M/s. Rathi Ispat Ltd., New Delhi V. ITO, New Delhi

ITA 233/DEL/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1617 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJIT SINGH
• Keywords: Reopening of assessment; Income from undisclosed sources; Competent authority; Reason to believe; Reassessment proceedings
• Section: 234B; 147; 131; 148; 144

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 231 TO 233/DEL/2013 (ASSESSMENT YEAR: 2004 - 05 TO 2006 - 07 ) M/S. RATH I ISPAT LTD, C - 235, SAVITRI NAGAR, NEW DELHI PAN: AAACR2470C VS. ITO, WARD - 15(4), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJIT SINGH, CIT DR REVENUE BY: SHRI SA N JIV SAPRA, FCA DATE OF HEARING 29/08 / 2018 DATE OF PRONOUNCEMENT 2 7 / 1 1 / 2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . TH ESE ARE THE THREE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - XVIII, NEW DELHI [THE LD CIT A] DATED 25.10.2012, FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2004 - 05: - 1 THAT THE ASSESSMENT ORDER PASSED U/S 147/ 144 OF THE IT ACT BEING ARBITRARY, UNJUST AND ILLEGAL ON VARIOUS FACTUAL AND LEGAL GROUNDS INCLUDING THE FOLLOWING OUGHT TO HAVE BEEN QUASHED/ ANNULLED BY THE LD CIT(A): - A) THE ISSUE OF NOTICE U/S 147/148 WAS BARRED BY LIMITATION. B) THERE WAS NO VALID AND LEGAL SERVICE OF SECTION 147/148 NOTICE. C) IN THE ABSENCE OF FILING ANY RETURN BY THE ASSESSEE, QUESTION OF ISSUE OF NOTICE U/S 143(2) DID NOT ARISE AND IF ANY SUCH NOTICE WAS ISSUED AND ALLEGED TO HS .E BEEN SERVED WAS WHOLLY ILLEGAL. D) THE AO HAVING NOT APPLIED HIS MIND INDEPENDENTLY BEFORE ISSUE OF NOTICE U S 147/148 OF I.T, ACT, SUCH NOTICE WA S ILLEGAL. E) THE LD. CIT(A) HAD NO DOUBT REPRODUCED APPELLANTS SUBMISSIONS VIDE LETTER DATED 24/08/2012 AT PAGES 2 - 5 OF HER APPELLATE ORDER BUT HAD NOT DECIDE: THEM BY APPLYING HER OWN MIND. VARIOUS OBSERVATIONS MADE BY THE LD. CIT A) WHILE UPHOLDING THE ISSUE AND SERVICE OF NOTICE U/S 147/148 ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. PAGE | 2 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE ADDITION OF RS. 214,72,55,565/ - AS MADE BY THE AO TOWARDS THE ASSESSABLE INCOME OF THE APPELLANT AND CONFIRMED B Y THE LD. CIT(A) IS WHOLLY ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE ADDITION AS MADE IS VERY EXCESSIVE. THE OBSERVATIONS OF THE LD. CIT(A) IN PARA 5 AT PAGE 15 THAT 'IT IS APPARENT THAT THE EXCESS UNDECLARED PRODUCTION HAS BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNTS ARE FACTUALLY AND LEGALLY INCORRECT. THE REVENUE HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW ANY EXCESS UNDECLARED PRODUCTION BY THE ASSESSEE AND ITS SALE OUTSIDE THE ACCOUNT BOOKS. 3. THAT VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. THE SUBMISSIONS MADE BY THE APPELLANT SUPPORTED BY CASE LAWS BEFORE THE AUTHORITIES BELOW HAD EITHER BEEN IGNORED OR HAD NOT BEEN PROPERLY APPRECIATED. 4. THAT THE LEVY OF INTEREST U/S 234B IS ARBITRARY, UNJUST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME IS VERY EXCESSIVE. 5. THAT THE TOTAL INCOME ASSESSED AND THE INCOME - TAX DEMAND CREATED THEREON ARE ARBITRARY, UNJUST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME I S VERY EXCESSIVE. 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2005 - 06 : - 1. THAT THE ASSESSMENT ORDER PASSED U/S 147/144 OF THE I.T. ACT BEING ARBITRARY, UNJUST AND ILLEGAL ON VARIOUS FACTUAL AND LEGAL GROUNDS INCLUDING TH E FOLLOWING OUGHT TO HAVE BEEN QUASHED/ANNULLED BY THE LD. CIT(A): A) THE ISSUE OF NOTICE U/S 147/148 WAS BARRED BY LIMITATION. B) THERE WAS NO VALID AND LEGAL SERVICE OF SECTION 147/148 NOTICE. C) IN THE ABSENCE OF FILING ANY RETURN BY THE ASSESSEE, QUESTION OF ISSUE OF NOTICE U/S 143(2) DID NOT ARISE AND IF ANY SUCH NOTICE WAS ISSUED AND ALLEGED TO HAVE BEEN SERVED WAS WHOLLY ILLEGAL. D) THE AO HAVING NOT APPLIED HIS MIND INDEPENDENTLY BEFORE ISS UE OF NOTICE U/S 147/148 OF I.T. ACT, SUCH NOTICE WAS ILLEGAL. E) THE LD. CIT(A) HAD NO DOUBT REPRODUCED APPELLANT'S SUBMISSIONS VIDE LETTER DATED 24/08/2012 AT PAGES 2 - 5 OF HER APPELLATE ORDER BUT HAD NOT DECIDED THEM BY APPLYING HER OWN MIND. VARIOUS OBSERVATIONS MADE BY THE LD. CIT(A) WHILE UPHOLDING THE ISSUE AND SERVICE OF NOTICE U/S 147/148 ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE ADDITION OF RS. 268,75,56,855/ - AS MADE TOWARDS THE ASSESSAB LE INCOME OF THE APPELLANT ON THE BASIS OF ORDER OF THE CENTRAL EXCISE AUTHORITIES IS WHOLLY ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE ADDITION AS MADE IS VERY EXCESSIVE. THE OBSERVATIONS OF THE LD. CIT(A) IN PARA 5 AT PAGE 15 THAT IT IS APPARENT THA T THE EXCESS UNDECLARED PRODUCTION HAS BEEN SOLD OUTSIDE PAGE | 3 THE BOOKS OF ACCOUNTS' ARE FACTUALLY AND LEGALLY INCORRECT. THE REVENUE HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW ANY EXCESS UNDECLARED PRODUCTION BY THE ASSESSEE AND ITS SALE OUTSIDE THE ACCOUN T BOOKS. 3 VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. THE SUBMISSIONS MADE BY THE APPELLANT SUPPORTED BY CASE LAWS BEFORE THE AUTHORITIES BELOW HAD EITHER BEEN IGNORED OR HAD NOT BEEN PROPERLY APPRECIATED. 4 THAT THE LEVY OF INTEREST U/S 234B IS ARBITRARY, UNJUST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME IS VERY EXCESSIVE. 5 THAT THE TOTAL INCOME ASSESSED AND THE INCOME - TAX DEMAND CREATED THEREON ARE ARBITRARY, UNJ UST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME IS VERY EXCESSIVE. 4 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2006 - 07: - 1. THAT THE ASSESSMENT ORDER PASSED U/S 147/144 OF THE I.T. ACT BEING ARBITRARY, UNJUST AND ILLEGAL ON VARIOUS FACTUAL AND LEGAL GROUNDS INCLUDING THE FOLLOWING OUGHT TO HAVE BEEN QUASHED/ANNULLED BY THE LD. CIT(A): A) THE ISSUE OF NOTICE U/S 147/148 WAS BARRED BY LIMITATION. B) THERE WAS NO VALID AND LEGAL SERVICE OF SECTION 147/148 NOTICE. C) IN THE ABSENCE OF FILING ANY RETURN BY THE ASSESSEE, QUESTION OF ISSUE OF NOTICE U/S 143(2) DID NOT ARISE AND IF ANY SUCH NOTICE WAS ISSUED AND ALLEGED TO HAVE BEEN SERVED WAS WHOLLY ILLEGAL. D) THE AO HAVING NOT APPLIED HIS MIND INDEPENDENTLY BEFORE ISSUE OF NOTICE U/S 47/148 OF I.T. ACT, SUCH NOTICE WAS ILLEGAL. E) THE LD. CIT(A) HAD NO DOUBT REPRODUCED APPELLANTS SUBMISSIONS VIDE LETTER DATED 24/08/2012 AT PAGES 2 - 5 OF HER APPELLATE ORDER BUT HAD NOT DECIDED THEM BY APPLYING HER OWN MIND. VARIOUS OBSE RVATIONS MADE BY THE LD. CIT(A) WHILE UPHOLDING THE ISSUE AND SERVICE OF NOTICE U/S 147/148 ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE ADDITION OF RS. 252,76,56,547/ - AS MADE TOWARDS THE ASSESSABLE I NCOME OF THE APPELLANT ON THE BASIS OF ORDER OF THE CENTRAL EXCISE AUTHORITIES IS WHOLLY ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE ADDITION AS MADE IS VERY EXCESSIVE. THE OBSERVATIONS OF THE LD. CIT(A) IN PARA 5 AT PAGE 15 THAT 'IT IS APPARENT THAT THE EXCESS UNDECLARED PRODUCTION HAS BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNTS' ARE FACTUALLY AND LEGALLY INCORRECT. THE REVENUE HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW ANY EXCESS UNDECLARED PRODUCTION BY THE ASSESSEE AND ITS SALE OUTSIDE THE ACCOUNT BOO KS. 3. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. THE SUBMISSIONS MADE BY THE APPELLANT SUPPORTED BY CASE LAWS BEFORE THE AUTHORITIES BELOW HAD EITHER BEEN IGNORED OR HAD NOT BEEN PROPERLY APPRECIATED.' PAGE | 4 4. THAT THE LEVY OF INTEREST U/S 234B IS ARBITRARY, UNJUST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME IS VERY EXCESSIVE. 5. THAT THE TOTAL INCOME ASSESSED AND THE INCOME - TAX DEMAND CREATED THEREON ARE ARBITRARY, UNJU ST AND ILLEGAL. AT ANY RATE, WITHOUT PREJUDICE, THE SAME IS VERY EXCESSIVE. 5 . BRIEF FACTS OF THE CASE ARE THAT APPELLANT IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF SS FLATS, SS BILLETS ETC . WE FIRST STATE THE FACTS FOR AY 2004 - 05. FOR ASSESSMENT YEAR 2004 05 , ASSESSEE FILED ITS RETURN OF INCOME ON 30/10/2004 DECLARING INCOME OF 7458513/ . THE RETURN WAS PROCESSED U/S 143 (1) AND APPARENTLY NO ASSESSMENT IS MADE. 6 . INFORMATION WAS RECE IVED FROM CENTRAL EXCISE AUTHORITY WHEREIN IT WAS INFORMED THAT DURING THE COURSE OF SEARCH CONDUCTED BY CENTRAL EXCISE DEPARTMENT , IT WAS FOUND THAT DURING FINANCIAL YEAR 2003 04 THERE HAD BEEN AN UNACCOUNTED PRODUCTION OF STAINLESS STEEL BILLETS AND FLATS WORTH RS. 2147255565/ - . ACCORDINGLY, NOTICE UNDER SECTION 147 OF THE INCOME TAX ACT WAS INITIATED. N OTICE UNDER SECTION 148 WAS ISSUED ON 30/3/2011. DESPITE SEVERAL OPPORTUNITIES GRANTED TO THE ASSESSEE , NONE APPEARED BEFORE THE ASSESSING OFFICER . H OWEVER ON 8/11/2011 THE ASSESSEE SUBMITTED A LETTER STATING THAT THE SEARCHES CONDUCTED BY THE CENTRAL EXCISE AUTHORITIES ALLEGING RE COVERY OF INCRIMINATING RECORDS AND DOCUMENTS AND DETECTION OF UNACCOUNTED PRODUCTION AND SALE OF FINISHED GOODS IS ENTIRELY INCORRECT AND NOT BASED ON PROPER APPRECIATION OF THE FACTS INVOLVED. IT WAS FURTHER STATED THAT EXCESS CONSUMPTION OF CHROMIUM FO R MANUFACTURING OF PELLETS AND FLATS IS A TOTAL MISREPRESENTATION OF PRODUCTION. PERCENTAGES ARRIVED AT FOR CONSUMPTION OF CHROMIUM IS ALSO INCORRECT. THE TECHNICAL PARAMETERS OF CONSUMPTION OF CHROMIUM, BURNING AND MANUFACTURING LOSSES ARE ENTIRELY SUBJ ECT TO INTERPRETATION BASED ON FACTS, WHICH ARE UNDER CHALLENGE BEFORE THE CUSTOM EXCISE AND SERVICE TAX APPELLATE TRIBUNAL. IT WAS FURTHER CLAIMED BY THE ASSESSEE THAT THERE IS NO ERROR IN UNDERREPORTING OF PRODUCTION IN THE BOOKS OF ACCOUNTS AND THE A LLEGATION MADE BY THE CENTRAL EXCISE DEPARTMENT A S CONFIRMED BY THE C OMMISSIONER ARE UNDER CHALLENGE BEFORE THE CESTATE AND NO ACTION SHALL BE CALLED FOR TILL THE MATTER IS FINALLY DISPOSED OF BY TRIBUNAL . IT WA S FURTHER STATED THAT NO EXCESS RAW MATERIA L PAGE | 5 WAS PURCHASED AND THERE IS NO QUESTION OF ANY UNACCOUNTED INCOME OF THE ASSESSEE COMPANY OR UNACCOUNTED PRODUCTION. THEREFORE, ASSESSEE DENIED THE UNACCOUNTED PRODUCTION OF RS. 214.73 CRORES. THE ASSESSEE ALSO SUBMITTED A COPY OF ORDER PASSED BY THE COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE AND SERVICE TAX TO THE ASSESSING OFFICER ALONG WITH THE COPIES OF THE APPEAL FILED BEFORE THE CESTATE . THE LEARNED AO FURTHER ISSUED NOTICES TO THE ASSESSEE AT VARIOUS ADDRESSES HOWEVER, NONE ATTENDED. LATER ON A FINAL SHOW CAUSE NOTICE WAS ISSUED ON 28/12/2011 STATING THAT WHY THE TOTAL INCOME CHARGEABLE TO TAX AMOUNTING TO 2 147255565/ MAY NOT BE TREATED AS ESCAPED INCOME IN THE HANDS OF THE ASSESSEE. NO REPLY WAS RECEIVED AND THEREFORE THE LEARNED ASSESSING OFFICER MADE AN ADDITION HOLDING AS UNDER: - 4 . THE SUBMISSION OF THE ASSESSEE WAS CONSIDERED. THE FACTS ARE THAT THE CENTRAL EXCISE AUTHORITIES CONDUCTED SEARCH UNDER THE PROVISIONS OF THE CENTRAL EXCISE AND CUSTOMS ACT ON 9/3/2006 AT OFFICE, FACTORY, AND GODOWN PREMISES OF M / S RATHI ISPAT LTD. VARIOUS INCRIMINATING RECORDS AND DOCUMENTS WERE RECOVERED AND SEIZED FR OM THE PREMISES SEARCHED. AFTER DETAILED ANALYSIS, THE GOVERNMENT AUTHORITIES DETECTED UNACCOUNTED PRODUCTION AND SALE OF SS FLATS AND SS BILLETS. THE MODUS OPERANDI DETECTED WAS AS UNDER: - T HE COMPANY WAS SHOWING EXCESS CONSUMPTION OF CHROMIUM FOR MANUFACTURING OF SS BILLETS AND SS BILLETS IN RECORDS, WHILE ONLY OPTIMUM QUANTITY WAS USED; SPARE QUANTITY OF CHROMIUM WAS BEING USED IN MANUFACTURING OF UNACCOUNTED SS BILLETS AND SS FLATS. THE C OMPANY WAS ALSO SHOWING CONSUMPTION OF MANGANESE, MORE THAN 40 %, WHICH IS EXCESSIVELY ON HIGHER SIDE FROM STANDARD NORMS IN THIS LINE OF INDUSTRY. THE SPARE QUANTITY OF MANGANESE WAS FOUND BEING USED IN UNACCOUNTED PRODUCTION OF BILLETS AND FLATS. THE EX CISE AUTHORITIES ALSO FOUND CONCLUSIVE EVIDENCE TO SHOW THAT THE COMPANY HAD BEEN CLAIMING BURNING/MANUFACTURING LOSS AT THE RATE OF 10% ON MANUFACTURING OF SS BILLETS AND SS FLATS AND 1% ON ROLLING OF BILLETS AND FLATS. THE COMPANY WAS SHOWING PRODUCTION OF BILLETS AND FLATS AT ONLY AROUND 39% OF ITS PAGE | 6 INSTALLED CAPACITY AND EVEN AFTER ENHANCING PRODUCTION CAPACITY OF PLANT, THE PRODUCTION CONTINUED TO BE SHOWN AS WAS BEING SHOWN BEFORE ENHANCING PRODUCTION CAPACITY. 7 . BASED ON THE ABOVE INFORMATION , LEARNED ASSESSING OFFICER HELD THAT THE EXCESS PRODUCTION AS DETERMINED BY THE CENTRAL EXCISE AUTHORITIES AMOUNTING TO 2 147255565/ AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES . HE HELD THAT ASSESSEE WOULD NOT BE ADMISSIBLE FOR CLAIM OF ANY EXPENDITUR E AGAINST THE SAME, AS SUCH, EXPENSES HAVE ALREADY BEEN BOOKED BY THE ASSESSEE, AND THE FIGURE OF THE TURNOVER REPRESENTS UNDISCLOSED SALES ONLY. CONSEQUENTLY THE ASSESSMENT ORDER UNDER SECTION 147 READ WITH SECTION 143 ( 3 ) WAS PASSED ON TOTAL INCOME OF R S. 2 154714078/ AGAINST THE INCOME PROCESSED UNDER SECTION 143 ( 1 ) OF THE INCOME TAX ACT OF 7458513/ . CONSEQUENTLY THE NET ADDITION OF RS. 2147255565/ WAS MADE BECAUSE OF UNACCOUNTED PRODUCTION MADE BY THE ASSESSEE. 8 . THE ASSESSEE AGGRIEVED WITH THE ORD ER OF THE LEARNED ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) XVIII, NEW DELHI. THE ASSESSEE CHALLENGED THE ACTION OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT. THE ASSESSEE CHALLENGED THAT NO NOTICE HAS BEEN RECEIVED BY THE ASSESSEE ISSUED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 148 OF THE INCOME TAX ACT ON 30/3/2011. IN THE REMAND PROCEEDINGS, THE LEARNED ASSESSING OFFICER STATED THAT THE NOTICE WAS SENT THROUGH SPEED POST ON 30/3/ 2011 AND ACKNOWLEDGEMENT OF THE POSTAL DEPARTMENT IS PASTED ON THE OFFICE RECORD. THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS REJECTED THE CONTENTION OF THE ASSESSEE THAT ASSESSMENT PROCEEDINGS UNDER SECTION 148 WERE INITIATED WITHOUT JURISDICTION. THE ASSESSEE ALSO OBJECTED THAT THERE IS NO REASON TO BELIEVE WHICH WAS ALSO REJEC TED BY THE LEARNED COMMISSIONER OF INCOME TAX HOLDING THAT LEARNED ASSESSING OFFICER AFTER RECORDING OF THE REASON AS PER LAW BASED ON INFORMATION RECEIVED FROM THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT AND AFTER APPROVAL OF THE COMPETENT AUTHORITY HAS INI TIATED THE REASSESSMENT PROCEEDINGS. HE FURTHER HELD THAT THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143 ( 1 ) OF THE INCOME TAX ACT AND THEREFORE THE DECISION OF THE HONOURABLE SUPREME COURT IN CASE OF RAJESH JHAVERI PAGE | 7 STOCKBROKERS PRIVATE LIMITED 291 I TR 500 COVERS THE ISSUE AGAINST THE ASSESSEE. THEREFORE , CONSIDERING THE FACTS AND ARGUMENTS RAISED BEFORE THE CIT ( A) BY THE ASSESSEE AND AS WELL AS THE REMAND REPORT AND REJOINDER OF THE LEARNED AUTHORISED REPRESENTATIVE , HE HELD THAT ASSESSMENT CAN THE REFORE NOT BE HELD AS INVALID ON THE GROUNDS OF THE NON APPLICABILITY OF MIND, NON SERVICE OF NOTICE UNDER SECTION 148 AND 143 (2) OF THE INCOME TAX ACT AND OTHER OBJECTIONS RAISED BY THE APPELLANT. HE THEREFORE UPHELD THE REOPENING OF ASSESSMENT. 9 . ON THE MERITS OF THE CASE , HE HELD THAT AS PER THE SEARCH REPORT THERE WAS UNACCOUNTED PRODUCTION OF BILLETS AND FLATS DUE TO SUPPRESSION OF THE YIELD IN THE M ANUFACTURING PROCESS. ALL THE STORES WERE PROPERLY SHOWN IN THE BOOKS OF ACCOUNT BUT CONSUMPTION THERE OF IN THE MANUFACTURING PROCESS WERE SHOWN MORE THAN WHAT WAS REQUIRED. THE MANUFACTURING EXPENSES HAVE ALREADY BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER AFTER CONSIDERING THE MODUS OPERANDI DETECTED BY THE EXCISE AUTHORITIES TREATED THE EXCESS PRODUCTION AS UNDISCLOSED SALES OF THE ASSESSEE. ON THE ISSUE OF THE OPPORTUNITY, HE HELD T HAT THE ASSESSING OFFICER HAS GIVEN DETAILS OF THE NUMEROUS OPPORTUNITIES PROVIDED OF WHICH THERE WAS NO COMPLIANCE. HE FURTHER HELD THAT THE PERUSAL OF THE REPORT OF THE CENTRAL EXCISE AUTHORITIE S REVEALED THAT THERE WAS PRIMA FACIE INFORMATION AGAINST T HE APPELLANT THAT IT WAS INDULGING IN CLANDESTINE PRODUCTION OF EXCISE GOODS AND THEIR REMOVAL AND THUS WAS EVADING EXCISE DUTY. THEREFORE, SEARCHES WERE CARRIED OUT BY THE CENTRAL EXCISE DEPARTMENT THAT RESULTED IN RECOVERY OF NUMBER OF INCRIMINATING DOC UMENTS. DURING SEARCH, EVIDENCE OF EXCESS CONSUMPTION OF RAW MATERIAL WAS ALSO FOUND. THE COMPARISON BETWEEN THE PRODUCTION OF FINISHED GOODS AND THE CONSUMPTION OF FERRO ALLOYS REVEALED A CONSIDERABLE DIFFERENCE BETWEEN THE TWO AS A QUANTITY OF FERRO AL LOYS CONSUMED WAS MUCH HIGHER THAN THE QUANTITY OF FINISHED GOODS PRODUCED AND ACCOUNTED FOR IN THE STATUTORY RECORDS. THUS, THE PRODUCTION OF BILLETS AND FLATS DID NOT MATCH AS PER THE STANDARD NORMS OF THE INDUSTRY. THE STATEMENT OF SHRI HARI MOHAN BHA SIN , PRESIDENT OF THE COMPANY LOOKING AFTER THE TECHNICAL ASPECTS AND THE CRCL REPORT SHOWS THAT THE PERCENTAGE OF CONTENT OF FERRO C HROME MADE IN THE SA MPLE WAS 13.4% AS AGAINST CONSUMPTION OF MORE THAN 40% SHOWN BY THE APPELLANT. THE ANALYSIS PAGE | 8 SHOWS THAT THE ALLEGATION AGAINST THE APPELLANT IS BASED UPON THREE INDEPENDENT SOURCES ( 1 ) THE STANDARD NORMS (2) STATEMENT OF THE PRESIDENT (TECHNICAL), (3) THE CRCL REPORT. THEREFORE HE HELD THAT IT CAN SAFELY BE HELD THAT THE APPELLANT HAS BEEN CARRYING OUT P RODUCTION OUTSIDE OF BOOKS OF ACCOUNTS WHICH HAS NOT BEEN REFLECTED BOTH FOR THE PURPOSE OF EXCISE AS WELL AS INCOME TAX AND THEREFORE THE EXCESS UNDECLARED PRODUCTION HAS BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNTS AND HE CONFIRMED THE ADDITION OF RS 2147255565/ . 