The ACIT, Panchmahal Circle, Godhra. V. M/s. Zaveri Paper & Board Mills, Tal. Limkheda.

ITA 964/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0182 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-10-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 29-03-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: J P SHAH
• Keywords: Rectification of order; Difference of opinion; Condonation of delay; Change of opinion
• Section: 271(1)(c); 143(3); 64; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 28.10.09 DRAFTED ON: 28.10.20 09 ITA NO.964/AHD/2004, ITA NO.1812/AHD/2004 ASSESSMENT YEAR : 1995-1996 ASSISTANT COMMISSIONER OF INCOME TAX, PANCHMAHAL CIRCLE, GODHRA. VS. M/S. ZAVERI PAPER & BOARD MILLS, PALLI, TAL. LIMKHEDA. DIST:DAHOD PAN/GIR NO. : AAAFZ 1293 J (APPELLANT) .. (RESPONDENT) ITA NO.3515/AHD/2004, ITA NO.1827/AHD/2004 ASSESSMENT YEAR : 1995-1996 M/S. ZAVERI PAPER & BOARD MILLS, PALLI, TAL. LIMKHEDA. DIST:DAHOD VS. ASSISTANT COMMISSIONER OF INCOME TAX, PANCHMAHAL CIRCLE, GODHRA. PAN/GIR NO. : AAAFZ 1293 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI C.K.MISHRA SR. D.R. RESPONDENT BY: SHRI J.P.SHAH A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE CROSS APPEALS FILED BY THE REVENUE A ND ASSESSEE AGAINST THE ORDERS OF THE LD.CIT(APPEALS)-V, BARODA , DATED 16.01.2004, 15.03.2004. 2. THE APPEAL FILED BY THE ASSESSEE IN ITA NO.3515/ AHD/2004 IS BARRED BY LIMITATION OF 255 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE REASON FOR DELAY IN FILING OF THE AP PEAL WHICH READS AS FOLLOWS. ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 2 - I, YOGESHBHAI NATVERLAL ZAVERI PARTNER OF M/S. ZAV ERI PAPER & BOARD MILLS AT PALLI, TALUKA:LIMKJHEDA, DIST.GODHRA, AGED 55 YEARS, RESIDING AT PALLI, TALUKA:LIMKHEDA, DIST.GODHRA SOLEMNLY AFFIRM AND STATE AS FOLLOWS: 2. IMMEDIATELY ON RECEIPT THE ORDER DATED 15.01.200 4 BY C.I.T.(APPEALS) IN APPEAL NO.CAB V-229/03-04 BY THE CHARTERED ACCOUNTANT, SHRI V.C.SHAH, HE PREPARED THE GROUNDS OF APPEAL AND THE MEMORANDUM OF APPEAL TO FILE THE APPEAL TO THE TRIB UNAL AND HANDED OVER FOUR COPIES THEREOF TO OUR STAFF MEMBER JASHWA NTBHAI MATHURBHAI PRAJAPATI TO SEND THEM TO THE OFFICE OF THE TRIBUNA L WITH A CHALLAN OF RS.10,000/-. UNFORTUNATELY, THE SAID STAFF MEMBER T OTALLY FORGOT TO TAKE OUT SIGNATURE ON THE PAPERS AND TO FILE THEM IN THE OFFICE OF THE TRIBUNAL. THEREFORE, MR. V.C.SHAH WHILE CONDUCTING THE FIRST APPEAL AGAINST 271(1)(C) ORDER CONTENDED THAT THE APPEAL AGAINST A BOVE SECTION 154 ORDER IS PENDING IN THE TRIBUNAL BECAUSE OF THE BON AFIDE BELIEF THAT THE APPEAL WOULD HAVE ALREADY BEEN FILED. WHEN THE PENA LTY APPEAL CAME UP FOR HEARING BEFORE THE TRIBUNAL, MR. J.P.SHAH TO WH OM THE MATTER FIXED ON 08.12.2004 BEFORE THE TRIBUNAL WAS ENTRUSTED ASK ED FOR THE PAPERS OF THE TRIBUNAL APPEAL IN THE MATTER OF SECTION 154 OR DER, MR.V.C.SHAH INQUIRED WITH US AND ON FURTHER INQUIRY WE COULD FI ND OUT THAT JASHWANTBHAI MATHURBHAI PRAJAPATI TOTALLY FORGOT TO FILE THE APPEAL TO THE TRIBUNAL. IN THE CIRCUMSTANCES, I PRAY THAT THE DEL AYED FILING OF THE APPEAL BE KINDLY CONDONED. 3. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT THERE WAS NO MALA FIDE INTENTION OF THE ASSESS EE IN NOT FILING THE APPEAL IN TIME BEFORE THE TRIBUNAL. HE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF N. BALAKRISHAN VS. M. KRISHNAMURTHY (1998) 7 SUPREME COURT CASES 123, WHEREIN IT WAS HELD AS U NDER: THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE T HE DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. THE TIM E LIMIT FIXED FOR APPROACHING THE COURT IN DIFFERENT SITUATION IS NOT BECAUSE ON THE EXPIRY OF SUCH TIME A BAD CAUSE WOULD TRANSFORM INTO A GOO D CAUSE. RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHTS OF P ARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTI CS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL REMEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. THE LAW OF LIMITA TION FIXES A LIFESPAN FOR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJU RY SO SUFFERED. THE LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTEREST RCIPUBLICAE UP SIT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUT TO LITIGATION). RULES OF LIMITATION A RE NOT MEANT TO DESTROY THE RIGHTS OF THE PARTIES. THEY ARE MEANT TO SEE TH AT PARTIES DO NOT RESORT ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 3 - TO DILATORY TACTICS BUT SEEK THEIR REMEDY PROMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. CONDONATION OF DELAY IS A MATTER OF DISCRETION OF THE COURT. SECTION 5 OF THE LIMITATION ACT DOES NOT SAY THAT S UCH DISCRETION CAN BE EXERCISED ONLY IF THE DELAY IS WITHIN A CERTAIN LIM IT. LENGTH OF DELAY IS NO MATTER, ACCEPTABILITY OF THE EXPLANATION IS THE ONL Y CRITERION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCONDONABLE DUE TO A WANT OF ACCEPTABLE EXPLANATION WHEREAS IN CERTAIN OTHER CAS ES, DELAY OF A VERY LONG RANGE CAN BE CONDONED AS THE EXPLANATION THERE OF IS SATISFACTORY. IN EVERY CASE OF DELAY, THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCERNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HI S PLEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY, THE C OURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS A RE ASONABLE GROUND TO THINK THAT THE DELAY WAS OCCASIONED BY THE PARTY DE LIBERATELY TO GAIN TIME, THEN THE COURT SHOULD LEAN AGAINST ACCEPTANCE OF TH E EXPLANATION. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD RESULT IN FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTI ON THAT DELAYS IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THE WOR DS SUFFICIENT CAUSE UNDER SECTION 5 OF THE LIMITATION ACT SHOULD RECEIV E A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE. HE THEREFORE, PRAYED THAT THE DELAY IN FILING OF TH E APPEAL BE CONDONED AND THE APPEAL ACCEPTED FOR HEARING. 4. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY O PPOSED THE CONDONATION PETITION FILED BY THE ASSESSEE. HE SUBM ITTED THAT THE REASONS FOR THE DELAY IN FILING OF THE APPEAL AS STATED IN THE AFFIDAVIT ARE NOT CONVINCING AND REASONABLE. THEREFORE, THE CONDONATI ON PETITION OF THE ASSESSEE SHOULD BE REJECTED AND THE APPEAL BE DISMI SSED AS UNADMITTED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND NO MATERIAL TO SHOW THAT DELAY IN FILING OF THE APPEAL WAS A PART OF THE DILATORY TACTICS ADOPTED BY THE ASSESSEE OR WAS DUE TO ANY M ALA FIDE INTENTION. THE ASSESSEE HAS STATED IN DETAIL THE REASONS FOR DELAY IN FILING OF THE APPEAL WHICH COULD NOT BE CONTROVERTED BY THE LEARNED DEPA RTMENTAL REPRESENTATIVE. IN THE CIRCUMSTANCES, WE RESPECTFUL LY FOLLOWING THE ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 4 - DECISION OF HON'BLE SUPREME COURT IN THE CASE OF N. BALAKRISHAN VS. M. KRISHNAMURTHY (1998) 7 SUPREME COURT CASES 123 (SUP RA) CONDONE THE DELAY AND ALLOW THE PARTIES TO MAKE SUBMISSIONS ON MERIT. 6. IN THE CROSS APPEALS FILED BY THE REVENUE AND AS SESSEE IN 964/AHD/2004 AND ITA NOS.3515/AHD/2004, THE EFFECTI VE GROUNDS OF APPEAL TAKEN READS AS UNDER: ITA NO.964/AHD/2004 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE LD.CIT(A) ERRED IN RESTRICTING THE INCOME OF RS.19,50,166/- TO RS.7,20 ,860/-, DETERMINED IN THE ORDER UNDER SECTION 154 DATED 13.06.2003 IGNORI NG THE FOLLOWING FACTS. AS PER THE ORDER DATED 31.12.2002 OF THE HON'BLE IT AT, THE UNITS CONSUMED BY THE ASSESSEE ARE TAKEN INTO ACCOUNT FOR THE PERIOD JULY, 1994 TO NOVEMBER 1994 WHICH MAKES A TOTAL OF 98777 UNITS . THE PRODUCTION IN THE MONTHS OF JUNE, 1994 TO OCTOBER, 1994 MAKES A T OTAL OF 283181 KGS. THE GEB HAS WORKED OUT THEFT OF 245726 UNITS COSTIN G RS.1552910/-. THIS ORDER WAS CHALLENGED BY THE ASSESSEE AND THE AMOUNT WAS REDUCED TO RS.15,23,429/- IN PLACE OF RS.15,52,910/- IN APPEAL . THIS ORDER OF THE APPELLATE AUTHORITY WAS NOT CHALLENGED BY THE ASSES SEE IN ANY COURT OF LAW. NOW PROPORTIONATE UNITS TO THESE REDUCED AMOUN T WORKS OUT TO 241061 AS AGAINST 245726 WORKED OUT ORIGINALLY. ON THIS THEFT CONSUMPTION OF UNITS, THE VALUE OF PRODUCTION WORKS OUT TO RS.77,06,861/- AND GROSS PROFIT @ 16% GIVES PROFIT AT RS.12,33,097 /- AS AGAINST RESTRICTED TO RS.7,20,860/- BY THE LD.CIT(A). ITA NOS.3515/AHD/2004 (1) THE C.I.T.(APPEALS) ERRED IN UPHOLDING SECTION 154 ORDER PASSED BY THE LEARNED ASSESSING OFFICER ENHANCING THE INCOME FROM RS.75,730/- TO RS.19,50,166/- FORGETTING THAT 154 ORDER ITSELF WAS BAD IN LAW, THERE BEING NO APPARENT ERROR IN THE ORIGINAL ORDER. (2) THE C.I.T.(APPEALS) FAILED TO APPRECIATE THAT IN AN Y CASE ADDITION OF RS.19,50,166/- WAS ON EXCESSIVELY HIGH SIDE AND THA T THE ADDITION OF RS.75,730/- WAS IN ORDER. 7. SINCE THE FACTS AND ISSUE INVOLVED IN THE ABOVE GROUNDS OF APPEAL ARE COMMON THEY ARE BEING CONSIDERED AND DECIDED TO GETHER AS UNDER. ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 5 - 8. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS E NGAGED IN THE MANUFACTURING AND SALE OF CRAFT PAPER AT ITS FACTOR Y AT LIMKHEDA, DAHOD. RETURN OF INCOME WAS FILED ON 31.12.95 DECLARING NI L INCOME. SUBSEQUENTLY, IT CAME TO THE NOTICE OF THE AO THAT GUJARAT ELECTRICITY BOARD HAD MADE A SURPRISE CHECK OF THE FACTORY PREM ISES OF THE APPELLANT AND REGISTERED A CASE FOR THEFT OF 245726 UNITS OF UNMETERED ELECTRICITY AMOUNTING TO RS 15,52,910. 9. AS THE AO WAS OF THE VIEW THAT THE APPELLANT HAD NOT DISCLOSED THE SALES AND CONSEQUENT PRODUCTION CARRIED OUT BY USIN G THE UNMETERED POWER, A NOTICE U/S 148 WAS ISSUED ON 24.2.1999. 10. IN RESPONSE TO THE NOTICE U/S 148, THE APPELLA NT FILED RETURN ON 25.3.1999 DECLARING NIL INCOME. THE AO IN THE ORDER PASSED U/S 143(3) R.W.S. 147 DATED 26.2.2001 WORKED OUT THE SUPPRESSE D SALES ON ACCOUNT OF THEFT OF POWER AT RS 22,34,708 AS UNDER :- NO OF ELECTRIC UNITS USED 546448 (300732 UNITS AS SHOWN BY THE APPELLANT AND 245716 UNITS WORKED OUT BY GEB AS THEFT ) PRODUCTION IN KG PER UNIT 1.68 EXPECTED PRODUCTION OF PAPER ( IN KG) 9180 32 LESS : PRODUCTION SHOWN (IN KG)(AY95-96) 712447 205585 VALUE IS TAKEN AT THE AVERAGE RATE OF RS 10.87 PER KG X 10.87 VALUE OF SUPPRESSED/UNRECORDED PRODUCTION RS 22,34,708 11. IN THE MEANTIME, THE APPELLANT FILED AN APPEAL BEFORE THE GEB APPELLATE AUTHORITY ON 8.11.94 AND THE FINAL ELECTR ICITY LIABILITY WAS DETERMINED AT RS 15,23,429. ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 6 - 12. IN APPEAL BEFORE CIT(A)-VI, BARODA VIDE APPELLA TE ORDER NO VI- 40/01-02 DATED 19.3.2002, PART RELIEF WAS ALLOWED. THE CIT(A) WORKED OUT THE TURNOVER CORRESPONDING TO UNMETERED POWER OF RS 1,26,83,677 AND AFTER APPLYING GROSS PROFIT RATE ON THE ABOVE TURNO VER, ARRIVED AT A FIGURE OF RS 20,29,340 AS SUPPRESSED PRODUCTION/SALES. IN PAR A.2.10, CIT(A)-VI HAS OBSERVED AS UNDER :- 'THE APPELLANT HAS ALSO CONTENDED THAT IF THE SUPPR ESSED SALES/PRODUCTION IS ADDED TO THE INCOME, THE GROSS PROFIT RATIO WILL BE ABOUT 50% WHICH WILL GIVE ABSURD RESULT. HERE I DO NOT AGREE WITH THE VIEWS OF THE APPELLANT. SINCE THE SUPPRESSED PRODUC TION OR SALES HAVE TO BE FIRST CALCULATED AND THEN A REASONABLE GROSS PROFIT RATE OF 16% DECLARED BY THE APPELLANT IN THE LAST A.Y. HAS TO B E APPLIED. THEREFORE, THE GROSS PROFIT RATIO WILL NOT INCREASE ABNORMALLY TO 50% AND WILL REMAIN AT 16% ONLY. THE AO AHS WORKED OUT THE SUPPR ESSED PRODUCTION/ SALES ON THE BASIS OF QUANTITY OF SUPPR ESSED PRODUCTION OF 205585 KGS WHICH HAS BEEN MULTIPLIED WITH THE AVERA GE SALES RATE OF 10.87. THIS GIVES SUPPRESSED PRODUCTION IN VALUE TE RMS OF RS 22,34,708. IN MY OPINION SUPPRESSED SALES/PRODUCTIO N CAN ALSO BE CALCULATED REASONABLY AND REALISTICALLY AS FOLLOWS :- ASST YEAR 95-96 ASST YEAR 94-95 (LAST YEAR) ------------------- ---------------------- - SALES RS 70,05,826 RS 75,00,548 ELECTRICITY EXPENSES RS 8,84,029 RS 8,57 ,876 GROSS PROFIT 17% 16% (A) THE AVERAGE SALES OF TWO YEARS RS 1,45, 00,394 / 2 (B) COST OF AVERAGE POWER EXPENSES RS 1 7,41,905 / 2 (C) TURNOVER CORRESPONDING TO UNMELERED ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 7 - POWER OF RS 15,23,000 RS 1,26,83,377 (D) GROSS PROFIT (A} 16% APPLIED TO THE ABOVE TURNOVER OF RS 1,26,83,377 RS 20 ,29,840 THEREFORE, IT IS SEEN THAT A REASONABLE FIGURE OF S UPPRESSED PRODUCTION/SALES WORKS OUT TO RS 20,29,340 WHICH HAS NOT BEEN ACCOUN TED FOR BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS AND THEREFORE, A DDITION TO THIS EXTENT IS CONFIRMED AS AGAINST ADDITION OF RS 22,34,708 MADE BY THE AO.' 13. THE APPELLANT PREFERRED FURTHER APPEAL BEFORE H ON'BLE ITAT AHMEDABAD AGITATING THE ABOVE ADDITION. THE HON'BLE ITAT, AHMEDABAD, VIDE ORDER IN ITA NO 2207/AHOV2002 DATED 31.12.2002 , IN PARA 3 DECIDED THE ISSUE AS UNDER :- ' WE HAVE HEARD THE PARTIES AND CONSIDERED THE RIVA L SUBMISSIONS. FROM THE COPY OF LETTER ADDRESSED BY THE ASSESSEE TO GEB PLACED AT PAGE 7 OF THE PAPER BOOK, WE FIND THAT THE REASON FOR DOUBT W AS FOR THE PERIOD FROM 14.6.1994 UPTO THE DATE OF CHECKING OF THE ELECTRIC METRE I.E. 9.10.1994. THE EXPENDITURE IS ALSO SAID TO HAVE BEEN SETTLED A ND CLAIMED IN THE SUBSEQUENT YEAR. IN THESE CIRCUMSTANCES, IF AT ALL ANY ADDITION IS TO BE MADE ON THE BASIS OF ELECTRICITY CONSUMPTION, IT IS FOR THE PERIOD FROM 14.6.1994 TO 9.10.1994. WE THEREFORE, DIRECT THE AO TO RECOMPUTED THE ADDITION ON THE BASIS OF THE ELECTRICITY CONSUMPTIO N BETWEEN THESE PERIODS. THE ORDER OF THE CIT(A) IS MODIFIED TO THE ABOVE EXTENT.' 14. THE AO WHILE PASSING ORDER DATED 28.3.2003 GIVI NG EFFECT TO ITATS ORDER DETERMINED THE UNRECORDED PRODUCTION ( AS PER ANNEXURE-A OF SAID ORDER ) ON ACCOUNT OF ELECTRIC THEFT AS UNDER :- - TOTAL NUMBER OF DAYS FOR THE PERIOD 14.6.1994 LO 9.10.1994 118 DAYS - TOTAL NON-WORKING DAYS DURING THE ABOVE PERIOD 54 DAYS ( PROOF FILED BY THE ASSESSEE DATED 10.3.2003 ) - ACTUAL WORKING DAYS FOR THE ABOVE PERIOD ( 118-54) 64 DAYS - NO OF ELECTRIC UNITS THEFT MAY HAVE BEEN CONSUMED AS PER FORMULA ADOPTED BY GEB ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 8 - EARLIER IN FINDING THE UNITS 134956 UN ITS - NO OF ELECTRIC UNITS USED :- ORIGINAL UNITS OF THE WHOLE YEAR 300772 ADD: THEFT PERIOD UNITS 134956 435728 UNITS - EXPECTED PRODUCTION IN KG PER UNIT (A) 1.68 PER/KG 732023 KGS (435728 X 1.68) - ACTUAL PRODUCTION SHOWN IN KGS AS PER HOOKS 712447 KGS - SUPPRESSED PRODUCTION ( 732023 - 712447 ) 1 9576 KGS - VALUE TAKEN AT THE AVERAGE PER KG RS 10.87 - VALUE OF UNRECORDED PRODUCTION ( 19576 KGS X RS 10.87 ) RS 2,12,791 - CIT(A), 16% ON THE ABOVE AS PER CIT(A)'S ORDER RS 34,0 96 THE AO THEREFORE WORKED OUT THE UNRECORDED PRODUCTI ON/SALES AT RS 34,096 AND DETERMINED THE INCOME AT RS 75,730 15. SUBSEQUENTLY, A NOTICE U/S 154 WAS ISSUED BY TH E AO OBSERVING THAT EFFECT TO ITAT'S ORDER (SUPRA), WAS WRONGLY GIVEN A ND THE INCOME COMPUTED VIDE ORDER DATED 28.3.03 WAS NOT AS PER TH E DIRECTION OF THE HON'BLE ITAT. THE AO PASSED ORDER U/S 154 REJECTING THE PRELIMINARY OBJECTIONS FILED BY THE APPELLANT IN RESPONSE TO TH E NOTICE U/S 154 AND DETERMINED THE INCOME AT RS 19,50,166 BY WORKING OU T THE SUPPRESSED PRODUCTION ( AS PER ANNEXURE ENCLOSED TO THE AC'S O RDER U/S 154) AS UNDER:- - TOTAL TURNOVER RS 1,23,83,377 LESS-UNMETERED POWER RS 15,23,000 ------------------- RS 1,11,60,377 AS PER ITAT'S ORDER, DIRECTION OF THE PERIOD FROM 14.6.1994 TO 9.10.1994 FOR 118 DAYS SUPPRESSED PRODUCTION 36093 X 10.87 ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 9 - (AVERAGE PER KG) RS 3,92,333 RS 1,15,52,710 16 % GP SUPPRESSED PRODUCTION CONFIRMED BY ITAT AHMEDABAD RS 18.48.433 LESS : CONFIRMED BY CIT(A) RS 20.29.34 0 (-) RS 1.80.907 IN VIEW OF THE ABOVE, THE INCOME HAS BEEN INCREASED TO RS 19,50,166 AS AGAINST THE SAME DETERMINED VIDE ORDER DATED 28.3.0 3 AT RS 75,730. THE APPELLANT FILED APPEAL BEFORE THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) AGAINST THE ORDER PASSED U/S 154 DATED 13.6.2003 DETERMINING INCOME AT RS 19,50,166. 16. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) THE OBJECTION WAS AGAINST THE PASSING OF ORDER U/S 154. ACCORDING TO THE APPELLANT THERE IS NO MISTAKE APPARENT FROM RECORD AND IT IS MERELY A CHANGE OF OPINION. THE APPELLANT HAS ALSO OBJECTED TO THE ACTION OF THE AO OF ADOPTING THE NUMBER OF WORKING DAYS AS 118 AND S TATED THAT THE AO HAS MISINTERPRETED THE ORDER OF ITAT, AHMEDABAD. 17. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS), THE LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT TH E AO WHILE PASSING ORDER DATED 28.3.2003 GIVING EFFECT TO ITAT'S ORDER DETERMINED THE UNRECORDED PRODUCTION ( AS PER ANNEXURE-A OF SAID O RDER) ON ACCOUNT OF ELECTRIC THEFT AND DETERMINED INCOME AT RS.34,096. IT IS ARGUED THAT HE HAS GIVEN DETAILED WORKING TO ARRIVE AT THE ABOVE INCOM E AND THEREFORE THERE IS NO MISTAKE APPARENT FROM RECORD TO BE RECTIFIED U/S 154. IT IS STATED THAT ISSUANCE OF NOTICE U/S 154 IN THE PRESENT CASE IS O NLY A CHANGE OF OPINION AND THE ENTIRE PROCEEDINGS ARE BAD IN LAW AND PLEAD ED TO BE CANCELLED. ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 10 - 18. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) THAT THE AO WHILE PASSING THE O RDER DATED 28.3.2003 GIVING EFFECT TO ITAT'S ORDER HAS DULY ACCEPTED THE ACTUAL WORKING OF 64 DAYS AFTER CONSIDERING THE NECESSARY EVIDENCE FILED BY THE APPELLANT VIDE LETTER DATED 10.3.2003 AND ALSO TREATED 54 DAYS AS NON-WORKING WHILE COMPUTING THE SUPPRESSED PRODUCTION. THE COUNSEL FU RTHER STATED THAT THE AO HAS ALSO APPLIED GP RATE TO MAKE THE ADDITION AN D HENCE RE-WORKING OF SAME BY THE SUBSEQUENT AO IS BAD IN LAW. 19. THE COUNSEL SUBMITTED THAT THE ACTION OF THE A O OF ISSUANCE OF NOTICE AND PASSING OF ORDER U/S 154 WHEREIN THE NUM BER OF DAYS HAVE BEEN TAKEN AT 118 AND TURNOVER HAS BEEN WORKED OUT AT RS 1,1 5,52,710 IS LEGALLY INCORRECT. THE COUNSEL VEHEMENTLY ARGUED THAT SUCH AN ACTION ON THE PART OF THE AO IS ONLY A RESULT OF MISINTERPRETATION OF ORD ER PASSED BY THE ITAT AND THE SAME IS AN ILLEGAL EXERCISE AND THEREFORE, PLEADED TO BE QUASHED. 20. THE COUNSEL FURTHER ARGUED THAT WITHOUT PREJUDI CE TO THE ABOVE, EVEN IF THERE ARE TWO VIEWS POSSIBLE, THE SAME IS OUTSID E THE PURVIEW OF PROVISIONS OF SECTION 154 AS HELD BY HON'BLE SUPREM E COURT IN THE CASE OF T.S BALRAM VS VOLKERT BROS 82 1TR 50 (SC) AND CIT V S HERO CYCLES LTD 228 ITR 463 (SC). 21. THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE APPELLANT WAS FORWARDED TO THE AO FOR HIS REPORT/COMMENT. THE AO ALSO REMAINED PRESENT DURING THE APPELLATE PROCEEDINGS AND THE RE PORT OF ADDL. C1T DATED 12.12.03 HAS BEEN SUBMITTED WHICH IS PLACED ON RECO RD. THE ADDL. C1T IN THE REPORT HAS SUBMITTED THAT THE FIGURES ADOPTED W HILE PASSING ORDER U/S 154 BY AC1T WHEREIN THE INCOME HAS BEEN DETERMINED AT RS 19,50,166 ARE NOT EXPLAINABLE. IN THE REPORT, THE ADDL. CIT HAS F URNISHED A DETAILED WORKING OF SUPPRESSED PRODUCTION/SALES AGAIN AT SOM E ENHANCED FIGURE AND ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 11 - ALSO DISPUTED THE AVERAGE PRODUCTION PER UNIT. IN H IS REPORT THE ADDL. CIT HAS WORKED OUT THE TURNOVER AT RS 1,36,93,445/- WHI CH IS MORE THAN RS 1,23,83,377/- ADOPTED BY THE AO IN HIS ORDER DATED 13.6.2003 AND RS 1,26,83,377/- WORKED OUT BY CIT(A)-VI, BARODA IN AP PEAL. THE ADDL. CIT ALSO DISPUTED PRODUCTION PER UNIT WHICH ACCORDING T O HIM SHOULD BE OF 2.52 UNITS INSTEAD OF 1.68 UNITS. ACCORDING TO THE ADDL. CIT, THE INCOME DETERMINED U/S 154 STILL NEEDS FURTHER CHANGE AT AN ENHANCED FIGURE. 22. THE REPORT OF THE ADDL. CIT DATED 12.12.03 WAS DULY CONFRONTED TO THE LEARNED COUNSEL FOR THE APPELLANT. HE ONCE AGAI N OBJECTED TO THE PASSING OF ORDER U/S 154 AND REITERATED THE FACTS SUBMITTED EARLIER. IT IS REITERATED THAT ONCE THE AO FAILS TO EXPLAIN THE BASIS OF ADDI TION MADE IN THE RECTIFICATION ORDER, THE ENTIRE PROCEEDINGS BECOME NULL AND VOID AND ONCE AGAIN PLEADED THAT ORDER U/S 154 BE CANCELLED. IT I S STATED THAT THE AO WHILE PASSING ORDER GIVING EFFECT TO ITAT'S ORDER HAS DUL Y CONSIDERED ALL THE CRITERIA AND HENCE IT IS NOT CLEAR TO THE AO AS TO WHICH MISTAKE IS RECTIFIED IN THE ORDER UNDER CONSIDERATION. 23. IT IS STATED THAT WHERE MORE THAN ONE VIEW ARE POSSIBLE, THE MISTAKE BECOMES OUTSIDE THE AMBIT OF PROVISIONS OF SECTION 154. ACCORDING TO THE COUNSEL, THE WORKING MADE AT DIFFERENT LEVEL CLEARL Y SUGGEST THAT MATTER NEEDS IN DEPTH INVESTIGATION AND CAN BE SETTLED BY ARGUMENTS AND LONG PROCEDURE AND THEREFORE, THE SAME CANNOT BE RECTIFI ED BY INVOKING PROVISIONS OF SECTION 154 OF THE ACT. THE COUNSEL A GAIN CITED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS HERO CYCLES PVT. LTD 228 ITR 463 (SC) WHEREIN IT HAS BEEN HELD THAT RECTIFIC ATION U/S 154 CAN ONLY BE MADE WHEN A GLARING MISTAKE OF FACT OR LAW COMMI TTED BY THE OFFICER PASSING THE ORDER BECOMES APPARENT FROM THE RECORD. RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 12 - 24. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COU NSEL DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), HAS ALSO S UBMITTED DETAILED WORKING BASED ON MOVER, AND TAKEN AN ALTERNATE PLEA THAT THE ADDITION IF ANY WOULD BE AS UNDER :- - TOTAL AVERAGE TURNOVER OF TWO YEARS RS 72,53,1 97 - AVERAGE COST OF POWER EXPENSES RS 8,70,953 - SALE PER RUPEE OF ELECTRIC POWER 8.32 - TOTAL ELECTRIC CHARGES PAID FOR 6 MONTHS AS CALCULATED BY GEB RS 15, 23,000 - FOR 64 DAYS (118 DAYS-54DAYS), THE CHARGES CAN BE 1523000X64/180 RS 5,41,511 - TURNOVER CORRESPONDING TO UNMETERED POWER RS 5,41,511 78.32 RS 45,05,371 - GP @ 16% ON RS 45,05,371 RS 7,20,860 25. THE COUNSEL REITERATED THAT THE PROVISIONS OF S ECTION 154 ENVISAGE THAT THE MISTAKE MUST BE AN OBVIOUS AND PATENT AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASO NING ON POINTS ON WHICH THERE MAY CONCEIVABLY TWO OPINIONS. ACCORDING TO THE COUNSEL, THE WORD 'APPARENT' IS THAT IT MUST BE SOMETHING WHICH APPEARS TO BE EX-FACIE AND IS INCAPABLE OF ARGUMENTS OR DEBATE AND IN THE PRESENT CASE, THE MISTAKE CANNOT BE SAID TO BE AN APPARENT MISTAKE WH ICH NEEDS ANY RECTIFICATION. THE ACTION OF THE AO IS THEREFORE PL EADED TO BE HELD AS INCORRECT AND ADDITION MADE IS STATED TO BE DELETED . 26. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFT ER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE AS WELL ARG UMENTS PUTFORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE REPORT O F THE AO IS ALSO CONSIDERED. THE APPELLANT HAS STRONGLY OBJECTED TO THE ACTION OF THE AO OF ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 13 - PASSING ORDER U/S 154 OF THE ACT AND HAS CONTENDED THAT THERE IS NO MISTAKE APPARENT FROM RECORD WHICH NEEDS RECTIFICAT ION. THE APPELLANT HAS ALSO STATED THAT IT IS ONLY A CHANGE OF OPINION BASED ON SECOND- THOUGHT OF SUBSEQUENT AO. 4.11 I HAVE CAREFULLY PERUSED THE ORDER PASSED U/S 143(3) R.W.S. 147, CIT(A)'S ORDER, ORDER BY THE HON'BLE ITAT, AO'S ORD ER GIVING EFFECT TO ITAT'S ORDER AND RECTIFICATION ORDER U/S 154 WHICH IS IN DISPUTE IN THE PRESENT APPEAL. THE BASIS OF ADDITION IS THEFT OF POWER FOR WHICH GEB RAISED A BILL OF RS 15,23,000. THIS BILL WAS STATED TO BE PREPARED FOR 6 MONTHS SINCE AS PER GEB RULES, AS IN CASES WHERE THEFT IS OBSERVED, MINIMUM BILL TO BE RAISED IS OF 6 MONTHS. THE APPEL LANT DURING THE APPELLATE PROCEEDINGS BEFORE THE HON'BLE ITAT, AHME DABAD HAD SUBMITTED A COPY OF LETTER ADDRESSED TO GEB (PAGE N O 7 OF PAPER BOOK FILED BEFORE THE ITAT) AND ACCORDINGLY THE HON'BLE ITAT AFTER ACCEPTING THE PLEA OF THE APPELLANT HAD MADE THE OBSERVATIONS THAT THE, ADDITION IF ANY, HAS TO BE MADE FOR THE PERIOD FROM 14.6.19 94 TO 9.10.1994. DURING THE COURSE OF PRESENT APPELLATE PROCEEDINGS THE APPELLANT FILED THE COPY OF THE SAME LETTER BEFORE ME WHICH IS CAR EFULLY CONSIDERED AND IT IS OBSERVED THAT THE APPELLANT HAD PLEADED TO THE G EB AUTHORITIES TO CONSIDER THE PERIOD OF DOUBT FROM 14.6.1994 TO I 9. 10.1994 AND ALSO STATED TO REDUCE THE NUMBER OF WORKING DAYS AFTER E XCLUDING STAGGERED HOLIDAYS, FAILURE OF POWER DUE TO TRANSFORMER-FAILU RE FOR THE PERIOD FROM 23.9.1994 TO 30.9.1994 AND BOILER INSPECTION FROM 4 .7.94 TO 14.7.1994. IN SECOND APPEAL, THE APPELLANT ALSO FILED DETAILS OF 54 NON-WORKING DAYS BEFORE THE ITAT AHMEDABAD (PAGE NO 8 OF PAPER BOOK ) THIS DETAIL WAS ALSO PLACED BEFORE THE AO ON 10.3.2003 WHICH HAS BEEN ACCEPTED WITHOUT ANY DISPUTE WHILE GIVING EFFECT TO ITAT'S O RDER DATED 28.3.2003. THE AO IN THE SAID ORDER HAS ACCEPTED NUMBER OF WOR KING DAYS AS 64 I.E. TOTAL NUMBER OF DAYS LESS NON-WORKING DAYS (118 - 5 4 = 64 ) AND WORKED OUT THE SUPPRESSED PRODUCTION ACCORDINGLY. 4.12 CUMULATIVE READING OF THE ORDER OF .THE AO GIV ING EFFECT TO THE ITAT'S ORDER, ORDER U/S. 154 PASSED BY THE AO RECTI FYING THE MISTAKE IN THE ABOVE ORDER AND ALSO THE REPORT OF THE ADDL. CI T DATED 12.12.03 , THE FOLLOWING ISSUES ARISE A) AS PER THE DEPARTMENT, THERE IS AN ERROR IN COMPUTING THE AMOUNT OF SUPPRESSED PRODUCTION AS THE AO HAS CHANGED THE MET HOD WHICH IS ADOPTED BY THE CIT (A) AND MODIFIED BY THE ITAT B) THE AO WHILE PASSING THE ORDER GIVING EFFEC T, HAS ERRONEOUSLY EXCLUDED THE NON-WORKING DAYS FROM THE COMPUTATION AND ACCORDINGLY HAS COMPUTED THE SUPPRESSED PRODUCTION WRONGLY FOR ONLY 64 DAYS AS AGAINST 118 DAYS. 4.13 THEREFORE, AS PER THE AO AND ADDL. CIT, THERE ARE TWO MISTAKES WHICH ARE SOUGHT TO BE RECTIFIED AND NOT ONE SINGLE MISTAKE. IN THIS CONNECTION IT IS OBSERVED THAT THE A.O. WHILE MAKIN G THE ORIGINAL ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 14 - ASSESSMENT COMPUTED THE SUPPRESSED PRODUCTION FOR 1 80 DAYS AT RS. 22,34,708. WHILE COMPLETING THE ASSESSMENT THE AO M ADE ADDITION OF THE GROSS AMOUNT OF THE TURNOVER. THIS FINDING OF THE A O WAS MODIFIED BY THE CIT (A). THE CIT (A) HELD THAT THE COMPUTATION SHOU LD ACTUALLY BE MADE AS STATED IN PARA 2.10 APPELLATE ORDER DATED 19.03. 2002 AND ACCORDINGLY, THE SUPPRESSED PRODUCTION IS NOT RS.22,34,708/- BUT IT IS 1.26 CRORES. THE CIT (A) FURTHER HELD THAT ONLY 16 % THEREOF, BEING THE GP THEREON AMOUNTING IS REQUIRED TO BE ADDED TO THE TOTAL INCO ME. ACCORDINGLY, THE CIT (A) UPHELD THE ADDITION OF RS. 20.29 LACS. WH ILE ARRIVING AT THE SAID CONCLUSION THE CIT (A) CONSIDERED ENTIRE UNMETERED POWER OF RS. 15.23 LACS (I.E. FOR THE PERIOD OF 180 DAYS I.E. 6 MONTHS ). THE ITAT WHILE DISPOSING OFF THE APPEAL OF THE APPELLANT HAS CONSI DERED THE COMPUTATION MADE BY THE AO IN THE ORIGINAL ASSESSMENT AS WELL A S THAT OF THE CIT (A). THEREAFTER, THE ITAT NOTICED THAT THE SAID WORKING ALSO INCLUDES THE DAYS FOR WHICH THERE IS A HYPOTHETICAL LEVY I.E. IT INCL UDES THE PERIOD ON WHICH THE FACTORY HAS ACTUALLY NOT WORKED. THE SAID WORKI NG DONE BY THE CIT (A), THUS FOUND BY THE ITAT TO AS NOT ACCEPTABLE AN D ACCORDINGLY THEY GRANTED PARTIAL RELIEF TO THE APPELLANT ON THE GROU ND THAT THE COMPUTATION DONE BY THE CIT (A) BE MODIFIED TO THE EXTENT THE S AME COMPUTES SUPPRESSED PRODUCTION EVEN FOR THE PERIOD ON WHICH THE FACTORY HAS ACTUALLY NOT WORKED. IT IS HOWEVER, SEEN THAT TH E AO WHILE GIVING ORDER U/S. 154 IGNORED THE COMPUTATION DONE BY THE CIT (A ) IN THE ORIGINAL APPEAL AND RE-COMPUTED THE SUPPRESSED PRODUCTION AS PER THE FORMULA ADOPTED IN THE ORIGINAL ASSESSMENT. THIS IN MY V IEW IS THE MISTAKE APPARENT FROM RECORD. THE ITAT HAS MODIFIED THE C OMPUTATION DONE BY THE CIT (A), WHEREAS THE AO WHILE GIVING EFFECT RE- COMPUTED THE SUPPRESSED PRODUCTION ON THE BASIS OF METHOD ADOPTE D BY THE AO IN ORIGINAL ASSESSMENT. IN MY VIEW THIS BEING A MIST AKE AND A MISTAKE WHICH IS APPARENT FROM RECORD REQUIRES TO BE MODIFI ED. THE AO WHILE PASSING ORDER U/S. 154 IS RIGHT TO THE EXTENT HE CO NTENDS THAT THE COMPUTATION IS NOT DONE CORRECTLY BY THE AO WHILE P ASSING ORDER GIVING EFFECT TO THE ITATS ORDER. 4.14 SECOND MISTAKE WHICH IS POINTED OUT BY THE AO IS ABOUT THE NUMBER OF WORKING DAYS FOR THE APPELLANT. THE DISPUTE BETW EEN THE AO AND THE APPELLANT IS THAT IN THE ORDER GIVING EFFECT THE AO HAS WRONGLY EXCLUDED THE NON-WORKING (54) DAYS OUT OF THE TOTAL 118 DAYS FOR WHICH THERE WAS ACTUALLY A DEFAULT. THE AO NOW STATES THAT THE SUPP RESSION OF PRODUCTION SHOULD BE CHARGEABLE TO THE EXTENT OF ALL THE 118 D AYS AND NOT ONLY FOR 64 DAYS. IN THE LAST PARA THE ITAT, WHILE DISPOSING OFF THE APPEAL OF THE APPELLANT HAS MADE A SPECIFIC REFERENCE TO THE LETT ER OF THE APPELLANT WRITTEN TO THE GEB DATED 19 TH JANUARY, 1996 (FILED BEFORE THE ITAT AT PAGE 7 OF THE PAPER BOOK AND ALSO PRODUCED BEFORE M E). IN THE SAID LETTER THE APPELLANT HAS CONTENDED AND REQUESTED THE GEB F OR RESTRICTING THE PENALTY ONLY FOR 118 DAYS AND ALSO MADE A FURTHER R EQUEST FOR IGNORING THE DAYS ON WHICH THE FACTORY OF THE APPELLANT WAS CLOSED EITHER ON ACCOUNT OF STAGGERING (WEEKLY) OR NON-AVAILABILITY OF POWER DUE TO FAILURE ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 15 - OF TRANSFORMER OR VISIT OF THE BOILER INSPECTOR. AF TER GOING THROUGH THE CONTENTS OF THE SAID LETTER THE ITAT HAS RELIED COM PLETELY ON THE SAID LETTER AND HAS THEREAFTER GIVEN DIRECTION FOR EXCLUSION OF THE PERIODS. IT MAY THEREFORE BE POSSIBLE AND REASONABLY STATED THAT TH E ITAT GAVE THE DIRECTION TO CONSIDER THE- CONTENTS OF THE ENTIRE L ETTER, ESPECIALLY WHEN THE ITAT GAVE THE DIRECTION TO THE AO FOR RECOMPUTING T HE ADDITION ON THE BASIS OF THE ELECTRICITY CONSUMPTION BETWEEN THESE PERIODS. THERE WAS THEREFORE NECESSITY TO RECOMPUTE THE ELECTRICITY CO NSUMPTION DURING THIS PERIOD. IT IS NATURAL THAT FOR COMPUTING THE SAME , IT IS ALSO NECESSARY TO EXCLUDE THE NON-WORKING DAYS AND IF THE AO HAS CONS IDERED THE SAME, THERE IS NO MISTAKE APPARENT FROM RECORD IN THIS RE GARD. I AM THEREFORE, OF THE VIEW THAT THE VIEW OF THE DEPARTMENT (DURING THE COURSE OF THE APPELLATE PROCEEDINGS) THAT THE SUPPRESSED PRODUCTI ON SHOULD BE COMPUTED WITH REFERENCE TO 118 DAYS INSTEAD OF 54 D AYS AS CONSIDERED BY THE LEARNED ASSESSING OFFICER WHILE GIVING EFFECT T O THE ITATS ORDER IS NOT TENABLE AS NOT A MISTAKE APPARENT FROM RECORD A ND THEREFORE THE RECTIFICATION TO THIS EXTENT IS CANCELLED. 4.15. IT IS SEEN THAT THE APPELLANT HAS ALSO TAKEN AN ALTERNATIVE PLEA IN THE SUBMISSION, WHICH IS REPRODUCED IN PARA 4.9 ABO VE. ACCORDINGLY THE APPLICATION FOR RECTIFICATION CAN BE SUSTAINED TO T HE EXTENT OF ONLY RS 7,20,860 ON THE BASIS OF THE COMPUTATION MADE BY TH E APPELLANT. IT IS SEEN THAT THE SAID COMPUTATION IS IN TUNE WITH THE OBSER VATIONS MADE ABOVE AS IT DULY TAKES INTO CONSIDERATION THE METHOD ADOPTED BY THE CIT (A) FOR ESTIMATING THE SUPPRESSED PRODUCTION AND ALSO GIVES DUE CREDIT FOR THE NON-WORKING DAYS. 27. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES A ND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 28. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THAT THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE LEA RNED ASSESSING OFFICER IN PASSING OF THE RECTIFICATION ORDER UNDER THE PRO VISIONS OF SECTION 154 OF THE ACT. THE ORDER UNDER APPEAL BEFORE US IS IN CON SEQUENCE TO AN ORDER PASSED UNDER SECTION 154 OF THE ACT. IT IS OBSERVED THAT IN THE INSTANT CASE, ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 16 - THE TRIBUNAL VIDE ITS ORDER DATED 31.12.2002 PASSED IN ITA NO.2207/AHD/2002 DIRECTED THE LEARNED ASSESSING OFF ICER AS UNDER: IN THOSE CIRCUMSTANCES, IF AT ALL MY ADDITION IS TO BE MADE ON THE BASIS OF ELECTRICITY CONSUMPTION, IT IS FOR THE PERIOD FR OM 14.09.1994 TO 9.10.1994. WE THEREFORE, DIRECT THE AO TO RECOMPUTE D THE ADDITION OF ON THE BASIS OF THE ELECTRICITY CONSUMPTION BETWEEN TH OSE PERIOD. 29. IN PURSUANCE TO THE ABOVE ORDER, THE LEARNED AS SESSING OFFICER PASSED THE CONSEQUENTIAL ORDER ON 28.03.2003, WHERE IN HE DETERMINED THE ELECTRICITY CONSUMPTION OF 134956 UNITS DURING THE PERIOD 14.06.1994 TO 09.10.1994. IN DETERMINING THE ABOVE UNITS OF CONSU MPTION, THE LEARNED ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION THAT THE SAID PERIOD CONSISTS OF 118 DAYS OUT OF WHICH 64 DAYS ARE WORKING DAYS A ND 54 DAYS ARE NON WORKING DAYS. AFTER PASSING OF THE ABOVE ORDER, THE LEARNED ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 154 OF THE AC T ON 30.05.2003 AND CLAIMED THAT THE UNITS OF CONSUMPTION OF ELECTRICIT Y DURING THE PERIOD 14.06.1994 TO 09.10.1994 WORKED OUT IN THE ORDER AT 134956 UNITS AFTER CONSIDERING 64 DAYS AS WORKING DAYS ONLY WAS A MIST AKE APPARENT FROM THE RECORD WHICH IS RECTIFIABLE UNDER SECTION 154 OF TH E ACT AND AS PER THE LEARNED ASSESSING OFFICER THE UNITS OF ELECTRICITY CONSUMED DURING THE SAID PERIOD OF 118 DAYS SHOULD BE 245726 UNITS. IN REPLY TO THE NOTICE, THE ASSESSEE FILED ITS OBJECTION WHEREIN THE ASSESSEE C ONTENDED THAT WORKING OF 118 DAYS IN THE NOTICE WAS NOT PROVIDED TO IT AND T HE BASIS ON WHICH GROSS PROFIT WAS CALCULATED IN THE NOTICE WAS ALSO NOT PR OVIDED TO IT AND THEREFORE, HE REQUESTED THE LEARNED ASSESSING OFFICER TO PROVI DE THE SAME AND THEREAFTER, ALLOW HIM OPPORTUNITY TO RAISE ITS OBJE CTION THERE AGAINST. WE FIND THAT THE LEARNED ASSESSING OFFICER HAS NOT CON SIDERED THE REQUEST OF THE ASSESSEE AND PASSED IMPUGNED ORDER WITHOUT CONT ROVERTING THE SUBMISSION MADE BY THE ASSESSEE. IN OUR CONSIDERED OPINION, THE ABOVE ACTION WAS NOT FAIR AND REASONABLE. BE THAT AS IT M AY. WE FIND THAT CONSUMPTION OF UNITS IN THE ORDER DATED 19.02.2003 WAS WORKED OUT BY THE ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 17 - AO AFTER CONSIDERING THE FACT THAT THE SAID PERIOD WAS CONSISTING OF 118 DAYS AND IN WHICH 54 DAYS WERE NON WORKING DAYS. IT CANNOT BE SAID THAT THE WORKING WAS DONE UNDER A MISTAKEN BELIEF OF ANY FACT OR LAW. THE WORKING WAS DONE BY THE LEARNED ASSESSING OFFICER A FTER CONSIDERING THE FACTS AVAILABLE BEFORE HIM AND AFTER APPLYING HIS M IND TO THOSE FACTS. THE REVENUE COULD NOT BRING ANY MATERIAL BEFORE US TO S HOW THAT THE ACTUAL CONSUMPTION OF ELECTRICITY DURING THE PERIOD FROM 1 4.06.1994 TO 09.10.1994 WAS MORE THAN 134956 UNITS AS WORKED OUT IN THE ORDER DATED 19.02.2003 PASSED BY THE LEARNED ASSESSING OFFICER. IN THE RECTIFICATION ORDER, THE NUMBER OF UNITS CONSUMED WAS WORKED OUT AT MORE UNITS BY ASSUMING THAT ALL THE DAYS COMPRISING IN THE PERIOD FROM 14.06.1994 TO 09.10.1994 WERE WORKING DAYS I.E. IN OTHER WORDS ON LY ON THE BASIS OF CERTAIN ASSUMPTIONS AND PRESUMPTIONS. IN THE ABOVE CIRCUMSTANCES IN OUR CONSIDERED OPINION, THE ALLEGED MISTAKE CANNOT BE S AID TO BE A PATENT MISTAKE WHICH DOES NOT ADMIT ANY ARGUMENT OR DEBATE . IT IS AN ESTABLISH POSITION OF LAW THAT ONLY THOSE MISTAKES WHICH ARE PATENT ON ITS FACE AND ON WHICH NO TWO OPINIONS ARE POSSIBLE ARE ONLY RECTIFI ABLE UNDER SECTION 154 OF THE ACT. IN THE INSTANT CASE, THE ALLEGED MIST AKE WHICH WAS RECTIFIED IN EXERCISE OF THE PROVISIONS OF SECTION 154 BEING NOT SUCH A PATENT MISTAKE IN OUR CONSIDERED OPINION, THE SAME COULD NOT HAVE BEE N RECTIFIED BY INVOKING PROVISIONS OF SECTION 154 OF THE ACT. WE THEREFORE, CANCEL THE ORDER OF THE LEARNED ASSESSING OFFICER PASSED UNDER SECTION 154 OF THE ACT. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE R EVENUE IS DISMISSED. 30. IN THE APPEAL OF THE REVENUE IN ITA NO.1812/AHD /2004 AND THE APPEAL OF THE ASSESSEE IN ITA NO.1827/AHD/2004, THE FOLLOWING GROUNDS OF APPEAL ARE TAKEN: ITA NO.1812/AHD/2004 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN REDUCING THE PENALTY OF RS.15,60,140/- LEV IED U/S. 271(1)(C) OF THE ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 18 - ACT BY DIRECTING THE AO TO LEVY PENALTY U/S. 271(1) (C) ON THE REDUCED INCOME OF RS.7,20,860/- THAT TOO AT 100% AND NOT 20 0% AS LEVIED BY THE AO ON ALLEGED CONCEALED INCOME OF RS.19,50,166/- DE TERMINED IN THE ORDER U/S.154 OF THE ACT DATED 13.06.2003. ITA NO.1827/AHD/2004 1. THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE PENALTY OR RS.7,20,860/- UNDER SECTION 2781(1)(C). 2. THE C.I.T.(APPEALS) OUGHT TO HAVE APPRECIATED THAT IT WAS NOT POSSIBLE TO REACH A FIRM CONCLUSION FROM FACTS AND CIRCUMSTANCE S OF THE CASE THAT THE ASSESSEE HAD CONCEALED/FURNISHED INACCUARATE PARTIC ULARS AND HENCE, PENALTY COULD NOT BE LEVIED. 3. THE C.I.T.(APPEALS)OUGHT TO HAVE HELD THAT FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) IT IS TO BE PROVED BY THE DEPARTM ENT THAT THERE WAS CONCEALMENT BY THE ASSESSEE BY ADDUCING CONCLUSIVE PROOF THAT THERE WAS SUCH DEFAULT ON THE PART OF THE ASSESSEE. NEEDLESS TO SAY SUCH CONCLUSIVE PROOF IS NOWHERE THERE ON RECORD. 4. THE C.I.T.(APPEALS) COMPLETELY OVERLOOKING THE FACT THAT IN A SUIT FILED BEFORE THE JUDICIAL MAGISTRATE, FIRST CLASS, LIMKHE DA, IT WAS HELD BY THE HON'BLE JUDGE THAT THE ASSESSEE HAD NOT MADE ANY TH EFT OF ELECTRICITY. 5. THE C.I.T.(APPEALS) ERRED IN OVERLOOKING THE FACT T HAT NO NOTICE OF PENALTY WAS SERVED ON THE APPELLANT, AND HENCE, THE MANDATO RY REQUIREMENT OF PUTTING THE ASSESSEE TO NOTICE WAS NOT FULFILLED AN D HENCE THE PENALTY IS BAD IN LAW AS WELL AS ON FACTS. 6. THE C.I.T.(APPEALS) ERRED IN NOT HOLDING THAT NO SA TISFACTION WAS REACHED BY THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER ABOUT LEVY OF PENALTY AND WHETHER THE DEFAULT IS OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS WHICH IS A MANDATORY REQUIRE MENT. 31. SINCE THE FACTS AND ISSUE INVOLVED IN THE ABOVE GROUNDS OF APPEAL ARE COMMON THEY ARE BEING CONSIDERED AND DECIDED TO GETHER AS UNDER. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, IT IS OBSERVED THAT THE ADDITION TO THE INCOME OF T HE ASSESSEE IS MADE ON THE BASIS OF ESTIMATE OF SUPPRESSED PRODUCTION ON THE G ROUND OF EXCESS CONSUMPTION OF ELECTRICITY. IN THE INSTANT CASE, GU JARAT ELECTRICITY BOARD HAS MADE A SURPRISE CHECK OF THE FACTORY PREMISES O F THE ASSESSEE AND REGISTERED A CASE FOR THEFT OF 2,45,726 UNITS OF UN METERED ELECTRICITY ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 19 - AMOUNTING TO RS.15,52,910/-. THE ASSESSEE FILED AN APPEAL BEFORE THE GUJARAT ELECTRICITY BOARD APPELLATE AUTHORITY ON 8. 11.1994 AND THE FINAL ELECTRICITY LIABILITY WAS DETERMINED AT RS.15,23,42 9/- WHICH WAS ACCEPTED BY THE ASSESSEE. ON THE BASIS OF THE ORDER PASSED B Y THE GUJARAT ELECTRICITY BOARD IN RESPECT OF THEFT OF ELECTRICITY CONSUMPTIO N BY THE ASSESSEE, IT WAS INFERRED THAT THE ASSESSEE MIGHT HAVE USED THAT ELE CTRICITY FOR THE PURPOSE OF PRODUCTION WHICH MIGHT NOT HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THUS, IT IS OBSERVED THAT THE SUPPRESSED INCOME WAS BASED ON INFERENCE ONLY AND NOT ON THE BASIS OF ANY MATERIAL WHICH UNMISTAKENLY SHOW THAT ASSESSEE ACTUALLY USED THE THEFT ELECTRIC ITY FOR THE PURPOSE OF PRODUCTION AND SUCH PRODUCTION WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNT. IT IS AN ESTABLISHED POSITION OF LAW THAT DIFFERENT CONSIDERATION APPLY IN A PENALTY PROCEEDINGS THAN THE CONSIDERATION WHICH AP PLY IN AN ASSESSMENT PROCEEDINGS. IN THE INSTANT CASE, AS THERE IS NO MA TERIAL ON RECORD TO SHOW THAT THE ASSESSEE ACTUALLY EARNED ANY INCOME BY ACT UALLY SUPPRESSING ANY PRODUCTION, IN OUR CONSIDERED VIEW, PENALTY UNDER S ECTION 271(1)(C) IS NOT EXIGIBLE. WE THEREFORE, DELETE THE PENALTY LEVIED U NDER SECTION 271(1)(C) IN THE INSTANT CASE. THEREFORE, THE APPEAL OF THE ASSE SSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. 33. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENUE ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/10/2009 PREPARED AND COMPARED BY : PARAS ITA NOS.964,1812,1827,3515/AHD/200 4 M/S.ZAVERI PAPER AND BOARD MILLS. ASST.YEAR -1995-1996 - 20 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD