Rajuri Stells P.Ltd., Jalna V. Addl.CIT,Range-1, Aurangabad, Aurangabad

ITA 291/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1242 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL GANOO SPECIAL
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained expenditure; Search and seizure; Principle of natural justice; Additional evidence; Cost of acquisition; Reassessment proceedings
• Section: 69C; 40A(3); 143(3); 153A; 260A; 145; 148; 144

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !' # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM / ITA NOS.231 & 232/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 & 2007-08 PAWAN RE-ROLLING MILLS PRIVATE LIMITED, (NOW KNOWN AS GAJLAXMI STEEL JALNA PVT. LTD., D-68/2, ADDL. MIDC, AURANGABAD ROAD JALNA 431 203 PAN NO. AAECP3612N . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.638 & 639/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 & 2007-08 ITO, WARD-1(3), JALNA . /APPELLANT V/S PAWAN RE-ROLLING MILLS PRIVATE LIMITED, (NOW KNOWN AS GAJLAXMI STEEL JALNA PVT. LTD., D-68/2, ADDL. MIDC, AURANGABAD ROAD JALNA 431 203 PAN NO. AAECP3612N . /RESPONDENT / ITA NO.245/PN/2012 $ % % / ASSESSMENT YEAR : 2007-08 SHREE ANAND OMPRAKASH PAHADE, PROP. OF M/S. ADINATH STEEL RE-ROLLING MILLS, A-28/05, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA-431 203 PAN NO. ALSPP4628A . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NO.640/PN/2012 $ % % / ASSESSMENT YEAR : 2007-08 ITO, WARD-1(3), JALNA . /APPELLANT V/S 2 SHREE ANAND OMPRAKASH PAHADE, PROP. OF M/S. ADINATH STEEL RE-ROLLING MILLS, A-28/05, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA-431 203 PAN NO. ALSPP4628A . /RESPONDENT / ITA NOS.289 TO 291/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 RAJURI STEELS PRIVATE LIMITED, F-12, PHASE-II, ADDL. MIDC, JALNA 431 203 PAN NO. AABCR5546A . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.426 TO 428/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 ADDL.CIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S RAJURI STEELS PRIVATE LIMITED, F-12, PHASE-II, ADDL. MIDC, JALNA 431 203 PAN NO. AABCR5546A . /RESPONDENT / ASSESSEE BY : SHRI J.P. BAIRAGRA / DEPARTMENT BY : SHRI SUNIL GANOO (SPECIAL COUNSEL) & / ORDER PER R.K. PANDA, AM : THE ABOVE BATCH OF CROSS APPEALS FILED BY THE DIFFERENT ASS ESSEES AND THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A), AURANGABAD PASSED AGAINST ORDER UNDER SECTION 143(3) R. W.S. 147 AND/OR UNDER SECTION 143(3) FOR THE ASSESSMENT YEARS 2005-06 T O 2008-09 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE ALL THESE APPE ALS WERE HEARD / DATE OF HEARING : 19.05.2015 !' / DATE OF PRONOUNCEMENT:05.08.2015 3 TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDE R. THE DETAILS OF THE RESPECTIVE APPEALS ARE AS UNDER : SR. NO. APPEAL NO. NAME OF ASSESSEE DATE OF ORDER OF THE CIT (A), AURANGABAD ASSTT. YEAR 1. ITA NOS.2 31 & 23 2 /PN/2012 (ASSESSEE) PAWAN RE - ROLLING MILLS PVT. LTD. 09 - 01 - 2012 2006 - 07 & 2007-08 ITA NOS. 638 & 639 /PN/2012 (REVENUE) 2. ITA NO .2 45 /PN/2012 (ASSESSEE) SHRI ANAND OMPRAKASH PAHADE 06 - 01 - 2012 2007 - 08 ITA NO. 640 /PN/2012 (REVENUE) 3. ITA NOS.2 89 TO 291 /PN/2012 (ASSESSEE) RAJURI STEELS PVT. LTD. 30 - 12 - 2011 2006 - 07 TO 2008-09 ITA NOS.4 26 TO 4 28 /PN/2012 (REVENUE) 2. FIRST WE TAKE UP THE CROSS APPEAL IN THE CASE OF PAWA N RE-ROLLING MILLS PVT. LTD. FOR A.Y. 2006-07 AS THE LEAD CASE. FACTS OF THE CASE, IN BR IEF, ARE THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF TMT OR CTD BARS. THE ASSESSEE HAD NOT FILED RETURN OF INCOME. HOWEV ER, THE AUDITOR HAD CONDUCTED THE AUDIT AND HAD REPORTED LOSS OF RS.4,72 ,491/-. THEREAFTER, THE CASE WAS PICKED UP FOR SCRUTINY AND AS SESSMENT WAS COMPLETED UNDER SECTION 143(3)/147 OF THE ACT ON 30.12. 2010. IN THIS CASE THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD (CE C) VIDE LETTER DATED 29.03.2010 THAT THE ASSESSEE HAD INDULGED IN MANUFACTURE OF FINISHED GOODS AND REMOVAL THEREOF WITHOUT PAYING EXCISE D UTY. THE ASSESSING OFFICER FURTHER ALLEGES THAT THE ADJUDICATION ORD ER OF CEC QUANTIFYING THE VALUE OF SUPPRESSED PRODUCTION OR EXCISE DUTY EVASION WAS ON RECORD. FURTHER, INFORMATION WAS RECEIVED BY THE ASS ESSING OFFICER THAT THE ASSESSEE IN ANOTHER MATTER IN CONNECTION WITH AN AC TION CONDUCTED BY THE DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE (IN SH ORT DGCEI) CONFESSED AND ADMITTED TO CLANDESTINE REMOVAL OF FINISHED G OODS WITHOUT EXCISE COVER BEFORE THE EXCISE AUTHORITIES. THE ASSESSEE MADE A PETITION 4 BEFORE THE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISS ION FOR WAIVER OF PENALTY, INTEREST AND PROSECUTION. THE SAID PETITION WAS ADMITTED AND DISPOSED OF. THE ASSESSEE HAD MADE THE PAYMENT OF EXCIS E DUTY EVADED IN ACCORDANCE WITH THE NOTICES ISSUED BY DGCEI. THE ASSES SEE ALSO ADMITTED THAT THE RAW MATERIAL USED IN THE PRODUCTION OF THE FINISHE D PRODUCTS WAS OBTAINED IN CASH, FOR WHICH NO RECORDS WERE MAINTAINED. SIM ILARLY, RECEIPTS ON SALE OF FINISHED PRODUCTS WERE ALSO IN CASH AND NOT ACCOUNTED FOR. 3. THE ASSESSING OFFICER, IN VIEW OF THE INFORMATION RECEIVED, RE CORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. 4. THE ASSESSING OFFICER OBSERVED THAT INTELLIGENCE WAS GATH ERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN THE CASE OF SHRI SALASAR ISPAT PVT. LTD. AND MITC ROLLING MILLS PVT. LTD., MANUFACTURERS OF THERMO MECHANICA LLY TWISTED (TMT) BARS. WE FIND THAT SIMILAR ACTION OF DGCEI WAS REFERRED TO BY THE TRIBUNAL IN THE RELATED CASE OF THE ASSESSEE I.E. IN M/S. SRJ PEETY STEELS PVT. LTD. VS. THE ADDITIONAL CIT IN ITA NOS.123 & 124 /PN/2012 AND IN CROSS APPEALS FILED BY THE REVENUE IN ITA NOS.435 & 43 6/PN/2012 RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 AND VIDE ORDER DATED 16.01.2015, THE FACTUAL ASPECTS OF THE INTELLIGENCE REPORT OF THE DGCEI HAVE BEEN REFERRED TO BY THE TRIBUNAL, WHICH ARE THE BAS IS FOR CARRYING ON THE INVESTIGATION IN THE HANDS OF THE ASSESSEE BEFORE US. IN VIEW OF IDENTICAL INTELLIGENCE REPORT BEING RELIED UPON AS IN THE CASE OF SISTER CONCERN, FOR THE SAKE OF BREVITY, WE REFER TO THE FACTUAL A SPECTS OF THE CASE AS NOTED BY THE TRIBUNAL, WHICH READ AS UNDER:- 4.1 THE ASSESSING OFFICER HAS OBSERVED THAT INTELL IGENCE WAS GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI, IN THE CASE OF SHRI SALA SAR ISPAT (PVT.) LIMITED AND MITC ROLLING MILLS (PVT.) LTD., MANUFACTURERS OF TH ERMO MECHANICALLY TWISTED (TMT) BARS, THAT THEY WERE INVOLVED IN CLANDESTINE CLEARANCE OF FINISHED PRODUCTS THROUGH A BROKER, SHRI UMESH MODI, MUMBAI. AS NOTE D BY THE ASSESSING OFFICER SEARCHES WERE CONDUCTED BY THE DGCEI ON 18-12-2006 AND VARIOUS INCRIMINATING 5 DOCUMENTS WERE RECOVERED WHICH INDICATED CLANDESTIN E REMOVAL OF GOODS BY MANUFACTURERS OF TMT BARS BY MANUFACTURERS LOCATED AT JALNA. THE ASSESSING OFFICER ALSO REFERRED TO THE ADMISSION OF SHRI UMES H MODI BEFORE THE CENTRAL EXCISE AUTHORITIES THAT HE HAD ACTED AS A SUB-BROKE R FOR SHRI ANIL D LINGADE, PROPRIETOR OF ANIL TRADERS, JALNA AND SHRI MUKESH G UPTA, PROPRIETOR OF R.J. STEEL TRADERS, NAVI MUMBAI, WHILE SOURCING TMT BARS. AS NOTED BY THE ASSESSING OFFICER THE SAID SHRI ANIL D. LINGADE ADMITTED THAT HE ACTED AS A BROKER FOR THE NINE MANUFACTURERS FROM JALNA WHICH DETAILS ARE GIVEN IN PARA NO. 2.2 OF THE ASSESSMENT ORDER. THEN THE ASSESSING OFFICER HAS D ISCUSSED THE MODUS OPERANDI ADOPTED BY SHRI ANIL LINGADE IN PARA NO. 2.3 OF THE ASSESSMENT ORDER BUT AS THE NAME OF THE ASSESSEE IS NOT THERE IN NINE LISTED PA RTIES, HENCE, WE DO NOT CONSIDER IT NECESSARY TO GO IN THE DETAILS OF THE S AME. THE ASSESSING OFFICER HAS ALSO REFERRED TO ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES AGAINST ONE SHRI FARUK SHAIKH, WHO WAS ALSO A BROKER FROM WHOM THE NAME OF THE ANOTHER BROKER SHRI PAWAN GARG OF JALNA WAS REVEALED. 4.2 IN SUM AND SUBSTANCE ALL THE ABOVE REFERRED INF ORMATION WAS ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES AND THEY REMOVED THE TMT BARS WITHOUT PAYMENT OF THE LEGITIMATE EXCI SE DUTY. THE ASSESSING OFFICER HAS ALSO DISCUSSED THE MODUS OPERANDI ADOPTED BY SH RI FARUK SHAIKH IN PARA NO. 2.5 OF THE ASSESSMENT ORDER BUT THAT IS ALSO BASED ON THE INVESTIGATION CARRIED OUT BY THE DGCEI. THE ASSESSING OFFICER ALSO REFERRED TO THE INVESTIGATION MADE BY DGCEI AND OBSERVED THAT THE MANUFACTURERS OF THE TM T BARS WERE CONFRONTED AND THE MANUFACTURERS ADMITTED THAT THEY HAD SUPPLIED T MT BARS TO THE BROKERS WITHOUT PAYING EXCISE DUTY AND THEY CONFIRMED THE MODUS OPE RANDI AS NARRATED BY SHRI FARUK SHAIKH AND SHRI PAWAN GARG. THE ASSESSING OF FICER HAS NOTED THAT CONSEQUENT TO ADMISSION BY THE SUPPLIERS OF UNACCOU NTED TMT BARS, THEY ALSO ADMITTED THAT THEY HAD MANUFACTURED THESE TMT BARS FROM RAW MATERIAL VIZ., INGOTS AND BILLETS FROM UNACCOUNTED RECEIPT OF RAW MATERIA L. AS OBSERVED BY THE ASSESSING OFFICER THE SUPPLIERS IDENTIFIED THE INGO TS/BILLETS FROM ALLEGED UNACCOUNTED RECEIPTS OF RAW MATERIAL. THE ASSESSIN G OFFICER HAS GIVEN THE NAMES OF THE PARTIES IN PARA NO. 2.7 OF THE ASSESSMENT OR DER AGAINST WHOM THE INVESTIGATION WAS CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES AND THE NAME OF THE ASSESSEE APPEARS AT SL. NO. 10 WHO HAD ALLEGEDLY SU PPLIED INGOTS/BILLETS TO ITS SISTER CONCERN SHRI OM ROLLING MILLS PVT. LTD. TO T HE EXTENT OF 288.500 MT. 4.3 ON THE BASIS OF THE INVESTIGATION MADE BY THE D IRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE (IN SHORT THE DGCEI) BY INITIATING SEARCHES AGAINST SOME BROKERS AND SUB-BROKERS THE CENTRAL EX CISE DEPARTMENT ISSUED SHOW CAUSE NOTICES TO THE ASSESSEE AND OTHER MANUFACTURES WHOSE NAMES WERE REVEALED DURING INVESTIGATION FOR EVASIO N OF EXCISE DUTY. THE ASSESSEE ADMITTED TO CLANDESTINE REMOVAL OF FINISHE D PRODUCTS TO EXTENT OF 288.50 MT WITHOUT PAYMENT OF EXCISE DUTY. THE ASSE SSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD MADE A PETITION BEFO RE THE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISSION ( HEREIN AFTER RE FERRED TO AS THE SETTLEMENT COMMISSION) FOR WAIVER OF PENALTY, INTER EST AND IMMUNITY FROM THE PROSECUTION. THE SAID PETITION WAS ADMITTED AN D DISPOSED OFF BY THE SETTLEMENT COMMISSION. AS NOTED BY THE ASSESSING O FFICER THE ASSESSEE ALSO ADMITTED THAT THE RAW MATERIAL USED IN PRODUCT ION OF THEIR FINISHED PRODUCTS WAS OBTAINED IN CASH FOR WHICH NO RECORDS WERE MAINTAINED. SIMILARLY, RECEIPTS ON SALE OF FINISHED PRODUCTS I. E. 288.50 MT OF BILLETS/INGOTS, TOO WERE ALSO IN CASH AND NOT ACCOU NTED FOR. 5. THE DGCEI HAD GATHERED THE INFORMATION VIS--VIS QUANT ITY OF TMT BARS IN THE HANDS OF VARIOUS RE-ROLLING MILLS, WHICH WAS CONFRO NTED TO THE MANUFACTURERS OF TMT BARS, WHO IN TURN ADMITTED THAT TH EY HAD SUPPLIED TMT BARS TO THE BROKERS WITHOUT PAYING EXCISE DUTY AND THEY ALSO 6 CONFIRMED THE MODUS OPERANDI REVEALED BY THE BROKERS. TH E ASSESSEE BEFORE US I.E. PAWAN RE-ROLLING MILLS PVT. LTD., JALNA ADMITTED TO THE MANUFACTURE OF 188.185 MT OF TMT BARS, WHICH WERE CLANDEST INELY REMOVED WITHOUT PAYMENT OF EXCISE DUTY. THE STATEMENT OF THE AUTHORIZED PERSON OF THE ASSESSEE COMPANY I.E. SHRI SACHIN NARENDRA AGRAWAL WAS RECORDED ON 24.03.2007, IN WHICH HE ADMITTED THAT THE AS SESSEE WAS ENGAGED IN THE MANUFACTURE OF TMT BARS OF VARIOUS SIZES FR OM BILLETS. HE ALSO ADMITTED THE UNACCOUNTED CLEARANCE OF TMT BARS, FOR WHICH NO RECORDS WERE MAINTAINED AND THE PAYMENTS WERE ALSO REC EIVED THROUGH CASH. HE FURTHER ADMITTED TO HAVE CLEARED 29.500 MT THR OUGH SHRI ANIL LINGADE AND SHRI UMESH MODI WITHOUT PAYMENT OF EXCISE DU TY AND HE AGREED TO MAKE REQUISITE PAYMENT OF EXCISE DUTY ON CLAN DESTINE SALES MADE BY HIM. THE ASSESSEE THEREAFTER, APPROACHED THE C USTOMS AND CENTRAL EXCISE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY AND GRANT OF IMMUNITY FROM THE PENALTY, INTEREST AND PROSECUTIO N. THE PETITION OF THE ASSESSEE WAS ADMITTED AND THE DUTY WAS PAID BY THE ASSESSEE. FURTHER, PENALTY OF RS.25,000/- WAS IMPOSED BY THE SETTLE MENT COMMISSION. 6. THE ASSESSING OFFICER AFTER GOING THROUGH THE PROCESS OF MANUFACTURE OF CTD BARS OR TMT BARS FROM INGOTS OR BILLETS BY THE ROLLING MILLS IN PARA 53 OBSERVED THAT THE VARIABLE ELECTRICITY CONS UMPTION IS IMPORTANT IN ARRIVING AT THE ACTUAL PRODUCTION OF TMT / CT D BARS. THE ASSESSING OFFICER REFERRED TO THE DATA FOR ELECTRICITY CONS UMPTION FOR STEEL BAR MILLS IN USA, WHERE THE AVERAGE CONSUMPTION OF ELECTRIC ITY IN BAR MILLS WAS 132 165 KWH/TONNE AFTER ALLOWING FOR LOSSES AS IRRET RIEVABLE AND AS PER THE ASSESSING OFFICER, THE AVERAGE CONSUMPTION WAS 150 KW H/MT. THE ASSESSING OFFICER NOTED THAT THE ROLLING MILLS AT JALNA USE THERMEX QUENCHING TECHNOLOGY WHICH IS THE LATEST TECHNOLOGY IN OFFER IN INDIA. SINCE THE INGOTS AND BILLETS USED IN PRODUCTION CONFORM TO T HE STANDARDS FOR 7 PRODUCING FE-415, FE-500 AND FE-550 GRADE OF TMT AS PER INDIA N STANDARDS ISSUED BY THE BIS, THERE IS NO REASON TO SUSPECT THA T THE INHERENT QUALITIES OF THE BILLETS AND INGOTS USED WILL NOT BE ACCORDING TO S TANDARD SPECIFICATION. THE ASSESSING OFFICER THUS, AFTER ALLOWING AN ALLOWANCE OF 25% OVER AND ABOVE THE US COST OBSERVED THAT THE RANGE OF ELECTRICIT Y CONSUMPTION WOULD BE IN THE RANGE OF 169 KWH/MT TO 206 KWH/MT I.E. AV ERAGE OF 188KWH/MT. THE ASSESSING OFFICER NOTED THE CONSUMPTION OF VARIOUS MANUFACTURERS IN JALNA CLUSTER DURING THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YEARS 2006-07 TO 2008-09 AND WAS OF THE V IEW THAT THE AVERAGE RATE OF ELECTRICITY CONSUMPTION ACCORDING TO INTER NATIONAL STANDARDS AFTER GIVING HANDICAP OF 25% WAS 188KWH/MT AND THE AVERAGE MINIMUM CONSUMPTION IN THE PEER GROUP DURING THE THREE Y EARS WAS 191 KWH/MT. THEREFORE, HE ADOPTED THE ELECTRICITY CONSUMPTION IN STEEL BAR ROLLING MILL AT 188KWH/MT OR THE CONSUMPTION OF THE ASSESSE E, IF LOWER. AS PER THE ASSESSING OFFICER, THE ADOPTION OF THE SAID RAT ES BECAME IMPORTANT IN VIEW OF EVASION OF EXCISE DUTY BY TMT BAR MAN UFACTURERS IN JALNA CLUSTER FOUND BY THE DGCEI, WHICH IN TURN, HAD BEEN ACCEPTED BY THE MANUFACTURERS. THE AO ACCORDINGLY MADE ADDITION OF RS.29,08,435/- RELATABLE TO THIS YEAR AS INCOME U/S.69C BEING INCOME FROM SUPPRESSED PRODUCTION AND CLANDESTINE REMOVAL OF GOODS. 7. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.20,75,000/- A ND ANOTHER RS.82,50,000/- U.S.68 OF THE I.T. ACT BEING INTRODUC TION OF CAPITAL AND UNSECURED LOAN RESPECTIVELY. THE CIT(A) HAS DELETED THE ADDITION AND THE REVENUE IS NOT IN APPEAL BEFORE US. THEREFORE, WE ARE NOT CONCERNED WITH THIS ADDITION. THE AO HAS ALSO MADE ADDITION OF RS.5,81 ,687/- U/S.40A(3) OF THE I.T. ACT, 1961. 8. THE CIT(A) UPHELD THE REOPENING OF THE ASSESSMENT UNDE R SECTION 147 OF THE ACT. WITH REGARD TO THE ADDITION MADE ON ACC OUNT OF 8 SUPPRESSED PRODUCTION / SALES OF TMT BARS ON THE BAS IS OF ELECTRICITY UNIT CONSUMPTION, THE CIT(A) HELD AS UNDER:- 7. THE FIRST ISSUE TO BE DECIDED IS WHETHER ON THE FACTS AND IN LAW, THE A.O. IS JUSTIFIED IN ARRIVING AT THE SUPPRESSED PRO DUCTION/SALE OF MS INGOTS/BILLETS ON THE BASIS OF ELECTRICITY UNIT CON SUMPTION. 