Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 93930 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 4 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-07-2015
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
] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM ITA NOS.284, 285 & 286/PN/2012 ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09 BHAGYALAXMI STEEL ALLOYS PVT. LTD., G-8, ADDITIONAL MIDC, PHASE II, JALNA 431203 . APPELLANT PAN: AACCB4708R VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . RESPONDENT ITA NOS.437, 438 & 439/PN/2012 ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . APPELLANT VS. BHAGYALAXMI STEEL ALLOYS PVT. LTD., P. NO. G-8, ADDL. MIDC, JALNA 431203 . RESPONDENT PAN: AACCB4708R ASSESSEE BY : SHRI J. P. BAIRAGRA DEPARTMENT BY : SHRI SUNIL GANOO (SPECIAL COUNSEL FOR DEPARTMENT) ITA NOS.179 TO 182/PN/2012 ASSESSMENT YEARS: 2005-06 TO 2008-09 OMSAIRAM STEEL & ALLOYS PVT. LTD., C/O BANSILAL KABRA, ADVOCATE, 1 ST FLOOR, AMBIKA MARKET, JALNA 431203 . APPELLANT PAN: AAACO6232H VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . RESPONDENT 2 ITA NOS.656 TO 659/PN/2012 ASSESSMENT YEARS: 2005-06 TO 2008-09 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD . APPELLANT VS. OMSAIRAM STEEL & ALLOYS PVT. LTD., P.NO. F-1, 2 & 3, PHASE II, ADDL. MIDC, JALNA 431203 . RESPONDENT PAN: AAACO6232H ITA NO.1084/PN/2012 ASSESSMENT YEAR: 2004-05 OMSAIRAM STEEL & ALLOYS PVT. LTD., C/O BANSILAL KABRA, ADVOCATE, 1 ST FLOOR, AMBIKA MARKET, JALNA 431203 . APPELLANT PAN: AAACO6232H VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . RESPONDENT ITA NO.1468/PN/2012 ASSESSMENT YEAR: 2004-05 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . APPELLANT VS. OMSAIRAM STEEL & ALLOYS PVT. LTD., P.NO. F-1, 2 & 3, PHASE II, ADDL. MIDC, JALNA 431203 . RESPONDENT PAN: AAACO6232H ASSESSEE BY : SHRI J. P. BAIRAGRA DEPARTMENT BY : SMT. M. S. VERMA, CIT-DR ITA NO.1466/PN/2012 ASSESSMENT YEAR: 2004-05 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . APPELLANT VS. M/S. RISHI STEEL & ALLOYS PVT. LTD., P.NO.C 55/7, ADDL. MIDC AREA, JALNA 431203 . RESPONDENT PAN: AABCR3131P 3 ITA NO.1523/PN/2012 ASSESSMENT YEAR: 2004-05 M/S. RISHI STEEL & ALLOYS PVT. LTD., D-52/7, ADDL. MIDC AREA, JALNA 431203 . APPELLANT PAN: AABCR3131P VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . RESPONDENT ASSESSEE BY : SHRI J. P. BAIRAGRA DEPARTMENT BY : SMT. M. S. VERMA, CIT-DR ITA NOS.142 TO 146/PN/2012 ASSESSMENT YEARS : 2004-05 TO 2008-09 MATSYODARI STEEL & ALLOYS PVT. LTD., D-32/1, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA 431 203. PAN: AABCM9598D . APPELLANT VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE -1, AURANGABAD. . RESPONDENT ITA NOS.631 TO 635/PN/2012 ASSESSMENT YEARS : 2004-05 TO 2008-09 THE INCOME TAX OFFICER, WARD 1(3), JALNA. . APPELLANT VS. MATSYODARI STEEL & ALLOYS PVT. LTD., D-32/1, ADDL. MIDC AREA, AURANGABAD ROAD, JALNA 431 203. PAN: AABCM9598D . RESPONDENT ASSESSEE BY : SHRI J. P. BAIRAGRA DEPARTMENT BY : SHRI SUNIL GANOO (SPECIAL COUNSEL FOR DEPARTMENT) 4 ITA NOS.214 & 215/PN/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 JALNA SIDDHIVINAYAK ALLOYS PVT. LTD., C-4/1/2, ADDL. MIDC AREA, JALNA 431 203. PAN: AAACJ8761E . APPELLANT VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE -1, AURANGABAD. . RESPONDENT ITA NOS.412 & 413/PN/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 1, AURANGABAD. . APPELLANT VS. JALNA SIDDHIVINAYAK ALLOYS PVT. LTD., C-4/1/2, ADDL. MIDC AREA, JALNA 431 203. PAN: AAACJ8761E . RESPONDENT ASSESSEE BY : SHRI J. P. BAIRAGRA DEPARTMENT BY : SHRI SUNIL GANOO (SPECIAL COUNSEL FOR DEPARTMENT) / DATE OF HEARING: 05.05.2015/ 07.05.2015/ 08.05.2015/ 14.05.2015 / DATE OF PRONOUNCEMENT: 15.07.2015 % / ORDER PER SUSHMA CHOWLA, JM : THE PRESENT BUNCH OF CROSS APPEALS FILED BY THE DIF FERENT ASSESSEES AND THE REVENUE ARE AGAINST SEPARATE ORDERS OF CIT(A), AURA NGABAD PASSED UNDER SECTION 143(3) R.W.S. 147 AND/OR UNDER SECTION 143(3) RESPE CTIVELY OF THE INCOME TAX ACT, 1961 AND THE DETAILS OF RESPECTIVE ASSESSEES ARE AS UNDER :- 5 SR. NO. APPEAL NO. NAME OF ASSESSEE DATE OF ORDER OF THE CIT(A), AURANGABAD ASSTT. YEAR 1. ITA NOS.284 TO 286/PN/2012 BHAGYALAXMI STEEL ALLOYS PVT. LTD. 30/12/2011 2006-07 TO 2008-09 ITA NOS.437 TO 439/PN/2012 2. ITA NOS.179 TO 182/PN/2012 OMSAIRAM STEEL & ALLOYS PVT. LTD. 06/01/2012 2005-06 TO 2008-09 ITA NOS.656 TO 659/PN/2012 3. ITA NO.1084/PN/2012 OMSAIRAM STEEL & ALLOYS PVT. LTD. 30/04/2012 2004-05 ITA NO.1468/PN/2012 4. ITA NO.1466/PN/2012 M/S RISHI STEEL & ALLOYS PVT. LTD. 30/04/2012 2004-05 ITA NO.1523/PN/2012 5. ITA NOS.142 TO 146/PN/2012 MATSYODARI STEEL & ALLOYS PVT. LTD. 09/01/2012 2004-05 TO 2008-09 ITA NOS.631 TO 635/PN/2012 6. ITA NOS.214 & 215/PN/2012 JALNA SIDDHIVINAYAK ALLOYS PVT. LTD. 30/12/2011 2006-07 & 2007-08 ITA NOS.412 & 413/PN/2012 2. THIS BUNCH OF APPEALS RELATING TO THE DIFFERENT ASSESSEES ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING M ADE TO THE FACTS AND ISSUES IN ITA NO.284/PN/2012 AND ITA NO.437/PN/2012 TO ADJUDI CATE THE ISSUES. 3. IN ITA NO.284/PN/2012, THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE RE-OPENING OF THE ASSESSMENT U/S. 147 OF THE IN COME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT REASONS FOR RE-OPENING OF THE ASSESSMENT WERE NOT SUPPLIED TO THE APPELLANT COMPA NY, NEITHER ON RE-OPENING OF THE ASSESSMENT NOR AT THE STAGE OF AP PELLATE PROCEEDINGS BEFORE THE LD. C . I . T. (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS.2 8,59 , 32,329/- . 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON THE BASIS OF THE 6 ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS , AURANGABAD AND ON THE BASIS OF EVASION OF EXCISE DU TY BY STEEL MANUFACTURERS IN JALNA CLUSTER FOUND BY THE DIRECTO RATE GENERAL OF CENTRAL EXCISE AND CUSTOMS (DGCEI). 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE SUPPRESSION OF SALES OF RS.28 , 59,32,329/- ON THE BASIS OF THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD WHEREIN THEY HAVE RELIED ON THE CONSUMPT ION OF ELECTRICITY VIS-A-VIS PRODUCTION ON THE BASIS OF AN ARTICLE WRI TTEN BY DR. N. K . BATRA, PROFESSOR OF IIT, KANPUR I.E . ON PRESUMPTION AND ASSUMPTION AND WITHOUT AN Y EVIDENCE OF PURCHASE OF RAW MATERIAL OR SALES OF FINISHED PRODUCTS OUT OF BOOKS . 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON TH E GROUNDS OF MONTHLY VARIATION IN CONSUMPTION OF ELECTRICIT Y VIS A VIS PRODUCTION . 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN H OLDING THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY ARE CORR ECTLY REJECTED U/S. 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR F INDING AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIV I NG ANY SHOW CAUSE NOTICE TO THE APPELLANT COMPANY TO EXPLAIN TH E FACTS AGAINST THE PROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGA INST THE RULES OF NATURAL JUSTICE. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROFIT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS.28,59,32,329/-. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FURTHER ERRED IN MAKING ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMEN T REQUIRED FOR UNDISCLOSED TURNOVER OF RS.27,49,349/-. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FURTHER 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 BE EN PASSED WITHOUT ISSUE OF NOTICE U/S.143(2) OF THE I . T. ACT . 12. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX APPE LLATE TRIBUNAL IN THE CASE OF M/S. SRJ PEETY STEELS PVT . LTD . FOR ASSESSMENT YEARS 2000 - 01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHERE IN THE SIMILA R ADDITION WAS DELETED. 13. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER O R AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER , AT THE TIME OF HEARING. 4. IN ITA NO.437/PN/2012, THE REVENUE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL:- 7 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCT ION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CL ANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MAN UFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTI ON WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODU CTION SHOWN IN THE BOOKS OF ACCOUNTS? 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 ALTE R ANY GROUNDS OF APPEAL. 5. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE A SSESSEE HAD FILED THE RETURN OF INCOME ON 11.12.2006 DECLARING LOSS OF RS.1,22,42,0 39/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASS ESSEE WAS ENGAGED IN MANUFACTURER OF INGOTS/BILLETS. THE ASSESSING OFFI CER RECEIVED INFORMATION FROM THE OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CU STOMS, AURANGABAD VIDE LETTER DATED 29 TH MARCH, 2010 THAT THE ASSESSEE HAD INDULGED IN MANU FACTURE OF FINISHED GOODS AND REMOVAL WITHOUT PAYING EXCISE DUTY. THE ADJUDICATION ORDER OF THE CCE QUANTIFYING THE VALUE OF SUPPRESSED PRODUCTION WAS ALSO FORWARDED TO THE ASSESSING OFFICER. IN VIEW OF THE SAID INFORMATION , THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 30.03.20 10. THE ASSESSEE IN RESPONSE STATED THAT THE ORIGINAL RETURN OF INCOME MAY BE TR EATED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. IN RESPONSE T O STATUTORY NOTICES RECEIVED, THERE WAS REPRESENTATION BY THE ASSESSEE AND THE ASSESSIN G OFFICER NOTES THAT THE BOOKS OF ACCOUNT WERE PRODUCED WHICH WERE VERIFIED ON TES T CHECK BASIS. THE ASSESSEE WAS SHOW-CAUSED WITH THE AMOUNT OF INCOME ESCAPING ASSESSMENT AMOUNTING TO RS.28,59,32,329/-. THE ASSESSING OFFICER THEREAFTE R CONSIDERED THE MANUFACTURING PROCESS OF THE ASSESSEE IN DETAIL AND NOTED THAT TH E ELECTRICITY WAS ONE OF THE MAJOR COST INPUT IN THE PROCESS OF MANUFACTURE OF INGOTS/ BILLETS AND ALSO ACCOUNTED FOR MAJOR SHARE OF EXPENSES. THE ASSESSING OFFICER ALS O NOTED THAT THE ASSESSEE HAD CONSUMED SPONGE AND SCRAP AND THE DATA OF CONSUMPTI ON WAS COMPARED WITH THE 8 PURCHASE OF RAW MATERIALS. THE ASSESSING OFFICER D URING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE AS TO WHY THE CONSUM PTION OF ELECTRICITY PER METRIC TONNE SHOULD NOT BE ADOPTED FOR THE PURPOSES OF CAL CULATION OF SUPPRESSION IN PRODUCTION AS PER THE ORDER OF THE CCE, AURANGABAD S SHOW-CAUSE NOTICE. IN RESPONSE, THE STAND OF THE ASSESSEE WAS THE SAME AS BEFORE THE CCE, AURANGABAD. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DO NOT REFLECT THE TRUE AND CORRECT PI CTURE OF MANUFACTURING RESULTS AND THE SAME WERE REJECTED UNDER SECTION 145(1) OF THE ACT. THE ASSESSING OFFICER ALSO NOTED THAT THE ORDER OF THE CCE, AURANGABAD WA S IN RESPECT OF FURNACE COMPANIES IN JALNA DISTRICT. THE ASSESSING OFFICER COMPUTED THE ADDITION OF RS.28,59,32,329/-. 6. THE CIT(A) NOTED THAT VARIOUS MANUFACTURERS TO M S INGOTS/BILLETS WERE IN APPEAL AND THE CONTENTION OF THE SAID PERSONS WERE THAT THE UNDISCLOSED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION WAS NOT JUSTIFIED. EVEN THOUGH ADDITION ON ACCOUNT OF CLANDESTINE REMOVAL OF MS IN GOTS/BILLETS IN THE YEAR UNDER APPEAL WAS AGREED TO PURCHASE PEACE OF MIND AND TO AVOID LITIGATION. THE CIT(A) IN THE BUNCH OF APPEALS HELD AS UNDER :- 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE 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 AN D 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. 9 (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 UNDER 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 ORDER WAS N OT BEFORE THE HON'BLE ITAT, PUNE WHILE DECIDING THE ABOVE REFERRED CASES. FURTHER IN THE SAID CASES ACTION U/S 132 WAS CONDUCTED AND THE APPELLAN T WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT OF CO MPLETED ASSESSMENTS IN SUCH CASES COULD BE MADE ONLY ON THE BASIS OF MATER IAL FOUND IN SEARCH ACTION. IN VIEW OF THE ABOVE FACTS, THE RELIANCE PL ACED BY THE APPELLANT ON THE ABOVE REFERRED DECISION IS MISPLACED. 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 REMOV AL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT . FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BASIS OF ELECTRICI TY UNITS CONSUMED WERE NOT PRESENT IN THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW O F THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PURCHASES AND SALES ADMITTED BY THE APPELLANT AND ALSO IN VIEW OF VARIOUS REASONS MENTI ONED 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; 10 (C) COMMISSIONER OF INCOME TAX (APPEALS)' CONFIRMED NET ADDITION OF INCOME OF RS.23.5 LAKHS ON ACCOUNT OF SUPPRESSED PR ODUCTION 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. 7. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE SAID ORDER OF THE CIT(A), WHICH IN TURN WAS PASSED PURSUANT TO THE ORDER PASS ED IN THE CASE OF SRJ PEETY STEELS PVT. LTD.. 8. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE TRIBUNAL IN SRJ PEETY STEELS PVT. LTD. VS. ADDL.CIT IN ITA NOS.123 & 124/PN/2012 RELATING TO ASSESSMENT YEARS 2007-08 & 2008-09 AND IN CROSS-APPEAL FILED BY THE REVENUE IN ITA NOS.435 & 436/PN/2012 R ELATING TO ASSESSMENT YEARS 2007-08 & 2008-09 VIDE ORDER DATED 16.01.2015. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE APPEAL OF THE REVENUE 11 IS ALSO SIMILARLY COVERED BY THE RATIO LAID DOWN IN SRJ PEETY STEELS PVT. LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY THE LD. AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IN THE PRESENT CASE AS AGAINST THE FA CTS IN SRJ PEETY STEELS PVT. LTD. (SUPRA), THERE WAS NO INVESTIGATION BY THAT DGCEI A ND THERE IS NO ORDER OF THE SETTLEMENT COMMISSION. THE LD. AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE FURTHER STRESSED THAT IN ALL THE YEARS UNDER APPEAL I.E. ASSESSMENT YEARS 2006-07 TO 2008-09 THERE WAS NO INSPECTION BY THE EXCISE DEPAR TMENT AND THERE WAS NO CASE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AGAINST THE ASSESSEE. 9. THE LD. SPECIAL AR FOR THE REVENUE IN FAIRNESS P OINTED OUT THAT THERE WAS NO EVIDENCE HOWEVER WITH THE EXCISE DEPARTMENT OR WITH THE INCOME TAX DEPARTMENT REGARDING THE CLANDESTINE REMOVAL OF MATERIAL WITHO UT PAYMENT OF EXCISE DUTY IN THE CASE OF ASSESSEE. THE PLEA OF THE LD. SPECIAL AR B EFORE US WAS THAT BECAUSE OF HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND PRO DUCTION OF INGOTS AND BILLETS, ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. TH E LD. SPECIAL AR FURTHER STATED THAT BECAUSE OF THE CIRCUMSTANTIAL EVIDENCE I.E. TH E ORDER PASSED BY THE CCE, AURANGABAD PRESUMPTION WAS AGAINST THE ASSESSEE. R ELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREM E COURT IN MELTON INDIA VS. CIT REPORTED IN 2007-TIOL-14-SC-CT. FURTHER, THE LD. S PECIAL AR POINTED OUT THAT THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE WITH RE GARD TO THE HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND ALSO NO WAGES REGISTER WAS PRODUCED BY THE ASSESSEE. THE LD. SPECIAL AR POINTED OUT THAT NO DOUBT THE DE PARTMENT HAS TO SHOW THE PRIMA-FACIE EVIDENCE AGAINST THE ASSESSEE, BUT WHER E THE PRIMA-FACIE EVIDENCE HAS BEEN SHOWN, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE SAME. THE LD. SPECIAL AR IN THIS REGARD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN COLLECTOR OF CUSTOMS, MADRAS AND OTHERS VS . D. BHOORMULL REPORTED IN 2002-TIOL-253-SC-CUS. IT WAS FURTHER ALLEGED BY HI M THAT NO BOOKS OF ACCOUNT WERE PRODUCED AND NO EXPLANATION WAS FILED BY THE A SSESSEE, IN THE ABSENCE OF 12 WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE IS JUSTIFIED. HE FURTHER ADMITTED THAT THE CASE LAWS RELIED UPON WERE CITED BEFORE THE TRI BUNAL IN SRJ PEETY STEELS PVT. LTD. (SUPRA) WHICH WERE DISMISSED ON THE GROUND THA T NO EVIDENCE WAS FOUND AGAINST THE ASSESSEE. IT WAS PLEADED BY THE LD. SP ECIAL AR THAT THE CENTRAL EXCISE COMMISSIONER HAD CONSIDERED THE CASE AND CAME TO A FINDING THAT THERE WAS A CLANDESTINE REMOVAL OF GOODS. RELIANCE WAS PLACED UPON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN SUMATI DAYAL VS. CIT REPOR TED IN 214 ITR 801 (SC) FOR THE PROPOSITION OF PREPONDERANCE OF PROBABILITIES. THE LD. SPECIAL AR SUBMITTED THAT THOUGH THE ASSESSING OFFICER AT PAGE 2 OBSERVE D THAT THE BOOKS OF ACCOUNT WERE PRODUCED BUT IN PARA 4.2 THE ASSESSING OFFICER STATES THAT THE DETAILS WERE NOT GIVEN. IT WAS FURTHER VEHEMENTLY STRESSED BY HIM T HAT THE ISSUE IN THE PRESENT CASE IS NOT COVERED BY THE RATIO LAID DOWN IN SRJ PEETY STEELS PVT. LTD. (SUPRA) AND IN ANY CASE THE DECISION IS NOT FINAL. THE LD. SPECIA L AR POINTED OUT THAT ACCORDING TO THE ASSESSEE THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN R.A. CASTINGS (SUPRA) HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT BUT THERE IS NO DECISION OF SUPREME COURT AS ONLY THE SLP HAS BEEN DISMISSED. 10. IN REJOINDER, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSMENT IN THE HANDS OF THE ASSESSEE HA D BEEN RE-OPENED ON THE BASIS OF THE ORDER OF THE CCE, AURANGABAD. OUR ATTENTION WAS DRAWN TO PARA 1 OF THE ASSESSMENT ORDER AND ALSO TO THE LAST PAGE OF THE A SSESSMENT ORDER TO POINT OUT THAT THE ADDITION WAS MADE ON THAT BASIS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER REFERRED TO THE ORDER OF THE T HIRD MEMBER OF CESTAT AND POINTED OUT THAT ALL THE DECISIONS AND ARGUMENTS RA ISED BY THE LD. SPECIAL AR HAVE BEEN CONSIDERED BY THE CESTAT THIRD MEMBER. OUR AT TENTION WAS DRAWN TO THE ISSUES RAISED BEFORE THE THIRD MEMBER OF CESTAT I.E . WHETHER IN VIEW OF THE DECISION OF R.A. CASTINGS (SUPRA), THE IMPUGNED ORD ER OF CCE, AURANGABAD HAS TO BE SET-ASIDE. THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT AT PAGE 10 OF THE ORDER OF THE THIRD MEMBER OF CEST AT REFERENCE HAS MADE TO THE 13 RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MEL TON INDIA (SUPRA) AND AT PAGE 11 TO COLLECTOR OF CUSTOMS, MADRAS AND OTHERS (SUPR A) AND ALL THE OTHER JUDGEMENTS UNDER THE EXCISE ACT HAVE BEEN CONSIDERE D BY THE THIRD MEMBER OF CESTAT AND THEREAFTER THE ADDITIONS HAVE BEEN DELET ED. THE CLAIM OF THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE U S WAS THAT ONCE THE ADDITIONS MADE BY THE CCE, AURANGABAD HAVE BEEN DELETED BY TH E THIRD MEMBER OF CESTAT, NO ADDITION UNDER THE INCOME TAX ACT IS TO BE MADE IN THE HANDS OF THE ASSESSEE AS THE BASIS FOR REOPENING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS THE ORDER OF THE CCE, AURANGABAD, WHICH HAS BEE N OVERTURNED BY THE THIRD MEMBER OF CESTAT. THE LD. AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE FURTHER REFERRED TO PARA 12 OF THIRD MEMBER OF CESTAT WHICH TALKS ABOUT THE COLLECTION OF CORROBORATE EVIDENCE AND SINCE NOTHING WAS FOUND AG AINST THE ASSESSEE, THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESS EE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER TOOK US THR OUGH THE ORDER OF THE TRIBUNAL FROM PARA TO PARA AND PAGE TO PAGE AND POINTED OUT THAT ALL THE SUBMISSIONS MADE BY THE ASSESSEE HAVE BEEN CONSIDERED BY THE TRIBUNA L IN SRJ PEETY STEELS PVT. LTD. (SUPRA) AND IN VIEW THEREOF THE ISSUE IN THE P RESENT CASE MERITS TO BE ALLOWED. 11. IN RESPECT OF GROUNDS OF APPEAL NO.1, 2 AND 11 IN ASSESSMENT YEAR 2006-07, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IT IS AGITATING THE REOPENING UNDER SECTION 147 OF THE ACT, WHEREIN NO REASONS FOR REOPENING THE ASSESSMENT WERE GIVEN TO THE ASSESSEE AND ALSO NO N OTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED UPON THE ASSESSEE. THE LD. AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE BEFORE THE C IT(A) HAD RECEIVED THE REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT AND HENCE IT IS NOT AGGRIEVED BY THE SAID GROUNDS OF APPEAL I.E. IS SUE RAISED VIDE GROUNDS OF APPEAL NO.1 AND 2. HOWEVER, IT IS STRONGLY OBJECTE D TO NON-ISSUE OF NOTICE UNDER SECTION 143(2) AFTER INITIATION OF PROCEEDINGS UNDE R SECTION 148 OF THE ACT. THE LD. 14 AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED R ELIANCE ON THE FOLLOWING DECISIONS :- (I) MANISH PRAKASH GUPTA VS. CIT, 249 CTR 57 (ALLAH ABAD); (II) PARIKALPANA ESTATE DEVELOPMENT (P) LTD. VS. C IT, 220 TAXMANN.COM 39; (III) CEBON INDIA LTD. VS. CIT, 347 ITR 583; AND, (IV) SALMAN KHAN IN ITA NO.508/2010 DATED 06.06.20 11. 12. THE LD. SPECIAL AR ON THE OTHER HAND POINTED OU T THAT THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED UPON THE ASSES SEE AND THE COPY OF THE SAME WOULD BE FILED ON THE NEXT DATE. IT MAY BE CLARIFI ED HERE THAT NO SUCH COPY OF NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT WAS FILED BY THE LD. SPECIAL AR. HE FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONB LE KERALA HIGH COURT IN CIT VS. SHRI V.R. SREEKUMAR IN ITA NO.52 OF 2012, ORDER DAT ED 07.04.2014. 13. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER POINTED OUT THAT AS IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD . THERE IS NO ORDER OF THE SETTLEMENT COMMISSION, IN THE CASE OF M/S RISHI STE EL & ALLOYS PVT. LTD. AND JALNA SIDDHIVINAYAK ALLOYS PVT. LTD. AND IN ABSENCE OF AN Y FINDING OF THE CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY, TH ERE IS NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE FOR EXTRAPOLATION OF PR ODUCTION IN THE HANDS OF THE ASSESSEE FOR ANY OF THE YEARS. IN THE CASE OF MATS YODARI STEEL & ALLOYS PVT. LTD. THE ORDER OF THE SETTLEMENT COMMISSION IS FOR THE A SSESSMENT YEAR 2007-08 AND IN THE CASE OF OMSAIRAM STEEL & ALLOYS PVT. LTD. THE O RDER OF THE SETTLEMENT COMMISSION IS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. ITA NOS.179 TO 182/PN/2012, A.YS. 2005-06 TO 2008-0 9 (BY ASSESSEE IN THE CASE OF OMSAIRAM STEEL & ALLO YS PVT. LTD.) : ITA NOS.656 TO 659/PN/2012, A.YS. 2005-06 TO 2008-0 9 (BY REVENUE IN THE CASE OF OMSAIRAM STEEL & ALLOY S PVT. LTD.) : ITA NO.1084/PN/2012, A.Y. 2004-05 15 (BY ASSESSEE IN THE CASE OF OMSAIRAM STEEL & ALLO YS PVT. LTD.) : ITA NO.1468/PN/2012, A.Y. 2004-05 (BY REVENUE IN THE CASE OF OMSAIRAM STEEL & ALLOY S PVT. LTD.) : 14. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A), AURANGABAD RELATING TO ASSESSMENT YEARS 2004-05 TO 2008-09. THE REVENU E HAS ALSO FILED CROSS- APPEAL AGAINST THE AFORESAID ORDER OF THE CIT(A), A URANGABAD FOR ALL THE ABOVE-SAID YEARS. 15. THE GROUND OF APPEAL RAISED ON REOPENING OF THE ASSESSMENT WAS NOT PRESSED BY THE LD. AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE. IN RESPECT OF THE ISSUE ON MERITS, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS IDENTICAL TO THE ISSUE RAISED IN SRJ PEETY STEELS PVT. LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY HIM THAT EVIDENCE REG ARDING THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THE ADM ISSION OF THE ASSESSEE BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION, WAS F OUND IN THE HANDS OF THE ASSESSEE RELATING TO ASSESSMENT YEARS 2006-07 TO 20 08-09. 16. THE LD. CIT-DR FOR THE REVENUE REFERRED TO THE SHOW-CAUSE NOTICE ISSUED BY THE EXCISE AUTHORITY IN WHICH THE DOCUMENTS AND STATEMENTS OF THE VARIOUS PERSONS WERE REFERRED. IT WAS POINTED OUT BY THE L D. CIT-DR THAT THERE WAS EVIDENCE ON BOTH THE CAPTIVE CONSUMPTION OF ELECTRI CITY IN THE CASE OF THE ASSESSEE AND ALSO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PA YMENT OF EXCISE DUTY. IT WAS FURTHER POINTED OUT BY HER THAT THE THIRD MEMBER OF CESTAT HAD GIVEN RELIEF ONLY ON THE ERRATIC CONSUMPTION OF ELECTRICITY, WHEREAS THE TRIBUNAL IN THE APPEAL RELATING TO ASSESSMENT YEAR 2006-07 HAD UPHELD THE EXTRAPOLA TION OF SALES FOR THE ENTIRE YEAR ON THE BASIS OF THE EVIDENCE FOUND FOR PART OF THE YEAR. ANOTHER CONTENTION RAISED BY THE LD. CIT-DR WAS THAT THE REPORT OF PRO FESSOR BATRA ON THE BASIS OF WHICH THE ERRATIC CONSUMPTION OF ELECTRICITY WAS LI NKED WITH THE PRODUCTION, WAS PART OF THE FINANCIAL REPORT MADE BY THE GOVERNMENT OF I NDIA AND ON THIS ACCOUNT 16 DIFFERENCE HAD TO BE ADDED IN THE HANDS OF THE ASSE SSEE. IT WAS POINTED OUT BY THE LD. DR THAT THE REVENUE WAS IN APPEAL AGAINST THE O RDER OF THE CIT(A) IN CHALLENGING THE GP RATE OF 4% AND FURTHER IN ALLOWI NG THE MANUFACTURING AND ADMINISTRATIVE EXPENSES ON UNACCOUNTED PRODUCTION W ORKED OUT IN THE HANDS OF THE ASSESSEE. THE ISSUE IN GROUND OF APPEAL NO.3 WAS A GAINST THE DELETION OF THE WORKING CAPITAL REQUIRED FOR INVESTMENTS IN UNACCOU NTED PRODUCTION. IT WAS POINTED OUT BY THE LD. DR THAT IN ALL THE APPEALS OF THE AS SESSEE, THE CIT(A) HAD APPLIED GP RATE OF 4% ON THE SUPPRESSED PRODUCTION AND IN A SSESSMENT YEAR 2004-05 THE ADDITION ON ACCOUNT OF WORKING CAPITAL REQUIRED WAS UPHELD. WHEREAS IN ALL THE ASSESSMENT YEARS REVENUE IS IN APPEAL AGAINST THE A PPLICATION OF GP RATE OF 4% AND ALSO AGAINST THE DELETION OF ADDITION MADE ON A CCOUNT OF WORKING CAPITAL REQUIREMENT. 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 ON REC ORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY 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 CAS ES LISTED BEFORE US, WHICH WERE MADE VIDE ORDER SHEET ENTRY DATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEARING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO ARGUE THE AP PEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR SEEKING ADJOURNMENT I.E. CONTEMPLATION OF FILING MA AGAINST THE EARLIER ORDERS OF THE TRIBUNAL, WAS REJ ECTED. 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 COUNSEL 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 SUBMISSIONS ALONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS 17 ADJOURNED TO 07.05.2015 FOR FURTHER HEARING. ON 07 .05.2015, THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH BY T HE SPECIAL AR FOR THE REVENUE. THE COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE S AME ON THE GROUND THAT THE SPECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUME NTS ON EARLIER DATE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARIN G 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 THE PART IES CONSENTED. ON REASSEMBLING OF THE BENCH, THE SPECIAL AR FOR THE REVENUE FURNIS HED LETTER UNDER HIS SIGNATURE STATING THAT THE PR.CIT, AURANGABAD WAS CONTEMPLATI NG TO FILE CERTAIN PETITIONS BEFORE THE HONBLE PRESIDENT/VICE PRESIDENT, ITAT, MUMBAI AND THEREFORE THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVE R, THE NATURE AND CONTENTS OF THE PETITION CONTEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASKED TO CONTINUE HIS ARGUMENTS BY THE BENCH, B UT HE REFERRED TO HIS ADJOURNMENT LETTER. 19. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COURT ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN REPLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH WERE GON E INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FOR THE REVEN UE LEFT THE COURT PROCEEDINGS, ON THE OTHER HAND, SMT. M.S. VERMA, LD. CIT-DR AND SHRI RAJESH DAMOR, LD. ADDL.CIT-DR WERE PRESENT IN THE COURT. THEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. ADDL.CIT-DR WERE T AKEN UP FOR HEARING AND THE MATTERS IN ITA NOS.125, 127, 430 & 431/PN/2012 ALON G WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012, ITA NOS.179 TO 182/PN/2012, IT A NOS.656 TO 659/PN/2012, ITA NO.1084/PN/2012, ITA NO.1468/PN/2012, ITA NO.15 58/PN/2012, ITA NO.1629/PN/2012, ITA NO.1516/PN/2012 AND ITA NO.163 8/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 A S PART HEARD. 18 20. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FI ND 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. TH E CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN REPLY SHE STATED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIANCE OF THE LD. SPECIAL AR IN YESTERDAYS HEARING AND HIS NON-APPEARANCE IN TODAYS HEARING, CONDUCT OF THE L D. SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED IN THE BENCH AS T O WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CONTINUED DEFIANC E AND FOR INTERRUPTING PROCEEDINGS OF THE BENCH. THE HEARING IS TO CONTIN UE IN THE LISTED MATTERS AS ANNEXED ON 13.05.2015 AS PART-HEARD. 21. ON 13.05.2005, SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-D R & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. THE MATTER WAS FINALLY HEARD ON 14.05.2015 WHEN SHRI J.P. BAIRAGRA PRESENT FOR THE ASSESSEE AND SHRI SUN IL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. 22. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSE ARE FOUR-FOLD ON THE FOLLOWIN G ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NO N-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF T HE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS AND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JALNA CLUS TER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS; AND WORKING OUT THE ADDITION BY APPLYING GP RATE OF 4% ON THE ALLEGED SUPPRESSION O F SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHA SES RELATING TO SUPPRESSION OF SALE. 19 23. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE TOT AL SUPPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDU LGING IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY; AN D B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN- ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OF FICER. 24. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WITH WRITTEN SU BMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAWS RELIED UPON BY THE RESPECTIVE AUTHORIZED REPRESENTATIVES. IT MAY BE PUT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE RELATABLE TO THE ADDITION M ADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EVASION OF DUTY ON AC COUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 25. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFFERENT ISSUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS COMPLETED UNDER SECTION 143 (3) R.W.S. 148 OF THE ACT, THE ASSESSEE HAS RAISED THE ISSUE AGAINST RE-OPENING OF ASSESSMENT, NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 AND ALSO N ON-SERVICE OF NOTICE UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SEC TION 147 OF THE ACT. HOWEVER, IN SOME CASES, THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE-OPENING OF THE A SSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE PRESENT BUNC H OF APPEALS RELATING TO BHAGYALAXMI STEEL ALLOYS PVT. LTD. AT THE OUTSET ST ATED THAT THE GROUNDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE-OPENING OF THE AS SESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 OF THE ACT, ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 20 26. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRO DUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUP PRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPPRESSE D PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PARTIES H AVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO THE DECISION OF THE TRIBUNAL AND THE N MEET WITH THE RESPECTIVE OBJECTIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. 27. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRE SENTATIVE 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 VARIANCE AND MADE EL ABORATE SUBMISSIONS. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEETY STEELS PVT. LT D. (SUPRA) IS A CASE OF FURNACE, WHICH IS ENGAGED IN THE MANUFACTURE OF INGOTS / BIL LETS. 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 ELECTRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEM BER OF CESTAT DELETED THE ADDITION MADE IN THE HANDS OF RESPECTIVE FURNAC E CASES. ALSO, IN THE CASE OF THE ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURA NGABAD 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 THE SETTLEMENT COMMISSION AND OFFERED ADDITIONAL PRODUC TION, WHICH WAS ACCEPTED BY THE SETTLEMENT COMMISSION IN ENTIRETY. THE ASSESSI NG OFFICER OBSERVED THAT THERE WAS SUPPRESSION OF PRODUCTION BY THE FURNACE COMPAN IES IN JALNA CLUSTER ON THE GROUND OF VARIANCE IN CONSUMPTION OF ELECTRICITY VE RSUS PRODUCTION. THE ASSESSING OFFICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. 21 SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING O N THE ADDITION MADE IN THE HANDS OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), I N TURN, ON THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDITIONS 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 STE ELS PVT. LTD., ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IN TURN, WAS THE BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE THEREIN BY C CE, AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THAT SINCE THE ORDER OF THE C CE, AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. THE OTHER ASPECTS OF THE IS SUE THAT THE ASSESSEE THEREIN HAD MADE THE PETITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVEST IGATION OR MATERIAL COLLECTED BY THE ASSESSING OFFICER, THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-0 8. FURTHER, IN ASSESSMENT YEAR 2008-09, THERE WAS NO ADMISSION OF ANY CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMEN T COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER EVIDENCE BEING BROUGHT ON RECO RD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. WAS SUMMARIZED U NDER PARA 9, WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDING O F THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES OF ING OTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOME REASONABLE PERCE NTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PROD UCTION/SALES AND ACCORDINGLY, PARTLY SUSTAINED THE ADDITIONS. NOW, WE FIRST DECI DE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39,20,36,546 /- IN THE A.Y. 2007-08 AND 22 RS.40,75,72,486/- IN THE A.Y. 2008-09 ON ALLEGED SU PPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT P ICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED. 29. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSIONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE REJOINDE R OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, THE TRIBUNA L OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT ON 05-11-2014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIO NS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE W AS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHILE COMPLETING THE ASSESS MENT U/S. 143(3) OF THE ACT, IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICIT Y CONSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGHER SIDE AS COMPARED TO THE QUAN TUM OF PRODUCTION DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MA DE THE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRO DUCTION OF THE INGOT/BILLETS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEI VED FROM THE OFFICE OF THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WE LL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCT ION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INITIATED THE R E-ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF TH E ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO T HE ASSESSEE COMPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OFFICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEIVED FROM THE CENTRAL EXC ISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGENCE) AGAINST THE FEW BROKERS AND SUB-BROKERS WHO WERE INVOLVED IN THE TRADING INTO THE INGOT/BIL LETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FIL ED BY THE ASSESSEE BEFORE THE CENTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION, MU MBAI BENCH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETTING IMMUNIT Y FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED S UPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFORMAT ION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATION ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03- 2006 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE A CTION U/S. 132(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 1 53A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 2006-07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRIMINATING EVIDE NCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPA RED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER REFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT AND CERT AIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAMED BY THE ASSESSIN G OFFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS. 2007-08 AND 2008-09 BEFORE US A RE IMMEDIATELY NEXT 23 ASSESSMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUEN CE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION OR ANY ENQUIR Y IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX AUTHORITIES. IN TH E ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON THE INFORMA TION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING BEFORE THE SE TTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI. THE INVESTIGATION WAS CAR RIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGCEI, AGAINST FEW BROKERS/SUB-BRO KERS AND THOSE BROKERS GAVE THE NAMES OF MANY COMPANIES WHO ARE IN THE MANUFACTURIN G OF INGOT/BILLETS AND TMT BARS. AS PER THE STATEMENT GIVEN BEFORE THE CENTRA L EXCISE AUTHORITIES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MO DI, MUMBAI, SHRI ANIL D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED THAT THE Y WERE INVOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIPS ON LY AND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROVIDING FAKE TRADING BI LLS AND CHALLANS WHICH ACCOMPANIED THE VEHICLES CARRYING THOSE CONSIGNMENT S. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVE R THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB-BROKERS ALSO ADMITTED THA T THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSI ON OF RS.100/- PER MT. THE ASSESSING OFFICER HAS DISCUSSED THE INFORMATION GAT HERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA NOS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGAINST THE BROKERS AND SUB-BROKER S ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACTURERS WHO WERE INVOLVED IN CLEARING THE EXC ISABLE GOODS WITHOUT PAYMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLE TS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIES, THE ASSESSEE WHO IS MAN UFACTURING OF INGOTS/BILLETS SUPPLIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER A LSO REFERRED TO A STATEMENT OF SHRI SURENDRA S. PEETY, MANAGING DIRECTOR OF THE AS SESSEE RECORDED ON 12-01- 2007, BY THE DGCEI WHO ALLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. INGOTS/ BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MIL LS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMEN T COMMISSION AND PAID THE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/- FOR CLEA RING THE GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AUTHORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN T HE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONCERNED WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER IN HIS DIS CUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF T HE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS G IVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING O FFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDI A INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TECHNOLOGY IN T HE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN INDUCTION FUR NACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE USED. THE ASSESSING OFFICER ALSO REFERRED TO 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, VARIES FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNI TS. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSME NT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD IN RESPECT OF THE ALLEGED SUPPRESSION OF 24 PRODUCTION AFTER CONSIDERING THE ELECTRICITY CONSUM PTION DECLARED BY THE ASSESSEE AND THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH REASONABLE, FAIR AND JUSTI FIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCOUNT ED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVING THE REA SON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS SUPPRESSED THE PRODU CTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTION OF THE A.Y. 2007-08 AS UN DER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U /S. 143(3) OF THE ACT IN THE ORDER DATED 31-12-2008 AND MADE THE NET ADDITIO N OF RS.30,76,35,042/-. SO FAR AS A.Y. 2008-09 IS CONCERNED NO ADJUSTMENT W AS MADE IN THE A.Y. 2008-09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3 ) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008-09, THE ASSESSING OFFICER H AS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHOR ITY IS NOT RELEVANT, BUT FINALLY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURA NGABAD AS PER THE VALUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION. IN T HE COMPUTATION FOR THE A.Y. 2008-09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTIONING RS. (-) 1,91,62,000/- AS PER THE ORDER U/S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008-09. 30. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE , THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSING OFFICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERMINED BY THE CCE, AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY. THE B ASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFES SOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CASES OF FURNACE OWNER S HELD THAT THE ORDER OF CCE, AURANGABAD WAS NOT SUSTAINABLE AND HAD TO BE C ANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA). THE R ELEVANT FINDING OF THE TRIBUNAL IN TURN, INCORPORATING THE ORDER OF THIRD MEMBER OF CE STAT IN PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE PRODUCTIO N/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD ON THE BASIS OF POWER 25 CONSUMPTION. THE COPY OF THE ADJUDICATION ORDER PA SSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE TAX, AURANGAB AD DATED 28-08-2009 (IN SHORT REFERRED TO AS THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. THE CCE, AURANGABAD HAS O BSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF PO WER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRU TINY OF THE VARIOUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE V ALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIES, COST O F MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT), KANPUR AND HAS OBSERVED THAT AS P ER THE SAID TECHNICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACT URE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MI X OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEI R ELECTRICITY BILLS, THE AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODUCTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 UNITS (MAXIMUM LIMIT) OF ELECTR ICITY FOR PER MT OF MS INGOTS PRODUCED, IT IS NOTICED THAT THERE IS A HUGE DIFFER ENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEE S RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFUL LY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WI TH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED THEMSELVES I N THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO R EFERRED TO NON-MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION RECORD MORE P ARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINA TION OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABAD. THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSI BLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS OF THE TRIB UNAL. THE LD. COMMISSIONER ALSO RELIED ON THE INVESTIGATION MADE BY THE DGCEI AND S HOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLE MENT COMMISSION AND ADMITTED THE EVASION AND PAID THE EXCISE DUTY AND O BTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DE MAND RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXT ENT OF RS.33,07,22,069/-. 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL EXC ISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEMBERS OF THE CESTA T, I.E. LD. VICE-PRESIDENT AND LD. TECHNICAL MEMBER AND THE MATTER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTINGS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRI VENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNALS DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STEEL (SUPRA) AND HANS CASTINGS PVT. LTD. (S UPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDER PASSED BY LD. COMMISSIONER OF CENTRAL 26 EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE A ND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARE LY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE E LECTRICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPE ALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIF ICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (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. VA RSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMIN G THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL M AKING [THUS NOT FOR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUMPTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM AGREEING-., W ITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION AND INFORMI NG THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMP TION. 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICITY CO NSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOW ING DIFFERENT REPORTS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT C OMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI , GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIV E DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CC E, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 27 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THI S RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COM MISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS AL LEGEDLY AS PER REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCT ION. MOREOVER, THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED TH AT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REP ORTED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITH OUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKE RS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DE POSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS SUCH BEC AUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GO ODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTR OVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PRE MISES, AND NON-ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLO YED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECOR DS OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF G OODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUC H AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT C HECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECE IPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIG NOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVID ENCE RELATING TO 28 THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REV ENUE, NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERM ITTED TO JUSTIFY THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTANT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLAN ATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CAS ES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FIN DINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CH ALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVE LLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (S UPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUC T EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT T OO 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 T HAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BAS IS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BE EN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVE NUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOP TED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVE NUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WH ATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THA T TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BA SIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGN ED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIF IED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF A LLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE 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 OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLANDESTINE C LEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRICITY 29 CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY-'F ROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY B Y HON'BLE TRIBUNAL IN RA CASTING (SUPRA). THUS, IN MY OPINION THE PRIM ARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND N O OTHER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUE THAT FURNACES INSTALLED IN THE FACTORY OF PRESENT A PPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA) , HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO RELY ON AN ORDER PASSED BY TRIBUNAL IN GU IABCHAND SILK MILLS PVT. LTD., V/S. CCE, HYDERABAD-II, 2005 (184) ELT 2 63, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). I T HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RE LYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMU LL - 1983 (13) ELT 1546 (SC), RELIED UPON BY THE COMMISSIONER AS W ELL AS THE HON'BLE MEMBER (TECHNICAL). IT IS SEEN THAT EVEN TH IS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJ UDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS D EFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBAB ILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND A SSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTU RING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLAN TS, I AM OF THE VIEW THAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REAS ON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PE RIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTI ON. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTI ON UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. E LECTRIC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND I N ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRI C CONSUMPTION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECORD. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA) IS SQUARELY APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSI ONER TRADE TAX, U.P, - 2007-TIOL-14-SC-CT, THE JUDGMENT OF THE HON' BLE GUJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOME TAX, 2014-TIOL-203-HC-AHM-IT, AND AN UNREPOR TED ORDER DTD. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHER S COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000-01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS 30 WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CAS E ARE THAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS , NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PROD UCTIVITY AS COMPARED TO THAT IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN-PROGRESS IN TH E BOOKS OF ACCOUNTS. I AM THEREFORE OF THE OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDINGS 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 CONSUMPTIO N WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONS IDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND S ILK 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. CASTING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED M AINLY 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. C ASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE IN STANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDE R IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE H ERE THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKERS AND IN CONSEQUENCE THE SHOW CA USE 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 D GCEI MADE AGAINST THE BROKERS AND SUB-BROKERS REFERRED BY THE ASSESSING O FFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AURANGABAD. ON PERUSAL OF TH E ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 2008-09, THE ASSESSIN G OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCI SE AUTHORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2 007-08. AS VARY BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSI ONER OF CENTRAL EXCISE (CCE), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION THE ASSESSMENT ORDERS PASSED BY THE ASS ESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION 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 OF CE STAT WAS A LEGAL ORDER. THIS 31 PLEA OF THE LD. SPECIAL AR WAS REJECTED BY THE TRIB UNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 32. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CASE O F SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDE R HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING THE VALUE OF AL LEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VIDE PARA 19. THE RELEVANT O BSERVATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WERE AS UND ER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMEN T COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BA SIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BR OKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NOTICE WAS I SSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANGABA D IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VAL UE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO B E INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTL EMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDEN TICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. T HE ASSESSEE HAS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLA CED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FIN DINGS IN THIS CASE ARE BASED ONLY ON MATERIAL AND EVIDENCE THAT HAVE B EEN BROUGHT ON RECORD IN THE INSTANT CASE. 33. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION RECEIVED FRO M THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY THE THIRD MEMB ER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PARA 21 THAT THE INVESTIGATION BY T HE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION WERE CONSIDERED BY THE CC E IN ITS ADJUDICATION ORDER, 32 WHICH IN TURN, WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET- ASIDE, HENCE, IT WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR, WHICH ARE IN THE CONTEXT OF ADMISSION O F THE DIRECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 34. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRI BUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGU MENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF C ESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER READS AS UNDER: - 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICU LARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON-SEC. 17, SE C. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAINS T HAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MA DE BY THE REVENUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF T HE INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE A DJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGAB AD. MOREOVER, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OP INION AND HENCE, FOUNDATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 200 8-09 DO NOT EXIST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FIL ES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER A PPELLATE AUTHORITY THEN THE ENTIRE ORDER GETS MERGED WITH THE ORDER OF THE HIGH ER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER, INVESTIGAT ION BY DGCEI AND PROCEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALS O BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SE T ASIDE. HENCE, WE DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF ADMISSION OF TH E DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DGC EI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS AR E NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAIN TAINING OF FORM G-7 IN RESPECT OF THE ELECTRICITY CONSUMPTION, THE SAID IS SUE WAS ALSO BEFORE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHE R APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 19 44 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WH ETHER THAT ORDER IS RIGHT OR WRONG. 35. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIB UNAL (INCOME-TAX) COULD NOT ACT 33 AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WH ETHER THAT ORDER WAS RIGHT OR WRONG. 36. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAIN ST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UNDER SECTION 153A R .W.S. 143(3) OF THE ACT. THE ASSESSEE THEREIN I.E. M/S. SRJ PEETY STEELS PVT. LT D. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATING TO ASSESSM ENT YEARS 2000-01 TO 2006-07 UNDER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SEIZURE, IT WAS ALSO HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOTS / BILLETS DEPENDING ON VARIOU S FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT IT HAD SU PPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATED 10.02.2014 IN T HE CASE OF ASSESSEE AND OTHER COMPANIES BY THE HONBLE BOMBAY HIGH COURT AN D THERE WERE OBSERVATIONS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUM PTION OF ELECTRICITY. THE TRIBUNAL WHILE DECIDING THE APPEAL OF M/S. SRJ PEET Y 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 CARRI ED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE AS SESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BAS IS OF CONSUMPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A F ORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UN IFORMLY IN ORDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESUL TANT CONCEALED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TO OK 1,600 UNITS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY T HE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLE GED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS W HILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OF FICER HAD SIMPLY TAKEN 34 THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONC EALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEE TY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WE LL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 20 00-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT A CCOMPANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINA TING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHO RITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BE EN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UN IT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICIT Y CONSUMPTION 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 ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL D ETAILS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DE PARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME, IT CO ULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN TH E ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY O F THESE ASSESSMENT 35 YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005 -06 ARE NOT CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE 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 ALREADY ON RECORD. THE RETURNS HAVE ALREADY BE EN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING O N THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PRO VISIONS 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 TH E AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS O F 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 REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES TH E POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CON SIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL THE YEA RS UNDER 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 F OR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE TH E SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTIO N IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS B Y THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE M ONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO-CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIK E QUALITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE S UPPLY, POWER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FIN ALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE F ACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRO DUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/T MT BARS AND ARRIVED AT A CONCLUSION THAT THERE IS AN EXCESS CON SUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNTED PRODUC TION. 36 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASS T. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF T HE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. Y R. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE AS SESSEE COMPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THE REFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND AP PLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CO NSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT THE AS SESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION . THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE INCOME-TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APPEAL WAS DI SMISSED VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSES SEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE CATEGORICAL OB SERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSU MPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEARCH W AS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 HAD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOCUMENTS AND PROCEEDI NGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO IN CRIMINATING MATERIAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE C ONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSI DERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT RE PORT ALSO CONTAINS THE UNIT PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YE AR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. TH E FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX AP PELLATE TRIBUNAL REFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELE CTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT, WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S. 153A OF THE ACT. THE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT Y EARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MAT ERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NOR MAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN INTO CONSIDERATION A ND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED PRODUCTION CA LCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR TH ESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUM PTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CON SEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCE PT THE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN THE RESIDENCE OF THE DIRECTOR TO MA KE OUT A CASE AGAINST THE 37 ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION OR S ALES. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT IN A.YS. 2007-08 AND 20 08-09, NO INVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH ARE IMMEDIATE NE XT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AND OBSERVATIO N OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTANT TO DEC IDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMP TION 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 T HE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATELY PRECEDING YEAR, WHEREIN DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOUND I N THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED S UPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING THE APPEAL IN M /S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UN DER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PR ODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION REC EIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBU NAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX AP PELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF T HE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED O N RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVIC E TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECTS OF T HE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGH ER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SE RVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTIO N QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT TH E AUTHORITIES INTERVENED LAWFULLY RECORDING THE OUTPUT IN THE PRESENCE OF WI TNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL HELD THAT T HEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESS IVE EXERCISE OF ITS JURISDICTION TO THE DETRIMENT OF JUSTICE. THE CUSTO MS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTIO N STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UND ER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LAW AN D COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO S HOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE REM OVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STAND. BOTH THE APP EALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL RELIEF, IF ANY.' 38 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY THE HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A-108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CAS E WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUP PRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF T HE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (S UPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT T HE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THA T THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID FINDINGS OF THE CUS TOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT IN ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTME NT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNE XPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUN T. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 AN D 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRO DUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGI NG DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDE R OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIF ICATION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. I N THE LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITION S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASS ESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURIN G OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE ADDITIONS MADE TOWARDS THE ALLEGED 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. 2008- 09. 38. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GROSS PROFIT TO DETER MINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FINDING THA T SINCE THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE HAVE BEEN DELETED, THERE WAS NO MERIT IN ANY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER:- 39 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONL Y REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS THE ALLEGED SUPPRESSION OF PRO DUCTION/SALES AND WHICH WAS DETERMINED ON THE BASIS OF THE ADJUDICATION ORDER P ASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPINION OF DR. BATRA, IIT, KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSESSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE A DDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. WE, THEREFORE, HO LD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE, A CCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISS UE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008- 09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIO NS MADE BY THE ASSESSING OFFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2 007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE O BJECTION FOR MAKING THE ADDITION OF RS.37,69,582/-. THE SAID ADDITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UND ISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMA TED AS AN AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARL IER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE F OR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVEST MENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.3 7,69,582/-. IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS C ONFIRMED THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSE SSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DEL ETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES , HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 39. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UNDER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAV E ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRE SSION OF THE PRODUCTION/SALES. AS THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING TH E GROUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVEN UE IN BOTH APPEALS ARE DISMISSED. 40. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEALS 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 STEEL ALLOYS PV T. LTD., THERE WAS NO INVESTIGATION BY THE DGCEI AND FURTHER THERE WAS NO ORDER OF SETTLEMENT 40 COMMISSION. HOWEVER, THE CCE, AURANGABAD HAD PASSE D AN ORDER AGAINST THE ASSESSEE, BUT THERE WAS NO CASE OF CLANDESTINE REMO VAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY AGAINST THE ASSESSEE. THE L D. SPECIAL AR ADMITTED THAT THERE WAS NO EVIDENCE WITH THE EXCISE DEPARTMENT OR THE INCOME-TAX DEPARTMENT REGARDING CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY. HOWEVER, BECAUSE OF HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND PRODUCTION OF INGOTS / BILLETS, ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, IN OMSAIRAM STEEL & ALLOYS PVT. LTD., IT WAS FAIRLY AD MITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THERE WAS INVE STIGATION BY THE DGCEI AND IN ASSESSMENT YEARS 2006-07 AND 2007-08, THE ASSESSEE HAD FILED THE PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH WAS ACCEPTED. HOW EVER, IN ASSESSMENT YEARS 2005-06 AND 2008-09, THERE WAS NO SUCH PETITION FIL ED BEFORE THE SETTLEMENT COMMISSION. 41. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF E LECTRICITY BASED ON THE REPORT OF DR. BATRA. THE ADDITION IN THE HANDS OF SISTER CON CERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ONE DR. BATRA WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD MEMBER OF CESTAT HAD DELE TED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. SIMILARLY, IN THE CASE OF ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGABAD AND OF CESTAT AND THE ASSE SSING OFFICER WORKED OUT THE ADDITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY AS DETERMINED BY CCE, AURANGABAD. FOLLOWING THE SAME LINE OF REASON ING AS IN THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERI T IN THE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON SURMISES. BOTH THE LEARNE D AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR HAS RAISED IDEN TICAL ARGUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUN AL HAS ALREADY DECIDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THE RAT IO OF THE SAID DECISION IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEV ER, ADDITIONAL PRODUCTION RELATING 41 TO THE DECLARATION MADE BEFORE THE SETTLEMENT COMMI SSION IS TO BE ADDED IN THE HANDS OF THE ASSESSEE, AS ADMITTED BY THE LEARNED A UTHORIZED 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 16.01.2015 AND THE HEARING OF THE PRESENT APPEALS BE KEPT IN ABEYANCE. AFTER HEARING THE APP EALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED FOR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN DATE DISMI SSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT I N THE SAID MISCELLANEOUS APPLICATION FILED BY THE REVENUE AND NO REMEDY IS A VAILABLE TO THE REVENUE UNDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF, THE NE XT OBJECTION OF THE LD. SPECIAL AR FOR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEE LS PVT. LTD. (SUPRA) ALSO STANDS DISMISSED. 43. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHE RE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESS EE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. THE LD. SPECIAL AR FOR THE SAI D PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE REL ATING TO ASSESSMENT YEAR 2006- 07. THE CASE OF THE REVENUE BEFORE US WAS THAT WHE RE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PART OF THE PERIOD, THEN IN VIEW OF THE ORDER OF THE SETTLEMENT COMMISSION AND ALSO SINCE THE ASSESSEE H AD ADMITTED TO ADDITIONAL 42 INCOME ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER , THE SALES FOR THE ENTIRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCO UNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTAIN BROKERS A ND SUB-BROKERS. CONSEQUENT THERETO, SHRI SRJ PEETY, MANAGING DIRECT OR OF M/S. SRJ PEETY STEELS PVT. LTD. ADMITTED TO THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMENT COMMISSIO N FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY. THE ASSESSEE BE FORE THE ASSESSING OFFICER ADMITTED THAT THE ADDITIONAL INCOME IN RESPECT OF T HE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO BE A DDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFORMATION WAS AVAILABLE BEFOR E THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT NO OTHER INVESTIGATION OR INQUIRY WAS 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 THAT THE ASSESSEE HAD NOT CORRECTLY DISCLOSED THE PRODUCTION OF INGOTS / BILLETS. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSUMPTION, FO R WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE REPORT OF DR. BATRA AND ORDE R OF CCE, AURANGABAD. THE ASSESSING OFFICER APPLYING THE FORMULA WORKED OUT T HE SUPPRESSED PRODUCTION AND SALES IN THE HANDS OF THE ASSESSEE. WE IN THE PARA S HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACCOUNT O F SUPPRESSED PRODUCTION / SALES ON SUCH ACCOUNT COULD BE MADE IN THE HANDS OF THE A SSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND, STRESSED THAT WHERE THE ASSESSIN G OFFICER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAY MENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED I N THE HANDS OF THE ASSESSEE. HE STRESSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTIN E REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WA S FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE A DDITIONAL INCOME FOR WHOLE OF THE 43 YEAR. MERELY BECAUSE THE ASSESSING OFFICER HAD ADO PTED ANOTHER METHODOLOGY OF SUPPRESSION, THE ADDITION IN THE HANDS OF THE ASSES SEE COULD BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FOR 300 DAYS, IN VI EW OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT 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 DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, HOWEVER, NO SEARCH AN D SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE. IN ORDER TO BUY PEACE OF MIND, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION WAS TO BUY PE ACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SINCE THE OBJECT OF MOVING PETIT ION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHER E ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS, THE AUTHORITIES HAVE THE PO WER TO RE-VISIT THE OFFER MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAI LABLE AGAINST THE PERSON MAKING THE OFFER, THEN THE FIGURES OF SETTLEMENT CA N BE INCREASED. HOWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEE N ACCEPTED FOR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO BE RESTRICTED T O THE NUMBER OF DAYS FOR WHICH IT WAS OFFERED. THE BASIS OF ANY SETTLEMENT IS THE OF FER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE SETTLEMENT AND WHERE THE EVIDENCE HAS BEEN FOUND FOR PART OF THE YEAR, SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATION. IN CASE S WHERE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMMISS ION, THEN NO FURTHER 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 FOUN D AGAINST THE ASSESSEE FOR THE BALANCE PERIOD. 44 45. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSION, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOME ON SUCH OFFER OF SETTLEMENT WAS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER, NO FURTHER I NQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSESSING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPEAL IS WHETHER ANY E XTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGA TIVE. 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) 6 27, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON T HE BASIS OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE INCOME-TAX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH WERE ADMITTED BY THE AS SESSEE TO REFLECT SUPPRESSION OF SALES. ON THE BASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAPOLATED, WHICH ORDER OF THE TRIBUNAL WAS APPRO VED BY THE HONBLE BOMBAY HIGH COURT. HOWEVER, FOR THE YEAR UNDER CONSIDERAT ION, THERE WAS NO SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME-TAX DEP ARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS MADE BY TH E ASSESSING OFFICER, AS STATED EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE, MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE IN A PRECEDING YEAR, WE FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SALES FOR THE ASSESSMENT YEAR 2007 -08 SHOULD BE MADE IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PE TITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSE SSMENT ORDER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKIN G THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE 45 MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECT RICITY. UNDOUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFO RE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY THE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF ELECTRICITY, WERE BEFORE THE ASSESSI NG OFFICER. HOWEVER, THE ASSESSING OFFICER ADOPTED THE SECOND ISSUE IN THE H ANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OUT THAT THE S AID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHODOLOGIES FOR WORKING OU T THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT BY THE ASS ESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMI SSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN THE HA NDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD. 47. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF T HE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. THE SAID INFOR MATION WAS FORWARDED TO THE CENTRAL EXCISE DEPARTMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER, TH E TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORRO BORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FROM THE POSSESSION OF THE ASSESSEE BY THE EXCISE AUTHORITIE S. 48. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT, IN RESPECT OF SALE OF GOODS FOR A PARTI CULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COULD NOT BE RELIED UPON AS EVIDEN CE, WHILE EXTRAPOLATING THE 46 SALES AND THE ADDITIONAL INCOME THEREON IN THE HAND S OF THE ASSESSEE DURING THE INCOME-TAX PROCEEDINGS. THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED PRODUCTION AND EVEN AFTER THE ORDER OF S ETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NOT INVESTIGATED OR BROUGHT A NY MATERIAL ON RECORD ESTABLISHING SUPPRESSED PRODUCTION AND / OR ITS SAL E OUTSIDE THE BOOKS OF ACCOUNT. 49. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THIS WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFOR E THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYM ENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY OF PETITION BEF ORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSES SEE COMPANY WAS RECORDED EITHER BY ASSESSING OFFICER OR CIT(A) DURING THE CO URSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE RELIANCE PLACE D UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRIC TED TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE. 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 TH E TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRIBUNAL JUSTIF YING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FAC TS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDIT ION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS B ASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY THE L D. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 47 51. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITIO N VIS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 52. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSION AL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVIDENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY THE HONBLE SUPREME C OURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (S UPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO THE AMO UNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE FOR EXTRAPOLATING THE SAME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGALORE BENCH OF TRIBU NAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXI STENCE OF EVIDENCE OF CONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT B E THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESSMENT YEARS. 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 COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOU NTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND THE TRIBU NAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFFICER MAY HAVE PERHAPS BE EN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTI NG YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISCREPANCY. 54. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 48 55. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION A VAILABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHEREIN UNACCOUNTED SALE S WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR T HE REMAINING PERIOD. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESSEE A ND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAPERS SEI ZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSI ON AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD TH AT NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE P ERIOD. THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESUMPTION WAS NOT SUSTAINABLE I N LAW. NO DETAILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUC H FIGURE OR HAD THERE BEEN ANY CONCEALED SALES FOR 9 MONTHS, IT COULD HAVE BEEN DE TECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. THEREFOR E, THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GUESS WORK, PR ESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL FOUND DURING THE C OURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES. SUCH ADDITI ON BASED ON HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GP ON PRE SUMPTION AND SURMISES WERE NOT SUSTAINABLE . THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN I N CST VS. H.M. ESUFALI H.M. ABDULALI (SUPRA). THE LD. SPECIAL AR RELIED O N THE SAID DECISION AND IN VIEW OF THE DECISION OF COORDINATE BENCH ON SIMILAR ISSU E 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 ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY S TEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED THE ISSUE OF EXTRAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMO VAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILING A PET ITION BEFORE THE SETTLEMENT COMMISSION. 49 57. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMEN T DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER, IN THE INTERES T OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED B Y THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF J USTICE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTED LY, DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EV IDENCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST THE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED 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 PET ITION BEFORE THE 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 WHI CH IT HAS OFFERED. IN OTHER WORDS, ONCE A PERSON MAKES A SETTLEMENT PETITION FO R A PARTICULAR YEAR ON ACCOUNT OF THE EVIDENCE FOUND FOR PART OF THE PERIO D AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE, NO FURTHER A DDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS OR SUPPRESSED SALES, IN THE ABSENCE OF EVIDENCE FOR THE BALANCE PERIOD. THE AB OVE 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 KUMA R (SUPRA). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF H ONBLE BOMBAY HIGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGU ING THE ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOP E OF ASSESSMENT UNDER CHAPTER XIV-B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSED INCOME OF THE BLOCK PERIOD AND NOT T HE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REG ULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULAR ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER UNDER CHAPTER X IV-B, WHERE THE ASSESSING OFFICER HAD TO ASSESS ONLY THE UNDISCLOSE D INCOME. HOWEVER, THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER C HAPTER XIV-B, THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED I NCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 50 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 200 6-07 IS MISPLACED AS THE ADDITION IN THE HANDS OF THE ASSESSEE IN THAT Y EAR WAS MADE ON ACCOUNT OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE INCOME-TAX DEPARTMENT, WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS . HOWEVER, NO INDEPENDENT INVESTIGATION / INQUIRY BY THE INCOME-T AX DEPARTMENT HAS BEEN MADE BEFORE COMPLETING ASSESSMENT PROCEEDINGS AGAIN ST THE ASSESSEE. ANOTHER ASPECT OF THE ISSUE IS THAT THE PETITION BE FORE THE SETTLEMENT COMMISSION HAS BEEN MADE BY THE ASSESSEE IN ASSESSM ENT YEAR 2007-08 ONLY AND NO SUCH PETITION FOR CLANDESTINE REMOVAL O F MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOU NT OF SUCH CLANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR A SSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSES SMENT UNDER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILAB LE WITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEE N MADE ON ONLY ON THE ISSUE OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IS THE BASIS OF ORDER PASSED BY CCE, AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF TH E CLANDESTINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED O UT BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMISSION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCEEDINGS, BUT SINC E THE SETTLEMENT PETITION FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMENT COMMISSION, NO FURTHER ADDITION COULD BE MADE IN TH E HANDS OF THE ASSESSEE ON THIS GROUND, IN THE ABSENCE OF ANY INQUIRY OR IN VESTIGATION BY THE ASSESSING OFFICER. ACCORDINGLY, THE RELIANCE PLACE D UPON BY THE LD. SPECIAL AR IN ASSESSEES OWN CASE REPORTED IN 137 TTJ 627 [ PUNE] IS MIS-PLACED AND THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. S PECIAL AR IN THIS REGARD. 58. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDERANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUP RA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (S UPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING T HE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND S AME HAVE ALREADY BEEN CONSIDERED. 51 59. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, HAS BEE N ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTLEMENT COMMIS SION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAIM OF THE ASSESSEE OF AD DITIONAL EXCISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN T HE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THA T IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTING THE INCOM E IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEAR S. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS FOR TH E RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLAND ESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EIT HER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THER E IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTI GATION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFICER H AS FAILED TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF T HE ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES FOR 300 DAYS ON ACCOUNT OF A NY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS. FURTHER, NO ADDITIO N CAN BE MADE IN THE HANDS OF THE ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY T HE ASSESSEE BEFORE THE 52 SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEAR S OR BEFORE THE EXCISE AUTHORITIES. IN THE CASE OF BHAGYALAXMI STEEL ALLO YS PVT. LTD., THERE IS NO INVESTIGATION BY DGCEI AND HENCE, NO ADDITION ON AC COUNT 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 C ONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FO R THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVESTMEN T IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMO VED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO ADDITION CAN BE MADE I N THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED INVESTMENT IN PURCHASES UNDER SE CTION 69C OF THE ACT. 61. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF T HE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSED PROD UCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. 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 APPLIC ATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 63. THE FACTS AND ISSUES IN ITA NOS.179 TO 182/PN/2 012, ITA NOS.656 TO 659/PN/2012, ITA NO.1084/PN/2012, ITA NO.1468/PN/20 12, ITA NO.1466/PN/2012, ITA NO.1523/PN/2012, ITA NOS.142 T O 146/PN/2012, ITA NOS.631 TO 635/PN/2012, ITA NOS.214 & 215/PN/2012 A ND ITA NOS.412 & 413/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUES I N ITA NOS.284 TO 286/PN/2012 AND ITA NOS.437 TO 439/PN/2012 AND OUR DECISION IN ITA NOS.284 TO 286/PN/2012 53 AND ITA NOS.437 TO 439/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.179 TO 182/PN/2012, ITA NOS.656 TO 659/PN/2012, ITA NO.108 4/PN/2012, ITA NO.1468/PN/2012, ITA NO.1466/PN/2012, ITA NO.1523/P N/2012, ITA NOS.142 TO 146/PN/2012, ITA NOS.631 TO 635/PN/2012, ITA NOS.21 4 & 215/PN/2012 AND ITA NOS.412 & 413/PN/2012. 64. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISPOSED OFF AS ABOVE AND ALL APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY, 2015. SD/- SD/- ( R.K. PANDA ) ( SUSHMA CHOWLA ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE ; DATED : 15 TH JULY, 2015. /GCVSR % & '()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE
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