Asstt. CIT Cent. Cir., V. SRJ Peety Steels Pvt. Ltd.,

ITA 975/PUN/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3131 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 11-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Assessee Lawyers: S K TULSIYAN
• Keywords: Rejection of books of accounts; Depreciation; Income from undisclosed sources; Loose papers; Document seized; Documents seized
• Section: 143(3); 153A; 234B; 32; 145; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 975 TO 981/PN/2008 A.Y. 2000-01 TO 2006-07 ASSTT. CIT CENTRAL CIR. AURANGABAD APPELLANT VS. SRJ PEETY STEELS PVT. LTD., PLOT NO. D-51/1 & 2 ADDL. MIDC, JALNA PAN AAACT 6742 M RESPONDENT ITA NO. 857/PN/2008 : A.Y. 2006-07 SRJ PEETY STEELS PVT. LTD., PLOT NO. D-51/1 & 2 ADDL. MIDC, JALNA PAN AAACT 6742 M APPELLANT VS. ASSTT. CIT CENT. CIR. AURANGABAD RESPONDENT ITA NO. 968 TO 974/PN/2008 A.Y. 2000-01 TO 2006-07 ASSTT. CIT CENT. CIR. AURANGABAD VS. SRI OM ROLLING MILLS PVT. LTD., PLOT NO. D-51/1 & 2, ADDL. MIDC, JALNA PAN AACT 6741 M RESPONDENT ITA NO. 856/PN/2008 : A.Y. 2006-07 SRI OM ROLLING MILLS PVT. LTD., PLOT NO. D-51/1 & 2, ADDL. MIDC, JALNA PAN AACT 6741 M APPELLANT VS. ASSTT. CIT CENT. CIR. AURANGABAD RESPONDENT TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 2 ASSESSEES BY : SHRI S.K. TULSIYAN DEPARTMENT BY: SHRI A.S. SINGH ORDER PER BENCH THE CAPTIONED 16 APPEALS RELATE TO TWO ASSESSES OF THE SAME GROUP AND ARE DIRECTED AGAINST COMMONLY WORDED RESPECTIVE ORDERS OF THE CIT(A) FOR A.Y. 200 0-01 TO 2006-07. ITA NO. 975/PN/2008 TO 981/PN/2008 ARE THE APPEALS OF THE REVENUE IN THE CASE OF SRJ P EETY STEELS PVT. LTD., AND ITA NO. 857/PN/2008 IS THE CR OSS APPEAL OF THE ASSESSEE. SIMILARLY, ITA NO. 968/PN/2008 TO 974/PN/2008 ARE THE APPEALS OF THE REVENUE IN THE CASE OF SRI OM ROLLING MILLS AND ITA NO. 856/PN/2008 IS THE CROSS APPEAL OF THE ASSESSEE FOR A.Y. 2006-07 ONLY. SINCE IT WAS THE COMMON POINT BETWEEN THE PARTIES AND THAT THE FACTS AND CIRCUMSTANCES IN BOTH THE ASSESSES ARE SIMILAR, WE PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIEN CE AND BREVITY. 2. BEFORE WE PROCEED TO DEAL WITH THE DISPUTE INVOLVED IN EACH APPEAL, IT WOULD BE APPROPRIATE TO BRIEFLY TOUCH UPON THE BACKGROUND OF THE CAPTIONED DISPUTE. BOTH THE CAPTIONED ASSESSES ARE PRIVATE LIMITED COMPANIES INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND ARE INTER ALIA ENGAG ED TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 3 IN THE BUSINESS OF INGOTS/BILLETS ETC. IN THIS CAS E, A SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE DIRECTORS OF THE ASSESSEE-COMPANIES ON 17-3-2006. AS A CONSEQUENCE OF SUCH SEARCH ACTION, THE ASSESSING OFFICER HAS FRAMED THE IMPUGN ED ASSESSMENT IN TERMS OF SECTION 153A OF THE ACT (HEREINAFTER REFERRED TO ACT IN SHORT) FOR THE CAPTIONED SEVEN ASSESSMENT YEARS. THE RETURNS OF INCOME FILED BY TWO ASSESSES IN RESPONSE TO NOTICES ISSUED U/S 153A OF THE ACT WERE SUBJECTED TO SCRUTI NY ASSESSMENT U/S 143(3)/144 OF THE ACT WHEREIN THE TOTAL INCOME WAS DETERMINED AT A HIGHER FIGURE THAN THOSE RETURNED. AGAINST THE ADDITIONS MADE, THE ASSESSEES CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED FULL RELIEF IN RELATION TO A.Y. 2000-01 TO 2005-06 AND ALLOWED PARTIAL RELIEF IN A. Y. 2006-07. IN THE ASSESSMENT YEARS 2000-01 TO 2005-0 6 AND 2006-07 THE REVENUE IS IN APPEAL CHALLENGING RESPECTIVE RELIEFS ALLOWED BY THE CIT(A) WHEREAS TH E ASSESSEE IN ITS CROSS APPEAL IS CONTESTING PARTIAL SUSTENANCE OF ADDITION BY THE CIT(A) IN A.Y. 2006-0 7. 3. IN THIS BACKGROUND BOTH THE PARTIES HAD TAKEN UP FOR DISCUSSIONS THE APPEAL IN ITA NO. 975/PN/2008 I N THE CASE OF SRI SRJ PEETY STEELS PVT. LTD., FOR A.Y . TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 4 2000-01 TO APPRECIATE THE CONTROVERSY. IN THIS BACKGROUND, WE MAY NOW CONSIDER THE DISPUTE AS MENTIONED IN THE AFORESAID APPEALS. 4. GROUNDS OF APPEAL OF THE REVENUE IN ITA NO. 975/PN/2008 FOR A.Y. 2000-01 ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AT RS. 3,41,454/- ON ACCOUNT OF SUPPRESSED PROFIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE REJECTION OF THE BOOKS OF ACCOUNTS WAS NOT VALID INSPITE OF THERE BEING CLINCHING EVIDENCE THAT THE BOOKS OF ACCOUNTS ARE DEFECTIVE. 5. THE MAIN ISSUE INVOLVED IS THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED SUPPRES SED PRODUCTION. THE SAID ADDITION HAS BEEN MADE UNIFORMLY IN ALL THE SEVEN ASSESSMENT YEARS IN RESP ECT OF BOTH THE AFORESAID COMPANIES. THE ASSESSING OFFICER ON THE BASIS OF CERTAIN FACTORS CAME TO THE CONCLUSION THAT THE BOOKS OF ACCOUNTS IN RESPECT OF BOTH THE COMPANIES, MAINTAINED BY THE RESPECTIVE ASSESSEES FOR EACH YEARS COVERED BY PROCEEDINGS U/S 153A ARE NOT RELIABLE AND CONSEQUENTLY HE INVOKED SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNTS FOR ALL THE YEARS UNDER CONSIDERATION. HA VING REJECTED THE BOOKS OF ACCOUNT, THE ASSESSING OFFICE R DEVISED A STATISTICAL FORMULA ON THE BASIS OF ELECT RICITY TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 5 CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME IN THE CASE OF BOTH THE COMPANIES FOR EACH Y EAR UNDER CONSIDERATION AND MADE CERTAIN ADDITIONS ON T HE SAID COUNT. THE MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY WHEREIN THE ASSESSEE RAISED FOLLOWING ISSUES: 1. THE GENESIS OF REJECTION OF BOOKS OF ACCOUNTS WHETHER JUSTIFIED AND REASONABLE. 2. WHETHER STATISTICAL FORMULA, BASED ON ELECTRICITY CONSUMPTION, CAN BE APPLIED UNIFORMLY TO HE PRODUCTION UNIT FOR EACH YEAR, WITHOUT TAKING COGNIZANCE OF OTHER FACTORS, PLAYING A VITAL ROLE IN ANY PRODUCTION UNIT, AND THAT ARE SUBJECT TO VARIATION DUE TO SOME INHERENT AND SOME EXTRANEOUS FACTORS AS WELL. 3. WHETHER INFERENCE AND CONCLUSIONS DRAWN BY THE ASSESSING OFFICER ABOUT SUPPRESSED PRODUCTION OF THE COMPANY DRAW SUPPORT FROM/GET SUBSTANTIATED BY ANY OTHER CORROBORATIVE EVIDENCE, SUCH AS UNEXPLAINED ASSETS OR EXPENDITURE, INVESTMENT, ETC. 4. WHETHER, IN THE INSTANT CASE, FRAMING AND PASSING OF ASSESSMENT ORDERS U/S 144 OF THE ACT IS CORRECT AND JUSTIFIED. 6. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CONSISTENTLY INCURRED BUSINESS LOSSES INSPITE O F INCREASE IN TURNOVER. HENCE, THE BOOKS OF ACCOUNTS SUBMITTED BY THE ASSESSEE AND THOSE SEIZED ON CD FORMAT WERE EXAMINED. THE STAND OF THE ASSESSEE WA S THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR ALL THESE YEARS ARE STATUTORILY AUDITED UNDER THE COMPANIES A CT, 1956 AND INCOME-TAX ACT, 1961. THE RECORDS OF THE TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 6 COMPANY ARE AUDITED UNDER THE COMPANIES ACT, 1956, INCOME-TAX ACT, 1961. THE COST RECORDS OF THE COMPANY ARE AUDITED U/S 234B OF THE COMPANIES ACT, 1956. THE EXCISE RECORDS ARE AUDITED AT REGULAR INTERVALS BY THE PERSONNEL OF THE CENTRAL EXCISE DEPARTMENT. ON THE SPOT VERIFICATION OF STOCKS ARE CARRIED AT FREQUENT INTERVALS BY THE EXCISE OFFICIA LS, YEAR AND STOCK AUDIT IS CARRIED BY THE BANK OFFICIA LS, BY AN EXTERNAL AGENCY. THE ASSESSING OFFICER DID N OT CONSIDER THESE RELEVANT FACTS AND HAS RELIED ONLY O N THE FACT THAT THE ASSESSEE HAD INCURRED LOSSES WHIC H, AS SUBMITTED ABOVE, ARE COMPLETELY OUT OF CONTEXT I N THE MATTER OF COMPUTATION OF INCOME. THE FINANCIAL RESULTS OF THE ASSESSEE ARE AS FOLLOWS: A.Y. PROFIT BEFORE DEPRECIATION NET PROFIT AFTER DEPRECIATION TAXABLE PROFIT AFTER SET OFF B/F BUSINESS LOSS 2000-01 40,10,511/- 22,75,000/- NIL 2001-02 45,27,282/- 16,50,000/- NIL 2002-03 54,65,000/- 31,35,000/- NIL 2003-04 83,28,994/- 52,40,777/- 19,36,000/- 2004-05 67,74,444/- 40,000/- 40,000/- 2005-06 36,36,600/- 85,85,000/- NIL 2006-07 67,60,000/- 24,22,660/- NIL 7. FROM THE ABOVE TABLE, IT WAS STATED THAT EACH YE AR THE ASSESSEE HAD SUFFICIENT NET PROFITS WHICH WERE NOT CONSIDERED BY THE ASSESSING OFFICER. THE LOSSES INCURRED BY THE ASSESSEE CANNOT THE SOUND BASIS FOR REJECTION OF BOOKS OF ACCOUNTS. THE ASSESSING OFFI CER TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 7 OUGHT TO HAVE APPRECIATED THAT INCURRING OF LOSS IS A NORMAL INCIDENCE OF BUSINESS AS INCURRING OF A PROF IT AND THERE IS NOTHING IN LAW THAT A BUSINESSMAN SHOU LD ALWAYS INCUR PROFIT. 8. THE SECOND OBSERVATION OF THE ASSESSING OFFICER FOR REJECTION OF BOOKS OF ACCOUNT RELATE TO UNACCOU NTED STOCK. THE ALLEGATION OF THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT THAT DURING THE SEAR CH ACTION AT DHANLAXMI SPONGE IRON, THE MANAGING DIRECTOR OF THE COMPANY HAD OFFERED RS. 25 LAKHS AS UNDISCLOSED INCOME ON ACCOUNT OF EXCESS STOCK FOR A .Y. 2006-07. ACCORDING TO THE ASSESSEE, THE INCEPTION OF DHANLAXMI SPONGE IRON WAS DURING A.Y. 2005-06 AND ITS PRODUCTION HAD BEGUN FROM 30-6-2005. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNTS FOR A.Y. 2000-01 TO 2005-06 ON TH E BASIS OF EVENTS OCCURRING DURING A.Y. 2006-07. THU S, THE ASSESSING OFFICER FAILED TO CONSIDER THE REPLY FURNISHED BY THE ASSESSEE VIDE SUBMISSION DATED 28- 12-2007. FOR THE SAKE OF BREVITY, THE WRITTEN SUBMISSIONS DATED 28-12-2007 IS REPRODUCED AS UNDER: IN CASE THE DHANLAKSHMI SPONGE IRON A UNIT OF SRJ PEETY STEELS (P) LTD. THERE WAS NO DIFFERENCE IN THE QUANTITY OF THE SPONGE IRON FOUND AND MENTIONED IN THE STOCK REGISTER AS ALLEGED IN YOUR ABOVE MENTIONED SHOW CAUSE NOTICE. THE OPENING STOCK ON 17-3-2006 AS PER THE STOCK REGISTER WAS 84,780 MT AND THAT FOUND WAS ALSO 84,780 MT. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 8 THERE WAS NO DIFFERENCE IN THE RAW MATERIAL I.E. IRON ORE ALSO WHICH WAS 51581.700 MT AS PER THE STOCK REGISTERS MAINTAINED. PRACTICALLY SPEAKING THE WEIGHMENT OF THE SAID STOCK OF IRON ORE BY US ALSO WOULD HAVE TAKEN MORE THAN 15 DAYS AS THE SAME SHOULD HAVE BEEN LOADED IN TRUCKS, WEIGHED AND THEN THE WEIGHED TRUCK UNLOADED AND UNLOADED AGAIN FOR WEIGHING THE SAME. 9. IN THIS BACKGROUND, THE STAND OF THE ASSESSEE IS THAT THE AUTHORIZED OFFICERS PRESENT IN THE PREMISE S OF DHANLAKSHMI SPONGE IRON WERE RELUCTANT TO GO THROUG H THE LABORIOUS AND TIME CONSUMING PROCESS INVOLVED I N A SYSTEMATIC STOCK CHECKING, THEY PERSUADED THE MANAGING DIRECTOR FOR A HANDSOME DECLARATION ON ACCOUNT OF STOCKS. ACCORDINGLY, AN AMOUNT OF RS. 2 7 LAKHS WAS OFFERED FOR TAXATION ON ACCOUNT OF 3525.6 90 MT IRON ORE AND RS. 4 LAKHS APPROXIMATELY ON OTHER ACCOUNTS. THE DECLARATION SHOULD BE JUDGED FROM THE FOLLOWING ANGLES. I). THERE WAS A DEPARTURE FROM THE SET PROCEDURE FOR STOCK VALUATION WHICH ARE NORMALLY CARRIED OUT IN THE COURSE OF SURVEY AND SEARCH TO FIND OUT UNACCOUNTED STOCK. THERE WAS NO STOCKTAKING, NO DRAWING OF THE TRADING ACCOUNT ON THE DATE OF SEARCH TO FIND OUT EITHER DEFICIT OR EXCESS STOCK T O DRAW AN ADVERSE CONCLUSION AGAINST THE APPELLANT. II) MERELY BECAUSE THE APPELLANT AGREED TO DECLARE THE AMOUNT WITHOUT ANY SPECIFIC INFIRMITY HAVING BEEN NOTICED IN THE BOOKS BY THE OFFICERS OF THE DEPARTMENT, CANNOT BE A GROUND FOR REJECTION OF BOOKS. TAXABILITY OF AN AMOUNT HAS TO BE DETERMINED BY THE DEPARTMENT IN ACCORDANCE WITH THE PROVISIONS OF LAW BUT NOT OTHERWISE. THERE COULD BE THOUSAND AND ONE REASONS FOR OFFERING SOME AMOUNT FOR TAXATION WHICH IS QUITE USUAL IN COURSE OF SURVEY AND SEARCH. THE DEPARTMENT IS NO STRANGER TO THE SAME. BUT THAT COULD NOT BE A REASON FOR REJECTION OF BOOKS UNDER SECTION 145 OF TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 9 I.T. ACT WHICH STIPULATES SPECIFIC CONDITIONS. IN THE CASE OF THE APPELLANT, THE AMOUNT WAS DECLARED TO BUY PEACE OF MIND AND SETTLE THE MATTER AS WOULD BE EVIDENT FROM THE COURSE OF EVENTS AND THE ADMITTED INCOME WAS SHOWN UNDER THE HEAD OTHER SOURCES FOR A.Y. 2006-07. THE ASSESSING OFFICER HAS ASSUMED UNACCOUNTED PRODUCTION AND SALE ON THE BASIS OF SOME NOTINGS IN THE LOOSE SLIPS FOUND AT THE RESIDENCE OF SHRI SHAN TILAL WHERE ALL THE MEMBERS OF PEETY FAMILY RESIDE. WITH REGARDS TO LOOSE PAPERS FOUND IN HE POSSESSION OF S HRI SURENDRA S. PEETY THE RELEVANT QUESTION AND ANSWER IS REPRODUCED AS UNDER: Q.5: I AM SHOWING YOU THE ANSWER OF SRI JITENDRA S. PEETY TO Q.NO. 11 OF THE STATEMENT DATED 18-3-2006 IN WHICH ON MANY OF THE DOCUMENTS HE HAS STATED THAT HIS BROTHER SURENDRA PEETY WILL PROVIDE THE NECESSARY EXPLANATION. PLEASE GO THROUGH THE RELEVANT DOCUMENTS AND FURNISH YOUR SAY. ANS. AS I HAVE ALREADY STATED EARLIER, I HAVE JUST STARTED DEALING IN M.S. ROUNDS, MS INGOT AND COAL. PAPER AT NO. 3 TO 92 ARE RELATED TO THE SAID TRADING. THE TOTAL OF THE SALES RECORDED ON THESE PAPERS ARE AS FOLLOWS: CREDIT SALE WT.(MT) AMT. RS. M.S. ROUND 313.315 73,83,153 M.S. INGOTS/ BILLETS 119.070 24,17,121 ------------ 98,00,274 ------------ I OFFER THE G.P @ 1.5% ON THE ABOVE SALES AT RS. 1,50,000/- APPROX. AS THE UNDISCLOSED INCOME FROM THE SAID SOURCE. THE ENTIRE PURCHASE AS WELL AS SALES ARE ON CREDIT BASIS AND AS AND WHEN PAYMENT IS RECEIVED FROM THE DEBTORS, PAYMENT TO THE CREDITORS WILL BE MADE. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 10 10 IN THIS BACKGROUND, IT WAS SUBMITTED THAT THOUGH THE PREMISES OF THE COMPANIES WERE SEARCHED, NOT AN IOTA OF EVIDENCE REGARDING UNACCOUNTED PRODUCTION W AS FOUND TO INDICATE THAT THE BARS AND INGOTS REPRESEN T UNACCOUNTED PRODUCTION OF THE ASSESSEE M/S. SRJ PEETY STEELS PVT. LTD., WHICH IS A SEPARATE ASSESSA BLE ENTITY, WHOSE ACCOUNTS ARE STATUTORILY AUDITED BY VARIOUS AUTHORITIES. AS THE NOTINGS ON THE SAID PAPERS WERE ACCEPTED BY SRI SURENDRA THE INCOME FRO M THE SAME WAS RETURNED BY HIM IN HIS RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2006-07 FILED IN COMPLIANCE TO THE NOTICE U/S 153A AND THE TAX DUE ON THE SAME WAS ALSO PAID. WITHOUT PREJUDICE TO THE ABOVE, THE STA ND OF THE ASSESSEE WAS THAT IN A.Y. 2006-07 THE ASSESS EE WAS ENTITLED TO CARRY ON TRADING OF THOSE COMMODITI ES AND THE BUSINESS WAS IN NASCENT STAGE WHEN THE SEARCH TOOK PLACE. CONSEQUENT TO SEARCH, THERE WAS TOTAL DISRUPTION OF THE BUSINESS AND THE SAME COULD NOT TAKE OFF AS THE SUPPLIERS AS WELL AS THE CUSTOM ERS WERE NOT INTERESTED IN CO-OPERATING WITH SRI SUREND RA AND HENCE THE BUSINESS WAS DISCONTINUED. THE ASSESSEE COULD NOT CONFIRM THE TRANSACTION AS THE PARTIES WITH WHOM HE HAD DEALINGS WERE RELUCTANT TO COME FORWARD AFTER SEARCH. IN THIS BACKGROUND, THE STAND OF THE ASSESSEE WAS THAT ANY STOCK FOUND DURI NG TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 11 THE COURSE OF SEARCH IN ITS BUSINESS OF MANUFACTURI NG OF INGOTS IRON CANNOT BE THE SOUND BASIS FOR REJECT ING THE BOOKS OF ACCOUNTS OF THE EARLIER YEAR IN WHICH THE BUSINESS WAS ON DIFFERENT KIND. SO THE EVIDENCE RELATING TO ONE YEAR DIFFERENTLY PLACED CANNOT BE IMPORTED FOR THE EARLIER YEARS. 11 ANOTHER REASON FOR REJECTION OF BOOKS OF ACCOUNT RELATED TO ADVANCE TAKEN. THESE ADVANCES WERE UNSECURED LOANS TAKEN BY THE ASSESSEE DURING A.Y. 2005-06. THE STAND OF THE ASSESSEE WAS THAT ALL UNSECURED LOANS TAKEN DURING A.Y. 2005-06 WERE IN FACT SQUARED UP IN A.Y. 2006-07. THESE LOANS DO NO T PERTAIN TO A.Y. 2000-01 TO 2004-05. ALL THESE TRANSACTIONS ARE RECORDED IN THE BOOKS. SO, IT WAS NOT JUSTIFIED TO REJECT THE BOOKS OF ACCOUNT FOR A.Y. 2 000- 01 TO 2004-05 ON THE BASIS OF ADVANCES PERTAINING T O A.Y. 2005-06. IN THIS REGARD, THE ASSESSEE FURTHER RELIED ON THE WRITTEN SUBMISSIONS DATED 28-12-2007 DISCUSSED ABOVE. THE STAND OF THE ASSESSEE THAT TH E ASSESSING OFFICER DID NOT CONSIDER THAT THE ISSUE O F THE CHEQUE AND THE PRESENTATION OF THE SAME DOES IN NO WAY AFFECT THE PROFITABILITY OF THE COMPANY BUT IT ONLY SHIFTS THE LIABILITY FROM THAT OF THE UNSECURED LOA N TO DENA BANK WHICH IS A SECURED LOAN. IT WAS SUBMITTE D WITHOUT PREJUDICE TO THE FACT THAT THE ASSESSEE FIL ED TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 12 CONFIRMATION OF ACCOUNTS WITH THE LOAN CREDITORS. THUS, THE REGULAR TRANSACTION CANNOT BE CONSTRUED A S A DEFECT TO REJECT THE BOOKS OF ACCOUNT. 12 ANOTHER BASIS FOR REJECTION OF BOOKS OF ACCOUNT THAT DURING SCRUTINY OF RECORDS OF DHANLAXMI SPONGE IRON, CERTAIN CASH PAYMENTS WERE FOUND TO HAVE BEEN MADE TO RAW MATERIAL CREDITOR BHATIA INTERNATIONA L, INDORE. ACCORDING TO THE ASSESSEE, THESE WERE ALL ACCOUNTED PAYMENTS DURING THE PREVIOUS YEAR 2005- 06. THE INCEPTION OF DHANLAXMI SPONGE IRON WAS DURING A.Y. 2005-06 AND ITS PRODUCTION HAD BEGUN FROM 30-6-2005AS STATED ABOVE. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNTS FOR A.Y. 2000-01 TO 2005-06 ON TH E BASIS OF EVENTS WHICH OCCURRED DURING A.Y. 2006-07. 13 ANOTHER BASIS FOR REJECTING THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER IS THAT THE CONSULTANCY CHARGES WERE PAID WITHOUT DEDUCTING TAX AT SOURCE F OR ASSESSMENT YEAR 2006-07. THE STAND OF THE ASSESSEE IN THIS REGARD IS THAT THESE PAYMENTS WERE MADE FOR SERVICES RENDERED TO DHANLAXMI SPONGE IRON. AS STATED EARLIER, THE INCEPTION OF DHANLAKSHMI SPONGE IRON WAS DURING A.Y. 2005-06 AND ITS PRODUCTION HAD BEGUM FROM 30-6-2005. THE ASSESSING OFFICER WAS NO T TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 13 JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS FOR A. Y. 2000-01 TO 2005-06 ON THE BASIS OF EVENTS OCCURRED DURING A.Y. 2006-07. THE ASSESSING OFFICER FAILED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE DATED 28-1 2- 2007 AS MENTIONED AS ABOVE THAT THE PAYMENTS MADE ON ACCOUNT OF CONSULTANCY FEES TO VARIOUS PERSONS O N WHICH NO TAX WAS DEDUCTED AT SOURCE, HAS BEEN ADDED BACK IN THE COMPUTATION OF INCOME FOR THE A.Y. 2006 - 07 AND THE SAME HAS BEEN CLAIMED AS AN EXPENDITURE IN THE YEAR DURING WHICH THE SAID TAX WAS DULY PAID . IT HAS NO SOUND BASIS FOR REJECTION OF BOOKS OF ACCOUNT. THE STAND OF THE ASSESSEE WAS THAT FOR COMPUTATION OF INCOME THERE ARE SEPARATE PROVISIONS IN THE STATUTE WITHOUT ANY OVERLAPPING. THEREFORE, TH E PROVISIONS OF SECTION 145 CANNOT BE IMPORTED FOR AN Y INFRINGEMENT OF ANOTHER SECTION ON A DIFFERENT CONT EXT. 14 ANOTHER GROUND FOR REJECTION OF BOOKS OF ACCOUNT S WAS THE EXCESSIVE CLAIM OF BURNING LOSS. IN THIS BACKGROUND, IT WAS SUBMITTED THAT THE ASSESSEE FAIL ED TO CONSIDER THE DETAILED REPLY GIVEN BY IT ON VARIA TIONS IN BURNING LOSSES VIDE WRITTEN SUBMISSIONS DATED 22 - 10-2007 WHICH WAS NOT DISLODGED BY THE ASSESSING OFFICER THE MINIMUM OF BURNING LOSS REPORTED BY THE ASSESSEE DURING ALL THE YEARS WAS 1.73%. THE ASSESSING OFFICER CONSIDERED THE BURNING LOSS OF TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 14 2.46%/2.08% AS REASONABLE AND HAS ARITHMETICALLY WORKED OUT THE VALUE OF BURNING LOSS IN EXCESS OF 2.46%/2.08%. THE ASSESSING OFFICER FAILED TO APPRECIATE THE COMPARABLE RESULTS OF SIMILARLY PLAC ED SITUATION BEFORE REACHING TO THE CONCLUSION OF EXCE SS BURNING LOSS. 15 ANOTHER REASON FOR REJECTION OF BOOKS OF ACCOUNT S WAS UNACCOUNTED PURCHASES OF STORES AND SPARES. TH E ASSESSING OFFICER REFERRING TO CERTAIN LOOSE PAPERS FOUND DURING THE SEARCH AT THE RESIDENTIAL PREMISES OF SHANTILAL G. PEETY AND PURPORTED TO PERTAIN TO PURCHASE OF STORES AND SPARES. THE STAND OF THE ASSESSEE IN THIS REGARD WAS THAT THERE IS NO EVIDEN CE THAT ALLEGED PURCHASE OF STORES AND SPARES WAS ACTUALLY MADE BY THE ASSESSEE, SRJ PEETY STEELS PVT . LTD. THEREFORE, THE SAME COULD NOT BE MADE THE BAS IS FOR REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY IN ABSENCE OF EVIDENCE ON RECORD. WITHOUT PREJUDICE TO ABOVE, IT WAS STATED THAT THE ASSESSEE HAS OFFERED AN ADDITIONAL INCOME/UNDISCLOSED EXPENDITUR E FOR A.Y. 2006-07, RS. 3,46,000/- FOR A.Y. 2006-07 F OR PURCHASE OF STORES AND SPARES OF M/S. DHANLAXMI SPONGE IRON. THE INCEPTION OF DHANLAXMI SPONGE IRON WAS DURING A.Y. 2005-06 AND ITS PRODUCTION HAD BEGU N FROM 30-6-2005. THEREFORE, THE ASSESSING OFFICER WA S TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 15 NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT FOR A.Y. 2000-01 TO 2005-06 ON THE BASIS OF THE EVENTS OCCURRED DURING A.Y. 2006-07. THE BOOKS OF ACCOUNT COULD NOT BE REJECTED ON MERE DEFECTS PERTAINING TO AN ISOLATED AREA AND IF ANY STRAY DEFECT IS NOTICED TH E ASSESSMENT CAN BE CURED TO THE EXTENT OF SUCH DEFEC TS. MOREOVER AFTER THE ASSESSEE HAS OFFERED THE AMOUNT FOR TAXATION ON THIS ACCOUNT PRIMARILY MOTIVATED BY A DESIRE TO SETTLE THE MATTER TO AVOID PROTRACTED LITIGATION. SO IT CANNOT BE THE SOUND BASIS FOR DR AWING AN ADVERSE CONCLUSION WITH REGARDS TO ALL OTHER YEA RS IN WHICH THIS ISSUE WAS NOT CROPPED UP. 16 ANOTHER REASON FOR REJECTING THE BOOKS OF ACCOUN T IS INCONSISTENT ELECTRICITY CONSUMPTION. IN THIS REGARD, THE STAND OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAS SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN THE WHOLE YE AR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT THE PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO-CALLED SUPPRESSED PRODUCTION IS NOT BASED ON COGENT REASONS. THE ASSESSING OFFICER HAS GONE BY TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 16 SUPPOSITION BUT NOT BY ACTUAL DETECTION WHICH IS NO T JUSTIFIED. THE ENTIRE METHOD IN THIS REGARD IS BAS ED ON PRE-SUPPOSITION AND LACKS SCIENTIFIC BASIS. THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE ENTIRE MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE. HE HAS NOT GONE INTO THE QUALITY OF RAW MATERIALS, NOR HAS HE BOTHERED TO TAKE THE TYPE OF TECHNOLOGY USED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO NOT T AKEN STRENGTH FROM COMPARABLE CASE OF SIMILARLY PLACED SITUATION. THE FACTORS RESPONSIBLE FOR VARIATION IN ELECTRICITY CONSUMPTION HAVE BEEN EXPLAINED BY THE ASSESSEE IN HIS DETAILED WRITTEN SUBMISSIONS DATED 22- 10-2007 WHERE THE MAIN POINTS OF THE SAME ARE REPRODUCED AS UNDER: IMPROPER SUPPLY BY MSEB, WHICH DEFICITS THE MELTIN G EFFICIENCY, LOWER THE VOLTAGE SUPPLY LEVEL, HIGHER THE CONSUMPTION OF ELECTRICITY. NOTABLY, VOLTAGE SUPPL Y VARIES ON A DAILY BASIS WHICH WOULD AT ONCE BE CLEAR IF SO ME COMPARABLE CASES HAD BEEN STUDIED BY THE ASSESSING OFFICER BEFORE JUMPING TO CONCLUSIONS. REHEATING OF THE MATERIAL DUE TO THE INTERRUPTIONS IN SUPPLY, WHEN THE HEAT IS IN PROCESS AND THERE IS AN INTERRUPTION IN SUPPLY, THE RAW MATERIAL HAS TO BE HEATED AGAIN USING ELECTRICITY THOUGH THE SAME WAS USED EA RLIER, WITHOUT GIVING THE FINAL PRODUCT. NOTABLY SUPPLY I S NOTORIOUSLY ERRATIC IN A PLACE LIKE JALANA, WHICH W OULD AT ONCE HAVE BEEN CLEAR IF SOME COMPARABLE CASES HAD B EEN STUDIED BY THE ASSESSING OFFICER BEFORE JUMPING TO HYPOTHESES AND CONCLUSIONS. REHEATING OF THE MATERIAL DUE TO THE BREAKDOWN IN EQUIPMENT OR MACHINERY WHICH IS QUITE USUAL IN A MANUFACTURING PROCESS : WHEN THE HEAT IS IN PROCESS AND THERE IS A BREAKDOWN IN EQUIPMENT OR MACHINERY, THE RAW MATERIAL HAS TO BE HEATED AGAIN USING ELECTRICITY T HOUGH TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 17 THE SAME WAS USED EARLIER, WITHOUT GIVING THE FINAL PRODUCT. TO MANUFACTURE THE FINAL PRODUCT NUMBER OF MACHINES HAVE TO BE USED AND UNEXPECTED BREAKDOWN OF ANY ONE MACHINE CONSUMES ELECTRICITY AGAIN. REPROCESSING DUE TO METALLURGICAL REASONS AND QUALI TY CONTROL, CHANGES IN THE SETTINGS OF THE GENERATOR P ANEL. THE ASSESSING OFFICER REJECTED THE SUBMISSION BY SA YING THAT THERE WOULD BE EQUAL PROBABILITY OF THE ABOVE FACTORS IN EVERY MONTH. THIS IS DIFFICULT TO UNDERSTAND. THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUES I N DETAIL; INSTEAD HE SAYS IN PARA 8.4 OF HIS ORDER: A LOOK AT THE DETAILS COMPARES MONTHLY ELECTRICITY CONSUMPTIO N. HAD THE ASSESSING OFFICER GONE INTO THE REASONABLEN ESS OF THE EXPLANATION AND TECHNICAL DETAILS ADDUCED BY TH E APPELLANT INSTEAD OF MERELY EVALUATING THE TECHNICA L ISSUES IN A CASUAL AND ISOLATED MANNER WITH A CURSO RY LOOK INTO MONTHLY ELECTRICITY CONSUMPTION WITHOUT A NY SUPPORT FROM OTHER COMPARABLE CASES, HIS CONCLUSION S WOULD HAVE BEEN SIGNIFICANTLY DIFFERENT. IT MAY ALSO BE SEEN THAT ASSESSING OFFICER HAS HIMS ELF AGREED THAT THERE MAY BE FACTORS OUTSIDE THE CONTRO L OF APPELLANT WHICH MAY AFFECT ELECTRICITY CONSUMPTION. HOWEVER, HE MAKES AN ALLOWANCE OF 10% OVER AND ABOV E THE LOWEST MONTHLY CONSUMPTION IN THE YEAR. THE BA SIS OF ALLOWING THIS OVER THE LOWEST MONTHLY CONSUMPTIO N IN THE YEAR IS NOT SCIENTIFIC AND THEREFORE ARBITRARY. FURTHER, EVEN THE BASIS OF ARRIVING AT THIS 10% HAS NOT BEEN SPELT OUT BY THE ASSESSING OFFICER 17 IN THIS BACKGROUND, THE CIT(A) CALLED FOR A REMA ND REPORT AND THE ASSESSING OFFICER HAS SUBMITTED HIS REMAND REPORT INTER ALIA IN HIS REMAND REPORT HAS JUSTIFIED THE R EASONS FOR REJECTION OF BOOKS OF ACCOUNTS ON THE GROUND OF (A) UNRELIABLE BOOKS OF ACCOUNTS; (B) UNACCOUNTED PRODUCTION AND SALE; (C) INCONSISTENCY IN THE ELECTRICITY CONSUMPTION; TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 18 (D) FURNISHING OF WRONG/INCORRECT PARTICULARS AND M IS- REPRESENTATION OF FACTS DURING ASSESSMENT PROCEEDIN GS; (E) UNACCOUNTED PURCHASES OF STORES AND SPARES; AND (F) INCONSISTENT BURNING LOSS. AFTER REJECTING THE BOOKS OF ACCOUNTS, THE ASSESSIN G OFFICER DETERMINED THE SUPPRESSED PRODUCTION. SINCE THE EL ECTRICITY WAS THE MAJOR RAW MATERIAL OUTSIDE THE CONTROL OF T HE ASSESSEE, IT WAS CONSIDERED THE BASIS FOR DETERMINING THE SUP PRESSED PRODUCTION AS MENTIONED IN THE FOLLOWING CHART. MONTH PRODUCTION MT ELECTRICITY CONSUMPTION UNITS/MT DIFFERENCE IN ELECTRICITY CONSUMPTION PER MT OF TMT BARS PRODUCTION (TAKING THE LOWEST PMT CONSUMPTION) EXPECTED PRODUCTION SUPPRESSED PRODUCTION APR 05 2687.32 5921960 2203.63 515.21 3506.35 820.0 4 MAY 05 3023.10 5291860 1750.47 62.05 3134.22 111.12 JUN 05 2406.08 5878280 2443.09 754.67 3481.54 1075. 46 JUL 05 3081.03 5769020 1872.43 184.01 3414.81 713.8 0 AUG 05 2701.01 5765600 2134.61 446.19 3414.81 713.8 0 SEP 05 3027.23 5979560 1975.26 286.84 3541.53 514.3 0 OCT 05 3080.67 6253160 2029.81 341.39 3703.57 622.9 1 NOV.05 3303.52 6192080 1874.39 185.97 3667.40 363.8 8 DEC 05 3381.00 6419000 1898.55 210.13 3801.80 420.8 0 JAN.06 3133.16 5952800 1899.94 211.52 3525.68 393.5 2 FEB.06 3082.27 5763680 1869.95 181.53 3413.67 331.4 0 MAR.06 311.61 5253680 1688.41 -0.01 36017.98 70440580 5702.03 18. THE PER METRIC TONS ELECTRICITY CONSUMPTION SHO WN BY THE ASSESSEE WAS TAKEN AS THE BASIS FOR CALCULATION OF EXCESS PRODUCTION, E.G. IN THE ABOVE MENTIONED TABLE IT WA S OBSERVED THAT 1688 UNITS PER MT IS THE LOWEST PER METRIC TON CONSUMPTION. THEREFORE, TAKING 1688 AS THE BASIS F OR THE YEAR TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 19 UNDER CONSIDERATION I.E. 2005-06 (A.Y. 2006-07) THE EXPECTED PRODUCTION WAS WORKED OUT FOR THE REMAINING 11 MONT HS. THE FORMULA IS GIVEN AS UNDER: EXPECTED PRODUCTION FOR THE MONTH = NO. OF UNITS CONSUMED IN THE MONTH DIVIDED BY PMT CONSUMPTION IN THE LOWEST MONTH DURING THE YEAR. 19. ONCE THE EXPECTED PRODUCTION IS WORKED OUT FROM THE ABOVE FORMULA, IT WAS COMPARED WITH THE ACTUAL MONT HLY PRODUCTION FOR THE MONTH SHOWN BY THE ASSESSEE. THE DIFFERENCE BETWEEN THE EXPECTED PRODUCTION AND THE ACTUAL PRODUCTION HAS BEEN CONSIDERED AS THE SUPPRESSED PR ODUCTION. THUS, THE ASSESSING OFFICER IN HIS REMAND JUSTIFIED THE REJECTION OF BOOKS OF ACCOUNT BASED ON PROPER AND V ALID REASONS AND CLAIMED TO HAVE DETERMINED THE SUPPRESS ED PRODUCTION ON SCIENTIFIC BASIS. 20. THE ASSESSEE HAS FILED A DETAILED REPLY TO THE REMAND REPORT MENTIONED ABOVE. THE SUM AND SUBSTANCE OF TH E REPLY IS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT BY EXTRAPOLATING THE FIGURES FOR T HE ENTIRE PERIOD COVERED U/S 153A AS THE ASSESSMENT PERTAINED TO AN ACTION U/S 132 HAS TO BE COMPLETED BASED ON THE EVI DENCES FOUND AT THE TIME OF SEARCH AND NOT BY EXTRAPOLATIN G A SINGLE EVIDENCE. AFTER CONSIDERING THE REPLY OF THE ASSESS EE THE CIT(A) CONCLUDED AS UNDER : TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 20 A. THE AO HAS RESORTED TO A PRESUMPTIVE ASSESSMENT IN THE CASE OF APPELLANT FOR ALL THE YEARS UNDER CONSIDERATION WHICH IS HELD WRONG AND UNREASONABLE AS THE APPELLANT HAS ' MAINTAINED REGULAR BOOKS OF ACCOUNTS AND EXCISE RECORDS FOR ALL THE YEARS THAT HAVE NOT BEEN FAULTED BY THE AO. B. RECORDS ARE MAINTAINED BY THE APPELLANT AS REQUIRED BY THE COMPANY'S ACT, IT ACT, EXCISE DEPARTMENT, AND YEAR END BANK AUDIT AND CERA AS WELL AS OTHER ROUTINE INSPECTIONS ARE CARRIED OUT BY THESE AGENCIES IN APPELLANT'S CASE AND NO ADVERSE FINDING WHATSOEVER FROM THESE AGENCIES HAS BEEN BROUGHT TO MY KNOWLEDGE BY THE AO, INSPITE OF GIVING HIM A FRESH OPPORTUNITY IN THIS REGARD DURING THE APPELLATE PROCEEDINGS. C. NOR COULD THE AO JUSTIFY AND SUBSTANTIATE HIS COMMENT IN THE IMPUGNED ORDERS, ESPECIALLY FOR AY 2000-01 TO 2005-06, THAT MAJOR IRREGULARITIES WERE FOUND IN THE BOOKS OF ACCOUNT. HENCE HIS APPREHENSIONS AND SUSPICION ON THIS COUNT ARE TREATED AS MISPLACED. D. REJECTION OF BOOKS OF ACCOUNTS IS NOT HELD VALID AND JUSTIFIED, ESPECIALLY IN THE YEARS FROM 2000-01 TO 2005-06. E. EVEN FOR AY 2006-07 REJECTION OF COMPLETE BOOKS IS NOT CONSIDERED NECESSARY AS ASSESSMENT STANDS MODIFIED, RESULTING IN ENHANCED INCOME THAN WHAT IS SHOWN BY THE ASSESSEE, TO THE EXTENT OF SALE DETECTED VIDE RELEVANT SEIZED DOCUMENT, A/1. F. IT IS HELD THAT NO FIXED PARAMETERS AND STATISTICAL FORMULA ON THE BASIS OF BURNING LOSS AND ELECTRICITY CONSUMPTION, IN ISOLATION, CAN BE APPLIED FOR WORKING OUT SUPPRESSED PRODUCTION, THAT TOO, IN TOTAL DISREGARD OF THE BOOKS OF ACCOUNTS WHICH, IN THE FACTS OF THE CASE, DO NOT WARRANT REJECTION. G. NO INCRIMINATING MATERIAL WHATSOEVER HAS BEEN FOUND AS A RESULT OF SEARCH IN RESPECT OF AY 2000-01 TO 2005-06, HENCE ASSESSING OFFICERS SUSPICION AND APPREHENSIONS WITH REGARD RESULTS REFLECTED IN THE BOOKS OF TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 21 ACCOUNTS, HOLDING THE SAME AS NOT RELIABLE, ARE HELD AS MISPLACED AND ILL FOUNDED. H. AS A RESULT OF NO EVIDENCE IN RESPECT OF AY 2000-01 TO 2005-06 OF SUPPRESSED PRODUCTION, ADDITIONS ON ACCOUNT OF THE SAME IN THESE YEARS ARE DELETED IN TOTO. I. ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION IN AY 2006-07 IS WORKED OUT ON THE BASIS OF SEIZED MATERIAL INVENTORIED AS A/1, DATED 15 TH AND 16 TH MARCH 2006, AND FIGURES ARE TAKEN FOR THE ENTIRE YEAR OF 300 WORKING DAYS. J. THE ADDITION THUS WORKED OUT IS RS.75,05,160/- (GP). K. THE APPELLANT MADE ALTERNATE PLEA FOR GIVING BENEFIT OF TELESCOPE VIS--VIS SURRENDER OF INCOME ON ACCOUNT OF MANUFACTURING ITEMS MADE BY IT AT THE TIME OF SEARCH VALUING RS. 51,52,257/- ON WHICH TAXES WERE DULY PAID. L. APPELLANT'S REQUEST FOR TELESCOPE IS FOUND REASONABLE AND ACCEPTED, DRAWING SUPPORT FROM THE DECISION IN THE CASE OF RAMESHWAR LAL SONI VS. ACIT OF JODHPUR, ITAT, THIRD MEMBER (CITED SUPRA) WHICH, IN TURN, RELIES ON THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ANANTHARAM VEERSINGHAIAH & CO. VS. CIT (CITED SUPRA). THUS NET ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION REMAINS AT RS. 23,53,160/- ONLY. M. APPELLANTS CONTENTIONS, AGITATING APPLICATION O F SECTION 144 IN ITS CASE, ARE ACCEPTED AS APPLICATION OF SECTION 144 IS NOT FOUND TENABLE, ON THE BASIS OF FACTS, AND ALSO IN THE EYES OF LAW. N. APPELLANTS GROUND OF APPEAL RELATED TO CHARGING OF INTEREST IS DISMISSED FOR ALL THE YEARS UNDER CONSIDERATION. APPELLANTS REQUEST FOR INTERVENTION AT THE STAGE OF INITIATION OF PENALTY U/S 271(1)(C) IS DISMISSED FOR ALL THE YEARS UNDER CONSIDERATION. 21. THE REVENUE HAS OPPOSED THE RELIEF GRANTED BY T HE CIT(A) WHILE THE LEARNED AR OPPOSED THE SUSTENANCE OF ADDI TION MADE TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 22 BY THE ASSESSING OFFICER THE LEARNED DR MADE DETA ILED SUBMISSIONS IN THIS REGARD AND HE TOOK US THROUGH V ARIOUS DETAILS OF THE PAPER BOOK TO STRONGLY SUPPORT THE O RDER OF THE ASSESSING OFFICER ON THE OTHER HAND, THE LEARNED AR CONTENDED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN REJECTING THE BOOKS OF ACCOUNT ON VARIOUS COUNT. H E DREW OUR ATTENTION TO EVERY POINT OF REJECTION OF BOOKS OF A CCOUNT AND ALSO OPPOSED THE ADDITION MADE BY THE ASSESSING OFF ICER AS DISCUSSED ABOVE AND PRACTICALLY SUPPORTED THE ORDER TO THE EXTENT THE RELIEF GRANTED BY THE CIT(A) AND OPPOSED THE ORDER OF THE CIT(A) TO THE EXTENT ADDITIONS ARE SUSTAINED BY HIM. 22. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A PRIVATE L IMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT AND IS ENGAGED IN THE BUSINESS OF INGOTS AND BILLETS USED FOR PRODUCTION OF MS BARS AND TMT BARS. THE MAJOR INPU T COMPONENT IN THE MANUFACTURING OF MILD STEEL INGOTS /BILLETS AFTER MILD STEEL SCRAP IS ELECTRICITY. THE MILD ST EEL SCRAP IS INTRODUCED IN A FURNACE WHICH WITH THE HELP OF ELEC TRICITY IS TRANSFORMED INTO LIQUID METAL WHICH IS THEN CAST IN TO INGOTS/BILLETS BY POURING THE LIQUID IN THE MOULDS. DHANLAKSHMI SPONGE IRON IS A BRANCH OF SRJ PEETY ST EELS PVT. LTD. WHERE SPONGE IRON IS ALSO MANUFACTURED. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 23 23. THE RETURNS OF INCOME FOR A.Y. 2000-01 TO 2005- 06 WERE DULY FILED US 139(1) OF THE ACT ACCOMPANIED BY ALL REQUISITE DOCUMENTS SUCH AS FORM 3CA, 3CD UNDER THE PROVISION S OF SECTION 44AB OF THE ACT. THE SAID RETURNS WERE PRO CESSED U/S 143(1) OF THE ACT AND NO DEFECTS THEREIN WERE POINT ED OUT. IN THIS REGARD, THE MAIN EMPHASIS OF THE ASSESSEE WAS THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR ALL THESE YEA RS WERE STATUTORILY AUDITED UNDER THE COMPANIES ACT, 1956 A ND THE INCOME-TAX ACT 1961. COPIES OF THE AUDITED ACCOUNT S FOR ALL THE YEARS UNDER CONSIDERATION ARE ATTACHED AS PAGES 1-216 OF THE PAPER BOOK. THE COST RECORDS OF THE COMPANY AR E AUDITED U/S 233B OF THE COMPANIES ACT, 1956. COPIES OF THE AUDITED REPORTS FOR ALL THE YEARS UNDER CONSIDERATION ARE A TTACHED AS PAGES 217 TO 416 OF THE PAPER BOOK AND CLAIMED TO B E CERTIFIED BEFORE THE AUTHORITIES BELOW. ACCORDING TO THE ASS ESSEE, THE EXCISE RECORDS ARE LOOKED INTO AT REGULAR INTERVALS BY THE PERSONNEL OF THE CENTRAL EXCISE DEPARTMENT. COPIES OF THE AUDITED EXCISE RECORDS FOR ALL THE YEARS UNDER CONS IDERATION ARE ATTACHED AS PAGES 413 TO 417 OF THE PAPER BOOK AND CLAIMED TO BE CERTIFIED BEFORE THE AUTHORITIES BELO W. ON THE SPOT VERIFICATION OF STOCKS ARE CARRIED AT FREQUENT INTERVALS BY THE CONCERNED EXCISE OFFICIALS. YEAR END STOCK AUD IT IS CARRIED BY THE CONCERNED BANK OFFICIALS BY AN EXTERNAL AGEN CY. COPIES OF THE STOCK AUDIT REPORT FOR ALL THE YEARS UNDER C ONSIDERATION ARE ATTACHED AS PAGES 418 TO 499 OF THE PAPER BOOK AND CERTIFIED TO BE FILED BEFORE THE AUTHORITIES BELOW. SALES-TAX TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 24 ASSESSMENTS HAVE BEEN CARRIED ON REGULARLY AND FROM THE A.Y. 2006-07, AUDIT REPORT U/S 61 OF THE MAHARASHTRA VAL UE ADDED TAX ACT, 2002 HAS ALSO BEEN FILED. COPIES OF THE SA LES TAX ASSESSMENT ORDER FOR THE EARLIER YEARS AND MVAT AUD IT REPORT FOR A.Y. 2006-07 ARE ATTACHED AS PAGES 500 TO 542 O F THE PAPER BOOK AND AGAIN CLAIMED TO BE CERTIFIED BEFORE THE A UTHORITIES BELOW AND NOT DISPUTED BY THE LEARNED DR. 24. AS DISCUSSED ABOVE, A SEARCH WAS CONDUCTED IN T HE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROU P, JALNA ON 17-3-2006. CONSEQUENTLY NOTICES U/S 153A WERE I SSUED FOR ALL THE YEARS UNDER CONSIDERATION AND THE RETURNS O F INCOME WERE FILED ON 29-8-2006 DECLARING NIL INCOME FOR EA CH YEAR. 25. AS STATED ABOVE, CERTAIN PAPERS WERE FOUND AT T HE RESIDENCE OF SHRI SHANTILAL J. PEETY INVENTORIED AS ANNEXURE A- 1 WHICH CONTAINED THE DETAILS OF SALE OF TMT BARS O F DIFFERENT DIMENSIONS AND INGOTS ON 15 TH AND 16 TH MARCH 2006. SHRI SURENDRA S. PEETY STATED THAT THESE PAPERS BELONG T O TRADING TRANSACTION IN TMT BARS AND INGOTS IN HIS INDIVIDUA L ACCOUNT. THE INCOME FROM THE SAME WAS RETURNED BY HIM IN HIS RETURN OF INCOME FOR A.Y. 2006-07 FILED IN COMPLIANCE TO T HE NOTICE U/S 153A AND THE TAX DUE ON THE SAME WAS ALSO PAID. 26. THE ASSESSING OFFICER MAINLY RELYING ON THE EVE NTS OCCURRING IN A.Y. 2006-07 IN CASE OF DHANLAXMI SPON GE IRON TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 25 AND CONSIDERED IT THE BASE FOR REJECTING THE BOOKS OF ACCOUNTS OF SRJ PEETY STEELS PVT. LTD. FOR A.Y. 2000-01 TO 2 005-06. ALL ALONG THE STAND OF THE ASSESSEE HAS BEEN THAT THE U NACCOUNTED STOCKS, ADVANCES TAKEN, CASH PAYMENTS ON ACCOUNTED EXPENDITURE, NO TDS ON CONSULTANCY CHARGES AND UNACCOUNTED PURCHASE OF STORES AND SPARES CANNOT FO RM THE BASIS FOR REJECTING THE BOOKS OF ACCOUNTS OF SRJ PE ETY STEELS PVT. LTD. FOR A.Y. 2000-01 TO 2005-06 AS THESE ISSU ES WERE RELATED TO DHANLAXMI SPONGE IRON FOR A.Y. 2006-07. THESE MATTERS WERE DEALT IN DETAIL BY THE ASSESSEE IN ITS SUBMISSION DATED 28-12-2008. THE COPY OF THE SAID WRITTEN SUB MISSION IS PLACED AT PAGES 613 TO 635 OF THE PAPER BOOK CERTIF IED TO BE BEFORE THE AUTHORITIES BELOW. THE STAND OF THE ASS ESSEE IS THAT DHANLAKSHMI SPONGE IRON WAS ESTABLISHED IN THE A.Y. 2005-06 AND HAD COMMENCED PRODUCTION ONLY ON 30-6-2005, SO REJECTING THE BOOKS OF SRJ AND THAT TOO FOR A PERIO D BEFORE THE COMMENCEMENT OF PRODUCTION IS NOT JUSTIFIED. ANOT HER REASON FOR REJECTING THE BOOKS OF THE ASSESSEE AS PER THE ASSESSING OFFICER WAS THAT IT HAD CONSTANTLY INCURRED BUSINE SS LOSSES INSPITE OF THE INCREASE IN TURNOVER. IN THIS REGAR D, THE STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE HAD SUFFICI ENT NET PROFITS WHICH HAVE BEEN OVERLOOKED BY THE ASSESSING OFFICER WITHOUT PREJUDICE TO THE ABOVE THE STAND OF THE ASS ESSEE HAS BEEN THAT EVEN OTHERWISE EVEN IF AN ASSESSEE CONTIN UOUSLY INCURS LOSSES WHICH ARE DULY SUPPORTED BY HIS BOOKS THAT TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 26 CANNOT BE THE REASON FOR REJECTION OF THE BOOKS VIS --VIS ADDITION IN QUESTION WHICH IS SUBJECT MATTER OF THE SE APPEALS 27. HAVING CONVINCED THAT THE ASSESSEE COMPANY INDU LGES IN UNACCOUNTED PRODUCTION AND SALE, THE ASSESSING OFFI CER WENT ON TO COMPUTE THE SUPPRESSED PRODUCTION ON THE BASI S OF ELECTRICITY CONSUMPTION FOR ALL THE YEARS UNDER CON SIDERATION. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPT ION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCT ION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THERE MAY BE VARIOUS FACTORS EXCESS CONSUMPTION OF ELECTRICITY. THE CONSUMPTION OF ELECTRICITY DEPENDS ON QUALITY OF RAW MATERIAL USED FOR ULTIMATE FINISHED PRODUCTI ON AND THE CONSUMPTION OF ELECTRICITY IS ALSO AFFECTED BY IRRE GULAR SUPPLY OF ELECTRICITY. SOMETIMES, THERE IS BREAK IN ELECT RICITY SUPPLY. IN CASE OF SUCH BREAK DOWN IN THE SUPPLY OF ELECTRI CITY WHILE THE ABOVE RAW MATERIAL IS ALREADY IN THE FURNACE, T HE CONSUMPTION WILL AUTOMATICALLY INCREASE BECAUSE SAM E RAW MATERIAL WOULD BE HEATED TWICE FOR MAKING THE FINIS HED PRODUCTS BY CONSUMPTION OF ELECTRICITY. THIS ASPEC T OF THE EXCESS CONSUMPTION IN THE ABOVE SAID MANNER IN THE BUSINESS OF STEEL MANUFACTURING HAS NOT BEEN DULY CONSIDERED BY THE ASSESSING OFFICER AS DISCUSSED ABOVE, VIDE ORDER U /S 144 TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 27 R.W.S. 143(3) OF THE ACT ON 31-12-2007 FOR A.Y. 200 6-07INTER ALIA THE ASSESSING OFFICER MADE AN ADDITION OF RS. 3,60,57,000/- ON ACCOUNT OF SUPPRESSED PROFITS. FO R THE A.Y. 2000-01 TO 2005-06 THE ASSESSMENT WAS MADE U/S 153A R.W.S. 144 OF THE ACT MAKING THE FOLLOWING ADDITION S. A.Y AMOUNT OF ADDITION (RS.) 2000-01 3,41,37,454 2001-02 65,25,000 2002-03 2,10,90,000 2003-04 4,09,63,500 2004-05 4,68,32,500 2005-06 5,59,97,500 28. THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESS EE FOR A.Y. 2000-01 TO 2005-06 BY HOLDING THAT THE REJECTION OF BOOKS OF ACCOUNT FOR THESE YEARS IS NOT JUSTIFIED. THE CIT(A ) RIGHTLY OBSERVED THAT SIMPLY BECAUSE THERE ARE VARIATION IN MONTHLY CONSUMPTION OF ELECTRICITY THE ASSESSING OFFICER WA S NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT FOR EAR LIER YEARS AND COMPUTING THE SUPPRESSED PRODUCTION ON THIS BASIS A LONE. AT THE SAME TIME, HE EXTRAPOLATED SALE FIGURES PERTAIN ING TO ONLY TWO DAYS AS MENTIONED IN THE AID SEIZED PAPER AND DETERMINING THE SALES FOR THE WHOLE YEAR PERTAINING TO A.Y. 2006-07 OF 300 DAYS AT RS. 36,25,68,150/- AND DETE RMINING THE PROFIT ON THE SAME AT RS. 75,05,116/-. THIS ADD ITION HAS BEEN MADE BY INVOKING THE PROVISIONS OF SECTION 153 A READ WITH SECTION 144 OF THE ACT. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 28 29. LET US ANALYZE THE PROVISIONS OF SECTION 153A O F THE ACT WHICH APPLIES TO A PERSON IN RESPECT OF WHOM A SEAR CH IS INITIATED UNDER SECTION 132 OF THE ACT OR WHOSE BOO KS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER MAY 31, 2003. THE SECOND PROVISO TO SECITON153A MAKES IT CLEAR THAT ASSESSMENT OR REASS ESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION U/S 132A SH ALL ABATE. IN OTHER WORDS, IF ON THE DATE OF INITIATION OF SEA RCH OR REQUISITION U/S 132 OR SECTION 132A ANY ASSESSMENT OR REASSESSMENT PROCEEDING IS INITIATED RELATING TO A NY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS, IT SHALL STAND ABATED AND THE ASSESSING AUTH ORITY CANNOT PROCEED WITH SUCH PENDING ASSESSMENT AFTER I NITIATION OF SEARCH OR REQUISITION AS THE CASE MAY BE BUT ASS ESSMENT OR REASSESSMENT CAN BE DONE UNDER SECTION 153A OF THE ACT IN CASES OF COMPLETED ASSESSMENTS OR IN CASES WHERE ASSESSMENTS HAVE NOT BEEN FRAMED DUE TO NON-FILING OF RETURNS ETC. FOR THE ABOVE MENTIONED ASSESSMENT YEARS ASSE SSMENT CAN BE MADE UNDER SECTION 153A ON THE BASIS OF ENTI RE MATERIAL INCLUDING THAT FOUND DURING COURSE OF SEAR CH. THE WORD ABATEMENT MEANS THE ACT OF ELIMINATING OR NU LLIFYING OR SUSPENSION OR DEFEAT OF A PENDING ACTION. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 29 30. WE FIND THAT THE CBDT CIRCULAR DATED 15-9-2003 EXPLAINED THE SCOPE AND EFFECT OF NEW ASSESSMENT PR OCEEDINGS IN SEARCH CASES I.E. SECTION 153A TO 153C IN PARAS 65.5 TO 65.11 , RELEVANT PORTIONS OF WHICH ARE REPRODUCED B ELOW: 65.5 THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTI ON 132A, AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIF IED THAT THE APPEAL, REVISION OR RECTIFICATION PROCEEDINGS P ENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 1 32 OR REQUISITION SHALL NOT ABATE. SAVE AS OTHERWISE PROV IDED IN THE PROPOSED SECTION 153A, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A. IT IS ALSO CLARIFIED THAT ASSESSMENT OR REASSESSMENT M ADE UNDER SECTION 153A SHALL BE SUBJECT TO INTEREST, PE NALTY AND PROSECUTION, IF APPLICABLE. IN THE ASSESSMENT O R REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. 65.6 THE NEW SECTION 153B PROVIDES FOR THE TIME LIM IT COMPLETION OF SEARCH ASSESSMENTS. IT PROVIDES THAT THE ASSESSING OFFICER SHALL MAKE AN ORDER OF ASSESSMENT OR REASSESSMENT IN RESPECT OF EACH ASSESSMENT YEAR, FA LLING WITHIN SIX ASSESSMENT YEARS UNDER SECTION 153A WITH IN A PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL Y EAR IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UND ER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A W AS EXECUTED. 65.9 THE NEW SECTION 153C PROVIDES THAT WHERE AN ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG OR BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT, OR DOCUMEN TS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED O VER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGA INST SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTIC E AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17-3-2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 30 PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASS ESSEE- COMPANY AS WELL. PRIOR TO THE SEARCH, THE RETURNS O F INCOME FOR THE A.Y. 2000-01 TO 2005-06 HAD ALREADY BEEN FILED U/S 139(1) OF THE ACT ACCOMPANIED BY THE ALL REQUISITE DOCUMEN TS AND PROCEEDING U/S 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIALS WERE FO UND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN A DDED BACK IN THE PROCEEDINGS U/S 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFOR E THE AUTHORITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCTION OF EACH Y EAR WHICH WAS ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLO WING CHART SHOWS THE YEAR-WISE PRODUCTION VIS--VIS ELECTRICIT Y CONSUMPTION WHICH HAS BEEN PLACED BEFORE THE AUTHOR ITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR. A.Y. ELECTRICITY PRODUCTION YEAR AVERAGE CONSUMPTION (M.T. ) CONSUMPTION UNITS 2000-01 24331059 18524.239 1313 2001-02 25528565 17010.558 1501 2002-03 31404354 19709.654 1593 2003-04 31623843 20396.313 1550 TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 31 2004-05 43123824 23240.189 1856 2005-06 62650888 29582.434 2118 2006-07 70440580 36017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL DETAILS REGARDING ELECTRICITY VIS--VIS PRODUCTION WERE BEF ORE THE DEPARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARD ING THE SAME, IT COULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS U /S 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF THESE ASSESSMEN T YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED O N THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN A.Y. 2000-01 TO 2005-0 6 ARE NOT CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE COURSE OF SEARCH. THE RELEVANT INCOME-TAX RETURNS FOR SAI D YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSI NG THE PARTICULARS OF SUBJECT MATTERS WERE ALREADY ON RECO RD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMEN T AS SUCH COULD BE SAID TO BE PENDING ON THE DATE OF INI TIATION OF SEARCH AND ABATED IN LIGHT OF THE PROVISIONS OF SEC TION 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARDS TO INV OKING THE PROVISIONS OF SECTION 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE ASSESSING OFFICER IS SNOT SATISFIED ABOUT THE C ORRECTNESS OR TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 32 COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE N O METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUN TING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE N OT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSING O FFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTIO N 144. SECTION 145 GIVES THE POWER TO ASSESSING OFFICER TO REJECT THE BOOK IN CERTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPECTS. (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A METHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY 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 A LL THE YEARS UNDER CONSIDERATION, THE AO DEVISED A STATIST ICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THA T WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PROD UCTION AND RESULTANT CONCEALED INCOME FOR EACH YEAR UNDER CONS IDERATION. THE ASSESSING OFFICER COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREAT ED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MUL TIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELEC TRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING TH E SO TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 33 CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN AB SENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTOR S LIKE QUALITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, V OLTAGE OF THE SUPPLY, POWER' INTERRUPTIONS, MECHANICAL AND ELECTR ICAL 'BREAKDOWNS AND THE CHEMICAL COMPOSITI9N OF THE LIQ UID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. T HE ASSESSING OFFICER FAILED TO APPRECIATE THESE FACTS AND DID NO T ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED TO A CONCLUSION THAT THERE IS AN EXCESS CON SUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNT ED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS T O THE A.Y'S 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EAC H YEAR OF THE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND R ELATING TO A. Y. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON T HE ASSESSMENTS OF THE ASSESSEE COMPANY FROM THE A.Y'S 2000-01 TO 2005-06. THEREFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF SECTI ON 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RI GHTLY BEEN TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 34 DELETED IN A.Y. 2000-01 TO 2005-06 IN BOTH THE CASE S. 38. APPEALS OF THE ASSESSES FOR A.Y. 2006-07 DURING THE COURSE OF SEARCH AT THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROUP, JALNA ON 17.03.2006, A ND ON THE BASIS OF CERTAIN PAPERS FOUND AT THE RESIDENCE OF SHRI SHANTILAL 1. PEETY (WHERE ALL THE MEMBERS OF THE PEETY GROUP RESIDE) INVENTORIED AS ANNEXURE A-I PERTAINING TO T HE TRADING BUSINESS OF SRI SURENDRA S PEETY, IT WAS OBSERVED T HAT THE ASSESSEE COMPANY INDULGES IN UNACCOUNTED PRODUCTION AND SALES OF TMT BARS AND INGOTS OUTSIDE ITS BOOKS OF A CCOUNTS. LIST OF THE INVENTORY OF PAPERS FOUND IN THE RESIDE NTIAL PREMISES OF PEETY GROUP MARKED AS ANNEXURE-L ON THE BASIS OF WHICH SALES FIGURES WERE EXTRAPOLATED ARE ATTACHED AS PAGES 724-796 OF THE PAPER BOOK. 39. THE ADDITION WAS CALCULATED AT RS. 75,05,160 FO R THE A.Y. 2006-07, BEING THE GROSS PROFIT ON SUPPRESSED PRODU CTION, WHICH WAS WORKED OUT ON THE BASIS OF SEIZED MATERIA L INVENTORIED AS ALL AND THE FIGURES WERE TAKEN FOR T HE ENTIRE YEAR OF 300 WORKING DAYS. THE ADDITION WAS THEN TEL ESCOPED TO RS. 23,53,160/ 1 BY ALLOWING RS. 51,52,257/- WHICH THE APPELLANT COMPANY HAD VOLUNTARILY OFFERED AS UNDISC LOSED INCOME ON ACCOUNT OF STORES AND RAW MATERIALS. BEIN G AGGRIEVED BY THE SAID ORDER OF THE LD. C.I.T.(A), T HE APPELLANT IS NOW IN APPEAL BEFORE US REGARDING THE ADDITION MADE ON ACCOUNT OF SUPPRESSED PRODUCTION. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 35 40 IN THIS REGARD, THE CONTENTS OF THESE PAPERS ARE SUMMARIZED IN THE TABLE BELOW: PAGE NO. DETAILS 1. 2. LETTER FROM SUPPLIER TO COMPANY NOT RELEVANT 3,4 REPORT OF SALES DELIVERIES OF MS BARS W.R.T. TRUCK NO, GROSS WEIGHT, TARE WEIGHT, NET WEIGHT, DATE 5. REPORT OF SALES QTY. IN BUNDLES DATED 16-3-06 6. REPORT OF SALES W.R.T. SIZE, QTY. BUNDLES 7. DETAILS OF OTHER PARTIES WEIGHMENTS DONE AT SRJ SCALE NOT RELEVANT 8. SINGLE LINE PAGE SALES REGISTER SALE DATE 15-3-06 TO 16-3-06 AND QTY. 432.385 9-13 SALES REGISTER PRINT W.R.T. SALE NO. VEHICLE N O. PARTY NAME, BUNDLE, SIZE, QTY. RATE 14 WRITTEN MEMO OF SALES TO PARTY OF SCRAP 15-26 WEIGHMENT SLIP OF SALES 27 COMPONENTS OF VARIOUS METALS AND NON METALS 28-34 WEIGHTMENT SLIP OF SALES 35 COVERSHEET OF WEIGHTMENT SLIPS 36-92 WEIGHMENT SLIP OF SALES 93 LIST OF EXHIBITS NOT RELEVANT 94-95 BLANK CHEQUES NOT RELEVANT 96 BANK BALANCE OF HDFC A/C OF COMPANIES 97-99 ROUGH WORKING OF ORDERS 100 COPY OF DENA BANK DD 101 CHEMICAL COMPOSITION DETAILS 102 BUDGETED EXPENDITURE ON EMPLOYEES 103 DETAILS REQUIRED FOR AUDIT 104-105 UNACCOUNTED PURCHASES OF STORES OFFERED TO INCOME IN SRJ PEETY STEELS PVT. LTD. 106 COPY OF PAGE 100 (REPEATED) 41. THESE PAPERS WERE FOUND IN THE BEDROOM OF SRI S URENDRA S PEETY WHO ACCEPTED THE NOTINGS ON THE SAID PAPER AND STATED THAT THESE PAPERS BELONG TO HIS TRADING TRANSACTION IN TMT TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 36 BARS AND INGOTS IN HIS INDIVIDUAL ACCOUNT. THE INCO ME FROM THE SAME AMOUNTING TO RS. 1,50,0001- WAS RETURNED BY HIM IN HIS RETURN OF INCOME FOR THE A.Y. 2006-07 FILED IN COMP LIANCE TO THE NOTICE U/S 153A AND THE TAX DUE ON THE SAME WAS ALSO PAID. THE TRADING INCOME AS PER THE QUANTITY SUMMED FROM LOOSE SHEETS OFFERED IN CASE OF SHRI SURENDRA PEETY FOR A.Y. 2006-07 IS AS FOLLOWS: .. PRODUCT QUANTI RATE AMOUNT PURCHAS NET INGOT/BIL 119.07 20300 24,17,1 23,33,77 BARS 313.31 23889 74,84,8 74,28,24 COAL 9.94 3800 37,772 36,778 TOTAL 99,39,7 97,98,79 1,41,001 42. THESE LOOSE SHEETS PRIMARILY CONTAIN THE WEIGHM ENT SLIPS OF GOODS, COPIES OF THE SALES REGISTER, SOME NOTING S ABOUT INCOMINGS AND REPORT PRINT. THE ASSESSING OFFICER H AS TAKEN THE TOTAL QUANTITY AND MULTIPLIED IT WITH THE AVERA GE RATE TO ARRIVE AT A DECISION THAT THERE HAVE BEEN SUPPRESSE D SALES OF GOODS WORTH RS. 98 LAKHS. IN APPEAL, THE CIT(A) WI TH REGARDS TO SUPPRESSED PRODUCTION IN CASE OF ASSESSEE FOR A. Y. 2006-07 OBSERVED THAT IN EARLIER YEARS I.E. A.Y. 2000-01 TO 2005-06 A STATISTICAL FORMULA BASED ON ELECTRICITY CONSUMPTIO N CANNOT BE ADOPTED AS IT GIVES UNSCIENTIFIC RESULT THAT IS FAR FROM REALITY ON THE GROUND LEVEL. THE CIT(A) ALREADY OBSERVED TH AT RESORTING TO SUCH A FORMULA HAS RESULTED IN ABNORMALLY HIGH P ITCHED ASSESSMENTS. AT THE SAME TIME, THE CIT(A) OBSERVED THAT INCRIMINATING MATERIAL RECOVERED FROM THE PREMISES OF FAMILY MEMBER SHOWING PURCHASE AND SALE OF ITEMS, OUTSIDE BOOKS, TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 37 THAT ARE PRODUCED BY BOTH THE CONCERNS CANNOT BE IG NORED. ACCORDINGLY, SAID SEIZED DOCUMENTS WERE EXAMINED, A NALYZED AND UTILIZED FOR WORKING OUT UNDISCLOSED INCOME OF THE ASSESSEE FOR A.Y. 2006-07. AS OBSERVED ABOVE, THE CIT(A) DID NOT ACCEPT SHRI SURENDRA PEETYS CONTENTION EARLIER THAT THE SAID DOCUMENT RELATED TO HIS PERSONAL BUSINESS OF T RADING IN THE ITEMS THAT ARE ACTUALLY PRODUCED BY THESE TWO C OMPANIES OF THE GROUP. THE CIT(A) ALSO DID NOT ACCEPT SHRI SURENDRA PEETYS SURRENDER OF RS. 1,50,000/- IN HIS PERSONAL ASSESSMENT ON ACCOUNT OF THE SAME. THE FIGURES OF PURCHASE AND SALE REPORTED ON THE SAID DOCUMENT ARE TAKEN AS PRODUCTION OF THE TWO COMPANIES OUTSIDE THEIR BOOKS OF ACCOUNTS. THE FIGURES ARE FOR TWO DATES, I.E. 15 TH AND 16 TH MARCH 2006. THE SAME ARE EXTRAPOLATED FOR THE ENTI RE YEAR AS THERE IS A STRONG PRESUMPTION THAT THIS KIND OF UNA CCOUNTED PRODUCTION AND SALE WAS THERE THROUGHOUT THE YEAR, MORE SO WHEN EXPANSION OF THE UNIT HAD ALSO BEEN COMPLETED IN A.Y. 2005-06. THE PERIOD TAKEN FOR CALCULATION OF UNACC OUNTED PRODUCTION IS 300 DAYS FOR EACH COMPANY BECAUSE THA T IS THE NORMAL WORKING PERIOD IN THE ENTIRE YEAR. THEREAFTE R GP RATE AS DECLARED IN THE AUDITED BOOKS WAS APPLIED TO WOR K OUT UNACCOUNTED INCOME. THE WORKING IN THIS REGARD IS GIVEN HEREUNDER. 1. SRJ PEETY STEELS PVT. LTD. TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 38 SALE OF 2 DAYS VALUE FOR 2 DAYS QTY. FOR 300 DAYS SALE VALUE (RS.) 119.020 MT RS. 24,17,121/- 17860.50 MT 36,25,68,1 50 2. SHREE OM ROLLING MILLS PVT. LTD. SALE OF 2 DAYS VALUE FOR 2 DAYS QTY. FOR 300 DAYS SALE VALUE (RS.) 313.315 MT 74,85,836 46,997 112,27,25,400 SALE VALUE (RS.) GROSS PROFIT GROSS PROFIT (RS.) SRJ 36,25,68,150 2.07% 75,05,160/- SOM 112,27,25,400 1.87% 2,09,94,965/- 43. THUS TAKING THE OVERALL VIEW OF UNDISCLOSED INC OME OF THE ASSESSEE BY WORKING AT RS. 75,05,116/- BASED ON THE EVIDENCE FOUND DURING THE COURSE OF SEARCH, THE ADDITION OF RS. 3,60,57,000/- IN A.Y. 2006-07 IN THE CASE OF SRJ WA S RESTRICTED TO RS. 75,05,116/-. REGARDING TELESCOPY, IT WAS OBSERVED THAT FOLLOWING DISCLOSURES HAVE BEEN MADE BY THE ASSESSEE. (I) RS, 13,35,322/- STORES (II) RS. 36,66,935/- ITEMS IN DHANLAXMI (III) RS. 1,50,000/- DECLARATION BY SURENDRA PEETY ON THE BASIS OF SEIZED DOCUMENTS RS. 51,52,257/- TOTAL THE ASSESSEES STAND WAS THAT WHATEVER STORES AND M ATERIAL TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 39 WERE SURRENDERED BY THE ASSESSEE ON THE DAY OF SEAR CH HAVE BEEN TAKEN INTO BOOKS OF ACCOUNTS AND THEY FORM PAR T OF THE MANUFACTURING AND TRADING ACCOUNT OF THE ASSESSEE. THEREFORE, ONLY GP SHOULD BE WORKED OUT ON THE AMOU NT OF UNDISCLOSED PRODUCTION (SUPRA) AND THE SURRENDERS M ADE ON ACCOUNT OF ABOVE ITEMS SHOULD BE TELESCOPED INTO. IN THE LIGHT OF THE ABOVE MENTIONED SURRENDER AND PROPOSAL FOR A DDITION ON ACCOUNT OF SUPPRESSED PRODUCTION ON THE BASIS OF A/ 1, THE CIT(A) OBSERVED THAT THE FUNDS ARE AVAILABLE FROM I NTANGIBLE ADDITIONS (SUPPRESSED PRODUCTION) MADE IN ITS CASE BY THE A.O WERE SUSTAINED IN THE APPEAL. IN VIEW OF DISCLOSUR E IN THE HANDS OF THE COMPANY/INDIVIDUAL HAS TO BE TAKEN FOR TELESCOPING WITH REGARDS TO OTHER ADDITIONS OR SURR ENDER THAT ARE OTHERWISE CALLED FOR ON THE BASIS OF SEIZED MAT ERIAL. THE CIT(A) WAS THEREFORE OF THE VIEW THAT THE INTANGIBL E ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION MADE IN THE CASE O F ASSESSEE WAS AVAILABLE IN THE FORM OF FUND TO THE A SSESSEE FOR ROTATING THE SAME IN INCURRING THE EXPENDITURE/INVE STMENT IN RAW MATERIAL/STORES FOR WHICH SEPARATE ADDITION/SUR RENDER OF RS. 36,66,935/- AND RS. 13,35,322/- FOR MATERIAL AN D STORES RESPECTIVELY WAS MADE. SINCE THE ASSESSEE HAS VOLUN TARILY SURRENDERED THESE AMOUNTS AND PAID TAXES THEREON, I TS REQUEST FOR TELESCOPING THE SAME INTO THE INTANGIBL E ADDITION SUSTAINED ON ACCOUNT OF SUPPRESSED PRODUCTION WAS F OUND REASONABLE BY THE CIT(A). IN ADDITION TO THE SAME, DECLARATION MADE BY SHRI SURENDRA PEETY OF GP ON ACCOUNT OF THE SAME TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 40 SEIZED DOCUMENT A/1 ALSO NEEDS TO BE SET OFF AGAINS T THE ADDITION SUSTAINED. ACCORDINGLY, NET ADDITION OF RS . 23,53,160/- (RS. 75,05,116/- MINUS RS. 51,52,257/-_ WAS SUSTAINED WHICH IS A REASONED FINDING OF THE CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. SIMILAR RELIEF GRANTED IN THE CASE OF SHREE OM ROLLING MILLS PVT. LTD., BASED ON SAME FAC TS IS ALSO UPHELD. WE UPHOLD THE SAME. IT IS PERTINENT TO MENT ION HERE THAT ALL THE CASES RELIED UPON BY THE PARTIES HAVE BEEN TAKEN INTO CONSIDERATION THOUGH THE SAME HAVE NOT BEEN SP ECIFICALLY DISCUSSED. 44. IN THE RESULT, THE APPEALS OF THE REVENUE FOR A LL THE YEARS ARE DISMISSED AND ASSESSEES APPEAL FOR A.Y. 2006-0 7 IN BOTH THE CASES ARE ALSO DISMISSED. ORDER PRONOUNCED ON THE 30 TH NOVEMBER 2010. SD/- SD/- (G.S. PANNU ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 30 TH NOVEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- I NAGPUR 4. THE CIT- (CENTRAL) NAGPUR 5. THE D.R, B BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE TA NO. 975 TO 981 & 857, 976 TO 980/PN/2008 SRJ PEETY STEELS A.Y. 2000-01 TO 2006-07 41