Dy. Commissioner of Income Tax, Lucknow V. M/s Shimla Special Flavour, Lucknow

ITA 422/LKW/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7630 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Loose papers; Additional evidence
• Section: 153A; 132

Judgement Text

I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 DY.C.I.T., CENTRAL CIRCLE-1, LUCKNOW. VS. M/S SHIMLA SPECIAL FLAVOUR, 13/14, NIWAJ KHERA, LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE A GAINST THE CONSOLIDATED ORDER OF LEARNED CIT(A)-III, LUCKNOW D ATED 02/05/2016 PERTAINING TO ASSESSMENT YEAR 2012-13 & 2013-14. T HE REVENUE HAS TAKEN SIMILAR GROUNDS OF APPEAL IN BOTH THE CASES WHICH W ERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 2. LEARNED D. R., AT THE OUTSET, SUBMITTED THAT LEA RNED CIT(A) HAS WRONGLY DELETED THE ADDITIONS AS THE ADDITIONS WERE MADE ON THE BASIS OF SEIZED MATERIAL/INCRIMINATING MATERIAL FOUND DURING SEARCH. LEARNED D. R. FURTHER ARGUED THAT LEARNED CIT(A) HAS DELETED THE ADDITION BY ACCEPTING THE ADDITIONAL EVIDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER WHICH WAS GROSS VIOLATION OF RULE 46 OF I.T. RULES. APPELLANT BY SHRI A. K. BAR, CIT, (DR) RESPONDENT BY SHRI YOGESH AGRAWAL, ADVOCATE DATE OF HEARING 07/01/2019 DATE OF PRONOUNCEMENT 11/01/2019 I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 2 3. LEARNED A. R., ON THE OTHER HAND, INVITED OUR AT TENTION TO THE FINDINGS OF LEARNED CIT(A) RECORDED BY HIM AT PARA 4(4)(A). LEARNED A. R. FURTHER SUBMITTED THAT NO INCRIMINATING DOCUMENTS WERE SEIZ ED FROM THE PREMISES OF THE ASSESSEE WHICH COULD HAVE POINTED OUT THAT T HE TURNOVER RECORDED BY BALAJI MARKETING WERE THE SALES OF THE ASSESSEE COM PANY. OUR SPECIFIC ATTENTION AS ALSO INVITED TO PARA 4.8 ONWARDS OF LE ARNED CIT(A) ORDER. 4. AS REGARDS THE ADDITIONAL EVIDENCE, LEARNED A. R . SUBMITTED THAT NO ADDITIONAL EVIDENCE WAS THERE AND THE ADDITIONAL EV IDENCE BEING TALKED ABOUT BY LEARNED D. R. IS A CORRESPONDENCE WHICH WA S MADE BY ASSESSING OFFICER AND RANGE HEAD IN TERMS OF DIFFERENCE OF OP INION AND ISSUES MENTIONED IN APPRAISAL REPORT IN THE CASE OF THE AS SESSEE AND IT WAS SUBMITTED THAT LEARNED CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE AND HAS JUST STRENGTHENED HIS ORDER BY RECORDING THE CONTEN TS OF LETTER. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDER, ARE THAT A SEARCH & SEIZURE OPERATION ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON THE SHIMLA KAYAM GUTKHA GROUP OF CASES ON 06/02/ 2013 AND DURING SEARCH & SEIZURE OPERATION SEVERAL DOCUMENTS AND BO OKS OF ACCOUNT, LOOSE PAPERS AND COMPUTERS ETC. WERE SEIZED. THE ASSESSE E IS A PARTNERSHIP FIRM CONSISTING OF TWO PARTNERS SMT. SARITA GUPTA AND SH RI ANIL KUMAR YADAV. THE ASSESSEE FIRM BEING PART OF THE GROUP WAS ALSO REQUIRED U/S 153A TO FILE THE RETURN OF INCOME WHICH WAS DULY FILED BY THE AS SESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS ENGAGED IN T HE BUSINESS OF MANUFACTURING OF PAN MASALA, GUTKHA AND ALLIED PROD UCTS. THE ASSESSING OFFICER ALSO OBSERVED THAT ONE SOLE PARTNERSHIP FIR M BALAJI MARKETING WITH THE PROPRIETOR SHRI ASHOK KUMAR GUPTA ALSO STARTED SELLING THE PRODUCTS PRODUCED BY THE ASSESSEE. THE ASSESSING OFFICER OB SERVED THAT DURING THE I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 3 SEARCH PROCEEDING AT THE PREMISES OF THE ASSESSEE, A HARD DISK WAS SEIZED AND IN WHICH THE DATA IN RESPECT OF BUSINESS OF GUT KHA MANUFACTURING AND SELLING WAS FOUND RECORDED IN TWO FORMATS, ONE OF W HICH WAS IN TALLY ACCOUNTING SOFTWARE AND OTHER WAS IN THE FORM OF EX CEL SHEETS. HE FURTHER OBSERVED THAT IN BOTH THE FORMATS SOME OF THE DATA WAS STORED IN THE NAME OF GHEE. THE ASSESSING OFFICER FURTHER OBSERVED TH AT THE DISK WAS USED TO RECORD BUSINESS TRANSACTIONS OF BALAJI MARKETING, P ROPRIETOR OF WHICH WAS SHRI ASHOK KUMAR GUPTA WHO WAS SPOUSE OF SMT. SARIT A GUPTA, THE MAJOR PARTNER IN THE ASSESSEE FIRM. THE ASSESSING OFFICE R AFTER ANALYZING THE DATA, ARRIVED AT THE CONCLUSION THAT BALAJI MARKETING WIT H PROPRIETOR SHRI ASHOK KUMAR GUPTA WHO WAS SOLE SELLING AGENT OF THE ASSES SEE FORM, HAD RECORDED HUGE UNDECLARED TURNOVER WHICH WAS NOT DECLARED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER FURTHER OBSERVED THAT SHRI AS HOK KUMAR GUPTA, THE PROPRIETOR OF BALAJI MARKETING HAD ACCEPTED THE UNA CCOUNTED TURNOVER AND THEREFORE, SHRI ASHOK KUMAR GUPTA WAS QUESTIONED TO EXPLAIN THE MODE AND MANNER IN WHICH THE ACCEPTED TURNOVER WAS ACHIEVED. THE ASSESSING OFFICER FURTHER OBSERVED THAT VIDE REPLY OF SHRI AS HOK KUMAR GUPTA DATED 24/02/2015 IN THE CASE OF BALAJI MARKETING, HE HAD ACCEPTED THAT THE UNACCOUNTED TURNOVER WAS MADE AFTER PURCHASING THE GOODS FROM THE OPEN MARKET OF SIMILAR PRODUCTS. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE THAT THE PURCHASES WERE M ADE FROM THE OPEN MARKET AS HE OBSERVED THAT THE ENTIRE PURCHASES HAD BEEN SHOWN FROM ONE FORM GURU IN THE TALLY ACCOUNTS WHICH HE ASSUMED TH AT IT WAS CODE NAME OF THE ASSESSEE. THEREFORE, ASSESSING OFFICER REJECTE D THE CLAIM OF THE ASSESSEE AND HELD THAT BALAJI MARKETING MUST HAVE P URCHASED ITS UNRECORDED TURNOVER FROM THE ASSESSEE AND THEREFORE, THE ASSES SEE WAS SHOW CAUSED AS TO WHY THE UNRECORDED TURNOVER OF BALAJI MARKETING BE NOT TREATED AS UNRECORDED TURNOVER OF THE ASSESSEE ALSO. IN RESPO NSE THE ASSESSEE SUBMITTED THAT THE UNRECORDED TURNOVER OF BALAJI MA RKETING WAS NOT RELATED I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 4 TO THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER HE LD THAT THE FACTS OF THE CASE POINT TOWARDS THE UNACCOUNTED TURNOVER OF BALA JI MARKETING BEING DRAWN OUT OF THE SALE OF MANUFACTURED PRODUCTS OF T HE ASSESSEE AND THEREFORE, UNACCOUNTED INCOME @50% OF THE UNACCOUNT ED TURNOVER OF BALAJI MARKETING WAS MADE AS ADDITION TO THE INCOME. THE L EARNED CIT(A) HOWEVER DELETED THE SAME BY HOLDING THAT THERE WAS NO EVIDE NCE TO SUBSTANTIATE THAT UNRECORDED TURNOVER OF BALAJI MARKETING WAS NECESSA RILY OUT OF UNRECORDED TURNOVER OF THE ASSESSEE. WE FIND THAT IT IS AN UN DISPUTED FACT THAT THE ASSESSEE AND BALAJI MARKETING, WHICH IS A PARTNERSH IP FIRM OF SPOUSE OF ONE OF THE PARTNERS OF THE ASSESSEE COMPANY ARE GROUP C OMPANIES. IT IS ALSO AN UNDISPUTED FACT THAT HARD DISK WAS FOUND DURING SEA RCH OPERATION FROM THE PREMISES WHEREIN THE TRANSACTIONS OF UNRECORDED SAL ES MADE BY BALAJI MARKETING WAS FOUND. IT IS ALSO AN UNDISPUTED FACT THAT PROPRIETOR OF BALAJI MARKETING HAS ACCEPTED THE UNACCOUNTED TURNOVER AND AT THE SAME TIME HE HAS ALSO STATED THAT THE UNACCOUNTED TURNOVER WAS P URCHASED FROM OPEN MARKET AND NOT FROM THE ASSESSEE COMPANY. THE LEAR NED CIT(A) HAS ANALYZED THE FACTUAL POSITION AND HAS HELD THAT THE RE WAS NO EVIDENCE IN THE SEIZED MATERIAL WHICH ESTABLISHED UNACCOUNTED TRADI NG BETWEEN THE ASSESSEE AND BALAJI MARKETING. THE LEARNED CIT(A) HAS HELD THAT DISCLOSED TURNOVER OF THE ASSESSEE DURING ASSESSMENT YEAR 201 3-14 WAS RS.32.15 CRORES WHEREAS THE TURNOVER OF BALAJI MARKETING WAS RS.26.99 CRORES. IN VIEW OF THESE FACTS HE HELD THAT THE FINDINGS OF AS SESSING OFFICER THAT THE ENTIRE SALE OF THE ASSESSEE WAS THROUGH BALAJI MARK ETING WAS NOT SUPPORTED BY EVIDENCE. THE LEARNED CIT(A) FURTHER HELD THAT THERE WAS NO EVIDENCE IN THE SEIZED MATERIAL IN SUPPORT OF THE FINDINGS THAT THE ENTIRE TURNOVER OF BALAJI MARKETING WAS DERIVED FROM TRADING IN GOODS MANUFACTURED BY THE ASSESSEE. THEREFORE, THE LEARNED CIT(A) HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS ONLY BASED UPON THE PRESUMPTI ONS. THE LEARNED CIT(A) HAS PASSED A DETAILED ORDER IN BOTH THE YEAR S. FOR THE SAKE OF I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 5 COMPLETENESS, THE RELEVANT PART OF THE ORDER OF LEA RNED CIT(A), AS CONTAINED FROM PARA 4(8) TO 4(9)(IV), IS REPRODUCED BELOW: 4(8) I ALSO FIND THAT NO EVIDENCE IS AVAILABLE IN THE SEIZED MATERIAL WHICH ESTABLISHES ANY UNACCOUNTED TRADING BETWEEN M/S SIMLA SPECIAL FLAVOUR, THE APPELLANT AND M/S BA LAJI MARKETING CO. IN FACT THE DISCLOSED TURNOVER OF THE APPELLANT IS RS.32,15,27,088/- AND THE DISCLOSED TURNOVER OF M/S BALAJI MARKETING IS RS.26,99,34,047/-. IN OTHER WORDS THE FINDING OF THE AO THAT ENTIRE SALE OF THE APPELLANT IS THROUGH M/S BALAJI MARKETING IS NOT SUPPORTED BY THE AUDITED ACCOUNTS. M/S BALAJI MARKETING IS NOT EVEN SHOWING THE ENTIRE MANUFACTUR ED TURNOVER OF THE APPELLANT AS ITS TURNOVER. THERE IS NO EVIDENCE IN THE SEIZED MATERIAL IN SUPPORT OF THE FINDING TH AT THE ENTIRE TURNOVER OF M/S BALAJI MARKETING IS DERIVED FROM TR ADING IN GOODS MANUFACTURED BY M/S SIMLA SPECIAL FLAVOUR. FU RTHER, DURING THE COURSE OF SEARCH NO DOCUMENT/ TRANSACTIO N RELATED TO UNACCOUNTED MANUFACTURING, PURCHASES OR SALES BY M/S SIMLA SPECIAL FLAVOUR, THE APPELLANT WERE FOUND. NO CORRELATION COULD BE ESTABLISHED FOR THE TREATMENT OF TURNOVER RECORDED UNDER THE HEAD BRAND 'TIE' IN THE EXCEL FI LES 7' 'GHEE123' IN THE TALLY ACCOUNTS OF M/S BALAJI MARKE TING AS THE TURNOVER OF 'KAYAM' BRAND OF THE APPELLANT, WHICH I S A PRESUMPTION MADE BY THE AO. 4(9)(I) NOW COMING TO THE MANUFACTURING ACTIVITIES OF THE APPELLANT, I FIND THAT THE APPELLANT DEALS IN MANUF ACTURING OF PAN MASALA GUTKHA WHICH IS GOVERNED BY THE COMPOUND ED LEVY SCHEME OF THE EXCISE RULES. IN 2008, THE CENTR AL GOVERNMENT, IN EXERCISE OF THE POWERS CONFERRED BY SECTION 3A OF CEA, 1944, FRAMED PAN MASALA PACKING MACHINES (CAPACITY DETERMINATION AND COLLECTION OF DUTY) RUL ES, 2008 TO LEVY AND COLLECT THE EXCISE DUTY WITH RESPECT TO THE MANUFACTURING OF PAN MASALA. THE WHOLE THEME OF COMPOUNDED LEVY IS BASED ON THE DEEMED PRODUCTION I NSTEAD OF ACTUAL PRODUCTION. IN DEEMED PRODUCTION A QUANTI TY IS DEEMED TO BE PRODUCED BY USING ONE MACHINE FOR A PA RTICULAR PERIOD OF TIME. FIRST OFF, THE. MANUFACTURER HAS TO DECLARE CERTAIN INFORMATION, IN ACCORDANCE WITH RULE 6, IN FORM 1 TO THE CENTRAL EXCISE AT LEAST SEVEN DAYS PRIOR TO THE COMMENCEMENT OF PRODUCTION. FOLLOWING INFORMATION H AS TO BE DECLARED BY THE MANUFACTURER: I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 6 -NUMBER OF SINGLE TRACK PACKING MACHINES AVAILABLE AND INSTALLED IN HIS FACTORY AND THE NUMBER OF MACHINES WHICH HE ACTUALLY INTENDS TO OPERATE DURING A PARTI CULAR MONTH. -NUMBER OF MULTIPLE TRACK OR MULTIPLE LINE PACKING MACHINES AVAILABLE AND INSTALLED IN HIS FACTORY AND THE NUMBER OF MACHINES WHICH HE ACTUALLY INTENDS TO OPERATE DURING A PARTICULAR MONTH. -NUMBER OF MULTIPLE TRACK OR MULTIPLE LINE PACKING MACHINES WHICH ARE INCAPABLE OF PERFORMING ADDITION AL PROCESSES OF BRANDING OR MOULDING THE POUCHES. IT I S GENERALLY DONE TO INTIMATE THE CONCERNED OFFICER TO SEAL THE MACHINES. SIMPLY PUT, NO MANUFACTURER WOULD DESIRE TO PAY THE DUTY FOR NON-FUNCTIONAL MACHINE. -NAME OF THE MANUFACTURER OF EACH OF THE PACKING MACHINE, IDENTIFICATION NUMBER OF THE MACHINE, PURCHASING DATE OF MACHINE AND THE MAXIMUM PACKING SPEED OF EACH OF THE MACHINE. IT IS DIFFICULT TO UNDERSTAND THAT WHY THE DEPARTMENT CALLS FOR THE MANUFACTURER TO DECLARE THE PACKING SPEED OF THE MACHINE WHEN THE DUTY IS LEVIED ON THE BASIS OF DEE MED PRODUCTION. THE PURPOSE OF SUCH DECLARATION IS HARD TO CONSTRUE IN CASE OF COMPOUNDED LEVY SCHEME. -DESCRIPTION OF GOODS AND BRAND NAMES WHICH HE SHAL L MANUFACTURE I.E. PAN MASALA OR GUTKHA OR BOTH. -RETAIL SALE PRICES OF POUCHES TO BE MANUFACTURED. IT IS REQUIRED TO ASCERTAIN THE DUTY TO BE LEVIED ON THE BASIS OF DEEMED PRODUCTION. -BESIDES, THE MANUFACTURER HAS TO DECLARE THE PART OR SECTION OF THE PREMISE TO BE EXPENDED FOR THE MANUFACTURE OF NOTIFIED GOODS OF DIFFERENT RETAIL P RICE. 4(9)(II) DURING NORMAL COURSE OF BUSINESS, THE MAXI MUM NUMBER OF MACHINES SHALL BE CONSIDERED AS THE NUMBE R OF MACHINES DECLARED BY THE MANUFACTURER, UNDER RULE 6 , WHICH HE INTENDS TO OPERATE DURING A PARTICULAR MONTH. RU LE 8 ADDRESSES THE SITUATION WHEN SOME ALTERATION IS MAD E BY THE MANUFACTURER IN THE NUMBER OF OPERATING PACKING MAC HINES AS DECLARED UNDER RULE 6. RULE 8 ENVISAGES THAT THE MA XIMUM NUMBER OF MACHINE SHALL BE TAKEN AS THE MAXIMUM NUM BER OF PACKING MACHINES INSTALLED ON ANY DAY DURING THE MO NTH IRRESPECTIVE OF ANY ALTERATION IN THE NUMBER OF MAC HINES. ACCORDING TO RULE 10, IF A MANUFACTURE DOES NOT MAN UFACTURE I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 7 THE NOTIFIED GOODS FOR ANY CONTINUOUS PERIOD OF 15 DAYS OR MORE, THE DUTY CALCULATED ON THE PRO-RATA BASIS SHA LL BE ABATED WITH RESPECT TO THE PERIOD OF NON PRODUCTION . TO CLAIM SUCH ABATEMENT, THE MANUFACTURER HAS TO INTIMATE TH E DEPUTY COMMISSIONER OF CENTRAL EXCISE OR ASSISTANT COMMISS IONER OF CENTRAL EXCISE AT LEAST THREE DAYS BEFORE THE COMME NCEMENT OF SUCH PERIOD OF NON PRODUCTION. ACCORDING TO RULE 7 DUTY PAYABLE FOR A PARTICULAR MONTH SHALL BE CALCULATED BY APPLICATION OF THE APPROPRIATE RATE OF DUTY BY THE GOVERNMENT TO THE NUMBER OF OPERATING PACKING MACHINES IN THE FACTORY DURING THE MONTH. RULE 9 PRESCRIBES MANNER OF PAYME NT OF EXCISE DUTY. THE PAYMENT OF THE ASCERTAINED DUTY IN NORMAL SCHEME IS MADE IN THE FOLLOWING MONTH OF THE PRODUC TION. BUT, IN CASE OF COMPOUNDED LEVY SCHEME (PAN MASALA RULES ) THE PAYMENT IS TO BE MADE IN ADVANCE I.E. BY THE 5TH DA Y OF THE SAME MONTH OF PRODUCTION. IT IS ALSO KNOWN AS ADVAN CE PAYMENT IN TAXATION PARLANCE. THE MANUFACTURER IS BOUND BY THE FOLLOWING RESTRICTIONS AS PROVIDED UNDER RULE 1 3 OF PAN MASALA RULES, 2008 -IN CASE IF HE INTENDS TO STOP OPERATING ANY MACHIN E, HE HAS TO INTIMATE THE CONCERNED EXCISE OFFICER ABO UT HIS INTENTION AT LEAST 3 DAYS IN ADVANCE. NO CONCES SION IN THE DUTY PAYABLE WILL BE GRANTED IF HE STOPS OPE RATING ANY MACHINE WITHOUT INTIMATION. -THE CONCERNED OFFICER WILL GET THE MACHINES SEALED UNDER HIS PHYSICAL SUPERVISION. SAME PROCESS IS TO BE FOLLOWED FOR ADDITION OR INSTALLATION OF ANY PACKIN G MACHINE. -A MANUFACTURER SHALL NOT BE ALLOWED TO KEEP AS WEL L AS TO TRADE IN THOSE GOODS OF WHICH NO RETAIL SALE PRI CE HAD BEEN DECLARED BY HIM. 4(9)(III) THERE IS NO EVIDENCE BROUGHT ON RECORD TH AT THERE WAS PRODUCTION IN EXCESS OF THAT DECLARED IN COMPOU NDED EXCISE LEVY. THE SORT OF UNACCOUNTED PRODUCTION OF RS.90,25,69,255/- COMPUTED BY THE AO WOULD REQUIRE OPERATION OF PACKING MACHINES AND ASSEMBLY LINE FAR IN EXCESS OF THAT DECLARED TO EXCISE AUTHORITIES IN TERMS OF THE RULES DISCUSSED SUPRA. THERE IS NO EVIDENCE OF ANY POSSES SION OR OPERATION OF ANY PACKING MACHINES EXCEPT THE NUMBER APPROVED BY THE EXCISE. ADMITTEDLY NO CORROBORATIVE EVIDENCE IS AVAILABLE EITHER IN THE FORM OF SEIZURE OF UNACC OUNTED GOODS I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 8 LYING IN THE FACTORY OR SEIZURE OF GUTKA/PAN MASALA HAVING BEEN REMOVED WITHOUT GATE PASSES. THERE IS NO EVIDE NCE IN THE FORM OF SALE RECORDS TO SHOW THAT THE QUANTITIE S OTHER THAN THOSE REMOVED HAVE BEEN SOLD BY THE APPELLANT. THER E IS NO ALLEGATION OF THE RECEIPT AND CONSUMPTION OF EXCESS RAW MATERIAL. IN SHORT, THERE ARE NO OTHER EVIDENCES TO SUPPORT THE ALLEGATION OF EXCESS PRODUCTION AND THEIR CLANDESTI NE REMOVAL. THERE WERE NO MATERIALS BROUGHT ON RECORD ON THE BA SIS OF WHICH THE AO COULD FORM REASONABLE BELIEF; THAT THE EVASION OF CENTRAL EXCISE DUTY WAS IN RESPECT OF GUTKHA MANUFA CTURED BY THE APPELLANT. 4(9)(IV) THE SECOND LEG OF THE AO'S CASE IS REQUIRE D TO BE ESTABLISHED I.E. OF THESE UNACCOUNTED POUCHES, HAVI NG BEEN FILLED WITH QUANTITY OF TOBACCO AND OTHER INGREDIEN TS AND PACKED BOXES AND REMOVED IN TRUCKS AND/OR STORED IN THE FACTORY OR ELSEWHERE, IN ABSENCE OF ANY MATERIAL ON RECORD TO SHOW PROCUREMENT AND/OR AVAILABILITY OF THE CONTENT S OF THE POUCHES AND FINAL PACKING AND TRANSPORT OF SUCH ENO RMOUS MAGNITUDE OF UNACCOUNTED PRODUCTION WOULD LEAD TO B E, IS ONLY LAME CONCLUSIONS BASED ON A PRESUMPTION THAT T HE POUCHES WERE SO FILLED AND THEREAFTER PACKED IN OTH ER MATERIAL AND TRANSPORTED, OF WHICH THERE IS NOT WHISPER IN A NY MATERIAL. AN ASSUMED POUCH PACKED WITH PRESUMED CONTENTS AND THEREAFTER REMOVED ON UNCORROBORATED TRANSPORT, AND WHERE WERE THE SALE PROCEEDS WHICH WOULD BE FLOWING IN CA NNOT BE UPHELD. EXCESS PRODUCTION OF GUTKA /PAN MASALA AND ITS REMOVAL AS ALLEGED CANNOT BE ESTABLISHED. 5.1 THE ABOVE FINDINGS OF LEARNED CIT(A) ARE QUITE EXHAUSTIVE AND LEARNED D. R. WAS NOT ABLE TO CONTRADICT THESE FINDINGS. THE LEARNED CIT(A) HAS EXHAUSTIVELY EXAMINED THE FACT THAT ASSESSEE WAS SUBJECTED TO EX CISE DUTY ON THE GOODS MANUFACTURED BY IT. THE LEARNED CIT(A) HAS ALSO HE LD THAT EXCISE DUTY WAS BEING IMPOSED ON THE ASSESSEE ON THE BASIS OF DEEMED PROD UCTION BASED UPON NUMBER OF MACHINES INSTALLED AND THEIR CAPACITY. THE ASSE SSEE BEING ENGAGED IN EXCISABLE GOODS WAS NOT FOUND TO HAVE MANUFACTURED GOODS IN E XCESS OF CAPACITIES OF MACHINES. NO DOCUMENTARY EVIDENCE WAS AVAILABLE IN THE SEIZED MATERIAL WHICH ESTABLISHED ANY UNACCOUNTED TURNOVER BETWEEN ASSESS EE AND BALAJI MARKETING. FURTHER DURING COURSE OF SEARCH, NO DOCUMENT RELATE D TO UNACCOUNTED MANUFACTURING OF GOODS WAS FOUND. WE FIND THAT PRO PRIETOR OF BALAJI MARKETING I.T.A. NO.421 & 422/LKW/2016 ASSESSMENT YEAR:2012-13 & 13-14 9 HAD ACCEPTED ITS UNACCOUNTED TURNOVER AND HE HAD AL SO STATED THAT HE HAD PURCHASED THE GOODS FROM OPEN MARKET TO MEET OUT TH E INCREASED DEMAND. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). 5.2 AS REGARDS THE GROUND RELATING TO ADDITIONAL EV IDENCE, WE FIND THAT THE SO CALLED ADDITIONAL EVIDENCE IS A COPY OF LETTER EXCH ANGED BY ACIT, CIRCLE-1 TO JT. CIT, CENTRAL CIRCLE, A COPY OF WHICH IS PLACED AT P AGES 72 TO 76 OF THE PAPER BOOK AND THE CONTENTS OF WHICH HAVE ALSO BEEN REPRODUCED BY LEARNED CIT(A) IN HIS ORDER FROM PARA 4(10)(I) OF HIS ORDER. THE ASSESSE E HAD FILED THIS LETTER DURING APPELLATE PROCEEDINGS AND THE CASE OF THE REVENUE I S THAT THIS LETTER WAS NOT CONFRONTED TO THE ASSESSING OFFICER. HOWEVER, WE F IND THAT LEARNED CIT(A) HAS NOT ALLOWED RELIEF TO THE ASSESSEE ON THE BASIS OF THIS LETTER ONLY AND IN HIS EARLIER PARAGRAPHS HE HAS ALREADY DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE. THE SAID LETTER, BEING PART OF THE OFFICIAL RECORD OF THE RE VENUE, CANNOT BE SAID TO BE A DOCUMENT TO WHICH THE ASSESSING OFFICER HAD NO ACCE SS. IN THIS LETTER, WHICH IS CLAIMED BY THE REVENUE TO BE ADDITIONAL EVIDENCE, T HE ASSESSING OFFICER HAS ONLY EXPRESSED ITS OPINION ON THE ADDITION MADE BY THE A SSESSING OFFICER AND HAS WRITTEN TO JT.CIT THAT THE ADDITIONS WERE NOT SUSTA INABLE. THE LEARNED CIT(A) HAS NOT MUCH RELIED ON THE LETTER AND HAS IN FACT ALREA DY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ITS EARLIER PARA OF HIS ORDER. THE REFORE, THE GROUND RELATING TO ADMISSION OF ADDITION EVIDENCE WITHOUT CONFRONTING THE ASSESSING OFFICER HAS NO FORCE. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:11/01/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW