D.C.I.T. Central cricle, RAIPUR V. DEVI IRON & POWER LIMITED, RAIPUR

ITA 262/BIL/2014

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3227 (ITAT-RAIPUR)
• Duration Of Justice: 7 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Keywords: Unexplained cash credit; Rejection of books of accounts; Capital asset; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Share purchase agreement; Cost of acquisition; Tangible material; Accommodation entries; Documents seized; Set aside
• Section: 143(3); 153A; 133(6); 205; 195; 207; 264; 44AB; 43; 48; 73; 72; 13; 153; 145(3); 22; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ./ I.T.A. NOS. 262 TO 265/RPR/2014 A/W. CROSS OBJECTION NOS. 25 TO 28/RPR/2015 ( ASSESSMENT YEARS : 2006-07 TO 2009-10) THE DEPUTY COMMISSIONER OF INCOME-TAX (CENTRAL), AAYAKAR BHAWAN, CENTRAL REVENUE BUILDING, CIVIL LINES, RAIPUR (C.G.) / VS. M/S. DEVI IRON & POWER PVT. LTD. MAHAMAYA TOWER, 3 RD & 4 TH FLOOR, IN FRONT OF ANUPAM NAGAR, NEAR VARUN HONDA, G. E. ROAD, RAIPUR (CG) ./ ./PAN/GIR NO. : AABCD9753D ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) /REVENUE BY : SHRI P. K. MISHRA, CIT.DR / ASSESSEE BY : SHRI VEEKAAS S SHARMA, A.R. DATE OF HEARING 09/08/2021 ! / DATE OF PRONOUNCEMENT 21/10/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS ARE DIRECTED AT THE INSTANCE OF REVENUE IN RESPECT OF ASSESSEE CAPTIONED ABOVE, ARISING FRO M THE COMMON AND COMBINED ORDERS OF THE COMMISSIONER OF INCOME T AX (APPEALS) [CIT(A)] FOR ALL ASSESSMENT YEARS. IN COUNTER, T HE ASSESSEE HAS ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 2 - ALSO FILED CROSS OBJECTIONS IN ALL REVENUES APPEAL S AS TABULATED HEREUNDER: ITA NOS. NAME OF ASSESSEE AY COMBINED ORDER OF CIT(A) DATED COMBINED ORDER OF AO DATED ASSESSMENT ORDER PASSED UNDER SECTION 262 TO 265 /RPR/14 A/W. CO NOS. 25 TO 28/RPR/2015 M/S. DEVI IRON & POWER PVT. LTD. 2006-07 TO 2009- 10 18.07.2014 -DO- 153A R.W.S. 143(3) OF THE ACT 2. THE ISSUES BEING COMMON, INTERLINKED AND SIMILAR AND ARISING FROM A COMMON ORDER OF CIT(A), ALL THE CAPTIONED RE VENUES APPEALS IN RESPECT OF THE CAPTIONED ASSESSEE HAVE B EEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. 3. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS SOME WHICH TRANSCENDS TO ALL THE ASSESSMENT YEARS IN APP EAL BEGINNING FROM A.Y. 2006-07 UPTO 2009-10. THE GROUNDS ARE THU S CLUBBED & CONSOLIDATED FOR VARIOUS YEARS FOR THE SAKE OF CONV ENIENCE OF ADJUDICATION. 4. AS PER ITS GROUNDS OF APPEAL, THE REVENUE HAS BR OADLY CHALLENGED THE RELIEF GRANTED BY THE CIT(A) ON TWO COUNTS; (1) ADDITIONS OF RS.4,56,00,000/- (A.Y. 2006-07), RS.95 ,00,000/- (A.Y. 2007-08) & RS.1,78,50,000/- (A.Y. 2009-10) INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT IN RESPECT OF R ECEIPT OF SHARE APPLICATION/SHARE CAPITAL; & (2) ADDITIONS OF DIFFE RENT AMOUNTS ON ACCOUNT OF SUPPRESSION OF YIELD AND UNACCOUNTED PRO DUCTIONS/SALES IN EACH ASSESSMENT YEAR FROM A.YS. 2007-08 & 2008-0 9. 5. AS PER ITS CROSS OBJECTIONS FOR THE VARIOUS ASSE SSMENT YEARS IN QUESTION SPANNING OVER A.YS. 2006-07 TO 2009-10, TH E ASSESSEE HAS PRIMARILY RAISED A LEGAL OBJECTION THAT IN THE ABSE NCE OF ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 3 - INCRIMINATING DOCUMENT QUA THE ADDITIONS/DISALLOWANCES MADE, THE JURISDICTION OF THE AO GETS OUSTED UNDER S.153A OF THE ACT FOR MAKING THE ADDITION/DISALLOWANCES UNCONNECTED TO TH E INCRIMINATING MATERIAL IN RESPECT OF UNABATED AND CONCLUDED ASSES SMENTS CONCERNING A.YS. 2006-07 TO 2009-10 IN QUESTION. TH E ASSESSEE HAS HOWEVER SUPPORTED THE ACTION OF THE CIT(A) IN REVER SING THE ADDITIONS/DISALLOWANCES MADE BY THE AO ON MERITS WH ILE ASSAILING HIS OPINION IN FAVOUR OF REVENUE ON LEGAL OBJECTION S. 6. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF PRODUCTION OF SPONGE IRON FROM IRON ORE, FOR WHICH, THE COMPANY WAS INCORPORATED ON 31.03.2004. 6.1 A SEARCH WAS CONDUCTED ON THE RESIDENTIAL/ BUSI NESS PREMISES OF THE ASSESSEE GROUP, NAMELY, MAHAMAYA GROUP ON 21 .06.2011 INCLUDING THE ASSESSEE HEREIN. A SUM OF RS.20400 /- WAS FOUND IN CASH IN MAIN OFFICE AT TATIBANDH, RAIPUR AND ANOTHE R RS.79,350/- WAS FOUND KEPT IN FACTORY PREMISES. CONSEQUENT UPON SEARCH, NOTICES UNDER S.153A OF THE ACT WERE ISSUED ON THE ASSESSEE. PURSUANT THERETO, THE ASSESSEE FILED RETURN OF INCO ME UNDER S.153A OF THE ACT. THE ASSESSMENT WAS INTER ALIA FRAMED UNDER S.143(3) R.W.S. 153A OF THE ACT FOR A.YS. 2006-07 TO 2009-10 IN QUESTION. A COMMON ORDER COVERING ALL YEARS UNDER SEARCH WAS PA SSED. 6.2 IN THE COURSE OF THE SEARCH ASSESSMENT NOTED AB OVE, THE AO INTER ALIA OBSERVED THAT CREDITS IN RESPECT OF SHARE APPLICAT ION MONEY TO THE TUNE OF RS.4,56,00,000/- (A.Y. 2006-07 ), RS.95,00,000/- (A.Y. 2007-08) & RS.1,78,50,000/- (A .Y. 2009-10) IN THE BOOKS DOES NOT SATISFY THE REQUIREMENTS OF S ECTION 68 OF THE ACT. IT WAS ESSENTIALLY OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE S HARE APPLICANTS ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 4 - (SUBSCRIBERS). THE AO ALSO OBSERVED THAT THE ASSESS EE HAS SUPPRESSED THE YIELD OF SPONGE IRON QUA THE CONSUMPTION OF IRON ORE AND COAL AND HAS THUS INDULGED INTO UNACCOUNTED SAL ES IN THE ALL THESE YEARS UNDER APPEALS. THE BOOKS OF ACCOUNTS W ERE REJECTED AND ADDITIONS WERE MADE ON ACCOUNT OF LOW YIELD AND CON SEQUENT ALLEGED SUPPRESSION OF PRODUCTION/ SALES OF VARIED AMOUNTS WERE MADE AFTER COMPARISON OF ACTUAL YIELD WITH A BENCHMARK YIELD O F 60% EXPECTED BY THE AO ON THE BASIS OF SOME AVERAGE YIELD IN THE INDUSTRY. THUS, AN ADDITION OF RS.72,19,622 /- WAS MADE ON ACCOUNT OF DIFFERENCE IN PRODUCTION WHILE FRAMING THE ASSESSMENT ORDER FOR A Y 2006-07. SIMILAR ADDITIONS TOWARDS LOW YIELDS WERE MADE TOWA RDS LOW YIELDS IN OTHER ASSESSMENT YEARS ALSO. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) CHALLENGING THE AFORESAID ADDITIONS IN ALL THESE YE ARS. 8. THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE T HE CIT(A) AND THE DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM ON BOTH ISSUES; NAMELY, (I) ADDITIONS UNDER S.68 OF THE ACT ON ACCO UNT OF SHARE APPLICATION MONEY & (II) ADDITIONS ON ACCOUNT OF LO W YIELD OF FINISHED PRODUCT. A LEGAL OBJECTION WAS SIMULTANEOU SLY RAISED ON JURISDICTION UNDER S. 153A IN RESPECT OF ASSESSMENT S UNABATED AND CONCLUDED PRIOR TO SEARCH. THE CIT(A) TOOK NOTE OF FACTUAL AND LEGAL SUBMISSIONS SO MADE AND FOUND MERIT IN THE PLEA OF THE ASSESSEE ON BOTH ISSUES INVOLVED ON MERITS. HOWEVER, THE LEGAL OBJECTIONS OF THE ASSESSEE QUESTIONING JURISDICTION UNDER S. 153A WAS DISCARDED. 9. THE CIT(A) ADDRESSED THE FIRST ISSUE ON ADDITION S MADE BY THE AO UNDER S.68 OF THE ACT ON MERITS IN FAVOUR OF THE ASSESSEE FOR WHICH THE RELEVANT OPERATIVE PARA READS AS UNDER: ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 5 - 5. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AND SUBMISSIONS OF THE APPELLANT. AS REGARDS ALLEGATION OF THE A.O. REGARDING NON-MAINTENANCE OF STATUTORY RECORDS, THE APPELLANT WAS ASKED TO FURNISH THE COPY OF STATEMENTS RECORDED DU RING THE COURSE OF PROCEEDINGS U/S 132, IT HAS BEEN SUBMITTED BY THE A PPELLANT THAT THE STATEMENT OF NONE OF THE APPELLANT COMPANYS REPRES ENTATIVE WAS RECORDED AT THE REGISTERED OFFICE PREMISES AND IT H AS ALSO BEEN SUBMITTED BY THE APPELLANT THAT NONE OF THE OFFICER OF SEARCH TEAM EVER VISITED THE REGISTERED OFFICE PREMISES OF THE APPEL LANT COMPANY. WITH A VIEW TO ASCERTAIN THE FACTS, DURING THE COURSE OF A PPELLATE PROCEEDINGS OF OTHER COMPANIES COVERED IN THE MAHAMAYA GROUP OF CASES AND IN APPEAL BEFORE THE UNDERSIGNED, NAMELY (1) MAHAMAYA STEEL INDUSTRIES LIMITED, (2) ABHISHEK STEEL INDUSTRIES LIMITED, (3) MAHALAXMI TECHNOCAST PRIVATE LIMITED (4) SHREE SHYAM SPONGE & POWER LIMITED, WERE ASKED TO FURNISH COPY OF STATEMENTS OF ALL THE PERSONS RECORDED BY THE SEARCH TEAM DURING THE PROCEEDINGS U/S 132. THE STATEMENTS WERE FURNISHED BY THE SAID COMPANIES. I HAVE CAREFULLY G ONE THROUGH ALL THE STATEMENTS OF ALL THE PERSONS RECORDED DURING THE P ROCEEDINGS U/S 132 ON 21/22.06.2011. I AM IN AGREEMENT WITH THE SUBMIS SIONS OF THE APPELLANT COMPANY THAT NO STATEMENT OF APPELLANT CO MPANYS REPRESENTATIVE WAS RECORDED DURING THE SEARCH PROCE EDINGS. THE STATEMENTS OF OTHER PERSONS BELONGING TO THE AFORES AID COMPANIES ALSO DOES NOT, IN ANY WAY, LEAD TO AN INFERENCE THAT THE GROUP COMPANIES OR THE APPELLANT COMPANY DO NOT MAINTAIN STATUTORY REC ORDS / REGISTERS. IT IS ALSO SEEN THAT THE APPELLANT COMPANY HAD MADE SP ECIFIC REQUEST BEFORE THE A.O. VIDE ITS LETTER SUBMITTED ON 14.03. 2014 AND 18.03.2014 TO DISPEL THE DOUBTS OF THE A.O. REGARDING NON-MAIN TENANCE OF STATUTORY RECORDS AND REGISTERS. FROM THE ASSESSMENT ORDER, I T APPEARS THAT THE A.O. DID NOT TAKE ANY COGNIZANCE OF THE ASSERTION M ADE BY THE APPELLANT REGARDING MAINTENANCE OF STATUTORY RECORDS AND REGI STERS IN ACCORDANCE WITH THE PROVISIONS OF COMPANIES ACT AND WITHOUT VERIFYING THE VERIFIABLE FACTS REGARDING MAINTENANCE OR OTHER WISE OF STATUTORY RECORDS AND REGISTERS, THE A.O SIMPLY SEEMS TO HAVE FOUND IT CONVENIENT TO REMAIN SILENT AND SIT BACK AFTER MAKING THE ALLE GATION WITHOUT ANY PROPER BASIS. I DO FIND CONSIDERABLE FORCE IN THE S UBMISSIONS OF THE APPELLANT THAT THE A.O. MERELY MADE THE ALLEGATION, HOWEVER, THE A.O. HAS NOT BROUGHT ON RECORD ANY BASIS FOR SUCH ALLEGA TION. IT IS NOT THE CASE OF THE A.O. THAT THE SEARCH TEAM DID VISIT THE REGISTERED OFFICE PREMISES OF THE APPELLANT COMPANY AND HAD ASKED A S PECIFIC QUERY TO THE APPELLANT COMPANYS REPRESENTATIVE WITH REGARD TO MAINTENANCE OF STATUTORY RECORDS AND THAT THE APPELLANT COMPANYS REPRESENTATIVE FAILED TO PRODUCE THE STATUTORY RECORDS OR REGISTER S OR EXPRESSED THEIR INABILITY TO PRODUCE THE SAME OR HAD ADMITTED THAT NO SUCH RECORDS ARE BEING MAINTAINED. I FIND THAT ON ONE HAND, THE A.O MADE THE ALLEGATION, HOWEVER, WITHOUT BRINGING ON RECORDS ITS BASIS AND ON THE OTHER HAND, THE A.O. DID NOT ALSO ADHERE TO THE APPELLANT COMPA NYS SPECIFIC REQUEST TO VERIFY THE STATUTORY RECORDS THAT ARE BE ING MAINTAINED BY THE APPELLANT COMPANY, SUCH AN ACTION OF THE A.O. HAS M ADE THE ASSESSMENT ORDER VITIATED BY ONE SIDED CONCLUSION BY THE A.O. I HAVE CAREFULLY PERUSED THE STATEMENT OF MS. JASWINDER KAUR MISSION RECORDED ON 21.6.2011, FROM THE PERUSAL OF SAID STATEMENT, I FI ND THAT THE SAID EMPLOYEE OF GROUP COMPANY DID SHOW MEMBERS REGISTER , SHARE CERTIFICATES AND COUNTERFOILS OF THE APPELLANT COMP ANY AND THEREFORE, THE ALLEGATION OF THE A.O APPEARS TO BE BASELESS. N EITHER FROM THE ASSESSMENT ORDER NOR FROM THE STATEMENTS RECORDED D URING SEARCH ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 6 - PROCEEDINGS, IT IS EMERGING THAT THERE WAS ANY ATTE MPT TO LOCATE SUCH STATUTORY RECORDS. 5.2 THE DISCHARGE OR OTHERWISE OF THE ONUS U/S 68 H AS BEEN INDEPENDENTLY EVALUATED AND EXAMINED. THE APPELLANT HAS SUBMITTED THAT ESCORTS FINVEST PRIVATE LIMITED IS A GROUP COM PANY, THE APPELLANT HAS PLACED ON RECORD, COPY OF ASSESSMENT ORDER IN T HE CASE OF ESCORTS FINVEST PRIVATE LIMITED FOR THE ASSESSMENT YEAR 200 6-07 AND 2007-08. 5.3 IT IS SEEN THAT ESCORTS FINVEST PRIVATE LIMITE D WAS ASSESSED U/S 143(3) AND THE ITO, WARD-1(4), KOLKATA RECORDED A S PECIFIC FINDING THAT THE SAID COMPANY HAD SHARE CAPITAL AND SHARE P REMIUM RESERVE OF RS.5,64,50,200/- AND RS.44,37,90,000/- AS ON 31.3.2 006 AND THAT THE ITO, WARD-1(4), KOLKATA HAD CONDUCTED ENQUIRIES WIT H THE VARIOUS SHAREHOLDERS OF ESCORTS FINVEST PRIVATE LIMITED BY ISSUING NOTICES U/S 133(6) AND VERIFYING THEIR RESPONSES. I FIND THAT I TO, WARD-1(4), KOLKATA WAS SATISFIED WITH THE GENUINENESS OF ADDIT ION TO SHARE CAPITAL AND RESERVES OF ESCORTS FINVEST PRIVATE LIMITED INA SMUCH AS NO ADVERSE INFERENCE WAS DRAWN BY ITO, WARD-1(4), KOLKATA WITH REGARD TO SAID ADDITION TO SHARE CAPITAL AND RESERVES OF ESCORTS F INVEST PRIVATE LIMITED. APART FROM THE AUDITED FINANCIAL STATEMENT S IN SUPPORT OF CREDIT WORTHINESS OF THE SAID COMPANY, I AM CONVINC ED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORT HINESS OF THE SAID COMPANY WHEN THE SAID COMPANY HAS BEEN DULY ASSESSE D AND THE SHARE CAPITAL AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NO T ONLY EXPLAINED THE SOURCE OF RECEIPT OF SHARE APPLICATION / CAPITAL MO NEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMP ANY NAMELY ESCORTS FINVEST PRIVATE LIMITED. FURTHERMORE, I FIND THAT T HE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD C OVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, THEREFORE, E VEN ASSUMING WITHOUT ACCEPTING THE CONTENTION OF THE A.O., NO UN DISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCE EDINGS AS THE SAME ARE BEYOND THE PERIOD COVERED UNDER THE PRESENT SEA RCH ASSESSMENT PROCEEDINGS. 5.4 THE APPELLANT HAS SUBMITTED THAT ANTARIKSH COM MERCE PRIVATE LIMITED IS A GROUP COMPANY, THE APPELLANT HAS PLACE D ON RECORD, COPY OF ASSESSMENT ORDER IN THE CASE OF ANTARIKSH COMMER CE PRIVATE LIMITED FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09. 5.5 IT IS SEEN THAT ANTARIKSH COMMERCE PRIVATE LIM ITED WAS ASSESSED U/S 143(3) R.W.S 147 AND EVEN AS ON 31.3.2005, THE SAID COMPANY HAD SHARE CAPITAL AND RESERVES OF RS.23.62 CRORES. APAR T FROM THE AUDITED FINANCIAL STATEMENTS IN SUPPORT OF CREDIT WORTHINES S OF THE SAID COMPANY, I AM CONVINCED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORTHINESS OF THE SAID COMPANY W HEN THE SAID COMPANY HAS BEEN DULY ASSESSED AND THE SHARE CAPITA L AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS AND THE SAID COMPANY HAD SUF FICIENT MEANS TO INVEST EVEN PRIOR TO THE PERIOD COVERED UNDER PRESE NT SEARCH PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NOT ONLY EXPLAINED THE SOURCE OF RECE IPT OF SHARE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 7 - APPLICATION / CAPITAL MONEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMPANY NAMELY ANTARIKSH COMMERCE PRIVAT E LIMITED. FURTHERMORE, I FIND THAT THE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD COVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, THEREFORE, EVEN ASSUMING WITHOUT ACCEP TING THE CONTENTION OF THE A.O., NO UNDISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCEEDINGS AS THE SAME ARE BEYOND THE P ERIOD COVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS. 5.6 THE APPELLANT HAS SUBMITTED THAT CALLIDORA TRA DERS PRIVATE LIMITED IS A GROUP COMPANY, THE APPELLANT HAS PLACE D ON RECORD, COPY OF ASSESSMENT ORDER IN THE CASE OF CALLIDORA TRADER S PRIVATE LIMITED FOR THE ASSESSMENT YEAR 2006-07. 5.7 IT IS SEEN THAT CALLIDORA TRADERS PRIVATE LIMI TED WAS ASSESSED U/S 143(3) AND THE ITO, WARD-1(1), KOLKATA RECORDED A SPECIFIC FINDING THAT THE SAID COMPANY HAD SHARE CAPITAL AND SHARE P REMIUM RESERVE OF RS.45,00,000/- AND RS.10,51,20,000/- AS ON 31.3.200 6 AND THAT THE ITO, WARD-1(1), KOLKATA HAD CONDUCTED ENQUIRIES WITH THE VARIOUS SHAREHOLDERS OF CALLIDORA TRADERS PRIVATE LIMITED B Y ISSUING NOTICES U/S 133(6) AND VERIFYING THEIR RESPONSES. I FIND TH AT ITO, WARD-1(1), KOLKATA WAS SATISFIED WITH THE GENUINENESS OF ADDIT ION TO SHARE CAPITAL AND RESERVES OF CALLIDORA TRADERS PRIVATE LIMITED I NASMUCH AS NO ADVERSE INFERENCE WAS DRAWN BY ITO, WARD-1(1), KOLK ATA WITH REGARD TO SAID ADDITION TO SHARE CAPITAL AND RESERVES OF CALL IDORA TRADERS PRIVATE LIMITED. APART FROM THE AUDITED FINANCIAL S TATEMENTS IN SUPPORT OF CREDIT WORTHINESS OF THE SAID COMPANY, I AM CONV INCED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CRE DIT WORTHINESS OF THE SAID COMPANY WHEN THE SAID COMPANY HAS BEEN DULY AS SESSED AND THE SHARE CAPITAL AND RESERVES I.E. THE NET WORTH OF TH E SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS, I N THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NOT ONLY EXPLAINED THE SOURCE OF RECEIPT OF SHARE APPLICATION / CAPITA L MONEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMP ANY NAMELY CALLIDORA TRADERS PRIVATE LIMITED. FURTHERMORE, I F IND THAT THE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD COVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, TH EREFORE, EVEN ASSUMING WITHOUT ACCEPTING THE CONTENTION OF THE A. O., NO UNDISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMEN T PROCEEDINGS AS THE SAME ARE BEYOND THE PERIOD COVERED UNDER THE PR ESENT SEARCH ASSESSMENT PROCEEDINGS. 5.8 THE APPELLANT HAS SUBMITTED THAT WELFIT FASIONS PRIVATE LIMITED IS A COMPANY, THE APPELLANT HAS PLACED ON RECORD, C OPY OF ASSESSMENT ORDER IN THE CASE OF WELFIT FASIONS PRIVATE LIMITED FOR THE ASSESSMENT YEAR 2005-06. 5.9 IT IS ALSO SEEN THAT THE APPELLANT WAS ASSESSE D IN THE PAST AND CASE OF ASSESSMENT YEAR 2006-07 AND 2007-08 WAS UND ER SCRUTINY ASSESSMENT U/S 143(3) AND IN THE SAID ASSESSMENT PR OCEEDINGS, THE ADDITION TO SHARE APPLICATION / SHARE CAPITAL WAS D ULY ACCEPTED AS GENUINE. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 8 - 5.10 IT IS SEEN THAT WELFIT FASIONS PRIVATE LIMITED WAS ASSESSED U/S 143(3) AND THE ITO, WARD-2(4), KOLKATA RECORDED A S PECIFIC FINDING THAT THE SAID COMPANY HAD SHARE CAPITAL OF RS.53,50 ,000/- AND RESERVE AND SURPLUS OF RS.4,72,50,000/- AS ON 31.3.2005. I FIND THAT ITO, WARD- 2(4), KOLKATA WAS SATISFIED WITH THE GENUINENESS OF ADDITION TO SHARE CAPITAL AND RESERVES OF WELFIT FASIONS PRIVATE LIMI TED INASMUCH AS NO ADVERSE INFERENCE WAS DRAWN BY ITO, WARD-2(4), KOLK ATA WITH REGARD TO SAID ADDITION TO SHARE CAPITAL AND RESERVES OF WELF IT FASIONS PRIVATE LIMITED. APART FROM THE AUDITED FINANCIAL STATEMENT S IN SUPPORT OF CREDIT WORTHINESS OF THE SAID COMPANY, I AM CONVINC ED THAT NO ADVERSE VIEW CAN BE TAKEN REGARDING IDENTITY OR CREDIT WORT HINESS OF THE SAID COMPANY WHEN THE SAID COMPANY HAS BEEN DULY ASSESSE D AND THE SHARE CAPITAL AND RESERVES I.E. THE NET WORTH OF THE SAID COMPANY WAS DULY ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS, IN THE FACTUAL MATRIX OF THIS CASE, I AM CONVINCED THAT THE APPELLANT HAS NO T ONLY EXPLAINED THE SOURCE OF RECEIPT OF SHARE APPLICATION / CAPITAL MO NEY, THE APPELLANT HAS ALSO EXPLAINED THE SOURCE OF SOURCE BY PLACING ON RECORD ASSESSMENT ORDER IN THE CASE OF ITS SUBSCRIBER COMP ANY NAMELY WELFIT FASIONS PRIVATE LIMITED. FURTHERMORE, I FIND THAT T HE SAID INVESTOR COMPANY WAS IN EXISTENCE EVEN PRIOR TO THE PERIOD C OVERED UNDER THE PRESENT SEARCH ASSESSMENT PROCEEDINGS, THEREFORE, E VEN ASSUMING WITHOUT ACCEPTING THE CONTENTION OF THE A.O., NO UN DISCLOSED INCOME CAN BE ADDED IN THE PRESENT SEARCH ASSESSMENT PROCE EDINGS AS THE SAME ARE BEYOND THE PERIOD COVERED UNDER THE PRESENT SEA RCH ASSESSMENT PROCEEDINGS. 5.11 IT IS SEEN THAT THE ADDITION TO SHARE APPLICAT ION AND CAPITAL WAS DULY ACCEPTED IN THE SCRUTINY ASSESSMENT PROCEEDING S OF THE APPELLANT U/S 143(3) FOR A.Y 2006-07 AND 2007-08, THE PRESENT ACTION OF THE A.O IS NOT CULMINATING FROM ANY SPECIFIC FINDING AGAINS T THE APPELLANT THAT IT WAS A BENEFICIARY OF ANY RACKET WHICH HAS BEEN U NEARTHED AS A RESULT OF SEARCH PROCEEDINGS NOR HAS THE A.O BROUGHT ON RE CORD ANY OTHER EVIDENCE TO INDICATE THAT THE APPELLANT DID MAKE UN DISCLOSED INCOME AND SUCH EVIDENCE CAME ON THE SURFACE AS A RESULT O F SEARCH PROCEEDINGS. THE A.O HAS NOT REBUTTED THE DETAILS O F TANGIBLE NET WORTH SUBMITTED BY THE APPELLANT TO DEMONSTRATE THAT THE SUBSCRIBERS HAD SUFFICIENT MEANS TO INVEST IN THE SHARE APPLICATION /CAPITAL OF THE APPELLANT COMPANY, I HAVE PERUSED THE DETAILS OF NE T WORTH OF THE SUBSCRIBERS WITH REFERENCE TO THE AUDITED FINANCIAL STATEMENTS OF THE SUBSCRIBERS AND FOUND SATISFACTORY. IN THIS BACKGRO UND, IN MY CONSIDERED VIEW, THERE IS NO SCOPE AND REASON TO TA KE A CONTRARY VIEW THAN THAT TAKEN BY THE THEN A.O WITHOUT THERE BEING ANY DOCUMENTARY EVIDENCE AGAINST THE APPELLANT TO DEMONSTRATE THAT THE SHARE APPLICATION MONEY WAS NOTHING BUT UNDISCLOSED INCOM E OF THE APPELLANT. 5.12 FURTHERMORE, I AM IN AGREEMENT WITH THE SUBMIS SIONS OF THE APPELLANT THAT THE SAME A.O HAS ACCEPTED THE ADDITI ON TO PREFERENCE SHARE CAPITAL IN THE CASE OF MAHAMAYA STEEL INDUSTR IES LIMITED RECEIVED FROM ESCORTS FINVEST PRIVATE LIMITED & ANT ARIKSH COMMERCE PRIVATE LIMITED AND THEREFORE, THE IDENTITY AND CRE DITWORTHINESS OF ESCORTS FINVEST PRIVATE LIMITED & ANTARIKSH COMMERC E PRIVATE LIMITED WERE UNDISPUTEDLY ACCEPTED AND GENUINENESS OF ADDIT ION WAS ALSO DULY ACCEPTED, HENCE, THERE CANNOT BE ANY REASON TO TAKE A CONTRARY VIEW IN THE CASE OF APPELLANT. THE A.O CANNOT BE PERMITTED TO TAKE TWO DIVERGENT VIEWS ON SAME SET OF FACTS AND ON SAME SE T OF EVIDENCES, WHEN ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 9 - THE SAME A.O UNDISPUTEDLY ACCEPTED THE GENUINENESS OF ADDITION TO SHARE CAPITAL OF MAHAMAYA STEEL INDUSTRIES LIMITED, THERE WAS NO REASON FOR HIM TO TAKE A CONTRARY VIEW IN THE CASE OF THE APPELLANT. 5.13 IT IS AN UNDISPUTED FACT THAT THE NAMES, ADDRE SSES AND ASSESSMENT PARTICULARS OF THE INVESTORS, THEIR ACTIVE STATUS A S PER THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS AND BANK STATEMENT OF THE APPLICANTS HAD BEEN FURNISHED BY THE APPELLANT BEFORE THE AO. IT I S FURTHER OBSERVED THAT THE SHARE APPLICATION/CAPITAL MONEY HAS BEEN R ECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE INVESTORS MOST OF WH OM ARE COMPANIES AND IS DULY REFLECTED IN THE BANK ACCOUNT OF THE AP PELLANT. I HAVE PERUSED THE BANK STATEMENTS OF THE INVESTORS, THEIR AUDITED FINANCIAL STATEMENTS AND CONFIRMATION FOR MAKING SUCH INVESTM ENTS, WHICH CLEARLY ESTABLISHES THE FACTUM OF MAKING INVESTMENTS. THESE FACTS ARE CLEARLY ESTABLISHING THE IDENTITY OF THE INVESTORS AND THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. 5.14 IT IS OBSERVED FROM THE RECORDS AND ASSESSMENT ORDER THAT FOR THE PURPOSE OF MAKING ADDITION AS UNEXPLAINED CASH CRED ITS, THE AO HAS HEAVILY RELIED UPON THE JUDICIAL PRONOUNCEMENTS, HO WEVER, THE APPELLANT HAS MADE ELABORATE SUBMISSIONS DISTINGUIS HING THE FACTS, I AM CONVINCED WITH THE EXPLANATION OF THE APPELLANT THA T THE DECISIONS RELIED UPON BY THE A.O ARE NOT APPLICABLE IN THE FA CTS OF THE PRESENT CASE AS THERE IS NOTHING ON RECORD WHICH CAN INDICA TE THAT THE RECEIPT OF SHARE APPLICATION MONEY WAS BY WAY OF ACCOMMODATION ENTRIES ONLY. IT IS ALSO NOT THE CASE OF THE A.O THAT THE INVESTORS HAVE ACCEPTED BY WAY OF STATEMENT THAT THE SUMS PAID TO THE APPELLANT WA S IN FACT RECEIVED FROM THE APPELLANT AND INVESTORS MERELY ROUTED THE UNDISCLOSED INCOME OF THE APPELLANT THROUGH MONEY LAUNDERING PROCESS I N THE FORM OF SHARE APPLICATION MONEY. ON THE CONTRARY, THE A.O HIMSELF HAS STATED IN THE ASSESSMENT ORDER THAT THE INVESTORS HAVE SENT CONFI RMATORY LETTERS, I HAVE GONE THROUGH THE CONFIRMATORY LETTERS, IT IS S EEN THAT THE LETTERS WERE SENT THROUGH REGISTERED/SPEED POST WHICH CANNO T BE SAID TO BE UNAUTHENTIC MODE, SECONDLY, THE INVESTORS HAVE CONF IRMED HAVING MADE THE INVESTMENT BY WAY OF AFFIDAVITS WHICH ARE DULY NOTARIZED, THE INVESTORS HAVE ALSO FURNISHED THE COPIES OF SHARE A PPLICATION FORMS, THEIR AUDITED FINANCIAL STATEMENTS, ITR, BANK STATE MENT. IN THE BACKDROP OF THESE FACTS AND DOCUMENTARY EVIDENCES , IN MY CO NSIDERED OPINION, THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBER S HAS BEEN ESTABLISHED AND CANNOT BE DOUBTED, IT IS NOT JUSTIF IED ON THE PART OF THE A.O TO SIMPLY REJECT THE DOCUMENTARY EVIDENCES ON R ECORD AND TAKE AN ADVERSE VIEW AND CLOTHING THE CASE OF THE APPELLANT WITH THE JUDICIAL PRONOUNCEMENTS WHICH HAVE BEEN RENDERED ON ABSOLUTE LY DIFFERENT FACTS AND CIRCUMSTANCES. 5.15 THE APPELLANT HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS AND CORRELATED THE FACTS IN THOSE DECISIONS WITH TH E FACTS IN THE CASE OF THE APPELLANT. I AM CONVINCED THAT THE DECISIONS RE LIED UPON BY THE APPELLANT ARE CERTAINLY APPLICABLE IN THE CASE OF T HE APPELLANT AS THE FACTS ARE NOT ONLY SIMILAR BUT IDENTICAL. THE APPEL LANT HAS ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT AND JURISDICTIONAL HIGH COURT WHICH CANNOT BE IGNORED. THE A.O HAS REF ERRED TO THE NOTICES ISSUED UNDER SECTION 133(6) WHICH HAVE BEEN RETURNED UN-SERVED IN SOME OF THE CASES. IT IS SEEN THAT IN THE SUBSEQ UENT PARAGRAPH, THE A.O HIMSELF HAS GIVEN THE PARTICULARS OF RECEIPT OF REPLIES FROM THE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 10 - INVESTORS, THEREFORE, IN MY CONSIDERED VIEW, NO ADV ERSE INFERENCE CAN BE DRAWN AGAINST THE APPELLANT FOR MERE NON SERVICE OF NOTICES INITIALLY, I HAVE CAREFULLY PERUSED THE EXPLANATION SUBMITTED BY THE APPELLANT IN RESPECT OF CASES WHERE THE NOTICES REMAINED UNSERVE D, THE SUBMISSIONS OF THE APPELLANT ARE FOUND TO BE CONVINCING. IT IS FURTHER OBSERVED THAT NO FURTHER ENQUIRY OR INVESTIGATION HAS BEEN CONDUC TED BY THE AO TO CORROBORATE OR SUPPORT THE CONCLUSIONS DRAWN IN THE ASSESSMENT ORDER SO AS TO ASSESS THE SHARE CAPITAL MONEY AS THE UNDI SCLOSED INCOME OF THE APPELLANT COMPANY. IN MY CONSIDERED OPINION, AP ART FROM DRAWING PRESUMPTIONS, THE AO HAS NOT BROUGHT ANY CLINCHING MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE SAID SHARE CAP ITAL MONEY BELONGS TO THE APPELLANT SINCE NO NEXUS HAS BEEN ESTABLISHE D THAT THE MONEY FOR AUGMENTING THE INVESTMENT IN THE BUSINESS HAS FLOWN FROM APPELLANTS OWN MONEY WHICH IS AN ESSENTIAL PRE-REQUISITE FOR M AKING ADDITION IN SUCH CASES. I AM CONVINCED THAT THE CASE OF THE APP ELLANT IS SQUARELY COVERED BY THE THE DECISIONS RENDERED BY THE HONBL E APEX COURT IN THE CASE OF THE CIT VS. LOVELY EXPORTS (P) LTD. REPORTE D IN 216 CTR 195 AND THE JURISDICTIONAL HIGH COURT VIZ. THE CHHATTIS GARH HIGH COURT IN THE CASE OF THE ACIT VS. VENKATESHWAR ISPAT (P) LTD . REPORTED IN 319 ITR 393 FOR THE REASON THAT THE FACTS IN SUCH CASES ARE ENTIRELY SAME, PARTICULARLY, WHEN NO DIFFERENTIATION COULD BE EFFE CTIVELY DEMONSTRATED AND BROUGHT ON TO THE RECORD BY THE A.O. THE SUBMIS SIONS OF THE AO THAT THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF LOVELY EXPORTS (P) LIMITED WAS RENDERED IN THE LIGHT OF DI FFERENT FACTS INASMUCH AS THE SAID JUDGEMENT WAS RENDERED BY THE HONBLE SUPREME COURT IN THE CONTEXT OF PUBLIC ISSUE, IS DEVOID OF MERIT BECAUSE THE DECISION WAS RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD. WHICH IS A PRIVATE LIMITED COMPANY AND WHICH CANNOT BRING PUBLIC ISSUE OF SHARES. I FIND THAT TH E INVESTMENTS MADE BY THE SHARE APPLICANTS WERE DULY REFLECTED IN THE AUD ITED FINANCIAL STATEMENTS OF THE CORPORATE INVESTORS. IT IS A SETT LED PRINCIPLE OF LAW THAT REASON FOR SUSPICION, HOWEVER GRAVE IT MAY BE, CANNOT BE A BASIS FOR HOLDING ADVERSITY AGAINST APPELLANT. 5.16 THE ASSESSING OFFICER HAS DISREGARDED THE DOCU MENTARY EVIDENCES ADDUCED BY THE APPELLANT SUCH AS CONFIRMA TION FROM THE SHARE APPLICANTS, THEIR PAN, CERTIFICATE OF INCORPORATION OF SUBSCRIBER COMPANIES, RECORDS OF THE REGISTRARS OF COMPANIES ( ROC) GENERATED FROM THE WEBSITE, AFFIDAVITS FILED IN SUPPORT OF TH E FACT OF ADVANCING SHARE APPLICATIONS MONIES ETC. THE SUBSCRIPTION FOR THE SHARES WERE RECEIVED THROUGH CHEQUES. THE INVESTOR-COMPANIES WE RE ACTIVE AS PER THE WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS AN D THEY WERE DULY REGISTERED WITH ROC. THOSE COMPANIES WERE ALSO HAVI NG THEIR INCOME TAX PAN NUMBERS AND REGULARLY FILED RETURNS OF INCO ME. NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO S HOW THAT THE AFFIDAVITS FILED BY THE DIRECTORS OF THE INVESTOR- COMPANIES WERE NOT GENUINE. NO ENQUIRIES WERE CONDUCTED ABOUT THE CONT ENTS OF THE AFFIDAVITS. THE A.O DID NOT MAKE ANY ATTEMPT TO DIS CREDIT THE AFFIDAVITS. THE RESULT IS THAT THE CONTENTS OF THE AFFIDAVITS H AVE NOT BEEN DISPROVED. IT ALSO SHOWS THAT THE PARTIES (DEPONENTS) WERE PRE SENT AT THE GIVEN ADDRESSES AGAINST WHOM ACTION COULD HAVE BEEN TAKEN . NO MATERIAL WAS BROUGHT ON RECORD BY THE A.O INDEPENDENTLY OF THE I NFORMATION RECEIVED, IF ANY, FROM THE INVESTIGATION WING OF TH E INCOME TAX DEPARTMENT TO SHOW THAT THE MONIES REPRESENTED THE APPELLANT'S UNDISCLOSED INCOME. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 11 - 5.17 THE HONBLE SUPREME COURT IN CIT VS. LOVELY EX PORT, 216 ITR 198 SC AND THE DELHI HIGH COURT IN DIVINE LEASING A ND FINANCE LIMITED, (2008) 299 ITR 268 HAVE HELD THAT IN THE C ASE OF MONEY RECEIVED TOWARDS SHARE CAPITAL ONLY THE IDENTITY OF THE SHARE HOLDERS NEEDS TO BE PROVED AND ONCE THAT IS ESTABLISHED AND IT IS ALSO SHOWN THAT THE MONEY DID IN FACT COME FROM THEM, IT IS NO T FOR THE ASSESSEE TO PROVE AS TO HOW THE SHARE APPLICANTS CAME TO BE IN POSSESSION OF THE MONEY. IN THE LIGHT OF THE ABOVE DISCUSSION, I AM I NCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLA NT TO SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE APPLICATION MO NEY RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE SAME WERE NOT ACC OMMODATION ENTRIES. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE A.O. WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY T HE APPELLANT AS ITS UNDISCLOSED INCOME. 5.18 THE CASE OF THE APPELLANT FINDS SUPPORT FROM T HE DECISION IN: A) CIT VS. KAMDHENU STEEL & ALLOYS LIMITED & ORS. ( 2012) 68 DTR (DEL) 38 B) IN THE CASE OF COMMISSIONER OF INCOME-TAX V. HLT FINANCE (P.) LTD. [2011] 12 TAXMANN.COM 247 (DELHI) C) IN THE CASE OF COMMISSIONER OF INCOME-TAX-IV V. DWARKADHISH INVESTMENT (P.) LTD. [2010] 194 TAXMAN 43 (DELHI) D) IN THE CASE OF COMMISSIONER OF INCOME-TAX V. WIN STRAL PETROCHEMICALS (P.) LTD. [2011] 10 TAXMANN.COM 137 (DELHI) E) IN THE CASE OF COMMISSIONER OF INCOME-TAX V. ARU NANANDA TEXTILES (P.) LTD. [2011] 15 TAXMANN.COM 226 (KAR.) F) IN THE CASE OF COMMISSIONER OF INCOME-TAX V. CRE ATIVE WORLD TELEFILMS LTD. [2011] 15 TAXMANN.COM 183 (BOM.) 5.19 THE A.O HAS RELIED UPON THE DECISION IN CIT V. NOVA PROMOTERS & FINLEASE (P) LTD. [2012] 342 ITR 169/206 TAXMAN 2 07/18 TAXMANN.COM 217 (DELHI). HOWEVER, ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) I FIN D THAT THE FACTS ARE CLEARLY DISTINGUISHABLE. IN FACT, IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) ITSELF THE HONBLE DELHI HIGH COURT HAS OBS ERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA), AS UNDER:- 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND AP PRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOM E TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ET C. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSIN G OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS AR E FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMEDY OP EN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCO RDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A C ASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTI CULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 12 - SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHO SE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF A CCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBS CRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CA SE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE AS SESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERI AL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF I NVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACT IVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- MEDITATED PLAN - A SMOKESCREEN - CON CEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE Q UESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLAC ED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTIT Y AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFI CER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS A LL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COM E FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD B E A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTR ARY. 5.20 THE CASE OF THE APPELLANT ALSO FINDS SUPPORT F ROM THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (A) COMMISSIONER OF INCOME-TAX-III V. NAMASTEY CHEM ICALS (P.) LTD. [2013] 33 TAXMANN.COM 271 (GUJARAT); (B) COMMISSIONER OF INCOME TAX V. KUBER PLORITECH L TD. [2010] 2 DTLONLINE 136 (DELHI); (C) COMMISSIONER OF INCOME-TAX V. TANIA INVESTMENTS (P.) LTD. IT APPEAL NO. 15 OF 2009, HIGH COURT OF MUMBAI ; (D) BHAV SHAKTI STEEL MINES (P.) LTD. V. COMMISSION ER OF INCOME-TAX [2009] 179 TAXMAN 25 (DELHI); (E) COMMISSIONER OF INCOME-TAX V. SAMIR BIO-TECH (P .) LTD. [2010] 325 ITR 294 (DELHI) (F) COMMISSIONER OF INCOME-TAX-I V. MICRO MELT (P.) LTD. [2009] 177 TAXMAN 35 (GUJ.) (G) COMMISSIONER OF INCOME-TAX-V V. REAL TIME MARKE TING (P.) LTD. [2008] 173 TAXMAN 41 (DELHI) (H) ASSISTANT COMMISSIONER OF INCOME-TAX V. MANSARO VAR URBAN CO-OPERATIVE BANK LTD. [2009] 124 TTJ 269(LUCKNOW); (I) COMMISSIONER OF INCOME-TAX IV V. EMPIRE BUILDT ECH (P.) LTD. [2014] 43 TAXMANN.COM 269 (DELHI); (J) COMMISSIONER OF INCOME-TAX V. MULBERRY SILK INTERNATIONAL LTD. [2012] 19 TAXMANN.COM 31 (KAR.); (K) COMMISSIONER OF INCOME-TAX-III V. NILCHEM CAPIT AL LTD. [2012] 18 TAXMANN.COM 350 (GUJ.); (L) COMMISSIONER OF INCOME-TAX V. JAY DEE SECURITIE S & FINANCE LTD. [2013] 32 TAXMANN.COM 91 (ALLAHABAD); (M) COMMISSIONER OF INCOME-TAX, DELHI-II V. KINETIC CAPITAL FINANCE LTD. [2011] 14 TAXMANN.COM 150 (DELHI); ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 13 - (N) COMMISSIONER OF INCOME-TAX V. VLS FOODS (P.) LT D. [2011] 15 TAXMANN.COM 225 (DELHI); (O) COMMISSIONER OF INCOME-TAX V. AMBUJA GINNING PR ESSING AND OIL CO. (P.) LTD. [2011] 15 TAXMANN.COM 273 (GU J.); (P) COMMISSIONER OF INCOME-TAX V. ROCK FORT METAL & MINERALS LTD. [2011] 198 TAXMAN 497 (DELHI); (Q) COMMISSIONER OF INCOME-TAX V. SIRI RAM SYAL HYD RO POWER (P.) LTD.[2011] 196 TAXMAN 441(DELHI); (R) COMMISSIONER OF INCOME-TAX V. ORBITAL COMMUNICA TION (P.) LTD. [2010] 327 ITR 560 (DELHI); (S) COMMISSIONER OF INCOME-TAX-I V. HIMATSU BIMET L TD. [2011] 12 TAXMANN.COM 87 (GUJ.); 5.21 I AM CONVINCED THAT THE APPELLANT HAS BEEN ABL E TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS AS ALSO THE GENUINENESS OF THE TRANSACTIONS. IN MY CONSIDERED OPINION, THE RATIO OF THE AFORESAID JUDGEMENTS OF THE HONBLE SUPREME COURT IN LOVELY E XPORTS AND THAT OF JURISDICTIONAL HIGH COURT ARE CERTAINLY BINDING IN NATURE ON ALL THE REVENUE AUTHORITIES AND COURTS ETC. AND FURTHER, TH E JUDGEMENT OF THE JURISDICTIONAL HIGH COURT AS WELL AS THAT OF THE HO NBLE SUPREME COURT IN LOVELY EXPORTS HAS BEEN RENDERED ON IDENTICAL FA CTS. HENCE, IT IS IMPERMISSIBLE TO DEVIATE FROM THE RATIO LAID DOWN T HEREIN AND AGAINST THE LAW OF JUDICIAL PRECEDENTS. I AM CONVINCED THAT THE ACTION OF THE A.O IN MAKING THE ADDITION IN RESPECT OF EVEN THOSE SUMS WHICH WERE REFUNDED IS ILLEGAL AS THE SAME IS CLEARLY BEYOND T HE PURVIEW OF SECTION 68. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE RATIO OF THE BINDING JUDGEMENTS, THE ADDITION OF SHARE APPLICATI ON/CAPITAL MONEY OF RS.24,40,90,000/- AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 IS UNCALLED FOR AND HENCE, DELETED. THE APPELLANT GETS RELIEF OF RS. 24,40,90,000/-. A.Y. AMOUNT (RS.) 2006-07 4,56,00,000.00 2007-08 95,00,000.00 2009-10 1,78,50,000.00 2010-11 9,40,00,000.00 2011-12 4,07,00,000.00 2012-13 3,64,40,000.00 10. AS REGARDS SECOND ISSUE PERTAINING TO LOW YIELD AND ALLEGED SUPPRESSION OF PRODUCTION AND UNACCOUNTED SALES, TH E CIT(A) TOOK NOTE OF THE NUANCES OF FACTUAL MATRIX AND LEGAL SUB MISSIONS PLACED BEFORE HIM BY THE ASSESSEE TOWARDS UNTENABILITY OF ADDITIONS AND PASSED A DETAILED COMMON AND COMBINED ORDER ON THE ISSUE COVERING ALL THE ASSESSMENT YEARS NOTED ABOVE. THE RELEVANT OPERATIVE PARA ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 14 - OF THE ORDER OF THE CIT(A) ALSO EXTRACTED HEREUNDER FOR EASY REFERENCE: 9. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSIONS OF THE APPELLANT. THE SEARCH OPERATION U/S 132 HAD TAKEN PLACE IN THE PREMISES OF THE APPELLANT INCLUDING RE SIDENTIAL PREMISES OF THE DIRECTORS. THE A.O HAD ISSUED SHOW CAUSE NOTICE CUM QUERY LETTER INTERALIA ASKING THE APPELLANT TO SHOW CAUSE WHY AD DITION SHOULD NOT BE MADE AS THE YIELD OF SPONGE IRON USING IRON ORE AS RAW MATERIAL DECLARED BY THE APPELLANT WAS LESS THAN 60%. 9.2 THE A.O HAS MADE THE ADDITION ON ACCOUNT OF ALL EGED UNACCOUNTED SALES BASED ON UNACCOUNTED PRODUCTION B Y ESTIMATING THE PRODUCTION AT 60%. THE A.O HAS REPRODUCED VARIOUS M ATHEMATICAL CALCULATIONS AND TABLES CONTAINING DATA OF CONSUMPT ION OF IRON ORE, COAL, POWER, PRODUCTION, AVERAGE CONSUMPTION, HIGHE ST AND LOWEST CONSUMPTION ETC. THE A.O ULTIMATELY ZEROED DOWN TO THE ISSUE OF YIELD OF SPONGE IRON USING IRON ORE AS RAW MATERIAL DECLA RED BY THE APPELLANT. THE A.O HAS FAILED TO ESTABLISH THE NEXU S BETWEEN THE MATHEMATICAL CALCULATIONS OF HIGHEST AND LOWEST CON SUMPTION OF POWER, RAW MATERIAL ETC WITH YIELD OF 60% ADOPTED BY THE A .O. THE A.O HAS MERELY STATED THAT THE YIELD BEING SHOWN BY THE APP ELLANT IS QUIET LOW IN COMPARISON TO THE YIELD SHOWN BY OTHER MANUFACTURER S OF CG, HOWEVER, WHEREFROM THE A.O DERIVED THIS FIGURE OF 60% IS BES T KNOWN TO THE A.O ONLY. THE UNDERSIGNED MADE AN ATTEMPT TO WORK OUT T HE AVERAGE YIELD IN THE INDUSTRY BASED ON DATA AVAILABLE FROM THE DEPAR TMENT ITSELF. 9.3 THE APPELLANT HAS SUBMITTED THAT DESPITE REPEA TED REQUESTS MADE BEFORE THE A.O, THE BASIS OF ADOPTING YIELD IN THE CASE OF APPELLANT AT 60% WAS NOT PROVIDED. WITH A VIEW TO MAKE THE COMPA RISON OF YIELD DECLARED BY OTHER ASSESSEES ENGAGED IN SIMILAR LINE OF BUSINESS, INFORMATION REGARDING YIELD WAS SOUGHT FROM THE OFF ICE OF DCIT-1(2), RAIPUR VIDE LETTER DATED 22.04.2014. THE INFORMATIO N WAS RECEIVED FROM THE OFFICE OF DCIT-1(2), RAIPUR VIDE LETTER DATED 2 5.04.2014. 9.4 THE YIELD DECLARED BY THE APPELLANT AND INFORMA TION REGARDING YIELD DECLARED BY OTHER ASSESSEES, AS RECEIVED FROM THE DCIT-1(2), RAIPUR, WAS COMPARED WITH REFERENCE TO THE UNIFORM AND STANDARD YIELD ADOPTED BY THE A.O. THE RESULTS OF THE COMPARISON S O MADE ARE AS UNDER:- SL NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. YIELD (%) BENCHMARK TAKEN BY AO YIELD (%) OF APPELLANT A.Y. 2008-09 1 GOPAL SPONGE & POWER PVT. LTD. 2007-08 48.86 60.00 48.36 2 GR SPONGE & POWER LTD. 2007-08 51.76 60.00 48.36 3 SHRI NAKODA ISPAT PVT. LTD. 2007-08 52.64 60.00 48.36 4 RASHMI SPONGE IRON & POWER INDUSTRIES LTD 2007-08 40.35 60.00 48.36 ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 15 - ARITHMETICAL MEAN OF YIELD 48.40 60.00 48.36 A.Y. 2009-10 1 GR SPONGE & POWER LTD. 2008-09 52.77 60.00 56.35 2 SHRI NAKODA ISPAT PVT. LTD. 2008-09 53.68 60.00 56.35 3 RASHMI SPONGE IRON & POWER INDUSTRIES LTD 2008-09 52.78 60.00 56.35 4 GOPAL SPONGE & POWER PVT. LTD. 2008-09 51.08 60.00 56.35 5 M/S SUNIL SPONGE & PRIVATE LIMITED 2008-09 51.58 60.00 56.35 6 M/S MAHENDRA SPONGE & POWER LIMITED 2008-09 49.74 60.00 56.35 7 M/S BALDEV ALLOYS PRIVATE LIMITED 2008-09 53.88 60.00 56.35 ARITHMETICAL MEAN OF YIELD 52.22 60.00 56.35 A.Y. 2010-11 1 GOPAL SPONGE & POWER PVT. LTD. 2009-10 55.14 60.00 60.01 2 GR SPONGE & POWER LTD 2009-10 53.69 60.00 60.01 3 SHRI NAKODA ISPAT PVT. LTD. 2009-10 53.09 60.00 60.01 ARITHMETICAL MEAN OF YIELD 53.97 60.00 60.01 THE AFORESAID TABLE LEADS TO FOLLOWING INFERENCES: (A) THE YIELD DECLARED BY DIFFERENT ASSESSEES IN TH E SAME YEAR IS NOT UNIFORM, CONVERSELY, EVERY ASSESSEE DECLARED DIFFER ENT YIELD. (B) THE YIELD DECLARED BY SAME ASSESSEE IN DIFFEREN T YEARS IS ALSO NOT UNIFORM, FOR INSTANCE, YIELD ACHIEVED BY RASHMI SPO NGE IRON & POWER INDUSTRIES LTD IN A.Y 2008-09 AND 2009-10 WAS 40.35% AND 52.78% RESPECTIVELY. (C) NOT EVEN A SINGLE COMPARABLE INSTANCE WAS FOUND DECLARING YIELD OF 60% EXCEPT THE APPELLANT ITSELF. (D) THE ARITHMETICAL MEAN OF YIELD DECLARED BY OTHE R ASSESSEES WAS COMPUTED ON THE BASIS OF DATA AVAILABLE WITHIN THE DEPARTMENT. HOWEVER, THE YIELD DECLARED BY THE APPELLANT IN DIF FERENT YEARS WAS FOUND TO BE MORE THAN THE ARITHMETICAL MEAN OF THE YIELD DECLARED BY THE OTHER ASSESSEES. (E) FROM THE TABLE ABOVE, WHEREIN AVERAGE YIELD OF THE INDUSTRY HAS BEEN COMPUTED BASED ON DATA RECEIVED FROM DCIT-1(2) , RAIPUR, IT IS SEEN THAT THE YIELD ACHIEVED BY THE APPELLANT IN FINANCIAL YEAR 2007-08 AND 2008-09 IS MORE THAN THE AVERAGE I NDUSTRY YIELD. IN VIEW OF AFORESAID FINDINGS, THE ACTION OF THE A. O IN ADOPTING UNIFORM AND STANDARD YIELD OF 60% APPEARS TO BE UNR EASONABLE. 9.5 THEREAFTER, WITH A VIEW TO MAKE COMPARISON OF FINANCIAL RESULTS OF THE APPELLANT WITH OTHER ASSESSEES ENGAGED IN SI MILAR LINE OF BUSINESS, LETTER WAS ISSUED TO DCIT-1(2), RAIPUR ON 28.04.2014. THE DESIRED DOCUMENTS WERE RECEIVED FROM THE DCIT-1(2), RAIPUR VIDE LETTER DATED 26TH MAY, 2014. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 16 - 9.6 I HAVE CAREFULLY GONE THROUGH THE TAX AUDIT RE PORTS, AUDITED FINANCIAL STATEMENTS AND ASSESSMENT ORDERS PASSED BY THE DCIT-1(2), RAIPUR IN THE CASE OF OTHER ASSESSEES REFERRED SUPR A. FROM THE PERUSAL OF SAID ASSESSMENT ORDERS, IT WAS GATHERED THAT NO ADVERSE INFERENCE WAS DRAWN IN THE CASE OF THOSE ASSESSEES THAT WERE ASSESSED IN THE PAST IN THE OFFICE OF DCIT-1(2), RAIPUR ON THE ISSUE OF LOWER YIELD, AND IN FACT DECLARED LESS YIELD THAN THAT DECLARED BY THE APPELLANT. IN NONE OF THE COMPARABLE CASE RECEIVED FROM DCIT-1(2), RAIPUR , SUCH STANDARD YIELD OF 60% WAS ADOPTED DESPITE OF THE FACT THAT A LL THE COMPARABLE CASES DECLARED YIELD MUCH LESS THAN 60% AND EVEN LE SS THAN THAT DECLARED BY THE APPELLANT. 9.7 I HAVE CAREFULLY ANALYZED THE FINANCIAL RESULT S OF THE APPELLANT AND A COMPARISON OF GP AND NP RATE WAS DRAWN BETWEE N GP AND NP RATE DECLARED BY THE APPELLANT AND THE COMPARABLE C ASES RECEIVED FROM DCIT-1(2), RAIPUR. THE RESULT OF THE COMPARISON IS AS UNDER: SL. NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. TURNOV ER (RS. IN LACS.) G.P. (%) N.P. (%) YIEL D (%) TURNO VER OF APPEL LANT (RS. IN LACS. ) GP (%) OF APPELLA NT NP (%) OF APPEL LANT YIELD (%) OF APPEL LANT 1 RASHMI SPONGE IRON & POWER INDUSTRIES LTD 2007- 08 9061.3 3 18.79 4.66 * 40.35 2544. 88 23.13 12.49 48.36 AVERAGE YIELD FOR F.Y. 2007- 08 *** 40.35 1 GOPAL SPONGE & POWER PVT. LTD. 2008- 09 10668. 98 11.15 4.73 51.08 3297. 14 20.54 12.67 56.35 2 M/S MAHENDRA SPONGE & POWER LIMITED 2008- 09 12790. 05 6.71 4.09 49.74 3297. 14 20.54 12.67 56.35 3 M/S SUNIL SPONGE & PRIVATE LIMITED 2008- 09 7699.3 0 4.07 1.42 51.58 3297. 14 20.54 12.67 56.35 4 M/S BALDEV ALLOYS PRIVATE LIMITED 2008- 09 468.44 ** 10.93 ** - 13.86 53.88 3297. 14 20.54 12.67 56.35 AVERAGE YIELD FOR F.Y. 2008- 09 *** 51.71 *RASHMI SPONGE IRON & POWER INDUSTRIES LTD YIELD = PRODUCTION OF SPONGE IRON/CONSUMPTION OF IR ON ORE 34167.00/84683.42 YIELD 40.35 ** M/S BALDEV ALLOYS PRIVATE LIMITED PARTICULARS ALL BUSINESS TRADING BUSINESS IRON ORE CRUSHING ONLY MANUFACTU RING BUSINESS A B C D= A-B-C ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 17 - SALES 468433831.2 140359915 26193426.2 301880490 PURCHASE 348971102.5 80086986 0 268884116 .5 G.P. 119462728.7 60272929 26193426.2 32996373. 5 G.P. RATIO 25.50 10.93 N.P. 44639793.23 60272929 26193426.2 - 41826561. 97 N.P. RATIO 9.53 -13.86 *** THE AVERAGE YIELD OF THE INDUSTRY WAS CALCULATE D AS UNDER: SL. NO. NAME OF COMPARABLE ASSESSEE ASSESSED IN CIRCLE 1(2), RAIPUR F.Y. TOTAL PRODUCTION TOTAL CONSUMP TION YIELD (%) YIELD (%) OF APPELLAN T 1 RASHMI SPONGE IRON & POWER INDUSTRIES LTD 2007-08 34167 84683.42 40.35 AVERAGE YIELD FOR FY 2007- 08 2007-08 34167 84683.42 40.35 48.36 1 GOPAL SPONGE & POWER PVT. LTD. 2008-09 48990 95910 51.08 2 M/S SUNIL SPONGE & PRIVATE LIMITED 2008-09 33027.4 64035.72 1 51.58 3 M/S BALDEV ALLOYS PRIVATE LIMITED 2008-09 16959.19 31471.60 5 53.89 AVERAGE YIELD FOR FY 2008- 09 2008-09 98976.59 191417.3 26 51.71 56.35 9.8 I HAVE CAREFULLY COMPARED THE FINANCIAL RESULT S OF THE APPELLANT COMPANY WITH THE FINANCIAL RESULTS OF OTHER COMPARA BLE CASES AS RECEIVED FROM DCIT-1(2), RAIPUR. AS IS SELF EXPLAN ATORY FROM THE DETAILS TABULATED ABOVE, IN MY CONSIDERED VIEW, THE FINANCIAL RESULTS DECLARED BY THE APPELLANT ARE FOUND TO BE BETTER IN COMPARISON TO ALL THE COMPARABLE INSTANCES IN TERMS OF GP RATE AS WEL L AS NP RATE AND EVEN IN TERMS OF YIELD. IT IS ALSO OBSERVED THAT TH ERE IS NO DIRECT CO- RELATION BETWEEN GP RATE AND YIELD, FOR INSTANCE, T HE YIELD DECLARED BY RASHMI SPONGE IRON & POWER INDUSTRIES LTD IN FINANC IAL YEAR 2007-08 IS 40.35% WHICH IS LOWER THAN THE YIELD DECLARED BY GOPAL SPONGE & POWER PVT. LTD. AT 51.08% IN F.Y 2008-09, HOWEVER, THE GP RATE OF RASHMI SPONGE IRON & POWER INDUSTRIES LTD IS FOUND TO BE MUCH BETTER I.E. 18.79% IN COMPARISON TO 11.15% DECLARED BY GOP AL SPONGE & POWER PVT. LTD. I AM IN AGREEMENT WITH THE SUBMISSIONS OF THE APPEL LANT THAT THE VARIATION IN CONSUMPTION/YIELD IS BOUND TO TAKE PLA CE AS RAW MATERIAL I.E. IRON ORE IS ESSENTIALLY A MINERAL WHICH DIFFER S IN IRON CONTENT AS OBTAINED FROM THE MINES, CONVERSELY, BEING MINERAL, THE QUALITY OF ORE AND COAL CANNOT BE EXPECTED TO BE UNIFORM. IT NEEDS NO REITERATION THAT AT A GIVEN POINT OF TIME, RATE OF IRON ORE WILL VAR Y WITH THE VARIATION IN IRON CONTENT IN IRON ORE, FURTHERMORE, IT IS A MATT ER OF COMMON KNOWLEDGE THAT THE QUALITY AND QUANTITY OF OUTPUT V ARIES WITH THE QUALITY AND COMPOSITION OF INPUTS. THEREFORE, IN MY CONSIDERED VIEW, YIELD CANNOT BE SAID TO BE SOLE DECISIVE FACTOR WHI LE ASSESSING THE RELIABILITY OF BOOKS OF ACCOUNT. IN OTHER WORDS, ME RELY LOW YIELD CANNOT LEAD TO AN IRREVOCABLE PRESUMPTION THAT THE BOOKS O F ACCOUNTS OF THE APPELLANT ARE UNRELIABLE AND REASONABLE PROFIT CANN OT BE DEDUCED THEREFROM. IN MY CONSIDERED VIEW, IF A PERSON USES LOW GRADE OF RAW MATERIAL WHICH WILL GIVE LOW YIELD, YET HE MAY MAKE HANDSOME PROFIT IF HE IS ABLE TO BUY RAW MATERIAL AT COMPETITIVE RATES , IN SUCH A SITUATION, ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 18 - IT CANNOT BE SAID THAT THE BOOKS OF ACCOUNTS ARE NO T RELIABLE MERELY DUE TO LOW YIELD. 9.9 IT IS A MATTER ON RECORD THAT THE APPELLANT HAS MAINTAINED QUANTITATIVE RECORDS OF RAW MATERIAL CONSUMED AND F INISHED PRODUCT PRODUCED. THE BOOKS OF ACCOUNTS WERE SUBJECTED TO T AX AUDIT AS WELL AS AUDIT UNDER COMPANY LAW WHICH WERE PRODUCED BEFORE THE A.O. TOGETHER WITH BILLS AND VOUCHERS AND THE SAME WERE EXAMINED BY TEST CHECK. THE APPELLANT HAS FURNISHED THE COPIES OF EX CISE RETURNS FILED BY THE APPELLANT ON MONTHLY BASIS IN FORM ER-1 FOR FIN ISHED GOODS AND IN FORM ER-6 FOR RAW MATERIALS, THE SAME ARE PLACED IN PAPER BOOK. I HAD CAREFULLY ANALYZED VARIOUS COLUMNS AND DETAILS FURN ISHED BY THE APPELLANT ON MONTHLY BASIS TO THE CENTRAL EXCISE DE PARTMENT. IT IS GATHERED THAT IN FORM ER-1, THE APPELLANT HAS GIVEN THE DETAILS ON MONTHLY BASIS VIZ. CHAPTER HEADING, DESCRIPTION OF GOODS, UNIT OF QUANTITY, OPENING BALANCE, QUANTITY MANUFACTURED, Q UANTITY CLEARED, CLOSING STOCK, ASSESSABLE VALUE, TYPE OF CLEARANCE, EXCISE DUTY PAYABLE ETC. IN FORM ER-6, THE APPELLANT FURNISHED THE DETA ILS ON MONTHLY BASIS VIZ. DESCRIPTION OF PRINCIPAL INPUTS, QUANTITY CODE , OPENING BALANCE, RECEIPT, TAKEN FOR USE IN THE MANUFACTURE OF DUTIAB LE AND EXEMPTED FINISHED GOODS, REMOVED AS SUCH FOR EXPORT OR FOR H OME CONSUMPTION, CLOSING BALANCE, FINISHED GOODS MANUFACTURED OUT OF INPUT, QUANTITY CODE OF FINISHED GOODS, QUANTITY OF FINISHED GOODS MANUFACTURED. 9.10 IT IS SEEN THAT THE EXCISE RETURNS IN FORM ER- 1 AND ER-6 FILED BY THE APPELLANT ON MONTHLY BASIS ARE DULY ACKNOWLEDGE D AND BEARS THE SEAL AND SIGNATURE OF THE CENTRAL EXCISE AUTHORITY. THE APPELLANT WAS ASKED TO PRODUCE THE EXCISE RECORDS MAINTAINED ON D AILY BASIS. THE APPELLANT DID PRODUCE THE EXCISE RECORDS IN FORM-IV AND RG-1 FOR RAW MATERIAL AND FINISHED GOODS RESPECTIVELY FOR ALL TH E YEARS UNDER CONSIDERATION. ON TEST CHECK OF EXCISE RECORDS MAIN TAINED ON DAILY BASIS WITH THE FIGURES OF PRODUCTION, CONSUMPTION O F RAW MATERIAL AND CLOSING STOCK OF FINISHED GOODS AND RAW MATERIAL SH OWN IN FORM-ER-1 AND ER-6, IT WAS FOUND THAT THE SAME ARE TALLYING A ND THUS, WERE FOUND TO BE SATISFACTORY. THE ENTRIES IN THE EXCISE RECOR DS FOR MATERIAL INWARDS WAS CROSS CHECKED WITH REFERENCE TO PURCHAS E BILLS AND ON TEST CHECK, THE SAME WAS FOUND TO BE SATISFACTORY AND NO INFIRMITY WAS OBSERVED. THE QUANTITY OF FINISHED GOODS CLEARED WA S ALSO VERIFIED WITH THE SALES INVOICE/CHALLAN ISSUED BY THE APPELLANT A ND THE SAME WAS FOUND TO BE SATISFACTORY. FROM THE DETAILS FURNISHE D BY THE APPELLANT IN FORM ER-6, THE DATA FOR CALCULATION OF PERCENTAGE O F YIELD AND BURNING LOSS IS READILY AVAILABLE. 9.11 THE APPELLANT WAS ASKED TO SUBMIT COPIES OF SE IZED DOCUMENTS AND REPLY / EXPLANATION OF THE APPELLANT THEREON. T HE EXPLANATION GIVEN BY THE APPELLANT ON SEIZED DOCUMENTS DURING THE COU RSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O. WAS CROSS CHECKED WITH REFERENCE TO THE SEIZED DOCUMENTS, EXCISE RECORDS, BOOKS OF ACCOUNT AND BILL AND VOUCHERS AND THE SAME WAS FOUND TO BE SATISFACTORY. 9.12 THE FINDINGS OF THE A.O REGARDING CAPACITY UTI LIZATION AND OTHER POINTS MENTIONED ON PAGE NO.21 OF THE ASSESSMENT OR DER ARE DISCUSSED HEREUNDER:- ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 19 - (1) REGARDING CAPACITY UTILIZATION, THE APPELLANT HAD S UBMITTED THAT THE KILN USED FOR MANUFACTURING OF SPONGE IRON NEED TO BE SHUT DOWN PERIODICALLY AS THE REFRACTORY USED IN SIDE THE KIL N HAS A PARTICULAR LIFE AND AFTER THAT THE REFRACTORY HAS TO BE CHANGED AND THUS, KILN WILL HAVE TO BE SHUT DOWN. I AM IN AGREEMENT WITH THE SUBMISS IONS OF THE APPELLANT THAT IT WOULD NOT BE CORRECT TO COMPARE A CTUAL PRODUCTION WITH THE INSTALLED CAPACITY WITHOUT TAKING INTO CON SIDERATION NUMBER OF DAYS FOR WHICH THE PRODUCTION OPERATION WAS SHUTDOW N AND ACTUAL NUMBER OF DAYS FOR WHICH PRODUCTION WAS IN OPERATIO N. (2) I FIND THAT THE A.O HAS NOT POINTED OUT ANY INFIRMI TY IN THE DETAILS FURNISHED BY THE APPELLANT REGARDING NUMBER OF DAYS PLANT WAS SHUT DOWN, CONVERSELY, THE ACTUAL NUMBER OF DAYS FOR WHI CH PRODUCTION ACTIVITIES HAD TAKEN PLACE. IT IS ALSO SEEN THAT TH E A.O HAS NOT REBUTTED THE SUBMISSION OF THE APPELLANT THAT THE CAPACITY U TILIZATION WAS AS HIGH AS 90% ALSO. THE DETAILS OF SHUT DOWN WERE CROSS CH ECKED WITH REFERENCE TO THE LETTERS VIDE WHICH INTIMATIONS WER E GIVEN TO THE SUPERINTENDENT, RANGE-CENTRAL EXCISE REGARDING SHUT DOWN AND RESTART FROM TIME TO TIME AND THE SAME WERE FOUND TO BE COR RECT. I AM CONVINCED WITH THE EXPLANATION TENDERED BY THE APPE LLANT REGARDING CAPACITY UTILIZATION AND IN VIEW THEREOF, I AM OF T HE CONSIDERED OPINION THAT THE CAPACITY UTILIZATION CANNOT BE SAID TO BE LOWER AS PRESUMED BY THE A.O. ON THE BASIS OF INCORRECT INTERPRETATION O F FACTS. (3) REGARDING VARIATION IN CONSUMPTION OF COAL AND IRON ORE, IN MY CONSIDERED VIEW, THE SAME MAY LAY FOUNDATION FOR RA ISING SUSPICION, HOWEVER, AT THE SAME TIME, IT IS SETTLED PRINCIPLE OF LAW THAT SUSPICION, HOWSOEVER GRAVE IT MAY BE, CANNOT TAKE PLACE OF THE EVIDENCE. ON AN INDEPENDENT APPRECIATION OF REASONS EXPLAINED BY TH E APPELLANT FOR VARIATION IN YIELD I.E. FOR VARIATION IN CONSUMPTIO N OF COAL AND IRON ORE, I FIND THE EXPLANATION OF THE APPELLANT TO BE CONVI NCING, PARTICULARLY, WHEN THE APPELLANT HAS BROUGHT ON RECORD CERTIFICAT E FROM REGISTERED VALUER WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO .8 OF VOLUME 7 OF THE PAPER BOOK IN THE CASE OF APPELLANT. THE A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO DISBELIEVE THE CERTIFICATE OF REGISTERED VALUER WHO IS DULY APPROV ED U/S 34AB OF THE WEALTH TAX ACT, 1957 VIDE ORDER DATED 06.07.2011. A S PER THE SAID CERTIFICATE OF THE REGISTERED VALUER, THE AVERAGE Y IELD OF SPONGE IRON UNIT USING IRON ORE AND COAL AS RAW MATERIAL MAY VA RY FROM 40 TO 60% AND COAL CONSUMPTION MAY VARY FROM 1.60 TO 2.1 MT D EPENDING UPON FIXED CARBON IN COAL. THE QUANTITATIVE DETAILS OF C ONSUMPTION OF SPONGE IRON AND COAL WERE FOUND TO BE WITHIN THE REASONABL E RANGE AS CERTIFIED BY THE REGISTERED VALUER. FURTHERMORE, IN MY CONSID ERED VIEW, IT IS IMPRACTICAL TO PRESUME UNIFORM QUALITY OF COAL AND IRON ORE, THE A.O HAS NOT REBUTTED ANY SUBMISSION OF THE APPELLANT EX PLAINING THE REASONS FOR VARIATION IN COAL AND IRON ORE. (4) REGARDING STOCK, THE A.O. HAS MADE AN ADDITION OF R S.1,76,51,940/- ON ACCOUNT OF DIFFERENCE IN SPONGE IRON. THE ISSUE HAS BEEN ELABORATELY DEALT IN PARA 12 TO 15 BELOW. IT IS SEEN THAT, THOU GH, THE APPELLANT HAS SURRENDERED THE EXCESS STOCK OF COAL AND SHELL STON E, THE APPELLANT HAS MADE VARIOUS SUBMISSIONS ON THE VERACITY AND CORREC TNESS OF QUANTITY ASSESSMENT REPORT OF THE DRV AND VEHEMENTLY OBJECTE D AGAINST THE ACTION OF THE DRV IN ADOPTING DENSITY OF COAL AT 1. 50 MT PER CU. METER WHICH IS FOR ANTHRACITE COAL OF SOLID STATE, PARTIC ULARLY, WHEN THE DRV ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 20 - MISERABLY FAILED TO EXPLAIN THE BASIS OF DENSITY AD OPTED BY THE DRV AND, ON THE CONTRARY, THE APPELLANT HAS BROUGHT ON RECORD CERTIFICATE FROM REGISTERED VALUER REPRODUCED SUPRA WHEREIN THE REGISTERED VALUER HAS CERTIFIED THE DENSITY OF COAL AT 0.800 T O 0.960 MT/CU.M IN SUPPORT OF ITS CONTENTION THAT DENSITY OF BITUMINOU S COAL OF BROKEN STATE IS 833 KG PER CUBIC METER I.E. 0.833 MT PER CUBIC M ETER. IN VIEW OF REASONS ELABORATELY MENTIONED, IN MY CONSIDERED VIE W, THE REFERENCE OF THE A.O TOWARDS EXCESS STOCK DOES SEEM TO BE SUPPOR TING THE ACTION OF THE A.O. I FIND THAT THE APPELLANT DID STATE THAT I T IS SURRENDERING THE IMPUGNED EXCESS STOCK OF COAL/SHELL STONE JUST TO B UY PEACE OF MIND, IN MY CONSIDERED VIEW, IF THE APPELLANT WAS ENGAGED IN UNACCOUNTED PRODUCTION, THE TEST OF PROBABILITIES SUGGEST THAT THE STOCK OF SPONGE IRON SHOULD HAVE BEEN MUCH MORE, HOWEVER, THAT IS N OT THE CASE IN THE INSTANT CASE. THEREFORE, I FIND NO MERIT IN THE CON TENTION OF THE A.O THAT THE EXCESS STOCK IS LEADING TO AN INFERENCE REGARDI NG UNACCOUNTED PRODUCTION. 9.13 THE RECORDING OF REASONS BY THE AO IS A CON DITION PRECEDENT FOR ANY BELIEF OF THE A.O, HOWEVER, IN THE INSTANT CASE, THE A.O HAS NOT STATED ANY REASON FOR HIS INFERENCE REGARDING STAND ARDIZED YIELD OF 60% IN THE SPONGE IRON UNIT. REASON MUST BE RECORDED BY TH E AO THAT ANY UNDISCLOSED INCOME BELONGS TO THE APPELLANT. THE MA TERIAL ITSELF SHOULD NOT BE VAGUE, INDEFINITE, DISTINCT OR REMOTE. IF THERE IS NO RATIONAL OR INTANGIBLE NEXUS BETWEEN THE MATERIAL AND THE SATIS FACTION THAT A PERSON HAS UNDISCLOSED INCOME, THE CONCLUSION WOULD NOT DESERVE ACCEPTATION. THEN THE SATISFACTION IS VITIATED. 9.14 IN THE INSTANT CASE, THE A.O HAS COMPLETELY FA ILED TO RECORD THE REASONS BASED ON MATERIAL AVAILABLE AS THE A.O HAS NOT REFERRED TO EVEN A SINGLE SEIZED DOCUMENT WHICH COULD BE REGARDED AS I NCRIMINATING DOCUMENT AND USED AS AN EVIDENCE TO EVEN REMOTELY SUPPORT TH E CONCLUSION OF THE A.O. THE A.O SEEMS TO HAVE BLOWN OUT OF PROPORTION MERELY ON THE BASIS OF MATHEMATICAL AND MECHANICAL CALCULATIONS. THE A.O H AS LAID TOO MUCH EMPHASIS ON STATISTICS, THOSE STATISTICS WHICH CANN OT BE SAID TO HAVE BEEN GATHERED AS A RESULT OF SEARCH ONLY. THE STATISTICS RELIED UPON BY THE A.O ARE THOSE WHICH ARE QUITE ROUTINELY CALLED FOR EVEN DURING THE REGULAR ASSESSMENT PROCEEDINGS U/S 143(3). THE A.O HAS NOT STATED WHAT ACCORDING TO HIM SHOULD HAVE BEEN THE AVERAGE CONSUMPTION OF COAL, IRON ORE ETC. ANOTHER FACT NOTICED IS THAT THE CASE OF THE APPELL ANT WAS UNDER SCRUTINY ASSESSMENT FOR TWO CONSECUTIVE YEARS I.E. IN A.Y 20 06-07 AND 2007-08 WHERE REGULAR ASSESSMENTS WERE MADE UNDER SCRUTINY AND THE YIELD WAS SHOWN BY THE APPELLANT WAS NOT DISPUTED. 9.15 I FIND THAT THE A.O, IN PARA 9.1 HAS STATED TH AT THE EVIDENCES OF UNACCOUNTED PRODUCTION BY SUPPRESSING ITS YIELD WER E FOUND AND THESE EVIDENCES ARE DISCUSSED IN THE SUBSEQUENT PARAGRAPH S, FROM THIS ASSERTION OF THE A.O, I AM INCLINED TO DRAW A REASONABLE INFE RENCE THAT APART FROM WHAT HAS BEEN STATED IN THE ASSESSMENT ORDER, THE A .O HAS NO OTHER EVIDENCE IN ANY FORM WHATSOEVER. 9.16 FINISHED GOODS OF THE APPELLANT IS SPONGE IRON WHICH IS CONSUMED BY ITS SISTER CONCERNS NAMELY MAHAMAYA ST EELS INDUSTRIES LIMITED AND ABHISHEK STEEL INDUSTRIES LIMITED A S RAW MATERIAL AND BOTH THE SAID SISTER CONCERNS ARE ALSO PART OF MAHA MAYA GROUP OF ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 21 - COMPANIES. EVEN IF FOR THE TIME BEING CONTENTION OF THE A.O THAT THE APPELLANT HAS SUPPRESSED THE YIELD AND INDULGED INT O UNACCOUNTED SALES IS ACCEPTED, PREPONDERANCE OF PROBABILITIES DO NOT SUG GEST THIS FOR THE REASON THAT THE FINISHED PRODUCT OF THE APPELLANT IS ULTIM ATELY CONSUMED BY THE GROUP COMPANIES ONLY, IF THE APPELLANT STARTS TO SE LL ITS FINISHED GOODS, THE SISTER CONCERN OF THE APPELLANT MAY HAVE TO BUY THE SAME IN HIGHER QUANTITY FROM THE OPEN MARKET, THE BUSINESS SENSE I S NOT SUGGESTING WHAT HAS BEEN SUSPECTED AND INFERRED BY THE A.O. 9.17 IT IS GATHERED THAT M/S MAHAMAYA STEEL INDUST RIES LIMITED (FORMERLY KNOWN AS RAJESH STRIPS LIMITED) WAS PRIMA RILY INTO MANUFACTURING OF RE-ROLLED PRODUCTS SINCE ITS INCOR PORATION. IT IS ALSO GATHERED THAT TO GIVE EFFECT TO THE EXPANSION PLANS , THE GROUP HAD GONE INTO BACKWARD INTEGRATION AND AS A RESULT, THE SMS DIVIS ION WAS BROUGHT INTO EXISTENCE FOR MANUFACTURING BLOOMS AND BILLETS USIN G SPONGE IRON AS RAW MATERIAL. IT IS ALSO GATHERED THAT TO MEET THE REQU IREMENT OF SPONGE IRON, THE GROUP HAD MADE INVESTMENT IN SPONGE IRON UNITS WHICH ALSO FIT INTO THE EXPANSION PLAN BY WAY OF BACKWARD INTEGRATION. THUS , FROM THE PERSPECTIVE OF THE MAHAMAYA GROUP, SPONGE IRON AND BLOOMS & BIL LETS CONSTITUTE INTERMEDIARY PRODUCTS. I FIND THAT THE TOTAL QUANTI TY OF SPONGE IRON INDIGENOUSLY CONSUMED BY THE GROUP COMPANIES, NAMEL Y MAHAMAYA STEEL INDUSTRIES LIMITED AND ABHISHEK STEEL INDUSTRIES LI MITED, IN THEIR SMS DIVISION WAS MUCH MORE THAN OWN PRODUCTION OF SPONG E IRON BY THE GROUP COMPANIES NAMELY THE APPELLANT AND SHREE SHYAM SPON GE & POWER LIMITED, IN OTHER WORDS, THE GROUP COMPANIES HAD TO PURCHASE SPONGE IRON FROM THE OPEN MARKET SO AS TO CATER TO THE RAW MATE RIAL REQUIREMENT IN THEIR SMS DIVISION. THE PREPONDERANCE OF PROBABILIT IES SUGGESTS THAT THE GROUP COMPANIES WERE ALWAYS SHORT OF SPONGE IRON AN D THEREFORE, THE ALLEGATION OF THE A.O. THAT THE APPELLANT HAS SOLD SPONGE IRON APPEARS TO BE UNREASONABLE IN AS MUCH AS WHY WOULD A PERSON GO FOR BACKWARD INTEGRATION (SPONGE IRON UNIT) AND THEN SELL ITS OW N INTERMEDIARY PRODUCT AND AT THE SAME TIME BUY THE SAME PRODUCT FROM THE OPEN MARKET. IT IS A MATTER OF COMMON KNOWLEDGE THAT THE BUSINESSMAN GOE S FOR BACKWARD INTEGRATION WHEN HE IS ABLE TO PRODUCE THE GOODS IN DIGENOUSLY AT A COST LOWER THAN THE PURCHASE COST FROM MARKET. THE A.O H AS DULY ACCEPTED THE PURCHASE OF SPONGE IRON BY THE GROUP COMPANIES THAT ARE RECORDED IN THEIR BOOKS OF ACCOUNTS AND CONSUMED IN SMS DIVISION OF G ROUP COMPANIES, THEREFORE, IT IS HARD TO BELIEVE THAT THE APPELLANT MUST HAVE SOLD ITS PRODUCT I.E. SPONGE IRON WHICH, IN FACT, IS AN INTE RMEDIARY PRODUCT FROM THE PERSPECTIVE OF THE GROUP AS A WHOLE. 9.18 I HAVE CAREFULLY GONE THROUGH THE STATEMENT O F MR. M. R. ATRI, PRESIDENT OF THE APPELLANT COMPANY DATED 21/22.06.2 011. I FIND THAT THE SEARCH TEAM HAD SEIZED CERTAIN DOCUMENTS REFERRED A S BS-1/1 WHICH CONTAINS DAILY PERFORMANCE REPORT FOR THE PERIOD SU BSEQUENT TO NOVEMBER 2010, FROM THE STATEMENT OF MR. M. R. ATRI, IT IS S EEN THAT MR. M. R. ATRI HAD EXPLAINED THE MODUS OPERANDI AND SYSTEM ADOPTED BY THE APPELLANT COMPANY FOR RECORDING INWARD OF RAW MATERIAL AS WEL L AS FOR CAPTURING OF DATA RELATING TO PRODUCTION, I ALSO FIND THAT NEITH ER IT IS THE CASE OF THE SEARCH TEAM NOR IT IS THE CASE OF THE A.O THAT THE FIGURES OF THE PRODUCTION MENTIONED IN THE DAILY PERFORMANCE REPORT DID NOT T ALLY WITH THE PRODUCTION RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND EXCISE RECORDS OF THE APPELLANT COMPANY, IN RESPONSE TO QUESTION NO.14, S HRI M. R. ATRI DID STATE THAT EVERY MORNING AND EVENING I.E. BEFORE DISPATCH , THE PHYSICAL STOCK TAKING OF SPONGE IRON LYING IN THE BUNKERS IS CARRI ED OUT AND NO CASE OF ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 22 - VARIATION IN QUANTITY OF PRODUCTION VIS--VIS STOCK HAS BEEN NOTICED, UNDISPUTEDLY, THE STATEMENT OF MR. M. R. ATRI HAS R EMAINED UN-REBUTTED EITHER BY SEARCH TEAM OR BY THE A.O. 9.19 I HAVE ALSO CAREFULLY PERUSED THE STATEMENT OF SHRI RISHIKESH DIXIT RECORDED ON 21.6.2011 AS REGARDS COMMON ALLEGATION IN CASE OF ALL THE FOUR MANUFACTURING COMPANIES I.E. SISTER CONCERNS O F MAHAMAYA GROUP THAT THE GROUP IS FOLLOWING THE SYSTEM OF DESTROYIN G THE INITIAL DOCUMENT I.E. THE LOOSE SLIP IN WHICH QUANTITY OF PRODUCTION AND CONSUMPTION IS RECORDED. FROM THE STATEMENT OF SHRI RISHIKESH DIXI T, IT IS GATHERED THAT IT WAS STATED IN CLEAR TERMS THAT THE QUANTITY RECORDE D IN THE LOOSE SLIPS TALLIES WITH THE QUANTITY RECORDED IN THE REGULAR B OOKS OF ACCOUNTS, EXCISE RECORDS AND EXCISE RETURNS; THAT AS THE EXCISE RETU RN IS BEING FILED ON MONTHLY BASIS, THEREFORE, AFTER FILING OF EXCISE RE TURN SUCH LOOSE PAPERS BECOME REDUNDANT AND THAT IS THE REASON SAID LOOSE PAPERS ARE DESTROYED, AT THIS JUNCTURE, I FIND THAT NEITHER IN THE SHOW C AUSE NOTICE NOR IN THE ASSESSMENT ORDER THERE IS ANY WHISPER OF ANY SUCH L OOSE PAPER WHICH BEARS THE FIGURES OF PRODUCTION AND WHICH THE APPELLANT F AILED TO RECONCILE WITH THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS AND EX CISE RECORDS/RETURNS. IN THE ABSENCE OF ANY SPECIFIC INSTANCE HAVING BEEN BROUGHT ON RECORD BY THE A.O, I AM CONSTRAINED TO CONSTRUE THE ALLEGATIO N OF THE A.O AS MERE BALD STATEMENT. 9.20 THE LOW YIELD IN COMPARISON TO THE BENCHMARK A DOPTED BY THE A.O BASIS WHEREOF IS STILL IN THE DARK AND HASNT C OME ON THE SURFACE, IN THE ABSENCE OF ANY COGENT REASONS COULD NOT, BY ITS ELF, HAVE BEEN A GROUND TO HOLD THAT PROPER INCOME OF THE APPELLANT CANNOT BE DEDUCED FROM THE ACCOUNTS MAINTAINED BY IT AND CONSEQUENTLY, COULD N OT HAVE BEEN A GROUND TO REJECT THE ACCOUNTS INVOKING SECTION 145(3) OF T HE ACT. THE VARIATION IN YIELD AND CONSUMPTION OF POWER ETC COULD BE FOR VAR IOUS REASONS. THERE IS NO FINDING BY THE A.O THAT ACTUAL QUANTITY OF FINIS HED GOODS SOLD BY THE APPELLANT WAS MORE THAN WHAT IT WAS SHOWN IN THE AC COUNTS BOOKS ON THE STRENGTH OF DOCUMENTARY EVIDENCE. 9.21 HAD THERE BEEN SCIENTIFIC METHODOLOGY IN PLACE FOR MEASUREMENT OF INPUTS, IN MY CONSIDERED VIEW, IT IS ONLY THE AC CURACY LEVEL OF STATISTICS WHICH WILL INCREASE, HOWEVER, IT IS HARD TO BELIEVE THAT MERELY DUE TO SCIENTIFIC METHODOLOGY FOR MEASUREMENT OF INPUTS, T HE YIELD OF THE APPELLANT WILL ALSO INCREASE, THE IMAGINATION OF TH E A.O IS TOO FARFETCHED AND DEVOID OF LOGIC. I FIND NO MERIT IN THE ALLEGAT ION OF THE A.O THAT ABSENCE OF SCIENTIFIC METHODOLOGY FOR MEASUREMENT O F INPUTS IS LEADING TO AN INFERENCE THAT THE APPELLANT HAS SUPPRESSED THE YIELD. I HAVE ALSO CAREFULLY PERUSED THE STATEMENT OF SHRI RISHIKESH D IXIT RECORDED ON 21.6.2011 AS REGARDS COMMON ALLEGATION IN CASE OF A LL THE FOUR MANUFACTURING COMPANIES I.E. SISTER CONCERNS OF MAH AMAYA GROUP THAT THE GROUP IS FOLLOWING THE SYSTEM OF DESTROYING THE INI TIAL DOCUMENT I.E. THE LOOSE SLIP IN WHICH QUANTITY OF PRODUCTION AND CONS UMPTION IS RECORDED. FROM THE STATEMENT OF SHRI RISHIKESH DIXIT, IT IS G ATHERED THAT IT WAS STATED IN CLEAR TERMS THAT THE QUANTITY RECORDED IN THE LO OSE SLIPS TALLIES WITH THE QUANTITY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS, EXCISE RECORDS AND EXCISE RETURNS; THAT AS THE EXCISE RETURN IS BEING FILED ON MONTHLY BASIS, THEREFORE, AFTER FILING OF EXCISE RETURN SUCH LOOSE PAPERS BECOME REDUNDANT AND THAT IS THE REASON SAID LOOSE PAPERS ARE DESTROYED, AT THIS JUNCTURE, I FIND THAT NEITHER IN THE SHOW CAUSE NOT ICE NOR IN THE ASSESSMENT ORDER THERE IS ANY WHISPER OF ANY SUCH LOOSE PAPER WHICH BEARS THE FIGURES ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 23 - OF PRODUCTION AND WHICH THE APPELLANT FAILED TO REC ONCILE WITH THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS AND EXCISE RECORDS /RETURNS. IN THE ABSENCE OF ANY SPECIFIC INSTANCE HAVING BEEN BROUGH T ON RECORD BY THE A.O, I AM CONSTRAINED TO CONSTRUE THE ALLEGATION OF THE A.O AS MERE BALD STATEMENT. 9.22 IN THE CASE OF ACIT VS. M/S. BALAJEE STRUCTURA LS (I) PVT. LTD. (SUPRA), THE JURISDICTIONAL BENCH HON'BLE ITAT HAD AN OCCASION TO DECIDE IDENTICAL ISSUE AND THE HON'BLE TRIBUNAL HAS OBSERV ED AS UNDER:- ..WE FIND THE ASSESSEE IN HIS SUBMISSIONS BEFORE THE A.O. HAD EXPLAINED THE REASONS FOR VARIATION IN THE YIELD. H OWEVER, THE A.O. HAS NOT CONSIDERED THE SAME AND MERELY MENTIONED THAT T HE EXPLANATION GIVEN BY THE ASSESSEE IS NOT FOUND TO BE ACCEPTABLE . WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE PRODUCTION RESULTS ARE CLOSELY MONITORED BY THE EXCISE DEPARTM ENT WHO HAS ACCEPTED THE SAME AND WHEN THE DEPARTMENT HAS NO OT HER MATERIAL TO PROVE THAT THE ASSESSEE DURING THE IMPUGNED ASSESSM ENT YEAR HAS INDULGED IN UNACCOUNTED SALES AND SINCE THE ASSESSE E HAS ALREADY DISCLOSED AN AMOUNT OF RS.396.60 LACS ON ACCOUNT OF STOCK AND DEBTORS FOR THE ASSESSMENT YEAR 2008-09, THEREFORE, IN VIEW OF THE OFFICE NOTE BY THE A.O. REPRODUCED EARLIER, NO ADDITION, IN OUR OP INION IS CALLED FOR.' IN THAT CASE, THE ASSESSMENT YEAR INVOLVED WAS 2005 -06 AND THE ASSESSEE HAD OFFERED ADDITIONAL INCOME IN ASSESSMEN T YEAR 2008-09. HOWEVER, RATIO OF THE PRINCIPLES DECIDED THAT (I) W HEN THE A.O. HAS NOT CONSIDERED THE ASSESSEE'S EXPLANATION BY MERELY MEN TIONING THAT IT IS NOT FOUND TO BE ACCEPTABLE AND (II) WHEN EXCISE DEP ARTMENT HAS ACCEPTED THE YIELD AND WHEN THE DEPARTMENT HAS NO O THER MATERIAL TO PROVE THAT THE ASSESSEE HAS INDULGED IN UNACCOUNTED SALES NO ADDITION IS CALLED FOR, ARE SQUARELY APPLICABLE IN THIS CASE . 9.23 SIMILARLY IN THE CASE OF ACIT VS. M/S. SUPER I RON & STEEL PVT. LTD., WHICH IS ONE OF THE COMPARABLE CASES CITED AB OVE, IN ITA NO.139 TO 141/ BLPR/2010, THE JURISDICTIONAL BENCH OF HON' BLE ITAT HAD AN OCCASION TO DECIDE SIMILAR ISSUE AND THE HON'BLE TR IBUNAL HAS OBSERVED AS UNDER:- '6. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIAL ON RECORD WE FIND THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF MANUFACTURING OF MS INGOTS WITH SPONGE IRON AS THE MAIN RAW MATERIAL. ACCORDING TO THE AO THERE WAS NO BASIC DOCUMENT REGARDING CONSUMPTION OF RAW MATERIAL AND PRODUCTION OF FINISHED GOODS WERE MAINTAINED BY THE ASSESSEE I N THE FACTORY PREMISES. THE AO FOUND THAT THERE IS NO SYSTEM IN P LACE FOR KEEPING RECORD OF CONSUMPTION OF RAW MATERIAL AND P RODUCTION OF FINISHED GOODS, IT IS APPARENT THAT THE UNACCOUNTED PRODUCTION IS EVIDENCED FROM VARIATION IN UNITS OF ELECTRICITY CO NSUMED PER MT OF FINISHED GOODS SO AO MADE THE ADDITION IN QUESTI ON. THE STAND OF THE ASSESSEE WAS THAT IT IS MAINTAINING REGULAR BOOKS OF ACCOUNT ALONG WITH ALL THE SUPPORTING BILLS AND VOU CHERS. THE ASSESSEE SUBMITTED THAT THE VARIATION IN CONSUMPTIO N OF ELECTRICITY HAS BEEN EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AO HAS NOT MADE ANY ADVERSE COM MENT ON THE SAME. ACCORDING TO THE ASSESSEE THE YIELD IN TH IS A. Y IS ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 24 - BETTER IN COMPARISON TO THE PRECEDING ASSESSMENT YE ARS WHICH WAS ALSO COVERED BY SCRUTINY ASSESSMENT UNDER SECTI ON 143(3) OF THE ACT. THE ADDITION IN QUESTION IS NOT BASED ON S UCH MATERIAL AND THE ADDITION HAS BEEN MADE ONLY ON PRESUMPTIONS AND SURMISES AND IS NOT JUSTIFIED. THE AO HAS ALSO NOT MADE OUT ANY COMPARABLE CASES. IN SUCH SITUATION THE ADDITION IN QUESTION MADE BY AO IS NOT JUSTIFIED SAME WERE RIGHTLY DELET ED BY REASONED FINDING, WE UPHOLD THE SAME.' 9.24 THE LOW YIELD IN COMPARISON TO THE BENCHMARK A DOPTED BY THE A.O BASIS WHEREOF IS STILL IN THE DARK AND HASNT C OME ON THE SURFACE, IN THE ABSENCE ANY COGENT REASONS COULD NOT, BY ITSELF , HAVE BEEN A GROUND TO HOLD THAT PROPER INCOME OF THE APPELLANT CANNOT BE DEDUCED FROM THE ACCOUNTS MAINTAINED BY IT AND CONSEQUENTLY, COULD N OT HAVE BEEN A GROUND TO REJECT THE ACCOUNTS INVOKING SECTION 145( 3) OF THE ACT. THE VARIATION IN YIELD AND CONSUMPTION OF POWER ETC COU LD BE FOR VARIOUS REASONS. THERE IS NO FINDING BY THE A.O THAT ACTUAL QUANTITY OF FINISHED GOODS SOLD BY THE APPELLANT WAS MORE THAN WHAT IT W AS SHOWN IN THE ACCOUNTS BOOKS ON THE STRENGTH OF DOCUMENTARY EVIDE NCE. 9.25 IT IS SEEN THAT THE A.O HAS NOT POINTED OUT AN Y SUPPRESSION OF PRODUCTION BASED ON ANY COGENT AND INCRIMINATING MA TERIAL AGAINST THE APPELLANT. MATERIAL SHOWING FINANCIAL NEXUS CAN ONL Y BE A VALID BASIS FOR HOLDING SUSPICION OR MAKING THE ADDITION. UNFOR TUNATELY NOT A SINGLE DOCUMENT SHOWING ANY FINANCIAL DEALINGS BY T HE APPELLANT HAS BEEN REFERRED TO EITHER IN THE ASSESSMENT ORDER, OR EVEN DURING THE COURSE OF HEARING, DESPITE THE LIBERTY GRANTED VIDE THIS OFFICE LETTERS ON 28.04.2014 AND 16.05.2014. AN ORDER BASED ON UNCONF IRMED OR UNCORROBORATED BELIEF OF SUSPICION; EVEN THOUGH THE SUSPICION RESTS ON THE HIGH PEDESTAL OF BONA FIDES CANNOT STAND THE SC RUTINY OF LAW. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE REVEAL THAT THE A.O JUST BRUSHED ASIDE THE OBJECTIONS/SUBMISSIONS AND CONTEN TIONS RAISED BY THE APPELLANT AND EVIDENCES PLACED ON RECORD. THE A.O H AS MADE MECHANICAL ADDITION OF THE DIFFERENCE BETWEEN THE U NACCOUNTED PRODUCTION/SALES WORKED OUT ON THE BASIS OF 60% YIE LD SUSPECTED BY THE A.O THAT MUST HAVE BEEN ACHIEVED BY THE APPELLANT. THE ASSESSMENT ORDER CONCLUSIVELY INDICATES THAT THE ADDITION HAS BEEN MADE OUT OF SOME LURKING SUSPICION BASED EITHER ON RUMOURS OR O N SOMETHING LESS SERIOUS THAN THAT. 9.26 THE A.O HAS MERELY REFERRED TO VARIATIONS BASE D ON MATHEMATICAL CALCULATIONS VIZ_ VARIATION IN COAL, IRON ORE, THIS MAY WELL BE THE BASIS OF SUSPICION, HOWEVER, THESE CANNOT PER SE CONSTITU TE THE BASIS OF THE ADDITION, THOUGH IT CAN VERY WELL BE A STARTING POI NT FOR FURTHER INVESTIGATION. IN LALCHAND BHAGAT AMBICA RAM VS. CIT: (1959) 37 ITR 288, THE SUPREME COURT DISAPPROVED THE PRACTICE OF MAKI NG ADDITIONS IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES OR BY TAKING NOTE OF THE 'NOTORIOUS PRACTICE' PREVAILING IN TRADE CIRCLES. 9.27 THE SIGNIFICANCE OF TANGIBLE EVIDENCE HAS BE EN EMPHASIZED IN VARIOUS JUDICIAL PRONOUNCEMENTS. HAVING TEST CHECKE D THE SEIZED DOCUMENTS WITH REFERENCE TO SUBMISSIONS OF THE APPE LLANT AND BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS, HAVING GONE THROUGH ALL THE STATEMENTS RECORDED DURING THE SEARCH PROCEEDINGS, HAVING ANALYSED THE RESULTS OF ENQUIRY CONDUCTED REGARDING YIELD, I AM CONVINCED THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE A.O NOR HAS THE A.O BROUGHT ANY SUCH EVIDENCE ON RECORD TO CORROBORATE HIS SUSPICIO N. THE CASE OF THE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 25 - APPELLANT FINDS SUPPORT FROM THE DECISION IN INCOME TAX OFFICER VS. W.D. ESTATE P. LTD. (1993) 46 TTJ (BOM) 143 : 45 IT D 473. 9.28 SIMILAR RATIO WAS LAID DOWN BY THE HONBLE HIG H COURT OF DELHI IN COMMISSIONER OF INCOME TAX VS. DISCOVERY ESTATES PVT. LTD. VIDE ORDER DATED 18TH FEBRUARY, 2013 (2013) 356 ITR 159 (DELHI). I DO FIND CONSIDERABLE FORCE IN THE SUBMISSION OF THE APPELLA NT THAT NO UNRECORDED ASSET/INVESTMENT WAS FOUND DURING THE CO URSE OF SEARCH. THE SIGNIFICANCE OF TANGIBLE DISPROPORTIONATE ASSET HAV ING BEEN FOUND AS A RESULT OF SEARCH WAS EMPHASIZED IN MANGILAL RAMESHWARLAL SONI (HUF) VS. ASSISTANT COMMISSIONER OF INCOME TAX (2004) 83 TTJ (JD) 770 : (2004) 4 SOT 680 (JD). 9.29 I FIND THAT NO UNRECORDED ASSET OR INVESTMENT WAS FOUND DURING THE COURSE OF SEARCH WITH WHICH UNDISCLOSED INCOME OF SUCH MAGNITUDE COULD BE CORRELATED I.E. DEPLOYMENT OF UNDISCLOSED INCOME. THIS FACTOR WAS GIVEN DUE COGNIZANCE IN BANSAL STRIPS (P) LTD. & ORS. VS. ASSISTANT COMMISSIONER OF INCOME TAX (2006) 100 TTJ (DEL) 665 : (2006) 99 ITD 177 (DEL) BY THE HONBLE ITAT, DELHI A BENCH AS C IRCUMSTANTIAL EVIDENCE. 9.30 THE HONBLE SUPREME COURT HAD PUT AN EMBARGO O N THE LEEWAY I.E. FLEXIBILITY OF ASSESSING OFFICERS IN DHAKESWAR I COTTON MILLS LTD. VS. COMMISSIONER OF INCOME TAX (1954) 26 ITR 775 (SC). THE SIGNIFICANCE OF CONSIDERING THE EVIDENCES IN FAVOUR AND AGAINST THE ASSESSEE WAS EMPHASIZED BY THE HONBLE SUPREME COURT IN OMAR SAL AY MOHAMED SAIT VS. COMMISSIONER OF INCOME TAX (1959) 37 ITR 1 51 (SC). 9.31 UNDISPUTEDLY, THE APPELLANT DID FURNISH EXPLA NATION ON ALL THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, THE E XPLANATION OF THE APPELLANT WAS TEST CHECKED WITH REFERENCE TO THE SE IZED MATERIAL, BOOKS OF ACCOUNTS, BILLS/INVOICES AND OTHER EVIDENCES PLA CED ON RECORD AND THE EXPLANATION WAS FOUND TO BE SATISFACTORY AND IT IS ALSO A MATTER ON RECORD THAT THE A.O HAS ALSO NOT POINTED OUT ANY IN FIRMITY IN THE EXPLANATION OF THE APPELLANT AND NOR DID THE A.O BR ING ON RECORD ANY DOCUMENTARY EVIDENCE OR REASONING TO NEGATE THE SUBMISSIONS/EXPLANATION OF THE APPELLANT. IT IS ALS O AN UNDISPUTED FACT THAT IN THE CASE OF THE APPELLANT NEITHER ANY DIARY OR LOOSE PAPER WAS FOUND WHICH INDICATES THAT THE APPELLANT DID INDULG E INTO UNACCOUNTED SALES AND EARNED SUCH HEFTY AMOUNT OF INCOME. THE F ACTS IN THE CASE OF THE APPELLANT ARE MUCH BETTER THAN THE FACTS BEFORE THE HONBLE HIGH COURT OF GUJARAT IN COMMISSIONER OF INCOME TAX VS. MAULIKKUMAR K. SHAH (2008) 307 ITR 137 (GUJ). 9.32 I FIND THAT EVEN NON MAINTENANCE OF STOCK REGISTER IS NOT FATAL AS HELD IN COMMISSIONER OF INCOME TAX VS. JACKSONS HOUSE (2010) 39 DTR (DEL) 212 : (2011) 198 TAXMAN 385. 11.35. SIMILAR VIEW WAS TAKEN IN M. DURAI RAJ VS. COMMISSIONER OF INCOME TA X (1972) 83 ITR 484 (KER). 9.33 ON THE MATTER OF RECORDING THE CONSUMPTION OF RAW MATERIAL GOING IN TO KLIN AND QUANTITY OF PRODUCTION COMING OUT FROM KLIN, IN MY CONSIDERED OPINION, THE MERE FACT OF ESTIMATION CAN NOT BE MADE THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS SO LONG AS THE FINANCIAL RESULTS ARE NOT STRIKINGLY LOWER THAN THE INDUSTRY AVERAGE OR THAT THE RESULTS ARE NOT SUPPORTED BY BILLS/VOUCHERS OR THAT THE QUA NTITATIVE DETAILS HAVE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 26 - NOT BEEN MAINTAINED PROPERLY. IN POLISETTI SUBBARAIDU & CO. VS. COMMISSIONER OF INCOME TAX SOURCE : (1968) 69 ITR 738 (AP). ANOTHER DECISION WHEREIN IT WAS HELD THAT NON MAINT ENANCE OF DAILY STOCK REGISTER PER SE IS NOT SUFFICIENT TO REJECT T HE BOOKS OF ACCOUNTS AS IT IS NOT MANDATED BY LAW IS THE DECISION OF THE HO NBLE HIGH COURT OF DELHI IN COMMISSIONER OF INCOME TAX VS. SMT. POONAM RANI (2010) 326 ITR 223. FROM THE RATIO OF THE AFORESAID DECISI ON, IT IS ALSO QUITE CLEAR THAT THE COURTS HAVE TAKEN JUDICIAL NOTE OF T HE ESTIMATION I.E. RECORDING OF FINANCIAL TRANSACTIONS WITH CERTAIN DE GREE OF ESTIMATION IN THE BOOKS OF ACCOUNTS. DRAWING REFERENCE FROM THE A FORESAID DECISION, IN MY CONSIDERED VIEW, MERELY BECAUSE CERTAIN TRANS ACTIONS ARE RECORDED ON THE BASIS OF ESTIMATION WILL NOT MAKE T HE ACCOUNTS LIABLE FOR REJECTION U/S 145, PARTICULARLY WHEN THE ESTIMA TION IS NOT STRIKINGLY HIGH OR LOW EITHER IN COMPARISON TO PAST TREND OR C OMPARABLE CASES, INCIDENTALLY, NONE OF THESE FACTS ARE PREVAILING IN THE CASE OF THE APPELLANT. 9.34 THE HONBLE HIGH COURT OF DELHI LAID STRESS UP ON THE MATERIAL AND EVIDENCES AND BRUSHED ASIDE ADVERSITIES HELD ME RELY ON THE BASIS OF SUSPICION AND CONJECTURES IN COMMISSIONER OF INCOME TAX VS. RAM PISTONS & RINGS LTD. VIDE ORDER DATED 16TH FEBRUARY 2012 (2012) 80 CCH 055 DEL HC. 9.35 IT IS SETTLED PRINCIPLE OF LAW THAT THE A.O HA S TO BRING ON RECORD SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS OF THE APP ELLANT AS A RESULT OF WHICH REASONABLE PROFITS CANNOT BE DEDUCED. THE A. O EXAMINED THE AUDITED BOOKS OF ACCOUNT BUT HAD NOT POINTED OUT AN Y SPECIFIC DISCREPANCY NOR HAS HE DETECTED ANY SUPPRESSION IN SALES OR INFLATION IN PURCHASES/EXPENSES. NO EVIDENCE WHATSOEVER WAS BRO UGHT ON RECORD TO PROVE THAT, THE APPELLANT, IN FACT, EARNED MORE THA N THAT RETURNED AS PER THE BOOKS OF ACCOUNT KEPT IN THE REGULAR COURSE OF BUSINESS. THE ASSESSMENT ORDER IS EVIDENCE TO THE FACT THAT THERE WAS NO SPECIFIC FINDING GIVEN BY THE A.O TO THE EFFECT THAT THE MET HOD EMPLOYED BY THE APPELLANT WAS SUCH THAT CORRECT PROFITS COULD NOT B E DEDUCED THERE FROM. THE A.O. HAS NOT COME ACROSS ANY MATERIAL DE FECT IN ACCOUNTS SO AS TO HOLD THAT ANY PROFIT HAS BEEN SUPPRESSED. IT IS ALSO NOT THE CASE OF THE A.O THAT THE APPELLANT HAS NOT FOLLOWED THE MER CANTILE SYSTEM OF ACCOUNTING. IT IS ALSO NOT THE CASE OF THE A.O THAT THE APPELLANT HAS NOT FOLLOWED ANY PARTICULAR ACCOUNTING STANDARDS WHICH ARE NOTIFIED BY THE CENTRAL GOVERNMENT. IT IS ALSO NOT IN DISPUTE THAT THE APPELLANT HAS MAINTAINED BOOKS OF ACCOUNT REGULARLY AND THESE ARE DULY AUDITED U/S 44AB OF THE I.T. ACT AND THE QUANTITATIVE DETAILS W ERE PREPARED AND WERE DULY AUDITED. IF THE STOCK REGISTER WAS NOT M AINTAINED BY THE APPELLANT, THAT MAY PUT THE A.O ON GUARD AGAINST TH E FALSITY OF THE RETURN MADE BY THE APPELLANT AND PERSUADE HIM TO CA REFULLY SCRUTINIZE THE ACCOUNT BOOKS OF THE APPELLANT. THE LOW YIELD I N COMPARISON TO THE BENCHMARK ADOPTED BY THE A.O, IN THE ABSENCE OF ANY MATERIAL POINTING TOWARDS FALSEHOOD OF THE ACCOUNT BOOKS, COULD NOT B Y ITSELF BE A GROUND TO REJECT THE ACCOUNT BOOKS U/S 145(3) OF THE I.T. ACT, 1961 MUCH LESS A GROUND TO MAKE ESTIMATED ADDITION. I FIND THAT THER E IS NO DISPUTE WITH REGARD TO THE FACT THAT THE APPELLANT HAS MAINTAINE D QUANTITATIVE DETAILS. IN THE CASE OF CIT VS. SMT POONAM RANI 326 ITR 223 (DELHI) IT WAS HELD THAT WHERE AN ADDITION WAS MADE BECAUSE OF MERE FALL IN GROSS ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 27 - PROFIT WITHOUT ANY DEFECT IN THE ACCOUNTS EXCEPT FO R THE ABSENCE OF STOCK REGISTER- DELETION OF ADDITION WAS UPHELD BY THE HI GH COURT. THE APPELLANTS CASE FINDS SUPPORT FROM THE FOLLOWING D ECISIONS: A) ASHOK REFRACTORIES PVT LTD. VS. CIT (2005) 148 TAXM AN 635 (CAL.). B) ITO V. BOTHRA INTERNATIONAL [2008] 117 TTJ (JD.) 67 2 C) DELHI SECURITIES PRINTERS V. DY. CIT [2007] 15 SOT 353 (DELHI) CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , AS ALSO DECISIONS RELIED UPON BY THE APPELLANT AND THOSE CI TED ABOVE, I AM OF THE VIEW THAT THERE WAS NO FINDING TO THE EXTENT TH AT THE ACCOUNTS WERE NOT CORRECT AND COMPLETE OR THAT THE A.O WAS OF THE OPINION THAT THE INCOME COULD NOT BE DEDUCED FROM THE ACCOUNTS MAINT AINED BY THE APPELLANT. 9.36 THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECOR D TO DISBELIEVE THE BOOK RESULT SHOWN BY THE APPELLANT. IF THERE IS NO SUPPRESSION OF MATERIAL FACTS, THE AUTHORITY CANNOT EMBARK UPON A SPECULATIVE ASSESSMENT OF NOTIONAL PROFITS. THE ASSESSMENT SHOU LD BE BASED ON COGENT FACTS AND THERE SHOULD BE NO VINDICTIVENESS OR ARBITRARINESS IN PASSING THE ASSESSMENT ORDER. THE ESTIMATED ADDITIO NS MADE BY THE A.O. DO NOT BEAR ANY RELATIONSHIP WITH THE SPECIFIC DEFE CTS IN BOOKS OF ACCOUNTS AND THE A.O. CANNOT BE PERMITTED TO MAKE A RBITRARY ADDITION. 9.37 THE CORE THING TO BE SEEN IS THE EVIDENCE FOUN D WHICH WILL BE THE BASIS FOR MAKING THE ASSESSMENT. COMING TO THE FACT S OF THE CASE, THE AO ESTIMATED THE UNACCOUNTED PRODUCTION AND SALES B ASED ON BENCHMARK YIELD OF 60% IN SPONGE IRON UNIT. THE ENT IRE ESTIMATED SUPPRESSED SALE HAS BEEN TREATED AS PROFIT. I AM CO NVINCED THAT THE DETERMINATION OF UNDISCLOSED INCOME IN THIS CASE IS MERELY ON THE BASIS OF PRESUMPTION AND ON AN ESTIMATE BASIS. SEARCH ASS ESSMENT HAS TO BE FRAMED ON THE BASIS OF SOME MATERIAL, WHICH IN THIS CASE IS RAW MATERIAL CONSUMED IN SPONGE IRON UNIT FOR MANUFACTURING OF S PONGE IRON. NO OTHER MATERIALS OR ASSET DETAILS WERE FOUND DURING THE COURSE OF SEARCH. 9.38 THE QUESTION OF BEST JUDGMENT IS RULED OUT AND THEREFORE THE APPLICATION OF ANY FORMULA FOR ESTIMATING INCOME DO ES NOT ARISE. IN THE INSTANT CASE, SEARCH HAD UNDERTAKEN FROM 21ST JUNE, 2011 TO 22ND JUNE, 2011. THE STATEMENTS OF VARIOUS PERSONS ASSOCIATED WITH THE APPELLANT COMPANY AND MAHAMAYA GROUP WERE RECORDED AND IN THO SE STATEMENTS, NO INCRIMINATING MATERIAL WAS THERE WHICH COULD BE TERMED AS EVIDENCE ON THE BASIS OF WHICH THE UNDISCLOSED INCOME COULD BE COMPUTED. CERTAIN DOCUMENTS WERE SEIZED, BUT THERE WAS NOTHIN G IN THOSE MATERIALS RELATING TO SALES WHICH COULD ESTABLISH T HAT APPELLANT HAD UNDISCLOSED INCOME. THEREFORE, IN MY CONSIDERED VIE W, IT IS UNREASONABLE TO ESTIMATE THE SUPPRESSED SALES ON TH E BASIS OF UNDISCLOSED YIELD. IT CANNOT BE SAID THAT THERE IS ALWAYS STANDARDIZED YIELD DURING THE SEARCH PERIOD. 9.39 AS A MATTER OF FACT THE SEARCH TEAM COULD NOT COME ACROSS ANY EVIDENCE OF UNACCOUNTED SALES, IN MY CONSIDERED OPI NION, HAD THERE BEEN ANY UNACCOUNTED SALES, THE SAME WOULD HAVE BEE N DETECTED BY THE SEARCH TEAM. THE CASE OF THE APPELLANT ALSO FINDS S UPPORT FROM THE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 28 - DECISION OF THE JURISDICTIONAL TRIBUNAL I.E. ITAT, BILASPUR BENCH IN CHHATTISGARH STEEL CASTING (P) LTD. VS. ASSISTANT C OMMISSIONER OF INCOME TAX (2008) 8 DTR (BILASPUR) (TRIB) 14. 9.40 THE SIGNIFICANCE OF TANGIBLE EVIDENCE IS INDIC ATIVE FROM THE FACT THAT IN COMMISSIONER OF INCOME TAX VS. VISHAL RUBBER PRODUC TS (2003) 264 ITR 542 (P&H) : (2004) 136 TAXMAN 151 DE SPITE BALANCE SHEET HAVING BEEN FOUND FROM THE PREMISES SEARCHED, NO ADDITION WAS SUSTAINED IN THE ABSENCE OF TANGIBLE EVIDENCE. 9.41 ON THE CONTRARY, THE APPELLANT HAD PROVIDED AL L THE REQUISITE DETAILS REGARDING ITS PRODUCTION ACTIVITY. THE ITEM S OF RAW MATERIAL PURCHASED ARE EXCISABLE PRODUCTS, THE QUANTITY OF R AW MATERIAL PURCHASED AS MENTIONED IN EXCISABLE AND COMMERCIAL INVOICE WAS TEST CHECKED WITH THE ENTRIES IN THE EXCISE RECORD FOR R AW MATERIAL I.E. RG- 1 AND THE SAME WAS FOUND TO BE IN ORDER. THE QUANTI TY APPEARING IN THE EXCISE REGISTERS WAS CROSS CHECKED WITH THE ENTRIES IN THE EXCISE RETURNS AND THE SAME WAS FOUND TO BE IN ORDER AND T ALLYING WITH THE EXCISE RECORDS. THE INVENTORY APPEARING IN THE EXCI SE RECORDS AND EXCISE RETURNS WAS FOUND TO BE THE SAME AS IN FINAN CIAL RECORDS I.E. THE BOOKS OF ACCOUNTS AND AUDITED FINANCIAL STATEMENTS. UNDISPUTEDLY, THE PRODUCTION WAS METICULOUSLY ROUTED THROUGH THE APPE LLANTS DAILY PRODUCTION REGISTER/ EXCISE RECORDS. THE ENTRIES TH EREIN WERE DEFINITELY CO-RELATABLE TO THE ENTRIES IN THE STOCK REGISTER, ENABLING AN EASY STOCK TALLY, IF ONE WAS SO REQUIRED. HOWEVER, THE AO DID NOT DEEM IT FIT TO CARRY OUT THE EXERCISE OF TALLYING THE STOCK AS PER THESE ENTRIES IN THE TWO TYPES OF BOOKS. HE MERELY WENT BY THE ALLEGED S UPPRESSED YIELD. VARIOUS SUBMISSIONS REGARDING REASONS FOR VARIATION IN CONSUMPTION OF POWER, FURNACE OIL, YIELD ETC WERE DULY FURNISHED B Y THE APPELLANT. THE APPELLANT DID FURNISH THE COMPARABLE INSTANCES AND ALSO DEMONSTRATED WITH TECHNICAL DETAILS OF PRODUCTION. THESE COPIOUS EVIDENCES WERE WRONGLY IGNORED BY THE AO. COMMISSIONER OF INCOME TAX VS. HINDUSTAN TIN WORKS LTD. (2007) 291 ITR 290 (DEL) : (2007) 164 TAXMAN 529 9.42 A CAREFUL READING OF THE DECISION IN COMMISSIONER OF INCOME TAX VS. R.K. RICE MILLS (2009) 319 ITR 173 : (2009) 185 TAXMAN 107 (P&H) THE HONBLE HIGH COURT HAD UPHELD THE DELETIO N OF ADDITION AND IT LEADS TO AN IRRESISTIBLE CONCLUSION THAT THERE C ANNOT BE ANY REJECTION OF BOOKS OF ACCOUNTS MERELY BECAUSE THE YIELD DECLA RED BY THE ASSESSEE IS LOWER IN COMPARISON TO OTHER ASSESSEES ENGAGED I N SIMILAR LINE OF BUSINESS. 9.43 THE NOTORIETY THAT APPELLANT SUPPRESSED THE YI ELD WOULD BE MERELY A BACKGROUND OF SUSPICION AND THE APPELLANT SHOULD NOT BE HELD TO HAVE INDULGED IN SUCH ILLEGAL PRACTICES WITHOUT ANY EVIDENCE. THE MERE POSSIBILITY OF THE APPELLANT GETTING HIGHER YI ELD WOULD BE A MATTER OF PURE CONJECTURE. COMMISSIONER OF AGRICULTURAL INCOME TAX VS. M.J. CHERIAN (1979) 117 ITR 371 (KER) 9.44 I FIND NO MERIT IN THE ACTION OF THE A.O IN RE JECTING THE BOOKS OF ACCOUNTS MERELY DUE TO THE REASON THAT THE YIELD AC HIEVED BY THE APPELLANT IS LESS THAN THE YIELD PERCENTAGE I.E. 60 % WHICH HAS NOT BEEN ACHIEVED EVEN BY OTHER ASSESSEES ENGAGED IN SIMILAR LINE OF BUSINESS, THE A.O HAS NOT BROUGHT ON RECORD THE MANNER IN WHI CH HE WORKED OUT ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 29 - THE YIELD OF 60%. THE A.O HAS NO EVIDENCE IN HIS PO SSESSION TO INDICATE THAT THE QUALITY OF RAW MATERIAL USED BY THE APPELL ANT IN ALL THESE 7 YEARS WAS UNIFORM AND STANDARDIZED ONE. THE HONBLE MADRAS HIGH COURT TOOK JUDICIAL NOTE OF SUCH FACTS IN C. ARUMUG ASWAMI NADAR VS. COMMISSIONER OF INCOME TAX (1961) 42 ITR 237 ( MAD). 9.45 THE FACTS IN THE CASE OF THE APPELLANT ARE AKIN TO THE FACTS BEFORE THE HONBLE HIGH COURT OF ASSAM IN HARAKCHAND ARAKCHAND RADHAKISAN VS. COMMISSIONER OF INCOME TAX (1962) 46 ITR 196 (ASSAM). THE HONBLE HIGH COURT OF DELHI HAS LAID D OWN CERTAIN PRINCIPLES ON REJECTION OF BOOKS OF ACCOUNTS IN COMMISSIONER OF INCOME TAX VS. PARADISE HOLIDAYS (2010) 48 DTR (DEL) 349 : (2010) 325 ITR 13. 9.46 IN SUKHADIA JAMNADAS MAGANLAL VS. INCOME TAX OFFICER (2008) 13 DTR (GUJ) 149, THE HONBLE HIGH COURT OF GUJARAT ELABORATELY CONSIDERED THE VARIOUS QUESTION S AND ISSUES AND ULTIMATELY DECIDED THE QUESTION IN FAVOUR OF THE AS SESSEE, IDENTICAL ISSUES AND QUESTIONS ARE PRESENT IN THE INSTANT CAS E. 9.47 UNDISPUTEDLY, THE CASE OF THE APPELLANT WAS UN DER SCRUTINY ASSESSMENT FOR TWO CONSECUTIVE YEARS I.E. IN A.Y 20 06-07 AND 2007-08. IT IS SELF EVIDENT FROM THE ABOVE REFERRED ASSESSME NT ORDERS U/S 143(3) THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT WERE AC CEPTED IN ALL THESE YEARS AND YIELD DECLARED BY THE APPELLANT WAS ALSO ACCEPTED. EVEN DURING THE SURVEY PROCEEDINGS, NO INCRIMINATING DOC UMENT WAS FOUND WHICH IS EVIDENT FROM THE FACT THAT NO ADDITION WAS MADE IN THE SCRUTINY ASSESSMENT, FOR THE YEAR IN WHICH SURVEY PROCEEDING S TOOK PLACE, ON THE BASIS OF INCRIMINATING DOCUMENT. THE CASE OF APPELL ANT FINDS SUPPORT FORM DECISION IN SUKHADIA JAMNADAS MAGANLAL VS. INCOME TAX OFFICER (2008) 13 DTR (GUJ) 149, THE HONBLE HIGH COURT OF GUJARAT. 9.48 THE HONBLE HIGH COURT OF BOMBAY IN R.B. BANSILAL ABIRCHAND SPINNING & WEAVING MILLS LTD.. VS. COMMISSIONER OF INCOME TAX (1970) 75 ITR 260 (BOM) HAS HELD THAT MERELY BY CO MPARISON OF THE PERCENTAGE OF LOSSES IN A PARTICULAR YEAR, IT IS NO T POSSIBLE TO SAY WITH ANY REASONABLE CERTAINTY THAT THE INCREASE IN THE P ERCENTAGE OF LOSS MUST BE ATTRIBUTABLE AND MUST LEAD TO A REASONABLE INFERENCE OF SUPPRESSION OF PRODUCTION. 9.49 IN THE INSTANT CASE ALSO, THE ULTIMATE ADDITIO N HAS BEEN MADE ON THE BASIS OF ALLEGED SUPPRESSION OF YIELD/ UNACCOUN TED PRODUCTION. EXCEPT MAKING COMPARISON OF YIELD ACHIEVED BY THE A PPELLANT WITH A.OS OWN STANDARDIZED YIELD PERCENTAGE OF 60%, THE A.O HAS NOT BROUGHT ON RECORD ANY EVIDENCE, GIVEN THE FACT THAT THE PRESENT PROCEEDINGS ARE CULMINATING FROM THE SEARCH PROCEED INGS, AS A MATTER OF FACT THE SEARCH TEAM COULD NOT COME ACROSS EVEN A SINGLE DOCUMENT WHICH EVEN INDICATES OF APPELLANTS INDULGENCE INTO ANY SUCH SUPPRESSION OF YIELD OR UNACCOUNTED SALES. IT IS NO T THE CASE OF THE A.O THAT THE BUYERS OF ALLEGED UNACCOUNTED SALES HAVE G IVEN THE STATEMENTS AGAINST THE APPELLANT, NOR ANY EMPLOYEE UTTERED ANY SUCH THING. 9.50 WHETHER MERE VARIATION IN YIELD CAN EVEN BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNTS WAS DECIDED BY THE H ONBLE HIGH COURT ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 30 - OF JAMMU & KASHMIR IN INTERNATIONAL FOREST CO. VS. COMMISSIONER OF INCOME TAX 1975 CTR (J&K) 88 : (1975) 101 ITR 721 (J&K). WHERE AO HAD FAILED TO BRING ON RECORD ANY COGENT M ATERIAL TO SHOW QUANTUM OF SALES OF ASSESSEE OUT OF BOOKS OF ACCOUN TS, THEN ADDITION MADE BY REVENUE ON ESTIMATED BASIS WAS NOT JUSTIFIE D, THIS WAS HELD IN COMMISSIONER OF INCOME TAX VS. MAHAN MARBLES (P) LT D. BY HONBLE HIGH COURT OF RAJASTHAN VIDE ORDER DATED 9T H JANUARY, 2013 (2013) 354 ITR 238 (RAJ). 9.51 IT IS NOT THE CASE OF THE A.O THAT THE STOCK R ECORDS AND INVENTORY OF THE APPELLANT OR THE QUANTITY OF PRODUCTION AND SALES DECLARED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS WAS NOT ACCEPTED BY THE OTHER REVENUE AUTHORITIES SUCH AS SALES TAX DEPARTMENT OR THE EXCISE DEPARTMENT. THE CASE OF APPELLANT FINDS SUPPORT FRO M THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN COMMISSIONER OF IN COME TAX VS. SANJAY OIL CAKE INDUSTRIES (2005) 197 CTR (GUJ) 520 : (2005) 149 TAXMAN 190: 9.52 I AM CONVINCED WITH THE REASONS FOR VARIATION IN POWER CONSUMED IN COMPARISON TO THE PRODUCTION IN DIFFERENT PERIOD S WHICH COULD BE ON ACCOUNT OF FURNACE CONDITION, QUALITY OF RAW MATERI AL USED, LABOUR PRODUCTIVITY, INCOMING VOLTAGE, BREAKDOWN TIME, ETC . DUE TO THE ABOVE REASONS, MONTHLY CONSUMPTION OF POWER MAY VARY. UND ISPUTEDLY, THE STATISTICS OF POWER CONSUMPTION AND PRODUCTION AND THE SIMILAR VARIATION EXISTED EVEN DURING THE COURSE OF ASSESSM ENT PROCEEDINGS U/S 143(3), BUT NO ADVERSE INFERENCE HAD BEEN DRAWN IN THOSE ASSESSMENT PROCEEDINGS U/S 143(3). IT IS GATHERED THAT THE APP ELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND SALES/PURCHASES ARE VE RIFIABLE AND VOUCHED, RECORDED AND SUPPORTED BY RAW MATERIAL CON SUMPTION REGISTER AND FINISHED GOODS REGISTER AND WAS ALSO SUBJECTED TO EXCISE DUTY AND ITS PRODUCTION DECLARED FOR THE INSTANT YEARS HAD D ULY BEEN ACCEPTED BY THE EXCISE DEPARTMENT AFTER VERIFICATION. THE CASE OF THE APPELLANT CERTAINLY FINDS SUPPORT FROM THE DECISION IN THE CA SE OF N. RAJA PULLAIAH VS. DY. CTO (1969) 73 ITR 224 (AP). 9.53 AS REGARDS VARIATION IN POWER CONSUMPTION AND FOR THAT MATTER VARIATION IN CONSUMPTION OF OTHER RAW MATERIAL, IT HAS BEEN HELD THAT THE MERE VARIATION IN POWER CONSUMPTION CANNOT BE C ONSTRUED AS REASONABLE GROUND FOR REJECTING THE BOOKS OF ACCOUN TS AND ESTIMATION OF INCOME. IN PONDY METAL & ROLLING MILLS (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX ITAT, DELHI B BENCH (2 007) 107 TTJ (DEL) 336. THE CASE OF THE APPELLANT FINDS SUPPORT FROM THE DE CISION IN THE CASE OF MAHABIR PRASAD JAGDISH PRASAD VS. CST 27 STC 337 (A LL) AND DECISION OF THE HONBLE HIGH COURT OF RAJASTHAN IN KAY POLYPLAST LTD. VS. ADDITIONAL COMMISSIONER OF INCOME TAX (2008) 9 DTR (RAJ) 163. 9.54 I FIND THAT NO MARGIN FOR ESTIMATION OF SUPPRE SSED SALES AND INCOME HAS BEEN ALLOWED EVEN IN THOSE CASES WHERE I NSTANCES OF SUPPRESSION OF SALES HAS BEEN FOUND ON THE BASIS OF INCRIMINATING MATERIAL EXCEPT FOR THE PERIOD FOR WHICH SUPPRESSIO N HAS BEEN UNEARTHED BASED ON COGENT AND DOCUMENTARY EVIDENCE, UNDISPUTEDLY, IN THE CASE OF THE APPELLANT, NOTHING INCRIMINATING HA S BEEN FOUND, ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 31 - THEREFORE, AS HELD IN DEPUTY COMMISSIONER OF INCOME TAX VS. ROYAL MARWAR TOBACCO PRODUCT (P) LTD. (2009) 120 TTJ (AH D) 387 : (2008) 16 DTR 129. 9.55 MERE VARIATION IN POWER CANNOT BE A GROUND FOR HOLD ING ADVERSITY WAS HELD IN INCOME TAX OFFICER VS. PRAGAT I FASHIONS VIDE ORDER DATED 12TH FEBRUARY, 2010 (2011) 12 ITR 444 ( AHD)(TRIB). 9.56 UNDER SIMILAR FACTS, THE HONBLE ITAT CHANDIGA RH BENCH IN ASSISTANT COMMISSIONER OF INCOME TAX VS. A.K. ALLOY S P. LTD. VIDE ORDER DATED 29TH FEBRUARY, 2012 (2012) 17 ITR (TRIB ) 424 (CHANDIGARH) HAS DECIDED IN FAVOUR OF ASSESSEE. THE EXTRAPOLATION OF FIGURES FOR ESTIMATION OF INCOME HAS BEEN HELD TO B E UNSUSTAINABLE IN EVERGREEN BAR & RESTAURANT VS. ADDITIONAL COMMISSIO NER OF INCOME TAX (2008) 6 DTR (MUMBAI)(TRIB) 56. 9.57 IN MY CONSIDERED VIEW, THERE WAS NO GROUND FOR THE A.O TO REJECT THE BOOKS OF ACCOUNTS OF THE APPELLANT U/S 145, HOW EVER, EVEN IF IT IS ASSUMED THAT THERE WAS SUFFICIENT GROUND FOR REJECT ING THE BOOKS OF ACCOUNTS, THE ASSESSMENT HAD TO BE MADE TO THE BEST OF HIS JUDGEMENT. AS TO HOW THE BEST JUDGMENT ASSESSMENT SHOULD BE MA DE, THE LEADING DECISION ON THE POINT IS THE ONE RENDERED BY THE PR IVY COUNCIL IN CIT VS. LAXMI NARAIN BADRIDAS (1937) 5 ITR 170 (PC) : T C11R. 192, REVERSING LAXMI NARAIN BADRIDAS VS. CIT (1934) 2 IT R 246 (NAG) : TC11R.201 AND APPROVING ABDUL BAREE CHOWDHURY VS. C IT (1932) 5 ITC 352 (RANG). IN THIS DECISION RENDERED UNDER THE PROVISIONS OF THE 1922 ACT, IT WAS OBSERVED : HE (THE ASSESSING AUTHORITY) MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT IN THE MATTER. HE MUST MAKE WHAT HE HONEST LY BELIEVES TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST, THEIR LORDSHIPS THINK, BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEES CIRCUMSTANCES, AND HIS OWN KNOWLEDGE OF PREVIOUS RE TURNS BY AND ASSESSMENTS OF THE ASSESSEE, AND ALL OTHER MATERIAL S WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ES TIMATE; AND THOUGH THERE MUST NECESSARILY BE GUESS-WORK IN THE MATTER, IT MUST BE HONEST GUESS-WORK. THESE OBSERVATIONS RECEIVED THE IMPRIMATUR OF THE SUPREME COURT IN STATE OF KERALA VS. C. VELUKUTTY ( 1966) 60 ITR 239 (SC) IN THE FOLLOWING WORDS : THE PRIVY COUNCIL, W HILE RECOGNIZING THAT AN ASSESSMENT MADE BY AN OFFICER TO THE BEST O F HIS JUDGMENT INVOLVED SOME GUESS-WORK, EMPHASIZED THAT HE MUST E XERCISE HIS JUDGMENT AFTER TAKING INTO CONSIDERATION THE RELEVA NT MATERIAL. IDENTICAL OBSERVATIONS MADE BY THE JUDICIAL COMMITT EE IN SETH GURMUKH SINGH VS. CIT (1992) 194 ITR 507 (ALL) : TC1R.357 W ERE APPROVED BY THE SUPREME IN DHAKESWARI COTTON MILLS LTD. VS. CIT (1994) 117 CTR (GAU) 179 : (1994) 205 ITR 45 (GAU) : TC1R.508. 9.58 AS EMPHASIZED BY THE SUPREME COURT IN STATE OF KERA LA VS. C. VELUKUTTY (1966) 60 ITR 239 (SC) THOUGH THERE IS AN ELEMENT OF GUESS-WORK IN BEST JUDGMENT ASSESSMENT, IT SHOULD N OT BE A WILD ONE AND SHOULD HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF EACH CASE. LIKEWISE, IT HAS BEEN LAID DOWN BY THE SUPREME COURT IN THE CASE OF STATE OF ORISSA VS. MA HARAJA SHRI B. P. SINGH DEO (1970) 76 ITR 690 (SC) : TC11R.251 THAT THE MERE FACT THAT THE MATERIAL PLACED BY THE ASSESSEE BEFORE THE ASSESSING ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 32 - AUTHORITIES IS UNRELIABLE DOES NOT EMPOWER THOSE AU THORITIES TO MAKE AN ARBITRARY ORDER. THE POWER OF LEVY ASSESSMENT ON TH E BASIS OF BEST JUDGMENT IS NOT AN ARBITRARY POWER; IT IS AN ASSESS MENT ON THE BASIS OF BEST JUDGMENT. IN OTHER WORDS, THAT ASSESSMENT MUST BE BASED ON SOME RELEVANT MATERIAL. IT IS NOT A POWER THAT CAN BE EX ERCISED UNDER THE SWEET WILL AND PLEASURE OF CONCERNED AUTHORITIES. THE BASIS OF ESTIMATE OR THE BASIS OF COMPUTATION SHOULD BE DISC LOSED BY THE ASSESSING AUTHORITY, OR OTHERWISE THE BEST JUDGMENT ASSESSMENT MAY BE QUASHED. IN ANAND RICE & OIL MILLS VS. CIT (1977) 108 ITR 3 72 (CAL) : TC11R.254 HUGE ADDITIONS WERE MADE BY THE ITO ON TH E GROUND THAT THE ASSESSEE HAD INFLATED THE PURCHASE PRICES OF GOODS AND A MAJOR PORTION OF THE ADDITION WAS SUSTAINED BY THE TRIBUNAL WITHO UT FURNISHING ANY BASIS OF ITS OWN ESTIMATE. THE CALCUTTA HIGH COURT HELD THAT THE ORDER OF THE TRIBUNAL BEING ARBITRARY, THE SAME COULD NOT BE SUSTAINED. IN GANGA PRASAD SHARMA VS. CIT (1981) 132 ITR 87 (MP) : TC11R.285 THE MADHYA PRADESH HIGH COURT EMPHASIZED THAT WHILE MAK ING A BEST JUDGMENT ASSESSMENT, THE BASIS OF COMPUTATION SHOUL D BE DISCLOSED BY THE ITO. IN CIT VS. RANICHERRA TEA CO. LTD. (1994) 207 ITR 979 (CAL) : TC11PS.3, THE ITO REJECTED THE LOSS RETURN AND DETERMINED THE LOSS AT NIL ON DEFAULT OF ASSESSEE TO PRODUCE BOOKS OF ACCO UNT. NO BASIS FOR COMPUTATION WAS DISCLOSED BY THE ITO. IT WAS HELD B Y THE CALCUTTA HIGH COURT THAT THE ITO ACTED ILLEGALLY . AS ASSESSMENT HAS TO BE COMPLETED ON THE BASIS OF RECORDS AND MATERIAL AVAI LABLE BEFORE THE AO AND PERSONAL KNOWLEDGE AND EXCITEMENT ON EVENTS AND EXTRANEOUS FACTS SHOULD NOT LEAD THE AO TO A STATE OF AFFAIRS WHERE THE SALIENT/PRIMARY/DIRECT EVIDENCES ARE OVERLOOKED AND SHOULD NOT INFLUENCE THE AO FOR RESORTING TO ADHOC ADDITIONS/D ISALLOWANCES. IF GENERAL/CASUAL/ROUTINE OBSERVATIONS OF THE AO ARE T O BE CONSIDERED AS MATERIAL EVIDENCE FOR THE PURPOSE OF FRAMING AN ASS ESSMENT, THE AO SHALL HAVE BLANKET AND ARBITRARY POWERS TO DISPOSE OF THE SCRUTINY ASSESSMENTS ACCORDING TO HIS WHIMS AND FANCIES WHIC H IS NOT THE SPIRIT OF THE CIRCULARS ISSUED BY THE BOARD ON SCRUTINY AS SESSMENT. AN ASSESSMENT CANNOT BE MADE ARBITRARILY AND IN ORDER THAT AN ASSESSMENT CAN BE SUSTAINED, IT MUST HAVE NEXUS TO THE MATERIA L ON RECORD. (CIT V. MAHESH CHAND [1983] 199 ITR 247, 249 (ALL.). IT IS THE SETTLED POSITION THAT, THOUGH THE AO HAS VERY WIDE POWERS AND IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, THERE IS ONE OVER-RIDING RESTRICTION ON HIS JUDGEMENT AND THAT IS, THAT, HE MUST ACT HONESTLY AND DILIGENTLY ON THE MATERIAL, HOWSOEVER, INADEQUATE I T WAS, AND NOT VINDICTIVELY, CAPRICIOUSLY OR ARBITRARILY. PROBABI LITY CANNOT BE CONSTRUED AS MATERIAL EVIDENCE TO FORM AN OPINION B Y THE AO TO CONCLUDE AN ASSESSMENT AND FOR DRAWING ADVERSE INFE RENCE AGAINST THE APPELLANT UNLESS THERE IS EVIDENCE TO SUBSTANTIATE SUCH PROBABLE INFERENCE. ASSESSMENT HAS TO BE MADE BASED ON THE REAL INCOME THEORY, I.E., INCOME TO BE DETERMINED FOR TAXATION MUST INV ARIABLY BE PROVED TO HAVE BEEN THE CORRECT QUANTUM OF INCOME EARNED BY T HE APPELLANT DURING THE RELEVANT PREVIOUS YEAR AND THE ONE PRESU MED TO HAVE BEEN EARNED. THE PRESUMPTIONS AND HYPOTHETICAL ESTIMATI ONS AND OBSERVATIONS MADE BY THE A.O. FOR MAKING THE IMPUGN ED ESTIMATED ADDITION, WERE EXTRANEOUS, IRRELEVANT AND OPPOSED T O THE FACTS OBTAINING FROM THE RECORD. THE FATE OF THE APPELLAN T COULD NOT BE DECIDED BY THE A.O. ON MERE SURMISES OR PROBABILITI ES (NORTHERN BENGAL JUTE MILLS TRADING CO. LTD. V. CIT (1968) 70 ITR 40 7 (CAL). THE MERE EXISTENCE OF REASONS FOR SUSPICION WOULD NOT TANTAM OUNT TO EVIDENCE (CAL. HC IN NARAYAN CHANDRA BAIDYA V. CIT (1951) 20 ITR 287 (CAL.). ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 33 - 9.59 IT IS INDEED A CASE OF FRIVOLOUS ADDITION WITH FACTS IDENTICAL TO THE FACTS IN THE CASE OF BHARTI AIRTEL LIMITED VS. ACIT (ITAT DELHI). LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS ALSO DECISIONS CITED ABOVE, THE ADDITION MADE BY THE A.O IS HELD T O BE BASELESS AND WITHOUT ANY EVIDENCE, HENCE, THE REJECTION OF BOOKS OF ACCOUNTS IS HELD TO BE INVALID AND ADDITION MADE BY THE A.O ON ACCOUNT OF ALLEGED SUPPRESSION OF YIELD IS DELETED. THE APPELLANT GETS RELIEF OF RS. 14,52,32,036/-. A.Y. AMOUNT (RS.) 2007-08 72,19,622.00 2008-09 5,37,41,146.00 2010-11 1,84,88,252.00 2011-12 6,57,83,016.00 11. AS NOTED EARLIER, WHILE ADJUDICATING THE ISSUES INVOLVED IN FAVOUR OF THE ASSESSEE ON FACTUAL MATRIX, THE LEGAL OBJECTION OF THE ASSESSEE ON JURISDICTION UNDER S. 153A CONCERNING A Y 2006-07 TO 2009-10 IN QUESTION WAS HOWEVER SEEN WITH DISFAVOUR AND DECIDED AGAINST THE ASSESSEE BY THE CIT(A). 12. THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED TO THE ASSESSEE ON MERITS BY THE CIT(A) ON BOTH THE ISSUES OF (I) A DDITIONS UNDER S.68 OF THE ACT TOWARDS SHARE APPLICATION MONEY; & (II) SUPPRESSION OF PRODUCTION BASED ON LOWER YIELD AND CORRESPONDIN G UNRECORDED SALES IN ALL THE CAPTIONED APPEALS. 13. THE ASSESSEE, ON THE OTHER HAND, HAS FILED CROS S OBJECTIONS CHALLENGING THE LEGITIMACY OF ADDITIONS/ DISALLOWAN CES DEHORS ANY REFERENCE TO INCRIMINATING DOCUMENTS IN UNABATED AS SESSMENTS COVERING AY 2006-07 TO AY 2009-10 IN QUESTION. 14. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEA RNED CIT-DR FOR THE REVENUE, AT THE OUTSET, STRONGLY RELIED UPO N THE FACTUAL MATRIX DISCUSSED IN ASSESSMENT ORDERS IN QUESTION. AS REGARDS LEGAL OBJECTION OF THE ASSESSEE, IT IS THE CASE OF THE RE VENUE THAT ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 34 - DISCOVERY OF ANY INCRIMINATING DOCUMENT IS NOT A CO NDITION PRECEDENT TO MAKE ASSESSMENT UNDER S.153A OF THE AC T. IT WAS THUS CONTENDED THAT THE AO AND THE CIT(A) RIGHTLY OBSERV ED THAT THE ISSUE OF WARRANT OF SEARCH AND SEIZURE UNDER S.132 OF THE ACT SUFFICIENTLY EMPOWERS THE AO TO INITIATE THE PROCEE DINGS UNDER S.153A OF THE ACT AND TO MAKE ALL CONSEQUENT ADDITIONS/DISALLOWANCES REGARDLESS OF PRESENCE OF I NCRIMINATING DOCUMENTS OR OTHERWISE. IT WAS SUBMITTED THAT THE O NLY CONDITION FOR INITIATION OF PROCEEDINGS UNDER S.153A OF THE ACT I S OCCURRENCE OF A VALID SEARCH UNDER S.132 OF THE ACT. IT WAS REITER ATED THAT SECTION 153A OF THE ACT DOES NOT PROVIDE THAT ASSESSMENT/RE -ASSESSMENT SHOULD BE BASED ON INCRIMINATING MATERIAL ALONE A ND THE AO IS EMPOWERED TO ASSESS OR RE-ASSESS THE TOTAL INCOME OF THE SIX FINANCIAL YEARS COVERED UNDER THE SEARCH REGARDLESS OF PRESENCE OF INCRIMINATING MATERIAL. ON MERITS, IT WAS POINTED O UT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PLACED UP ON IT TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF SHARE APPLICATION MONEY AND CONSEQUENTLY, IN THE ABSENCE OF SATISFACTORY EXPLANATION TOWARDS NATURE AND SOURCE OF RECEIPTS, THE AO HAS RIGHTLY INVOKED SECTION 68 OF THE ACT. AS REGARDS L OW YIELDS, IT WAS CONTENDED THAT THE ASSESSEE HAS FAILED TO PROVIDE S ATISFACTORY EXPLANATION FOR LOWER YIELD QUA THE INDUSTRY STANDARD AS DEMONSTRATED BY THE AO IN ITS ORDER. THE FINDINGS O F THE CIT(A) FOR REVERSAL OF ADDITIONS WERE THUS ASSAILED ON MERITS. 15. PER CONTRA , THE LEARNED COUNSEL FOR THE ASSESSEE, TO BEGIN WITH, ADVERTED TO THE LEGAL OBJECTION AND POINTED O UT THAT THE A.YS. 2006-07 TO 2009-10 STOOD CONCLUDED AND COMPLETED PR IOR TO INITIATION OF SEARCH ON 21.06.2011 AND CONTENDED TH AT IN THE LIGHT OF THE LAW EXPOUNDED BY THE PLETHORA OF JUDICIAL PRECE DENTS OF DIFFERENT HIGH COURTS, IN THE ABSENCE OF ANY INCRIM INATING MATERIAL ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 35 - FOUND IN THE COURSE OF SEARCH QUA THE ADDITIONS/DISALLOWANCES MADE, THE ACTION OF AO IS DEVOID OF LEGITIMACY WITHOUT SH OWING ITS CONNECTION TO THE INCRIMINATING MATERIAL FOUND IN T HE COURSE OF SEARCH. THE SCHEMATIC INTERPRETATION GIVEN BY THE J UDICIAL PRECEDENTS WERE THUS RELIED UPON. 15.1 TURNING TO THE FACTS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SEARCH AND SEIZURE OPERATION UNDER S.132(1) OF THE ACT WAS CARRIED OUT ON THE RESIDENTIAL AND BUSINESS PREMISES OF VARIOUS COMPANIES AND ITS DIRECTORS ON 21.06.2011. HOWEVER, SIGNIFICANTLY, NO SEARCH ACTION WAS CARRIED OUT AT THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WHERE THE SHARE CERT IFICATES, RELEVANT STATUTORY RECORDS ARE KEPT AS REQUIRED IN LAW. NO A DVERSE INFORMATION IN RELATION TO SHARE APPLICANTS WERE FO UND IN THE COURSE OF SEARCH. IT WAS FURTHER ASSERTED THAT NO DOCUMENT RELATING TO VARIOUS ASSESSMENT YEARS IN QUESTION WERE EITHER FO UND OR SEIZED WHICH CAN BE BRANDED TO BE INCRIMINATING IN NATURE INDICATING PRESENCE OF ANY UNDISCLOSED INCOME. THE CASH FOUND IN SEARCH WAS MEAGER HAVING REGARD TO THE SCALE OF OPERATIONS. TH E DOCUMENTS FOUND AND SEIZED WERE OF ROUTINE NATURE MAINTAINED IN THE ORDINARY COURSE OF BUSINESS WHICH NATURALLY WILL BE FOUND IN THE BUSINESS PREMISES. THE DOCUMENTS FOUND SUPPORTS THE ENTRIES MADE IN THE BOOKS. HENCE, THE ASSESSMENTS FOR AYS 2006-07 TO 2 009-10 IN QUESTION WHICH STOOD CONCLUDED AND REMAINED UNABATE D IS BARRED BY PRINCIPLES OF FINALITY AND COULD NOT BE DISTURBED B Y THE AO IN THE ABSENCE OF THE INCRIMINATING MATERIAL. 15.2 TO BUTTRESS THE LEGAL POSITION THAT PRESENCE O F INCRIMINATING MATERIAL DISCOVERED IN THE COURSE OF SEARCH AS A SINE QUA NON FOR ADDITIONS/DISALLOWANCES IN RESPECT OF UNABATED ASSE SSMENT, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION RENDERED IN ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 36 - THE CASE OF KABUL CHAWLA (2016) 380 ITR 573 (DEL); PR.CIT VS. MEETA GUTGUTIA (2018) 96 TAXMANN.COM 468 (SC) AND SERIES OF OTHER DECISIONS IN LARGE NUMBERS GOVERNING THE FIELD. IN THE LIGHT OF JUDICIAL VIEW, IT WAS THUS ASSERTED THAT IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H, THE ACTION OF THE AO TO MAKE ADDITIONS IS A COMPLETE NON-STARTER. THE TIME LIMIT FOR ISSUANCE OF NOTICE UNDER S.143(2) OF THE ACT IS EITHER EXPIRED AT THE TIME OF SEARCH OR THE ASSESSMENTS WERE CONCLUDE D UNDER SECTION 143(3), AS THE CASE MAY BE, AND HENCE COULD NOT BE DISTURBED FOR MAKING ADDITIONS OF REGULAR & ROUTINE NATURE MERELY ON ACCOUNT OF SEARCH. THE LEARNED COUNSEL REITERATED THAT IN THE LIGHT OF JUDICIAL PRECEDENTS, THE LEGAL POSITION IS CRYSTAL CLEAR THA T IN UNABATED SEARCH ASSESSMENTS, NO ADDITION IS PERMISSIBLE MERELY ON T HE BASIS OF RE- APPRECIATION OF REGULAR BOOKS, ACCOUNTS AND DOCUMEN TS MAINTAINED BY THE ASSESSEE IN ORDINARY COURSE. THE LD. COUNSEL THUS SUBMITTED THAT ALL ADDITIONS/ DISALLOWANCES MADE IN THE IMPUG NED ASSESSMENTS COVERING AY 2006-07 TO 2009-10 IS ABSOLUTELY WITHOU T ANY LEGAL FOUNDATION AND DESERVES TO BE QUASHED AT THE THRESH OLD WITHOUT GOING IN MERITS. SOME OF THE OTHER PRECEDENTS IN TH IS REGARD AS CITED IS NOTED HEREUNDER: (A) RAWAL DAS JASWANI VS. ASSISTANT COMMISSIONER OF INCOME TAX, ITA NO. 87/BLPR/2009, ITAT RAIPUR BENCH; (B) DCIT VS. R. K. TRANSPORT & CONSTRUCTIONS PVT L TD, ITA NOS. 236 TO 242/RPR/2014, ITAT RAIPUR BENCH; (C) MINDA INDUSTRIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, (2018) 53 CCH 0287 DELTRIB; (D) ASSTT. COMMISSIONER OF INCOME TAX 1(2), RAIPU R VS. MARUTI CLEAN COAL & POWER LTD., ITA.NO:187/RAIPUR/2014& ITA.NO:95/RAIPUR/2012, ITAT RAIPUR BENCH; (E) DCIT, RAIPUR VS R. R. ENERGY LTD, ITA NOS.22 5 TO 231/RPR/2014, ITAT RAIPUR BENCH; (F) BEST INFRASTRUCTURE (INDIA) PVT. LTD. &ORS. V S. ACIT, (2016) 47 CCH 0159, ITAT DELHI BENCH; (G) MOON BEVERAGES LTD. &ANR VS. ACIT, (2018) 53 C CH 0120, ITAT DELHI BENCH; (H) CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY, (2017) 156 DTK 0161 SC; ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 37 - (I) ACIT & ANR. VS. MADHURI SUNIL KOTECHA &ANR, ( 2016) 55 CCH 0187, ITAT PUNE BENCH; (J) TRILOK CHAND CHAUDHARY VS. ACIT, (2019) 56 CC H 0435, ITAT DELHI BENCH; (K) COMMISSIONER OF INCOME TAX VS. DEEPAK KUMAR A GRAWAL & ORS., (2017) 398ITR586(BOM); (L) PCIT CENTAL-3 VS. ANAND KUMAR JAIN, TS-105-HC-2 021(DEL); (M) PRINCIPAL COMMISSIONER OF INCOME TAX VS. DIPA K JASHVANTLAL PANCHAL,(2017) 397 ITR 153 (GUJ); (N) RAJAT MINERALS (P) LTD. VS. DCIT (2020) 114 TA XMANN.COM 536 (RANCHI) 15.3 ON MERITS, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT IT IS A MATTER OF RECORD THAT ASSESSEE HAS FILED SE VERAL DOCUMENTARY EVIDENCES OF SUBSCRIBERS BEFORE THE AO TO SUPPORT T HE NATURE AND SOURCE OF SHARE APPLICATION MONEY: (A) PAN, ADDRESS, NAME (B) COI, MOA, AOA (C) AUDITED FINANCIAL STATEMENT (D) INCOME TAX RETURN (E) BANK STATEMENT (F) SHARE APPLICATION FORM (G) PAYMENT RECEIVED THROUGH BANKING CHANNEL (H) DETAILS OF PAYMENT RECEIVED 15.4 MOVING FURTHER, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE HAS MADE SEVERAL PRO-ACTIVE REQUE STS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS SOME OF WHICH ARE NOTED HEREUNDER AS REFERRED; (A) TO PROVIDE THE ASSESSEE COMPANY WITH THE COPY OF ALL THE LETTERS SENT BY THE LD. AO TO THE INVESTORS /SHARE APPLICAN TS REGARDING INVESTMENT MADE IN THE SHARES OF ASSESSEE COMPANY. (B) THE ASSESSEE COMPANY MAY KINDLY BE APPRAISED WI TH THE CASES I.E. THE NAME OF THE COMPANY ON WHOM LETTER SENT BY THE LD. AO REMAINED UN-SERVED. (C) THE ASSESSEE COMPANY MAY KINDLY BE MADE KNOWN WITH THE REASON COMMUNICATED BY THE POSTAL DEPARTMENT BEHIND NON-SE RVICE OF THE LETTERS SENT BY THE LD. AO. (D) THE ASSESSEE COMPANY MAY KINDLY BE CONFRONTED WITH THE ENQUIRY CONDUCTED BY THE LD. AO REGARDING YIELD OF ASSESSEE COMPANY AND BASIS OF INFERENCE OF 60% IN SPONGE IRON UNIT. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 38 - (E) THE ASSESSEE COMPANY MAY ALSO BE CONFRONTED WI TH THE ENQUIRY CONDUCTED BY THE LD. AO REGARDING ADDITION TO SHARE APPLICATION /SHARE CAPITAL. ' 15.5 IT WAS NEXT POINTED OUT THAT ASSESSMENT OF THE ASSESSEE WAS DULY COMPLETED UNDER S.143(3) OF THE ACT FOR A.Y. 2 006-07 & A.Y. 2007-08 PRIOR TO SEARCH AND THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY HAD ALREADY BEEN EXAMINED BY SEVERAL ROUNDS O F QUESTIONNAIRES IN THE SCRUTINY ASSESSMENT CARRIED O UT UNDER S.143(3) OF THE ACT. IT WAS AFTER DUE VERIFICATION OF FACTU AL ASPECTS, THE NATURE AND SOURCE OF SHARE APPLICATION MONEY WAS FO UND SATISFACTORY BY THE AO. 15.6 AS REGARDS THE ALLEGED LOWER YIELD AND ALLEGED UNACCOUNTED PRODUCTION AND SALES, IT WAS POINTED OUT THAT THE I SSUE WAS THOROUGHLY EXAMINED IN THE REGULAR ASSESSMENT AS CA N BE SEEN FROM THE ASSESSMENT ORDERS PASSED UNDER S.143(3) OF THE ACT. IT WAS BROADLY SUBMITTED THAT WHILE THE YIELD OF THE ASSES SEE IS COMPARABLE TO ITS PEERS, THE PERCENTAGE OF YIELD DECLARED IS I N SYNC WITH QUALITY OF INPUT. THE AO IN THE ORIGINAL ASSESSMENT HAS MAD E AVERMENTS TO THE EFFECT THAT THE YIELD HAS BEEN LOOKED INTO. BEF ORE US, THE LEARNED COUNSEL MAINLY RELIED UPON AN EXTENSIVE & OBJECTIVE ANALYSIS CARRIED OUT BY THE CIT(A) WHICH IS CLAIMED TO BE SE LF EXPLANATORY. IT WAS THUS SUBMITTED THAT NO INTERFERENCE THEREWITH I S CALLED FOR ON MERITS. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIALS PLACED ON RECORD AND REFERRED TO IN TERMS OF RULE18(6) OF THE INCOME TAX (APPELLATE TRIBUNAL), R ULES 1963. 16.1 BEFORE WE DEAL WITH ADDITIONS ON MERITS, IT WI LL BE DESIRABLE TO ADJUDICATE THE PERTINENT LEGAL OBJECTION OF OVERWHE LMING NATURE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 39 - RAISED ON BEHALF OF THE ASSESSEE WHICH GOES TO THE ROOT OF THE MATTER AND AFFECTS THE VERY FOUNDATION OF ADDITIONS / DISA LLOWANCES IN DISPUTE. THE LEGAL QUESTION THAT ARISES AS PER CROS S OBJECTION IS WHETHER WHILE MAKING ASSESSMENT UNDER S.153A OF THE ACT, THE REVENUE IS ENTITLED TO INTERFERE WITH AN ALREADY CO NCLUDED (AND NOT ABATED) ASSESSMENT PASSED EITHER UNDER S.143(1) OF THE ACT OR UNDER S.143(3) OF THE ACT AND NOT PENDING AT THE TIME OF SEARCH, IN THE ABSENCE OF INCRIMINATING DOCUMENTS UNEARTHED AS A R ESULT OF SEARCH?. AS A COROLLARY, THE SCOPE AND AMBIT OF ASS ESSMENT PROCEEDINGS IN SEARCH CASES UNDER S.153A OF THE ACT IS PUT UNDER SCANNER. 16.2 IN THE FIRST APPEAL, THE CIT(A) DISMISSED THE LEGAL GROUND OF JURISDICTION BY OBSERVING AS UNDER: 16. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. WHERE A SEARCH HAS BE EN INITIATED U/S 132 OF THE ACT, THE A.O. IS ENTITLED TO ISSUE NOTICE FO R SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH SEARCH HAS BEEN INITIATED. AS SUCH, THE ASSESSMENT FOR THOSE SIX ASSESSMENT YEARS STANDS REOPENED. ONCE THE ASSESSMENT IS REOPENED, THE A.O. HAS FULL POWERS TO ASSESS THE INCOME WHICH HAS ESCAPED, WHETHER FOUND AS A RESULT OF SEARCH OR OTHERWISE. ACCORDINGLY, THE ADDITIONS MADE BY THE A .O ARE WITHIN THE POWERS ASSIGNED TO HIM U/S 153A AND FOR THIS REASON , THIS GROUND OF APPEAL IS HEREBY DISMISSED . 16.3 WE HAVE EXAMINED THE LEGAL OBJECTION ON JURISD ICTION TO MAKE ADDITIONS INDEPENDENT OF INCRIMINATING MATERIAL FOU ND IN THE COURSE OF SEARCH. THE ISSUE IS NO LONGER RES INTEGRA AND ANSWERED IN FAVOUR OF THE ASSESSEE BY LARGE NUMBER OF JUDICIAL PRECEDE NTS. AS CONSISTENTLY ECHOED BY THE HONBLE COURTS OF DIFFER ENT JURISDICTION, THE SCOPE OF SEARCH ASSESSMENTS UNDER S.153A OF THE ACT IN RESPECT OF CONCLUDED AND UNABATED ASSESSMENTS IS NARROWER I N ITS SWEEP AND RESTRICTS THE RIGHT OF THE AO TO EXAMINE THE ISSUE EMANATING FROM SOME INCRIMINATING MATERIAL. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 40 - 16.3.1 WE SHALL FIRST REFER TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. MEETA GUTGUTIA (2017) 395 ITR 526 (DEL). THE HONBLE DELHI HIGH COURT REFERRED TO THE JUDGME NT IN THE CASE OF CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL); PR.CIT VS. SAUMYA CONSTRUCTIONS PVT. LTD. (2016) 38 7 ITR 529 (GUJ); PRINCIPAL COMMISSIONER OF INCOME TAX-1 VS. D EVANGI ALIAS RUPA 2017-TIOL-319-HC-AHM-IT; CIT VS. IBC KNOWLEDGE PARK PVT. LTD. (2016) 385 ITR 346 (KAR); PR. CIT-2 VS. S ALASAR STOCK BROKING LTD. 2016-TIOL-2099-HC-KOL-IT AND CIT VS. GURINDER SINGH BAWA (2016) 386 ITR 483 (BOM), REFERENCE IS ALSO MADE TO ANOTHER TWO DECISIONS OF HONBLE DELHI COURT IN PR. CIT VS. MAHESH KUMAR GUPTA 2016-TIOL-2994-HC-DEL AND THE DECISION DATED 7TH FEBRUARY, 2017 IN ITA NOS. 61/2017 AND 62/2017 IN THE PR. COMMISSIONER OF INCOME TAX-9 VS. RAM AVTAR VERMA WHERE THE DECISION IN KABUL CHAWLA (SUPRA) WAS FOLLOWED. THE HONBLE DELHI HIGH COURT MADE AN EXHAUSTIVE REFERENCE TO THE DECI SIONS NOTED ABOVE AND HELD THAT INVOCATION OF SECTION 153A OF T HE ACT TO REOPEN CONCLUDED ASSESSMENTS OF EARLIER ASSESSMENT YEARS W AS NOT PERMISSIBLE IN THE ABSENCE OF INCRIMINATING MATERIA L FOUND DURING SEARCH QUA EACH SUCH UNABATED ASSESSMENT YEARS. EVENTUALLY, THE HONBLE DELHI HIGH COURT IN MEETA GUTGUTIA (SUPRA) HELD THAT ADDITIONS BASED ON APPRECIATION OF FACTS DEHORS INCRIMINATING MATERIAL ARE NOT SUSTAINABLE IN LAW. THE SLP OF TH E REVENUE AGAINST THE AFORESAID DECISION OF THE HONBLE DELHI HIGH CO URT WAS DISMISSED BY THE HONBLE SUPREME COURT IN PR.CIT VS. MEETA GUTGUTIA (2018) 96 TAXMANN.COM 468 (SC). . 16.3.2 SIMILAR VIEW THAT NO ADDITIONS COULD BE MADE ON THE BASIS OF MATERIAL COLLECTED AFTER SEARCH AND IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND OR SEIZED DURING SEARC H HAS BEEN ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 41 - ENDORSED BY THE HONBLE GUJARAT HIGH COURT IN PR.CIT VS. SUNRISE FINLEASE (P.) LTD. (2018) 89 TAXMANN.COM 1 (GUJ.). 16.3.3 THE HONBLE GUJARAT HIGH COURT IN PR.CIT VS. SAUMYA CONSTRUCTIONS PVT. LTD. (2016) 387 ITR 529 (GUJ) ALSO DECLINED TO AGREE WITH THE PLEA ON BEHALF OF THE REVENUE THAT T HE NEW PROCEDURE PROVIDED UNDER S.153A OF THE ACT IS DIFFERENT FROM EARLIER PROCEDURE PROVIDED UNDER S.158BC R.W.S. 158BB OF THE ACT AND CONSEQUENTLY, THE PLEA OF THE REVENUE THAT THERE IS NO CONDITION IN SECTION 153A OF THE ACT THAT ADDITIONS SHOULD BE MADE STRICTLY O N THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF SEARCH WAS NOT APPROVED. THE HONBLE GUJARAT HIGH COURT ANALYZED THE POSITION OF LAW AND TOOK NOTE OF SEVERAL JUDICIAL PRECEDENTS AND CONCLUDED T HAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER S.153A OF THE ACT ONLY ON THE BASI S OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS ETC. THE HONBLE GUJARAT H IGH COURT NOTED THAT THE TRIGGER POINT FOR EXERCISE OF POWERS UNDER S.153A OF THE ACT IS A VALID SEARCH UNDER S.132 OF THE ACT OR A REQUI SITION UNDER S.132A OF THE ACT. ONCE A SEARCH OR REQUISITION IS MADE, THE MANDATE IS CAST UPON THE AO TO ISSUE NOTICE UNDER S .153A OF THE ACT AND COMPLETE THE ASSESSMENT OF 6 ASSESSMENT YEARS. THE HONBLE GUJARAT HIGH COURT TOOK NOTE OF THE FACT THAT OBJEC T OF SCHEME LEGISLATED FOR ASSESSMENT IN SEARCH CASES IS TO BRI NG TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND IN THE COURSE OF OR PURSUANT TO SEARCH OR REQUISITION AND THEREFORE ADDITIONS/DISAL LOWANCES MUST BE LINKED WITH SEARCH/REQUISITION. IT WAS NOTED BY TH E HONBLE COURT THAT ADDITIONS MADE ON THE BASIS OF SOME MATERIALS COLLECTED BY THE AO MUCH SUBSEQUENT TO THE SEARCH IS NOT PERMISSIBLE . ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 42 - 16.3.4 SIMILAR VIEW HAS BEEN EXPRESSED IN CATENA OF DECISIONS VIZ; PR.CIT VS. DEEPAK J. PANCHAL (GUJ) 397 ITR 153 (GUJ); CHETNABEN J. SHAH VS. ITO TAX APPEAL NO. 1437 OF 20 07 JUDGMENT DATED 14.07.2016; CIT VS. CONTINENTAL WAREHOUSING CORPORA TION (2015) 374 ITR 645 (BOM.); PR.CIT VS. DESAI CONSTRU CTION PVT. LTD. 387 ITR 552 (GUJ.); GURINDER SINGH BABA 386 ITR 483 (BOM); & CIT VS. DEEPAK KUMAR AGARWAL (2017) 398 ITR 586 (BO M.). 16.3.5 THE HONBLE DELHI HIGH COURT IN PR.CIT VS. SUBHASH KHATTAR ITA NO. 60/2017 JUDGMENT DATED 25.07.2017 ALSO HELD AGAINST THE REVENUE IN SIMILAR CIRCUMSTANCES WHERE SEARCH DID NOT RESULT IN DISCOVERY OF ANY INCRIMINATING MATERIAL QUA THE ASSESSEE. IT WAS OBSERVED BY THE HONBLE DELHI HIGH COURT THA T ENTIRE CASE AGAINST THE ASSESSEE WAS BASED ON WHAT WAS FOUND DU RING THE SEARCH OF THE PREMISES OF OTHER PARTIES AND THUS, IT IS AP PARENT ON THE FACE OF IT THAT NOTICE TO ASSESSEE UNDER S.153A OF THE A CT WAS MISCONCEIVED SINCE THE SO-CALLED INCRIMINATING MATE RIAL WAS NOT FOUND DURING THE SEARCH OF ASSESSEES PREMISES. 16.3.6 ON THE CONSPECTUS OF AFORESAID JUDGMENTS OF DIFFERENT COURTS, THE POSITION OF LAW IS LOUD AND CLEAR THAT ADDITIONS/DISALLOWANCES UNDER S.153A OF THE ACT TOW ARDS UNABATED ASSESSMENTS ARE PERMISSIBLE ONLY WHERE INCRIMINATIN G MATERIALS ARE FOUND IN SEARCH SHOWING UNACCOUNTED INCOME. 16.4 IN SUMMATION, IN THE LIGHT OF THE AFORESAID OV ERWHELMING LEGAL PRECEDENTS AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, DELHI HIGH COURT & GUJARAT HIGH COURT AS ALSO VARIOUS BEN CHES OF TRIBUNAL, THE CORRECT LEGAL POSITION IN RESPECT OF THE ASSESSMENTS UNDER S.153A OF THE ACT MAY BE SUMMARIZED AS FOLLOW S: (I) THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT IS LIMI TED TO THE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 43 - INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AND NO FURTHER IN SO FAR AS UNABATED ASSESSMENTS ARE CONCERNED; & (II) U NLESS THERE IS INCRIMINATING MATERIAL QUA EACH ASSESSMENT YEARS TO WHICH ADDITIONS ARE SOUGHT TO BE MADE IN RESPECT OF CONCLUDED ASSES SMENTS, THE ASSESSMENT UNDER S.153A OF THE ACT BY MAKING ADDITIONS/DISALLOWANCES WOULD BE VITIATED IN LAW. 16.5 AS DISCUSSED IN LENGTH, THE ISSUE HAS BEEN DYN AMIC AND A MATTER OF LEGAL INTERPRETATION. WE ARE GOVERNED BY THE SCHEMATIC INTERPRETATION GIVEN TO PROVISIONS OF SECTION 153A OF THE ACT BY DIFFERENT HONBLE COURTS. IN THE LIGHT OF JUDICIAL FIAT READING DOWN THE SCOPE AND SPECTRUM OF ASSESSMENT UNDER S.153A O F THE ACT IN NARROWER COMPASS, THE POSITION OF LAW IS EXPLICITLY CLEAR. IN THE ABSENCE OF ANY CONNECTION WITH THE INCRIMINATING MA TERIAL UNEARTHED IN SEARCH PROCEEDINGS OF ASSESSEE, ADDITIONS / DISA LLOWANCES IN RESPECT OF CONCLUDED ASSESSMENT I.E. AYS. 2006-07 T O 2009-10 IN INSTANT APPEALS, ARE NOT PERMISSIBLE IN LAW. THE BU RDEN OF PROOF TOWARDS EXISTENCE OF UNDISCLOSED INCOME DISCOVERED AS A RESULT OF SEARCH IS ON THE REVENUE. NO EVIDENCE HAS BEEN REF ERRED TO BY AO OR BROUGHT ON RECORD AS CLAIMED TO BE FOUND AT SEAR CH OF ASSESSEE TO SUGGEST EXISTENCE OF UNDISCLOSED INCOME AS PERCEIVE D BY THE AO. THE REVENUE HAS FAILED TO REBUT THE FACTUAL ASSERTI ONS MADE ON BEHALF OF THE ASSESSEE TOWARDS NON-DISCOVERY OF INC RIMINATING MATERIAL AT THE TIME OF DRASTIC ACTION OF SEARCH ON ASSESSEE AND REFERENCE THERETO IN ASSESSMENT ORDER. THERE IS NOT HING ON RECORD THAT INFORMATION CONTAINED IN SEIZED DOCUMENTS AS P ER LIST OF INVENTORY, WERE NOT RECORDED OR REFLECTED IN THE BO OKS OF ACCOUNTS. HENCE, THE ACTION OF THE AO TOWARDS MAKING ADDITION S IN RESPECT OF CONCLUDED ASSESSMENTS TOWARDS UNDISCLOSED INCOME IS CONTRARY TO THE JUDICIAL DICTA. ACCORDINGLY, WE ARE OF THE VIEW THAT VARIOUS ADDITIONS/DISALLOWANCES MADE BY THE AO ARE CLEARLY BEYOND THE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 44 - SCOPE OF AUTHORITY VESTED UNDER S.153A OF THE ACT W ITHOUT DISCHARGING THE BURDEN TO SHOW PRESENCE OF ANY INCR IMINATING MATERIAL OR EVIDENCE DEDUCED AS A RESULT OF SEARCH IN SO FAR AS COMPLETED ASSESSMENTS ARE CONCERNED. ADDITIONS/DIS ALLOWANCES MADE IN ASSESSMENTS FRAMED UNDER S.153A OF THE ACT IN RESPECT OF CAPTIONED ASSESSEE PERTAINING TO AYS. 2006-07 TO 20 09-10 ARE THUS REQUIRED TO BE STRUCK DOWN ON THIS SCORE ITSELF. H OWEVER, THE ASSESSMENTS/RE-ASSESSMENTS PENDING ON THE DATE OF S EARCH I.E. AY 2010-11 TO 2012-13 WHICH STOOD ABATED BY OPERATION OF LAW WILL CONTINUE TO BE GOVERNED BY ORDINARY POWERS OF ASSES SMENT UNDER S.153A OF THE ACT IN ACCORDANCE WITH LAW. 17. THE LEGAL GROUND OF JURISDICTION RAISED BY THE ASSESSEE AS PER THE CROSS OBJECTIONS, IS THUS ALLOWED IN RESPECT OF AY 2006-07 TO 2009-10. THE ADDITIONS / DISALLOWANCES MADE UNDER S . 68 AND TOWARDS LOW YIELDS ETC. WITHOUT SHOWING INCRIMINATI NG DOCUMENTS ARE BAD IN LAW AND THUS REQUIRES TO BE STRUCK DOWN FOR AY 2006-07 TO 2009-10 IN QUESTION. 18. NOTWITHSTANDING AND WITHOUT PREJUDICE, WE SHALL NOW ADVERT TO THE CORRECTNESS OF VARIOUS ADDITIONS MADE IN A.YS. 2006-07 TO 2009- 10 IN QUESTION ON MERITS. 19. AS NOTED EARLIER, THE AO HAS INVOKED SECTION 68 OF THE ACT AND MADE ADDITIONS ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN A.Y. 2006-07, 2007-08 & 2009-10 AS UNEXPLAINED CASH CREDIT. THE CIT(A), HOWEVER, AFTER TAKING EXT ENSIVE NOTE OF OBSERVATIONS MADE IN THE ASSESSMENT ORDER AND ALSO ORAL & WRITTEN SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, FOUND M ERIT IN THE PLEA OF THE ASSESSEE AND REVERSED THE ADDITIONS SO MADE. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 45 - 19.1 THE FINDINGS OF THE CIT(A) DEALING WITH THE IS SUE HAS BEEN REPRODUCED IN THE PRECEDING PARAGRAPH 9 OF THIS ORD ER. 19.2 ON PERUSAL OF THE ORDER OF THE CIT(A), IT IS N OTICED THAT CIT(A) HAS RECORDED A FINDING ON FACT THAT ADDITION S ON ACCOUNT OF SHARE APPLICATION MONEY HAS BEEN MADE WITHOUT ANY R EFERENCE TO THE INCRIMINATING MATERIAL DETECTED IN THE COURSE OF SE ARCH. THE CIT(A) HAS RECORDED VARIOUS OBSERVATIONS ON THE ISSUE OF S HARE APPLICATION MONEY IN A.Y. 2006-07, A.Y. 2007-08 & 2009-10 AS SU MMARIZED HEREUNDER: 'THE A.O. DID NOT PAY ANY HEED TO THE REQUESTS SEEK ING SUPPLY OF RESULTS OF INQUIRY CONDUCTED IF ANY FOR ARRIVING AT SUCH CO NCLUSIONS. FURTHERMORE, THE LD. ARS POINTED OUT THAT ASSESSMEN TS IN THE CASE OF PROMOTERS/DIRECTORS AND FAMILY MEMBERS WERE MADE IN MOST OF THE CASES BUT NO SUCH VIEW EVEN TO SUPPORT HIS OWN PASSING RE MARKS WAS OFFERED. DETAILED EXPLANATIONS WERE SUBMITTED WITH RESPECT T O THE LOOSE PAPERS SEIZED AND NOT EVEN A SINGLE DOCUMENT OUT OF IT REL ATE TO OR SUGGEST THAT ANY UNDISCLOSED INCOME OF THESE PERSONS HAS BEEN RO UTED BACK IN THE FORM OF SHARE APPLICATION MONEY. (PARA 4.4 ON PAGE NO.9) THE PRESENT ACTION OF THE A. O IS NOT CULMINATING F ROM ANY SPECIFIC FINDING AGAINST THE APPELLANT THAT IT WAS A BENEFIC IARY OF ANY RACKET WHICH HAS BEEN UNEARTHED AS A RESULT OF SEARCH PROC EEDINGS NOR HAS THE A. O BROUGHT ON RECORD ANY OTHER EVIDENCE TO INDICA TE THAT THE APPELLANT DID MAKE UNDISCLOSED INCOME AND SUCH EVID ENCE CAME ON THE SURFACE AS A RESULT OF SEARCH PROCEEDINGS. IN THIS BACKGROUND, IN MY CONSIDERED VIEW, THERE IS NO SCOPE AND REASON TO TAKE A CONTRARY VIEW THAN THAT TAKEN BY T HE THEN A.O WITHOUT THERE BEING ANY DOCUMENTARY EVIDENCE AGAINST THE AP PELLANT TO DEMONSTRATE THAT THE SHARE APPLICATION MONEY WAS NO THING BUT UNDISCLOSED INCOME OF THE APPELLANT. (PARA 5.11 ON PAGE NO. 16) IN MY CONSIDERED OPINION, APART FROM DRAWING PRESUM PTIONS, THE AO HAS NOT BROUGHT ANY CLINCHING MATERIAL OR EVIDENCE ON RECORD TO PROVE THAT THE SAID SHARE CAPITAL MONEY BELONGS TO THE AP PELLANT SINCE NO NEXUS HAS BEEN ESTABLISHED THAT THE MONEY FOR AUGME NTING THE INVESTMENT IN THE BUSINESS HAS FLOWN FROM APPELLANT 'S OWN MONEY. (PARA 5.15 ON PAGE NO. 18) NO MATERIAL WAS BROUGHT ON RECORD BY THE A.O INDEPE NDENTLY OF THE INFORMATION RECEIVED, IF ANY, FROM THE INVESTIGATIO N WING OF THE INCOME ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 46 - TAX DEPARTMENT TO SHOW THAT THE MONIES REPRESENTED THE APPELLANT'S UNDISCLOSED INCOME. ' (PARA 5.16 ON PAGE NO. 19) 19.3. APART FROM THE FACTUAL POSITION ON TOTAL ABSE NCE OF ANY INCRIMINATING MATERIAL AS NOTED BY THE CIT(A) REPRO DUCED IN PRECEDING PARA, THE CIT(A) HAS ALSO ANALYZED AND DE LINEATED THE FACTS AND CIRCUMSTANCES IN PROPER PERSPECTIVE WHILE DEALING ON MERITS OF ADDITIONS. THE CIT(A) FOUND THAT PRIMARY ONUS PLACED UPON THE ASSESSEE UNDER S.68 OF THE ACT WAS SATISFA CTORILY DISCHARGED BY THE ASSESSEE. THE CIT(A) HAS EXAMINED THE FACTUAL MATRIX IN RELATION TO EACH AND EVERY SUBSCRIBER IND IVIDUALLY, AS EXTRACTED IN PARA 9 OF THIS ORDER, AND FOUND THAT T HE SUBSCRIBERS WERE DULY ASSESSED AND PAYMENTS HAVE COME THROUGH BANKIN G CHANNELS. IT WAS FURTHER FOUND THAT THE TANGIBLE NET WORTH OF THE SUBSCRIBERS COMPANY IS SUFFICIENTLY ENOUGH TO MEET THE CRITERIA OF CREDITWORTHINESS ENVISAGED IN LAW. THE BANK STATEM ENTS, AUDITED FINANCIAL STATEMENT AND CONFIRMATIONS WERE ANALYZED . THE SOURCE OF THE INVESTMENT WAS THUS FOUND TO BE EXPLAINED SATIS FACTORILY IN THE FACTS OF THE CASE. IT WAS FURTHER NOTED THAT THE CR EDIT FOR SHARE APPLICATION MONEY WAS ACCEPTED IN THE REGULAR ASSES SMENT UNDER 143(3) CONCERNING A.Y. 2006-07 & 2007-08 PRIOR TO S EARCH AFTER MAKING ENQUIRIES. THE SUBSCRIBER CO. NAMELY ANTARIK SH COMMERCE PVT. LTD. AND ESCORT FINVEST PVT. LTD. WERE FOUND T O BE GROUP COS. THE ASSESSMENTS OF THE SUBSCRIBER COMPANIES CARRIED OUT UNDER S. 143(3) / 143(3) R.W.S. 147 WERE NOTED. IT WAS FURTH ER NOTED THE SAME AO IN THE CASE OF OTHER GROUP CONCERN ACCEPTED THE CREDITWORTHINESS OF THESE COS. FOR SUBSCRIPTION OF PREF. SHARE CAPIT AL. THE ADVERSE INFERENCE DRAWN BY THE AO WAS FOUND TO BE UNSUBSTAN TIATED AND IN THE REALM OF SUSPICION, SURMISES AND CONJECTURES. O N LEGAL POSITION, THE CIT(A) HAS REFERRED TO LARGE NUMBER OF JUDICIAL PRONOUNCEMENTS. WITHOUT REITERATING THE DIFFERENT FACETS ANALYZED B Y THE CIT(A), WE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 47 - FIND COMPLETE FORCE IN HIS VIEW. AFTER DETAILED EXA MINATION, THE CIT(A) EVENTUALLY SET ASIDE THE ADDITIONS MADE BY T HE AO UNDER S. 68 IN THE UNABATED SEARCH ASSESSMENT WITHOUT ANY IO TA OF INCRIMINATING MATERIAL TO SUPPORT THE ALLEGATION OF ACCOMMODATION ENTRIES. WE COMPLETELY ENDORSE HIS ACTION ON MERITS WITHOUT DEMUR . THE OBJECTION OF THE REVENUE IS FOUND TO BE UNSUBST ANTIATED AND DEHORS THE TELL-TALE EVIDENCES AND HENCE NOT SUSTAINABLE. WE THUS DECLINE TO INTERFERE WITH THE VIEW EXPRESSED BY THE CIT(A) ON MERITS OF ADDITIONS. 20. WE NOW ADVERT TO THE SECOND ISSUE CONCERNING AD DITIONS ON LOW YIELD IN VARIOUS ASSESSMENT YEARS IN QUESTION. 20.1 THE AO MADE AN ADDITION OF 72,19,622/- ON ACCO UNT OF LOW OF YIELD DECLARED BY THE ASSESSEE IN SPONGE IRON DIVIS ION FOR A.Y. 2007-08 AND SIMILAR ADDITIONS WERE ALSO CARRIED OUT ON THE GROUND OF LOW YIELD IN OTHER ASSESSMENT YEARS IN QUESTION. IT IS THE CASE OF THE ASSESSEE THAT ALLEGATION OF THE AO IS TOTALLY UNSUB STANTIATED AND IS WHOLLY IN THE REALM OF SURMISES AND CONJUNCTURES WI THOUT ANY IOTA OF EVIDENCE AGAINST THE ASSESSEE. 20.2 THE ASSESSEE HAS RAISED TWO FOLD SUBMISSIONS T O DEFEND HIS STANCE. ONE, IN THE ABSENCE OF INCRIMINATING MATERI AL, NO ADDITION IS PERMISSIBLE IN LAW ON ACCOUNT OF LOW YIELD AT LEAST IN THE UNABATED ASSESSMENTS FROM 2006-07 TO AY 2009-10 IN QUESTION AND SECONDLY, YIELD AND BOOK RESULT DECLARED BY THE ASSESSEE IS C ORROBORATED BY THE UNDERLYING EVIDENCES AND ALSO COMPARABLE WITH OTHER MANUFACTURERS AS EXAMINED BY THE CIT(A). ON THE OTHER HAND, THE A O HAS NOT DISCHARGED THE BURDEN LAY UPON HIM AS ASSOCIATED WI TH REJECTION OF BOOKS FOR MAKING ARTIFICIAL ESTIMATIONS. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 48 - 20.3 ADVERTING TO LEGAL GROUND, THE ASSESSEE CONTEN DS THAT NO INCRIMINATING MATERIAL WERE FOUND IN THE COURSE OF SEARCH OPERATIONS SHOWING ANY UNACCOUNTED PRODUCTION OR UNACCOUNTED S ALES RESULTING FROM ALLEGED LOW YIELD ON PRODUCTION SHOWN IN THE B OOKS. NO DOCUMENTS OR SHEET SHOWING RECORD OF ACTUAL PRODUCT ION IN EXCESS OF WHAT IS RECORDED IN BOOKS WERE FOUND IN THE COURSE OF SEARCH. IT WAS EMPHASIZED ON BEHALF OF THE ASSESSEE THAT EACH AND EVERY SEIZED DOCUMENTS, LOOSE PAPERS FOUND IN THE COURSE OF SEAR CH WAS EXPLAINED AND WERE NOT INCRIMINATING THE ASSESSEE I N ANY MANNER. EVEN THOUGH, ALL THE PREMISES OF THE ASSESSEE WERE THOROUGHLY SEARCHED BY THE SEARCH TEAM, NOT A SINGLE PIECE OF PAPER WAS FOUND FROM THE PREMISES OF THE ASSESSEE TO CORROBORATE AN D SUPPORT THE ALLEGATION OF UNACCOUNTED PRODUCTION AND SALE. 20.4 ON FACTS, THE BROAD COUNTERS OF THE MULTIPLE C ONTENTIONS OF THE ASSESSEE ARE THAT EVEN IF IT IS MOMENTARILY ASSUMED THAT THE YIELD SHOWN BY THE ASSESSEE IS LESS THAN INDUSTRIAL AVERA GE, IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL, THE ADVERSE INFERENC E REMAINS UNSUBSTANTIATED. EVEN IF, IT IS ASSUMED THAT PRODU CTION FACILITIES AND RESOURCES EVEN NOT UTILIZED OPTIMALLY OR EFFICI ENTLY, THIS BY ITSELF WILL NOT ENTITLE THE AO TO ALLEGE UNACCOUNTE D PRODUCTION BY PRESUMING HIGHER YIELD BY SOME MATHEMATICAL CALCULA TION. WITH REFERENCE TO THE TABULAR STATEMENT AT PAGE NOS. 59 TO 70 OF THE PAPER BOOK IN CONJUNCTION WITH FIRST APPELLATE ORDER IT W AS SUBMITTED THAT DESPITE REPEATED REQUESTS, THE AO COMPLETELY FAILED TO POINT OUT ANY SUPPRESSION OF PRODUCTION BASED ON ANY COGENT AND I NCRIMINATING MATERIAL IN HIS POSSESSION AGAINST THE ASSESSEE. TH E LOW YIELD IN COMPARISON TO THE BENCHMARK ADOPTED BY THE AO COULD NOT BE THE BASIS TO REJECT THE BOOKS OF ACCOUNTS UNDER S.145(3 ) OF THE ACT WITHOUT BRINGING ANY MATERIAL ON RECORD POINTING OU T TOWARDS FALSEHOOD IN THE ACCOUNTS. THE SEARCH TEAM COULD NO T COME ACROSS ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 49 - ANY UNACCOUNTED SALES AS RECORDED IN PARA 9.38 OF T HE FIRST APPELLATE AUTHORITY. THE INVENTORY APPEARING IN THE ELABORAT E EXCISE RECORDS AND EXCISE RETURNS WERE ALSO FOUND TO BE MATCHING W ITH THE FINANCIAL RECORDS. 21. WE NOTE THAT AFTER TAKING NOTE OF THE FACTS AND CIRCUMSTANCES OF THE CASE OBJECTIVELY, THE CIT(A) RIGHTLY CONCLUD ED THAT THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS MERELY OWING TO THE REASON THAT YIELD ACHIEVED BY THE ASSESSEE IS LESS THAN STANDARD YIELD PERCENTAGE I.E. 60% WHICH HAS NOT BEEN ACHIEVED EVE N BY OTHER ASSESSEE ENGAGED IN SIMILAR LINE OF BUSINESS. WHIL E CONCLUDING IN FAVOUR OF THE ASSESSEE THE CIT(A) ALSO OBSERVED THA T THE AO HAS NOT BROUGHT ON RECORD THE MANNER IN WHICH HE WORKED OUT THE STANDARD YIELD OF 60% OF SPONGE IRON. THE BASIS FOR DETERMI NING STANDARD YIELD @ 60% OF INPUT WAS NOT GIVEN DESPITE REPEATED REQUEST BY THE ASSESSEE EITHER. 21.1 WE OBSERVE THAT THE CIT(A) HAS CAPSULATED THE FINDINGS OF THE AO AND REPRODUCED THE TABULATED STATEMENT WHEREIN Y EAR-WISE YIELD OF FINISHED GOODS (SPONGE IRON) SHOWN BY THE ASSESS EE WERE COMPARED WITH THE AN INNOCUOUS STANDARD OF 60% SET BY THE AO. THE AO CONSEQUENTLY CALCULATED THE DIFFERENCE IN THE AC TUAL PRODUCTION VIS--VIS STANDARD PRODUCTION [YIELD OF 60% CONSIDERED AS ST ANDARD PRODUCTION] AND COMPUTED THE VALUE OF DIFFERENCE IN ACTUAL PRODUCTION VERSUS STANDARD PRODUCTION AS UNACCOUNTE D PRODUCTION/ SALES IN RESPECTIVE ASSESSMENT YEARS. WE SIMILARLY OBSERVE THAT THE CIT(A) HAS ALSO RECORDED THE DETAILED SUBMISSIONS O F THE ASSESSEE FILED IN ITS DEFENSE WHEREBY REASONS FOR JUSTIFICAT ION OF THE ACTUAL YIELD GENERATED BY THE ASSESSEE WERE GIVEN. THE CIT (A) ALSO RECORDED THE COMPARATIVE ANALYSIS OF THE YIELD OF T HE ASSESSEE VERSUS VARIOUS OTHER COMPANIES WHO ARE ENGAGED IN PRODUCTI ON OF SPONGE ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 50 - IRON AND OPERATING IN THE SAME FIELD IN THE STATE O F CHHATTISGARH. BY THIS EXERCISE, THE ASSESSEE HAS ATTEMPTED TO SHOW T HAT ACTUAL PRODUCTION SHOWN BY THE ASSESSEE IS EITHER HIGHER T HAN ITS PEERS OR QUITE COMPARABLE AND BRACKETED IN THE SAME RANGE. T HE STANDARD YIELD PRESUMED BY THE AO WAS THUS SOUGHT TO BE DEMO LISHED ON FACTS. 21.2 HAVING EXAMINED THE FINDINGS OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE IN REBUTTAL, THE CIT(A) HAS MADE WI DE RANGING OBSERVATIONS NOTED HEREUNDER: (I) THE AO HAS FAILED TO ESTABLISH THE NEXUS BETWEE N THE MATHEMATICAL CALCULATIONS OF HIGHEST AND LOWEST CON SUMPTION OF POWER, IRON ORE (RAW MATERIAL) ETC. WITH YIELD OF 6 0% ADOPTED BY THE AO. (II) THE BASIS FOR ARRIVING AT THE STANDARD YIELD O F 60% HAS NOT BEEN DISCLOSED DESPITE REPEATED REQUESTS ON BEHALF OF THE ASSESSEE. THE CIT(A) HIMSELF ATTEMPTED TO WORK OUT THE AVERAG E YIELD IN THE INDUSTRY BASED ON DATA AVAILABLE FROM THE DEPARTMEN T BUT FAILED TO ARRIVE AT THIS SO CALLED STANDARD FIGURE OF 60%. (III) COMPARISON OF YIELD DECLARED BY THE OTHER ASS ESSEE ENGAGED IN THE SIMILAR LINE OF BUSINESS WAS CARRIED OUT AS TAB ULATED IN PARA 9.4 OF THE APPELLATE ORDER. ON THE BASIS OF SUCH COMPA RISON, ARITHMETICAL MEAN OF YIELD STANDS AT 53.97% IN RESP ECT OF OTHER PARTIES VIS--VIS 59.40% SHOWN BY THE ASSESSEE. IT WAS ALSO FOUND BY THE CIT(A) THAT YIELD DECLARED BY THE DIFFERENT PARTIES IN THE SAME YEAR IS NOT UNIFORM AND EVERY PARTY HAS DECLAR ED A DIFFERENT YIELD. LIKEWISE, THERE IS A WIDE VARIATION IN THE YIELD OF ONE YEAR WITH ANOTHER YEAR IN OTHER CASES AS WELL. NOT EVEN A SINGLE COMPARABLE INSTANCE WAS FOUND DECLARING YIELD OF 60 % ADOPTED BY ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 51 - THE AO. THE YIELD ACHIEVED BY THE ASSESSEE IS GENE RALLY MORE THAN AVERAGE INDUSTRY YIELD. (IV) FINANCIAL RESULTS OF THE ASSESSEE AS WELL AS O THER PARTIES ENGAGED IN SIMILAR LINE OF BUSINESS WAS ALSO COMPAR ED AS DISCUSSED IN PARA 9.5 TO PARA 9.8 OF THE ORDER. ON ANALYSIS OF FACTUAL DATA TABULATED IN THE FIRST APPELLATE ORDER, IT WAS OBSE RVED THAT THE GROSS PROFIT & NET PROFIT DECLARED BY THE ASSESSEE IS STR ONGER THAN ITS PEERS DESPITE MARGINALLY LOWER YIELD AT SOME INSTANCES. IT WAS THUS NOTED BY THE CIT(A) THAT THE PERCENTAGE OF YIELD CANNOT B E SAID TO BE SOLE DECISIVE FACTOR WHILE ASSESSING RELIABILITY OF BOOK S OF ACCOUNTS AND MERELY LOW YIELD CANNOT LEAD TO AN INDEFEASIBLE PRE SUMPTION WITH BOOKS OF ACCOUNTS OF THE ASSESSEE ARE UNRELIABLE AN D TRUE PROFIT EARNED BY THE ASSESSEE CANNOT BE DEDUCED THEREFROM. IN PARA 9.9 OF ITS ORDER, THE CIT(A) HAS MADE REFERENCE TO THE EXC ISE RECORDS MAINTAINED BY THE ASSESSEE AND THE RETURNS FILED WI TH THE CENTRAL EXCISE AUTHORITY ON MONTHLY BASIS AND DAILY BASIS. ON ANALYSIS OF SUCH RECORDS, IT WAS FOUND TO BE TALLYING WITH THE FINANCIAL RECORDS. (V) THE CIT(A) ALSO TOOK COGNIZANCE OF THE FACT THA T CAPACITY UTILIZATION IN AN INDUSTRY DEPENDS ON NUMBER OF WOR KING DAYS AND IN THE CASE OF ASSESSEE WHERE THE KILN USED FOR MANUFA CTURING OF SPONGE IRON NEED TO BE SHUT DOWN PERIODICALLY, THE PRODUCTION OPERATION CONSEQUENTLY HALTS AND EFFECT THE YIELD. THE CIT(A), THEREAFTER, OBSERVED THAT NO INFIRMITY IN THE DETAI LS FURNISHED BY THE ASSESSEE HAS BEEN FOUND BY THE AO IN THIS REGARD. (VI) THE ASSESSEE HAS BROUGHT ON RECORD THE CERTIFI CATE FROM REGISTERED VALUER ACCORDING TO WHICH THE AVERAGE YI ELD OF SPONGE IRON UNIT USING IRON ORE AND COAL AS RAW MATERIAL M AY VARY FROM 40% TO 60% AND COAL CONSUMPTION MAY VARY FROM 1.62 TO 2 .1MT DEPENDING UPON FIXED CARBON IN COAL. THE QUANTITAT IVE CIT(A) ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 52 - OBSERVED THAT THE QUANTITY DETAILS OF CONSUMPTION O F SPONGE IRON AND COAL WERE FOUND TO BE WITHIN REASONABLE RANGE AS CE RTIFIED BY REGISTERED VALUER. THE CIT(A) ALSO NOTED THAT IT I S IMPRACTICAL TO PRESUME UNIFORM QUALITY OF COAL AND IRON ORE. (VII) THE AO HAS PROCEEDED TO ESTIMATE HIGHER YIELD ON THE BASIS OF MATHEMATICAL AND MECHANICAL CALCULATIONS. THE AO H AS LAID TOO MUCH EMPHASIS ON STATISTICS WHICH CANNOT BE SAID TO HAVE BEEN GATHERED AS A RESULT OF SEARCH ONLY. THE STATISTIC S RELIED UPON BY THE AO ARE THOSE WHICH ARE QUITE ROUTINELY CALLED FOR E VEN DURING THE REGULAR ASSESSMENT PROCEEDINGS UNDER S.143(3) OF TH E ACT. THE AO HAS NOT STATED WHAT ACCORDING TO HIM SHOULD HAVE BE EN THE AVERAGE CONSUMPTION OF COAL IRON ORE ETC. (VIII) THE STATEMENT OF SHRI RISHIKESH DIXIT RECORD ED ON 21.06.2011 WAS TAKEN NOTE OF FROM WHICH IT WAS GATHERED THAT T HE AFORESAID DIRECTOR STATED IN CLEAR TERMS THAT THE QUANTITY RE CORDED IN THE LOOSE SLIPS TALLIES WITH THE QUANTITY RECORDED IN THE REG ULAR BOOKS OF ACCOUNTS AND EXCISE RECORDS. THESE LOOSE SLIPS ARE DESTROYED AFTER IT BECOMES REDUNDANT WITH THE PASSAGE OF TIME. THE CI T(A) FURTHER OBSERVED THAT NEITHER IN THE SHOW CAUSE NOTICE NOR IN THE ASSESSMENT ORDER, THERE IS ANY WHISPER OF ANY SUCH LOOSE PAPER S WHICH BEARS THE FIGURE OF PRODUCTION AND WHICH THE APPELLANT FAILED TO RECONCILE WITH THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS AND EX CISE RECORDS/RETURNS. (IX) THE ALLEGED LOW YIELD IN COMPARISON TO BENCHMA RK OF 60% ADOPTED BY THE AO IS THE BASIS WHEREOF IS STILL IN DARK AND NOT KNOWN, CANNOT IN ITSELF PROVIDE A GROUND TO REJECT THE BOOKS OF ACCOUNTS WITHOUT SHOWING ANY DEFECT IN BOOKS BY TAN GIBLE EVIDENCE. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 53 - (X) THE AO HAS MERELY PROCEEDED ON THE BASIS OF SUS PICION AND CONJUNCTURES. IT IS TRITE THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF PROOF. (XI) THE CIT(A) IN PARA 9.22 ONWARDS ANALYZED THE D ECISION RENDERED BY THE CO-ORDINATE BENCH IN SIMILAR FACTUA L MATRIX TO FIND THAT ADDITION ON ACCOUNT OF LOW YIELD AS MADE BY TH E AO IS NOT SUSTAINABLE IN LAW IN THE ABSENCE OF TANGIBLE MATER IAL. 21.3 IN CONCLUSION, THE CIT(A) OBSERVED THAT ASSESS EE HAS FURNISHED EXPLANATION ON ALL THE DOCUMENTS SEIZED D URING THE COURSE OF SEARCH AND THE EXPLANATION OF THE ASSESSEE WERE TEST CHECKED WITH REFERENCE TO SEIZED MATERIAL, BOOKS OF ACCOUNTS, BI LLS/INVOICES AND OTHER EVIDENCES AND FOUND TO BE SATISFACTORY. IT W AS FURTHER NOTED THAT THE AO HAS NOT POINTED OUT ANY INFIRMITY IN TH E EXPLANATION OF THE ASSESSEE. 21.4 THE CIT(A), IN OUR MIND, HAS ANALYSED THE FAC TUAL MATRIX THREADBARE AND PASSED A VERY SPEAKING ORDER. WITHOU T REPEATING ALL THE OBSERVATIONS OF THE CIT(A), WE FIND OURSELVES I N COMPLETE AGREEMENT WITH THE CONCLUSION DRAWN BY THE CIT(A). THE CIT(A) HAS OBJECTIVELY ANALYZED THE FACTUAL SITUATION AND FOUND COMPLETE ABSENCE OF ANY ADVERSE MATERIAL AGAINST THE ASSESSE E WHICH CAN SUPPORT THE ALLEGATION OF THE AO TOWARDS UNACCOUNTE D PRODUCTION PRESUMED ON THE BASIS OF ALLEGED LOW YIELD DECLARED BY THE ASSESSEE. ON FACTS, THE CIT(A) HAS FOUND THAT THE YIELD DECLA RED BY THE ASSESSEE IS NEITHER LOW NOR THE BOOK RESULTS COULD BE IMPEACHED BY SOME TANGIBLE MATERIAL TO INDULGE IN REJECTION OF B OOKS OF ACCOUNTS. WE ARE UNABLE TO DISCERN ANY ERROR WHATSOEVER IN TH E PROCESS OF REASONING ADOPTED BY THE CIT(A) WHILE REVERSING THE TOTALLY ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 54 - UNTENABLE ACTION OF THE AO. WE, THUS, DECLINE TO IN TERFERE WITH THE ORDER OF THE CIT(A) ON THIS SCORE. 22. IN THE RESULT, GROUNDS RAISED BY THE REVENUE CH ALLENGING THE ACTION OF THE CIT(A) FOR REVERSAL OF ADDITIONS ON T HE GROUNDS OF SUPPRESSION OF YIELD AND UNACCOUNTED PRODUCTION AND SALES ARE DISMISSED FOR AYS. 2006-07 TO A.Y. 2009-10 IN APPEA L. 23. HENCE ALL THE CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. 24. THE QUESTION OF JURISDICTION RAISED BY THE ASSE SSEE IN RESPECT UNABATED ASSESSMENT YEARS IN SEARCH ASSESSMENT HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE AND THE FINDI NGS OF THE CIT(A) ARE SET ASIDE AND QUASHED. LIKEWISE, THE SUPPORTIVE PLEA OF THE ASSESSEE ON THE ORDER OF CIT(A) ON MERITS HAS ALSO BEEN AFFIRMED IN THE PRECEDING PARAGRAPHS. CONSEQUENTLY, THE CROSS O BJECTIONS OF ASSESSEE IN RESPECTIVE APPEALS OF REVENUE STANDS AL LOWED. 25. RESULTANTLY, ALL THE CAPTIONED REVENUE APPEALS ARE DISMISSED WHEREAS ALL THE CROSS OBJECTIONS OF THE ASSESSEE AR E ALLOWED. SD/- SD/- (PAWAN SINGH) (PRADIP KUM AR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- $. / REVENUE 2. / ASSESSEE &. '() * / CONCERNED CIT 4. *- / CIT (A) ORDER PRONOUNCED ON 21 / 10 /2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(4) OF THE INCOME TAX (A PPELLATE TRIBUNAL) RULE, 1963. ITA NOS. 262 TO 265/RPR/2014 A/W. CO NOS. 25 TO 28 (M/S. DEVI IRON & POWER PVT. LTD.) - 55 - -. ./0 122()3 ()!3 / DR, ITAT, RAIPUR 4. 056 7 / GUARD FILE. BY ORDER 3 SR. PRIVATE SECRETARY ITAT 3 RAIPUR (ON TOUR)