7.1 IN THIS REGARD, THE VARIOUS CONTENTIONS RAISED BY THE APPELLANT AND OTHER MANUFACTURES OF MS INGOTS/BILLETS WHO ARE ALS O IN APPEAL BEFORE ME ARE SUMMARIZED AS UNDER (1) THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE AUD ITED UNDER COMPANIES ACT AS WELL AS INCOME TAX ACT. IN SOME OF THE YEARS UNDER APPEAL, IN SOME OF THE CASES OF MS INGOTS/BILLETS M ANUFACTURERS THE SCRUTINY U/S 143(3) FOR EARLIER YEARS WAS COMPLETED WITHOUT ANY ADDITION TOWARDS SUPPRESSED SALE. (2) CENTRAL EXCISE DEPARTMENT VIDE ITS ORDER HAS SIMPLY & INCORRECTLY ESTIMATED THAT FOR MANUFACTURING ONE METRIC TON MS INGOT, 1026 UNITS OF ELECTRICITY ARE REQUIRED. (3) THE ORDER OF COMMISSIONER OF CENTRAL EXCISE IS BASED ON ESTIMATES, ACADEMIC STUDY AND THEORETICAL CALCULATIONS AND HEN CE IS CHALLENGED BY THE ASSESSEE BEFORE CESTAT. (4) THE CENTRAL EXCISE DEPARTMENT HAS ACTUALLY VERI FIED ELECTRICITY CONSUMPTION IN APPELLANT'S PLANT WHICH WAS FOUND TO BE IN ORDER. THE EXCISE DEPARTMENT SHOULD HAVE WORKED OUT THE ELECTRICITY U NITS REQUIRED FOR PRODUCING ONE METRIC TON MS INGOTS/BILLETS BY ACTUA L PHYSICAL VERIFICATION IN THE PLANTS OF VARIOUS MANUFACTURERS. (5) THE RELIANCE PLACED BY THE COMMISSIONER OF CENT RAL EXCISE IN ITS ORDER ON THE REPORT OF I.I.T., KANPUR AND TECHNICAL REPOR T OF DR.BATRA IS MISPLACED AS THE COPIES OF THE SAID REPORTS WERE NEITHER GIVE N TO THE APPELLANT NOR ANY CROSS EXAMINATION WAS ALLOWED. (6) THE EXECUTIVE DIRECTOR, ALL INDIA FURNACE ASSOC IATION VIDE HIS REPORT DATED 18/03/2008 HAS STATED THAT THE HIGHER CONSUMP TION OF ELECTRICITY CAN BE ATTRIBUTABLE TO LIGHT SCRAP AND SPONGE IRON ETC. REASONS. (7) THE EXCISE DEPARTMENT HAS CONSIDERED ENTIRE ELE CTRICITY UNITS FOR PRODUCTION WHEREAS ABOUT 75% UNITS ARE CONSUMED FOR FURNACE I.E. FOR PRODUCTION. (8) THE RELIANCE IS PLACED ON THE DECISION IN THE C ASE OF ACIT VS. SRJ PEETY STEELS PVT.LTD. (2011) 137 TTJ 627 (PUNE) WHE REIN IT HAS BEEN HELD THAT NO .ADDITION COULD BE MADE MERELY ON THE BASIS OF TECHNICAL ELECTRICITY CONSUMPTION FORMULA.Z (9) THE A.O. HAS OBSERVED IN THE ASSESSMENT ORDERS THAT THE UNIT CAPACITY INCLUDES USAGE OF FURNACE LOAD OR AUXILIARY LOAD; A 6 MT FURNACE WILL CONSUME SLIGHTLY MORE POWER THAN 25 MT FURNACE PER METRIC TON OF PRODUCTION; A CONTINUOUS CASTING PROCESS USES MORE ELECTRICITY, HOWEVER, THE A.O. HAS NOT GIVEN EFFECT TO THE ABOVE OBSERVAT IONS IN THE ASSESSMENT ORDER. (10) THE UNDISCLOSED PRODUCTION CALCULATED ON THE B ASIS OF ELECTRICITY CONSUMPTION IS NOT JUSTIFIED AS PER VARIOUS DECISIO NS UNDER EXCISE ACT AND ALSO INCOME TAX ACT RELIED ON BY THE APPELLANTS. SO ME OF THE DECISIONS HEAVILY RELIED ON ARE R.A. CASTINGS VS. COMMISSIONE R OF EXCISE, MEERAT-I 2009 (237) ELT 674; THIS DECISION IS UPHOLD BY THE HON'BLE ALLAHABAD HIGH COURT; NASHIK STRIPS PVT.LTD. VS. COMMISSIONER OF C ENTRAL EXCISE, NASHIK 9 2010-TIOL-1110-CESTAT (MUM); BHAVSHAKTI STEEL MINES P.L. VS. CCE, NASHIK ORDER NOS.356-3 57/11/EB/C-II, CESTAT, MUMBA I DATED 08/04/2011. (11) THE COST OF PRODUCTION CLAIMED BY THE APPELLAN T IS JUSTIFIED AS SIMILAR COST OF PRODUCTION HAS BEEN SHOWN BY OTHER MORE THA N 15 COMPANIES MANUFACTURING THE SAME PRODUCTS IN JALNA INDUSTRIAL ESTATE SINCE 1985. (12) THE ADDITION ON ACCOUNT OF CLANDESTINE REMOVAL OF MS INGOTS/BILLETS IN THE YEARS UNDER APPEAL HAS BEEN AGREED ONLY TO PURC HASE PEACE OF MIND AND TO AVOID LITIGATION. 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE RIVAL CONTENTIONS RAISED BY THE APPELLANT IN PARA-7.1 ABO VE AND RAISED BY THE A.O. MENTIONED IN PARA-5 ABOVE. ON PERUSAL OF THE SAME, IT HAS BEEN OBSERVED AS UNDER (1) THE APPELLANT HAS CLANDESTINELY REMOVED MS INGO TS/BILLETS AND HAS EVADED EXCISE DUTY AND HAS NOT ACCOUNTED FOR THE SA ID SALE OF MS INGOTS/BILLETS AS IS EVIDENT FROM THE INVESTIGATION AND ENQUIRIES MADE BY DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE (DG CEI). (2) THE APPELLANT HAS ALSO ADMITTED THE SAID CLANDE STINE REMOVAL OF GOODS IN THE STATEMENT RECORDED IN INVESTIGATION BY DGCEI AND ALSO BEFORE THE SETTLEMENT COMMISSION OF CUSTOMS AND EXCISE DEPARTM ENT AND HAS PAID EXCISE DUTY AND THE SETTLEMENT COMMISSION HAS LEVIE D TOKEN PENALTY IN RESPECT OF THE SAID CLANDESTINE SALE OUT OF THE BOO KS. (3) THE COMMISSIONER OF EXCISE IN HIS ORDER AND THE A.O. HAVE REASONABLY ESTIMATED, AFTER CONSIDERING VARIOUS REPORTS AND ST UDIES IN RESPECT OF ELECTRICITY CONSUMPTION REQUIRED FOR PRODUCING MS I NGOTS/BILLETS, AT 1026 ELECTRICITY UNITS PER METRIC TON. (4) THE A.O. HAS ALSO POINTED OUT THAT THERE IS SUB STANTIAL VARIATION IN VARIOUS MONTHS AND IN RESPECT OF VARIOUS MANUFACTUR ERS OF MS INGOTS/BILLETS IN ELECTRICITY CONSUMPTION REQUIRED FOR THE QUANTUM OF GOODS PRODUCED, WHICH IS ABNORMAL. THE A.O. HAS ALSO NOTED SUBSTANT IAL VARIATION IN YIELD AND SHORTAGES DURING VARIOUS MONTHS IN THE YEARS UN DER APPEAL. (5) THE DECISION IN THE CASE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE ) HAS BEEN RELIED ON BY THE APPELLANT. THE FACTS BEFORE THE HON'BLE ITAT WH ILE DECIDING THE SAID CASES WERE 'AFFERENT TO SOME EXTENT. IN THE SAID CA SES, CLANDESTINE REMOVAL OF GOODS BY THE APPELLANT AND THE ADMISSION OF THE APPELLANT ABOUT THE SAID FACT OF UNACCOUNTED TRANSACTIONS WAS NOT BEFORE THE HON'BLE ITAT. FURTHER, THE DETAILED ORDER OF THE COMMISSIONER OF EXCISE AN D THE OTHER FACTS BROUGHT ON RECORD BY THE A.O. IN THE ASSESSMENT ORD ER WAS NOT BEFORE THE HON'BLE ITAT, PUNE WHILE DECIDING THE ABOVE REFERRE D CASES. FURTHER IN THE SAID CASES ACTION U/S 132 WAS CONDUCTED AND THE APP ELLANT WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT O F COMPLETED ASSESSMENTS IN SUCH CASES COULD BE MADE ONLY ON THE BASIS OF MATERIAL FOUND IN SEARCH ACTION. IN VIEW OF THE ABOVE FACTS, THE RELIANCE PLACED BY THE APPELLANT ON THE ABOVE REFERRED DECISION IS MISPLAC ED. FURTHER, THE OTHER DECISIONS RELIED ON BY THE APPELLANT IN SUPPORT OF ITS ABOVE CONTENTION ARE ALSO DISTINGUISHABLE ON FACTS AS IN THE SAID CASES THE CLANDESTINE REMOVAL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT. FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BA SIS OF ELECTRICITY UNITS CONSUMED WERE NOT PRESENT IN THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW O F THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PURCHASES AND SALES ADMITTED BY THE APPELLANT AND ALSO IN VIEW OF VARIOUS REASONS M ENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. (7) THE APPELLANT HAS NOT MAINTAINED INFORMATION IN FORM NO.G-7, WHICH IS COMPULSORY, SHOWING DAILY CONSUMPTION OF POWER IN U NITS. 10 (8) THE FACTS OF THE DECISIONS RELIED ON BY THE APP ELLANT ARE DIFFERENT AND RATIO LAID DOWN BY THE SAID DECISIONS IN THE CASE O F ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. ( 2011) 137 TTJ 627 (PUNE) IN RESPECT OF GROSS PROFIT ADDITION CAN ONLY BE APP LIED WITH SOME ALTERATION CONSIDERING THE FACT OF THE CASE OF THE APPELLANT. (9) THE VARIOUS MANUFACTURERS OF MS INGOTS/BILLETS HAVE FILED PETITION FOR STAY OF RECOVERY OF EXCISE ON ALLEGED UNDISCLOSED PRODUC TION SOLD BEFORE HON'BLE CESTAT. THE HON'BLE APPELLATE TRIBUNAL, WEST ZONAL BENCH HAS PASSED ORDER DATED 01/03/2011 ON THE SAID STAY PETITION. I N THIS ORDER, THE HON'BLE APPELLATE TRIBUNAL HAS OBSERVED THAT THE FACTS OF T HE CASE INCLUDING R.A. CASTINGS RELIED ON BY THE APPLICANTS CANNOT BE FOLL OWED AS PRECEDENT AS IN THE SAID CASE NO CORROBORATIVE EVIDENCE WAS FOUND B Y THE BENCH. THE HON'BLE APPELLATE TRIBUNAL HAS FURTHER OBSERVED THA T THE CRUCIAL EVIDENTIARY FINDINGS HAVE BEEN NOTED IN THE CASES OF THE APPLIC ANTS INCLUDING THE APPELLANT. THE SAID FINDINGS IN THE CASE OF - THE A PPELLANT ARE AS UNDER '(A) COST OF ELECTRICITY AND RAW MATERIAL SHOWN TO BE 125% OF SELLING PRICE OF INGOTS. (B) SANCTIONED AUXILIARY LOAD WAS ONLY 7. 8% OF THE TOTAL SANCTIONED LOAD BUT CLAIMED TO BE 25% BY APPELLANT IN STATEMEN T; (C) COMMISSIONER OF INCOME TAX (APPEALS)' CONFIRMED NET ADDITION OF INCOME OF RS.23.5 LAKHS ON ACCOUNT OF SUPPRESSED PRODUCTION OF INGOTS FOR ASSESSMENT YEARS 2001 -02 TO 2006-07. (D) CLANDESTINE CLEARANCE FOR SPECIFIC CASE ADMITTE D BEFORE SETTLEMENT COMMISSION. SIMILAR OBSERVATIONS HAVE BEEN MADE BY THE HON'BLE APPELLATE TRIBUNAL IN THE CASE OF OTHER MANUFACTURERS. THE HON'BLE CESTAT HAS ALSO TAKEN SUPPORT OF DECISI ON OF HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGAPPA CEMENT PVT. LTD. VS. CEGAT & CCE, TRICHY (2010-TIOL-770-HC-MAD-CX) AND HELD THAT THE REVENUE CANNOT BE FAULTED FOR DEMANDING DUTY ON THE STEEL INGOTS WHIC H COULD HAVE BEEN MANUFACTURED BY CONSUMING EXCESS QUANTITY OF ELECTR ICITY. THE HON'BLE APPELLATE TRIBUNAL HAS HELD IN CONCLUDING PARA-22 T HAT 'NONE OF THE APPELLANTS EXCEPT M/S SHREE STEEL CASTINGS HAS MADE OUT THE PR IMA-FACIE CASE ON MERITS. THEY CANNOT RAISE A VALID PLEA OF LIMITATION EITHER . SUPPRESSION OF RELEVANT FACTS IS INBUILT IN CLANDESTINE PRODUCTION OF EXCISABLE G OODS AND ITS REMOVAL WITHOUT PAYMENT OF DUTY, AND THE SAME, PRIMA-FACIE, STANDS ESTABLISHED IN THESE CASES.' 7.3 IN VIEW OF THE FACTS OF THE CASE AND ABOVE MENT IONED REASONS MENTIONED BY THE A.O. AND RESPECTFULLY CONSIDERING OBSERVATIONS IN THE DECISION OF CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH ORDER 01/03/2011 IN THE CASE OF THE APPELLANT AND OTHERS, I HOLD THAT THERE IS SUPPRESSION OF SALE AND PROFIT IN THE YEAR S UNDER APPEAL AND HENCE THE PROFIT DECLARED BY THE APPELLANT CANNOT BE ACCEPTED WITHOUT MAKING FURTHER ADDITION ON ACCOUNT OF PROFIT ON SUPPRESSED SALE. 7.4 IN VIEW OF THE ABOVE FACTS, OBSERVATIONS AND DI SCUSSION AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A.O. IN TH E ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS JUSTIFIED I N ARRIVING AT THE SUPPRESSED PRODUCTION/SALE OF MS INGOTS/BILLETS ON THE BASIS O F ELECTRICITY UNIT CONSUMPTION. THE FIRST ISSUE IS, THEREFORE, DECIDED AGAINST THE APPELLANT. 9. THE CIT(A) FURTHER ADDRESSED THE ISSUE OF QUANTIFICATION O F UNDISCLOSED INCOME BY REDUCING ONLY PURCHASE COST OF ALLEG ED UNDISCLOSED 11 SALES OR WHETHER THE GROSS PROFIT IS TO BE TAXED IN RESP ECT OF THE SAID ALLEGED UNDISCLOSED SALES AND AT WHAT PERCENTAGE OF GP. T HE CIT(A) WAS OF THE VIEW THAT ONLY GP IN RESPECT OF UNACCOUNTED SALES H AS TO BE ADDED IN THE HANDS OF THE ASSESSEE, IN TURN, RELYING ON THE RATIO LAID DOWN BY THE TRIBUNAL IN ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM R OLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE), WHEREIN IT WAS HELD THAT THE GROSS PROFIT IN RESPECT OF UNDISCLOSED PRODUCTION SOLD COULD ONLY BE TAXED. HOWEVER, IN VIEW OF THE ADMISSION OF CLANDESTINE REMOVAL OF GOODS AND UNACCOUNTED PURCHASE OF RAW MATERIALS AND SALE OF FINISHE D GOODS ADMITTED BY THE ASSESSEE, THE GROSS PROFIT FOR MANUFACTUR E OF TMT BARS WAS ESTIMATED AT THE RATE OF 4%. FURTHER, IT WAS HELD BY THE CIT(A) THAT WHERE THE ACTUAL GROSS PROFIT AS PER THE BOOKS OF ACCOU NT IN THE YEARS UNDER APPEAL WAS MORE THAN 4%, THE ACTUAL GROSS PROFIT R ATE WAS TO BE ADOPTED AND DIRECTIONS TO THAT EFFECT WERE GIVEN TO THE ASSESSING OFFICER. THE CIT(A) FURTHER ESTIMATED THE UNDISCLOSED INVESTMENT IN RESPECT OF UNDISCLOSED TURNOVER AND WORKED OUT THE ADDITION AT RS.2 4,64,802/-. HOWEVER, NO ADDITION WAS MADE IN THE HANDS OF THE ASSESS EE BECAUSE OF THE ADDITION ON ACCOUNT OF ESTIMATED GP RATE IN THE PREC EDING YEAR I.E. ASSESSMENT YEAR 2006-07. THE CIT(A) UPHELD THE REJECTIO N OF BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. THE CIT(A) ALSO DE LETED THE ADDITION MADE BY THE AO U/S.40A(3) OF THE I.T. ACT ON THE GROUND THAT NO ADDITION U/S.40A(3) IS PERMISSIBLE WHEN THE PROFIT IS ESTIMATED BY REJ ECTING THE BOOK RESULTS. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US BY TAKING THE FOLLOWING GROUNDS : GROUNDS IN ITA NO.231/PN/2012 (A.Y. 2006-07) : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE INCOME TAX ACT. 12 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT REASONS FOR RE-OPE NING OF THE ASSESSMENT WERE NOT SUPPLIED TO THE APPELLANT COMPANY, NEITHER ON RE-OPENING OF THE ASSESSMENT NOR AT THE STAGE OF APPELLATE PROCEEDINGS BEFO RE THE ID. C.I.T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS. 1,92, 24,964/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON TH E BASIS OF THE CONSUMPTION OF ELECTRICITY AS PER U.S. STANDARD AND E VASION OF EXCISE DUTY BY TMT BARS MANUFACTURERS IN JALNA CLUSTER FOUND BY DIREC TOR GENERAL OF CENTRAL EXCISE AND CUSTOMS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON TH E GROUNDS OF MONTHLY VARIATION IN CONSUMPTION PATTERN OF ELECTRICITY VIS- A-VIS PRODUCTION. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN HOLDI NG THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY ARE CORRECTLY REJE CTED U/S. 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR FINDING AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKIN G AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIVING ANY SHOW C AUSE NOTICE TO THE APPELLANT COMPANY TO EXPLAIN THE FACTS AGAINST THE P ROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGAINST THE RULES OF NATURAL JUSTI CE. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROFIT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS. 1,92,24,964/-. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN ESTIMATING UNDISCLOSED INVESTMENTS FOR UNDISCLOSED PRODUCT ION OF RS. 1,84,855/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/ S. 143(3) R.W.S. 147 IS VOID AND NOT VALID IN LAW AS THE SAME HAS BEEN PASSED WITHOUT ISSUE OF NOTICE U/S. 143(2) OF THE I. T. ACT. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX APPELLAT E TRIBUNAL IN THE CASE OF M/S.. SHREE OM ROLLING MILLS PVT. LTD. FOR ASSESSMENT YE ARS 2000-01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHEREIN THE SIMILAR ADDITION WAS DELETED. 12. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER, AT THE TIME OF HEARING. GROUNDS IN ITA NO.638/PN/2012 (A.Y. 2006-07) : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT (A) HAS RIGHTLY DIRECTED' THE AO TO ADOPT THE GROSS PROFIT @ 4% ON TOTAL SUPPRESSED PRODUCTION ON ESTIMATED BASIS. 13 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS RIGHTLY HELD THAT WHERE PROFIT IS ESTIMATED, PROVISION OF SECTION 40A(3) IS NOT ATTRACTED. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 5,81,687/-, MADE U/S 40A(3) OF THE INCOME TAX ACT, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY GROUND OF APPEAL. 11. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUNDS OF APPE AL RELATING TO VALIDITY OF REASSESSMENT PROCEEDINGS. 12. SO FAR AS OTHER GROUNDS ARE CONCERNED HE SUBMITTE D THAT THE ARGUMENTS ADVANCED IN THE CASE OF OM ROLLING MILLS PVT. LTD. AND OTHER CONNECTED APPEALS RELATING TO RE-ROLLING MILLS WILL HOLD GOOD FO R THESE APPEALS. THE LD. SPECIAL AUTHORISED REPRESENTATIVE FOR TH E REVENUE ALSO FAIRLY AGREED THAT THE ARGUMENTS ADVANCED IN THE CASE OF OM ROLLING MILLS PVT. LTD. AND OTHER CONNECTED APPEALS RELATING TO RE-ROLLIN G MILLS WILL HOLD GOOD FOR THESE APPEALS. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF OM ROLLING MILLS PVT. LTD. AND OTHER C ONNECTED APPEALS VIDE ITA NOS.125 TO 127/PN/2012 AND ITA NOS.430 & 431/PN/2012 AND OTHER APPEALS VIDE CONSOLIDATED ORDER D ATED 15-07-2015 (TO WHICH BOTH OF US ARE PARTIES). WE FIND THE TRIBUNAL IN TH E AFORESAID CASE HAS THOROUGHLY DISCUSSED THE ISSUES RELATING TO AD DITION MADE ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR OF CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALLEGED INVESTM ENT IN THE PURCHASE FOR EFFECTING SUCH CLANDESTINELY REMOVED GOODS A ND THE ADDITIONS HAVE BEEN DELETED. THE RELEVANT OBSERVATION OF THE TRIBU NAL FROM PARA 30 ONWARDS IS REPRODUCED HEREUNDER FOR THE SAKE OF CLARITY : 14 30. WE PROCEED TO ADJUDICATE THE ISSUE RAISED IN T HE PRESENT BUNCH OF APPEALS BY REFERRING TO THE FACTS IN ITA NO.211/PN/2012, WH EREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 14 7 OF THE INCOME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT REASONS F OR RE-OPENING OF THE ASSESSMENT WERE NOT SUPPLIED TO THE APPELLANT COMPA NY, NEITHER ON RE-OPENING OF THE ASSESSMENT NOR AT THE STAGE OF AP PELLATE PROCEEDINGS BEFORE THE ID. C.I.T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS.3 5,47,80,518/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON THE BASIS OF THE CONSUMPTION OF ELECTRICITY AS PER U.S. STANDARD AND EVASION OF EXCISE DUTY BY TMT BARS MANUFACTURERS IN JALNA CLUSTER FOU ND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON THE GROUNDS OF MONTHLY VARIATION IN CONSUMPTION PATTERN OF ELECTRICITY VIS-A-VIS PRODUCTION. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N HOLDING THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT FIRM ARE CORRECT LY REJECTED U/S 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR FINDI NG AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N MAKING AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIV ING ANY SHOW CAUSE NOTICE TO THE APPELLANT FIRM TO EXPLAIN THE FACTS A GAINST THE PROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGAINST THE RULES OF NATURAL JUSTICE. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROF IT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS.35,47,80,518/-. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN ESTIMATING UNDISCLOSED INVESTMENTS FOR UNDISCLOS ED PRODUCTION OF RS.34,11,351/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSI NG OFFICER U/S. 143(3) R.W.S. 147 IS VOID AND NOT VALID IN LAW AS THE SAME HAS BEEN PASSED WITHOUT ISSUE OF NOTICE U/S 143(2) OF THE I.T. ACT. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX A PPELLATE TRIBUNAL IN THE CASE OF M/S. SHREE OM ROLLING MILLS PVT. LTD. FOR A SSESSMENT YEARS 2000- 01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHERE IN THE SIMILAR ADDITION WAS DELETED. 12. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER OR A MEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO O NE ANOTHER, AT THE TIME OF HEARING. 31. THE REVENUE IN ITA NO.432/PN/2012 HAS RAISED FO LLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDESTINE REMO VAL OF GOODS WITHOUT PAYMENT OF TAXES. 15 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUFAC TURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT I N THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODUCTION SHOWN IN THE B OOKS OF ACCOUNT? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 32. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE AT THE OUTSET POINTED OUT THAT THE GROUND OF APPEAL NOS.1, 2 AND 10 AGAIN ST THE RE-OPENING OF THE ASSESSMENT AND NON-SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT ARE NOT PRESSED IN ASSESSMENT YEAR 2006-07 AND IN ASSESSMEN T YEAR 2007-08, GROUNDS OF APPEAL NO.1, 2 AND 9 ARE NOT PRESSED. 33. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER SUBMITTED A SYNOPSIS OF HIS ARGUMENTS AND A NOTE ON NON ADOPTIO N OF SUPPRESSED SALES FOR PART OF THE PERIOD FOR EXTRAPOLATING FOR THE FULL YEAR A ND OTHER YEARS. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURNISH ED WRITTEN ARGUMENTS AND ALSO ADDITIONAL SUBMISSIONS ABOUT NON-APPLICABILITY OF DECISION OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA). THE CONTENTION OF THE ASSESSEE BEFORE US WAS THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO T HE FACTS AS IN SHREE OM ROLLING MILLS AND EVEN THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER WAS ON THE SAME LINE AS PASSED IN SHREE OM ROLLING MILLS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED T HAT ASSESSEE HAD FILED SETTLEMENT PETITION BEFORE THE SETTLEMENT COMMISSIO N IN ASSESSMENT YEARS 2006- 07 AND 2007-08. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEREAFTER TOOK US THROUGH THE ORDER OF THE ASSESSING OFFICER WHEREIN HE HAD QUANTIFIED THE CONSUMPTION OF ELECTRICITY ON US STANDARD AND BY AD OPTING THE AVERAGE SALE PRICE AND AVERAGE COST OF RAW MATERIAL WORKED OUT THE BOO K PROFITS AND CONSEQUENT EXCESS PRODUCTION, WHICH IS NOT REFLECTED IN THE BO OKS OF ACCOUNT. IT WAS FURTHER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE THAT THOUGH WORKING CAPITAL REQUIRED FOR INVESTMENT WAS QUANTIF IED BY THE ASSESSING OFFICER BUT NO ADDITION WAS MADE ON THIS ACCOUNT. SIMILARLY, T HE ASSESSING OFFICER HAD WORKED OUT THE DISALLOWANCE UNDER SECTION 40A(3) OF THE AC T BUT NO ADDITION WAS MADE ON THIS ACCOUNT. 34. IT WAS FURTHER POINTED OUT BY THE LD. AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE THAT THE CIT(A) VIDE PARA 7.3 HAD CONFIRME D THE QUANTUM OF SUPPRESSED PRODUCTION AND SALE THEREON AND BY APPLYING A GP RA TE OF 4%, HE HAD COMPUTED THE ADDITION IN THE HANDS OF THE ASSESSEE. FURTHER , THE CIT(A) VIDE PARA 8.6 HAD MADE ADDITION ON ACCOUNT OF THE WORKING CAPITAL REQ UIRED FOR INVESTMENT UNDER SECTION 69C OF THE ACT AT RS.34,11,351/-. IT WAS F URTHER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09 THERE WAS NO ADDITION MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 69C OF THE ACT. IT WAS FURTHER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IT HAD DECLARED UNDISCLOSED SALES IN ITS SETTLEMENT PETITION FILED BEFORE THE SETTLEMENT COMMISSION OF RS.21,74,229/- FOR ASSESSMENT YEAR 2006-07 AND RS.43,95,328/- FOR ASSESSMENT YEAR 2007-08. TH E LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE GP RATE ON SUCH SUPPRESSED PRODUCTION AND SALE WAS NOT OFFERED TO T AX, HOWEVER, 4% GP RATE ON SUCH AMOUNT IS TO BE ADDED IN THE HANDS OF THE ASSE SSEE. IT WAS FURTHER CLARIFIED BY HIM THAT THERE IS NO ORDER OF THE CENTRAL EXCISE BUT THERE IS ONLY ORDER OF SETTLEMENT COMMISSION. HOWEVER, THE ASSESSING OFFI CER HAD MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF US STANDA RD. WITH REGARD TO THE PLANK OF ARGUMENTS AS TO EXTRAPOLATION OF SALES ON THE BASIS OF SUPPRESSED SALES FOUND FOR PART OF THE PERIOD BY THE EXCISE DEPARTMENT, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AFTER PASSING OF THE ORDER BY THE SETTLEMENT COMMISSION ON 12.12.2007, THE EXCISE COMMISSIONER H AS PASSED ORDER IN THE CASE OF FURNACE COMPANY DATED 09.09.2009 AND IN RES PECT OF THE SAID SETTLEMENT PETITION, THE EXCISE COMMISSIONER HAD OBSERVED IN P ARA 19 IN THE CASE OF M/S. SRJ PEETY STEEL PVT. LTD. (SUPRA) THAT THE ASSESSEE IN ONE INSTANCE HAD APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED EVASION OF OFFEN CE OF AN IDENTICAL NATURE. THE THIRD MEMBER OF CESTAT AT PAGE 13 OF HIS ORDER HAD CONSIDERED THE ASPECT OF PROCEEDINGS, WHICH WERE SETTLED BY ACCEPTING THE ARGUMENT, THAT EACH HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERITS AND ALSO REFERRED TO PARA 19 OF 16 THE ORDER OF THE EXCISE COMMISSIONER. IT WAS FURTH ER POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA) HAD CONSIDERED THE FINDINGS OF CC E AND CESTAT IN PARA 20.1 OF THE ORDER AND DECIDED THE ISSUE AND THE SAID PARITY OF REASONING IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 35. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER SUBMITTED THAT WHERE THE ASSESSEE HAD FILED A SETTLEMENT PETITION FOR A PARTICULAR QUANTITY ONLY BEFORE THE EXCISE SETTLEMENT COMMISSION AND WHERE T HE DEPARTMENT HAS NOT PRODUCED ANY EVIDENCE IN RESPECT OF MORE QUANTITY O F SUPPRESSED SALES THAN THE QUANTITY DECLARED BY THE ASSESSEE AND WHERE THE SET TLEMENT COMMISSION HAD NOT REJECTED THE PETITION OF THE ASSESSEE NOR HAD COME UP FOR SETTLEMENT OF MORE QUANTITY OF GOODS THAN THE DECLARED, THERE WAS NO Q UESTION OF EXTRAPOLATION OF SALE BY THE INCOME TAX DEPARTMENT ON THE BASIS OF THE SE TTLEMENT PETITION BEFORE THE EXCISE AUTHORITY. ONCE THE ASSESSEE HAD PAID THE E XCISE DUTY ON WHATEVER EVIDENCE WAS FOUND FOR SALE OF GOODS OUT OF BOOKS B Y THE EXCISE DEPARTMENT AND HAD ALSO OFFERED ADDITIONAL INCOME ON THE BASIS OF GROSS PROFIT ON THE AFORESAID SUPPRESSED SALES, THERE IS NO QUESTION OF ANY FURTH ER ADDITION. IT WAS FURTHER POINTED OUT BY THE ASSESSEE THAT IN SIMILAR CASES T HE ASSESSEE THEREIN HAD DECLARED ADDITIONAL INCOME ON ACCOUNT OF SALE OF GO ODS OUT OF BOOKS FOR SUBSEQUENT YEARS AND PAID THE EXCISE DUTY AS APPLIC ABLE AND ALSO DECLARED ADDITIONAL INCOME OF GROSS PROFIT ON THE SALE OF GO ODS NOT RECORDED IN BOOKS OF ACCOUNT, BUT HAD NOT GONE TO THE SETTLEMENT COMMISS ION. IT WAS VEHEMENTLY STATED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT SOME OF THE EVIDENCES WERE FOUND BY THE EXCISE DEPARTMENT, HOWE VER, THE INCOME TAX DEPARTMENT HAD NOT FOUND ANY EVIDENCE OF PRODUCTION AND SALE OUT OF BOOKS OF ACCOUNT AND ALSO NO INQUIRY OR INVESTIGATION ON THA T ISSUE WAS MADE BY THE INCOME TAX DEPARTMENT. THEREFORE, THE DEPARTMENT HAS NO I OTA OF EVIDENCE IN THEIR HANDS IN RESPECT OF SUPPRESSED PRODUCTION AND SALE OTHER THAN THE EVIDENCE COLLECTED BY THE EXCISE DEPARTMENT IN SOME OF THE YEARS. FURTHE R, REFERENCE WAS MADE TO THE ORDER OF THE THIRD MEMBER OF CESTAT IN SRJ PEETY ST EEL PVT. LTD. (SUPRA) VIDE PARA 2.3 OF THE ORDER FOR THE ALLEGATION OF SUPPRES SED SALE AND PRODUCTION THERE SHOULD BE TANGIBLE AND DIRECT EVIDENCES AVAILABLE W ITH THE DEPARTMENT AS UNDER :- A. RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREM ISES AND NON ACCOUNTING THEREOF IN THE STATUTORY RECORDS; B. UTILISATION OF SUCH RAW MATERIAL FOR CLANDESTINE MANUFACTURE OF FINISHED GOODS; C. MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOYED AND PAY MENT TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; D. CLANDESTINE REMOVAL OF GOODS WITH REFERENCE TO E NTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOODS THEREIN, SECURIT Y GATE RECORDS, TRANSPORTERS DOCUMENTS, SUCH AS L.R.S, STATEMENTS OF LORRY DRIVE RS, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND T HE RECEIPT BY THE CONSIGNEES; E. AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT O F THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR AND ITS DISPOSAL. 36. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER POINTED OUT THAT THE ADDITION IF ANY IN THE HANDS OF THE ASSESSEE SH OULD BE MADE ON THE BASIS MATERIAL FOUND IN THE POSSESSION OF THE ASSESSEE AN D/OR ANY INQUIRY OR INVESTIGATION CARRIED OUT BY THE INCOME TAX DEPARTMENT AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN ANY EXTRAPOLATION OF INCOME IN THE HAND S OF THE ASSESSEE. RELIANCE IN THIS REGARD WAS PLACED UPON THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS :- (I) CHHATTISGARH STEEL CASTING (P) LTD. VS. ACIT, 8 DTR (BILASPUR) 14; (II) ANJANEYA BRICK WORKS VS. CIT, 74 TTJ 921 (BAN GALORE-ITAT); (III) C.J. SHAH & CO., 246 ITR 671 (BOM.); AND, (IV) ANAND KUMAR DEEPAK KUMAR, 294 ITR 497 (DELHI) . 17 37. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE STRESSED THAT ONCE THE DECISIONS FOR A PARTICULAR ISSUE ARE AVAILABLE UNDE R THE INCOME TAX ACT, THERE IS NO MERIT IN RELYING ON ANY DECISION UNDER ANY OTHER AC T. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT WHILE ARGUING THE CASE OF SHREE OM ROLLING MILLS, THE LD. DEPARTMENTAL REPRES ENTATIVE FOR THE REVENUE HAD RELIED ON THE RATIO LAID DOWN IN THE FOLLOWING DECI SIONS :- A. DR. M.K.E. MENON, 248 ITR 310 (BOM.); B. CIT VS. HOTEL MARIYA, 322 ITR 537 (KERALA); AND , C. CIT VS. CHETAN DAS LACHMAN DAS, 254 CTR 392 (DE LHI). 38. HE SUBMITTED THAT THE ABOVE-SAID RELIANCE IS NO T JUSTIFIED AND THE ISSUE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN C.J. SHAH & CO. (SUPRA) AND HONBLE DELHI HIGH COURT IN ANAND KUMAR DEEPAK KUMAR (SUPRA). IN CONCLUSION, THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE CASE OF ROLLING MILLS I.E. IN THE C ASE OF THE ASSESSEE BEFORE US, WHERE THERE IS NO ORDER OF COMMISSIONER OF CENTRAL EXCISE, THE DEPARTMENT HAS RELIED ON THE ORDER OF SETTLEMENT PETITION FILED BE FORE CENTRAL EXCISE SETTLEMENT COMMISSION AND THE ORDER PASSED BY THE SETTLEMENT C OMMISSION, WHICH WERE BASED ON FURNACE CASES AND IT WAS NOT JUSTIFIED TO RELY ON THE SAME. FURTHER, THE DEPARTMENT HAS RELIED ON THE CONSUMPTION OF ELECTRI CITY ON THE BASIS OF US STANDARD WHICH IS ALSO NOT WARRANTED. IT WAS ALSO EXPLAINED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE TRIBUNAL I N ASSESSMENT YEAR 2006-07 HAD CONFIRMED THE ADDITION OF GROSS PROFIT ON THE BASIS OF EVIDENCE FOUND IN SEARCH CONDUCTED BY THE INCOME TAX DEPARTMENT IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA) AND SHREE OM ROLLING MILLS PVT. LTD.. HOWE VER, IN THE SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 2007-08 TO 2009-10 AND ALSO I N OTHER CASES NO EVIDENCE HAS BEEN FOUND BY THE INCOME TAX DEPARTMENT FOR PRODUCT ION AND SALE OF GOODS OUT OF BOOKS OF ACCOUNT. FURTHER, THE EXCISE DEPARTMENT H AD NOT TAKEN ANY COGNIZANCE OF EVIDENCE OF TWO DAYS SALE FOUND BY THE INCOME TA X DEPARTMENT IN ASSESSMENT YEAR 2006-07. IN THIS REGARD, RELIANCE WAS PLACED ON THE ORDER OF THE CESTAT BANGALORE DECISION IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD DATED 22.12.2010, WHEREIN IT WAS HELD THAT CERTAIN DOCUMENTS WERE FOU ND BY THE INCOME TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZURE ACTION WH ICH INDICATED CLEARANCE AND SALES ON THE BASIS OF WHICH THE INCOME TAX DEPARTME NT LEVIED TAXES ON ACCOUNT OF UNACCOUNTED SALES AND CLEARANCE; THE SAID INFORMATI ON WAS SENT TO THE EXCISE DEPARTMENT AND ORDER WAS PASSED BY THE EXCISE COMMI SSIONER FOR LEVY OF EXCISE DUTY ON THAT. THE TRIBUNAL CANCELLED THE EXCISE DE MAND ON THE GROUND THAT AS THE CENTRAL EXCISE DEPARTMENT WERE NOT ABLE TO FIND ANY CORROBORATIVE EVIDENCE OF CLANDESTINE MANUFACTURE OF GOODS AND THEREFORE IT C ANNOT BE SAID THAT THERE WAS CLANDESTINE REMOVAL OF GOODS. THE COPY OF THE SAID DECISION REPORTED IN 2011 (266) E.L.T. 399 (TRI.-BANG.) WAS FILED ON RECORD. IT WAS CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT ON SAME ANALOGY THE EVIDENCE FOUND BY THE EXCISE DEPARTMENT IN RESPECT OF SALE O F GOODS FOR A PARTICULAR QUANTITY FOR A PARTICULAR PERIOD COULD NOT BE RELIED UPON AS EVIDENCE IN THE INCOME TAX DEPARTMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONCLUDED BY STATING THAT THE ISSUE IN THE PRESENT CASE IS TO BE DECIDED ON THE BASIS OF FINDINGS OF ASSESSING OFFICER AND THEN THE CIT(A) AND THE TRIBU NAL CANNOT TRAVEL BEYOND AND WHILE PASSING THE ORDER THE TRIBUNAL CANNOT PROCEED ON ANY OTHER BASIS. 39. THE LD. SPECIAL AR, IN REPLY, STATED THAT THE S UBMISSIONS FILED IN SHREE OM ROLLING MILLS BE TREATED AS NOTES FILED IN THE PRES ENT APPEAL ALSO. THE FIRST POINT RAISED BY THE LD. SPECIAL AR WAS THAT THE DECISION OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA) DECIDED ON 16.01.2015 IS NO T TO BE APPLIED AS IT HAD NOT CONSIDERED THE MATERIAL FACTS AND EVIDENCES ON RECO RD ABOUT THE CLANDESTINE REMOVAL OF FINISHED PRODUCTS. AS PER THE LD. SPECI AL AR, THE SAID DECISION FALLS INTO THE CATEGORY OF SUB SILENTIO AND THUS LOOSES ITS BI NDING EFFECT. HE REFERRED TO THE RELEVANT PAGES FROM THE BOOK SALMOND ON JURISPRUDEN CE, XII ADDITION. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NADU REPORTED IN 263 ITR 658 (SC). ANOTHER CONTENTION RAISED BY THE LD. SPECIAL AR WAS THAT WHERE THE ASSESSING OFFICER HAD TAXED THE ENTIRE SUPPRESSED SALES AS IN COME OF THE ASSESSEE MAINLY BECAUSE ALL THE MANUFACTURING AND OTHER EXPENSES WE RE ALREADY BOOKED IN REGULAR BOOKS OF ACCOUNTS, HENCE, NO FURTHER DEDUCTION WAS NECESSARY. THE ACTION OF CIT(A) IN ESTIMATING THE GP @ 4% OF SUPPRESSED SALE OR ACTUAL, WHICHEVER IS 18 MORE, WAS NOT CORRECT AS PER THE LD. SPECIAL AR. T HE CIT(A) HAD NOT GIVEN ANY COGENT AND RELEVANT REASONS IN SUPPORT OF HIS SAID DECISION BUT HAD SIMPLY RELIED UPON GENERAL PROPOSITIONS WITHOUT CONSIDERING THE P ECULIAR FACTS OF THE CASE. THE LD. SPECIAL AR STRESSED THAT NO QUESTION OF ALLOWAB ILITY OF ADDITIONAL ELECTRICITY EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNT FOR PRODUC TION OF SUPPRESSED SALE ARISES AND SIMILAR IS THE CASE WITH OTHER MANUFACTURING EX PENSES. THE STATEMENT OF THE ASSESSEE THAT THE RAW MATERIAL REQUIRED FOR PRODUCT ION OF SUPPRESSED TURNOVER WAS PURCHASED IN CASH WAS FOUND TO BE WITHOUT ANY BASIS AND SELF SERVING STATEMENT, BY THE LD. SPECIAL AR. IN THE SAID CIRCUMSTANCES, HE WAS OF THE VIEW THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE UPHELD. EVEN OT HERWISE THE UNEXPLAINED EXPENDITURE ON ACCOUNT OF PURCHASE OF RAW MATERIAL SHOULD BE TAXED IN THE HANDS OF THE ASSESSEE IN VIEW OF PROVISO TO SECTION 69C O F THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN IN VIJAY P ROTEINS LTD. VS. ACIT REPORTED IN 58 ITD 428 (AHD). THE LD. SPECIAL AR BY WAY OF WRI TTEN SUBMISSIONS HAS PROPOSED THAT WHERE FOR THE RELEVANT YEAR THE EXCIS E DUTY WAS 16% AND SALES TAX WAS 4%, AND SINCE THE ASSESSEE HAD RETAINED 50% OF EXCISE DUTY AND SALES TAX, THE PERCENTAGE OF GP WORKS OUT TO MORE THAN 42% AND HENCE THE REASONABLE GP SHOULD BE ESTIMATED @ 40% OF SUPPRESSED SALES. IN ALTERNATE SUBMISSIONS MADE BY THE LD. SPECIAL AR FOR EXTRAPOLATION ON THE RATI O LAID DOWN BY THE TRIBUNAL IN THE CASE OF M/S. SRJ PEETY STEEL PVT. LTD. (SUPRA), IT WAS FURTHER POINTED OUT BY HIM IN THE WRITTEN NOTES THE ASSESSING OFFICER HAD CALCULA TED THE SUPPRESSION OF SALES ON THE BASIS CONSUMPTION IN ELECTRICITY AND IF THE TRI BUNAL WAS OF THE OPINION THAT THE SAID METHOD EVOLVED BY THE ASSESSING OFFICER WAS NO T APPROPRIATE, THEN THE SUPPRESSION COULD BE ESTIMATED FOR 300 DAYS ON THE BASIS OF SUPPRESSION FOUND FOR FEW DAYS. 40. REPLYING TO THE SUBMISSIONS MADE BY THE LD. AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE THAT NO IOTA OF EVIDENCE WAS FOUND BY THE DEPARTMENT IN ORDER TO EXTRAPOLATE THE SALES FOR WHOLE OF THE YEARS, THE L D. SPECIAL AR STATED THAT WHEN THERE IS EVIDENCE BEFORE THE EXCISE DEPARTMENT AND EVEN BEFORE THE INCOME TAX DEPARTMENT, THEN SUCH EXCERCISE COULD BE CARRIED OU T IN THE HANDS OF THE ASSESSEE. HE STRESSED THAT IT WAS NOT THE CASE OF THE ASSESSEE THAT THERE WAS NO SUPPRESSION OF SALE. ON THE OTHER HAND, ASSESSEE H AS SUBMITTED REVISED COMPUTATION OF INCOME ON THE BASIS OF THE PETITION FILED BEFORE THE SETTLEMENT COMMISSION OR THE EXCISE AUTHORITY. IN VIEW THEREO F, WHERE TWO EVIDENCES WERE AVAILABLE BEFORE THE ASSESSING OFFICER I.E. THE STA TEMENT AND ORDER OF THE EXCISE AUTHORITY AND THE INDEPENDENT EVIDENCE BY WAY OF RE VISED COMPUTATION OF INCOME, THEN IN SUCH CIRCUMSTANCES EXTRAPOLATION OF SALES W AS WARRANTED IN THE HANDS OF THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE SHOW- CAUSE NOTICE ISSUED BY THE EXCISE AUTHORITY UNDER WHICH AT PARA 3.2 AT PAGES 9 TO 11 THE PAPER BOOK, THE BROKERS HAD ADMITTED TO CLANDESTINE REMOVAL OF GOOD S WITHOUT PAYMENT OF EXCISE DUTY AND THE NAME OF THE ASSESSEE WAS IN THE SAID L IST OF PERSONS. THE LD. SPECIAL AR REPEATED THE ARGUMENT THAT THE ASSESSEE CLAIMS T HAT IT HAD FILED THE PETITION BEFORE THE SETTLEMENT COMMISSION IN ORDER TO BUY PE ACE OF MIND, BUT IN THE PETITION THERE WAS NO MENTION OF PEACE OF MIND. OUR ATTENTI ON WAS DRAWN TO THE ORDER OF THE SETTLEMENT COMMISSION WHEREIN IT WAS OBSERVED B Y THE BENCH THAT THE BENCH COULD NOT IGNORE THE EVASION OF DUTY AND PENALTY OF RS.15,000/- WAS LEVIED AGAINST THE ASSESSEE. THIS, IN TURN, PROVED THAT THE ASSES SEE ACCEPTS THE FINDING OF THE SETTLEMENT COMMISSION AND IF THE ASSESSEE HAS NOT C HALLENGED THIS FINDING OF THE SETTLEMENT COMMISSION THEN THAT MEANS THE ASSESSEE ACCEPTS ITS DEFAULT. 41. WITH REGARD TO THE NEXT PLEA OF THE ASSESSEE TH AT THE FINDING OF THE SETTLEMENT COMMISSION WAS NOT CHALLENGED BY THE EXC ISE AUTHORITY. THE LD. SPECIAL AR STATED THAT THE SAME COULD NOT BE VIEWED ADVERSELY WHILE ANALYZING THE ACTION OF THE ASSESSING OFFICER. IT WAS ADMITTED B Y THE LD. SPECIAL AR THAT THE COMMISSIONER OF EXCISE CAN ISSUE THE SHOW-CAUSE NOT ICE VIS--VIS THE CONCRETE EVIDENCE FOUND AND ONLY TO THAT EXTENT THIS SHOW-CA USE NOTICE COULD BE ISSUED TO THE PRESENT ASSESSEE. BUT UNDER THE INCOME TAX ACT THE CODE IS SEPARATE AND INDEPENDENT WHEREIN THE ASSESSING OFFICER HAS POWER TO WORK OUT THE EXTRAPOLATION ON THE BASIS OF EVIDENCE FOUND, THERE SHOULD BE DIF FERENCE OF OPINION ON ITS WORKING AND IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFI CER ASKED THE ASSESSEE TO EXPLAIN THE CONSUMPTION OF ELECTRICITY TO COMPUTE T HE SUPPRESSION OF SALES IN HIS HANDS. 19 42. ON REASSEMBLE AFTER LUNCH, THE LD. SPECIAL AR P OINTED OUT THAT ALL THE TRIBUNALS WORKING UNDER DIFFERENT ACTS ARE INDEPEND ENT BODIES AND THE DECISION OF THE TRIBUNALS ARE BINDING ON THE AUTHORITIES BELOW, WHICH IS A GENERAL PROPOSITION OF LAW. HE FURTHER POINTED OUT THAT IN THE PRESENT CA SE THOUGH NO ORDER WAS PASSED BY THE EXCISE TRIBUNAL BUT HIS ARGUMENT WAS FOR THE BUNCH OF APPEALS. FURTHER, HE POINTED OUT THAT THE THIRD MEMBER OF CESTAT IN SRJ PEETY STEEL PVT. LTD. (SUPRA) TOOK A VIEW ON THE BASIS OF ELECTRICITY CONSUMPTION BUT THERE COULD BE OTHER CIRCUMSTANCES ON WHICH ADDITION COULD BE MADE IN TH E HANDS OF THE ASSESSEE. IN CASE, THERE WERE TWO REASONS AND WHERE THE ASSESSIN G OFFICER HAD TWO EVIDENCES I.E. ADMISSION BEFORE THE EXCISE AUTHORITY AND ADMI SSION BEFORE THE INCOME TAX DEPARTMENT ON ACCOUNT OF ADMISSION OF ADDITIONAL IN COME AND IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION FILED BEFORE THE ASSESSIN G OFFICER, THE ASSESSING OFFICER HAD WORKED ON THE DIRECT EVIDENCE ON THE STATEMENT OF THE ASSESSEE AND CIRCUMSTANTIAL EVIDENCE OF ELECTRICITY CONSUMPTION AND THE ADDITION WAS WARRANTED. 43. THE LD. SPECIAL AR THEREAFTER REFERRED TO THE S ERIES OF DECISIONS REFERRED TO WHILE ARGUING THE APPEAL IN SHREE OM ROLLING MILLS PVT. LTD.. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREM E COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NADU (SUPRA), WHEREIN THER E WAS AN IDENTICAL PROPOSITION ADDRESSED BY THE HONBLE APEX COURT. HE FURTHER ST RESSED THAT WHERE ALL THE EXPENSES WERE BOOKED IN THE BOOKS OF ACCOUNT, THERE IS NO MERIT IN ESTIMATION OF GP AT 4%. IN CONCLUSION, HE STATED THAT THE SUPPRE SSION ESTIMATED IN THE HANDS OF THE ASSESSEE AT REASONABLE BASIS OR EXTRAPOLATION O F 300 DAYS AND GP OF 4% ADOPTED ON THAT BASIS. HE ALSO STATED THAT WHERE T HERE WAS NO EVIDENCE OF SUPPRESSION OF SALES BUT IN LATER YEARS CERTAIN EVI DENCES WERE AGAINST THE ASSESSEE THEN BACKWARD SUPPRESSION COULD BE EXTRAPO LATED. 44. IN REJOINDER, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO EVIDENCE BEFORE THE ASSESSING OFF ICER AND NO ADDITIONAL INCOME WAS OFFERED BEFORE THE ASSESSING OFFICER. THOUGH T HE ASSESSING OFFICER MENTIONED ONLY IN PARA 3 OF THE ASSESSMENT ORDER TH AT THE SETTLEMENT COMMISSION HAD INCORPORATED THE SHOW-CAUSE NOTICE ISSUED BY TH E EXCISE AUTHORITY AND THAT WAS THE ONLY EVIDENCE AVAILABLE BEFORE THE ASSESSIN G OFFICER AGAINST THE ASSESSEE. IT WAS POINTED OUT BY THE LD. AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE THAT THE ASSESSEE HAD COOPERATED WITH THE EXCISE COMMISSIONE R BY COMING FORWARD TO PAY THE DIFFERENTIAL DUTY AND BY NOT PRESSING THE LEGAL STAND IN THE SPIRIT OF SETTLEMENT AND WHERE THE REVENUE HAS NOT CHALLENGED THE SETTLE MENT ORDER OF THE SETTLEMENT COMMISSION, THERE IS NO MERIT IN ANY FURTHER ADDITI ON IN THE HANDS OF THE ASSESSEE. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER W HILE PASSING THE ASSESSMENT ORDER HAD RELIED ON THE ERRATIC ELECTRICITY CONSUMP TION TO WORK OUT THE ADDITION IN THE HANDS OF THE ASSESSEE. HE DISAGREED THAT SETTLEMEN T OF ADDITIONAL INCOME IN LATER YEARS COULD BE THE BASIS FOR WORKING OUT THE EXTRAP OLATION, SINCE EACH YEAR OR THE SEPARATE YEAR. IT WAS FURTHER EXPLAINED BY HIM THA T IN ASSESSMENT YEAR 2006-07 PAPERS OF SALES OUTSIDE THE BOOKS WERE FOUND BY THE INCOME TAX DEPARTMENT AND ON THAT BASIS THE EXTRAPOLATION OF INCOME WAS MADE IN THE HANDS OF SRJ PEETY STEEL PVT. LTD. (SUPRA). HOWEVER, IN THE CASE OF T HE PRESENT ASSESSEE THERE WAS NO SEARCH BY THE INCOME TAX DEPARTMENT. FURTHER, NO P APERS WERE FOUND IN POSSESSION OF THE ASSESSEE BY THE INCOME TAX DEPART MENT TO ASSUME THE SUPPRESSION OF SALES. THE DOCUMENTS FOUND IN THE S EARCH CONDUCTED BY THE EXCISE AUTHORITY COULD NOT BE RELIED UPON FOR MAKING THE A DDITION. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE CESTAT IN RAVI FO ODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). HE FAIRLY ADMITTED THAT THE GRO SS PROFIT ON ADDITIONAL PRODUCTION SHOULD BE ASSESSED IN THE HANDS OF THE A SSESSEE AND WHERE THE SAME IS NOT DECLARED THEN THE SAME IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. FURTHER, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE RELIANCE OF LD. SPECIAL AR ON THE RATIO LAID DOWN B Y THE HONBLE SUPREME COURT IN S. SHANMUGAVEL NADAR VS. STATE OF TAMIL NADU (SUPRA ) IS MISPLACED AS SAME IS ON DIFFERENT FACTS AND OUR ATTENTION WAS DRAWN TO THE PAGES 660 TO 665 OF THE JUDGEMENT IN THIS REGARD. 45. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLAC ED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. 20 46. BEFORE ADDRESSING THE ISSUE ON MERITS, WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF THE PRESENT CAS ES LISTED BEFORE US, WHICH WERE MADE VIDE ORDER SHEET ENTRY DATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEARING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO A RGUE THE APPEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR S EEKING ADJOURNMENT I.E. CONTEMPLATION OF FILING MA AGAINST THE EARLIER ORDE RS OF THE TRIBUNAL, WAS REJECTED. THE APPEALS WERE ADJOURNED TO 13.03.2015 AND THEN 0 5.05.2015 AT THE REQUEST OF THE SPECIAL AR. ON 05.05.2015, THE COUNSEL FOR THE ASSESSEE OPENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR T HE REVENUE. ON 05.05.2015 ITSELF, THE SPECIAL AR FILED WRITTEN SUBMISSIONS AL ONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURNED TO 07.05.2015 FOR FURT HER HEARING. ON 07.05.2015, THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH BY THE SPECIAL AR FOR THE REVENUE. THE COUNSEL FOR THE AS SESSEE STRONGLY OPPOSED THE SAME ON THE GROUND THAT THE SPECIAL AR FOR THE REVE NUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DATE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE-LUNCH HOU R SESSION AND IT WAS DIRECTED THAT THE HEARING WOULD CONTINUE AT 03:00 PM I.E. AF TER THE LUNCH HOUR TO WHICH BOTH THE PARTIES CONSENTED. ON REASSEMBLING OF THE BENC H, THE SPECIAL AR FOR THE REVENUE FURNISHED LETTER UNDER HIS SIGNATURE STATIN G THAT THE PR.CIT, AURANGABAD WAS CONTEMPLATING TO FILE CERTAIN PETITIONS BEFORE THE HONBLE PRESIDENT/VICE PRESIDENT, ITAT, MUMBAI AND THEREFORE THE MATTER SH OULD BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PET ITION CONTEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASK ED TO CONTINUE HIS ARGUMENTS BY THE BENCH, BUT HE REFERRED TO HIS ADJO URNMENT LETTER. 47. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COURT ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN REPLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH WERE GON E INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FOR THE REVEN UE LEFT THE COURT PROCEEDINGS, ON THE OTHER HAND, SMT. M.S. VERMA, LD. CIT-DR AND SHRI RAJESH DAMOR, LD. ADDL.CIT-DR WERE PRESENT IN THE COURT. THEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. ADDL.CIT-DR WERE T AKEN UP FOR HEARING AND THE MATTERS IN ITA NOS.125, 127, 430 & 431/PN/2012 ALON G WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012, ITA NOS.179 TO 182/PN/2012, IT A NOS.656 TO 659/PN/2012, ITA NO.1084/PN/2012, ITA NO.1468/PN/2012, ITA NO.15 58/PN/2012, ITA NO.1629/PN/2012, ITA NO.1516/PN/2012 AND ITA NO.163 8/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 A S PART HEARD. 48. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FI ND THAT THE SPECIAL AR FOR THE REVENUE IS NOT PRESENT IN THE COURT AND THERE IS NO INTIMATION ABOUT HIS ABSENCE IN THE BUNCH OF MATTERS, WHICH ARE LISTED FOR HEARING. THE CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN REPLY SHE STA TED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIANCE OF THE SPECIAL AR IN YESTERDAYS HEARING AND HIS NON- APPEARANCE IN TODAYS HEARING, CONDUCT OF THE SPECI AL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED IN THE BENCH AS TO WHY COST S SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CONTINUED DEFIANCE AND FOR I NTERRUPTING PROCEEDINGS OF THE BENCH. THE HEARING IS TO CONTINUE IN THE LISTED MA TTERS AS ANNEXED ON 13.05.2015 AS PART-HEARD. 49. ON 13.05.2015, SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-D R & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. THE MATTER WAS FINALLY HEARD ON 14.05.2015 WHEN SHRI J.P. BAIRAGRA PRESENT FOR THE ASSESSEE AND SHRI SUN IL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. 50. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSEE ARE FOUR-FOLD ON THE FOLLOWI NG ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NO N-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND 21 C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS AND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JALNA CLUSTER FOUN D BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS; AND WORKING OUT THE ADD ITION BY APPLYING GP RATE OF 4% ON THE ALLEGED SUPPRESSION OF SALES, AFTER RE JECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHA SES RELATING TO SUPPRESSION OF SALE. 51. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE TOTAL SU PPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDULGING IN CLANDESTI NE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN-ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OFFICER. 52. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WITH WRITTEN SU BMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAWS RELIED UPON BY THE RESPECTIVE AUTHORIZED REPRESENTATIVES. IT MAY BE PUT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE RELATABLE TO THE ADDITION M ADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EVASION OF DUTY ON AC COUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 53. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFFERENT ISSUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS COMPLETED UNDER SECTION 143 (3) R.W.S. 148 OF THE ACT, THE ASSESSEE HAS RAISED THE ISSUE AGAINST RE-OPENING OF ASSESSMENT, NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 AND ALSO N ON-SERVICE OF NOTICE UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SEC TION 147 OF THE ACT. HOWEVER, IN SOME CASES, THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE-OPENING OF THE A SSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE PRESENT BUNC H OF APPEALS RELATING TO SHREE OM ROLLING MILLS AT THE OUTSET STATED THAT THE GROU NDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE-OPENING OF THE ASSESSMENT UNDER SECT ION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 OF THE ACT , ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 54. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRO DUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUP PRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPPRESSE D PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PAR TIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRIBUNAL IN S RJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO THE DECISION OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. 55. WHILE ARGUING THE APPEALS IN THE LEAD CASE OF S HREE OM ROLLING MILLS PVT. LTD. ON 05.05.2015, THE LD. SPECIAL AR FILED WRITTE N NOTE AND MADE ELABORATE SUBMISSIONS AND TOOK US THROUGH THE PAGE TO PAGE OF NOTE AND ALSO RELIED ON SERIES OF CASE LAWS. HE CONTINUED HIS ARGUMENTS IN THE PRE-LUNCH HOUR ON 07.05.2015. ON THE PERUSAL OF THE WRITTEN NOTE FIL ED BY THE LD. SPECIAL AR AND ON COMPARISON OF THE SAID WRITTEN NOTE WITH THE WRITTE N NOTE DATED 05.11.2014 FILED BY HIM BEFORE THE TRIBUNAL IN THE CASE OF M/S. SRJ PEE TY STEELS PVT. LTD., (SUPRA) WHICH IS A SISTER CONCERN OF SHREE OM ROLLING MILLS PVT. LTD., WE FIND THAT THE SAME ARE IDENTICAL. WE CALLED FOR APPEAL FOLDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND FOUND THAT THE ARGUMENTS RAISED BY THE LD. SPEC IAL AR IN THE CASE OF THE 22 PRESENT ASSESSEE BEFORE US WERE REPEATED BY THE LD. SPECIAL AR. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS IDENTICAL TO THE I SSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER, THE L D. SPECIAL AR STRESSED THAT THE ISSUE WAS AT VARIANCE AND MADE ELABORATE SUBMISSION S. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) IS A C ASE OF FURNACE, WHICH IS ENGAGED IN THE MANUFACTURE OF INGOTS / BILLETS, WHEREAS MAN UFACTURING OF TMT BARS IS CARRIED OUT BY SHREE OM ROLLING MILLS PVT. LTD. BY USING IN GOTS / BILLETS. IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THERE WAS AN OR DER OF CENTRAL EXCISE COMMISSIONER, AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. THE ASSESSEE F ILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER OF CESTAT DELETED THE ADDITION MADE IN THE HANDS OF RESPECTIV E FURNACE CASES. HOWEVER, IN THE CASE OF THE ASSESSEE BEFORE US, THERE IS NO ORD ER OF CCE, AURANGABAD AND THERE IS NO ORDER OF CESTAT. IN SOME OF THE YEARS, THE OWNERS OF ROLLING MILLS ON THE BASIS OF CERTAIN INFORMATION GATHERED BY THE DG CEI HAD MOVED A PETITION BEFORE THE SETTLEMENT COMMISSION AND OFFERED ADDITI ONAL INCOME, WHICH WAS ACCEPTED BY THE SETTLEMENT COMMISSION IN ENTIRETY. IN SOME CASES, SUCH OFFER OF ADDITIONAL INCOME WAS BEFORE THE EXCISE AUTHORITIES , WHO IN TURN, ACCEPTED THE SAME. THE ASSESSING OFFICER IN THE CASE OF ROLLING MILLS I.E. IN THE HANDS OF THE ASSESSEE BEFORE US WAS OF THE VIEW THAT BECAUSE OF ERRATIC CONSUMPTION OF ELECTRICITY, IN TURN, RELYING ON THE DATA OF CONSUM PTION OF ELECTRICITY AS PER US STANDARDS, CAME TO THE CONCLUSION THAT THERE WAS SU PPRESSION OF PRODUCTION BY THE TMT BARS MANUFACTURERS IN JALNA CLUSTER ON THE GROU ND OF VARIANCE IN CONSUMPTION OF ELECTRICITY VERSUS PRODUCTION. THE ASSESSING OF FICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING ON THE ADDITION MADE IN THE HAND S OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), IN TURN, ON THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDITIONS IN THE HANDS OF PRESENT SET OF ASSESSES BEFORE US. 56. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/S. SRJ PEETY STE ELS PVT. LTD., ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IN TURN, WAS THE BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE THEREIN BY C CE, AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THAT SINCE THE ORDER OF THE C CE, AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. THE OTHER ASPECTS OF THE IS SUE THAT THE ASSESSEE THEREIN HAD MADE THE PETITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVEST IGATION OR MATERIAL COLLECTED BY THE ASSESSING OFFICER, THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-0 8. FURTHER, IN ASSESSMENT YEAR 2008-09, THERE WAS NO ADMISSION OF ANY CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMEN T COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER EVIDENCE BEING BROUGHT ON RECO RD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. WAS SUMMARIZED U NDER PARA 9, WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDI NG OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOME REASONAB LE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT @ 4% ON THE VALUE OF ALLEGED SUP PRESSED PRODUCTION/SALES AND ACCORDINGLY, PARTLY SUSTAINED THE ADDITIONS. NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39,20,36,546 /- IN THE A.Y. 2007-08 AND RS.40,75,72,486/- IN THE A.Y. 2008-09 ON ALLEGED SU PPRESSION OF PRODUCTION/SALES AND; 23 (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT PICTURE O F THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED. 57. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSIONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE REJOINDE R OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, TH E TRIBUNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT ON 05-11-2014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECI SIONS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BI LLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE W AS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHILE COMPLETING THE ASSESS MENT U/S. 143(3) OF THE ACT, IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICIT Y CONSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGHER SIDE AS COMPARED TO THE QUAN TUM OF PRODUCTION DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILLETS. SUBSEQUENTLY, ON THE BASIS OF THE I NFORMATION RECEIVED FROM THE OFFICE OF THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29-0 3-2010 AS WELL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPR ESSED PRODUCTION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INIT IATED THE RE-ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE C OMPANY U/S. 147 OF THE ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISS UING THE NOTICE TO THE ASSESSEE COMPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OF FICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEI VED FROM THE CENTRAL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGENCE) AGAINST THE FEW BROKERS AND SUB-BROKERS WHO WERE INVOLVED IN THE TRADING INTO THE INGOT/BIL LETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FIL ED BY THE ASSESSEE BEFORE THE CENTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION, MU MBAI BENCH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETTING IMMUNIT Y FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED S UPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFO RMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATION ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03- 2006 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE A CTION U/S. 132(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 1 53A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 2006-07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRIMINATING EVIDE NCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPA RED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER REFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT AND CERT AIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAMED BY THE ASS ESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS. 2007-08 AND 2008-09 BE FORE US ARE IMMEDIATELY NEXT ASSESSMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUEN CE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION OR ANY ENQUIR Y IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX AUTHORITIES. IN TH E ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON T HE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING BEFOR E THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI. THE INVESTIGAT ION WAS CARRIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGCEI, AGAINST FEW BROKERS/ SUB-BROKERS AND THOSE BROKERS 24 GAVE THE NAMES OF MANY COMPANIES WHO ARE IN THE MAN UFACTURING OF INGOT/BILLETS AND TMT BARS. AS PER THE STATEMENT GIVEN BEFORE TH E CENTRAL EXCISE AUTHORITIES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI ANIL D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED T HAT THEY WERE INVOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGH MENT SLIPS ONLY AND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROVIDING F AKE TRADING BILLS AND CHALLANS WHICH ACCOMPANIED THE VEHICLES CARRYING THOSE CONSI GNMENTS. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVE R THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTINAT ION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB-BROKERS ALSO ADMITTED THA T THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSI ON OF RS.100/- PER MT. THE ASSESSING OFFICER HAS DISCUSSED THE INFORMATION GAT HERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA NOS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGAINST THE BROKERS AND SU B-BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE A SSESSEE AS WELL AS THE OTHER MANUFACTURERS WHO WERE INVOLVED IN CLEARING THE EXC ISABLE GOODS WITHOUT PAYMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLE TS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIES, THE ASSESSEE WHO IS MAN UFACTURING OF INGOTS/BILLETS SUPPLIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER A LSO REFERRED TO A STATEMENT OF SHRI SURENDRA S. PEETY, MANAGING DIRECTOR OF THE AS SESSEE RECORDED ON 12-01- 2007, BY THE DGCEI WHO ALLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. INGOTS/ BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MIL LS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMEN T COMMISSION AND PAID THE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/- FOR CLEA RING THE GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AUTHORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN T HE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONCERNED WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER IN HIS DIS CUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF T HE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS G IVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING O FFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDI A INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TE CHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN INDUC TION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE US ED. THE ASSESSING OFFICER ALSO REFERRED TO THE TECHNICAL REPORT OF THE IIT, W HICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS W HERE MELTING SCRAP IS USED AS AN INPUT, VARIES FROM 555 TO 754 UNITS AND WHERE S PONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSME NT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONSIDERING THE ELE CTRICITY CONSUMPTION DECLARED BY THE ASSESSEE AND THE PRODUCTION RATE OF UNITS OF EL ECTRICITY PER METRIC TON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH REASONABLE, FA IR AND JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCOUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT O RDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVING THE REA SON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS SUPPRESSED THE PRODU CTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTION OF THE A.Y. 2007-0 8 AS UNDER: 25 A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT IN THE ORDER DATED 31-12-2008 AND MADE THE NET ADDITION OF RS.30,76,35 ,042/-. SO FAR AS A.Y. 2008- 09 IS CONCERNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008-09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008-09, THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, BUT FINALLY THE A SSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CE NTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETERMINED IN THE ADJUD ICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION. IN THE COMPUTATION FOR THE A.Y. 2008-09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTIONING RS. (- ) 1,91,62,000/- AS PER THE ORDER U/S. 143(3) WHEN I N FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008-09. 58. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE , THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSING OFFICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERMINED BY THE CCE, AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY. THE B ASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFES SOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CASES OF FURNACE OWNER S HELD THAT THE ORDER OF CCE, AURANGABAD WAS NOT SUSTAINABLE AND HAD TO BE C ANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA). THE R ELEVANT FINDING OF THE TRIBUNAL IN TURN, INCORPORATING THE ORDER OF THIRD MEMBER OF CE STAT IN PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE PRODUCTIO N/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD ON THE BASIS OF POWER CONSUMPTION. THE COPY OF THE ADJUDICATION ORDER PA SSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE TAX, AURANGAB AD DATED 28-08-2009 (IN SHORT REFERRED TO AS THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. THE CCE, AURANGABAD HAS O BSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF PO WER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRU TINY OF THE VARIOUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE V ALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIES, COST O F MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT), KANPUR AND HAS OBSERVED THAT AS P ER THE SAID TECHNICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACT URE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MI X OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEI R ELECTRICITY BILLS, THE AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODUCTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 UNITS (MAXIMUM LIMIT) OF ELECTR ICITY FOR PER MT OF MS INGOTS PRODUCED, IT IS NOTICED THAT THERE IS A HUGE DIFFER ENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEE S RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFUL LY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WI TH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED THEMSELVES I N THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO R EFERRED TO NON-MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION RECORD MORE P ARTICULARLY IN FORM G-7. THE LD. 26 COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINA TION OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABAD. THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSI BLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS OF THE TRIB UNAL. THE LD. COMMISSIONER ALSO RELIED ON THE INVESTIGATION MADE BY THE DGCEI AND S HOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SE TTLEMENT COMMISSION AND ADMITTED THE EVASION AND PAID THE EXCISE DUTY AND O BTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DE MAND RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXT ENT OF RS.33,07,22,069/-. 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENT RAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEM BERS OF THE CESTAT, I.E. LD. VICE-PRESIDENT AND LD. TECHNICAL MEMBER AND THE MAT TER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTINGS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRI VENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNALS DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STEEL (SUPRA) AND HANS CASTINGS PVT. LTD. (S UPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDER PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE A ND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY AP PLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICIT Y CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIFICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GO BINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSH NEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATE D 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL MAKING [THUS NOT FOR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUMPTION, AND ANOTHER LETTER DATED 27 5.4.2008 OF ELECTROTHERM AGREEING-., WITH .THE VIEW S OF INDUCTION FURNACE 'ASSOCIATION AND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMPTION. 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICITY CONSUMPTIO N FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOWING DIFFERENT REPORTS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT C OMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI , GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIV E DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CC E, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSE D, THERE WAS NO REASON FOR THE COMMISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PER REPORT OF DR. BATRA, FO R ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTED BY TH E DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HI GHER THAN THAT REPORTED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITH OUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKE RS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DEPOSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS SUCH BEC AUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTROVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PRE MISES, AND NON- ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLO YED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORDS OF SE CURITY OFFICERS, DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; 28 (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF G OODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUC H AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT C HECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY TH E CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIG NOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVID ENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE , NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMITTED TO J USTIFY THE DEMANDS RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTAN T APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLAN ATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CAS ES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FIN DINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CH ALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVE LLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (S UPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFER ENT DATES TO ADOPT-THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW T HAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BAS IS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BE EN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACT ORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPTED AS A N ORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESE NT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER CANNOT B E PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIA TE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF TH E APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGNED DEMAND BASED MERELY ON ASSUMPTIONS AND PRE SUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIF IED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF A LLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT I T ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF A NY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ON US, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 29 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLANDESTINE C LEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRI CITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY-'FROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNAL IN RA CASTING (SUPRA). THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IM PUGNED ORDER IS ITSELF INADMISSIBLE, AND NO OTHER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUE THAT FURNACES INSTALLED IN THE FACTORY OF P RESENT APPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA) , HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT , NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SO UGHT TO RELY ON AN ORDER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS P VT. LTD., V/S. CCE, HYDERABAD-II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (SC), RELIED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNICAL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJ UDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS DEFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBABILITIES. HOWEVER, IT CANN OT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS, REGARDING THE CLAI M OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOTS HAS REDUCED IN FACTO RIES OF ALL THE APPELLANTS, I AM OF THE VIEW THAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQU ENT PERIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTI ON. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UP TO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HO WEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTRIC ARC FURNAC E IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THER E IS NO SUCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE LETTER OF M R. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPTION IN INDUCTION F URNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECORD. SINCE, VARYING REPO RTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA) IS SQUARELY APPLICABLE . 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER T RADE TAX, U.P, - 2007- TIOL-14-SC-CT, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF IN COME TAX, 2014-TIOL- 203-HC-AHM-IT, AND AN UNREPORTED ORDER DTD. 28/9/20 10 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWE R CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000 -01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT Y EARS 2001-02 AND 2002-03.THIS WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS O F THE CASE ARE THAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS , NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PROD UCTIVITY AS COMPARED TO THAT IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN-PROGRESS IN THE BOOKS OF ACCOU NTS. I AM THEREFORE OF THE OPINION THAT THESE CASES, APART FROM BEING UNDE R STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTA INING THE FINDINGS 30 RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI- BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONSIDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND SILK MILLS (SUPRA), A S ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS, 2012 (275) E.L.T. 232 (TRI . - DEL.) THE TRIBUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND A LLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVIDENCE OF POWE R CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON 'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDER IS PLACE D AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE THAT THE LD . COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAI NST SOME BROKERS AND IN CONSEQUENCE THE SHOW CAUSE NOTICES (SCN) WERE ISSUE D TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIE S CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY. HE NCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BROKERS AND SUB-BROKERS REFE RRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AURAN GABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSM ENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 2008-09, THE ASSESSIN G OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHOR ITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS S EEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007-08. AS VARY BASIS O F THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION T HE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. C IT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL LEGS TO STAND. 59. THE TRIBUNAL THEREAFTER, DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. TECHNICAL MEMBER OF CESTAT WAS A LEGAL ORDER. THIS PLEA OF THE LD. SPECIAL AR WAS REJECTED BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 60. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CASE O F SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDE R HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING THE VALUE OF AL LEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VIDE PARA 19. THE RELEVANT O BSERVATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WERE AS UND ER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMEN T COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BA SIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BR OKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NOTICE WAS I SSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANGABA D IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE I NVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMEN T COMMISSION, 31 ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE H AS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE AS SESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FINDINGS IN THIS CASE ARE BASED O NLY ON MATERIAL AND EVIDENCE THAT HAVE BEEN BROUGHT ON RECORD IN THE IN STANT CASE. 61. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION RECEIVED FRO M THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY THE THIRD MEMB ER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PARA 21 THAT THE INVESTIGATION BY T HE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION WERE CONSIDERED BY THE CC E IN ITS ADJUDICATION ORDER, WHICH IN TURN, WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET- ASIDE, HENCE, IT WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR, WHICH ARE IN THE CONTEXT OF ADMISSION O F THE DIRECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 62. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRI BUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGU MENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF C ESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER READS AS UNDER: - 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICU LARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON-SEC. 17, SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MADE BY THE REVENUE BU T THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMATION RECEIVED FRO M THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVER, AS OBSERVED A BOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE, FOUNDATION OF ASSESSMEN TS FOR A. YRS. 2007-08 & 2008- 09 DO NOT EXIST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GETS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER, INVE STIGATION BY DGCEI AND PROCEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALS O BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE . HENCE, WE DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD . SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF ADMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE NOT RELEVANT NOW THOUGH GOOD FO R ACADEMIC DISCUSSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTR ICITY CONSUMPTION, THE SAID ISSUE WAS ALSO BEFORE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT H OW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 19 44 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETH ER THAT ORDER IS RIGHT OR WRONG. 63. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIB UNAL (INCOME-TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WH ETHER THAT ORDER WAS RIGHT OR WRONG. 64. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAIN ST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UNDER SECTION 153A R .W.S. 143(3) OF THE ACT. THE ASSESSEE THEREIN I.E. M/S. SRJ PEETY STEELS PVT. LT D. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS REPORTED IN 137 TTJ (PUNE) 627. THE 32 TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATING TO ASSESSM ENT YEARS 2000-01 TO 2006-07 UNDER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SEIZURE, IT WAS ALSO HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOTS / BILLETS DEPENDING ON VARIOU S FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT IT HAD SU PPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH CO URT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATED 10.02.20 14 IN THE CASE OF ASSESSEE AND OTHER COMPANIES BY THE HONBLE BOMBAY HIGH COUR T AND THERE WERE OBSERVATIONS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WHILE DECIDING THE APPEA L OF M/S. SRJ PEETY STEELS PVT. LTD. IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT I N THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/ S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE ASSESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR T HE A.YS. 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSUMPTION OF THE ELECTRI CITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASIS OF ELECTRICITY CONSU MPTION AND THE SAME WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN ALLE GED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED INCOME IN THE CASE OF THE ASSES SEE. THE ASSESSING OFFICER TOOK 1,600 UNITS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORK ED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS W HILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OF FICER HAD SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHO LE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROU P, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WELL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 2000-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOMPANIED BY ALL REQUI SITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLET ED. DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIALS WERE FOUND REL ATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FO R THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED B EFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SA ME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOL LOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICITY CONSUMPT ION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000-01 24331059 18,524.239 1313 2001-02 25528565 17,010.558 1501 2002-03 31404354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 33 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL DETAILS RE GARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DEPARTMENT. IF THE DEPAR TMENT HAD ANY DOUBTS REGARDING THE SAME, IT COULD HAVE BEEN RAISED DURIN G THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS U NDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE CO URSE OF SEARCH RELATING TO ANY OF THESE ASSESSMENT YEARS, THE ASSESSMENTS F OR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005-06 ARE NOT C ORRESPONDING TO THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NO RMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREADY ON RECO RD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUCH COU LD BE SAID TO BE PENDING ON THE DATE OF INITIATION OF SEARCH AND ABA TED IN LIGHT OF THE PROVISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO I S NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF THE ASSE SSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB-S. (1) OR ACCO UNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDE D IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CE RTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL THE YEARS UNDER CONSIDERATION, THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS O F ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CER TAIN PRODUCTION AND RESULTANT CONCEALED INCOME FOR EACH YEAR UNDER CONS IDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN THE W HOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPT ION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO- CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN AB SENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUAL ITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, POWER INTER RUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. T HE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRE CT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFAC TURE OF ROUND/TMT BARS AND ARRIVED AT A CONCLUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASST. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF THE ASSESSMENT I S INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. YR. 2006-07 CANNO T HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE ASSESSEE COMPANY F ROM THE ASST. YRS. 34 2000-01 TO 2005-06. THEREFORE, REJECTION OF BOOKS F OR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CO NSUMPTION OF ELECTRICITY AND APPLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005- 06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CO NSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT THE AS SESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION . THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE INCOME-TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APPEAL WA S DISMISSED VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSES SEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE CATEGORICAL OB SERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSU MPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEARCH W AS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 HAD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOCUMENTS AND PROCEEDI NGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, N O INCRIMINATING MATERIAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD H AVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE C ONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSI DERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT RE PORT ALSO CONTAINS THE UNIT PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YE AR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. TH E FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX AP PELLATE TRIBUNAL REFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELE CTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT, WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S. 153A OF THE ACT. THE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT Y EARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MAT ERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NOR MAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN INTO CONSIDERATION A ND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED PRODUCTION CA LCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR TH ESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUM PTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUM ENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN C ONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS TH AT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN T HE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINST THE ASSESSEE FOR ALLEGED SU PPRESSION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THA T IN A.YS. 2007-08 AND 2008-09, NO INVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH AR E IMMEDIATE NEXT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERA TION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AN D OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTAN T TO DECIDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMP TION OF ELECTRICITY. 35 65. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09, NO INVESTIGATION WAS DONE BY T HE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATELY PRECEDING YEAR, WHEREIN DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOUND I N THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED S UPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING THE APPEAL IN M /S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UN DER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PR ODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION REC EIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBU NAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX AP PELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF T HE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED O N RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVIC E TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECTS OF T HE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGH ER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SE RVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTIO N QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT TH E AUTHORITIES INTERVENED LAWFULLY RECORDING THE OUTPUT IN THE PRESENCE OF WI TNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL HELD THAT T HEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESS IVE EXERCISE OF ITS JURISDICTION TO THE DETRIMENT OF JUSTICE. THE CUSTO MS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTIO N STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HE LD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LAW AN D COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO S HOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE REM OVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STAND. BOTH TH E APPEALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL RELIEF, IF AN Y.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY THE HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A-108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CAS E WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUP PRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF T HE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (S UPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORI CALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT T HE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THA T THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID FINDINGS OF THE CUS TOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT IN ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTME NT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNE XPLAINED INVESTMENT 36 MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUN T. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 AN D 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRODUCE 1 M T OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGING DIRECTOR O F THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) BEFORE T HE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDI TION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OUR ABOVE DISCUSSIO N, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY LD. CIT(A) IN BOTH THE ASSESSMENT YEARS BASED ON THE ORDER PASSED BY THE C CE, AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURING OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE A DDITIONS MADE TOWARDS THE ALLEGED SUPPRESSION OF PRODUCTION AND SALES AT ENTI RETY AND ALLOW THE GROUND NOS. 3, 4, 5, 6 & 8 IN THE A.Y. 2007-08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2008-09. 66. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GROSS PROFIT TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FI NDING THAT SINCE THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE HAVE BEEN DELETED , THERE WAS NO MERIT IN ANY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RE SPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONL Y REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS THE ALLEGED SUPPRESSION OF PRO DUCTION/SALES AND WHICH WAS DETERMINED ON THE BASIS OF THE ADJUDICATION ORDER P ASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPINION OF DR. BATRA, IIT, KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSESSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE A DDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. WE, THEREFORE, HO LD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE, A CCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISS UE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008- 09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIO NS MADE BY THE ASSESSING OFFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2 007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE O BJECTION FOR MAKING THE ADDITION OF RS.37,69,582/-. THE SAID ADDITION IS M ADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UNDISCLOSE D INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS AN AVERA GE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE FOR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.37,69,582/-. IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS CONFIRMED THE ALLEGED SUPPRESSION OF PRODUCTION/SAL ES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES, HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 67. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UNDER:- 37 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAVE ALREAD Y ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRESSION OF THE P RODUCTION/SALES. AS THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE . ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 68. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA ). SINCE THE BASIS FOR ADDITION WAS THE CONSUMPTION OF ELECTRICITY, THOUGH ON DIFFE RENT GROUND I.E. CONSUMPTION OF ELECTRICITY AS PER US STANDARD. HOWEVER, THE LD. S PECIAL AR STRESSED THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS AT VARIANCE. VIDE HIS WRITTEN SUBMISSIONS, HE HAS RAISED IDENTICAL GROUNDS OF APPEAL AND HAD E LABORATELY TOOK US THROUGH VARIOUS SUBMISSIONS AND HAS RELIED ON DIFFERENT CAS E LAWS. THE CONTENTION OF THE LD. SPECIAL AR IS SHEER WASTE OF PROCESS OF LAW, WH EREIN THE SUBMISSIONS MADE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. L TD. (SUPRA) HAVE BEEN VERBATIM REPEATED IN THE APPEAL FILED AGAINST THE ASSESSEE B EFORE US I.E. SHREE OM ROLLING MILLS PVT. LTD. 69. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF E LECTRICITY BASED ON THE CONSUMPTION OF ELECTRICITY AS PER US STANDARDS. TH E ASSESSING OFFICER HAD NOT ADOPTED THE US STANDARDS IN ENTIRETY, BUT HAD ALLOW ED A CREDIT OF 25% AND WORK THE ADDITION. THE ADDITION IN THE HANDS OF SISTER CONC ERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ONE DR. BATRA WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD MEMBER OF CESTAT HAD DELE TED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. HOWEVER, IN THE CASE O F ASSESSEE BEFORE US, THERE IS NO ORDER OF CCE, AURANGABAD OR OF CESTAT AND THE AS SESSING OFFICER WORKED OUT THE ADDITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY VIS--VIS THE CONSUMPTION AS PER US STANDARDS AFTER GIVING BENEFI T OF 25%. FOLLOWING THE SAME LINE OF REASONING AS IN THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE A SSESSEE ON SURMISES. BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR BY WAY OF WRITTEN SUBMISSIONS HAS RAISED IDENTICAL ARGUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUNAL HAS ALREAD Y DECIDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THE RATIO OF THE SA ID DECISION IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. 70. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR BEFORE US DURING THE COURSE OF HEARING OF THE BUNCH OF APPEALS WAS THAT IT HAD MOVED MISCELLANEOUS APPLICATION AGAINST THE ORDER OF TRIBUNAL DATED 16. 01.2015 AND THE HEARING OF THE PRESENT APPEALS BE KEPT IN ABEYANCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED FOR H EARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN DATE DI SMISSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT I N THE SAID MISCELLANEOUS APPLICATION FILED BY THE REVENUE AND NO REMEDY IS A VAILABLE TO THE REVENUE UNDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF, THE NE XT OBJECTION OF THE LD. SPECIAL AR FOR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEE LS PVT. LTD. (SUPRA) ALSO STANDS DISMISSED. 71. FURTHER, THE TRIBUNAL IN THE CASE OF ANOTHER RO LLING MILLS I.E. MAHAVEER STEEL RE-ROLLING MILLS VS. ACIT IN ITA NOS.1072 TO 1076/P N/2012 AND ACIT VS. MAHAVEER STEEL RE-ROLLING MILLS IN ITA NOS.1446 TO 1450/PN/2012, RELATING TO ASSESSMENT YEARS 2004-05 TO 2008-09 VIDE ORDER DATE D 05.03.2015 HAD APPLIED THE RATIO LAID DOWN BY THE TRIBUNAL IN M/S. SRJ PEE TY STEELS PVT. LTD. (SUPRA) AND HELD THAT THE ADDITION MADE TOWARDS ALLEGED SUPPRES SED PRODUCTION AND SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY WAS DELETED . IN OUR OPINION, THE ADDITION MADE BY THE ASSESSING OFFICER BY RELYING ON THE CON SUMPTION OF ELECTRICITY UNDER US STANDARDS, BY NO STRETCH OF IMAGINATION, CAN BE APPLIED UNDER INDIAN CONDITIONS, IN THE ABSENCE OF ANY FINDING THAT THE CONDITIONS F OR CARRYING OUT MANUFACTURING 38 ACTIVITY IN US AND INDIA WERE SAME. THE BENEFIT OF 25% ALLOWED IS WITHOUT ANY BASIS AND HAS NO LEGS TO STAND. THE ADDITION MADE BY THE ASSESSING OFFICER IS ON PURE ESTIMATES, CONJUNCTURE AND SURMISES AND THE SA ME CANNOT BE ACCEPTED. WE HEREBY DELETE THE SAME. 72. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHE RE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESS EE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. THE LD. SPECIAL AR FOR THE SAID PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE REL ATING TO ASSESSMENT YEAR 2006- 07. THE CASE OF THE REVENUE BEFORE US WAS THAT WHE RE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PART OF THE PERIOD, THEN IN VIEW OF THE ORDER OF THE SETTLEMENT COMMISSION AND ALSO SINCE THE ASSESSEE H AD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER , THE SALES FOR THE ENTIRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCO UNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTAIN BROKERS A ND SUB-BROKERS. CONSEQUENT THERETO, SHRI SRJ PEETY, PERSON IN-CHARG E OF SHREE OM ROLLING MILLS PVT. LTD. ADMITTED TO THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMENT COMMISSIO N FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY OF RS.9,000/-. T HE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT THE ADDITIONAL INCO ME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFORMATION WA S AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , BUT NO OTHER INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COM PLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER ON TH E OTHER HAND, WAS OF THE VIEW THAT THE ASSESSEE HAD NOT CORRECTLY DISCLOSED THE P RODUCTION OF TMT BARS. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSU MPTION, FOR WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE RESULTS OF ELECTRICI TY CONSUMPTION UNDER US STANDARDS AGAINST WHICH, HANDICAP OF 25% WAS GIVEN. THE ASSESSING OFFICER APPLYING THE FORMULA WORKED OUT THE SUPPRESSED PROD UCTION AND SALES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTIO N / SALES ON ACCOUNT OF SUCH FORMULA COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND, STRESSED THAT WHERE THE ASSESSING OFFIC ER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAY MENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED I N THE HANDS OF THE ASSESSEE. HE STRESSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTIN E REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WA S FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE A DDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BECAUSE THE ASSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY OF SUPPRESSION, THE ADDITION IN THE HANDS OF THE AS SESSEE COULD BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FOR 300 DAYS, I N VIEW OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME. 73. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE AUTHORITIES DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, HOWEVER, NO S EARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE. IN ORDER TO BUY PEACE OF MIND, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFORE THE S ETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION IN T OTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION W AS TO BUY PEACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SINCE THE OBJECT OF MOVI NG PETITION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHER E ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS, THE AUTHORITIES HAVE THE PO WER TO RE-VISIT THE OFFER MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAI LABLE AGAINST THE PERSON MAKING THE OFFER, THEN THE FIGURES OF SETTLEMENT CA N BE INCREASED. HOWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEE N ACCEPTED FOR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO BE RESTRICTED T O THE NUMBER OF DAYS FOR WHICH 39 IT WAS OFFERED. THE BASIS OF ANY SETTLEMENT IS THE OFFER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE SETTLEMENT AND WHERE THE EVIDENCE HAS BEEN FOUND FOR PART OF THE YEAR, SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATION. IN CASE S WHERE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMM ISSION, THEN NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE O N ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESSED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE FOR THE BALANCE PERIOD. 74. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSION, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOME ON SUCH OFFER OF SETTLEMENT WAS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER, NO FURTHER I NQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSESSING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPEAL IS WHETHER ANY E XTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGA TIVE. 75. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 6 27, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON T HE BASIS OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE INCOME-TAX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH WERE ADMITTED BY THE AS SESSEE TO REFLECT SUPPRESSION OF SALES. ON THE BASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAPOLATED, WHICH ORDER OF THE TRIBUNAL WAS APPRO VED BY THE HONBLE BOMBAY HIGH COURT. HOWEVER, FOR THE YEAR UNDER CONSIDERAT ION, THERE WAS NO SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME-TAX DEP ARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS MADE BY TH E ASSESSING OFFICER, AS STATED EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE, MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE IN A PRECEDING YEAR, WE FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SALES FOR THE ASSESSMENT YEAR 2007 -08 SHOULD BE MADE IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PE TITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSE SSMENT ORDER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKIN G THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECT RICITY. UNDOUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFO RE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY THE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF ELECTRICITY, WERE BEFORE THE ASSESSI NG OFFICER. HOWEVER, THE ASSESSING OFFICER ADOPTED THE SECOND ISSUE IN THE H ANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OUT THAT THE S AID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHODOLOGIES FOR WORKING OU T THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT BY THE ASS ESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMI SSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN THE HA NDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD. 76. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF T HE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. THE SAID INFOR MATION WAS FORWARDED TO THE CENTRAL EXCISE DEPARTMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER, TH E TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORRO BORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FROM THE POSSESSION OF THE ASSESSEE BY THE EXCISE AUTHORITIE S. 40 77. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT, IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COULD NOT BE RELIED U PON AS EVIDENCE, WHILE EXTRAPOLATING THE SALES AND THE ADDITIONAL INCOME T HEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME-TAX PROCEEDINGS. THE AS SESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED PRODUCTION AND EVE N AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NO T INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTABLISHING SUPPRESSED PRODUCTI ON AND / OR ITS SALE OUTSIDE THE BOOKS OF ACCOUNT. 78. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THIS WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFOR E THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYM ENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY OF PETITION BEF ORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSES SEE COMPANY WAS RECORDED EITHER BY ASSESSING OFFICER OR CIT(A) DURING THE CO URSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE RELIANCE PLACE D UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRIC TED TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE. 79. IN OUR CONSIDERED OPINION, THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER AND CIT(A) AND TH E TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBUNAL JUSTIF YING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FAC TS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDIT ION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS B ASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY THE L D. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 80. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITIO N VIS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 81. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSION AL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY THE HONBLE SUPREME C OURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (S UPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO THE AMO UNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE FOR EXTRAPOLATING THE SAME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGALORE BENCH OF TRIBU NAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXI STENCE OF EVIDENCE OF CONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT B E THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESSMENT YEARS. 82. FURTHER, BEFORE THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA), THE ISSUE WAS IN RELATION TO THE EVIDENCE FOUND OF UNACCOUNTED SALES FOR PART OF THE PERIOD DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOU NTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND THE TRIBU NAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFFICER MAY HAVE PERHAPS BE EN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTI NG YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISCREPANCY. 83. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 41 84. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION A VAILABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHEREIN UNACCOUNTED SALE S WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR T HE REMAINING PERIOD. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESSEE A ND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAPERS SEI ZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSI ON AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD TH AT NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE P ERIOD. THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESUMPTION WAS NOT SUSTAINABLE I N LAW. NO DETAILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUC H FIGURE OR HAD THERE BEEN ANY CONCEALED SALES FOR 9 MONTHS, IT COULD HAVE BEEN DE TECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. THEREFOR E, THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GUESS WORK, PR ESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL FOUND DURING THE C OURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES. SUCH ADDITI ON BASED ON HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GP ON PRE SUMPTION AND SURMISES WERE NOT SUSTAINABLE . THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN I N CST VS. H.M. ESUFALI H.M. ABDULALI (SUPRA). THE LD. SPECIAL AR RELIED ON THE SAID DECISION AND IN VIEW OF THE DECISION OF COORDINATE BENCH ON SIMI LAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPE CIAL AR. 85. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY S TEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED THE ISSUE OF EXTRAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMO VAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILING A PET ITION BEFORE THE SETTLEMENT COMMISSION. 86. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMEN T DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER, IN THE INTERES T OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED B Y THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF J USTICE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTEDLY, DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EVIDENCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST T HE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINS T THE ASSESSEE, BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND, IT HAD DECLARED THE SAID AMOUNT BY WAY OF PETITION BEFORE THE SETTLEMENT COM MISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOTO. IT MAY BE NO TED THAT THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE AS SESSEE, IN CASE, ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER. IT MAY ALSO BE NOTED THAT THE SETTLEMENT ACCEPTED IN THE HANDS OF THE ASSESSE E IS FOR THE FINANCIAL YEAR AND IS NOT RESTRICTED TO THE NUMBER OF DAYS FOR WHICH I T HAS OFFERED. IN OTHER WORDS, ONCE A PERSON MAKES A SETTLEMENT PETITION FOR A PAR TICULAR YEAR ON ACCOUNT OF THE EVIDENCE FOUND FOR PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS OR SUPPRESSED SALES, IN THE ABSENC E OF EVIDENCE FOR THE BALANCE PERIOD. THE ABOVE SAID RATIOS HAVE BEEN LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA), HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGU ING THE ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XIV- B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SA ID CHAPTER IS UNDISCLOSED INCOME OF THE BLOCK PERIOD AND NOT THE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UN DER SECTION 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULA R ASSESSMENT STANDS ON A 42 DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UNDER TAKEN BY THE ASSESSING OFFICER UNDER CHAPTER XIV-B, WHERE THE ASSESSING OFFICER HA D TO ASSESS ONLY THE UNDISCLOSED INCOME. HOWEVER, THE HONBLE BOMBAY HI GH COURT FURTHER HELD THAT UNDER CHAPTER XIV-B, THE ASSESSING OFFICER CANNOT E STIMATE THE UNDISCLOSED INCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 42. EVEN ON MERITS, THE REVENUE HAS NO CASE AGAINST THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR ON THE R ATIO LAID DOWN IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 IS MIS PLACED AS THE ADDITION IN THE HANDS OF THE ASSESSEE IN THAT YEAR WAS MADE ON ACCO UNT OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE INCOME-TAX DEPARTMENT , WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS. HOWEVER, NO INDEPENDENT I NVESTIGATION / INQUIRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE COMPLETI NG ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTHER ASPECT O F THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT COMMISSION HAS BEEN MADE BY T HE ASSESSEE IN ASSESSMENT YEAR 2007-08 ONLY AND NO SUCH PETITION FOR CLANDEST INE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOU NT OF SUCH CLANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR A SSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSESSMEN T UNDER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSE SSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEEN MADE ON ONLY ON THE ISSUE OF E RRATIC CONSUMPTION OF ELECTRICITY, WHICH IS THE BASIS OF ORDER PASSED BY CCE, AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF THE CLANDESTINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED OUT BY THE DGCEI AND THE PETITION BEFORE THE SETTLE MENT COMMISSION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCE EDINGS, BUT SINCE THE SETTLEMENT PETITION FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMENT COMMISSION, NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THIS GROUND, IN THE ABSENCE OF ANY INQU IRY OR INVESTIGATION BY THE ASSESSING OFFICER. ACCORDINGLY, THE RELIANCE PLACE D UPON BY THE LD. SPECIAL AR IN ASSESSEES OWN CASE REPORTED IN 137 TTJ 627 [PUNE] IS MIS-PLACED AND THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. SPECIAL AR IN THI S REGARD. 87. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDERANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUP RA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (S UPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING T HE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WE RE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND S AME HAVE ALREADY BEEN CONSIDERED. 88. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, HAS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTL EMENT COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION . MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAIM OF THE ASS ESSEE OF ADDITIONAL EXCISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MAT ERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THA T THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, THE ASSE SSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY A DMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTIN G THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT 43 THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS FO R THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED C LANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EIT HER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THER E IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTI GATION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFICER H AS FAILED TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF T HE ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES FOR 300 DAYS ON ACCOUNT OF A NY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS. FURTHER, NO ADDITIO N CAN BE MADE IN THE HANDS OF THE ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY T HE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEAR S OR BEFORE THE EXCISE AUTHORITIES. 89. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC C ONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FO R THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVE STMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDEST INELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PURCHA SES UNDER SECTION 69C OF THE ACT. 90. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF T HE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSED PROD UCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. 91. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENUE I.E. AGAINS T APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 14. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF OM RE-ROLLING MILLS PVT. LTD. (SUPRA), THEREFORE, FOLLOWING T HE SAME REASONINGS GIVEN THEREIN WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. HOWEVER, THE AO IS DIRECTED TO INCLUDE ADDITIONAL INCOME IN T HE HANDS OF ASSESSEE ON ACCOUNT OF CLANDESTINE REMOVAL OF GOODS WITHO UT PAYMENT OF EXCISE DUTY AS ADMITTED BY ASSESSEE BEFORE DGCEI, AURANGABAD. 15. THE GROUND OF APPEAL CHALLENGING THE REOPENING OF ASSE SSMENT U/S.147 WAS NOT PRESSED FOR WHICH THE SAME IS DISMISSED A S NOT PRESSED. HOWEVER, SINCE WE ARE ALLOWING THE APPEAL OF THE ASSESSEE ON MERIT THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE NON ISSUE OF NOTICE U/S.143(2) ARE NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. 44 16. SO FAR AS THE GRIEVANCE OF THE REVENUE CHALLENGING TH E DELETION OF ADDITION MADE BY THE AO U/S.40A(3) IS CONCERNED WE FIND TH E LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT PROVISIONS OF SECTION 40A(3 ) ARE NOT ATTRACTED WHEN PROFIT IS ESTIMATED. HOWEVER, SINCE THE O RDER OF THE CIT(A) IS SET-ASIDE ON THE ISSUE OF ESTIMATION OF PROFIT AND THE B OOK RESULT IS BEING ACCEPTED, THEREFORE, IN ABSENCE OF ANY VALID REASON GIVEN B Y THE LD. COUNSEL FOR THE ASSESSEE FOR CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT THE ADDITION MADE BY THE AO AT RS.5,81,687 /- U/S.40A(3) IS UPHELD AND THE ORDER OF THE CIT(A) ON THIS ISSUE IS REVERSED. 17. THE FACTS AND ISSUES IN ITA NO.232/PN/2012, ITA NO . 639/PN/2012, ITA NO.245/PN/2012 AND ITA NO.640/PN/2012 , ITA NOS.289 TO 291/PN/2012 AND ITA NOS. 426 TO 428/PN/201 2 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.231/PN/2012 & ITA NO.6 38/PN/2012 AND OUR DECISION IN ITA NO.231/PN/2012 & ITA NO.638/PN/2 012 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.232/PN/2012, ITA NO.63 9/PN/2012, ITA NO.245/PN/2012 AND ITA NO.640/PN/2012, ITA NOS.289 TO 291/PN/2012 AND ITA NOS. 426 TO 428/PN/2012. 18. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEES AS WELL AS THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 05-08-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER IQ.KS PUNE ; #$% DATED : 05 TH AUGUST, 2015. LRHK &'()*+,+) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ' ( ( ) , +%,$ / THE CIT(A), AURANGABAD 4. ' ' ( , +%,$ / THE CIT, AURANGABAD 5. -., / , ' /' , IQ.KS / DEPARTMENTAL REPRESENTATIVE, ITAT, A PUNE 6. ,1 2 / GUARD FILE. &$ / BY ORDER , - //TRUE C // TRUE COPY // 34 5 /6 / SR. PRIVATE SECRETARY ' /', IQ.KS / ITAT, PUNE