S UBMISSIONS FILED IN SHREE OM ROLLING MILLS BE TREATED AS NOTES FILED IN THE P RESENT APPEAL ALSO. THE FIRST POINT RAISED BY THE LD. SPECIAL AR WAS THAT THE DEC ISION OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA) DECIDED ON 16.01.2015 IS NOT TO BE APPLIED AS IT HAD NOT CONSIDERED THE MATERIAL FACTS AND EVIDENCES ON RECORD ABOUT THE CLANDESTINE REMOVAL OF FINISHED PRODUCTS. AS PER THE LD. SPECI AL AR, THE SAID DECISION FALLS INTO THE CATEGORY OF SUB SILENTIO AND THUS LOOSES I TS BINDING EFFECT. HE REFERRED TO THE RELEVANT PAGES FROM THE BOOK SALMOND ON JURISPR UDENCE, XII ADDITION. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NA DU REPORTED IN 263 ITR 658 (SC). ANOTHER CONTENTION RAISED BY THE LD. SPECIAL AR WAS THAT WHERE THE ASSESSING OFFICER HAD TAXED THE ENTIRE SUPPRESSED S ALES AS INCOME OF THE ASSESSEE MAINLY BECAUSE ALL THE MANUFACTURING AND O THER EXPENSES WERE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 37 ALREADY BOOKED IN REGULAR BOOKS OF ACCOUNTS, HENCE, NO FURTHER DEDUCTION WAS NECESSARY. THE ACTION OF CIT(A) IN ESTIMATING THE GP @ 4% OF SUPPRESSED SALE OR ACTUAL, WHICHEVER IS MORE, WAS NOT CORRECT AS PE R THE LD. SPECIAL AR. THE CIT(A) HAD NOT GIVEN ANY COGENT AND RELEVANT REASON S IN SUPPORT OF HIS SAID DECISION BUT HAD SIMPLY RELIED UPON GENERAL PROPOSI TIONS WITHOUT CONSIDERING THE PECULIAR FACTS OF THE CASE. THE LD. SPECIAL AR STR ESSED THAT NO QUESTION OF ALLOWABILITY OF ADDITIONAL ELECTRICITY EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNT FOR PRODUCTION OF SUPPRESSED SALE ARISES AND SIMILAR IS THE CASE WITH OTHER MANUFACTURING EXPENSES. THE STATEMENT OF THE ASSES SEE THAT THE RAW MATERIAL REQUIRED FOR PRODUCTION OF SUPPRESSED TURNOVER WAS PURCHASED IN CASH WAS FOUND TO BE WITHOUT ANY BASIS AND SELF SERVING STATEMENT, BY THE LD. SPECIAL AR. IN THE SAID CIRCUMSTANCES, HE WAS OF THE VIEW THAT THE ORD ER OF THE ASSESSING OFFICER SHOULD BE UPHELD. EVEN OTHERWISE THE UNEXPLAINED E XPENDITURE ON ACCOUNT OF PURCHASE OF RAW MATERIAL SHOULD BE TAXED IN THE HAN DS OF THE ASSESSEE IN VIEW OF PROVISO TO SECTION 69C OF THE ACT. RELIANCE IN THI S REGARD WAS PLACED ON THE RATIO LAID DOWN IN VIJAY PROTEINS LTD. VS. ACIT REPORTED IN 58 ITD 428 (AHD). THE LD. SPECIAL AR BY WAY OF WRITTEN SUBMISSIONS HAS PROPOS ED THAT WHERE FOR THE RELEVANT YEAR THE EXCISE DUTY WAS 16% AND SALES TAX WAS 4%, AND SINCE THE ASSESSEE HAD RETAINED 50% OF EXCISE DUTY AND SALES TAX, THE PERCENTAGE OF GP WORKS OUT TO MORE THAN 42% AND HENCE THE REASONABLE GP SHOULD BE ESTIMATED @ 40% OF SUPPRESSED SALES. IN ALTERNATE SUBMISSION S MADE BY THE LD. SPECIAL AR FOR EXTRAPOLATION ON THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF M/S. SRJ PEETY STEEL PVT. LTD. (SUPRA), IT WAS FURTHER P OINTED OUT BY HIM IN THE WRITTEN NOTES THE ASSESSING OFFICER HAD CALCULATED THE SUPP RESSION OF SALES ON THE BASIS CONSUMPTION IN ELECTRICITY AND IF THE TRIBUNAL WAS OF THE OPINION THAT THE SAID METHOD EVOLVED BY THE ASSESSING OFFICER WAS NOT APP ROPRIATE, THEN THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 38 SUPPRESSION COULD BE ESTIMATED FOR 300 DAYS ON THE BASIS OF SUPPRESSION FOUND FOR FEW DAYS. 40. REPLYING TO THE SUBMISSIONS MADE BY THE LD. AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE THAT NO IOTA OF EVIDENCE WAS FOUND BY THE DEPARTMENT IN ORDER TO EXTRAPOLATE THE SALES FOR WHOLE OF THE YEARS, TH E LD. SPECIAL AR STATED THAT WHEN THERE IS EVIDENCE BEFORE THE EXCISE DEPARTMENT AND EVEN BEFORE THE INCOME TAX DEPARTMENT, THEN SUCH EXCERCISE COULD BE CARRIED OUT IN THE HANDS OF THE ASSESSEE. HE STRESSED THAT IT WAS NOT THE C ASE OF THE ASSESSEE THAT THERE WAS NO SUPPRESSION OF SALE. ON THE OTHER HAND, ASS ESSEE HAS SUBMITTED REVISED COMPUTATION OF INCOME ON THE BASIS OF THE PETITION FILED BEFORE THE SETTLEMENT COMMISSION OR THE EXCISE AUTHORITY. IN VIEW THEREO F, WHERE TWO EVIDENCES WERE AVAILABLE BEFORE THE ASSESSING OFFICER I.E. THE STA TEMENT AND ORDER OF THE EXCISE AUTHORITY AND THE INDEPENDENT EVIDENCE BY WAY OF RE VISED COMPUTATION OF INCOME, THEN IN SUCH CIRCUMSTANCES EXTRAPOLATION OF SALES WAS WARRANTED IN THE HANDS OF THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE SHOW-CAUSE NOTICE ISSUED BY THE EXCISE AUTHORITY UNDER WHICH AT PARA 3.2 AT PAGES 9 TO 11 THE PAPER BOOK, THE BROKERS HAD ADMITTED TO CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY AND THE NAME OF THE ASSESSEE WAS IN THE SAID LIST OF PERSONS. THE LD. SPECIAL AR REPEATED THE ARGUMENT THAT THE ASSESSEE CLAIMS THAT IT HAD FILED THE PETITION BEFORE THE SETTLEMEN T COMMISSION IN ORDER TO BUY PEACE OF MIND, BUT IN THE PETITION THERE WAS NO MEN TION OF PEACE OF MIND. OUR ATTENTION WAS DRAWN TO THE ORDER OF THE SETTLEMENT COMMISSION WHEREIN IT WAS OBSERVED BY THE BENCH THAT THE BENCH COULD NOT IGNO RE THE EVASION OF DUTY AND PENALTY OF RS.15,000/- WAS LEVIED AGAINST THE ASSES SEE. THIS, IN TURN, PROVED THAT THE ASSESSEE ACCEPTS THE FINDING OF THE SETTLE MENT COMMISSION AND IF THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 39 ASSESSEE HAS NOT CHALLENGED THIS FINDING OF THE SET TLEMENT COMMISSION THEN THAT MEANS THE ASSESSEE ACCEPTS ITS DEFAULT. 41. WITH REGARD TO THE NEXT PLEA OF THE ASSESSEE TH AT THE FINDING OF THE SETTLEMENT COMMISSION WAS NOT CHALLENGED BY THE EXC ISE AUTHORITY. THE LD. SPECIAL AR STATED THAT THE SAME COULD NOT BE VIEWED ADVERSELY WHILE ANALYZING THE ACTION OF THE ASSESSING OFFICER. IT WAS ADMITT ED BY THE LD. SPECIAL AR THAT THE COMMISSIONER OF EXCISE CAN ISSUE THE SHOW-CAUSE NOTICE VIS--VIS THE CONCRETE EVIDENCE FOUND AND ONLY TO THAT EXTENT THI S SHOW-CAUSE NOTICE COULD BE ISSUED TO THE PRESENT ASSESSEE. BUT UNDER THE INCO ME TAX ACT THE CODE IS SEPARATE AND INDEPENDENT WHEREIN THE ASSESSING OFFI CER HAS POWER TO WORK OUT THE EXTRAPOLATION ON THE BASIS OF EVIDENCE FOUND, T HERE SHOULD BE DIFFERENCE OF OPINION ON ITS WORKING AND IN THE CASE OF THE ASSES SEE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE CONSUMPTION OF EL ECTRICITY TO COMPUTE THE SUPPRESSION OF SALES IN HIS HANDS. 42. ON REASSEMBLE AFTER LUNCH, THE LD. SPECIAL AR P OINTED OUT THAT ALL THE TRIBUNALS WORKING UNDER DIFFERENT ACTS ARE INDEPEND ENT BODIES AND THE DECISION OF THE TRIBUNALS ARE BINDING ON THE AUTHORITIES BEL OW, WHICH IS A GENERAL PROPOSITION OF LAW. HE FURTHER POINTED OUT THAT IN THE PRESENT CASE THOUGH NO ORDER WAS PASSED BY THE EXCISE TRIBUNAL BUT HIS ARG UMENT WAS FOR THE BUNCH OF APPEALS. FURTHER, HE POINTED OUT THAT THE THIRD ME MBER OF CESTAT IN SRJ PEETY STEEL PVT. LTD. (SUPRA) TOOK A VIEW ON THE BASIS OF ELECTRICITY CONSUMPTION BUT THERE COULD BE OTHER CIRCUMSTANCES ON WHICH ADDITIO N COULD BE MADE IN THE HANDS OF THE ASSESSEE. IN CASE, THERE WERE TWO REA SONS AND WHERE THE ASSESSING OFFICER HAD TWO EVIDENCES I.E. ADMISSION BEFORE THE EXCISE AUTHORITY AND ADMISSION BEFORE THE INCOME TAX DEPARTMENT ON A CCOUNT OF ADMISSION OF ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 40 ADDITIONAL INCOME AND IN THE ABSENCE OF ANY PLAUSIB LE EXPLANATION FILED BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER HAD WO RKED ON THE DIRECT EVIDENCE ON THE STATEMENT OF THE ASSESSEE AND CIRCUMSTANTIAL EVIDENCE OF ELECTRICITY CONSUMPTION AND THE ADDITION WAS WARRANTED. 43. THE LD. SPECIAL AR THEREAFTER REFERRED TO THE S ERIES OF DECISIONS REFERRED TO WHILE ARGUING THE APPEAL IN SHREE OM ROLLING MIL LS PVT. LTD.. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SU PREME COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NADU (SUPRA), WHEREIN THERE WAS AN IDENTICAL PROPOSITION ADDRESSED BY THE HONBLE APEX COURT. HE FURTHER STRESSED THAT WHERE ALL THE EXPENSES WERE BOOKED IN THE BOOK S OF ACCOUNT, THERE IS NO MERIT IN ESTIMATION OF GP AT 4%. IN CONCLUSION, HE STATED THAT THE SUPPRESSION ESTIMATED IN THE HANDS OF THE ASSESSEE AT REASONABL E BASIS OR EXTRAPOLATION OF 300 DAYS AND GP OF 4% ADOPTED ON THAT BASIS. HE AL SO STATED THAT WHERE THERE WAS NO EVIDENCE OF SUPPRESSION OF SALES BUT IN LATE R YEARS CERTAIN EVIDENCES WERE AGAINST THE ASSESSEE THEN BACKWARD SUPPRESSION COULD BE EXTRAPOLATED. 44. IN REJOINDER, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO EVIDENCE BEFORE THE ASSESSING OFF ICER AND NO ADDITIONAL INCOME WAS OFFERED BEFORE THE ASSESSING OFFICER. T HOUGH THE ASSESSING OFFICER MENTIONED ONLY IN PARA 3 OF THE ASSESSMENT ORDER TH AT THE SETTLEMENT COMMISSION HAD INCORPORATED THE SHOW-CAUSE NOTICE I SSUED BY THE EXCISE AUTHORITY AND THAT WAS THE ONLY EVIDENCE AVAILABLE BEFORE THE ASSESSING OFFICER AGAINST THE ASSESSEE. IT WAS POINTED OUT BY THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSEE HAD COOPERATED W ITH THE EXCISE COMMISSIONER BY COMING FORWARD TO PAY THE DIFFERENT IAL DUTY AND BY NOT PRESSING THE LEGAL STAND IN THE SPIRIT OF SETTLEMENT AND WHE RE THE REVENUE HAS NOT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 41 CHALLENGED THE SETTLEMENT ORDER OF THE SETTLEMENT C OMMISSION, THERE IS NO MERIT IN ANY FURTHER ADDITION IN THE HANDS OF THE ASSESSE E. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER HAD RELIED ON THE ERRATIC ELECTRICITY CONSUMPTION TO WORK OUT THE ADD ITION IN THE HANDS OF THE ASSESSEE. HE DISAGREED THAT SETTLEMENT OF ADDITION AL INCOME IN LATER YEARS COULD BE THE BASIS FOR WORKING OUT THE EXTRAPOLATION, SIN CE EACH YEAR OR THE SEPARATE YEAR. IT WAS FURTHER EXPLAINED BY HIM THAT IN ASSE SSMENT YEAR 2006-07 PAPERS OF SALES OUTSIDE THE BOOKS WERE FOUND BY THE INCOME TA X DEPARTMENT AND ON THAT BASIS THE EXTRAPOLATION OF INCOME WAS MADE IN THE H ANDS OF SRJ PEETY STEEL PVT. LTD. (SUPRA). HOWEVER, IN THE CASE OF THE PRESENT ASSESSEE THERE WAS NO SEARCH BY THE INCOME TAX DEPARTMENT. FURTHER, NO PAPERS W ERE FOUND IN POSSESSION OF THE ASSESSEE BY THE INCOME TAX DEPARTMENT TO ASSUME THE SUPPRESSION OF SALES. THE DOCUMENTS FOUND IN THE SEARCH CONDUCTED BY THE EXCISE AUTHORITY COULD NOT BE RELIED UPON FOR MAKING THE ADDITION. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE CESTAT IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). HE FAIRLY ADMITTED THAT THE GRO SS PROFIT ON ADDITIONAL PRODUCTION SHOULD BE ASSESSED IN THE HANDS OF THE A SSESSEE AND WHERE THE SAME IS NOT DECLARED THEN THE SAME IS TO BE ADDED I N THE HANDS OF THE ASSESSEE. FURTHER, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE RELIANCE OF LD. SPECIAL AR ON THE RATIO LAID DOWN B Y THE HONBLE SUPREME COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NADU (SU PRA) IS MISPLACED AS SAME IS ON DIFFERENT FACTS AND OUR ATTENTION WAS DRAWN T O THE PAGES 660 TO 665 OF THE JUDGEMENT IN THIS REGARD. 45. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNO PSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLACED ON RECORD. WE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 42 HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIO NS RELIED ON BY BOTH THE PARTIES. 46. BEFORE ADDRESSING THE ISSUE ON MERITS, WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF THE PRESENT CAS ES LISTED BEFORE US, WHICH WERE MADE VIDE ORDER SHEET ENTRY DATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEARING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO A RGUE THE APPEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR S EEKING ADJOURNMENT I.E. CONTEMPLATION OF FILING MA AGAINST THE EARLIER ORDE RS OF THE TRIBUNAL, WAS REJECTED. THE APPEALS WERE ADJOURNED TO 13.03.2015 AND THEN 0 5.05.2015 AT THE REQUEST OF THE SPECIAL AR. ON 05.05.2015, THE COUNSEL FOR THE ASSESSEE OPENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR T HE REVENUE. ON 05.05.2015 ITSELF, THE SPECIAL AR FILED WRITTEN SUBMISSIONS AL ONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURNED TO 07.05.2015 FOR FURT HER HEARING. ON 07.05.2015, THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH BY THE SPECIAL AR FOR THE REVENUE. THE COUNSEL FOR THE AS SESSEE STRONGLY OPPOSED THE SAME ON THE GROUND THAT THE SPECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DATE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE-LUNCH HOU R SESSION AND IT WAS DIRECTED THAT THE HEARING WOULD CONTINUE AT 03:00 PM I.E. AF TER THE LUNCH HOUR TO WHICH BOTH THE PARTIES CONSENTED. ON REASSEMBLING OF THE BENCH, THE SPECIAL AR FOR THE REVENUE FURNISHED LETTER UNDER HIS SIGNATURE ST ATING THAT THE PR.CIT, AURANGABAD WAS CONTEMPLATING TO FILE CERTAIN PETITI ONS BEFORE THE HONBLE PRESIDENT/VICE PRESIDENT, ITAT, MUMBAI AND THEREFOR E THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PETITION ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 43 CONTEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FO R THE REVENUE WAS ASKED TO CONTINUE HIS ARGUMENTS BY THE BENCH, BUT HE REFE RRED TO HIS ADJOURNMENT LETTER. 47. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COURT ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN REPLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH WERE GON E INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FOR THE RE VENUE LEFT THE COURT PROCEEDINGS, ON THE OTHER HAND, SMT. M.S. VERMA, LD . CIT-DR AND SHRI RAJESH DAMOR, LD. ADDL.CIT-DR WERE PRESENT IN THE COURT. THEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. A DDL.CIT-DR WERE TAKEN UP FOR HEARING AND THE MATTERS IN ITA NOS.125, 127, 43 0 & 431/PN/2012 ALONG WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012, ITA NOS.1 79 TO 182/PN/2012, ITA NOS.656 TO 659/PN/2012, ITA NO.1084/PN/2012, ITA NO .1468/PN/2012, ITA NO.1558/PN/2012, ITA NO.1629/PN/2012, ITA NO.1516/P N/2012 AND ITA NO.1638/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 AS PART HEARD. 48. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FI ND THAT THE SPECIAL AR FOR THE REVENUE IS NOT PRESENT IN THE COURT AND THERE I S NO INTIMATION ABOUT HIS ABSENCE IN THE BUNCH OF MATTERS, WHICH ARE LISTED F OR HEARING. THE CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN R EPLY SHE STATED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIANCE OF TH E SPECIAL AR IN YESTERDAYS HEARING AND HIS NON-APPEARANCE IN TODAYS HEARING, CONDUCT OF THE SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED IN TH E BENCH AS TO WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CON TINUED DEFIANCE AND FOR ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 44 INTERRUPTING PROCEEDINGS OF THE BENCH. THE HEARING IS TO CONTINUE IN THE LISTED MATTERS AS ANNEXED ON 13.05.2015 AS PART-HEARD. 49. ON 13.05.2015, SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-D R & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. THE MATTER WAS FI NALLY HEARD ON 14.05.2015 WHEN SHRI J.P. BAIRAGRA PRESENT FOR THE ASSESSEE AN D SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH D AMOR WERE PRESENT FOR THE DEPARTMENT. 50. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSEE ARE FOUR-FOLD ON THE FOLLOWI NG ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NO N-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS A ND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JAL NA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS; AND WORKING OUT THE ADDITION BY APPLYING GP RATE OF 4% ON THE ALLEG ED SUPPRESSION OF SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER S ECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHA SES RELATING TO SUPPRESSION OF SALE. 51. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE TOT AL SUPPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDU LGING IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXC ISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN- ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OF FICER. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 45 52. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WI TH WRITTEN SUBMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAW S RELIED UPON BY THE RESPECTIVE AUTHORIZED REPRESENTATIVES. IT MAY BE P UT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE REL ATABLE TO THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EV ASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 53. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFFERENT ISSUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS COMPLETED UNDER SECTION 143 (3) R.W.S. 148 OF THE ACT, THE ASSESSEE HAS RAISED THE ISSUE AGAINST RE-OPENIN G OF ASSESSMENT, NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 AND ALS O NON-SERVICE OF NOTICE UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SEC TION 147 OF THE ACT. HOWEVER, IN SOME CASES, THE ASSESSMENT HAS BEEN COMPLETED UN DER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE-OPENING OF T HE ASSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE P RESENT BUNCH OF APPEALS RELATING TO SHREE OM ROLLING MILLS AT THE OUTSET ST ATED THAT THE GROUNDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE-OPENING OF THE AS SESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECT ION 147 OF THE ACT, ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESS ED. 54. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRO DUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUP PRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPPRESSE D PRODUCTION ON ACCOUNT OF ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 46 ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PAR TIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRI BUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO THE DECISION OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIONS OF BOTH THE AUTHORIZED REPRES ENTATIVES. 55. WHILE ARGUING THE APPEALS IN THE LEAD CASE OF S HREE OM ROLLING MILLS PVT. LTD. ON 05.05.2015, THE LD. SPECIAL AR FILED WRITTE N NOTE AND MADE ELABORATE SUBMISSIONS AND TOOK US THROUGH THE PAGE TO PAGE OF NOTE AND ALSO RELIED ON SERIES OF CASE LAWS. HE CONTINUED HIS ARGUMENTS IN THE PRE-LUNCH HOUR ON 07.05.2015. ON THE PERUSAL OF THE WRITTEN NOTE FIL ED BY THE LD. SPECIAL AR AND ON COMPARISON OF THE SAID WRITTEN NOTE WITH THE WRI TTEN NOTE DATED 05.11.2014 FILED BY HIM BEFORE THE TRIBUNAL IN THE CASE OF M/S . SRJ PEETY STEELS PVT. LTD., (SUPRA) WHICH IS A SISTER CONCERN OF SHREE OM ROLLI NG MILLS PVT. LTD., WE FIND THAT THE SAME ARE IDENTICAL. WE CALLED FOR APPEAL FOLDE R OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND FOUND THAT THE ARGUMENTS RAISED BY THE LD. SPECIAL AR IN THE CASE OF THE PRESENT ASSESSEE BEFORE US WERE REPEATE D BY THE LD. SPECIAL AR. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS IDE NTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) . HOWEVER, THE LD. SPECIAL AR STRESSED THAT THE ISSUE WAS AT VARIANCE AND MADE EL ABORATE SUBMISSIONS. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEETY STEELS PVT. LT D. (SUPRA) IS A CASE OF FURNACE, WHICH IS ENGAGED IN THE MANUFACTURE OF ING OTS / BILLETS, WHEREAS MANUFACTURING OF TMT BARS IS CARRIED OUT BY SHREE O M ROLLING MILLS PVT. LTD. BY USING INGOTS / BILLETS. IN THE CASE OF M/S. SRJ PE ETY STEELS PVT. LTD. (SUPRA), THERE WAS AN ORDER OF CENTRAL EXCISE COMMISSIONER, AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CON SUMPTION OF ELECTRICITY. THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 47 ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER OF CESTAT DELETED THE A DDITION MADE IN THE HANDS OF RESPECTIVE FURNACE CASES. HOWEVER, IN THE CASE OF THE ASSESSEE BEFORE US, THERE IS NO ORDER OF CCE, AURANGABAD AND THERE IS NO ORDER OF CESTAT. IN SOME OF THE YEARS, THE OWNERS OF ROLLING MILLS ON T HE BASIS OF CERTAIN INFORMATION GATHERED BY THE DGCEI HAD MOVED A PETITION BEFORE T HE SETTLEMENT COMMISSION AND OFFERED ADDITIONAL INCOME, WHICH WAS ACCEPTED B Y THE SETTLEMENT COMMISSION IN ENTIRETY. IN SOME CASES, SUCH OFFER OF ADDITIONAL INCOME WAS BEFORE THE EXCISE AUTHORITIES, WHO IN TURN, ACCEPTE D THE SAME. THE ASSESSING OFFICER IN THE CASE OF ROLLING MILLS I.E. IN THE HA NDS OF THE ASSESSEE BEFORE US WAS OF THE VIEW THAT BECAUSE OF ERRATIC CONSUMPTION OF ELECTRICITY, IN TURN, RELYING ON THE DATA OF CONSUMPTION OF ELECTRICITY AS PER US ST ANDARDS, CAME TO THE CONCLUSION THAT THERE WAS SUPPRESSION OF PRODUCTION BY THE TMT BARS MANUFACTURERS IN JALNA CLUSTER ON THE GROUND OF VAR IANCE IN CONSUMPTION OF ELECTRICITY VERSUS PRODUCTION. THE ASSESSING OFFIC ER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING ON THE ADDITION MADE IN THE HAND S OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), IN TURN, ON THE BASIS OF THE ORD ER OF CCE, AURANGABAD, MADE ADDITIONS IN THE HANDS OF PRESENT SET OF ASSESSES B EFORE US. 56. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/S. SRJ PEETY STE ELS PVT. LTD., ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IN TURN, WAS THE BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE THEREIN BY C CE, AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THAT SINCE THE ORDER OF THE CCE, AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. THE OTHER ASPECTS OF THE ISSUE THAT THE ASSESSEE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 48 THEREIN HAD MADE THE PETITION BEFORE SETTLEMENT COM MISSION IN RESPECT OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF AN Y INQUIRY / INVESTIGATION OR MATERIAL COLLECTED BY THE ASSESSING OFFICER, THE TR IBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-08. FURTHER, IN ASSESSMENT YEAR 2008-09, THERE WAS NO A DMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER E VIDENCE BEING BROUGHT ON RECORD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRA NTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SR J PEETY STEELS PVT. LTD. WAS SUMMARIZED UNDER PARA 9, WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDI NG OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOME REASO NABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORD INGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES AND ACCORDINGLY, PARTLY SUSTAINED THE ADDITIONS. NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39,20,36 ,546/- IN THE A.Y. 2007-08 AND RS.40,75,72,486/- IN THE A.Y. 2008-09 ON ALLEGED SU PPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT P ICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJEC TED. 57. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSIONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE REJOINDE R OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, THE TRIB UNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNO PSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT ON 05- 11-2014 WHICH ARE PLACED ON ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 49 RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHILE COMPLE TING THE ASSESSMENT U/S. 143(3) OF THE ACT, IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICITY CONSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGHER SID E AS COMPARED TO THE QUANTUM OF PRODUCTION DECLARED BY THE ASSESSEE. TH E ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE AL LEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILL ETS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE O F THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WELL AS ADJUDICATI ON ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INITIATED THE RE-ASSESSMENT PROCE EDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF THE ACT. I N REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE A SSESSEE COMPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OFFICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEIVED FROM THE CENTR AL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGENCE) AGAINST THE FEW BROKERS AND SUB- BROKERS WHO WERE INVOLVED IN THE TRADING INTO THE I NGOT/BILLETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFORE THE CENTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION , MUMBAI BENCH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETTING IMM UNITY FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED S UPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFO RMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATIO N ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN T HIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GRO UP COMPANIES BY THE INCOME- TAX DEPT. ON 17-03-2006 AND IN CONSEQUENCE OF THE S EARCH AND SEIZURE ACTION U/S. 132(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BE EN FRAMED U/S. 153A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 2006-07. IT IS ALS O PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRI MINATING EVIDENCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SUPPRESSED THE PRO DUCTION AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST TH E ASSESSEE U/S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER REFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIG H COURT AND CERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAM ED BY THE ASSESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS . 2007-08 AND 2008-09 BEFORE US ARE IMMEDIATELY NEXT ASSESSMENT YEARS AFTER THE ASS ESSMENTS IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION OR ANY ENQUIR Y IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX AUTHORITIES. IN TH E ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON T HE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING B EFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI. THE INVESTIGATION WAS CARRIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGCEI, AGAIN ST FEW BROKERS/SUB-BROKERS AND THOSE BROKERS GAVE THE NAMES OF MANY COMPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TMT BARS. AS PE R THE STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITIES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI ANIL D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED THAT THEY WERE INVOLVED IN CLEARING THE CO NSIGNMENTS FROM THE FACTORY ON ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 50 WEIGHMENT SLIPS ONLY AND NO EXCISE DUTY WAS PAID AN D THEY WERE INVOLVED IN PROVIDING FAKE TRADING BILLS AND CHALLANS WHICH ACC OMPANIED THE VEHICLES CARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOP TED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHA LLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFIC ER THOSE BROKERS/SUB-BROKERS ALSO ADMITTED THAT THE ENTIRE EVIDENCE WAS DESTROYE D BY THEM AND THEY USED TO GET THE COMMISSION OF RS.100/- PER MT. THE ASSESSI NG OFFICER HAS DISCUSSED THE INFORMATION GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA NOS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORD ER. SO FAR AS ACTION AGAINST THE BROKERS AND SUB-BROKERS ARE CONCERNED THE CENTRAL E XCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACT URERS WHO WERE INVOLVED IN CLEARING THE EXCISABLE GOODS WITHOUT PAYMENT OF DUT Y. ALL THE MANUFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIES, THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUP PLIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MAN UFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF S HRI SURENDRA S. PEETY, MANAGING DIRECTOR OF THE ASSESSEE RECORDED ON 12-01 -2007, BY THE DGCEI WHO ALLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. INGOTS/ BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SA LE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT. LTD. AND HENCE, THE RE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EX CISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMENT COMMISSION AND PAID T HE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/- FOR CLEARING THE GOODS WITH OUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AUTHORITIE S. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN T HE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONCERNED WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF T HE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS G IVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING O FFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDI A INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TE CHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN IN DUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CH ARGE USED. THE ASSESSING OFFICER ALSO REFERRED TO THE TECHNICAL REPORT OF TH E IIT, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS W HERE MELTING SCRAP IS USED AS AN INPUT, VARIES FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSMENT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONSIDERING THE ELECTRICITY CONSUMPTION DECLARED BY THE ASSESSEE AND THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH RE ASONABLE, FAIR AND JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE O F CALCULATION OF ALLEGED UNACCOUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVING THE REA SON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 51 SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AU RANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS S UPPRESSED THE PRODUCTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTION O F THE A.Y. 2007-08 AS UNDER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT IN THE ORDER DATED 31-12-2008 AND MADE THE NET ADDITION OF RS.30,76,35 ,042/-. SO FAR AS A.Y. 2008-09 IS CONCERNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008-09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN TH OUGH IN THE A.Y. 2008-09, THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, BUT FINALLY THE A SSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CE NTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETERMINED IN THE ADJUD ICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC O F POWER CONSUMPTION. IN THE COMPUTATION FOR THE A.Y. 2008-09 THE ASSESSING OFFI CER MADE THE MISTAKES BY MENTIONING RS. (-) 1,91,62,000/- AS PER THE ORDER U /S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008-09. 58. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE , THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSING OFFICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERMINED BY THE CCE, AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY. THE B ASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFES SOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CASES OF FURNACE OWNER S HELD THAT THE ORDER OF CCE, AURANGABAD WAS NOT SUSTAINABLE AND HAD TO BE C ANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA). TH E RELEVANT FINDING OF THE TRIBUNAL IN TURN, INCORPORATING THE ORDER OF THIRD MEMBER OF CESTAT IN PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE P RODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND C USTOM, AURANGABAD ON THE BASIS OF POWER CONSUMPTION. THE COPY OF THE ADJUDI CATION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVI CE TAX, AURANGABAD DATED 28-08-2009 (IN SHORT REFERRED TO AS THE CCE ) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. TH E CCE, AURANGABAD HAS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BI LLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY T HE ASSESSEE TOWARDS THE COST ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 52 OF POWER CONSUMPTION (PRIMARY INPUT). HE HAS FURTH ER OBSERVED THAT FROM THE SCRUTINY OF THE VARIOUS RECORDS, THE COST OF PRODUC TION IS MUCH MORE THAN COST OF SALE VALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSE S LIKE STORES, WAGES, SALARIES, COST OF MAINTENANCE ETC. THE LD. COMMISS IONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLO GY (IIT), KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHNICAL OPINION RE PORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE METRIC TON OF ST EEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL E FFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MIX OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEIR ELECTRICITY BILLS, THE AVERAG E CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 T O 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODUCTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 UNITS (MAXIMUM LIMIT) OF ELECTR ICITY FOR PER MT OF MS INGOTS PRODUCED, IT IS NOTICED THAT THERE IS A HUGE DIFFER ENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEE S RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFUL LY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WI TH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED THEMSELVES I N THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER AL SO REFERRED TO NON- MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION R ECORD MORE PARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER. HE HAS ALSO RECO RDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMAN DED THE CROSS EXAMINATION OF DR. N.K. BATRA, PROFESSOR OF IIT, KA NPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABAD. THE LD. COMMISSI ONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROS S EXAMINATION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AND REFERRED TO TH E DIFFERENT DECISIONS OF THE TRIBUNAL. THE LD. COMMISSIONER ALSO RELIED ON THE INVESTIGATION MADE BY THE DGCEI AND SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED T HE EVASION AND PAID THE EXCISE DUTY AND OBTAINED IMMUNITY FROM CRIMINAL PRO CEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DEMAND RAISED IN THE SHO W CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXTENT OF RS.33,07,22,069 /-. 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENT RAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEMBERS OF THE CESTAT, I.E. LD. VICE- PRESIDENT AND LD. TECHNICAL MEMBER AND THE MATTER W AS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTINGS PVT. L TD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRI VENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNALS DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STEEL (SUPRA) AND HANS CASTINGS PVT . LTD. (SUPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDER PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE A ND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 53 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY AP PLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICIT Y CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVER AGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIFICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GO BINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATE D 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL MAKING [THUS NOT F OR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUMPTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM AGREEING-., W ITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION AND INFORMING THAT I T IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMPTION. 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICITY CO NSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOW ING DIFFERENT REPORTS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT C OMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI , GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIV E DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CC E, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED F OR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS RENDERS THE N ORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FIN DING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS B EEN DISMISSED, ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 54 THERE WAS NO REASON FOR THE COMMISSIONER IN THE INS TANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PER REPORT OF D R. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTE D BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REPORTED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITH OUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKE RS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DE POSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS SUCH BEC AUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTROVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PRE MISES, AND NON-ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLO YED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECOR DS OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIAL S AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF G OODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUC H AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT C HECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIG NOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVID ENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE , NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMITTED TO J USTIFY THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTA NT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLAN ATION, ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 55 B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CAS ES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FIN DINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CH ALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVE LLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (S UPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO O N DIFFERENT DATES TO ADOPT-THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW T HAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BAS IS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BE EN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACT ORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPTED AS A N ORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESE NT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER CANNOT B E PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIA TE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY O F THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DAT ES TO ADOPT THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHIC H CAN BE ADOPTED FOR FUTURE. THE IMPUGNED DEMAND BASED MERELY ON ASS UMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NO R COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF A LLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT I T ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF A NY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ON US, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLANDESTINE C LEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRI CITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY-'FROM REPORT O F DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNA L IN RA CASTING (SUPRA). THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO OTHER EVIDENCE IN THE I NSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, TH E DEMAND, IT IS CONTENDED BY REVENUE THAT FURNACES INSTALLED IN THE FACTORY OF PRESENT A PPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA), HOWE VER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO RELY ON AN ORDER ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 56 PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LT D., V/S. CCE, HYDERABAD-II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CON TENTION OF THE DEPARTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO P ROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF T HE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1 546 (SC), RELIED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER ( TECHNICAL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJ UDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS D EFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBAB ILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND A SSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTU RING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLAN TS, I AM OF THE VIEW THAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOW ER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PERIOD. I ALSO AG REE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTION. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTI ON UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FUR NACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECT RIC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGN ED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPTION IN IN DUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECORD. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA) IS SQUAREL Y APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSI ONER TRADE TAX, U.P, - 2007-TIOL-14-SC-CT, THE JUDGMENT OF THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIO NER OF INCOME TAX, 2014-TIOL-203-HC-AHM-IT, AND AN UNREPORTED ORDER DT D. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BE NCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STAT E OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR T HE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000- 01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS WAS FOLLO WED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CASE ARE THAT FOR THE ASSE SSMENT YEAR 2005-06, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS, NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PRODUCTIVITY AS COMPARED TO THA T IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN-PROGRESS IN THE BOOKS OF ACCOUNTS. I AM THEREFORE OF THE OPI NION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDINGS RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RE LIED FOR ARRIVING AT DEEMED PRODUCTION. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 57 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI-BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTIO N WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONS IDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND SILK MILLS (SUPRA), AS ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS, 2012 (275) E. L.T. 232 (TRI. - DEL.) THE TRIBUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVI DENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REM OVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON 'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SU PRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CAS E IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDE R IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HER E THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKERS AND IN CONSEQUENCE THE SHOW CAUSE NOTICES (SCN) WERE IS SUED TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIE S CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY. HENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BROKERS AND SUB-BROKERS REFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AURAN GABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSM ENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 2008-09, THE ASSESSIN G OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AU THORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007-08. AS VARY BASI S OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CC E), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINI ON THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SAL ES HAVE NO LEGAL LEGS TO STAND. 59. THE TRIBUNAL THEREAFTER, DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. TECHNICAL MEMBER OF CESTAT WAS A LEGAL ORDER. THIS PLEA OF THE LD. SPECIAL AR WAS REJECTE D BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 60. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CASE O F SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDE R HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING T HE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VID E PARA 19. THE RELEVANT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 58 OBSERVATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEE LS PVT. LTD. (SUPRA) WERE AS UNDER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMEN T COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPAN IES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BASIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BROKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAU SE NOTICE WAS ISSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANGABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DET ERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS U NDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE I NVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMEN T COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE H AS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FINDINGS IN THIS C ASE ARE BASED ONLY ON MATERIAL AND EVIDENCE THAT HAVE BEEN BROUGHT ON REC ORD IN THE INSTANT CASE. 61. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION RECEIVED FRO M THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY THE THIRD MEMB ER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATION FOR ASSESSM ENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PARA 21 THAT THE INVESTIGA TION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION WERE C ONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER, WHICH IN TURN, WAS THE SUBJ ECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET-ASIDE, HENCE, IT WAS NOT NE CESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR, WHICH ARE IN THE CONTEXT OF ADMISSION OF THE DIRECTOR IN THE COURSE OF INVESTIG ATION MADE BY THE DGCEI. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 59 62. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRI BUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGU MENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF CESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER R EADS AS UNDER:- 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICU LARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON-SEC. 17, SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MADE BY THE REVENUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMAT ION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATI ON ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVE R, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HA S BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE, FOUND ATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 2008-09 DO NOT EXIST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER O F THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDE R GETS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CAS E IS CESTAT. MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SE TTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. HENCE, WE DO NOT CONSIDER IT NECESSARY TO D EAL WITH DECISIONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF A DMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS AR E NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICITY CONSUMPTION, THE SAID ISSUE WAS ALS O BEFORE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGAB AD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MU MBAI BENCH, MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UND ER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS RE VISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER IS RIGHT OR WRON G. 63. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIBUNAL (INCOME-TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER WAS RIGHT OR WRONG. 64. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAIN ST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UNDER SECTION 1 53A R.W.S. 143(3) OF THE ACT. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 60 THE ASSESSEE THEREIN I.E. M/S. SRJ PEETY STEELS PVT . LTD. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL I S REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LT D. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS REL ATING TO ASSESSMENT YEARS 2000-01 TO 2006-07 UNDER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SEIZURE, IT WAS ALSO HE LD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGO TS / BILLETS DEPENDING ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE TH E ASSESSEE THAT IT HAD SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOU NTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BE FORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED B Y COMMON ORDER DATED 10.02.2014 IN THE CASE OF ASSESSEE AND OTHER COMPAN IES BY THE HONBLE BOMBAY HIGH COURT AND THERE WERE OBSERVATIONS ON THE ESTIM ATION OF PRODUCTION BASED ON THE CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WH ILE DECIDING THE APPEAL OF M/S. SRJ PEETY STEELS PVT. LTD. IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT I N THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS CARRI ED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE AS SESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W. S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSU MPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASI S OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED INCOM E IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNITS A S CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE ASSESSI NG OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MA DE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OFFICER HAD SIMPLY TAKEN THE LOWEST ELECTRICITY CON SUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRO DUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE A LLEGED CONCEALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERVATIONS AND FINDIN GS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WE LL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 20 00-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOM PANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 61 DURING THE COURSE OF SEARCH NO INCRIMINATING MATERI ALS WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTIO N OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPO RT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCTION OF EACH YEAR WHICH WE RE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICITY CONSUMPTION WHICH HAS BEEN PLACED BEFOR E THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000- 01 24331059 18,524.239 1313 2001- 02 25528565 17,010.558 1501 2002- 03 31404354 19,709.654 1593 2003- 04 31623843 20,396.313 1550 2004- 05 43123824 23,240.189 1856 2005- 06 62650888 29,582.434 2118 2006- 07 70440580 36,017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL DETAILS REGARDING ELECTRICITY VIS- A-VIS PRODUCTION WERE BEFORE THE DEPARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME, IT COULD HAVE BEEN RAISE D DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS U NDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN TH E COURSE OF SEARCH RELATING TO ANY OF THESE ASSESSMENT YEARS, THE ASSE SSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005-06 ARE NOT C ORRESPONDING TO THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NO RMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREADY ON RECORD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUC H COULD BE SAID TO BE PENDING ON THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PROVISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO I S NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE NO ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 62 METHOD OF ACCOUNTING PROVIDED IN SUB-S. (1) OR ACCO UNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANN ER PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE B OOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPEC TS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL THE YEARS UNDER CONSIDERATION, THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS O F ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME FOR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE R ATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELEC TRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO-CALLED SUPP RESSED PRODUCTION IS NOT JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME . 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUAL ITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, POWER IN TERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSIT ION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILL ETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMPT TO ESTAB LISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONCLUSION THAT THE RE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNT ED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASS T. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF T HE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. Y R. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE AS SESSEE COMPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THEREFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEE N DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF S. 14 4 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CO NSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT TH E ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUC TION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE TH E HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S . 260A OF THE INCOME-TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUE S APPEAL WAS DISMISSED ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 63 VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE C ATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEAR CH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 HAD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE SA ID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE R EVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UNIT PRODUCTION OF E ACH YEAR, WHICH WAS ACCEPTED YEAR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. THE FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL REFERS TO A DETAI LED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT, WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S . 153A OF THE ACT. THE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURING THE COU RSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETU RNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN IN TO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE A LLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUE NCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUM ENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN C ONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAIN S THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINST THE ASSESSEE FO R ALLEGED SUPPRESSION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE O F THE FACT THAT IN A.YS. 2007-08 AND 2008-09, NO INVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH ARE IMMEDIATE NEXT ASSESSMENT YEARS AFTER THE SEARCH AN D SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOV E FINDINGS AND OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT A RE ALSO IMPORTANT TO DECIDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY. 65. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09, NO INVESTIGATION WAS DONE BY T HE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATELY PR ECEDING YEAR, WHEREIN DURING ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 64 THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOU ND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING TH E APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF A LLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSER VATIONS OF THE TRIBUNAL ARE AS UNDER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PR ODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION REC EIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBU NAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX AP PELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF T HE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED ON RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXC ISE & SERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL AS PECTS OF THE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICI TY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH POWER CONNEC TION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RES ULTED IN HIGHER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY TH E CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT S O FAR AS THE PRODUCTION QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDING THE O UTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLAT E TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION TO THE DETRI MENT OF JUSTICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FU RTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSE E COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LA W AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON REC ORD TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDEST INE REMOVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STAND. BOTH THE APPEALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL R ELIEF, IF ANY.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY THE HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A- 108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CASE WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTME NT AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAID IN VESTIGATING TEAM. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 65 THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT O F THE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNA L (SUPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS C ATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PR OVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PU RCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID FINDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE 'S OWN CASE THERE IS NO MERIT IN ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AN D ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THE REOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCO UNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVA TIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE AS SESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF I TS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUNT. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 AND 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGI NG DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDE R OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIFICAT ION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIG HT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY TH E ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASSESSMENT YEAR S BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE BAS IS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURING OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE ADDITIONS MADE TOWARDS THE ALLEGED SUPPRESSION OF PRODUCTION AND SALES AT ENTIRETY AND ALLOW THE GROU ND NOS. 3, 4, 5, 6 & 8 IN THE A.Y. 2007-08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2008-09. 66. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GROSS PROFIT TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FI NDING THAT SINCE THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE HAVE BEEN DELETED , THERE WAS NO MERIT IN ANY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RE SPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETERMINED ON THE BASIS OF THE ADJUDICATI ON ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTR ICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPINION OF DR. BATRA, IIT, KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSE SSING OFFICER. WE HAVE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 66 ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUS TIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. W E, THEREFORE, HOLD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON C ANNOT BE UPHELD. WE, ACCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISS UE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 20 08-09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIR E ADDITIONS MADE BY THE ASSESSING OFFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE O BJECTION FOR MAKING THE ADDITION OF RS.37,69,582/-. THE SAID ADDITION IS M ADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UNDISCLOSE D INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS AN AVERA GE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE FOR THE EARLIEST YEAR UND ER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.37,69,582/-. IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS CONFIRMED THE ALLEGED SUPPRESS ION OF PRODUCTION/SALES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALL EGED SUPPRESSION OF PRODUCTION AND SALES, HENCE, THIS ADDITION DOES NOT SURVIVE AN D SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY T HE ASSESSEE. 67. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UNDER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAV E ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRE SSION OF THE PRODUCTION/SALES. AS THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GROUND S TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 68. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY STEELS PVT. L TD. (SUPRA). SINCE THE BASIS FOR ADDITION WAS THE CONSUMPTION OF ELECTRICITY, THOUGH ON DIFFERENT GROUND I.E. CONSUMPTION OF ELECTRICITY AS PER US STANDARD. HOW EVER, THE LD. SPECIAL AR STRESSED THAT THE ISSUE RAISED IN THE PRESENT APPEA L WAS AT VARIANCE. VIDE HIS WRITTEN SUBMISSIONS, HE HAS RAISED IDENTICAL GROUND S OF APPEAL AND HAD ELABORATELY TOOK US THROUGH VARIOUS SUBMISSIONS AND HAS RELIED ON DIFFERENT CASE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 67 LAWS. THE CONTENTION OF THE LD. SPECIAL AR IS SHEE R WASTE OF PROCESS OF LAW, WHEREIN THE SUBMISSIONS MADE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) HAVE BEEN VERBATIM REPEATED IN THE APP EAL FILED AGAINST THE ASSESSEE BEFORE US I.E. SHREE OM ROLLING MILLS PVT. LTD. 69. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF E LECTRICITY BASED ON THE CONSUMPTION OF ELECTRICITY AS PER US STANDARDS. TH E ASSESSING OFFICER HAD NOT ADOPTED THE US STANDARDS IN ENTIRETY, BUT HAD ALLOW ED A CREDIT OF 25% AND WORK THE ADDITION. THE ADDITION IN THE HANDS OF SISTER CONCERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ON E DR. BATRA WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD MEMBER OF CESTAT HAD DELETED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. HOW EVER, IN THE CASE OF ASSESSEE BEFORE US, THERE IS NO ORDER OF CCE, AURAN GABAD OR OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADDITION ON TH E BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY VIS--VIS THE CONSUMPTION AS PER US STANDARDS AFTER GIVING BENEFIT OF 25%. FOLLOWING THE SAME LINE OF REASONING AS IN TH E ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE A DDITION MADE IN THE HANDS OF THE ASSESSEE ON SURMISES. BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR BY WAY OF WRITTEN SUBMI SSIONS HAS RAISED IDENTICAL ARGUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SU PRA) AND SINCE THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN M/S. SRJ PEETY STE ELS PVT. LTD. (SUPRA), THE RATIO OF THE SAID DECISION IS APPLICABLE TO THE FAC TS OF THE PRESENT CASE. 70. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR BEFORE US DURING THE COURSE OF HEARING OF THE BUNCH OF APPEALS WAS THAT IT HAD MOVED MISCELLANEOUS APPLICATION AGAINST THE ORDER OF TRIBUNAL DATED 16. 01.2015 AND THE HEARING OF THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 68 PRESENT APPEALS BE KEPT IN ABEYANCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED F OR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN D ATE DISMISSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M /S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SUBMISSIONS OF B OTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT IN THE SAID MISCELLANEOUS APPLICATION FILED BY THE REV ENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE UNDER SECTION 254(2) OF TH E ACT. IN VIEW THEREOF, THE NEXT OBJECTION OF THE LD. SPECIAL AR FOR NOT RELYIN G ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) ALSO STANDS DISMISSE D. 71. FURTHER, THE TRIBUNAL IN THE CASE OF ANOTHER RO LLING MILLS I.E. MAHAVEER STEEL RE-ROLLING MILLS VS. ACIT IN ITA NOS.1072 TO 1076/PN/2012 AND ACIT VS. MAHAVEER STEEL RE-ROLLING MILLS IN ITA NOS.1446 TO 1450/PN/2012, RELATING TO ASSESSMENT YEARS 2004-05 TO 2008-09 VIDE ORDER DATE D 05.03.2015 HAD APPLIED THE RATIO LAID DOWN BY THE TRIBUNAL IN M/S. SRJ PEE TY STEELS PVT. LTD. (SUPRA) AND HELD THAT THE ADDITION MADE TOWARDS ALLEGED SUPPRES SED PRODUCTION AND SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY WAS DELETED . IN OUR OPINION, THE ADDITION MADE BY THE ASSESSING OFFICER BY RELYING ON THE CON SUMPTION OF ELECTRICITY UNDER US STANDARDS, BY NO STRETCH OF IMAGINATION, CAN BE APPLIED UNDER INDIAN CONDITIONS, IN THE ABSENCE OF ANY FINDING THAT THE CONDITIONS FOR CARRYING OUT MANUFACTURING ACTIVITY IN US AND INDIA WERE SAME. THE BENEFIT OF 25% ALLOWED IS WITHOUT ANY BASIS AND HAS NO LEGS TO STAND. THE AD DITION MADE BY THE ASSESSING OFFICER IS ON PURE ESTIMATES, CONJUNCTURE AND SURMI SES AND THE SAME CANNOT BE ACCEPTED. WE HEREBY DELETE THE SAME. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 69 72. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHE RE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESS EE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. THE LD. SPECIAL AR FOR THE SAID PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE REL ATING TO ASSESSMENT YEAR 2006-07. THE CASE OF THE REVENUE BEFORE US WAS THA T WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PART OF THE PE RIOD, THEN IN VIEW OF THE ORDER OF THE SETTLEMENT COMMISSION AND ALSO SINCE THE ASS ESSEE HAD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT BEFORE THE ASSESS ING OFFICER, THE SALES FOR THE ENTIRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCOUNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTA IN BROKERS AND SUB- BROKERS. CONSEQUENT THERETO, SHRI SRJ PEETY, PERSO N IN-CHARGE OF SHREE OM ROLLING MILLS PVT. LTD. ADMITTED TO THE SAID CLANDE STINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMEN T COMMISSION FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY O F RS.9,000/-. THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT THE ADDI TIONAL INCOME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMEN T OF EXCISE DUTY, IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFOR MATION WAS AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, BUT NO OTHER INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSES SING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE ASSESSEE HAD NOT COR RECTLY DISCLOSED THE PRODUCTION OF TMT BARS. THE BASIS FOR SUCH ASSUMPT ION WAS THE ELECTRICITY ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 70 CONSUMPTION, FOR WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE RESULTS OF ELECTRICITY CONSUMPTION UNDER US STANDARDS AGAINST WHICH, HANDICAP OF 25% WAS GIVEN. THE ASSESSING OFFICER APPLYING THE FORMULA WORKED OUT THE SUPPRESSED PRODUCTION AND SALES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION / SALES ON ACCOUNT OF SUCH FORMULA COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND, ST RESSED THAT WHERE THE ASSESSING OFFICER HAD THE INFORMATION OF ALLEGED CL ANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FO R THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED IN THE HANDS OF THE ASSESSEE . HE STRESSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERI AL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WAS FOUND FOR THE PA RT OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE ADDITIONAL INCOM E FOR WHOLE OF THE YEAR. MERELY BECAUSE THE ASSESSING OFFICER HAD ADOPTED AN OTHER METHODOLOGY OF SUPPRESSION, THE ADDITION IN THE HANDS OF THE ASSES SEE COULD BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FOR 300 DAYS, IN VI EW OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME. 73. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE AUTHORITIES DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE. IN ORDER TO BUY PEACE OF MIND, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY THE SETTLEME NT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION WAS TO BUY ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 71 PEACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SI NCE THE OBJECT OF MOVING PETITION BEFORE THE SETTLEMENT COMMISSION IS TO SET TLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIM ANTS, THE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE CLAIMANT AN D WHERE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER, T HEN THE FIGURES OF SETTLEMENT CAN BE INCREASED. HOWEVER, IN THE CASE OF THE ASSE SSEE, OFFER OF THE ASSESSEE HAS BEEN ACCEPTED FOR THE FINANCIAL YEAR AND THE SA ME CANNOT BE SAID TO BE RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT WAS O FFERED. THE BASIS OF ANY SETTLEMENT IS THE OFFER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE SETTLEMENT AND WHERE THE EV IDENCE HAS BEEN FOUND FOR PART OF THE YEAR, SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATION. IN CASES WHERE THE PETITION IS ACCE PTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMMISSION, THEN NO FURT HER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESS ED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINS T THE ASSESSEE FOR THE BALANCE PERIOD. 74. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSION, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOME ON SUCH OFFER OF SETTLEMENT WAS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER, NO FURTHER I NQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSESSING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPEAL IS WHETHER ANY E XTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGA TIVE. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 72 75. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 627, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN A SSESSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSE E WAS MADE ON THE BASIS OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE INCOME -TAX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH WERE ADMITTED BY THE ASSESSEE TO REFLECT SUPPRESSION OF SALES. ON THE B ASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAPOLATED, WHICH ORD ER OF THE TRIBUNAL WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT. HOWEVER , FOR THE YEAR UNDER CONSIDERATION, THERE WAS NO SEARCH AND SEIZURE OPER ATION CARRIED OUT BY THE INCOME-TAX DEPARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER, AS STATED EARLIE R. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE, MERELY BEC AUSE THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE IN A PRECEDING YEAR, W E FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SALES FOR THE ASSESSMENT YEAR 2007-08 SHOULD BE MADE IN T HE HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PETITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSESSMENT ORDER AN D THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKING THE A DDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECT RICITY. UNDOUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY THE DGCE I AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF ELECTRICITY, WERE BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER ADOPTED THE SECOND I SSUE IN THE HANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABOVE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 73 HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OU T THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHODOLOGIES FOR WORKING OUT THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE ST AND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT B Y THE ASSESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE THE SE TTLEMENT COMMISSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING MATERI AL FOUND FOR THE BALANCE PERIOD. 76. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF THE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT P URSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASS ESSEE. THE SAID INFORMATION WAS FORWARDED TO THE CENTRAL EXCISE DEPARTMENT PURS UANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COM MISSIONER. HOWEVER, THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MA TERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FROM THE POSSESSION OF THE AS SESSEE BY THE EXCISE AUTHORITIES. 77. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT, IN RESPECT OF SALE OF GOO DS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COULD NOT BE RELIED UPON AS EVIDENCE, WHILE EXTRAPOLATING THE SALES AND THE ADDITIONAL INCOME T HEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME-TAX PROCEEDINGS. THE AS SESSING OFFICER DOES NOT ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 74 HAVE ANY EVIDENCE FOR SUPPRESSED PRODUCTION AND EVE N AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NO T INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTABLISHING SUPPRESSED PROD UCTION AND / OR ITS SALE OUTSIDE THE BOOKS OF ACCOUNT. 78. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THIS WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFOR E THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WI THOUT PAYMENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY OF PET ITION BEFORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSES SEE COMPANY WAS RECORDED EITHER BY ASSESSING OFFICER OR CIT(A) DURING THE CO URSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE R ELIANCE PLACED UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRICTED TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE. 79. IN OUR CONSIDERED OPINION, THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER AND CIT(A) AND THE TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBUNAL JUSTIF YING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FAC TS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE A DDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS BASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY TH E LD. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 75 80. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITIO N VIS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 81. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSION AL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY THE HONBLE SUPREME C OURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (S UPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO TH E AMOUNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGA INST THE ASSESSEE FOR EXTRAPOLATING THE SAME FOR FULL YEAR AND FOR THE BA LANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WA S OFFERED. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGAL ORE BENCH OF TRIBUNAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HA S BEEN HELD THAT MERE EXISTENCE OF EVIDENCE OF CONCEALMENT IN THE NEXT AS SESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESS MENT YEARS. 82. FURTHER, BEFORE THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA), THE ISSUE WAS IN RELATION TO THE EVIDENCE FOUND OF UNACCOUNTED SALES FOR PART OF THE PERIOD DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOU NTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND TH E TRIBUNAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER T HE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISCREPANCY. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 76 83. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 84. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION A VAILABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHEREIN UNACCOUNTED SALES WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR THE REMAINING PERIOD. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESS EE AND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAP ERS SEIZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSION AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRI BUNAL HELD THAT NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE PERIOD. THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESUMPTION W AS NOT SUSTAINABLE IN LAW. NO DETAILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUCH FIGURE OR HAD THERE BEEN ANY CONCEALED SALES FOR 9 MONTHS, IT COU LD HAVE BEEN DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERAT IONS. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GU ESS WORK, PRESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORI TIES. SUCH ADDITION BASED ON HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GP ON PRESUMPTION AND SURMISES WERE NOT SUSTAINABLE . THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN I N CST VS. H.M. ESUFALI H.M. ABDULALI (SUPRA). THE LD . SPECIAL AR RELIED ON THE SAID DECISION AND IN VIEW OF THE DECISION OF COORDI NATE BENCH ON SIMILAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 77 85. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY S TEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED THE ISSUE OF EXTRAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILING A PET ITION BEFORE THE SETTLEMENT COMMISSION. 86. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMEN T DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER, IN THE INTERES T OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED B Y THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF J USTICE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTED LY, DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EV IDENCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST THE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE, BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND, IT HAD DECLARED THE SAID AMOUNT BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOTO. IT MAY BE NOTED THAT THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT T HE OFFER MADE BY THE ASSESSEE, IN CASE, ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER. IT MAY ALSO BE NOTED THAT THE SETTLEMENT ACCEPTED IN T HE HANDS OF THE ASSESSEE IS FOR THE FINANCIAL YEAR AND IS NOT RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT HAS OFFERED. IN OTHER WORDS, ONCE A PERSON MAKES A SET TLEMENT PETITION FOR A PARTICULAR YEAR ON ACCOUNT OF THE EVIDENCE FOUND FO R PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESS EE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF G OODS OR SUPPRESSED SALES, IN THE ABSENCE OF EVIDENCE FOR THE BALANCE PERIOD. THE ABOVE SAID RATIOS HAVE BEEN LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA ), HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA). THE L D. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGUING THE ISSUE NO.2 I.E. EST IMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XI V-B AND HELD THAT WHAT IS ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 78 TO BE ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSE D INCOME OF THE BLOCK PERIOD AND NOT THE TOTAL INCOME OR LOSS OF THE PREVIOUS YE AR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UNDER SECTION 143(3) OF TH E ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULAR ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UNDERTAKEN BY THE ASSESSIN G OFFICER UNDER CHAPTER XIV- B, WHERE THE ASSESSING OFFICER HAD TO ASSESS ONLY T HE UNDISCLOSED INCOME. HOWEVER, THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER CHAPTER XIV-B, THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOS ED INCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE F ACTS OF THE PRESENT CASE. 42. EVEN ON MERITS, THE REVENUE HAS NO CASE AGAINST THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR ON THE R ATIO LAID DOWN IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 IS MIS PLACED AS THE ADDITION IN THE HANDS OF THE ASSESSEE IN THAT YEAR WAS MADE ON ACCO UNT OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE INCOME-TAX DEPARTMENT , WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS. HOWEVER, NO INDEPEN DENT INVESTIGATION / INQUIRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE C OMPLETING ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTHER ASPECT O F THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT COMMISSION HAS BEEN MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2007-08 ONLY AND NO SUCH PETITION F OR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MA DE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAD OFFERED THE ADDITIONAL I NCOME ON ACCOUNT OF SUCH CLANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING O FFICER FOR ASSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FOR REOPENING T HE ASSESSMENT UNDER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEEN MADE ON O NLY ON THE ISSUE OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IS THE BASIS OF O RDER PASSED BY CCE, AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF THE CLANDE STINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED OUT BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMISSION, EVEN THE THIRD MEMBER OF CES TAT WAS AWARE OF ALL THESE PROCEEDINGS, BUT SINCE THE SETTLEMENT PETITIO N FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMENT COMMISSION, NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THIS GROUND , IN THE ABSENCE OF ANY INQUIRY OR INVESTIGATION BY THE ASSESSING OFFICER. ACCORDINGLY, THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN ASSESSEES OWN CASE R EPORTED IN 137 TTJ 627 [PUNE] IS MIS-PLACED AND THERE IS NO MERIT IN THE A RGUMENTS OF THE LD. SPECIAL AR IN THIS REGARD. 87. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDERANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUP RA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (S UPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING T HE COURSE OF HEARING, THE ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 79 LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECIS IONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPR A) AND SAME HAVE ALREADY BEEN CONSIDERED. 88. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, HAS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTL EMENT COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMM ISSION. MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAIM OF THE ASSESSEE OF ADDITIONAL EXCISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE R EVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAP OLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS O F THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY A DMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTIN G THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTI VE YEARS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE REC ORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUC H ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCI SE AUTHORITIES, IN THE HANDS ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 80 OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AN D IN SOME YEARS, THERE IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WIT HOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE A ND / OR ANY INVESTIGATION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFICER HAS FAILED TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES FOR 300 DAYS ON ACCOUNT OF ANY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS . FURTHER, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, WHERE NO PETI TION HAS BEEN FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AUTHORITIES. 89. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC C ONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FO R THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVE STMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDEST INELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PU RCHASES UNDER SECTION 69C OF THE ACT. 90. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF T HE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSED PROD UCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. ITA NOS.125 & 127/PN/2012 ITA NOS.430 & 431/PN/2012 ITA NOS.211 TO 213/PN/2012 ITA NOS.432 TO 434/PN/2012 ITA NOS.140 & 141/PN/2012 ITA NOS.629 & 630/PN/2012 81 91. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENUE I.E. AGAINS T APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 92. THE FACTS AND ISSUES IN ITA NOS.211 TO 213/PN/2 012, ITA NOS.432 TO 434/PN/2012, ITA NOS.140 & 141/PN/2012 AND ITA NOS. 629 & 630/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NOS.125 & 127/PN/2012 AND ITA NOS.430 & 431/PN/2012 AND OUR DECISION IN ITA NOS.125 & 127/P N/2012 AND ITA NOS.430 & 431/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.211 TO 213/PN/2012, ITA NOS.432 TO 434/PN/2012, ITA NOS.140 & 141/PN/2012 AND ITA N OS.629 & 630/PN/2012. 93. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AR E DISPOSED OFF AS ABOVE AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY, 2015. SD/- SD/- ( R.K. PANDA ) ( SUSHMA CHOWLA ) ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 15 TH JULY, 2015 . GCVSR/SUJEET $ % &'() *)' / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ) ) * () THE CIT(A), AURANGABAD; ) ) * / THE CIT, AURANGABAD; -./ 00 12, ) 12, 4 / DR A, ITAT, PUNE; /56 7 / GUARD FILE. $+ / BY ORDER - 0 // TRUE COPY // 89: 0 ; 1< / SR. PRIVATE SECRETARY ) 12,