10 . THE LEARNED AUTHORISED REPRESENTATIVE FIRSTLY CHALLENGED THE ACTION UNDER SECTION 148 OF THE INCOME TAX ACT HOLDING THAT THAT NOTICE UNDER SECTION 148 DATED 30/3/2011 IS ISSUED BEYOND TIME . THE NEXT OBJECTION OF THE ASSESSEE IS THAT REOPENING IS ON THE BASIS OF THE ORDER PASSED BY THE CENTRAL EXCISE AND CUSTOMS AUTHORITIES AND THE LEARNED ASSESSING OFFICER HAD NOT AT ALL APPLIED HIS OWN MIND OR NO R HE HAD EXAMINED THE ACCOUNT BOOKS AND THE OTHER RELEVANT RECORDS WHICH WERE LOCKED BY PUNJAB NATIONAL BANK AND WHO ARE IN POSSESSION OF THE ENTIRE SEARCH RECORDS. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER STATED THAT THE LEARNED ASSESSING OFFICER COULD HAVE USED HIS POWERS UNDER SECTION 131 OF THE INCOME TAX ACT TO OBTAIN AND EXAMINE SUCH RECORDS IN THE POSSESSION OF THE PUNJAB NA TIONAL BANK. NON APPLICATION OF MIND BY THE LEARNED ASSESSING OFFICER HIMSELF BEFORE ISSUE OF NOTICE UNDER SECTION 147 READ WITH SECTION 148 ALSO VITIATE THE IMPUGNED ASSESSMENT ORDER. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER STATED THAT THE SATISFA CTION RECORDED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX TO THE ISSUE OF NOTICE UNDER SECTION 147 READ WITH SECTION 148 WAS MECHANICAL IN NATURE. HE THEREFORE SUBMITTED THAT THOSE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 OF THE INCOME TAX AC T ARE NOT VALIDLY INITIATED AND ARE LIABLE TO BE QUASHED. 11 . ON THE ISSUE OF THE MERITS OF THE ADDITION, HE SUBMITTED THAT APPELLANT HAS PROVED BY FILING A COMPARATIVE CHART OF THE MANUFACTURING LOSS INCURRED DURING THE YEAR, WHICH WAS 24.27% IN THE PRECEDING YEAR AND WAS UP TO 26.89 %, WHICH HAS BEEN DULY ALLOWED BY THE LEARNED ASSESSING OFFICER. HE FURTHER STATED THAT THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING THE PAGE | 9 ADDITION OF TOTAL TURNOVER WITHOUT CONSEQUENTIAL MANUFACTURING EXPENSES BEING ALLOWE D TO THE ASSESSEE IS UNSUSTAINABLE IN THE LAW. IT WAS FURTHER STATED THAT THE ADDITION HAS BEEN MADE MERELY ON ALLEGATION AND WITHOUT ANY CONCRETE EVIDENCES AVAILABLE. 12 . THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUT HORITIES AND SUBMITTED THAT THE REOPENING HAS BEEN CORRECTLY MADE BY THE LEARNED ASSESSING OFFICER AS THERE WAS A SEARCH CARRIED OUT BY THE CENTRAL EXCISE DEPARTMENT WHEREIN IT WAS FOUND THAT ASSESSEE IS INDULGING IN MANUFACTURING THE GOODS WITHOUT RECORDI NG AND PAYMENT OF THE EXCISE DUTY. SEVERAL INCRIMINATING RECORDS AND DOCUMENTS WERE RECOVERED FOR THE DETECTION OF UNACCOUNTED PRODUCTION AND SALE OF FLATS AND BILLETS. BASED ON THIS THE LEARNED ASSESSING OFFICER HAS REOPEN ED THE ASSESSMENT PROCEEDINGS. HE FURTHER REFERRED TO THE REASONS RECORDED BY THE LEARNED ASSESSING OFFICER WHICH SHOWS THAT AS PER THE SEARCH DATED 9/3/2006 AT THE FACTORY, OFFICE AND GODOWN OF THE ASSESSEE VARIOUS INCRIMINATING RECORDS AND DOCUMENTS WERE RECOVERED AND AFTER THE DETAI LED ANALYSIS , THE GOVERNMENT AUTHORITIES DETECTED UNACCOUNTED PRODUCTION OF FLATS AND BILLETS. THE ORIGINAL ASSESSMENT UNDER SECTION 143 (1) WAS MADE IN THE CASE OF THE ASSESSEE. AT THE TIME OF REOPENING, THE ASSESSMENT - ASSESSING OFFICER IS NOT REQUIRED TO FRAME FULL PROOF ASSESSMENT BUT TO FORM A PRIMA FACIE REASON THAT THERE IS AN ESCAPEMENT OF INCOME. THEREFORE ASSESSEE HAS DEFINITELY FAILED TO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY AND THEREFORE THE REOPENING HAS BEE N CORRECTLY INITIATED. 13 . ON THE MERITS OF THE CASE, IT IS SUBMITTED THAT THE ASSESSEE HAS NEVER APPEARED BEFORE THE LEARNED ASSESSING OFFICER AND SUBMITTED ANY DETAIL THEREFORE THE LEARNED ASSESSING OFFICER HAS CORRECTLY MADE THE ADDITION. HE FURTHER STAT ED THAT THE DIRECTOR OF THE COMPANY HAS ALSO BEEN GIVEN SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT HOWEVER; HE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER. EVEN OTHERWISE, HE SUBMITTED THAT THE ADDITION HAS BEEN MADE BASED ON THE THREE EVIDENCES FO UND DURING THE COURSE OF SEARCH AND THEREFORE NO FAULT CAN BE FOUND WITH THE ASSESSING OFFICER IN MAKING THE ABOVE ADDITION. 14 . IN REJOINDER, THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE BOOKS OF ACCOUNTS OF T HE ASSESSEE WERE LYING WITH PUNJAB NATIONAL PAGE | 10 BANK AND FOR THAT REASON; THE ASSESSEE COULD NOT SUBMIT THE REQUIRED INFORMATION. HE REFERRED TO HIS WRITTEN SUBMISSION AT PAGE NUMBER 6 (C) WHEREIN HE HAS MENTIONED THE FULL FACTS ABOUT THE NON - AVAILABILITY OF THE BOOKS OF ACCOUNTS. HE T HEREFORE SUBMITTED THAT ASSESSEE COULD NOT PRODUCE THE RELEVANT DETAILS TO THE AO. REGARDING SUMMONS NOT COMPLIED WITH; HE SUBMITTED THAT IT WAS NEVER SERVED ON THE DIRECTOR. 15 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. FIRSTLY, WE EXAMINE THE FACTS WHETHER THE LEARNED ASSESSING OFFICER HAS REOPEN ED THE ASSESSMENT CORRECTLY OR NOT. THE LEARNED ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASONS FOR REOPENING OF THE ASSESSME NT FOR ASSESSMENT YEAR 2005 06 ( FOR ALL THE THREE YEARS THE REASON ARE SIMILAR) ARE AS UNDER : - THE CENTRAL EXCISE AUTHORITIES CONDUCTED SEARCH UNDER THE PROVISIONS OF THE CENTRAL EXCISE AND CUSTOMS ACT ON 9/3/2006 AT OFFICE, FACTORY, AND GODOWN PRE MISES OF M/S RATHI ISPAT LTD. VARIOUS INCRIMINATING RECORDS AND DOCUMENTS WERE RECOVERED DURING SEARCH. AFTER DETAILED ANALYSIS, THE GOVERNMENT AUTHORITIES DETECTED UNACCOUNTED PRODUCTION OF FLATS AND SS BILLETS. THE MODUS OPERANDI DETECTED WAS AS UNDER : - T HE COMPANY WAS SHOWING EXCESS CONSUMPTION OF CHROMIUM FRAUD MANUFACTURING OF PELLETS AND FLATS IN RECORDS, WHILE ONLY OPIUM QUANTITY WAS USED; SPARE QUANTITY OF CHROMIUM WAS BEING USED IN THE MANUFACTURING OF UNACCOUNTED BILLETS AND FLATS. THE COMPANY WAS ALSO SHOWING CONSUMPTION OF MANGANESE, MORE THAN 40%, WHICH IS EXCESSIVELY ON HIGHER SIDE FROM STANDARD NORMS IN THIS LINE OF INDUSTRY. THE SPARE QUANTITY OF MANGANESE WAS BEING USED IN UNACCOUNTED PRODUCTION OF BILLETS AND FLATS. THE EXCISE AUTHORITIES ALSO FOUND CONCLUSIVE EVIDENCE TO SHOW THAT THE COMPANY HAD BEEN CLAIMING BURNING/MANUFACTURING LOSS AT THE RATE OF 10% ON MANUFACTURING OF P ELLETS AND 1% ON ROLLING OF BILLETS ON SS FLATS. THE COMPANY WAS SHOWING PRODUCTION OF BILLETS AND FLATS AT ONLY AROUND 39% OF ITS PAGE | 11 INSTALLED CAPACITY AND EVEN AFTER ENHANCING PRODUCTION CAPACITY OF PLANT, THE PRODUCTION CONTINUE TO BE SHOWN AS WAS BEING S HOWN BEFORE ENHANCING THE PRODUCTION CAPACITY. THE UNACCOUNTED PRODUCTION OF BILLETS AND FLATS IS DETERMINED BY THE CENTRAL EXCISE AUTHORITIES AMOUNTS TO UNACCOUNTED INCOME OF THE ASSESSEE COMPANY AS THE INVESTMENT IN RAW MATERIAL IS NOT ACCOUNTED FO R IN THE BOOKS OF ACCOUNTS AND AS HELD BY CENTRAL EXCISE AUTHORITIES, ALL STORES WAS COVERED BY CENVAT WERE PROPERLY SHOWN IN THE BOOKS OF ACCOUNT BUT CONSUMPTION THEREOF IN MANUFACTURING PROCESS WAS SHOWN MORE THAN THAT WAS REQUIRED. ALL THE MANUFACTURIN G EXPENSES HAVE ALREADY BEEN SHOWN IN CLAIMED AS PER BOOKS OF ACCOUNTS. THE VALUE OF UNACCOUNTED BILLETS AND FLATS PRODUCED AND SOLD THUS AMOUNT TO INCOME CHARGEABLE TO TAX IN THE HANDS OF THE COMPANY. THE VALUE OF BILLETS AND FLATS HAS WORKED OUT BY THE CENTRAL EXCISE AUTHORITIES FOR THE FINANCIAL YEAR 2004 05 ( AY 2005 06) ARE AS UNDER. S R. NO FINANCIAL YEAR QUANTITY OF UNACCOUNTED, BILLET AND FLATS MANUFACTURED VALUE OF BILLETS PER MT TOTAL UNACCOUNTED PRODUCTION OF BILLETS AND FLATS 1 2004 05 58474.700 METRIC TON 45961/ 2687556855 THE OMISSION RESULTED IN UNDER ASSESSMENT OF INCOME OF RS. 2687556855/ . THE ASSESSEE HAS FAILED TO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY THAT WERE NECESSARY FOR ASSESSMENT. HERE IT IS RELEVANT TO MENTION THE EXPLANATION ONE IN SECTION 147 THAT STATES THAT THE PRODUCTION BEFORE THE AO OF ACCOUNT BOOKS OR OTHER EVIDENCES FROM WHICH MATERIAL EVIDENCES COULD WITH DILIGENCE HAVE BEEN DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO IN SECTION 147. IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO 2687556855/ HAS ESCAPED PAGE | 12 ASSESSMENT IN THE CASE AND THE SAME IS BROUGHT TO TAX UNDE R SECTION 147/148 OF THE INCOME TAX ACT. S ANCTION FOR ISSUE OF NOTICE UNDER SECTION 148 AS PRESCRIBED UNDER SECTION 151 TO REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO THE NOTICE SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEE DINGS, MAY KINDLY BE ACCORDED. 16 . SIMILAR WERE REASONS RECORDED FOR ASSESSMENT YEAR 2004 - 05 AND 2006 07. IT IS ALSO IMPORTANT TO NOTE THAT FOR ASSESSMENT YEAR 2004 05 , THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT, FOR ASSESSMENT YEAR 2005 06 THE ASSESSEE IS ALREADY ASSESSED UNDER SECTION 143 (3) OF THE ACT V IDE ORDER DATED 28/12/2007 AND FOR ASSESSMENT YEAR 2006 07 THE ASSESSEE IS ASSESSED U NDER SECTION 143 (3) VIDE ORDER DATED 30/12/2008. SIMILARLY FOR ASSESSMENT YEAR 2004 05 THE UNACCOUNTED PRODUCTION WAS DETERMINED AT RS. 2147255565/ , FOR 2005 06 THE UNACCOUNTED PRODUCTION WAS DETERMINED AT 2 687556855/ AND SIMILARLY FOR ASSESSMEN T YEAR 2006 07 IT WAS DETERMINED AT RS. 2527656547/ - . 17 . WITH RES PECT TO REOPENING OF ASSESSMENT , REASON TO BELIEVE RECORDED BY THE ASSESSING OFFICER ARE BASED ON SEARCH CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES WHERE IN SEVERAL INCRIMINATING DOCUMENTS WERE FOUND AND SIZED. FURTHER INFORMATION WAS GATHERED BY THE EXCISE DEPARTMENT FROM THE STATEMENTS OF THE (1) THE STANDARD NORMS (2) STATEMENT OF THE PRESIDENT (TECHNICAL),(3) THE CRCL REPORT , DURING THE SEARCH THAT WIDE VARIATION IS IN PR OCESS LOSS. THIS, IN OUR OPINION, CONSTITUTES A RELEVANT MATERIAL FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT. AT THE STAGE OF ISSUE OF NOTICE, WHAT HAS TO BE SEEN IS WHETHER THERE WAS RELEVANT MATERIAL UPON WHICH A REASONABLE PERSON COULD HAVE F ORMED THE REQUISITE PLEA. IT CAN THUS BE SEEN THAT THE ENTIRE MATERIAL COLLECTED BY THE CENTRAL EXCISE AUTHORITIES DURING THE SEARCH, WHICH INCLUDED INCRIMINATING DOCUMENTS AND OTHER SUCH RELEVANT MATERIALS, WAS ALONG WITH REPORT AND SHOW - CAUSE NOTICE PLAC ED AT THE DISPOSAL OF THE ASSESSING OFFICER. THESE MATERIALS PRIMA FACIE SUGGESTED SUPPRESSION OF SALE CONSIDERATION OF THE STEEL MATERIAL S MANUFACTURED BY THE ASSESSEE TO EVADE DUTY. BASED ON SUCH MATERIAL, THE ASSESSING OFFICER ALSO FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAD ALSO ESCAPED ASSESSMENT. WHEN THUS THE ASSESSING OFFICER HAD S EARCH MATERIAL AVAILABLE PAGE | 13 WITH HIM WHICH HE PERUSED, CONSIDERED, APPLIED HIS MIND AND RECORDED THE FINDING OF BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THE RE - OPENING COULD NOT BE DECLARED AS INVALID, ON THE GROUND THAT HE PROCEEDED ON THE SHOW - CAUSE NOTICE ISSUE D BY THE EXCISE DEPARTMENT WHICH HAD YET NOT CULMINATED INTO FINAL ORDER. AT THIS STAGE, THE ASSESSING OFFICER WAS NOT REQUIRED TO HOLD CONCLUSIVELY THAT ADDITIONS INVARIABLY BE MADE. HE TRULY HAD TO FORM A BONA FIDE BELIEF THAT INCOME HAD ESCAPED ASSESS MENT. ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 161 TAXMAN 316 (SC) HELD THAT 'REASON TO BELIEVE' CANNOT BE READ TO MEAN THAT THE AO HAS TO FINALLY ASCE RTAIN THE FACTS BY LEGAL EVIDENCE OR CONCLUSIONS. IT IS SUBMITTED THAT WHAT IS REQUIRED IS 'REASON TO BELIEVE , BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. IN OTHER WORDS, AT THIS STAGE, WHETHER THE MATERIALS AVAILABLE CAN PROVE DECISIVELY THAT T HERE WAS ESCAPEMENT OF INCOME, IS NOT A RELEVANT CIRCUMSTANCE AT THE STAGE OF REASSESSMENT, BECAUSE THE AO'S OPINION IS BASED ON HIS SUBJECTIVE SATISFACTION AND APPRAISAL OF THE FACTS AND MATERIALS AVAILABLE WITH HIM . IN VIEW OF THIS, WE UP HOLD THAT T HE REASON RECORDED BY THE ASSESSING OFFICER DOES NOT SUFFER FROM INFIRMITY. 18 . WITH RESPECT TO SATISFACTION OF THE HIGHER AUTHORITIES, HON. DELHI HIGH COURT IN CIT V. MEENAKSHI OVERSEAS (P.) LTD. [IT APPEAL NO. 651 OF 2015, DATED 11 - 1 - 2016] PARTICULARLY THE FOLLOWING EXTRACT: ' 16. ..FOR THE PURPOSE OF SECTION 151(1) OF THE ACT, WHAT THE COURT SHOULD BE SATISFIED ABOUT IS THAT THE ADDITIONAL CIT HAS RECORDED HIS SATISFACTION 'ON THE REASONS RECORDE D BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE . IN THE PRESENT CASE, THE COURT IS SATISFIED THAT BY RECORDING IN HIS OWN WRITING THE WORDS: 'YES, I AM SATISFIED', THE MANDATE OF SECTION 151(1) OF THE ACT AS FAR AS THE APPROVAL OF THE ADDITIONAL CIT WAS CONCERNED, STOOD FULFILLED.' IN THE PRESENT CASE , IN THE FORM FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS UNDER SECTION 148 AND FOR OBTAINING THE APPROVAL OF THE COMMISSION OF INCOME TAX , THE LEARNED ASSESSING OFFICER HAS SUBMITTED THE 12 POINTS CHECKLIST BEFORE THE HIGHER FORUM WHERE DETAILS A RE GIVEN WITH RESPECT TO THE ASSESSEE, THE ASSESSMENT HISTORY, AMOUNT DETERMINED OF ESCAPED INCOME, INCOME OR ORIGINALLY ASSESSED, PARTICULAR APPLICABILITY OF PROVISIONS OF SECTION 147 AND PROVISIONS OF SECTION 150 ALONG WITH THE REASONS FOR REOPENING. BASED ON THE ABOVE INFORMATION THE COMMISSIONER OF PAGE | 14 INCOME TAX HAS RECORDED HIS SATISFACTION WHEREIN HE RECORDED THAT HE IS SATISFIED THAT THIS IS A FIT CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. THEREFORE, WE ARE OF THE OPINION THAT THE SATISFACTION IS NOT RECORDED IN A MECHANICAL MANNER. THEREFORE, RESPECTFULLY FOLLOWING THE HONOURABLE JURISDICTIONAL HIGH COURT, WE ALSO DO NOT FIND ANY INFIRMITY IN THE SANCTION OF REOPENING GRANTED BY THE HIGHER AUTHORITIES. 19 . IN VIEW OF THI S, WE UP HOLD THE REOPENING OF ASSESSMENT FOR ALL THREE YEARS AND DISMISS ALL THE GROUNDS RELATED TO REOPENING OF THE ASSESSMENT IN ALL THREE APPEALS . GROUND NUMBER ONE FOR ASSESSMENT YEAR 2004 - 05, 2005 06 AND 2006 - 07 ARE DISMISSED. 20 . NOW WE COME TO THE MERITS OF THE ADDITION IN THREE YEARS. APPARENTLY, IN ALL THESE THREE YEARS THERE IS NO REPRESENTATION BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THE SIMPLE PRAYER WAS MADE THAT ASSESSMENT MAY NOT BE TAKEN UP IN THE ISSUE IS FINALLY SETTLED BY THE CESTATE . THE LEARNED ASSESSING OFFICER DID NOT ADHERE TO THE ABOVE REQUEST AND MADE THE ADDITION. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ALSO CONFIRMED THE ADDITION. THE MAIN PLANK OF THE ARGUMENT OF THE ASSESSEE IS THAT B EFORE THE COMMISSIO NER OF INCOME TAX APPEALS THE ASSESSEE HAS SUBMITTED CERTAIN OPINION OF EXPERTS DATED 21/2/2004 AND 25/2 /2004 AND 8/4/ 2004, WHICH WERE NOT CONSIDERED BY HIM. THE ASSESSEE ALSO STATED THAT ASSESSEE HAS SUBMITTED A COMPARATIVE CHART WHEN THE MANUFACTURING L OSS DURING THE YEAR WAS 24.38%, IN THE PRECEDING YEARS SUCH LOSS WAS 26.89%, AND IT HAS BEEN ALLOWED BY THE LEARNED ASSESSING OFFICER. IT IS FURTHER STATED THAT THE LOSS FROM CONVERSION WAS 4.55% DURING THE YEAR AND IN EARLIER YEARS OF 26%, IT IS ALLOWED. THEREFORE, THE YIELD AND THE LOSS ARE COMPARABLE WITH THE EARLIER YEARS. THE FURTHER CLAIM OF THE ASSESSEE IS THAT THE CONSEQUENTIAL EXPENDITURE AND EXPENSES SHOULD HAVE BEEN ALLOWED BY THE LEARNED ASSESSING OFFICER IF AT ALL THE UNACCOUNTED PRODUCTION IS HELD TO BE UNACCOUNTED SALES. IT WAS STATED THAT THE GROSS PROFIT DECLARED BY THE ASSESSEES 6.75% AND IF THE UNACCOUNTED SALES IS CONSIDERED THE GROSS PROFIT COMES TO 48.20 %, WHICH IS IMPOSSIBLE, AND GIVING ABSURD RESULT. ON CAREFUL CONSIDERATION OF THE ARGUMENT OF THE ASSESSEE, COUPLED WITH THE FACT THAT THE LEARNED ASSESSING OFFICER HAS GIVEN ENOUGH OPPORTUNITY TO THE ASSESSEE TO APPEAR AND SUBMIT DETAILS, ISSUE OF SUMMONS TO THE DIRECTOR OF THE COMPANY PAGE | 15 WHO DID NOT APPEAR BEFORE THE ASSESSING OFFICE R, SEVERAL INCRIMINATING DOCUMENTS FOUND DURING SEARCH BY THE CENTRAL EXCISE AUTHORITIES WHICH ARE BASED ON THE INTELLIGENCE REPORT LISTED OUT IN ORDER OF COMMISSIONER OF CENTRAL EXCISE DATED 4/11/2009 WHEREIN COMPLETE DETAILS OF THE SALES MADE TO THE PART IES HAS BEEN INVESTIGATED ALONG WITH THE TRANSPORT DETAILS OF THE GOODS AND TRAIL OF CASH RECEIPT ET CETERA, THESE DETAILS ARE REQUIRED TO BE EXPLAINED BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER IN DETAIL. FURTHER MERELY IN ABSENCE OF PROPER DET AILS BY THE ASSESSEE THE LEARNED ASSESSING OFFICER HAS CONFIRMED THE ADDITION OF THE WHOLE UNACCOUNTED PRODUCTION AS UNACCOUNTED INCOME OF THE ASSESSEE WITHOUT GIVING ANY DEDUCTION FOR EXPENSES AND MATERIAL. FURTHER ASSESSEE SUBMITTED THAT PUNJAB NATIONAL BANK WAS IN POSSESSION OF ALL THESE ENTIRE SEARCH RECORDS AND PREMISES ARE LOCKED BY THAT BANK. THEREFORE, THE ASSESSEE COULD NOT SUBMIT THE RELEVANT RECORDS AND REPLY BEFORE THE ASSESSING OFFICER. LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCES OF THE C ASE AND THE FACT THAT THE ASSESSEE WAS NOT HAVING THE ACCESS TO THE RECORDS, IN THE INTEREST OF JUSTICE, THE WHOLE ISSUE SET ASIDE TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION TO RE - EXAMINE THE WHOLE ISSUE AFTER GIVING PROPER OPPORTUNITY O F HEARING TO THE ASSESSEE. ACCORDINGLY, GROUND NUMBER TWO AND THREE FOR ALL THESE THREE APPEALS RELATING TO THE ADDITION OF UNDISCLOSED TURNOVER ARE ALLOWED WITH ABOVE DIRECTION. 21 . THE GROUND NUMBER FOUR OF ALL THE THREE APPEALS IS RELATED TO THE CHARGE OF INTEREST UNDER SECTION 234B OF THE ACT, NEITHER PARTY ADVANCED ANY ARGUMENTS ON THESE GROUNDS, THE CONSEQUENTIAL IN NATURE AND THEREFORE DISMISSED 22 . OTHER GROUNDS IN ALL THESE THREE APPEALS ARE GENERAL IN NATURE AND THEREFORE THERE DISMISSED. 23 . ACCORDINGLY, AL L THE THREE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24 . ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 / 1 1 / 2018 . S D/ - - SD/ - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 1 1 / 2018 PAGE | 16 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI