M/S Rutuja Ispat Pvt Ltd., Jalna V. ACIT, Aurangabad

ITA 1460/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1277 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUSHIL BADJATE
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Search and seizure; Opportunity of being heard; Period of limitation; Additional evidence; Retraction
• Section: 69C; 143(3); 153A; 260A; 145; 6; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA , JM AND SHRI R.K. PANDA , AM . / ITA NO S . 276 & 277 /PN/201 2 / ASSESSMENT YEAR S : 2006 - 07 & 200 7 - 08 M/S. RUTUJA ISPAT PVT. LTD., P.NO.D - 67, MIDC JALNA . . / APPELLANT PAN: AA CCR 8562P VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . . / RESPONDENT . / ITA NO S . 653 & 654 /PN/201 2 / ASSESSMENT YEAR S : 200 6 - 07 & 2007 - 08 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD. . / APPELLANT VS. M/S. RUTUJA ISPAT PVT. LTD., P.NO.D - 67, MIDC JALNA. . / RESPONDENT PAN: AA CCR8562P . / ITA NO. 1460 /PN/201 2 / ASSESSMENT YEAR : 200 9 - 1 0 M/S. RUTUJA ISPAT PVT. LTD., P.NO.D - 67, MIDC JALNA. . / APPELLANT PAN: AA CCR8562P VS. THE A SST . COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD. . / RESPONDENT 2 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. . / ITA NO. 1627 /PN/201 2 / ASSESSMENT YEAR : 200 9 - 1 0 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD. . / APPELLANT VS. M/S. RUTUJA ISPAT PVT. LTD., P.NO.D - 67, MIDC JALNA. . / RESPONDENT PAN: AA CCR8562P ASSESSEE BY : S/ SHRI PRAMOD SHINGTE AND SUSHIL BADJATE DEPARTMENT BY : SHRI RAJESH DAMOR / DATE OF HEARING : 13 .0 7 .2015 / DATE OF PRONOUNCEMENT: 12 .0 8 .2015 / ORDER PER SUSHMA CHOWLA, JM : T WO SET OF CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A), AURANGABAD , DATED 04 .0 1 .201 2 RELATING TO ASSESSMENT YEAR S 2006 - 07 AND 20 0 7 - 08 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 . ANOTHER SET OF CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF CIT(A), AURANGABAD , DATED 0 6 .0 6 .2012 RELATING TO ASSESSMENT YEAR 200 9 - 1 0 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 . 2. ALL T HE CROSS - APPEALS FILED BY THE ASSESSEE AND THE REVENUE RELAT ING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDA TED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS 3 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. AND ISSUES IN ITA NO. 276/PN/2012 AND ITA NO. 653/PN/2012 TO ADJUDICATE THE ISSUE S . 3 . THE ASSESSEE IN ITA NO. 276 /PN/2012 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - GROUND NO.1 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A), AURANGABAD, ERRED IN CONFIRMING THE REOPENING THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT AS VALID. THE APPELLANT PRAYS THAT THE REOPENING OF THE ASSESSMENT MAY PLEASE BE HELD AS BAD - IN - LAW. GROUND NO.2 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BL E CIT(A), AURANGABAD, ERRED IN CONFIRMING THE ASSESSMENT ORDER AS VALID AN D NOT BARRED BY LIMITATION EVEN THOUGH THE ORDER WAS SERVED AFTER THE END OF THE PERIOD OF LIMITATION. THE APPELLANT PRAYS THAT THE ASSESSMENT ORDER BE TREATED AS TIME BARRED AND HENCE NULL AND VOID. GROUND NO.3 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A), AURANGABAD, ERRED IN CONFIRMING THE DETERMINATION OF QUANTUM OF SUPPRESSED PRODUCTION / SALE OF TMT BARS MERELY ON THE BASIS OF CONSUMPTION OF ELECTRICITY UNIT. THE APPELLANT PRAYS THAT BASIS OF CONSUMPTION OF ELEC TRICITY MAY KINDLY NOT BE TAKEN FOR DETERMINATION OF QUANTUM OF SUPPRESSED PRODUCTION AND ADDITIONS SO CONFIRMED MAY KINDLY BE DELETED. GROUND NO.4: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION TO THE TUNE OF RS.83,52,082. THE APPELLANT PRAYS THAT THE ADDITION OF RS.83,52,082 ON ACCOUNT OF SUPPRESSED PRODUCTION MAY KINDLY BE DELETED. GROUND NO.5: WITHOUT PREJUDICE TO ANY OF THE ABOVE GROUNDS AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN ESTIMATING GROSS PROFIT @ 4% ON SUPPRESSED SALE AS THE INCOME OF THE APPELLANT. THE APPELLANT PRAYS THAT THE INCOME OF THE APPELLANT ON ACCOUNT OF SUPPRESSED PROD UCTION / SALE MAY KINDLY BE RESTRICTED TO THE GROSS PROFIT PERCENTAGE AS PER THE APPELLANT'S BOOKS OF ACCOUNTS AND THAT TOO BE APPLIED ON THE SUPPRESSED PRODUCTION / SALE ADMITTED BY THE APPELLANT BEFORE THE EXCISE AUTHORITIES FOR THE YEAR UNDER CONSIDERAT ION IN ORDER TO BUY PEACE OF MIND. GROUND NO.6: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT (A) ERRED IN ENHANCING THE ADDITION TO THE INCOME OF THE APPELLANT, WITHOUT GRANTING ANY OPPORTUNITY OF BEING HEARD, TO THE TUNE OF RS.20,07,712 ON ACCOUNT OF WORKING CAPITAL FOR SUPPRESSED PRODUCTION. THE APPELLANT PRAYS THAT THE ENHANCEMENT OF THE ADDITION OF 4 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. RS.20,07,712 ON ACCOUNT OF WORKING CAPITAL FOR SUPPRESSED PRODUCTION MAY KINDLY BE RS.20,07,712 ON ACCOUNT OF WORKING CAPITAL FOR SUPPRESSED PRODUCTION MAY KINDLY BE DELETED. THE APPELLANT CRAVES THE LIBERTY TO ADD, ALTER, AMEND OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING. 4. THE REVENUE IN ITA NO. 653 /PN/2012 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER THE ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYING TAXES. THAT THE ASSESSEE INDULGED IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYING TAXES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE D BY THE PRODUCTION SHOWN IN THE BOOKS OF ACCOUNTS. 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 ALTER ANY GROUNDS OF APPEAL. 5. THE GROUNDS OF APPEAL NO.1 AND 2 IN ITA NO.276/PN/2012 ARE AGAINST THE REOPENING OF ASSESSMENT AND ALSO WHETHER THE ASSESSMENT ORDER WAS VALID AND NOT BARRED BY LIMITATION, WAS NOT PRESSED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND HENCE, GROUNDS OF APPEAL NO.1 AND 2 ARE DISMISSED AS NOT PRESSED. 6. THE ISSUE IN GROUNDS OF APPEAL NO.3 TO 6 RAISED BY THE ASSESSEE IS AGAINST THE ESTIMATION OF PRODUCTION AND THE CONSEQUENT PROFITS THEREON ON THE BASIS OF THE ESTIMATION OF PRODUCTION AND THE CONSEQUENT PROFITS THEREON ON THE BASIS OF CONSUMPTION OF ELECTRICITY VIS - - VIS PRODUCTION OF TMT BARS. 7. T HE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN APPLYING GROSS PROFIT RA TE OF 4% AND CONSEQUENTLY ALLOWING MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POI NTED OUT THAT THE ISSUE IN THE PRESENT SET OF APPEAL S IS IDENTICAL TO THE ISSUE BEFORE THE 5 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. TRIBUNAL IN SHREE OM ROLLING MILLS PVT. LTD. IN ITA NOS.125 & 127/PN/2012 AND IN ITA NOS. 430 & 431/PN/2012 , RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AND OTHER RELATED PARTIES, ORDER DATED 15.07.2015 , MAHAVEER STEEL RE - ROLLING MILLS VS. ACT IN ITA NOS.1072 TO 1076/PN/2012 , RELATING TO ASSESSMENT YEARS 2004 - 05 TO 2008 - 09 , ORDER DATED 05.03.2015 AND SRJ PEETY STEELS PVT. LTD. VS. ACIT IN ITA NOS. 123 & 124/PN/2012, RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09 , ORDER DATED 16.01.2015 AND SAME ARGUMENTS ARE BEING MADE IN THE CASE. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ALSO MADE SIMILAR ARGUMENTS AS IN THE OTHER CASES AND POINTED O UT THAT THOUGH THERE WAS A PETITION BEFORE THE SETTLEMENT COMMISSION, BUT NO ADDITIONAL INCOME WAS OFFERED IN THE INCOME TAX RETURNS. IN VIEW OF THE FACT THAT THERE WAS EVIDENCE WITH THE EXCISE AUTHORITIES, WHICH WAS COMMUNICATED TO THE ASSESSEE IN THE SHOW CAUSE NOTICE, ESTIMATION OF GROSS PROFIT IN THE HANDS OF THE ASSESSEE IS TO BE MADE AND BECAUSE OF NON - PAYMENT OF EXCISE DUTY, GP OF 22.5% SHOULD BE APPLIED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. TH IS IS THE CASE OF ROLLI NG MILLS, WHEREIN THE ADDITION WAS WORKED OUT IN THE HANDS OF THE ASSESSEE ON THE BASIS OF US STANDARDS. IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, THERE WAS CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY AS DETECTED BY THE EXCISE AUTHORITIES F OR WHICH, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE OFFERED THE SAME BEFORE THE EXCISE AUTHORITIES. HOWEVER, NO ADDITIONAL INCOME WAS OFFERED TO THE INCOME TAX PROCEEDINGS. 1 1 . WE FIND THAT IDENTICAL ISSUE OF ROLLING MILLS HAS BEEN ADJUDICATED BY US IN SHREE OM ROLLING MILLS PVT. LTD. VS. THE ADDL. CIT IN ITA NOS. 125 & 127/PN/2012 AND ITA NOS.430 & 431/PN/2012 & ORS, RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AND VIDE ORDER DATED 15.07.2015 , IT WAS HELD AS UNDER: - 6 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 45. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSI DERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. 46.. 47.. 48.. 49.. 50. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSEE ARE FOUR - FOLD ON THE FOLLOWING ACCOUNTS: - A ) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NON - 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 ACCOUN T OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS AND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JALNA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS; AND WORKING OUT THE ADDIT ION BY APPLYING GP RATE OF 4% ON THE ALLEGED SUPPRESSION OF SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SUPPRESSION OF SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D ) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHASES RELATING TO SUPPRESSION OF SALE. 51. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGAINST 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 TOTAL SUPPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDULGING IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY; AND B ) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN - ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OFFICER. 52. THE STEEL GROUP OF CASES WERE HEARD FROM DAY - TO - DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WITH WRITTEN SUBMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAWS RELIED UPON BY THE RESPECTIVE A UTHORIZED REPRESENTATIVES. IT MAY BE PUT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE RELATABLE TO THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EVASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION OF ELEC TRICITY. 53. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE RAISED 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 ASSE SSEE HAS RAISED THE ISSUE AGAINST RE - OPENING OF 7 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. ASSESSMENT, NON - SUPPLY OF REASONS FOR RE - OPENING UNDER SECTION 147 AND ALSO NON - SERVICE OF NOTICE UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SECTION 147 OF THE ACT. HOWEVER, IN SOME CASES, THE ASS ESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE - OPENING OF THE ASSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE PRESENT 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 ASSESSMENT UNDER SECTION 147 AND NON - SUPPLY OF REASONS FOR RE - OPENING UNDER SECTION 147 OF THE ACT, ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 54. THE NEX T ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRODUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUPPRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUN T SUPPRESSED PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PARTIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRIBUNAL 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 REPRESENTATIVES. 55. WHILE ARGUING THE APPEALS IN THE LEAD CASE OF SHREE OM ROLLING MILLS PVT. LTD. ON 05 .05.2015, THE LD. SPECIAL AR FILED WRITTEN NOTE AND MADE ELABORATE SUBMISSIONS AND TOOK US THROUGH THE PAGE TO PAGE OF NOTE AND 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 WRIT TEN NOTE FILED BY THE LD. SPECIAL AR AND ON COMPARISON OF THE SAID WRITTEN NOTE WITH THE WRITTEN 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 ROLLING MI LLS PVT. LTD., WE FIND THAT THE SAME ARE IDENTICAL. WE CALLED FOR APPEAL FOLDER 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 REPEATED BY THE LD. SPE CIAL AR. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER, THE LD. SPECIAL AR STRE SSED THAT THE ISSUE WAS AT VARIANCE AND MADE ELABORATE SUBMISSIONS. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) IS A CASE OF FURNACE, WHICH IS ENGAGED IN THE MANUFACTURE OF INGOTS / BILLETS, WHEREAS MANUFACTURING OF TMT BARS IS CA RRIED OUT BY SHREE OM ROLLING MILLS PVT. LTD. BY USING INGOTS / BILLETS. IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THERE WAS AN ORDER OF CENTRAL EXCISE COMMISSIONER, AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC C ONSUMPTION OF ELECTRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER OF CESTAT DELETED THE ADDITION MADE IN THE HANDS OF RESPECTIVE FURNACE CASES. HOWEVER, IN THE CASE OF THE ASSESSEE BE FORE 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 THE BASIS OF CERTAIN INFORMATION GATHERED BY THE DGCEI HAD MOVED A PETITION BEFORE THE SETTLEMENT COMMISSION AND OFFERED AD DITIONAL INCOME, WHICH WAS ACCEPTED BY THE SETTLEMENT COMMISSION IN ENTIRETY. IN SOME CASES, SUCH OFFER OF ADDITIONAL INCOME WAS BEFORE THE EXCISE AUTHORITIES, WHO IN TURN, ACCEPTED THE SAME. THE ASSESSING OFFICER IN THE CASE OF 8 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. ROLLING MILLS I.E. IN THE HANDS 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 STANDARDS, CAME TO THE CONCLUSION THAT THERE WAS SUPPRESSION OF PRODUCTION BY THE TMT BARS MANUFACTURERS IN JALNA CLUSTER ON THE GROUND OF VARIANCE IN CONSUMPTION OF ELECTRICITY VERSUS PRODUCTION. THE ASSESSING OFFICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND REL YING ON THE ADDITION MADE IN THE HANDS OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), IN TURN, ON THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDITIONS IN THE HANDS OF PRESENT SET OF ASSESSES BEFORE 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 STEELS 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 CCE, 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 THEREIN HAD M ADE THE PETITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVESTIGATION OR MATERIAL COLLECTED BY THE ASSESSING OFFICER , THE TRIBUNAL 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 ADMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL 2008 - 09, THERE WAS NO ADMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE T HE SETTLEMENT COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER EVIDENCE BEING BROUGHT ON RECORD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE I SSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. WAS SUMMARIZED UNDER PARA 9, WHICH READS AS UNDER: - 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEALS FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDING 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 REASONABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, 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 WHETHER 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 SUPPRESSION 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 PICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED. 57. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE 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 REJOINDER OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, THE TRIBUNAL OBSERVED AS UNDER: - 9 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOT ES OF HIS ARGUMENT ON 05 - 11 - 2014 WHICH ARE PLACED ON 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 ASSESSM ENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 31 - 12 - 2009. WHILE COMPLETING 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 SIDE AS COMPARED TO THE QUANTUM OF PRODUCTION DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTI ON OF THE INGOT/BILLETS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE OF THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29 - 03 - 2010 AS WELL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INITIATED THE RE - ASSESSMENT PROCEEDINGS FOR A.Y. 2007 - 08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF THE ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE ASSESSEE 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 CENTRAL 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 INGOT/BILLETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILED BY THE 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 IM MUNITY FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED SUPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFORMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATION ORDER OF THE CCE, A URANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME - TAX DEPT. ON 17 - 03 - 2006 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION U/S. 132(1) THE ASS ESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 153A R.W.S. 143(3) FOR THE A.YS. 2000 - 01 TO 2006 - 07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRIMINATING EVIDENCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SU PPRESSED THE PRODUCTION 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 THE 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 HIGH COURT AND CERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAMED BY THE ASSE SSING 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 ASSESSMENTS 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 EVEN FOR THE A.YS. 2007 - 08 AND 2008 - 09, NO INDEPENDENT INVESTIGATION OR ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX AUTHORITIES. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONL Y ON THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI. THE INVESTIGATION WAS CARRIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGCEI, AGAINST FEW BROKERS/SUB - B ROKERS AND THOSE BROKERS GAVE THE NAMES OF MANY 10 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. COMPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TMT BARS. AS PER 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 CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIPS ONLY AND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROVIDING FAKE TRADING BILLS AND CHALLANS WHICH ACCOM PANIED THE VEHICLES CARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB - BROKERS ALSO ADMITTED THAT THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSION OF RS.100/ - PER MT. THE ASSESSING 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 ORDER. SO FAR AS ACTION AGAINST THE BROKERS AND SUB - BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACTURERS WHO WERE INVOLVED IN CLEARING THE EXCISABLE GOODS WI THOUT PAYMENT OF DUTY. 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 SUPP LIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF SHRI 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 SALE PRICE EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/ - FOR CLEARING T HE GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AUTHORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/ - . 16. THE ASSESSIN G OFFICER ALSO HAS IN DETAIL DISCUSSED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN THE 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 ASSESS ING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS GIVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTI ON TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING OFFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TECHNOLOGY IN THE 21 ST CENT URY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN INDUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE USED. THE ASSESSING OFFICER ALSO R EFERRED TO THE TECHNICAL REPORT OF THE IIT, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VARIES FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY R EQUIREMENT 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, AURANGABAD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONSIDERIN G 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 REASONABLE, FAIR AND 11 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLE GED UNACCOUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME - TAX ACT BY GIVING THE REASON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTIO N OF 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 ADDITION 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. 200 8 - 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 THOUGH IN THE A.Y. 2008 - 09, THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NO T RELEVANT, BUT FINALLY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE VALUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATI STIC OF POWER CONSUMPTION. IN THE COMPUTATION FOR THE A.Y. 2008 - 09 THE ASSESSING OFFICER 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 F OR 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 BASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CASES OF FURNACE OWNERS HELD THAT THE ORDER OF CCE, AURANGABAD WAS NOT SUSTAINABLE AND HAD TO BE CANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA). THE 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 YEARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD ON THE BASIS OF POWER CONSUMPTION. THE COPY OF THE A DJUDICATION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE 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. THE CCE, AURANGABAD HAS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VAR IOUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE VALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIES, COST OF MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT), KANPUR AND HAS OBSERVED THAT AS PER THE SAID 12 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. TECHNICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, E LECTRICITY 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 AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KANPUR 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 ELECTRICITY FOR PER MT OF MS INGOTS PRODUCED, IT IS N OTICED THAT THERE IS A HUGE DIFFERENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFULLY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED THEMSELVES IN 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 B Y THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO REFERRED TO NON - MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION RECORD 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 RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINATION OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABAD. T HE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS OF THE TRIBUNAL. THE LD. COMMISSIONER ALSO RELIED ON THE 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 THE EVASION AND PAID THE EXCISE DUTY AND OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DEMAND RAISED IN THE SHOW 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 CHALLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL 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 WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A . WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 T O 31 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTINGS PVT. LTD. (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 CO URTS JUDGMENT IN THE CASE OF TRIVENI 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 DISMI SSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED WITH THE FINDING OF THE HON'BLE VICE - PRESIDENT THAT THE ORDER PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE AND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDENT CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICITY 13 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. C ONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE 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 CONSI DERATION - (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOBINDGARH 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 DATED 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 FOR INDUCTION FURNACE] , (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A CLIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER - CONSUMPTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM AGREEING - ., WI TH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION AND INFORMING THAT IT 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 CONSUMPTI ON FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOWING 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 COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF IND IA; (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 EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CCE, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINED THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS REN DERS THE 14 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COMMISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PER REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTED 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 WITHOUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4 - 5 YEARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIB LE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALANCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DEPOSITED, (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 BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE 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 PREMISES, AND NON - ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDESTINE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INS TALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOYED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUCH AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT CHECK 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 CONSIGNOR 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 EVIDENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE, NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMITTED TO JUSTIFY 15 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTANT APPEALS, 20.6 THE EVIDENC E AS PER REVENUE IN THE INSTANT APPEALS ARE - A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CASES AND/OR ANY PROCEE DINGS 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 FINDINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CHALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVELLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (SUPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIM ENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON 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 THAT W HEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BASIS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPTED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGNED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF ALLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ONUS, 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 C LANDESTINE CLEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY - 'FROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNAL 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 INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUE 16 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. THAT FURNACES INSTALLED IN THE FA CTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER 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 OR DER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LTD., V/S. CCE, HYDERABAD - II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS C ASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (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 ADJUDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS DEFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBABILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS, I AM OF THE VIEW THAT IT CA NNOT BE - .A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PERIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVEN T, 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 CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION - FURNACE . HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTRIC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGEST ING THAT ELECTRIC CONSUMPTION IN INDUCTION 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 SQUARELY APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON'BLE SUPRE ME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER TRADE TAX, U.P, - 2007 - TIOL - 14 - SC - CT, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOME TAX, 2014 - TIOL - 203 - HC - AHM - IT, AND AN UNREPOR TED ORDER DTD. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRIC ITY 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 FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FAC TS OF THE CASE ARE THAT FOR THE ASSESSMENT 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 THAT 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 OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTA INING THE FINDINGS 17 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI - BANG.) SIMILAR ORDER BASED ON POWER CONS UMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONSIDERING 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 FOLL OWED THE DECISION OF R.A. CASTING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 30 - 07 - 2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY T HE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDER IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE 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 ISSUED TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY. HENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE 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, AURANGABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY EST IMATING 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 ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES 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 BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE), AURANGABAD HAS BEE N SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL LEGS TO STAND. 59. THE TRIBUNA L THEREAFTER, DEALT WITH THE ARGUMENTS 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 REJECTED BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTA T. 60. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CASE OF SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDER HAD TAKEN INTO CONSIDERATION THE SAID MATERI AL WHILE DETERMINING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VIDE PARA 19. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WERE AS UNDER: - 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. THE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMENT COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE 18 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMI SSION 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 CAUSE 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 DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VIOLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE HAS 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 CASE ARE BASED ONLY ON MATERIAL AND EVI DENCE THAT HAVE BEEN BROUGHT ON RECORD IN THE INSTANT CASE. 61. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT OF THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION RECEI VED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY THE THIRD MEMBER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALS O NOTED BY THE TRIBUNAL IN PARA 21 THAT THE INVESTIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT INVESTIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION WERE CONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER, WHICH IN TURN, WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET - AS IDE, HENCE, IT WAS NOT NECESSARY 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 INVESTIGATION MADE BY THE DGCEI. 62. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G - 7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRIBUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGUMENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF CESTAT HAD TO BE APPLIED. THE RE LEVANT PARA OF THE TRIBUNAL ORDER READS AS UNDER: - 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND RELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICULARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON - SEC. 17, SEC. 106 A ND 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 INFORMATION RECEIVED FROM THE CENTRAL EX CISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVER, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AN D HENCE, FOUNDATION 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 OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GETS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. 19 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID O RDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. HENCE, WE DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF ADMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COUR SE OF INVESTIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE 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 A LSO BEFORE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER IS RIGHT OR WRONG. 63. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIB UNAL (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 SEIZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAINST M/S. SRJ PEETY OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAINST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UNDER SECTION 153A R.W.S. 143(3) OF THE ACT. 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 IS REPORTED IN 137 TTJ ( PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATING 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 HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOTS / BILLETS DEPENDING ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT IT HAD SUPPRESSED THE PRODUCTION AND INDUL GED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATED 10.02.2014 IN THE CASE OF ASSESSEE AND OTHER COMPANIES BY THE HON BLE BOMBAY HIGH COURT AND THERE WERE OBSERVATIONS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WHILE 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 IN THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S. 132(1) OF THE INCOME - TAX ACT ON 17 - 03 - 2006 AND ACCORDINGLY THE ASSESSMENT ORDERS FOR THE A.YS. 2000 - 01 TO 2006 - 07 WERE FRAMED U/S. 153A R.W.S. 14 3(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 CONSUMPTION OF THE ELECTRICITY. THE ASS ESSING OFFICER DEVISED A FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED 20 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1 ,600 UNITS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE T HE ASSESSING OFFICER HAD SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE C ERTAIN IMPORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED ON 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WELL. 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 ACCOMPANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIALS WERE FOUND RELATING TO AFORESAID YEA RS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPOR T 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 WERE ACCEPTED YEAR CONTAINED THE UNIT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHA RT SHOWS THE YEAR - WISE PRODUCTION VIS - A - VIS ELECTRICITY CONSUMPTION WHICH HAS BEEN PLACED BEFORE 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 ELECTRICITY 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 COUL D HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF THESE ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD N OT BE DISTURBED ON THIS GROUND. 21 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 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 CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT - MATTERS WERE ALREADY ON RECORD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUCH 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 INVOKING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF T HE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB - S. (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB - S. (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES THE P OWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A METHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDUCED 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 OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORD ER 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 ELECTRICITY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED T HE 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 RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO - CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUALITY O F RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, POWER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE F ACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONCLUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF SEARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASST. YRS. 2000 - 01 TO 2005 - 06. IT IS AN ACCEPTED FACT THAT EAC H YEAR OF THE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. YR. 2006 - 07 22 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE ASSESSEE COMPANY FROM THE ASST. YRS. 2000 - 01 TO 2005 - 06. THEREFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF S. 144 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 O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESS EE THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE INCOM E - TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APPEAL WAS DISMISSED 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 CATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON TH E ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEARCH WAS INITIATED ON 17/03/2006 IN THE RES IDENTIAL 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. DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTIO N FOR EACH 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 REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UNIT PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YEA R 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 DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THEREFORE, WAS HELD T O 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 T HESE ASSESSMENT YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETURNS 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 INTO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED 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 SAID OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF THE 23 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS 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 FOR ALLEGED SUPPRES SION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE OF 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 AND SEIZURE OPERATION AGAINST THE ASSESSEE COM PANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AND OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT ARE 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 THE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATELY PRECEDING YEAR, WHEREIN DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING THE APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BEN CH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSERVATIONS 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 PRODUCTION AND ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBUNAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE ORDER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED ON REC ORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECTS OF THE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THA T HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGHER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTION QUANTU M IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDING THE OUTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE APPEARS TO H AVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION TO THE DETRIMENT OF JUSTICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF REVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO SHOW EITHER SUPPRESS ION OF PURCHASE OF INPUT OR 24 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. CLANDESTINE 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 RELIEF, IF ANY.' 11. THE C USTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL 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 REPORTE D IN 2011 (269) ELT A - 108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CASE WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY B ASED ITS ADDITION 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 OF THE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (SUPRA) IN THE APPEA L FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSIO N OF PURCHASE 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 AND ALSO ALLEGED ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS 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. (SUPRA) THE ADDITION WAS MADE ON THE BASIS OF ELEC TRICITY CONSUMPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGING DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER O F LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE ASSESSING OFFICE R AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASSESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE BASIS 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 GROUND 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. 25 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 66. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN TH E 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 FINDING 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 RESPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER: - 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIN D 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 ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY 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 ASSESSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITIONS TOWARDS ALLE GED SUPPRESSION OF PRODUCTION/SALES. WE, THEREFORE, HOLD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT 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 T HE PERCENTAGE OF THE GROSS PROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISSUE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007 - 08 AND GROUND NO. 7 IN THE A.Y. 2008 - 09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENT IRE 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 OBJECTION FOR MAKING THE ADDITION OF RS.37,69,582/ - . THE SAID ADDITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS AN AVERAGE 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 UNDER 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 M ADE BY THE LD. CIT(A) AS HE HAS CONFIRMED THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALE S, HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 67. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE REVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OB SERVING 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 HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. AS THE ASS ESSEE 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 GROUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 26 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 68. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATIVE 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. LTD. (SUPRA). SINCE THE BASIS FOR ADDITION WAS THE CONSUM PTION OF ELECTRICITY, THOUGH ON DIFFERENT GROUND I.E. CONSUMPTION OF ELECTRICITY AS PER US STANDARD. HOWEVER, THE LD. SPECIAL AR STRESSED THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS AT VARIANCE. VIDE HIS WRITTEN SUBMISSIONS, HE HAS RAISED IDENTICAL G ROUNDS OF APPEAL AND HAD ELABORATELY TOOK US THROUGH VARIOUS SUBMISSIONS AND HAS RELIED ON DIFFERENT CASE LAWS. THE CONTENTION OF THE LD. SPECIAL AR IS SHEER WASTE OF PROCESS OF LAW, WHEREIN THE SUBMISSIONS MADE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEEL S PVT. LTD. (SUPRA) HAVE BEEN VERBATIM REPEATED IN THE APPEAL FILED AGAINST THE ASSESSEE BEFORE US I.E. SHREE OM ROLLING MILLS PVT. LTD. 69. WE FIND THAT THE ASSESSING OFFICER IN THE PRESENT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CON SUMPTION OF ELECTRICITY BASED ON THE CONSUMPTION OF ELECTRICITY AS PER US STANDARDS. THE ASSESSING OFFICER HAD NOT ADOPTED THE US STANDARDS IN ENTIRETY, BUT HAD ALLOWED 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 ONE DR. BATRA WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD MEMBER OF CESTAT HAD DELETED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. HOWEVER, IN THE CASE OF ASSESSEE BEFORE US , THERE IS NO ORDER OF CCE, AURANGABAD OR OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADDITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY VIS - - VIS THE CONSUMPTION AS PER US 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 THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE ADDITION 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 SUBMISSI ONS HAS RAISED IDENTICAL ARGUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THE RATIO OF THE SAID DECISION IS APPLICABLE TO THE FACTS 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 PRESENT APPEALS BE K EPT IN ABEYANCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED FOR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN DATE DISMISSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SUBMISSIONS OF BOTH 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 REVENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE UNDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF, THE NEXT OBJECTION OF THE LD. SPECIAL AR FOR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. ( SUPRA) ALSO STANDS DISMISSED. 71. FURTHER, THE TRIBUNAL IN THE CASE OF ANOTHER ROLLING 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, RELA TING TO ASSESSMENT YEARS 2004 - 05 TO 2008 - 09 VIDE ORDER DATED 27 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 05.03.2015 HAD APPLIED THE RATIO LAID DOWN BY THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND HELD THAT THE ADDITION MADE TOWARDS ALLEGED SUPPRESSED 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 CONSUMPTION 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 ADDITION MADE BY THE ASSESSING OFFICER IS ON PURE ESTIMATES, CONJUNCTURE AND SURMISES AND THE SAME CANNOT BE ACCEPTED. WE HEREBY DELETE THE SAME. 72. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHERE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVA L OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESSEE 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 RELATING TO ASSESSMENT YEAR 2006 - 07. THE CASE OF THE REVENUE BEFORE US WAS THAT WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PART OF THE PERIOD, THEN IN VIEW O F THE ORDER OF THE SETTLEMENT COMMISSION AND ALSO SINCE THE ASSESSEE HAD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER, THE SALES FOR THE ENTIRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL 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 CERTAIN BROKERS AND SUB - BROKERS. CONSEQUENT THERETO, SHRI SRJ PEETY, PERSON IN - CHARGE OF SHREE OM ROLLING MILLS PVT. LTD. ADMITTED TO THE SAID C LANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY OF RS.9,000/ - . THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT THE ADDITIONAL INCOME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFORMATION WAS AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT NO OTHER INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE ASSESSEE HAD NOT CORRECTLY DISCLOSED THE PRODUCTION OF TMT BARS. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSUMPTION, FOR WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE RESULTS OF ELECTRICITY CONSUMPTION UNDER US STANDARDS AGAINST W HICH, 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 SUPPRES SED PRODUCTION / SALES ON ACCOUNT OF SUCH FORMULA COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND, STRESSED THAT WHERE THE ASSESSING OFFICER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FOR 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 MATER IAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WAS 28 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE ADDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BECAUSE THE ASSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY OF S UPPRESSION, THE ADDITION IN THE HANDS OF THE ASSESSEE COULD BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FOR 300 DAYS, IN VIEW OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCO ME. 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 SETTLEMENT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE T HAT DECLARATION WAS TO BUY PEACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SINCE THE OBJECT OF MOVING PETITION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS, THE AUTHORITIES HA VE THE POWER TO RE - VISIT THE OFFER MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER, THEN THE FIGURES OF SETTLEMENT CAN BE INCREASED. HOWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEEN ACCEPTED FOR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO BE RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT WAS OFFERED. THE BASIS OF ANY SETTLEMENT IS THE OFFER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE SETTLEMENT AND WHERE THE EVIDENCE 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 ACCEPTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMMISSION, THEN NO FURTHER AD DITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESSED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE FOR THE BALANCE PERIO D. 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 TH E ASSESSING OFFICER, HOWEVER, NO FURTHER INQUIRY, 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 EXTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE B ASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGATIVE. 75. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RATIO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 62 7, 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 ASSESSMENT YEAR 2006 - 07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON THE BASIS OF SEARC H 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 BASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAP OLATED, WHICH ORDER OF THE TRIBUNAL WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT. 29 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. HOWEVER, FOR THE YEAR UNDER CONSIDERATION, THERE WAS NO SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME - TAX DEPARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER, AS STATED EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE, MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE IN A PRECEDING YEAR, WE 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 THE HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PETITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSESSM ENT ORDER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKING THE ADDITION 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 ELECTRICITY. UNDOUB TEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY THE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF ELECTRICITY, WERE BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASS ESSING OFFICER ADOPTED THE SECOND ISSUE IN THE HANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OUT THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHOD OLOGIES FOR WORKING OUT THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT C OMMISSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD. 76. RELIANCE IN THIS REGARD IS PLACED UPON THE RATIO LAID DOWN IN RAVI FOOD S PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF THE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME - TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADD ED IN THE HANDS OF THE ASSESSEE. THE SAID INFORMATION WAS FORWARDED TO THE CENTRAL EXCISE DEPARTMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER, THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE G ROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FROM THE POSSESSION OF THE ASSESSEE 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 GOODS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COULD NOT BE RELIED UPON AS EVIDENCE, WHILE EXTRAPOLATING TH E SALES AND THE ADDITIONAL INCOME THEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME - TAX PROCEEDINGS. THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED PRODUCTION AND EVEN AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER H AD NOT INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTABLISHING SUPPRESSED PRODUCTION 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 BEFORE THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITION AL INCOME OFFERED BY THE 30 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSESS EE COMPANY WAS RECORDED EITHER BY ASSESSING OFFICER OR CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRICTED TO THE ADDI TIONAL 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). AD MITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBUNAL JUSTIFYING THE ADDITION. PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBUNAL JUSTIFYING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FACTS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDITION 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 THE LD. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 80. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOTH THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITION VIS - - VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 81. THE LD. SPECI AL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSIONAL STATEMENT BEFORE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSIONAL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY THE HO NBLE SUPREME COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (SUPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO THE AMOUNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST T HE ASSESSEE FOR EXTRAPOLATING THE SAME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGALORE BENCH OF TRIBUNAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXISTENCE OF EVIDENCE OF CONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESSMENT YEARS. ESTIMATING INCOME IN ANY OTHER ASSESSMENT 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 ASSU MED UNACCOUNTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND THE TRIBUNAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YE AR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISCREPANCY. 83. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 84. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING P VT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION AVAILABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHEREIN UNACCOUNTED SALES WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR 31 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. THE REMAINING PERIOD. THE ADDITION WAS DE LETED IN THE HANDS OF THE ASSESSEE AND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAPERS SEIZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSION AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE . THE TRIBUNAL 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 WAS NO T 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 COULD HAVE BEEN DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. THEREFORE, T HE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GUESS 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 AUTHORITIES. SUCH ADDITION BASED ON HYPOTH ETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GP ON PRESUMPTION AND SURMISES WERE NOT SUSTAINABLE. THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN IN 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 COORDINATE BENCH ON SIMILAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 85. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMENTS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY STEELS 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 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILING A PETITION BEFORE THE SETTLEMENT COMMISSION. 86. THE PLEA OF THE REVENUE RAISED IN THE MISCELLANEOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMENT DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCEL LANEOUS APPLICATION. HOWEVER, IN THE INTEREST OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED BY THE TRIBUNAL BY OBSERVING AS UNDER: - 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF JUSTICE, WE WOULD LIKE TO ADJUDICATE T HE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTEDLY, DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EVIDENCES 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 COMMI SSION. 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 THE OFFER MADE BY THE ASSESSEE, IN CASE, ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER. IT MA Y ALSO BE NOTED THAT THE SETTLEMENT ACCEPTED IN THE 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 SETTLEMENT PETITION 32 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. FOR A PARTICULAR YEAR ON AC COUNT OF THE EVIDENCE FOUND FOR PART OF THE FOR A PARTICULAR YEAR ON AC COUNT OF THE EVIDENCE FOUND FOR PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS OR SUPPRESSED SALES, IN THE ABSENCE OF EVIDENCE FOR THE BA LANCE 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 LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGUING THE ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS - PLACED. ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS - PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAI D DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XIV - B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSED INCOME OF THE BLOCK PERIOD AND NOT THE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REGU LAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULAR ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER UNDER CHAPTER XIV - B, WHERE THE ASSESSING OFFICER HAD TO ASSESS ONLY THE UNDISCLOSED INCOME. HOWEVER, THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER CHAPTER XIV - B, THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED CHAPTER XIV - B, THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED INCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAISED BY THE LD. SP ECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE FACTS 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 RATIO LAID DOWN IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006 - 07 IS MISPLACED AS THE ADDITION IN THE HANDS OF THE ASSESSEE IN THAT YEAR WAS MADE ON ACCOUNT OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE INCOME - TAX DEPARTMENT, WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR F EW DAYS. HOWEVER, NO INDEPENDENT BOOKS WERE FOUND FOR F EW DAYS. HOWEVER, NO INDEPENDENT INVESTIGATION / INQUIRY BY THE INCOME - TAX DEPARTMENT HAS BEEN MADE BEFORE COMPLETING ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTHER ASPECT OF 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 FOR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOUNT OF SUCH CLAND ESTINE REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007 - 08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER, WHICH WAS PARTICULAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE O F AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEEN MADE ON ONLY ON THE ISSUE OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IS THE BASIS OF ORDER PASSED 33 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. BY CCE, AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF THE CLANDESTINE REM OVAL OF MATERIAL AND THE INVESTIGATION CARRIED OUT BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMISSION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCEEDINGS, BUT SINCE THE SETTLEMENT PETITION 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 A SSESSEES OWN CASE REPORTED IN 137 TTJ 627 [PUNE] IS MIS - PLACED AND THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. SPECIAL AR IN THIS REGARD. 87. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS THAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDE RANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUPRA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (SUPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LT D. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING THE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PR ESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREADY BEEN CONSIDERED. STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREADY BEEN CONSIDERED. 88. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE HOLD T HAT 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 REMOVAL 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 SETTLEMENT COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. 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 REVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, THE A SSESSEE 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 OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT IN C ASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTING 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 RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT TH E ASSESSING OFFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THERE IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / 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 34 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 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 PETITION HAS BEEN FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AUTHO RITIES. 89. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FOR 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 INVESTMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THA T NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PURCHASES UNDER SECTION 69C OF THE ACT. 90. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON ISSUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 14 8 OF THE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. 91. IN VIEW OF OUR DELETING THE ADDITION IN THE HANDS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVE NUE I.E. AGAINST APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 12. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN SHREE OM ROLLING MILLS PVT. LTD. VS. THE ADDL. CIT (SUPRA) AND FOLLOWING THE SAME REASONING, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON ACCOUNT OF EXCESS PRODUCTION FOLLOWING THE CONSUMPTION OF ELECTRICITY AS PER US STANDARDS AS NOT MERITED. HOWEVER, ADDITION OF ADDITIONAL INCOME IN THE HANDS OF A SSESSEE ON ACCOUNT OF ADMISSION MADE BY THE ASSESSEE OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY IS TO BE MADE IN THE HANDS OF THE ASSESSEE AS PER OUR DIRECTIONS IN THE ABOVE SAID APPEALS. 13. THE FACTS AND ISSUE S IN ITA NO. 277 /PN/201 2 & ITA NO.654/PN/2012 AND ITA NO. 1460/PN/2012 & 1627/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUE S IN ITA NO. 276 /PN/201 2 AND 653/PN/2012 AND OUR DECISION IN ITA NO. 276 /PN/201 2 AND 653/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 277 /PN/201 2 & ITA NO.654/PN/2012 AND ITA NO.1460/PN/2012 & 1627/PN/2012 35 ITA NO S . 276 & 277 /PN/201 2 ITA NO S . 653 & 654 /PN/201 2 ITA NO.1460/PN/2012 ITA NO. 1627/PN/2012 M/S. RUTUJA ISPAT PVT. LTD. 14 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF AUGUST , 2015. SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOW LA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH AUGUST , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A), AURANGABAD ; 3. ( ) / THE CIT(A), AURANGABAD ; 4. / THE CIT , AURANGABAD ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE