Appeal Details
Counselvise Citation
[2015] 134 COUNSELVISE.COM (IT) 1260 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 5 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-08-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
18-11-2013
Assessment Year
2007-2008
Appeal Filed On
01-03-2012
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.219 TO 221/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 RHISHI STEEL & ALLOYS PRIVATE LIMITED, C-55/7, ADDL, MIDC, JALNA-431 203 PAN NO. AABCR3131P . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.414 TO 416/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S RHISHI STEEL & ALLOYS PRIVATE LIMITED, C-55/7, ADDL, MIDC, JALNA-431 203 PAN NO. AABCR3131P . /RESPONDENT / ITA NOS.216 & 218/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 JAILAXMI CASTING & ALLOYS PRIVATE LIMITED, GUT NO.75, PAITHAN ROAD, TQ. PAITHAN, DIST.AURANGABAD JALNA 431 203 PAN NO. AABCJ4567F . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.418 TO 420/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S JAILAXMI CASTING & ALLOYS PRIVATE LIMITED, GUT NO.75, PAITHAN ROAD, TQ. PAITHAN, DIST.AURANGABAD JALNA 431 203 PAN NO. AABCJ4567F . /RESPONDENT 2 / ITA NOS.224 TO 226/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 MAULI STEEL PRIVATE LIMITED, C-15,ADDL. MIDC, AURANGABAD ROAD, JALNA 431 203 PAN NO. AABCM6718R . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.402 TO 404/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 ITO, WARD-1(3), JALNA . /APPELLANT V/S MAULI STEEL PRIVATE LIMITED, C-15,ADDL. MIDC, AURANGABAD ROAD, JALNA 431 203 PAN NO. AABCM6718R . /RESPONDENT / ITA NOS.227 TO 230/PN/2012 $ % % / ASSESSMENT YEARS : 2005-06 TO 2008-09 GAJLAXMI STEEL PRIVATE LIMITED, F-4, PHASE-II, ADDL, MIDC, AURANGABAD ROAD, JALNA-431 203 PAN NO. AACCG0547R . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.676 TO 679/PN/2012 $ % % / ASSESSMENT YEARS : 2005-06 TO 2008-09 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S GAJLAXMI STEEL PRIVATE LIMITED, F-4, PHASE-II, ADDL, MIDC, AURANGABAD ROAD, JALNA-431 203 PAN NO. AACCG0547R . /RESPONDENT 3 / ITA NOS.243 & 244/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 & 2007-08 ADINATH CONCAST PRIVATE LIMITED, PLOT NO.E-12, PHASE-II, ADDL. MIDC, AURANGABAD ROAD, JALNA 431 203 PAN NO. AAECA9498F . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.636 & 637/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 & 2007-08 ITO, WARD-1(3), JALNA . /APPELLANT V/S ADINATH CONCAST PRIVATE LIMITED, PLOT NO.E-12, PHASE-II, ADDL. MIDC, AURANGABAD ROAD, JALNA 431 203 PAN NO. AAECA9498F . /RESPONDENT / ITA NOS.258 TO 261/PN/2012 $ % % / ASSESSMENT YEARS : 2005-06 TO 2008-09 SAPTASHRUNGI ALLOYS PRIVATE LIMITED, C-3/1, ADDL, MIDC, AURANGABAD ROAD, JALNA-431 203 PAN NO. AAICS2970E . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.680 TO 683/PN/2012 $ % % / ASSESSMENT YEARS : 2005-06 TO 2008-09 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S SAPTASHRUNGI ALLOYS PRIVATE LIMITED, C-3/1, ADDL, MIDC, AURANGABAD ROAD, JALNA-431 203 PAN NO. AAICS2970E . /RESPONDENT 4 / ITA NOS.279 TO 281/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 META ROLLS & COMMODITIES PVT. LTD., GUT NO.48, PHASE-II, MIDC, JALNA-431 203 PAN NO. AADCM3474C . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NOS.408 TO 410/PN/2012 $ % % / ASSESSMENT YEARS : 2006-07 TO 2008-09 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT V/S META ROLLS & COMMODITIES PVT. LTD., GUT NO.48, PHASE-II, MIDC, JALNA-431 203 PAN NO. AADCM3474C . /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 UNDER SECTION 143(3) R.W.S. 147 AND/OR UNDER SECTION 143(3) FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 RES PECTIVELY. FOR THE SAKE OF CONVENIENCE ALL THESE APPEALS WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. THE DETAILS OF THE RES PECTIVE APPEALS ARE AS UNDER : / DATE OF HEARING : 19.05.2015 !' / DATE OF PRONOUNCEMENT: 05.08.2015 5 SR. NO. APPEAL NO. NAME OF ASSESSEE DATE OF ORDER OF THE CIT (A), AURANGABAD ASSTT. YEAR 1. ITA NOS.219 TO 221/PN/2012 RHISHI STEEL AND ALLOYS PVT. LTD. 30-12-2011 2006-07 TO 2008-09 ITA NOS.414 TO 416/PN/2012 2. ITA NOS.216 TO 218/PN/2012 JAILAXMI CASTING AND ALLOYS PVT. LTD. 30-12-2011 2006-07 TO 2008-09 ITA NOS. 418 TO 420/PN/2012 3. ITA NOS.224 TO 226/PN/2012 MAULI STEEL PVT. LTD. 30-12-2011 2006-07 TO 2008-09 ITA NOS.402 TO 404/PN/2012 4. ITA NOS. 227 TO 230/PN/2012 GAJLAXMI STEEL PVT. LTD. 09-01-2012 2005-06 TO 2008-09 ITA NOS.676 TO 679/PN/2012 5. ITA NOS.243 AND 244/PN/2012 ADINATH CONCAST PVT. LTD. 06-01-2012 2006-07 & 2007-08 ITA NOS. 636 AND 637/PN/2012 6. ITA NOS.258 TO 261/PN/2012 SAPTASHRUNGI ALLOYS PVT. LTD. 06-01-2012 2005-06 TO 2008-09 ITA NOS.680 TO 683/PN/2012 7. ITA NOS.279 TO 281/PN/2012 META ROLLS & COMMODITIES PVT. LTD. 30-12-2011 2006-07 TO 2008-09 ITA NOS.408 TO 410/PN/2012 2. FIRST WE TAKE UP ITA NO.219/PN/2012 FILED BY THE ASSE SSEE AND ITA NO.414/PN/2012 FILED BY THE REVENUE. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF INGOTS/BILLETS. IT FILED ITS RETURN OF INCOME ON 21-11-2006 DECLARING TOTAL INCOME OF RS.7,28,329/-. THE RE TURN WAS DULY PROCESSED U/S.143(1) OF THE I.T. ACT. SUBSEQUENTLY, THE C ASE WAS PICKED UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) O N 31-12-2008 DETERMINING TOTAL INCOME AT RS.10,47,746/- WHICH INCLUDES AD DITION ON ACCOUNT OF DISALLOWANCE OF INTEREST AND DONATION AT RS.3,09 ,417/- AND RS.10,000/- RESPECTIVELY . 3. THE AO RECEIVED INFORMATION FROM THE OFFICE OF THE COMMIS SIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VIDE LETTER DATED 29-03-2010 THAT THE ASSESSEE HAD INDULGED IN MANUFACTURE OF FINISHED G OODS AND REMOVAL THEREOF WITHOUT PAYING EXCISE DUTY. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS QUANTIFYING THE ASSESSABLE VALUE OF SUPPRESSED PRODUCTION FOR THE A.YRS. 2006-07 TO 2008-09 WAS ALSO 6 RECEIVED. IN VIEW OF THE SAID INFORMATION, THE AO RECORDED REASONS FOR REOPENING OF THE ASSESSMENT U/S.147 OF THE I.T. ACT AND NOTICE U/S.148 WAS ISSUED ON 04-05-2010. IN RESPONSE TO THE SAME, T HE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED MAY BE TREATED A S RETURN IN RESPONSE TO NOTICE U/S.148 OF THE I.T. ACT. SUBSEQUENTLY, NOTICE U/ S.142(1) AND 143(2) BOTH DATED 12-05-2010 WERE ISSUED ALONG WITH A QUESTIO NNAIRE. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSE SSEE, IN RESPONSE TO STATUTORY NOTICES, PRODUCED THE BOOKS OF A CCOUNTS, FURNISHED THE DETAILS CALLED FOR AND EXPLAINED THE RETURN OF INCOME WH ICH WERE TEST CHECKED. SINCE THERE IS ESCAPEMENT OF INCOME AS PER TH E INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES THE AO ASKE D THE ASSESSEE TO EXPLAIN THE SAME. THE AO THEREAFTER CONSIDERED THE MANU FACTURING PROCESS OF THE ASSESSEE IN DETAIL AND NOTED THAT ELECTRIC ITY WAS ONE OF THE MAJOR COST INPUT IN THE PROCESS OF MANUFACTURE OF INGOTS /BILLETS AND ALSO ACCOUNTED FOR MAJOR SHARE OF EXPENSES. HE NOTED THAT THE ASSESSEE HAD CONSUMED SPONGE AND SCRAP AND THE DATA OF CONSUMPTION WAS COMPARED WITH PURCHASE OF RAW MATERIALS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS SPECIFICALLY ASKED THE ASSESSEE AS TO WHY T HE CONSUMPTION OF ELECTRICITY PER METRIC TONNE SHOULD NOT BE ADOPTED FOR T HE PURPOSE OF CALCULATION OF SUPPRESSED PRODUCTION AS PER THE COMMISSION ER OF CENTRAL EXCISE AND CUSTOMS, AURANGABADS SCN FOR THE REASON TH AT IT IS BASED ON THE TECHNICAL ANALYSIS WITH EXPERT OPINION, DETAILED REASONIN G AND DATA COLLECTED. IN RESPONSE TO THE SAME, THE ASSESSEE BY AN D LARGE REITERATED THE STAND TAKEN BEFORE THE COMMISSIONER OF CENTRAL EXCIS E AND CUSTOMS, AURANGABAD WHICH ACCORDING TO THE AO IS NOT ON SOUND FOOTINGS AND WHICH WAS REJECTED BY THE COMMISSIONER OF CENTRAL EXCISE AND C USTOMS. IN VIEW OF THE ABOVE, AS ALSO THE DETAILED COMPARATIVE ANALYSIS OF DATA PREPARED FROM THE ASSESSEES BOOKS OF ACCOUNTS, PEER ANALYSIS A ND DETAILS FURNISHED THE AO HELD THAT IT IS APPARENT THAT THE RATE OF UNITS O F ELECTRICITY PER 7 METRIC TONNE ADOPTED BY THE COMMISSIONER OF CENTRAL EXCIS E AND CUSTOMS, AURANGABAD IS VERY MUCH REASONABLE, FAIR AND JUS TIFIED. HE ACCORDINGLY CONCLUDED THAT THE RATES FOR CALCULATION OF S UPPRESSED PRODUCTION IN ASSESSEES CASE ADOPTED BY THE COMMISSION ER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD ARE ABSOLUTELY REASONAB LE. HE THEREFORE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF UNACCO UNTED PRODUCTION OF FINISHED GOODS. THE AO FURTHER WAS OF THE O PINION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DO NOT REFLECT THE TRU E AND CORRECT PICTURE OF MANUFACTURING RESULTS FOR WHICH HE REJECTED THE SAME B Y INVOKING THE PROVISIONS OF SECTION 145(1) OF THE I.T. ACT. ACCORDINGLY, THE AO MADE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION. 5. THE AO FURTHER NOTED THAT THE ASSESSEE PURCHASED THE CORRE SPONDING RAW MATERIAL FOR SUCH UNACCOUNTED PRODUCTION IN CASH FOR WHICH NO EXPLANATION WAS OFFERED. THEREFORE, SUCH INITIAL INVESTMENT FO R PURCHASE OF RAW MATERIAL FOR SUCH UNACCOUNTED PRODUCTION WAS TREATE D BY HIM AS DEEMED INCOME OF THE ASSESSEE U/S.69C OF THE I.T. ACT. S INCE THE ASSESSEE HAD ADMITTED TO HAVE SOLD M.S. INGOTS TO THE EXTENT OF 1 25 METRIC TONNE AND 75 METRIC TONNE TO RUTUJA STEELS PVT. LTD. AND VIJA YA ROLLING MILLS SEPARATELY TO THE EXTENT OF RS.35,19,360/- @ 18,048/- PE R METRIC TONNE DURING THE F.Y. 2005-06 AND 2006-07 RELEVANT TO A.YRS. 20 06-07 AND 2007-08 THE AO MADE ADDITION OF RS.17,59,680/- DURING A.Y. 2 006-07 AND ANOTHER RS.17,59,680/- DURING A.Y. 2007-08 U/S.69C OF THE I.T. ACT. 6. THE AO ALSO MADE ADDITION OF RS.3,51,936/- U/S.40A(3) OF THE I.T. ACT. HOWEVER, ACCORDING TO THE AO SINCE BOTH THE AMOUNT S ARE SUBSUMED IN THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION NO S EPARATE ADDITIONS WERE MADE IN THE COMPUTATION SHEET. 8 7. THE CIT(A) NOTED THAT VARIOUS MANUFACTURERS OF MS INGO TS/BILLETS WERE IN APPEAL AND THE CONTENTION OF THE SAID PERSONS WE RE THAT THE UNDISCLOSED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION WAS NOT JUSTIFIED, EVEN THOUGH ADDITION ON ACCOUNT OF CLAND ESTINE REMOVAL OF MS INGOTS/BILLETS IN THE YEAR UNDER APPEAL WAS AGREED T O BUY PEACE OF MIND AND TO AVOID LITIGATION. THE CIT(A) IN THE BUNCH OF AP PEALS 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, 9 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 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. 10 (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. (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. 11 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE A S WELL AS THE REVENUE ARE IN APPEAL BEFORE US BY TAKING THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE INCOME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER 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 LD. C.I.T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS. 13,01 ,57,459/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON TH E BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD AND ON THE BASIS OF EVASION OF EXCISE DUTY BY STEEL MANUFAC TURERS IN JAMA CLUSTER, FOUND BY DIRECTORATE GENERAL OF CENTRAL EXCISE AND C USTOMS (DGCEI). 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE SUPPRESSION OF SALES OF RS. 13,01,57,459/ - ON THE BASIS OF THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD WHEREIN THEY HAVE RELIED ON THE CONSUMPTION OF ELECT RICITY VIS-A-VIS PRODUCTION ON THE BASIS OF AN ARTICLE WRITTEN BY DR. N. K. BATRA , PROFESSOR OF IIT, KANPUR I.E. ON PRESUMPTION AND ASSUMPTION AND WITHOUT ANY EVIDENC E OF PURCHASE OF RAW MATERIAL OR SALES OF FINISHED PRODUCTS OUT OF BOOKS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON TH E GROUNDS OF MONTHLY VARIATION IN CONSUMPTION OF ELECTRICITY VIS-A-VIS PRO DUCTION. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER 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. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER 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. 9. 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. 13,01,57,459/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) F URTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF INITIAL UNDISC LOSED INVESTMENT FOR UNDISCLOSED TURNOVER OF RS. 12,51,514/-. 12 11. 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. 12. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) FURTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX APPELLAT E TRIBUNAL IN THE CASE OF M/S. THE SRJ PEETY STEELS PVT. LTD. FOR ASSESSMENT YEAR S 2000-01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHEREIN THE SIMILAR ADDITION WAS DELETED. 13. THE APPELLANT COMPANY CRAVES LEAVE TO ADD TO, AL TER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ON E ANOTHER, AT THE TIME OF HEARING. GROUNDS BY REVENUE : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDE STINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODU CTION SHOWN IN THE BOOKS OF ACCOUNT? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE C IT(A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 9. BOTH THE SIDES FAIRLY AGREED THAT THE ARGUMENTS ADV ANCED IN CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. AND OTHER CONNECTED APP EALS RELATING TO FURNACE CASES WILL HOLD GOOD FOR THESE APPEALS ALSO. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDER ED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. VS. ADDL.CIT AND VICE VERSA IN ITA NOS.284 TO 286/PN/2012 AN D ITA NOS. 437 TO 439/PN/2012 AND OTHER GROUP OF CASES VIDE CONSOLIDAT ED ORDER DATED 15-07-2015 WHERE BOTH OF US ARE PARTIES. WE FIND THE TRIBUNAL CONSID ERING THE ARGUMENTS ADVANCED BY BOTH THE SIDES DELETED THE ADDITION MADE ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AND THE ALLEGE D INVESTMENT IN THE PURCHASE FOR EFFECTING SUCH UNACCOUNTED SALES. THE 13 APPEAL FILED BY THE REVENUE CHALLENGING THE APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED BY THE TRIBUNAL. T HE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 17 ONWARDS READS AS UNDER : 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. A R FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLACED O N RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON B Y BOTH THE PARTIES. 18. BEFORE ADDRESSING THE ISSUE ON MERITS, WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF THE PRESENT CASES 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 ARGUE THE APPEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR SEEKI NG 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 05.05.2015 AT THE REQUEST OF THE SPECIAL AR. ON 05.05.2015, THE C OUNSEL FOR THE ASSESSEE OPENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR THE REVENUE. ON 05.05.2015 ITSELF, THE SPECIAL AR FILED WRITTEN SU BMISSIONS ALONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURNED TO 07.05.2015 FOR FURTHER HEARING. ON 07.05.2015, THE CASE WAS TAKEN U P IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH BY THE SPECIAL AR FOR THE R EVENUE. THE COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE SAME ON THE GROUND THAT THE SPECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DA TE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE- LUNCH HOUR SESSION AND IT WAS DIRECTED THAT THE HEARING WOULD CONTINUE AT 03:00 PM I.E. AFTER THE LUNCH HOUR TO WHICH BOTH TH E PARTIES CONSENTED. ON REASSEMBLING OF THE BENCH, THE SPECIAL AR FOR THE REV ENUE FURNISHED LETTER UNDER HIS SIGNATURE STATING THAT THE PR.CIT, AURANGABA D WAS CONTEMPLATING TO FILE CERTAIN PETITIONS BEFORE THE HONBLE PRESIDENT/V ICE PRESIDENT, ITAT, MUMBAI AND THEREFORE THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PETITION CON TEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASKED TO C ONTINUE HIS ARGUMENTS BY THE BENCH, BUT HE REFERRED TO HIS ADJOURNMENT LET TER. 19. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUMENT. H OWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COUR T ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN REPLY T O THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH WE RE GONE INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FOR THE REVENUE 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. T HEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. A DDL.CIT-DR WERE TAKEN UP FOR HEARING AND THE MATTERS IN ITA NOS.125, 127, 430 & 431/PN/2012 ALONG WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012, ITA NOS.179 TO 182/PN/2012, ITA NOS.656 TO 659/PN/2012, ITA NO.1084 /PN/2012, ITA NO.1468/PN/2012, ITA NO.1558/PN/2012, ITA NO.1629/P N/2012, ITA NO.1516/PN/2012 AND ITA NO.1638/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 AS PART HEARD. 20. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FIN D THAT THE LD. SPECIAL AR IS NOT PRESENT IN THE COURT ROOM AND THERE IS NO INTIM ATION 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 STATE D THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIANCE OF THE L D. SPECIAL AR IN YESTERDAYS 14 HEARING AND HIS NON-APPEARANCE IN TODAYS HEARING, CO NDUCT OF THE LD. SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED I N THE BENCH AS TO WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CO NTINUED DEFIANCE AND FOR INTERRUPTING PROCEEDINGS OF THE BENCH. THE HEAR ING IS TO CONTINUE IN THE LISTED MATTERS AS ANNEXED ON 13.05.2015 AS PART-HEARD. 21. ON 13.05.2005, SHRI J.P. BAIRAGRA WAS PRESENT FOR 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 H EARD 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 PRE SENT FOR THE DEPARTMENT. 22. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L, BUT THE ISSUES RAISED BY THE ASSESSE ARE FOUR-FOLD ON THE FOLLOWING ACC OUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AF TER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALE S ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS AND EVA SION 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 ADDITION BY APPLYING GP RATE OF 4% ON THE ALLEGED SUPPRESSION OF SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHASES RE LATING TO SUPPRESSION OF SALE. 23. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGAI NST 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 CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXP ENSES ON THE UN- ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OFFICE R. 24. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO-DA Y ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WITH W RITTEN SUBMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAWS R ELIED 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 MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EV ASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 25. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE RAISE D 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 ASSESSME NT, NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 AND ALSO NO N-SERVICE OF NOTICE 15 UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SECTION 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-OP ENING OF THE ASSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN T HE PRESENT BUNCH OF APPEALS RELATING TO BHAGYALAXMI STEEL ALLOYS PVT. LT D. AT THE OUTSET STATED THAT THE GROUNDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE-OPENING OF THE ASSESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 OF THE ACT, ARE NOT PRESSED. HENCE THE SAM E ARE DISMISSED AS NOT PRESSED. 26. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PROD UCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRODUC TION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUPPR ESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPPRESSED PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BO TH THE PARTIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO THE DECISIO N OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIONS OF BOTH THE AUTHO RIZED REPRESENTATIVES. 27. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER, THE LD. SPECIAL AR STRESSED THAT THE ISSUE WAS AT VARIAN CE AND MADE ELABORATE SUBMISSIONS. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEET Y STEELS PVT. LTD. (SUPRA) IS A CASE OF FURNACE, WHICH IS ENGAGED IN THE M ANUFACTURE OF INGOTS / BILLETS. IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD . (SUPRA), THERE WAS AN ORDER OF CENTRAL EXCISE COMMISSIONER, AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELEC TRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER OF CESTAT DELETED THE ADDITION MAD E IN THE HANDS OF RESPECTIVE FURNACE CASES. ALSO, IN THE CASE OF THE ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGABAD AND THERE IS ORDER OF THIRD MEMBER OF CESTAT. IN SOME OF THE YEARS, THE OWNERS OF FURNACE ON THE BASIS OF CERTAIN INFORMATION GATHERED BY THE DGCEI HAD MOVED A PETITION BEFORE T HE SETTLEMENT COMMISSION AND OFFERED ADDITIONAL PRODUCTION, WHICH WAS ACCEPTE D BY THE SETTLEMENT COMMISSION IN ENTIRETY. THE ASSESSING OFFICER OBSERVED TH AT THERE WAS SUPPRESSION OF PRODUCTION BY THE FURNACE COMPANIES IN J ALNA CLUSTER ON THE GROUND OF VARIANCE IN CONSUMPTION OF ELECTRICITY VER SUS PRODUCTION. THE ASSESSING OFFICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHER S AND RELYING ON THE ADDITION MADE IN THE HANDS OF M/S. SRJ PEETY STEELS PV T. LTD. (SUPRA), IN TURN, ON THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDIT IONS IN THE HANDS OF PRESENT SET OF ASSESSES BEFORE US. 28. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/S. SRJ PEETY ST EELS 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 CC E, AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THAT SINCE THE ORDER OF THE CCE, AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. THE OTHER ASPECTS OF THE ISSUE THAT THE ASSESSEE THEREIN HAD MADE THE PETITION BEFORE SETTLEMEN T COMMISSION IN RESPECT OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PA YMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVESTIGATION OR MATERIAL COLLECTED BY THE ASSESSING OFF ICER, THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-08. FURTHER, IN ASSESSMENT YEAR 2008- 09, THERE WAS NO ADMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL WITHO UT PAYMENT OF EXCISE 16 DUTY BEFORE THE SETTLEMENT COMMISSION AND IN THE ABSEN CE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFI CER OR ANY OTHER EVIDENCE BEING BROUGHT ON RECORD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFO RE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. WAS SUMMARIZED UNDER PARA 9 , WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEALS FI LED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDING O F THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES OF I NGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOME REASO NABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORD INGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES AND ACCORDINGLY, PARTLY SUSTAI NED THE ADDITIONS. NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39,20,36,5 46/- IN THE A.Y. 2007-08 AND RS.40,75,72,486/- IN THE A.Y. 2008-09 ON ALLEGED SUPPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLD ING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT PICTUR E OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED . 29. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN P ARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSIONS OF T HE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE REJOINDER OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, THE TRIBUNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AN D LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT ON 05-11-2 014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDEN TS AND DECISIONS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF ING OTS/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF TH E ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHI LE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT, IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICITY CONSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGHE R SIDE AS COMPARED TO THE QUANTUM OF PRODUCTION DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE ALLE GED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILLE TS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE OF THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WELL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INITIATED THE RE-ASSESSMENT PROCEEDIN GS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF THE ACT. IN REASO NS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE ASSESSEE CO MPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OFFICER GAVE REFERENCE OF T HE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEIVED FROM THE CENTR AL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGENCE) AGAINST THE FEW BROKERS AND SUB- BROKERS WHO WERE INVOLVED IN THE TRADING INTO THE IN GOT/BILLETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILE D BY THE ASSESSEE BEFORE THE CENTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION, MU MBAI BENCH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETTI NG IMMUNITY FROM A 17 PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED SUPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFORMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY A S WELL AS THE ADJUDICATION ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO N OTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03-2006 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION U/S. 132(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 153A R.W.S. 143(3) FOR THE A.YS. 2000 -01 TO 2006-07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH A ND SEIZURE OPERATION NO INCRIMINATING EVIDENCE WAS FOUND SUGGESTING THAT THE A SSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER RE FER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT AND CERTAIN IM PORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAMED BY THE ASSESSING O FFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS. 2007-08 AND 2008-09 BEF ORE US ARE IMMEDIATELY NEXT ASSESSMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EVEN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION OR ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX AUTHORITIES. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMB AI. THE INVESTIGATION WAS CARRIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGC EI, AGAINST FEW BROKERS/SUB-BROKERS AND THOSE BROKERS GAVE THE NAMES OF MANY COMPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TM T BARS. AS PER THE STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITIES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI ANI L D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED THAT THEY WERE INVOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIPS ONLY A ND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROVIDING FAKE TRADI NG BILLS AND CHALLANS WHICH ACCOMPANIED THE VEHICLES CARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTIN ATION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB-BROKERS ALSO ADMITTED THAT THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET TH E COMMISSION OF RS.100/- PER MT. THE ASSESSING OFFICER HAS DISCUSSED THE IN FORMATION GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA N OS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGA INST THE BROKERS AND SUB- BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSU ED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACTURERS WHO WERE INVO LVED IN CLEARING THE EXCISABLE GOODS WITHOUT PAYMENT OF DUTY. ALL THE MAN UFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL E XCISE AUTHORITIES, THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUPPLIED 28 8.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MA NUFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF SHR I SURENDRA S. PEETY, MANAGING DIRECTOR OF THE ASSESSEE RECORDED ON 12-01-200 7, 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 PA YMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXC ISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMENT COMMISSION AND P AID THE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/- FOR CLEARING THE GOODS WI THOUT PAYMENT OF EXCISE 18 DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTE D WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AU THORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUSSED THE P ROCESS 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 WHI CH IS IN PARA NO. 4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS GIV EN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACT ION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING O FFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIR ECTOR, ALL INDIA INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAK ING TECHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH I S ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POW ER CONSUMPTION IN INDUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE USED. THE ASSESSING OFFICER ALSO REFERRED T O THE TECHNICAL REPORT OF THE IIT, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VAR IES FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASSESSING OFFICER, TH EREFORE, CAME TO THE CONCLUSION THAT THE ASSESSMENT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD IN RESPECT OF THE ALLEGED SUPPR ESSION OF PRODUCTION AFTER CONSIDERING THE ELECTRICITY CONSUMPTION DECLARE D BY THE ASSESSEE AND THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC T ON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH REASONABLE, FAIR AND JUSTIFI ED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCO UNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS OF ACCO UNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVING THE REASO N THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFI CER ADOPTED THE SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AURAN GABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS SUPPRE SSED THE PRODUCTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTION OF T HE A.Y. 2007-08 AS UNDER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF T HE 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 TH E 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 INF ORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, B UT FINALLY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION. IN THE COMPUTATION FOR THE A.Y. 2008-09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTIONING RS. (-) 1,91,6 2,000/- AS PER THE ORDER U/S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008-09. 19 30. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE, THE TR IBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSING OFFICER HAD D ETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERMINED BY THE CC E, AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY. THE BASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CASES OF FURNACE O WNERS HELD THAT THE ORDER OF CCE, AURANGABAD WAS NOT SUSTAINABLE AND HAD T O BE CANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA ). THE RELEVANT FINDING OF THE TRIBUNAL IN TURN, INCORPORATING THE ORDER OF TH IRD MEMBER OF CESTAT IN PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YEARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE PRODUCTION/SAL ES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD O N THE BASIS OF POWER CONSUMPTION. THE COPY OF THE ADJUDICATION ORDER PASSE D BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE TAX, AURANGA BAD 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 H AS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VARIOUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE VALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIES, COST OF MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFE RRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT ), KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHNICAL OPINION REPOR T THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE METRIC TON OF STE EL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MIX OF RAW MATERIAL. AS OB SERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEIR ELECTRICITY BILLS, THE AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VAR IES 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 ELECTRIC ITY FOR PER MT OF MS INGOTS PRODUCED, IT IS NOTICED THAT THERE IS A HUGE DI FFERENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFULLY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEI R RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOL VED THEMSELVES IN THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REFERR ED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER W AS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. TH E LD. COMMISSIONER ALSO REFERRED TO NON-MAINTENANCE OF THE P ROPER ELECTRICITY CONSUMPTION RECORD MORE PARTICULARLY IN FORM G-7. T HE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MAR CH, 2008 IN HIS ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPAN Y. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINATION OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CC E, AURANGABAD. THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS N O MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AN D REFERRED TO THE DIFFERENT DECISIONS OF THE TRIBUNAL. THE LD. COMMISSIO NER ALSO RELIED ON THE INVESTIGATION MADE BY THE DGCEI AND SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED THE EVASION AND PAID THE EXCISE DUTY AND OBTAINED IMM UNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DEMAN D RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXTEN T OF RS.33,07,22,069/-. 20 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHALLEN GED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTR AL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEMB ERS OF THE CESTAT, I.E. LD. VICE-PRESIDENT AND LD. TECHNICAL MEMBER AND THE MATT ER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCE S: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 31 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTINGS P VT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALL OWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABO VE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRIVE NI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNALS DECISION IN THE CASE OF RATT AN STEELS WORKS (SUPRA), NAGPAL STEEL (SUPRA) AND HANS CASTINGS PVT. LT D. (SUPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDER PASSED BY LD. CO MMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE AND HA S TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDENT CO RRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECT RICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN TH E AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE IN STANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIFICATIONS FO R HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF I NDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOB INDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, A LL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. V ARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATED 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ART ICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL MAKING [THU S 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 ANO THER LETTER DATED 5.4.2008 OF ELECTROTHERM AGREEING-., W ITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION AND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMPTION. 21 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRI BUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICITY CONSUM PTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOWI NG 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 CO MMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF I NDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIVE D IRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (M R. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CCE, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINED THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTE R THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COMMISSIONER I N THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PE R REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REPORTED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R ,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITHO UT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 YEAR S, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALANC E SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DEPOSITE D, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS SUCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOOD S IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTROVERTIB LE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREM ISES, AND NON-ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDESTI NE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE T O INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOY ED AND 22 PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORD S OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MAT ERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE TO ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOO DS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUCH AS L .RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR A ND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVIDEN CE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE , NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMI TTED TO JUSTIFY THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN T HE INSTANT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APPEA LS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANA TION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CASES AN D/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 CON CERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FINDING S OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CHALL ENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVELL ED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (SUPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT-THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW THAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BASIS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACTO RIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPT ED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER C ANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE AP PROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN TH E FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT D ATES 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 23 ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUST AINED NOR COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF ALLE GED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PRO VE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE A BSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ONUS, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTH ER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLANDESTINE CLE ARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS EL ECTRICITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY-'FRO M 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 EVID ENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO OTHER EVI DENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANC E TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUE THAT FURNACES INSTA LLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER I NEITHER COULD FIND AN Y MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO RELY ON AN OR DER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LTD., V/S. CCE , HYDERABAD-II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THA T THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRE CISION, 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 COMMISSIO NER 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 ADJU DICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS DEFI NITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBABILIT IES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMP TIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURI NG ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS, I AM OF THE VIEW THAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN THE IM PUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PERIOD. I ALSO AGR EE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS A DDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTION. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEE N CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURN ACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTR IC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND IN AN Y EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPT ION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECOR D. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA ) IS SQUARELY APPLICABLE. 24 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON' BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER TRADE TAX, U.P, - 2007-TIOL-14-SC-CT, THE JUDGMENT OF THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOME TAX, 2014-TIOL-203-HC-AHM-IT, AND AN UNREPORTED ORDER DT D. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH ) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STATE O F ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSE SSMENT YEAR 2000-01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CASE ARE THAT FOR THE ASSESSMENT Y EAR 2005-06, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF T HE ASSESSEE AND MADE VARIOUS ADDITIONS, NOT ONLY FOR THE REASON OF UNE XPLAINED WIDE FLUCTUATIONS IN THE PRODUCTIVITY AS COMPARED TO THAT IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE W ORK-IN- PROGRESS IN THE BOOKS OF ACCOUNTS. I AM THEREFORE OF TH E OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER TH AN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDING S 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 W AS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONSIDER ING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND SIL K MILLS (SUPRA), AS ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS, 2012 (275) E. L.T. 232 (TRI. - DEL.) THE TRIBUNAL FOLLOWED THE DECISION OF R.A. CAST ING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON' BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SUPR A) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 30-0 7-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY T HE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDE R IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AG AINST SOME BROKERS AND IN CONSEQUENCE THE SHOW CAUSE NOTICES (SCN) WERE ISSUED TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY. HENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BROKERS AND SUB-BROKERS R EFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AUR ANGABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH TH E ASSESSMENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTI ON BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FO R MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 20 08-09, THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE C ENTRAL EXCISE AUTHORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL O F THE SAID ORDER, IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007-08. AS VARY BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED 25 BY THE LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUP PRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL LEGS TO STAND. 31. THE TRIBUNAL THEREAFTER, DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. TECHNICAL MEMBER O F 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. 32. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR W AS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CASE OF SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDER HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VIDE PAR A 19. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WERE AS UNDER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMENT COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BASIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BR OKERS AND SUB-BROKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NO TICE WAS ISSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANG ABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETER MINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VIOLA TIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE INVOLVE D. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMENT CO MMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE HAS HOW EVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE R ELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FINDINGS IN THIS CASE A RE BASED ONLY ON MATERIAL AND EVIDENCE THAT HAVE BEEN BROUGHT ON REC ORD IN THE INSTANT CASE. 33. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT OF THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BU T THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER P ASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY TH E THIRD MEMBER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PARA 21 T HAT THE INVESTIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSIO N WERE CONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER, WHICH IN TURN, W AS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET-ASIDE, HENCE, I T WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIA L AR, WHICH ARE IN THE CONTEXT OF ADMISSION OF THE DIRECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 34. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRIBUN AL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGUM ENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDE R OF CESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER R EADS AS UNDER:- 26 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND RE LIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICUL ARLY 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 REVE NUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMATION REC EIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVER, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HAS B EEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE, FOUND ATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 2008-09 DO NOT EXIST. THE LAW IS AL SO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDE R GETS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT C ASE IS CESTAT. MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SET TLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJ UDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAI D 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 O F ADMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DG CEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE NO T RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICITY CONSUMPTION, THE SAID ISSUE WAS ALSO BEFO RE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGAB AD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MU MBAI BENCH, MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT A S REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER IS RIGHT OR W RONG. 35. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE F ORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIBUNAL (INCOME-TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OB SERVATION WHETHER THAT ORDER WAS RIGHT OR WRONG. 36. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEIZU RE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AG AINST 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 PV T. LTD. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL I S REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATI NG TO ASSESSMENT YEARS 2000-01 TO 2006-07 UNDER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SEIZURE, IT WAS ALSO HELD TH AT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOT S / BILLETS DEPENDING ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARG E THE ASSESSEE THAT IT HAD SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTE D PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTME NT BEFORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSE D BY COMMON ORDER DATED 10.02.2014 IN THE CASE OF ASSESSEE AND OTHER COMPA NIES BY THE HONBLE BOMBAY HIGH COURT AND THERE WERE OBSERVATIONS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WHILE DECIDING THE APPEAL OF M/S. SRJ PEETY STEELS PVT. LTD . IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT 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 ASSE SSMENT 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 A SSESSEE FOR THE A.YS. 27 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALL EGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSUMPT ION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASIS OF EL ECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN ORDER TO WORK O UT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNITS AS CONSUMPTI ON PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANC E THE ASSESSING OFFICER HAD SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUM PTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRO DUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALL EGED 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 ON 17 TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WELL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 2000-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOMPANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT ST OOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL S WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADD ED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE C ONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCT ION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWIN G CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICITY CONSUMP TION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000-01 24331059 18,524.239 1313 2001-02 25528565 17,010.558 1501 2002-03 31404354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTRI CITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL DETAI LS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DEP ARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME, IT COUL D HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSE SSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING IN CRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF THE SE ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON TH IS GROUND. 28 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE F IND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005-06 ARE NOT CO RRESPONDING TO THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREA DY ON RECORD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING ON THE DATE OF INITIATIO N OF SEARCH AND ABATED IN LIGHT OF THE PROVISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB-S. (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2), HAVE NOT BEEN RE GULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNE R PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A METHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDUC ED 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 UN DER CONSIDERATION, THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME FO R EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICITY C ONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MO NTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF CO MPUTING THE SO-CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN ABSEN CE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANUF ACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUALITY O F RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, POW ER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICA L COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO IN GOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONCL USION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPP RESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS IN DULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF SEA RCH 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 TH E ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. YR. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE ASSESSEE CO MPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THEREFORE, REJ ECTION OF BOOKS FOR 29 THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN D IVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN A SST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMP TION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT TH E ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTE D PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTME NT 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 WAS DISMISSED VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT A ND THERE ARE CATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON THE ESTIM ATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMISSION ER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SR J PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RETURNS OF THE I NCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 HAD ALREADY BEEN FIL ED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DE TAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FO R EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED B Y THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UNIT PRODUCTI ON OF EACH YEAR, WHICH WAS ACCEPTED YEAR AFTER YEAR ALONG WITH RETURN S AND NO QUERY WAS RAISED BY THE REVENUE. THE FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL RE FERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THER EFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEP ARTMENT, WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR A SSESSMENT AND NOT U/S. 153A OF THE ACT. THE FINDING IS THAT NOTHING IN CRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMEN T YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SE IZED MATERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREA DY ON RECORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN INTO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECTRI CITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY, T HEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAID OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUM ENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUE NCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOU ND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF 30 PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE OF TH E FACT THAT IN A.YS. 2007-08 AND 2008-09, NO INVESTIGATION HAS BEEN DONE BY THE RE VENUE WHICH ARE IMMEDIATE NEXT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZ URE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION A BOVE FINDINGS AND OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIG H COURT ARE ALSO IMPORTANT TO DECIDE THE PRESENT APPEALS MORE PARTICUL ARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY. 37. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09, NO INVESTIGATION WAS DONE BY THE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATELY PRECE DING YEAR, WHEREIN DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE F OUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR A LLEGED SUPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING THE APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSERVA TIONS OF THE TRIBUNAL ARE AS UNDER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. (SUP RA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PRODU CTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION RECE IVED 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 ORDER O F CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELL ATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLA CED ON RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & S ERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASP ECTS OF THE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICIT Y OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH POWER CO NNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE A ND THAT RESULTED IN HIGHER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERV ED BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL VIDE PARA 4. 2 THAT SO FAR AS THE PRODUCTION QUANTUM IS CONCERNED, THERE IS ALSO NO EVID ENCE ON RECORD TO SHOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDI NG THE OUTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERVICE T AX APPELLATE TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE AP PEARS TO HAVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTIO N TO THE DETRIMENT OF JUSTICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF RE VENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECOR D TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE R EMOVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH , IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STA ND. BOTH THE APPEALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL REL IEF, IF ANY.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUN AL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE C RITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPE AL OF THE REVENUE WAS DISMISSED BY THE HON'BLE APEX COURT AS REPORTED IN 2 011 (269) ELT A-108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CASE WAS THE 31 INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMEN T AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTI GATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDITION O N THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CA USED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIB UNAL (SUPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CA TEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD T O PROVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HA S BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID F INDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSE SSEE'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 PRODUCTI ON AND ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VI EW THEREOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT M ERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WI TH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO E STABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUNT. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 A ND 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPRA) T HE 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 DI RECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE L D. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITIONS MA DE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASSESSM ENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE B ASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURING OF INGOTS/BILLE TS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE ADDITIONS MADE TOWARDS THE AL LEGED SUPPRESSION OF PRODUCTION AND SALES AT ENTIRETY AND ALLOW THE GROUND NOS. 3, 4, 5, 6 & 8 IN THE A.Y. 2007-08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2 008-09. 38. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GROSS PROFIT TO DE TERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FINDING THAT SINCE THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE HAVE BEEN DELETED, THE RE WAS NO MERIT IN ANY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RESPEC T OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS U NDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF ACCOUN T BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS THE ALLEGED SUPPRESSION OF P RODUCTION/SALES AND WHICH WAS DETERMINED ON THE BASIS OF THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELEC TRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TE CHNICAL 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 JUST IFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALE S. WE, THEREFORE, HOLD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON A BOVE REASON CANNOT BE 32 UPHELD. WE, ACCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS PROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISSUE ARISE S FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 20 08-09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITI ONS MADE BY THE ASSESSING OFFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE OBJECT ION FOR MAKING THE ADDITION OF RS.37,69,582/-. THE SAID ADDITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UNDISCLOSED IN VESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS AN AVERAG E UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UND ER 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 SUPP RESSION OF PRODUCTION/SALES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTI RE 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. 39. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE REVE NUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UN DER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. AS THE ASSESSEE HAS SUCCEEDED ON THE BASI C ADDITIONS, THE GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENT IRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GR OUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 40. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEA LS IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY HIM THAT IN THE CASE OF BHAGYALAXMI S TEEL ALLOYS PVT. LTD., THERE WAS NO INVESTIGATION BY THE DGCEI AND FURTHER THERE W AS NO ORDER OF SETTLEMENT COMMISSION. HOWEVER, THE CCE, AURANGABAD HAD PASSED AN ORDER AGAINST THE ASSESSEE, BUT THERE WAS NO CASE OF CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY AGAINST THE ASSESSEE. THE LD. SPECIAL AR ADMITTED THAT THERE WAS NO EVIDENCE WITH THE EXCISE D EPARTMENT OR THE INCOME-TAX DEPARTMENT REGARDING CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY. HOWEVER, BECAUSE OF HUGE FLU CTUATION IN ELECTRICITY CONSUMPTION AND PRODUCTION OF INGOTS / BILLETS, ADDITI ON WAS MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, IN OMSAIRAM STEEL & ALLOYS PVT . LTD., IT WAS FAIRLY ADMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE THAT THERE WAS INVESTIGATION BY THE DGCEI AND IN ASSESSMENT YEARS 200 6-07 AND 2007-08, THE ASSESSEE HAD FILED THE PETITION BEFORE THE SETTLEME NT COMMISSION, WHICH WAS ACCEPTED. HOWEVER, IN ASSESSMENT YEARS 2005-06 AND 2 008-09, THERE WAS NO SUCH PETITION FILED BEFORE THE SETTLEMENT COMMISSIO N. 41. WE FIND THAT THE ASSESSING OFFICER IN THE PRESENT CA SE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY BASED ON THE REPORT OF DR. BATRA. THE ADDITION IN THE HANDS OF SI STER CONCERN M/S. SRJ PEETY 33 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 CEST AT HAD DELETED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. SIMIL ARLY, IN THE CASE OF ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGABAD AND OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADDITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY AS DETERMINED BY CCE, AURANGABAD. FO LLOWING THE SAME LINE OF REASONING AS IN THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON SURMISES. BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR HAS RAISED IDENTICAL ARGUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN M/ S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THE RATIO OF THE SAID DECISION IS APPLICA BLE TO THE FACTS OF THE PRESENT CASE. HOWEVER, ADDITIONAL PRODUCTION RELATIN G TO THE DECLARATION MADE BEFORE THE SETTLEMENT COMMISSION IS TO BE ADDED IN THE HANDS OF THE ASSESSEE, AS ADMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 42. 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 16.0 1.2015 AND THE HEARING OF THE PRESENT APPEALS BE KEPT IN ABEYANCE. AFTER HEARI NG THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FI XED FOR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN DATE DISMISSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SUBMISSIONS OF BOTH TH E AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE H ELD THAT THERE IS NO MERIT IN THE SAID MISCELLANEOUS APPLICATION FILED BY THE REV ENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE UNDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF, THE NEXT OBJECTION OF THE LD. SPECIAL AR FOR NOT RELYIN G ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) ALSO STANDS DISMISSED. 43. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADD ITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHERE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITH OUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESSEE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. THE LD. SPECIAL AR FOR THE SAID PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07. THE CASE OF THE REVENUE BEFORE US WAS THAT WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATE RIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PA RT OF THE PERIOD, THEN IN VIEW OF THE ORDER OF THE SETTLEMENT COMMISSION AND AL SO SINCE THE ASSESSEE HAD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER, THE SALES FOR THE ENTIRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF E XCISE DUTY WAS ON ACCOUNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTAIN BROKERS AND SUB-BROKERS. CONSEQUENT THERETO, SHRI SRJ PEETY, MANAGING DIRECTOR OF M/S. SRJ PEETY STEELS PVT. LTD. ADMITTED TO THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY A ND APPROACHED THE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY ON TH E SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSE SSEE, BUT ALSO LEVIED PENALTY. THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITT ED THAT THE ADDITIONAL INCOME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF M ATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO BE ADDED IN THE HANDS OF THE ASSESSE E. ALL THIS INFORMATION WAS AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, BUT NO OTHER INVESTIGATION OR INQUIRY WA S MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THA T THE ASSESSEE HAD NOT CORRECTLY DISCLOSED THE PRODUCTION OF INGOTS / BILLET S. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSUMPTION, FOR WHICH T HE ASSESSING OFFICER 34 PLACED RELIANCE ON THE REPORT OF DR. BATRA AND ORDE R OF CCE, AURANGABAD. THE ASSESSING OFFICER APPLYING THE FORMULA WORKED OUT THE SU PPRESSED PRODUCTION AND SALES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS H EREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACC OUNT OF SUPPRESSED PRODUCTION / SALES ON SUCH ACCOUNT COULD BE MADE IN T HE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND, STRESSED THAT W HERE THE ASSESSING OFFICER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL O F MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED IN THE HANDS OF THE ASSESSEE. HE STRESSED THA T EVEN WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WAS FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE ADDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BECAUSE THE ASSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY OF SUPPRESSION, THE ADDITION IN THE HANDS OF THE ASSESSEE COUL D BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FOR 300 DAYS, IN VIE W OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYM ENT OF EXCISE DUTY AND SUPPRESSION OF INCOME. 44. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE AUTHORITIES DURI NG THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE. IN ORDER TO BUY PEACE OF MIND, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFO RE THE SETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THA T DECLARATION WAS TO BUY PEACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SINC E THE OBJECT OF MOVING PETITION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMAN TS, THE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OF FER, THEN THE FIGURES OF SETTLEMENT CAN BE INCREASED. HOWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEEN ACCEPTED FOR THE FINANCIAL YEAR AND T HE SAME CANNOT BE SAID TO BE RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT W AS 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 T HE EVIDENCE HAS BEEN FOUND FOR PART OF THE YEAR, SUCH SETTLEMENT BEING ACC EPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATION. IN CASES WHERE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMMISSION, THEN NO FUR THER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESSED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE FOR THE BALANCE PERIOD. 45. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACT UM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSION, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOME ON SUCH OFFER OF SETT LEMENT WAS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER, NO FURTHER INQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSESSING OFFICER I N THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPE AL IS WHETHER ANY EXTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BA SIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER , IN OUR OPINION, HAS TO BE IN NEGATIVE. 46. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE ) 627, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN ASSE SSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON THE BASIS OF 35 SEARCH AND SEIZURE ACTION CARRIED OUT BY THE INCOME-T AX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH WER E ADMITTED BY THE ASSESSEE TO REFLECT SUPPRESSION OF SALES. ON THE BASIS OF AF ORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAPOLATED, WHICH ORDE R OF THE TRIBUNAL WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT. HOWEVER , FOR THE YEAR UNDER CONSIDERATION, THERE WAS NO SEARCH AND SEIZURE OPERATIO N CARRIED OUT BY THE INCOME-TAX DEPARTMENT AGAINST THE ASSESSEE AND ALSO NO IN VESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER, AS STATED EARL IER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE, MERELY BECA USE THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE IN A PRECEDING YEAR, W E FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SALES FOR THE ASSESSMENT YEAR 2007-08 SHOULD BE MADE IN TH E HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PETITION BY THE ASSESSE E BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSESSMENT ORD ER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF EL ECTRICITY. UNDOUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY T HE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF ELECTRICIT Y, WERE BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER ADOPTED THE SEC OND ISSUE IN THE HANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH W E IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL A R POINTED OUT THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHODOLO GIES FOR WORKING OUT THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERI T IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRI ED OUT BY THE ASSESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEF ORE THE SETTLEMENT COMMISSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHE R ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRI MINATING MATERIAL FOUND FOR THE BALANCE PERIOD. 47. RELIANCE IN THIS REGARD IS PLACED UPON THE RATIO LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF THE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT PU RSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, O N THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. THE SAID INFORMATION WAS FORWARDED TO THE CENTRAL EXCISE DEPAR TMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER, THE TRIBUNAL CANCELLED THE EX CISE DEMAND ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FRO M THE POSSESSION OF THE ASSESSEE BY THE EXCISE AUTHORITIES. 48. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE TH E EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF E XCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT, IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COULD NOT BE RELIED UPON AS EVIDENCE, WHILE EXTRAPOLATING THE SALES AND THE ADDIT IONAL INCOME THEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME-TAX PROCEED INGS. THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED PRODU CTION AND EVEN AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NOT INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTABLISHING SUPPRESSE D PRODUCTION AND / OR ITS SALE OUTSIDE THE BOOKS OF ACCOUNT. 49. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSE SSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THIS WAS THE EVI DENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFORE THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WIT HOUT PAYMENT OF EXCISE 36 DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY O F PETITION BEFORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF TH E ASSESSEE COMPANY WAS RECORDED EITHER BY ASSESSING OFFICER OR CIT(A) DURIN G THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT I N THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDI TION AT BEST IS TO BE RESTRICTED TO THE ADDITIONAL INCOME OFFERED BY THE A SSESSEE. 50. IN OUR CONSIDERED OPINION, THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER AND CIT(A) AND THE TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A ). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBU NAL JUSTIFYING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN M IND THE FACTS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT M ADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFOR E THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS BASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNAT E PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 51. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITION V IS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 3 00 DAYS. 52. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DE CISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSIONAL ST ATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE . WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY THE HONBLE S UPREME COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERA LA AND ANOTHER (SUPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO THE AMOUNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE FOR EXTRAPOLATING THE SAME FOR FULL YEAR AN D 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 RA TIO LAID DOWN BY THE BANGALORE BENCH OF TRIBUNAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXISTENCE OF EVIDENCE OF C ONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATING INCO ME IN ANY OTHER ASSESSMENT YEARS. 53. 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 C OURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOUNTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND TH E TRIBUNAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFF ICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED A FTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISCREPANCY. 54. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 55. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION AVAIL ABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHEREIN UNACCOUNTED SA LES 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 AND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAPERS SE IZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COM MISSION AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD THAT NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE PERIOD. 37 THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULA TION OF TURNOVER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESU MPTION WAS NOT SUSTAINABLE IN LAW. NO DETAILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUCH FIGURE OR HAD THERE BEEN ANY CONCEALED SALES F OR 9 MONTHS, IT COULD HAVE BEEN DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER I S PURELY BASED ON GUESS WORK, PRESUMPTION AND SURMISES AND NOT ON THE BASIS OF AN Y MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES. SUCH ADDITION BASED ON HYPOTHETICAL CAL CULATION OF TURNOVER AND ESTIMATION OF GP ON PRESUMPTION AND SURMISES WERE NOT SUST AINABLE. THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN IN CST VS. H.M. ESUFALI H.M. ABDULALI (SUPRA). THE LD. SPECIAL AR RELIED ON THE SAID DECI SION AND IN VIEW OF THE DECISION OF COORDINATE BENCH ON SIMILAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 56. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMENT S 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, FILIN G A PETITION BEFORE THE SETTLEMENT COMMISSION. 57. THE PLEA OF THE REVENUE RAISED IN THE MISCELLANEO US APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMENT D URING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER, IN THE INTEREST O F JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED BY THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF JUSTI CE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALE S ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTEDLY, D URING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EVIDE NCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST THE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CA RRIED OUT AGAINST THE ASSESSEE, BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND, IT HAD DECLARED THE SAID AMOUNT BY WAY OF PETITION BEFORE T HE SETTLEMENT COMMISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOTO . IT MAY BE NOTED THAT THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE ASSESSEE, IN CASE, ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER. IT MAY ALSO BE NOTED THAT THE SETTLEMENT ACCEPTED IN THE HANDS OF THE ASSESSEE IS FOR THE FINANCIAL YEAR AND IS NOT RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT HAS OFFERED. IN OTHER WORDS, ONCE A PERSON MAKES A SETT LEMENT PETITION FOR A PARTICULAR YEAR ON ACCOUNT OF THE EVIDENCE FOUND FO R PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSE E, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVA L OF GOODS OR SUPPRESSED SALES, IN THE ABSENCE OF EVIDENCE FOR THE BALANCE PERI OD. THE ABOVE SAID RATIOS HAVE BEEN LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA), HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA ). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBA Y HIGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGUING THE ISSUE NO.2 I .E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBLE BOMBA Y HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAP TER XIV-B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SAID CHAPTER I S UNDISCLOSED INCOME OF THE BLOCK PERIOD AND NOT THE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UNDER SECTI ON 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH R EGULAR ASSESSMENT STANDS 38 ON A DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UN DERTAKEN BY THE ASSESSING OFFICER UNDER CHAPTER XIV-B, WHERE THE ASSESSING OFFICE R HAD TO ASSESS ONLY THE UNDISCLOSED INCOME. HOWEVER, THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER CHAPTER XIV-B, THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED 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 T HE 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 MISPLACED 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 DEPA RTMENT, WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS. HOWEVER, NO IN DEPENDENT INVESTIGATION / INQUIRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE COMPLETING ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOT HER ASPECT OF THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT C OMMISSION HAS BEEN MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2007-08 ONLY AND NO SUCH PETITION FOR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF E XCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOUNT OF SUCH CLANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FO R REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT. ONCE A PARTICU LAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVI NG BEEN MADE ON ONLY ON THE ISSUE OF ERRATIC CONSUMPTION OF ELECTRICITY, W HICH IS THE BASIS OF ORDER PASSED BY CCE, AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF THE CLANDESTINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED OU T BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMISSION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCEEDINGS, BUT SINCE THE SETTLE MENT PETITION FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMEN T COMMISSION, NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE A SSESSEE ON THIS GROUND, IN THE ABSENCE OF ANY INQUIRY OR INVESTIGATION BY THE ASSE SSING OFFICER. ACCORDINGLY, THE RELIANCE PLACED UPON BY THE LD. SP ECIAL 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 THIS REGARD. 58. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS THA T 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 (SUPRA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (SUPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS P VT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING THE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREADY BEEN CONSIDERED. 59. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCU MSTANCES, 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 RE MOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, H AS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTLEMEN T COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSI ON. MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAIM OF THE A SSESSEE OF ADDITIONAL EXCISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF TH E REVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED F OR EXTRAPOLATING THE SALES IN 39 THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTED LY, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE RE MOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS N OT BEEN ADDED WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE FOR T HE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT THE ASSESSING O FFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE A DDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLANDESTINE REMOVAL OF MATER IAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMEN T COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THERE IS NO ADMISSION OF CLAN DESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTIGATION OR INQUIRY M ADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFICER HAS FAILED TO CO LLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF TH E ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES FOR 300 DAYS ON ACCOUNT OF ANY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS. FURTHER, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY TH E ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AUTHORITIES. IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD., THERE IS NO INVESTIGATION BY DGCEI AND HENCE, NO ADDITION ON ACC OUNT OF EXTRAPOLATION CAN BE MADE, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE. 60. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC CO NSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FOR T HE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF E XCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVESTMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO ADDITION C AN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PURCHASE S UNDER SECTION 69C OF THE ACT. 61. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON ISSUE O F NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRE SSED PRODUCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. 62. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENUE I.E. AGAINST A PPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 11. FOLLOWING OUR DECISION IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. (SUPRA) WE HOLD THAT NO ADDITION CAN BE MADE ON ACC OUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AND THERE IS NO ALLEGED INVESTMEN T IN THE PURCHASE FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN C LANDESTINELY REMOVED. IN VIEW OF OUR DELETING THE ADDITION IN THE HANDS OF THE ASSESSEE, THE GROUNDS OF APPEAL RAISED BY THE REVENUE, I.E. AGAINST A PPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. HOWEV ER, THE AO IS 40 DIRECTED TO INCLUDE ADDITIONAL INCOME IN THE HANDS OF THE A SSESSEE ON ACCOUNT OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY AS ADMITTED BY THE ASSESSEE BEFORE THE DGCEI, AURANGABAD. 12. THE GROUND OF APPEAL CHALLENGING THE REOPENING OF ASSES SMENT 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. 13. THE FACTS AND ISSUES IN ITA NOS. 216 TO 218/PN/2012 , ITA NOS.418 TO 420/PN/2012, ITA NOS.224 TO 226/PN/2012, ITA NOS. 40 2 TO 404/PN/2012, ITA NOS. 227 TO 230/PN/2012, ITA NOS. 676 TO 679/PN/2012, ITA NOS. 243 & 244/PN/2012, ITA NOS. 636 & 637/PN/2012, ITA NOS. 258 TO 261/PN/2012, ITA NOS. 680 TO 683/PN/2012, ITA NOS. 279 TO 281/PN/2012 AND ITA NOS. 408 TO 410/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NOS. 219 TO 221/PN/2012 AND ITA NOS. 414 TO 416/PN/2012 AND OUR DECISION IN ITA NOS. 219 TO 221/PN/2012 AND ITA NOS. 414 TO 416/PN/20 12 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS. 216 TO 218/PN/2012, ITA NOS.418 TO 420/PN/2012, ITA NOS.224 TO 226/PN/2012, ITA NOS. 402 T O 404/PN/2012, ITA NOS. 227 TO 230/PN/2012, ITA NOS. 676 TO 679/PN/2012, ITA NOS. 243 & 244/PN/2012, ITA NOS. 636 & 637/PN/2012, ITA NOS. 258 TO 261/PN/2012, ITA NOS. 680 TO 683/PN/2012, ITA NOS. 279 TO 281/PN/2012 AND ITA NOS. 408 TO 410/PN/2012. 14. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE D ISPOSED OF AS ABOVE AND ALL APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05-08-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER IQ.KS PUNE ; #$% DATED : 05 TH AUGUST , 2015. LRH'K 41 &'()*+,+) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ' ( ( ) , +%,$ / THE CIT(A), AURANGABAD 4. ' ' ( , +%,$ / THE CIT, AURANGABAD 5. -., / , ' /' , IQ.KS / DR, ITAT, A PUNE 6. ,1 2 / GUARD FILE. &$ / BY ORDER , - //TRUE C // TRUE COPY // 34 5 /6 / SR. PRIVATE SECRETARY ' /', IQ.KS / ITAT, PUNE
Other Referred Cases
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Laws Referred To
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1:1 Consultation on Business Development
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1:1 Consultation on Tax Litigation
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1:1 Consultation on Tax Litigation
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Non-Compete Agreement
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CRM Implementation Plan
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