Income-tax Officer,, v. M/s. Ram Ritesh Ispat Pvt. Ltd.,, Jalna

ITA 1829/PUN/2014 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 182924514 RSA 2014
Assessee PAN AAHCA7117J
Bench Pune
Appeal Number ITA 1829/PUN/2014
Duration Of Justice 2 year(s) 14 day(s)
Appellant Income-tax Officer,,
Respondent M/s. Ram Ritesh Ispat Pvt. Ltd.,, Jalna
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 21-10-2016
Date Of Final Hearing 19-09-2016
Next Hearing Date 19-09-2016
Assessment Year 2010-2011
Appeal Filed On 07-10-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE . . ! # $ BEFORE SHRI R.K. PANDA AM AND SHRI VIKAS AWASTHY JM . / ITA NO.1730/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 M/S. ASTALAXMI RE - ROLLING MILLS PVT. LTD. F.NO.16 17 ADDL.MIDC AREA JALNA PAN : AAHCA7117J . / APPELLANT V/S ITO WARD - 1(3) JALNA . /RESPONDENT . / ITA NO.1828/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ITO WARD - 1(3) JALNA . / APPELLANT V/S M/S. ASTALAXMI RE - ROLLING MILLS PVT. LTD. F.NO.16 17 ADDL.MIDC AREA JALNA PAN : AAHCA7117J . /RESPONDENT . / ITA NO.1826/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ITO WARD - 1(3) JALNA . / APPELLANT V/S M/S. DURGA RE - ROLLING MILLS PVT. LTD. D-41 ADDL.MIDC AREA JALNA 431 203 PAN : AABCD1390C . /RESPONDENT . / ITA NO.1829/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ITO WARD - 1(3) JALNA . / APPELLANT V/S M/S. RAM RITESH ISPAT PVT. LTD. C-4/2 ADDL.MIDC AREA JALNA 431 203 PAN : AABCR 5278B . /RESPONDENT 2 ITA NOS.1730 1828 1826 & 1829/PN/2014 / ASSESSEE BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI P.L. KUREEL / ORDER PER R.K.PANDA AM : ITA NO. 1730/PN/2014 FILED BY THE ASSESSEE AND ITA NO.1828/PN/2014 FILED BY THE REVENUE ARE CROSS APPEALS A ND ARE DIRECTED AGAINST THE ORDER DATED 02-07-2014 OF THE CIT (A) AURANGABAD RELATING TO ASSESSMENT YEAR 2010-11. ITA N O.1826 AND ITA NO.1829/PN/2014 FILED BY THE REVENUE ARE DIRECTED AG AINST THE SEPARATE ORDERS DATED 02-07-2014 OF THE CIT(A) AURANG ABAD RELATING TO ASSESSMENT YEAR 2010-11. SINCE COMMON ISSUES ARE INV OLVED IN ALL THESE APPEALS THEREFORE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP THE CROSS APPEALS BEING ITA NO.1730 /PN/2014 AND ITA NO.1828/PN/2014. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUS INESS OF MANUFACTURING OF TMT BARS BY USING SCRAP PURCHASED AS R AW MATERIAL. THE ASSESSEE FILED RETURN OF INCOME ON 25-08-20 10 DECLARING TOTAL INCOME OF RS .7 64 290/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO EXAMINED THE DETAILS OF MONTHLY CONS UMPTION OR ELECTRICITY AND PRODUCTION OF TMT BARS AND MS MELTING SCRA P AND OBSERVED THAT MINIMUM ELECTRICITY UNIT CONSUMPTION PER METRIC TON OF PRODUCTION COMES TO 884 UNITS AND MAXIMUM ELECTRICITY UN IT CONSUMPTION PER METRIC TON COMES TO 1204 UNITS. HE OBSE RVED THAT THERE WAS ABNORMAL DEVIATION IN ELECTRICITY UNIT CONSUMPTION PER / DATE OF HEARING :19.09.2016 / DATE OF PRONOUNCEMENT:21.10.2016 3 ITA NOS.1730 1828 1826 & 1829/PN/2014 METRIC TON I.E. UPTO 320 PER METRIC TON WHICH CLEARLY INDIC ATES THAT THE ASSESSEE HAS NOT DISCLOSED ITS PRODUCTION IN THE BOO KS OF ACCOUNT CORRECTLY. IN VIEW OF THE HUGE DEVIATION IN MONTHLY CONS UMPTION AS WELL AS DUE TO ABNORMAL DEVIATION IN ELECTRICITY CONSUMPTION PRODUCTION IN VARIOUS RE-ROLLING MILL CASES THE PRODUCTION WAS ESTIMATED @ 188 UNIT PER METRIC TON. ACCORDINGLY THE A O DETERMINED THE SUPPRESSED PRODUCTION TO THE EXTENT OF 4198 METRIC TON. TAKING INTO ACCOUNT THE COST OF MATERIAL USED FOR PRODUCTION OF 1 METRIC TON AT RS.14 578 AND AVERAGE SALE PRICE OF FINISHED GOODS SOLD A T RS.25 987/- THE AO DETERMINED THE EXCESS SALE PRICE OVER AND ABOVE THE COST WHICH IS THE NET GAIN TO THE ASSESSEE AT RS.11 409/- PER METRIC TON. THUS THE AO MADE ADDITION OF RS.2 92 88 040/- ON ACCOUNT OF SUPPRESSED PRODUCTION. SIMILARLY THE AO MADE ADDITION OF RS.1 85 67 702/- U/S.69C BEING THE MONEY/WORKING CAPITAL REQ UIRED FOR CARRYING OUT THE UNACCOUNTED PRODUCTION. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). T HE LD.CIT(A) ESTIMATED 800 UNITS OF ELECTRICITY PER METRIC TON FOR MANUFACTURING OF FINISHED GOODS OF TMT BARS AS AGAINST 188 UNITS ESTIMATED BY THE AO. SIMILARLY HE DIRECTED THE AO TO COM PUTE THE PROFIT ON SUPPRESSED PRODUCTION @4% OF SUCH SUPPRESSED TURNOVER WHILE UPHOLDING THE REJECTION OF BOOK RESULTS BY THE AO. HE ALSO HELD THAT THE MANUFACTURING AND ADMINISTRATIVE EXPENSES ON TH E UNACCOUNTED PRODUCTION WORKED OUT HAS ALREADY BEEN BO RN BY THE PRODUCTION SHOWN IN THE BOOKS. HE ALSO RESTRICTED THE A DDITION MADE BY THE AO ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR CAR RYING OUT THE UNACCOUNTED PRODUCTION AT RS.57 971/- AS AGAINST RS.1 85 0 9 731/- MADE BY THE AO. 4 ITA NOS.1730 1828 1826 & 1829/PN/2014 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE IN ITA NO.1730/PN/2014 : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ALLEGED SUPPRESSION OF SA L ES TO THE TUNE OF RS. 3 92 88 045/- . AND CONFIRMING THE ADDITION TO THE EXTENT OF RS . 2 41 159/- . 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ALSO ER R ED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION ON AC COUNT OF UNDISCLOSED INVESTMENT FOR UNDISCLOSED TURNOVER TO THE EXTENT OF R S. 57 971/ -. 3. THE LEARNED CIT (A) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY ON PRESUMPTION AND ASSUMPTION B ASIS AND WITHOUT EVIDENCE OF PURCHASE OF RAW MATERIAL OR SALES OF FINISHED GOODS OUT OF BOOKS. 4. THE LEARNED CIT (A) FURTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTS ON THE GROUNDS OF MONTHLY VARIAT ION I N CONSUMPTION OF ELECTRICITY VIS-A - VIS PRODUCTION. 5. THE LEARNED CIT (A) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESS I NG OFFICER IN HOLDING THAT THE BOOKS OF ACCOUNTS OF T HE APPELLANT COMPANY ARE CORRECTLY REJECTED U/S 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR FINDINGS AS HOW THE PROVISION OF SEC. 145 (3) ARE SATISFIED. 6. THE LEARNED CIT (A) FURTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION ON ACCOUNT OF A LLEGED SUPPRESSION OF SALES WITHOUT GIVING ANY SHOW CAUSE NOTICE TO THE AP PELLANT COMPANY TO EXPLAIN THE FACTS AGAINST THE PROPOSED HUGE ADDITION O N THIS ACCOUNT WHICH IS AGAINST THE RULES OF NATURAL JUSTICE. 7. THE LEARNED CIT (A) FURTHER ERRED IN NOT FOLLOWI NG THE ORDER OF THE HON . ITAT PUNE IN THE CASE OF ACIT VS. M/S SRJ PEETY PVT L TD. (2011) 137 TTJ (PUNE) 627 ITAT PUNE WHEREIN THE ADDITION MAD E ON THE ACCOUNT OF UNIT CONSUMPTION ON PRESUMPTION BASIS WAS DELETED. 8. THE APPELLANT CRAVES LEAVE TO ALTER AMEND OR DEL ETE ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME IF DEEMED NECESSA RY. GROUNDS BY REVENUE IN ITA NO.1828/PN/2014: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN ESTIMATING THE 800 UNITS OF ELECTRICIT Y PER METRIC TON FOR MANUFACTURING OF FINISHED GOODS OF TMT BARS AS AGAINST 1 88 UNITS ESTIMATED BY THE AO. IGNORING THE FACT THAT METALLIC PROPERTIES REQUIRES FOR HEATING THE SIMILAR TEMPERATURE WHICH INVOLVED I DENTICAL PROCESS AND THE CONSUMPTION BY SMALL AND BIG MILLS . 5 ITA NOS.1730 1828 1826 & 1829/PN/2014 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE PROFIT ON SUPP RESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE BOOKS OF A CCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED BY THE A O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE P RODUCTION SHOWN IN THE BOOKS OF ACCOUNT? 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE W ORKING CAPITAL IS REQUIRED FOR PURCHASES OF RAW MATERIAL AND DAY TO D AY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR. 5. THE ORDER OF THE AO BE RESTORED AND THAT THE CIT( A) BE VACATED . 6. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY GROUNDS OF APPEAL . 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT ALL THE ASSESSEES ARE TMT BAR MANUFACTURING UNITS USING S CRAP AS RAW MATERIAL. IN NONE OF THE ABOVE CASES THERE IS ANY ORDE R OF SETTLEMENT COMMISSION OR COMMISSIONER EXCISE OR ALLEGATION OF CLANDESTINE REMOVAL OF GOODS. HE SUBMITTED THAT THERE IS NO ESTIMAT ION OR ADMISSION OR ALLEGATION OF SUPPRESSED PRODUCTION BY EXCISE DEPARTMENT OR NO PHYSICAL VERIFICATION BY EXCISE OR INCOME TAX DEPARTMENT AS TO THE CONSUMPTION OF ELECTRICITY UNIT PER METRIC TON FOR MANUFACTURING OF TMT BARS. HE SUBMITTED THAT THE AO ESTIMATED THE PRODUCTION BY REJECTING THE BOOKS AT 188 UNITS OF E LECTRICITY REQUIRED FOR MANUFACTURING OF TMT BAR PER METRIC TON ON T HE BASIS OF AN ORDER FOR OTHER STEEL UNITS IN JALNA AREA FOR A.Y. 2006-0 7 TO A.Y. 2009-10. HE SUBMITTED THAT IN ALL THESE CASES TMT BARS ARE MANUFACTURED FROM BILLETS AND INGOTS AND NOT FROM SCRAP. HOWEVER THE TRIBUNAL HAS DELETED THE ADDITION MADE BY THE AO O N THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY. 6 ITA NOS.1730 1828 1826 & 1829/PN/2014 6. THE LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOWING CHART TO EXPLAIN THE FACTS OF EACH CASE : ADDITION MADE BY THE AO : ASHTALAXMI RAM RITESH DURGA RE-ROLLING SUPPRESSED PRODUCTION BASIS 188 UNITS (M.TON) 3 443/ - 5 458/ - 4 998/ - PROFIT ESTIMATED ON SUPPRESSED PRODUCTION 3 92 88 045/ - 3 38 72 717/ - 2 75 02 582/ - WORKING CAPITAL INVESTMENT ESTIMATED 1 85 67 702/ - 2 17 50 122/ - 2 68 93 076/ - TOTAL RS. 5 86 20 040/ - 5 61 45 622/ - 5 47 72 929/ - ADDITION CONFIRMED BY CIT(A) ASHATAXMI RAM RITESH ISPAT DURGA RE-ROLLING SUPPRESSED PRODUCTION @800 UNITS (M.T) 232/ 60 28 984/- 89/ 23 15 780/- 4/ 1 03 972/- PROFIT ADOPTED WORKED OUT BY AO @4% 4% 2 41 159/- 4% 92 611/- - WORKING CAPITAL INVESTMENT ESTIMATED 57 971/ - 22 267/ - - TOTAL 2 99 130/ - 1 14 878/ - NO ADDITION APPEAL BY DEPARTMENT/ ASSESSEE YES YES YES YES - - 7. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIB UNAL IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. VS. ACIT VIDE ITA NO.1292/PN/20112 FOR A.YRS. 2009-10 AND BUNCH OF OTHER A PPEALS ORDER DATED 15-07-2015 HE SUBMITTED THAT AN IDENTICAL IS SUE HAS BEEN DECIDED BY THE TRIBUNAL AND THE ADDITION MADE ON ACCOUNT OF PROFIT ON SUPPRESSED PRODUCTION DUE TO ERRATIC CONSUMPTION OF ELE CTRICITY HAS BEEN DELETED. HE ACCORDINGLY SUBMITTED THAT SINCE THE T RIBUNAL HAS DECIDED THE ISSUE AND DELETED THE ADDITION IN THE HANDS OF DIFFERENT 7 ITA NOS.1730 1828 1826 & 1829/PN/2014 ASSESSEES ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQU ENT TO ERRATIC CONSUMPTION OF ELECTRICITY AND HAS ALSO DELETED THE ADDITIO N OF WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUPPRESSED PROD UCTION THEREFORE THE APPEAL FILED BY THE REVENUE SHOULD BE DISMISSED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND WHILE SUPPORTING THE ORDER OF THE AO FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. 9. AFTER HEARING BOTH THE SIDES WE FIND THE AO MADE ADDIT ION OF RS.3 92 88 045/- BEING THE PROFIT ESTIMATED ON SUPPRESSED P RODUCTION OF 3443 METRIC TON OF TMT BARS BASED ON ERRATIC CONSUMP TION OF ELECTRICITY BY CONSIDERING 188 UNITS CONSUMPTION OF ELECTRICIT Y FOR PRODUCTION OF 1 METRIC TON OF RAW MATERIAL. HE ALSO MADE ADDITION OF RS.1 85 67 702/- BEING WORKING CAPITAL REQUIRED FOR CARRYING O UT THE SUPPRESSED PRODUCTION. WE FIND THE LD.CIT(A) DIRECTED THE AO TO CONSIDER 800 UNITS OF ELECTRICITY PER METRIC TON FOR MANUFAC TURING OF FINISHED GOODS OF TMT BARS AS AGAINST 188 UNITS ESTIMATED BY THE AO. HE ALSO DIRECTED THE AO TO QUANTIFY THE PROFIT @4% ON SU CH SUPPRESSED SALE OF SUPPRESSED PRODUCTION. THE LD.CIT(A) FURTHER RESTRICTED THE REQUIREMENT OF WORKING CAPITAL FOR SUCH U NACCOUNTED PRODUCTION AT RS.57 971/- AS AGAINST RS.1 85 09 731/- DET ERMINED BY THE AO. 10. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNA L IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. (SUPRA) AND BUNC H OF OTHER APPEALS. THE TRIBUNAL HAS ELABORATELY CONSIDERED THE ISSUE AND DELETED THE ADDITION IN THE HANDS OF THE RESPECTIVE ASSE SSEES ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQUENT TO ERRATIC CONSUMPTION OF ELECTRICITY AND HAS ALSO DELETED THE ADDITION OF WORKING CAPITAL 8 ITA NOS.1730 1828 1826 & 1829/PN/2014 REQUIRED FOR INVESTMENT IN SUPPRESSED PRODUCTION BY OBSE RVING AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT SET OF APPEALS RELATING TO ASSE SSMENT YEAR 2009-10 IS IDENTICAL TO THE ISSUE RAISED IN THE EARLIER APPEALS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 IN THE CASE OF DIFFER ENT ASSESSEES. WE HAVE BY ORDER OF EVEN DATE ALREADY ADJUDICATED T HE ISSUE OF ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODU CTION/SALES ON THE BASIS OF ERRATIC ELECTRICITY CONSUMPTION. IN THE FACTS RELEVANT TO ASSESSMENT YEAR 2009-10 THE ASSESSEE WAS HELD TO HAVE CLAND ESTINELY MANUFACTURED AND CLEARED ITS MATERIAL WITHOUT PAYMEN T OF EXCISE DUTY IN TURN RELYING ON THE INVESTIGATION CONDUCTED AGAINST T HE FURNACE COMPANIES IN THE EARLIER YEARS. THE CCE AURANGABAD HAD MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE STUDY CONDUCTED BY DR.N.K. BATRA PROFESSOR IIT KANPUR AND AS PER HI S STUDY REPORT FOR MANUFACTURING ONE MT OF MS INGOT ELECTRICITY SHOULD BE CONSUMED FROM 555 UNITS TO 1046 UNITS. HOWEVER THE ASSESSEES WERE SHO WING MORE CONSUMPTION OF ELECTRICITY FOR PRODUCTION PER MT. T HE CCE AURANGABAD RAISED THE DEMANDS BY CONFIRMING THE ORDER OF ADJUDI CATING AUTHORITY. HOWEVER IN THE CASE OF DIFFERENT ASSESSEES TRIALS / EXPE RIMENTS WERE CONDUCTED IN THE FACTORY OF MOST OF THE APPELLANTS AN D ON SUCH EXPERIMENTS / TRIALS THE CONSUMPTION OF ELECTRICITY W AS FOUND TO BE MORE THAN 1026 UNITS PER MT. IN VIEW THEREOF THE FACTS O F THE PRESENT CASE ARE AT VARIANCE TO THE FACTS BEFORE THE TRIBUNAL IN ASSESSME NT YEARS 2006-07 AND 2007-08 WHEREIN THE CASE OF THE EXCISE AUTHORITY WAS THAT THE CONSUMPTION OF ELECTRICITY WAS NOT IN ACCORDANCE WITH THE REPORT OF DR. BATRA. HOWEVER THE SAID FACTUAL ASPECT HAS BEEN OVER TURNED BY THE INVESTIGATION CARRIED OUT BY THE EXCISE AUTHORITY AT THE PREMISES OF THE ASSESSEE ON DIFFERENT DATES AS MENTIONED HEREINABOVE AND THE FINDINGS OF THE AUTHORITY WERE AS UNDER :- SR. NO. APPEAL NO. MANUFACTURER APPELLANT PERIOD OF DISPUTE DUTY AMOUNT AND PENALTY DETAILS OF EXPERIMENT 1. E/86268/2014 SRJ PEETY STEEL PVT. LTD. JANUARY 2008 TO MARCH 2009 RS.12 41 64 392 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 4.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1496 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 2. E/86151/2014 BHAGYALAXMI STEEL ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.5 91 23 193 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1503.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 3. E/86275/2014 MAHAVEER STEEL RE- ROLLING MILLS APRIL 2008 - MARCH 2009 RS.79 74 603/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1209 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 4. E/86152/2014 REGENT STEEL PVT. LTD. FEBRUARY 200 8 TO MARCH 2009 RS.96 27 516/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 19.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1199 UNITS PER MT 9 ITA NOS.1730 1828 1826 & 1829/PN/2014 USING MIX INPUT OF SCRAP AND SPONGE IRON. 5. E/86348/2014 JAILAXMI CASTING & ALLOYS PVT. LTD. 2008-09 2009-10 (UP TO JULY 2009) RS.1 92 94 575/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 18.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1147.74 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 6. E/86249/2014 GAJLAXMI STEEL PVT. LTD. FEBRUARY 2 008 TO MARCH 2009 RS.2 76 52 805/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1433.78 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 7. E/86242/2014 KALIKA STEEL & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3 19 92 292/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.1.2009 SHOWED ELECTRICITY CONSUMPTION OF 1371.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 8. E/86330/2014 META ROLLS & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3 26 84 318/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1251 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 9. E/86220/2014 NILESH STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.2 06 54 292/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1253 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 10. E/86349/2014 OM SAIRAM STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3 90 21 947/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE ON 25.3.2009; HOWEVER COPY THEREOF WAS NOT GIVE TO APPELLANT. 11. E/86331/2014 SAPTASHRUNGI ALLOYS (P) LTD. APRIL 2008 TO MARCH 2009 RS.1 61 53 031/- & EQUAL PENALTY NO VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE DURING THE RELEVANT PERIOD. 10. THE DIVISION BENCH OF CESTAT HAD SET-ASIDE THE ORD ER OF THE CCE AURANGABAD ON ACCOUNT OF ADDITIONS MADE IN THE HANDS OF THE ASSESSEE BECAUSE OF ERRATIC CONSUMPTION OF ELECTRICITY. THE RELEVANT FINDING OF THE ORDER OF CESTAT READS AS UNDER :- IN THE IMPUGNED ORDER THE ADJUDICATING AUTHORITY H AS NOT CONSIDERED THE SPECIFIC VERIFICATION CONDUCTED BY THE DEPARTMENTAL OFFICERS WHO ASCERTAINED THE ACTUAL CONSUMPTION OF ELECTRICITY T O MANUFACTURE OF 1MT OF MS INGOTS IS MORE THAN 1026 UNITS FOR PER MT AS ALL EGED IN THE SCNS WHEN THE APPELLANTS HAVE SPECIFICALLY TAKEN THIS DEFENSE . IN FACT THE SPECIFIC INSPECTION/EXPERIMENT WHICH HAS BEEN CONDUCTED TO A SCERTAIN THE ELECTRICITY CONSUMPTION TO MANUFACTURE 1MT OF MS IN GOTS IS VITAL EVIDENCE WHICH HAS NOT BEEN CONSIDERED BY THE ADJUDICATING A UTHORITY. IF THE PHYSICAL VERIFICATION REPORT CONDUCTED BY THE REVENUE WOULD HAVE BEEN TAKEN INTO 10 ITA NOS.1730 1828 1826 & 1829/PN/2014 CONSIDERATION BY THE ADJUDICATING AUTHORITY THEN T HE ADJUDICATING AUTHORITY WAS NOT REQUIRED TO CONSIDER THE OTHER EV IDENCES. MOREOVER ALL THE EVIDENCES RELIED UPON BY THE LD. ADJUDICATING A UTHORITY ARE THEORETICAL AND HAVE BEEN CONSIDERED BY THIS TRIBUNAL IN APPELL ANTS OWN CASES FOR THE EARLIER PERIOD; WHEREIN THIS TRIBUNAL RELIED ON THE DECISION OF R.A. CASTING PVT. LTD. VS. CCE MEERUT REPORTED IN 2009 (273) EL T 674 AND HELD THAT ON THE BASIS OF STUDY REPORT OF DR. N.K. BATRA THE EL ECTRICITY CONSUMPTION CANT BE THE BASIS FOR DEMANDS. THE ORDER OF THIS TRIBUN AL WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE HIGH COURT AND THE HONB LE HIGH COURT OF ALLAHABAD VIDE ORDER DT. 9.9.2010 IN APPEAL NO.67/2 009 DISMISSED THE APPEAL FILED BY THE REVENUE AND AGAINST THE DECISI ON OF THE HONBLE HIGH COURT THE REVENUE FILED SLP BEFORE THE HONBLE APE X COURT AND THE HONBLE SUPREME COURT ALSO DISMISSED THE SLP VIDE ORDER DT. 31.3.2011. THEREAFTER THE REVENUE SOUGHT TO FILE REVIEW PETITION BUT THE THEN ATTORNEY GENERAL OF INDIA THE SHRI GOUTAM VAHANVATI OPINED NOT TO FILE REVIEW PETITION VIDE LETTER NO.276/417/2010 CX 8A DATED 26.05.2011. THE REFORE THE RELIANCE ON THE STUDY ANALYSIS CONDUCTED BY DR. N.K. BATRA PRO FESSOR IIT KANPUR IS NOT AN EVIDENCE TO ASCERTAIN THE ELECTRICITY CONSUMPTIO N FOR MANUFACTURE OF 1MT OF MS INGOTS. 7. IN APPELLANTS OWN CASE FOR THE EARLIER PERIOD ON THE BASIS OF THE EVIDENCE RELIED UPON BY THE ADJUDICATING AUTHORITY TRIBUNAL CAME TO THE CONCLUSION THAT THE 1026 UNITS OF ELECTRICITY FOR M ANUFACTURE OF 1MT OF MS INGOTS IS NOT CORRECT AND SET ASIDE THE ADJUDICATIO N ORDERS. IN THE CASES IN HAND THERE IS ADDITIONAL EVIDENCE OF SPECIFIC VERIF ICATION/TRIAL CONDUCTED BY THE REVENUE TO ASCERTAIN THE ACTUAL ELECTRICITY CON SUMPTION WHICH WORKS OUT TO MORE THAN 1026 UNITS OF ELECTRICITY CONSUMPTION PER 1MT OF MS INGOTS. THEREFORE RELYING ON THE DECISION OF THE EARLIER P ERIOD IN APPELLANTS OWN CASES AND THE ADDITIONAL EVIDENCES COLLECTED BY WA Y SPECIFIC VERIFICATION WE HOLD THAT IMPUGNED ORDERS ARE NOT LEGAL AND PROPER WHEREAS DURING THE IMPUGNED PERIOD THE PHYSICAL VERIFICATION WAS COND UCTED AND THE ELECTRICITY CONSUMPTION FOR MANUFACTURE OF 1MT OF M S INGOTS WAS FOUND TO BE MORE THAN 1026 UNITS OF ELECTRICITY. 8. IN THESE CIRCUMSTANCES WE SET ASIDE THE IMPUGNE D ORDERS AND ALLOW THE APPEALS WITH CONSEQUENTIAL RELIEF AND STAY APPL ICATIONS ARE ALSO DISPOSED OF IN THE ABOVE TERMS. 11. THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION M ADE IN THE HANDS OF THE ASSESSEE WAS DELETED BY THE DIVISION BENCH OF CESTAT VIDE ORDER DATED 22.10.2014 WHEREIN ON SPECIFIC INSPECTIO N / EXPERIMENTS BY THE AUTHORITIES CONDUCTED TO ASCERTAIN THE ELECTRICI TY CONSUMPTION TO MANUFACTURE ONE MT FOUND THAT THE CONSUMPTION OF ELE CTRICITY WAS MORE THAN 1026 UNITS PER MT. THE CASE OF THE EXCISE DEPART MENT WAS THAT 1026 UNITS PER MT WERE REQUIRED TO MANUFACTURE ONE M T OF MS INGOTS / BILLETS AND THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE IN THI S REGARD. HOWEVER SINCE THE PHYSICAL VERIFICATION CONDUCTED BY THE EXCISE DEPARTMENT REFLECTED HIGHER CONSUMPTION OF ELECTRICI TY THE TRIBUNAL CAME TO A FINDING THAT IN VIEW OF THE ADDITIONAL EV IDENCES OF SPECIFIC VERIFICATION / TRIAL CONDUCTED BY THE REVENUE TO ASC ERTAIN THE ACTUAL ELECTRICITY CONSUMPTION WHICH WORKED OUT TO MORE TH AN 1026 UNITS PER MT THERE WAS NO BASIS FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO REFERRED TO ITS EARLIER ORDE R IN THE CASE OF DIFFERENT ASSESSEES WHERE SIMILAR ADDITION WAS DELETED. 11 ITA NOS.1730 1828 1826 & 1829/PN/2014 12. THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN ITA NOS.284 TO 286/PN/2012 RELATING TO ASSESSMENT YEARS 2006-07 TO 2008 -09 IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. VS. ADDL.CI T AND CROSS APPEAL FILED BY THE REVENUE IN ITA NOS.437 TO 439/PN/2012 R ELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 ALONG WITH OTHER CON NECTED APPEALS WHILE DECIDING THE ISSUE OF ADDITION ON ACCOUN T OF SUPPRESSED PRODUCTION BECAUSE OF ERRATIC CONSUMPTION OF ELECTRIC ITY HELD AS UNDER :- 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLAC ED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RE LIED ON BY BOTH THE PARTIES. 18. BEFORE ADDRESSING THE ISSUE ON MERITS WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF THE PRESENT CASES LISTED BEFORE US WHICH WERE MADE VIDE ORDER SHEET ENTRY D ATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEARING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO ARGUE THE APPEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR SEEKING ADJOURNMENT I.E. CONTEMPLATI ON OF FILING MA AGAINST THE EARLIER ORDERS OF THE TRIBUNAL WAS REJECTED. THE APPEALS WERE ADJOURNED TO 13.03.2015 AND THEN 05.05.2015 AT THE REQUEST OF THE SPECIAL AR. ON 05.05.2015 THE COUNSEL FOR THE ASSESSEE OP ENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR THE REVENUE . ON 05.05.2015 ITSELF THE SPECIAL AR FILED WRITTEN SUBMISSIONS ALONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURNED TO 07.05.2015 FOR FURT HER HEARING. ON 07.05.2015 THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH BY THE SPECIAL AR FOR THE REVENUE. THE COUN SEL FOR THE ASSESSEE STRONGLY OPPOSED THE SAME ON THE GROUND THAT THE SP ECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DATE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE- LUNCH HOUR SESSION AND IT WAS DIRECTED THAT THE HEA RING WOULD CONTINUE AT 03:00 PM I.E. AFTER THE LUNCH HOUR TO WHICH BOTH TH E PARTIES CONSENTED. ON REASSEMBLING OF THE BENCH THE SPECIAL AR FOR THE R EVENUE FURNISHED LETTER UNDER HIS SIGNATURE STATING THAT THE PR.CIT AURANG ABAD WAS CONTEMPLATING TO FILE CERTAIN PETITIONS BEFORE THE HONBLE PRESID ENT/VICE PRESIDENT ITAT MUMBAI AND THEREFORE THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVER THE NATURE AND CONTENTS OF THE PETITION CO NTEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASK ED TO CONTINUE HIS ARGUMENTS BY THE BENCH BUT HE REFERRED TO HIS ADJO URNMENT LETTER. 19. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COUR T ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER I N REPLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE PARAWISE W HICH WERE GONE INTO AT LENGTH. THOUGH IN THE COURSE OF HEARING THE SPEC IAL AR FOR THE REVENUE LEFT THE COURT PROCEEDINGS ON THE OTHER HAND SMT. M.S. VERMA LD. CIT-DR AND SHRI RAJESH DAMOR LD. ADDL.CIT-DR WERE PRESENT IN THE COURT. THEREAFTER OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT- DR AND LD. ADDL.CIT-DR WERE TAKEN UP FOR HEARING AND THE MATTERS IN ITA NO S.125 127 430 & 431/PN/2012 ALONG WITH ITA NO.1525/PN/2012 ITA NO. 1476/PN/2012 ITA NOS.179 TO 182/PN/2012 ITA NOS.656 TO 659/PN/2 012 ITA NO.1084/PN/2012 ITA NO.1468/PN/2012 ITA NO.1558/P N/2012 ITA NO.1629/PN/2012 ITA NO.1516/PN/2012 AND ITA NO.163 8/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.0 5.2015 AS PART HEARD. 12 ITA NOS.1730 1828 1826 & 1829/PN/2014 20. ON 08.05.2015 ON CALLING OF THE MATTERS WE FI ND THAT THE LD. SPECIAL AR IS NOT PRESENT IN THE COURT ROOM AND THERE IS NO INTIMATION ABOUT HIS ABSENCE IN THE BUNCH OF MATTERS WHICH ARE LISTED F OR HEARING. THE CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN REPLY SHE STATED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIAN CE OF THE LD. SPECIAL AR IN YESTERDAYS HEARING AND HIS NON-APPEARANCE IN TODAY S HEARING CONDUCT OF THE LD. SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT -DR WAS INFORMED IN THE BENCH AS TO WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CONTINUED DEFIANCE AND FOR INTERRUPTING PROCEEDINGS OF THE BENCH. THE HEARING IS TO CONTINUE IN THE LISTED MATTERS AS ANN EXED ON 13.05.2015 AS PART-HEARD. 21. ON 13.05.2005 SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO LD. SPECIAL AR SMT. M.S. VERMA CIT-DR & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. THE MATTER WAS FINALLY HEARD ON 14.05.2015 WHEN SHRI J.P. BAIRAGRA PRESENT FOR THE ASSESSEE AND SHRI SUNIL GANOO LD. SPECIAL AR SMT. M.S. VERMA CIT-DR & SH RI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. 22. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL BUT THE ISSUES RAISED BY THE ASSESSE ARE FOUR-FOLD ON THE F OLLOWING ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NON-S UPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STAND ARDS AND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JALNA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUS TOMS; AND WORKING OUT THE ADDITION BY APPLYING GP RATE OF 4% ON THE ALLEGED SUPPRESSION OF SALES AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHASES RELATING TO SUPPRESSION OF SALE. 23. THE REVENUE ON THE OTHER HAND IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AG AINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F THE TOTAL SUPPRESSED PRODUCTION WHERE THE ASSESSEE WAS FOUND TO BE INDULGING IN CLANDESTINE REMOVAL OF GOODS WITHOUT P AYMENT OF EXCISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EX PENSES ON THE UN-ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OFFICER. 24. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALON G WITH WRITTEN 13 ITA NOS.1730 1828 1826 & 1829/PN/2014 SUBMISSIONS NOTES FILED BY THEM AND THE COMPILATIO N OF CASE LAWS RELIED UPON BY THE RESPECTIVE AUTHORIZED REPRESENTATIVES. IT MAY BE PUT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES B EFORE US ARE RELATABLE TO THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EVASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION O F ELECTRICITY. 25. NOW WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFFERENT IS SUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS COMPLETED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT THE ASSESSEE HAS RAISED THE ISSUE A GAINST RE-OPENING OF ASSESSMENT NON-SUPPLY OF REASONS FOR RE-OPENING UN DER SECTION 147 AND ALSO NON-SERVICE OF NOTICE UNDER SECTION 143(2) AFT ER RECORDING OF REASONS UNDER SECTION 147 OF THE ACT. HOWEVER IN SOME CAS ES THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE-OPENING OF THE ASSESSMENT. THE LD. AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE IN THE PRESENT BUNCH OF APPEALS RE LATING TO BHAGYALAXMI STEEL ALLOYS PVT. LTD. AT THE OUTSET STATED THAT TH E GROUNDS OF APPEAL NOS.1 2 AND 10 IN RELATION TO RE-OPENING OF THE ASSESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 OF THE ACT ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESS ED. 26. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRO DUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUP PRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPP RESSED PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THO UGH BOTH THE PARTIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORD ER OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA) WE FIRST REFER TO TH E DECISION OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIONS OF BOT H THE AUTHORIZED REPRESENTATIVES. 27. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT A PPEAL WAS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER THE LD. SPECIAL AR STRESSED THAT THE ISSUE WAS AT VARIANCE AND MADE ELABORATE SUBMISSIONS. IT MAY BE PUT ON RECOR D THAT M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) IS A CASE OF FURNACE WHIC H IS ENGAGED IN THE MANUFACTURE OF INGOTS / BILLETS. IN THE CASE OF M/ S. SRJ PEETY STEELS PVT. LTD. (SUPRA) THERE WAS AN ORDER OF CENTRAL EXCISE COMMI SSIONER AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER O F CESTAT DELETED THE ADDITION MADE IN THE HANDS OF RESPECTIVE FURNAC E CASES. ALSO IN THE CASE OF THE ASSESSEE BEFORE US THERE IS ORDER OF CCE A URANGABAD AND THERE IS ORDER OF THIRD MEMBER OF CESTAT. IN SOME OF THE YE ARS THE OWNERS OF FURNACE ON THE BASIS OF CERTAIN INFORMATION GATHERE D BY THE DGCEI HAD MOVED A PETITION BEFORE THE SETTLEMENT COMMISSION A ND OFFERED ADDITIONAL PRODUCTION WHICH WAS ACCEPTED BY THE SETTLEMENT CO MMISSION IN ENTIRETY. THE ASSESSING OFFICER OBSERVED THAT THERE WAS SUPPR ESSION OF PRODUCTION BY THE FURNACE COMPANIES IN JALNA CLUSTER ON THE GROUN D OF VARIANCE IN CONSUMPTION OF ELECTRICITY VERSUS PRODUCTION. THE ASSESSING OFFICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURN ACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING ON TH E ADDITION MADE IN THE HANDS OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) I N TURN ON THE BASIS OF THE 14 ITA NOS.1730 1828 1826 & 1829/PN/2014 ORDER OF CCE AURANGABAD MADE ADDITIONS IN THE HAN DS OF PRESENT SET OF ASSESSES BEFORE US. 28. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/S. SRJ PE ETY STEELS PVT. LTD. ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY WHICH IN TURN WAS THE BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE T HEREIN BY CCE AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THA T SINCE THE ORDER OF THE CCE AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. THE OTHER ASPECTS OF THE ISSUE THAT THE ASSESSEE THEREIN HAD MADE THE PETITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ALSO CONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVESTIGATION OR MATER IAL COLLECTED BY THE ASSESSING OFFICER THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 200 7-08. FURTHER IN ASSESSMENT YEAR 2008-09 THERE WAS NO ADMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER E VIDENCE BEING BROUGHT ON RECORD THE TRIBUNAL HELD THAT NO ADDITION IS WARRA NTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SR J PEETY STEELS PVT. LTD. WAS SUMMARIZED UNDER PARA 9 WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE F INDING OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCT ION/SALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOME REASONABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A) ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFI T @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES AND ACCORDINGLY PARTLY SUSTAINED THE ADDITIONS. NOW WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39 20 36 546/- IN THE A.Y. 2007-08 AND RS.40 75 72 486/- IN THE A.Y. 2008-09 ON ALLEGE D SUPPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT P ICTURE OF THE STATE OF AFFAIRS AND HENCE THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED. 29. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSI ONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE RE JOINDEROF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER TH E TRIBUNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED A RGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTE S OF HIS ARGUMENT ON 05-11-2014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE W AS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHILE COMPLE TING THE 15 ITA NOS.1730 1828 1826 & 1829/PN/2014 ASSESSMENT U/S. 143(3) OF THE ACT IN THE OPINION O F THE ASSESSING OFFICER THE ELECTRICITY CONSUMPTION SHOWN BY THE AS SESSEE WAS AT HIGHER SIDE AS COMPARED TO THE QUANTUM OF PRODUCTIO N DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER THEREFORE MA DE THE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCT ION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILLETS. SUBSEQ UENTLY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE O F THE CCE AURANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WE LL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND ALLEGED EVASION OF EXCISE DUTY THE ASSESSING OFFICER INITIATED THE RE-ASSESSMENT PROCE EDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF TH E ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE ASSESSEE COMPANY U/S. 147 FOR A.Y. 2007-08 THE ASS ESSING OFFICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF TH E CCE AURANGABAD RECEIVED FROM THE CENTRAL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGEN CE) AGAINST THE FEW BROKERS AND SUB-BROKERS WHO WERE INVOLVED IN TH E TRADING INTO THE INGOT/BILLETS AND TMT BARS. THE ASSESSING OFFI CER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFORE THE CE NTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION MUMBAI BENCH MUMBAI FOR WAIVER OF PENALTY INTEREST AND FOR GETTING IMMUNITY FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEG ED SUPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BAS ED ON THE INFORMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATION ORDER OF THE CCE AURANGABAD. IT IS P ERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03-2006 AND IN CONSEQUENCE OF THE SEARC H AND SEIZURE ACTION U/S. 132(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 153A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 20 06-07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRIMINATING EVIDENCE WAS FOUND SUGGE STING THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESS MENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE R EACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER R EFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT AND C ERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAM ED BY THE ASSESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THA T THE A.YS. 2007-08 AND 2008-09 BEFORE US ARE IMMEDIATELY NEXT ASSESSME NT YEARS AFTER THE ASSESSMENTS IN CONSEQUENCE OF SEARCH AND SEIZUR E ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09 NO INDEPENDENT INVESTIGATION O R ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOM E TAX AUTHORITIES. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS P LACED HIS RELIANCE ONLY ON THE INFORMATION RECEIVED FROM THE CENTRAL E XCISE AUTHORITIES AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM MUMBAI. THE INVESTIGATION WAS CAR RIED OUT BY 16 ITA NOS.1730 1828 1826 & 1829/PN/2014 CENTRAL EXCISE AUTHORITIES I.E. DGCEI AGAINST FEW BROKERS/SUB- BROKERS AND THOSE BROKERS GAVE THE NAMES OF MANY CO MPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TMT B ARS. AS PER THE STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITI ES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MO DI MUMBAI SHRI ANIL D LINGADE SHRI MUKESH GUPTA IT WAS ADMIT TED THAT THEY WERE INVOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIPS ONLY AND NO EXCISE DUTY WAS PAID AN D THEY WERE INVOLVED IN PROVIDING FAKE TRADING BILLS AND CHALLA NS WHICH ACCOMPANIED THE VEHICLES CARRYING THOSE CONSIGNMENT S. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOOD S REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFICER THO SE BROKERS/SUB- BROKERS ALSO ADMITTED THAT THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSION OF RS.100/ - PER MT. THE ASSESSING OFFICER HAS DISCUSSED THE INFORMATION GAT HERED BY THE DGCEI ZONAL UNIT MUMBAI IN PARA NOS. 2.1 2.2 2. 3 2.4 2.5 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGAI NST THE BROKERS AND SUB-BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHOR ITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACT URERS WHO WERE INVOLVED IN CLEARING THE EXCISABLE GOODS WITHOUT PA YMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIE S THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUPPLIED 288 .500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF SHRI SURENDRA S. PEETY MANAGING DIRECTOR OF THE ASSESSE E RECORDED ON 12-01-2007 BY THE DGCEI WHO ALLEGEDLY ADMITTED THA T THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. IN GOTS/ BILLETS WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUT Y AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT. LTD. AND HENCE THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SE TTLEMENT COMMISSION AND PAID THE EXCISE DUTY TO THE EXTENT O F RS.7 79 313/- FOR CLEARING THE GOODS WITHOUT PAYMENT OF EXCISE DU TY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITH OUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE A UTHORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8 00 0/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN THE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONCERNE D WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSME NT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY S HOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER HAS G IVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS A GAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING OFFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY EXECUTIVE DIRECTOR ALL INDIA INDUCTION FURNACES AS SOCIATION NEW DELHI ON ELECTRIC STEEL MAKING TECHNOLOGY IN THE 2 1 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTR IC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSU MPTION IN INDUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER M T DEPENDING 17 ITA NOS.1730 1828 1826 & 1829/PN/2014 UPON THE INPUT CHARGE USED. THE ASSESSING OFFICER ALSO REFERRED TO THE TECHNICAL REPORT OF THE IIT WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS W HERE MELTING SCRAP IS USED AS AN INPUT VARIES FROM 555 TO 754 U NITS AND WHERE SPONGE IRON IS USED AS AN INPUT THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASSESSING OFFICER THE REFORE CAME TO THE CONCLUSION THAT THE ASSESSMENT FRAMED BY THE COMMIS SIONER OF CENTRAL EXCISE AND CUSTOM AURANGABAD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONSIDERING THE ELE CTRICITY CONSUMPTION DECLARED BY THE ASSESSEE AND THE PRODUC TION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE AURANGABAD ARE VERY MUCH REASONABLE FAIR AND JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNAC COUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE A SSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVIN G THE REASON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PIC TURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUC TION DETERMINED BY THE CCE AURANGABAD AS PER HIS ADJUDICATION ORDE R AND HELD THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND ACCO RDINGLY WORKED THE SUPPRESSED PRODUCTION OF THE A.Y. 2007-08 AS UN DER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007 - 08 20 751 18 892 39 20 37 546 2008 - 09 29 276 21 444 40 75 72 486 18. IN THE A.Y. 2007-08 THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8 44 01 504/- WHICH WAS IN RESPECT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U /S. 143(3) OF THE ACT IN THE ORDER DATED 31-12-2008 AND MADE THE NET ADDITION OF RS.30 76 35 042/-. SO FAR AS A.Y. 2008-09 IS CONCE RNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008-09 AS IT WAS T HE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008-09 THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMA TION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT BUT FINALLY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDE R PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AURANGAB AD AS PER THE VALUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION . IN THE COMPUTATION FOR THE A.Y. 2008-09 THE ASSESSING OFFI CER MADE THE MISTAKES BY MENTIONING RS. (-) 1 91 62 000/- AS PER THE ORDER U/S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE R ETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008-09. 30. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT THE ASSESSING OFF ICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERM INED BY THE CCE AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF E LECTRICITY. THE BASIS OF THE ORDER OF CCE AURANGABAD WAS THE REPORT OF DR. N.K. BATRA PROFESSOR OF IIT KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP O F CASES OF FURNACE OWNERS HELD THAT THE ORDER OF CCE AURANGABAD WAS N OT SUSTAINABLE AND HAD TO BE CANCELLED IN TURN RELYING ON THE RATIO L AID DOWN IN R.A. CASTING (SUPRA). THE RELEVANT FINDING OF THE TRIBUNAL IN T URN INCORPORATING THE ORDER OF THIRD MEMBER OF CESTAT IN PARAS 19 TO 19.4 WHICH READ AS UNDER:- 18 ITA NOS.1730 1828 1826 & 1829/PN/2014 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSIO N OF THE PRODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AURANGABAD ON THE BASIS OF POWER CONSUM PTION. THE COPY OF THE ADJUDICATION ORDER PASSED BY THE COMMIS SIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE TAX AURANGAB AD DATED 28- 08-2009 (IN SHORT REFERRED TO AS THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. TH E CCE AURANGABAD HAS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICIT Y BILLS IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRU TINY OF THE VARIOUS RECORDS THE COST OF PRODUCTION IS MUCH MORE THAN C OST OF SALE VALUE LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORE S WAGES SALARIES COST OF MAINTENANCE ETC. THE LD. COMMISS IONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF T ECHNOLOGY (IIT) KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHN ICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACT URE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELEC TRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY ELECTRICITY EFFICIENCY AND NATURE OF MIX OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEIR ELECTRICITY BILLS THE AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODU CTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 U NITS (MAXIMUM LIMIT) OF ELECTRICITY FOR PER MT OF MS INGOTS PRODU CED IT IS NOTICED THAT THERE IS A HUGE DIFFERENCE IN THE ACTUAL/NORMA L PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. TH E LD. CCE ACCORDINGLY OBSERVED THAT THE ASSESSEE HAS WILLFUL LY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND HAVE INVOLVED THEMSELVES IN THE CLANDESTINE REMOVAL OF FINAL PROD UCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGC EI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO R EFERRED TO NON- MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION R ECORD MORE PARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALS O GAVE THE DATA OF PRODUCTION FROM APRIL 2003 TO MARCH 2008 IN HI S ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPAN Y. IT APPEARS THAT THE ASSESSEE DEMANDED THE CROSS EXAMINATION OF DR. N.K. BATRA PROFESSOR OF IIT KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE AURANGABAD. THE LD. COMMISSIONER OBSERVED THA T THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE HIS CROSS EXAMINA TION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AND REFERRED TO TH E DIFFERENT DECISIONS OF THE TRIBUNAL. THE LD. COMMISSIONER AL SO RELIED ON THE INVESTIGATION MADE BY THE DGCEI AND SHOW CAUSE NOTI CE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLE MENT COMMISSION AND ADMITTED THE EVASION AND PAID THE EX CISE DUTY AND OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE L D. COMMISSIONER CONFIRMED THE DEMAND RAISED IN THE SHO W CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXTENT OF RS.33 07 22 069/-. 19 ITA NOS.1730 1828 1826 & 1829/PN/2014 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL EXCISE ACT 1944. THERE WAS A DIFFERENCE OF THE OP INION BETWEEN THE LD. MEMBERS OF THE CESTAT I.E. LD. VICE-PRESIDENT AND LD. TECHNICAL MEMBER AND THE MATTER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 31 A ND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CA STINGS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRIVENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNAL S DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA) NAGPAL STE EL (SUPRA) AND HANS CASTINGS PVT. LTD. (SUPRA) THE IMPUGNED O RDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDE R PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AURANGAB AD WAS NOT SUSTAINABLE AND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A CASTING THE ELECTRICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUM PTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AN D CLARIFICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL GOV ERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST MANDI GOBINDGARH GIVEN IN JUNE-JULY 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR ALL INDIA INDUCTION FURNACE ASSOCIATION NEW DELHI (MR. VARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER AS PER LETTERS DATED 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL MAKING [THUS NOT FOR INDUCTION FURNAC E] (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22 6.2008 FROM ELECTROTHERM 20 ITA NOS.1730 1828 1826 & 1829/PN/2014 (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUM PTION AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM A GREEING- . WITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATIO N AND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY R ANGE OF POWER CONSUMPTION. 20.2 AS AGAINST THIS IN PARA 20 OF THE ORDER THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICI TY CONSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS IN GOTS REPORTED IN FOLLOWING DIFFERENT REPORTS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST MANDI GOBINDGARH GIVEN IN JUNE-JULY 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIV E DIRECTOR ALL INDIA INDUCTION FURNACE ASSOCIATION NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CCE CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147 20.3 AFTER PERUSAL OF THESE REPORTS TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL ING OT& AND THAT THIS RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FINDING WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS B EEN DISMISSED THERE WAS NO REASON FOR THE COMMISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS AL LEGEDLY AS PER REPORT OF DR. BATRA FOR ARRIVING AT DEEMED PRO DUCTION. MOREOVER THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTU ALLY HIGHER THAN THAT REPORTED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R A CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAI NST THE CASH SO DEPOSITED 21 ITA NOS.1730 1828 1826 & 1829/PN/2014 (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35% HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTI ON AS SUCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVA L OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE DIRECT AFFIRMATIVE AND INCONTROVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREMISES AND NON-ACCOUNTING THEREOF IN THE STATUTO RY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY CONSUMPTION OF ELECTRICITY LABOUR EMPLOYED AND PAYMENT MADE TO THEM PACKING MATERIAL USED RECORDS OF SECURITY OFFICERS .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINA L PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES LOA DING OF GOODS THEREIN SECURITY GATE RECORDS TRANSPORTE RS' DOCUMENTS SUCH AS L.RS STATEMENTS OF LORRY DRIVER S ENTRIES AT DIFFERENT CHECK POSTS FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES STATEMENT OF THE CONSIGNEES RECEIPTS OF SALE PROCE EDS BY THE CONSIGNOR AND ITS DISPOSAL 20.5 HOWEVER SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVIDENCE RELATING TO THE ABOVE POINTS WITH FURTHER FINDING THAT THE REVENUE NOT HAVING CONDUCTED ANY EXPERIME NT WHATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMA NDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTA NT APPEALS 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION B). SALE OF INGOTS AT LOSS WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CASES AND/OR ANY PROCEEDINGS UNDER INCOME TAX D). CLAIM OF HIGHER AUXILIARY LOAD E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION 22 ITA NOS.1730 1828 1826 & 1829/PN/2014 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED THE COMMISSIONER IS HOT RELYING ON THE S AME AND THE FINDINGS OF THE COMMISSIONER AS RECORDED EARLI ER HAVE NOT BEEN CHALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVELLED IN R.A. CASTING (SUP RA). IT WAS FURTHER OBSERVED IN R.A CASTING (SUPRA) THAT IT WO ULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OT HERS AND THAT TOO ON DIFFERENT DATES TO ADOPT-THE TEST RESUL TS AS THE BASIS TO ARRIVE AT A NORM WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW T HAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED A S THE BASIS TO RAISE DEMANDS THE ORDER OF THE LOWER AUTH ORITIES HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET A SIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIME NTS IN DIFFERENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPTED AS A NORM WHICH CAN BE FOLLOWED THER EAFTER AND THE REVENUE IN THE PRESENT CASE NOT HAVING COND UCTED ANY EXPERIMENT WHATSOEVER CANNOT BE PERMITTED TO JU STIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF TH E APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DAT ES TO ADOPT THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGNED DEMAND BASED MEREL Y ON ASSUMPTIONS AND PRESUMPTIONS CANNOT THEREFORE BE SUSTAINED NOR COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF A LLEGED CLANDESTINE REMOVAL THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE . IN THE ABSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REV ENUE TO DISCHARGE ITS ONUS THE IMPUGNED ORDER CANNOT BE SU STAINED.' 20.8 IN THE PRESENT APPEALS NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLA NDESTINE CLEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS AD MITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK A DOPTED ALLEGEDLY-'FROM REPORT OF DR. BATRA WHICH WAS ALRE ADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNAL IN RA CASTING (SUP RA). THUS IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IM PUGNED ORDER IS ITSELF INADMISSIBLE AND NO OTHER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEA RANCE TO SUSTAIN THE DEMAND IT IS CONTENDED BY REVENUETHAT FURNACES INSTALLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA) HOWE VER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO RELY ON AN ORDER PASSED BY TR IBUNAL IN GUIABCHAND SILK MILLS PVT. LTD. V/S. CCE HYDERABA D-II 2005 (184) ELT 263 HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPA RTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CA SE TO ITS 23 ITA NOS.1730 1828 1826 & 1829/PN/2014 MATHEMATICAL PRECISION BY RELYING ON JUDGMENT OF T HE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (SC) RELIED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNICAL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA) 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJUDICATION PROCEEDINGS THE CHARGE OF CLANDESTINE REMOVAL IS DEFINITELY TO BE ESTABLISHED ON THE BASIS OF PRE PONDERANCE OF PROBABILITIES. HOWEVER IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS REGARDING THE CLAIM O F THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDE RS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOT S HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS I AM OF THE VIEW THAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN T HE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REAS ON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQU ENT PERIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BL E VICE PRESIDENT THAT IN. ANY EVENT THIS ADDITIONAL MATER IAL IS ALSO ONLY OF POWER CONSUMPTION. 22. IN WRITTEN SUBMISSIONS OF REVENUE IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HOWEVER THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTRIC ARC FURNAC E IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT IN THE IMPUGN ED ORDERS THERE IS NO SUCH REASON TO DISCARD THE REPORT AND I N ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELE CTRIC CONSUMPTION IN INDUCTION FURNACE CAN BE UPTO 1800 U NITS PER MT IS ALSO ON RECORD. SINCE VARYING REPORTS ARE ON RECORD THE RATIO OF R.A. CASTING (SURA) IS SQUARELY APPLICABLE . 23. REVENUE ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER TRADE TAX U.P - 2007-TIOL-14-SC-CT THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOM E TAX 2014-TIOL-203-HC-AHM-IT AND AN UNREPORTED ORDER DT D. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMAN A STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH . IN THE CASE OF MELTON INDIA (SUPRA) FOR THE NORM OF POWE R CONSUMPTION ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000-01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDU STRIES FACTS OF THE CASE ARE THAT FOR THE ASSESSMENT YEAR 2005-0 6 THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS NOT ONLY FOR T HE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PRODUCTIVIT Y AS COMPARED TO THAT IN A.Y. 2004-05 BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN-PROGR ESS IN THE 24 ITA NOS.1730 1828 1826 & 1829/PN/2014 BOOKS OF ACCOUNTS. I AM THEREFORE OF THE OPINION TH AT THESE CASES APART FROM BEING UNDER STATUTES OTHER THAN C ENTRAL EXCISE ACT DO NOT ANY MANNER HELP IN SUSTAINING TH E FINDINGS RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER IN SARVANA ALLOYS STEELS PVT LTD 2011 - (274) ELT 248 (TRI-BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL W AS ALLOWED AFTER CONSIDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR) GULABCHAND SILK MILLS (SUPRA) A S ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS 2012 (275) E. L.T. 232 (TRI. - DEL.) THE TRIBUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND ALLOWED THE APPEAL AS THE DEMAND WAS BASED MAINLY ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON 'BLE VICE PRESIDENT AND IN MY OPINION THE JUDGMENT IN R.A. C ASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS O F THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FI LED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY O F THE MAJORITY ORDER IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B V I. IT IS PERTINENT TO NOTE HERE THAT THE LD. COMMISSIONER HAS ALSO CONSID ERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKER S AND IN CONSEQUENCE THE SHOW CAUSE NOTICES (SCN) WERE ISSUE D TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND O THER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND P AID THE EXCISE DUTY. HENCE THE INVESTIGATION OF THE DGCEI MADE A GAINST THE BROKERS AND SUB-BROKERS REFERRED BY THE ASSESSING O FFICER WAS ALSO BEFORE THE LD. COMMISSIONER AURANGABAD. ON PERUSA L OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSM ENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER EVEN IF I N THE A.Y. 2008-09 THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMA TION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER IT IS SEEN TH AT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007-08. AS VARY BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE) AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT IN OUR OPINION THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) APPROVING THE ESTIM ATED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL L EGS TO STAND. 31. THE TRIBUNAL THEREAFTER DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. TECHNICAL ME MBER OF CESTAT WAS A LEGAL ORDER. THIS PLEA OF THE LD. SPECIAL AR WAS R EJECTED BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 25 ITA NOS.1730 1828 1826 & 1829/PN/2014 32. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CA SE OF SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE AURANGABAD IN ITS ORDER HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING T HE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VID E PARA 19. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN M/S. SRJ P EETY STEELS PVT. LTD. (SUPRA) WERE AS UNDER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF TH E SETTLEMENT COMMISSION MUMBAI PASSED IN THE CASE OF THE ASSESS EE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BASIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BROKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NOTICE WAS I SSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE AURANGABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRO DUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS F OUND TO BE INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPR OACHED THE SETTLEMENT COMMISSION ADMITTED THE EVASION OFF ENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE HAS HOWEVER ARG UED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASE D ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FIN DINGS IN THIS CASE ARE BASED ONLY ON MATERIAL AND EVIDENCE THAT H AVE BEEN BROUGHT ON RECORD IN THE INSTANT CASE. 33. THE TRIBUNAL THEREAFTER NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION R ECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATI ON ORDER PASSED BY THE CCE AURANGABAD WHICH IN TURN HAD BEEN CANCELLED BY THE THIRD MEMBER OF CESTAT. THE TRIBUNAL THUS HELD THAT THE FOUNDA TION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PA RA 21 THAT THE INVESTIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION WERE CONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER WH ICH IN TURN WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEE N SET-ASIDE HENCE IT WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR WHICH ARE IN THE CONTEXT OF ADMISSION OF THE DI RECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 34. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION WAS ALSO BEFORE THE CESTAT AND THE TRIBUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND U PHELD THE ARGUMENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF CESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUNAL ORDER READS AS UNDER:- 26 ITA NOS.1730 1828 1826 & 1829/PN/2014 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MO RE PARTICULARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PER SON-SEC. 17 SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BU T THE FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPEN DENT INVESTIGATION IS MADE BY THE REVENUE BUT THE ENTIRE ASSESSMENTS A RE FRAMED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE AURANGABAD. MOREOVE R AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE AUR ANGABAD HAS BEEN CANCELLED BY THE CESTAT MUMBAI BY MAJORITY OP INION AND HENCE FOUNDATION OF ASSESSMENTS FOR A. YRS. 2007-0 8 & 2008-09 DO NOT EXIST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GETS MERG ED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER INVESTIGATION BY DGCEI AND PROCEEDING BEF ORE THE SETTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY T HE CCE AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDE R WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SE T ASIDE. HENCE WE DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISI ONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF A DMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGA TION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCU SSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICI TY CONSUMPTION THE SAID ISSUE WAS ALSO BEFORE THE CESTAT WHILE DEC IDING THE FATE OF ORDER OF THE LD. CCE AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT MUMBAI BENCH MUMBAI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETH ER THAT ORDER IS RIGHT OR WRONG. 35. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT 1962 AND CENTRAL EXCISE ACT 1954 AND THE TRIBUNAL (INCOME- TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER WAS RIGHT OR WRONG. 36. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.0 3.2006 AGAINST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UN DER SECTION 153A R.W.S. 143(3) OF THE ACT. THE ASSESSEE THEREIN I.E. M/S. SRJ PEETY STEELS PVT. LTD. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORD ER OF THE TRIBUNAL IS REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/ S. SRJ PEETY STEELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUN AL IN EARLIER PROCEEDINGS RELATING TO ASSESSMENT YEARS 2000-01 TO 2006-07 UND ER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SEIZURE IT WAS ALSO HELD THAT THE CONSUMPTION OF ELECTRICITY FOR T HE MANUFACTURE OF MILD STEEL INGOTS / BILLETS DEPENDING ON VARIOUS FACTOR S AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT IT HAD SU PPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDE R OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOM BAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATED 10.02.2014 IN THE CASE OF ASSESSEE AND OTHER COMPANIES BY THE HON BLE BOMBAY HIGH COURT AND THERE WERE OBSERVATIONS ON THE ESTIMATION OF PR ODUCTION BASED ON THE 27 ITA NOS.1730 1828 1826 & 1829/PN/2014 CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WHILE DEC IDING THE APPEAL OF M/S. SRJ PEETY STEELS PVT. LTD. IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT I N THE CASE OF THE ASSESSE THE SEARCH AND SEIZURE OPERATION WAS CARRI ED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE AS SESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BAS IS OF CONSUMPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A F ORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UN IFORMLY IN ORDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1 600 UNITS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY T HE ASSESSEE. THE ASSESSING OFFICER ACCORDINGLY WORKED OUT THE ALLE GED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS W HILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OF FICER HAD SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONC EALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE THE SEARCH WAS INITIATED O N 17TH MARCH 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEE TY GROUP JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WE LL. PRIOR TO THE SEARCH THE RETURNS OF INCOME FOR THE ASST. YRS. 20 00-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT A CCOMPANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINA TING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SA ME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YE AR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICITY CONSUMPTION WHICH HAS BEEN PL ACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH Y EAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000 - 01 24331059 18 524.239 1313 2001 - 02 25528565 17 010.558 1501 2002 - 03 31404354 19 709.654 1593 2003 - 04 31623843 20 396.313 1550 2004 - 05 43123824 23 240.189 1856 28 ITA NOS.1730 1828 1826 & 1829/PN/2014 2005 - 06 62650888 29 582.434 2118 2006 - 07 70440580 36 017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL D ETAILS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DE PARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME IT CO ULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN TH E ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY O F THESE ASSESSMENT YEARS THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005 -06 ARE NOT CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREADY ON RECORD. THE RETURNS HAVE ALREADY BE EN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING O N THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PRO VISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT ACCORDING TO WHICH IN CASE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVI DED IN SUB-S. (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2 ) HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES TH E POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CON SIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL T HE YEARS UNDER CONSIDERATION THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCO ME FOR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE TH E SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODU CTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METH OD OF COMPUTING THE SO-CALLED SUPPRESSED PRODUCTION IS NO T JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME. 29 ITA NOS.1730 1828 1826 & 1829/PN/2014 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIK E QUALITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT VOLTAGE OF THE S UPPLY POWER INTERRUPTIONS MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE TH ESE FACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/T MT BARS AND ARRIVED AT A CONCLUSION THAT THERE IS AN EXCESS CON SUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNTED PRODUC TION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASS T. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF T HE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. Y R. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE ASSESSEE COMPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THE REFORE REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND AP PLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT THE ASSES SEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUC TION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTM ENT BEFORE THE HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE INCOME-TAX ACT BEING TAX A PPEAL NO. 30 OF 2011. THE REVENUES APPEAL WAS DISMISSED VIDE COMM ON JUDGMENT DATED 10-02-2014 IN THE CASE OF THE ASSESSEE AND O THER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE CATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT T HE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSI NESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH TH E RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 H AD ALREADY BEEN FILED U/S. 139(1) OF THE ACT ACCOMPANIES BY A LL REQUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS C OMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINATING MATER IAL WAS FOUND RELATING TO THE SAID YEARS WHICH COULD HAVE BEEN A DDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE C ONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTE D BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UN IT PRODUCTION OF EACH YEAR WHICH WAS ACCEPTED YEAR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. THE FINDIN G OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX AP PELLATE 30 ITA NOS.1730 1828 1826 & 1829/PN/2014 TRIBUNAL REFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY THEREFORE WAS HELD TO BE ONE AND SIN CE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S . 153A OF THE ACT. THE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT YEARS. THE ADD ITIONS THEREFORE WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURIN G THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS IN NORMAL COURSE ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RE CORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES THE TRI BUNAL AS ALSO THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAK EN INTO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WI TH REGARD TO THE ALLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECT RICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ON LY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION O F ELECTRICITY THEREFORE WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHI NG WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINS T THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT IN A.YS. 2007-08 AND 2008-09 NO I NVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH ARE IMMEDIATE NEXT A SSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERATION AGAINS T THE ASSESSEE COMPANY AND HENCE IN OUR OPINION ABOVE FINDINGS AN D OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT A RE ALSO IMPORTANT TO DECIDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY. 37. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09 NO INVESTIGATION WAS DON E BY THE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATEL Y PRECEDING YEAR WHEREIN DURING THE COURSE OF SEARCH CERTAIN LOOSE SHEETS WERE FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WH ILE DECIDING THE APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD IN TURN RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL DELETED THE ADDIT ION MADE ON ACCOUNT 1OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRE TY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUP PRESSION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERI AL RELYING ON INFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBUNAL AND IT IS HELD A S UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE BEFORE THE CUSTOMS EXCISE & SERV ICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELH I (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS EXCI SE & 31 ITA NOS.1730 1828 1826 & 1829/PN/2014 SERVICE TAX APPELLATE TRIBUNAL IS PLACED ON RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERING THE FACTUA L ASPECTS OF THE CASE THE QUANTUM OF PRODUCTION THE CONSUMP TION OF ELECTRICITY OBSERVED THAT THERE IS NOTHING ON RECOR D TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WA S MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGHER AM OUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT S O FAR AS THE PRODUCTION QUANTUM IS CONCERNED THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AUTHORITIES INT ERVENED LAWFULLY RECORDING THE OUTPUT IN THE PRESENCE OF WI TNESS. THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL HE LD THAT THEREFORE A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION T O THE DETRIMENT OF JUSTICE. THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTIO N STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY A ND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN T O LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO P ROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE REMOVAL OF GOODS IN FOOL PROOF MANNER K NOWN TO LAW FOR WHICH IT CAN BE PAINFULLY SAID THAT THE AD JUDICATION HAS NO LEGS TO STAND. BOTH THE APPEALS ARE THEREFOR E ALLOWED WITH CONSEQUENTIAL RELIEF IF ANY.' 11. THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R. A. CASTINGS WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY TH E HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A- 108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CAS E WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTME NT AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAI D INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL (SUPRA) IN THE APPEA L FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HEL D THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT H AS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITH ER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOOD S. IN VIEW OF THE AFORESAID FINDINGS OF THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT IN ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSE E ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AN D ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF WE HOLD THAT NO ADDITION ON ACCOUNT OF PRO FIT ON THE 32 ITA NOS.1730 1828 1826 & 1829/PN/2014 SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNE XPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE AS SESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF C IT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION OUTSIDE THE BOOKS OF ACCOUNT. UPHOLDING THE ORDER OF THE CI T (APPEALS) WE DISMISS THE GROUND NOS.1 AND 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGING DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXC ISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) BEFORE THE TRIBU NAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OU R ABOVE DISCUSSION WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY TH E ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASS ESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MAN UFACTURING OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE ACCORDINGL Y DELETE THE ADDITIONS MADE TOWARDS THE ALLEGED SU1PRESSION OF P RODUCTION AND SALES AT ENTIRETY AND ALLOW THE GROUND NOS. 3 4 5 6 & 8 IN THE A.Y. 2007-08 AND GROUND NOS. 2 3 4 & 6 IN THE A.Y. 2008- 09. 38. THE TRIBUNAL THEREAFTER HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GR OSS PROFIT TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBU NAL ALSO GAVE A FINDING THAT SINCE THE ADDITIONS MADE IN THE HANDS OF THE A SSESSEE HAVE BEEN DELETED THERE WAS NO MERIT IN ANY ADDITION ON ACCO UNT OF UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS TH E ALLEGED SUPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETER MINED ON THE BASIS OF THE ADJUDICATION ORDER PASSED BY THE CCE AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPIN ION OF DR. BATRA IIT KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSE SSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NO T JUSTIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. WE THEREFORE HOLD THAT THE REJ ECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE A CCORDINGLY ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND N O. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES A ND SAID ISSUE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GR OUND NO. 7 IN THE A.Y. 2008-09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIONS MADE BY THE ASSESSING O FFICER ARE 33 ITA NOS.1730 1828 1826 & 1829/PN/2014 DELETED THE GROUND NO. 9 IN THE A.Y. 2007-08 AND G ROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10 THE ASSESSEE HAS RAISED THE O BJECTION FOR MAKING THE ADDITION OF RS.37 69 582/-. THE SAID AD DITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN E LEMENT OF THE UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSE D TURNOVER WHICH IS ESTIMATED AS AN AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE FOR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39 20 36 546/- AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS THEREFORE WORKED OUT RS.37 69 582/-. IN FACT THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS CONFIR MED THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSE SSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES HENCE THIS ADDITION DOES NOT SURVIVE AND SAID ADDI TION IS ALSO DELETED. WE ACCORDINGLY ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 39. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UNDER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT( A). WE HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE O N THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. AS THE ASSESS EE HAS SUCCEEDED ON THE BASIC ADDITIONS THE GROUNDS TAKEN BY THE RE VENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE . ACCORDINGLY ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISM ISSED. 40. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY ST EELS PVT. LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY HIM THAT IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. THERE WAS NO INVESTIGATION BY THE DGCEI AND FURTHER THERE WAS NO ORDER OF SETTLEMENT COMMISSION. HOWEVER THE CCE AURANGABAD HAD PASSED AN ORDER AGAINST THE ASSESSEE BUT THERE WAS NO CASE OF CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY AGAINST THE ASSESSEE. THE LD. SPECIAL AR ADMITTED THAT THERE WAS NO EVIDE NCE WITH THE EXCISE DEPARTMENT OR THE INCOME-TAX DEPARTMENT REGARDING C LANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY. HOWEV ER BECAUSE OF HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND PRODUCTI ON OF INGOTS / BILLETS ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. HO WEVER IN OMSAIRAM STEEL & ALLOYS PVT. LTD. IT WAS FAIRLY ADMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THERE WAS INVE STIGATION BY THE DGCEI AND IN ASSESSMENT YEARS 2006-07 AND 2007-08 THE AS SESSEE HAD FILED THE PETITION BEFORE THE SETTLEMENT COMMISSION WHICH WA S ACCEPTED. HOWEVER IN ASSESSMENT YEARS 2005-06 AND 2008-09 THERE WAS NO SUCH PETITION FILED BEFORE THE SETTLEMENT COMMISSION. 41. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY BASED ON THE REPORT OF DR. BATRA. THE ADDITION IN THE HANDS OF SISTER CONCERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ONE DR. BATRA 34 ITA NOS.1730 1828 1826 & 1829/PN/2014 WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD M EMBER OF CESTAT HAD DELETED THE AFORESAID ADDITION MADE UNDER THE EXCIS E LAW. SIMILARLY IN THE CASE OF ASSESSEE BEFORE US THERE IS ORDER OF CCE AURANGABAD AND OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADDITION O N THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY AS DETERMINED BY CCE AU RANGABAD. FOLLOWING THE SAME LINE OF REASONING AS IN THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WE FIND NO MERIT IN THE ADDITION MADE IN T HE HANDS OF THE ASSESSEE ON SURMISES. BOTH THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE AND LD. SPECIAL AR HAS RAISED IDENTICAL ARGUMENTS A S IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) THE RAT IO OF THE SAID DECISION IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEV ER ADDITIONAL PRODUCTION RELATING TO THE DECLARATION MADE BEFORE THE SETTLEM ENT COMMISSION IS TO BE ADDED IN THE HANDS OF THE ASSESSEE AS ADMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 42. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR BEFORE US DURING THE COURSE OF HEARING OF THE BUNCH OF APPEALS WAS THAT IT HAD MOVED MISCELLANEOUS APPLICATION AGAINST THE ORDER OF TRIB UNAL DATED 16.01.2015 AND THE HEARING OF THE PRESENT APPEALS BE KEPT IN A BEYANCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS THE MI SCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED FOR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN ORDER OF EVEN DATE DISMISSED THE MISCELLANEOUS APPLICATION F ILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSI DERING THE SUBMISSIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT IN THE SAID MISCELLANEO US APPLICATION FILED BY THE REVENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE U NDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF THE NEXT OBJECTION OF TH E LD. SPECIAL AR FOR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) ALSO STANDS DISMISSED. 43. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION RAISED BEFORE US IS THAT WHE RE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WIT HOUT PAYMENT OF EXCISE DUTY THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESSEE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. TH E LD. SPECIAL AR FOR THE SAID PROPOSITION RELIED ON THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07. THE CASE OF T HE REVENUE BEFORE US WAS THAT WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMEN T COMMISSION FOR PART OF THE PERIOD THEN IN VIEW OF THE ORDER OF THE SET TLEMENT COMMISSION AND ALSO SINCE THE ASSESSEE HAD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER THE SALES FOR THE ENT IRE YEAR SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCOUNT OF SE ARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTAIN BROKERS A ND SUB-BROKERS. CONSEQUENT THERETO SHRI SRJ PEETY MANAGING DIRECT OR OF M/S. SRJ PEETY STEELS PVT. LTD. ADMITTED TO THE SAID CLANDESTINE R EMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMEN T COMMISSION FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SET TLEMENT COMMISSION ACCEPTED THE PETITION OF THE ASSESSEE BUT ALSO LEV IED PENALTY. THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT THE ADDI TIONAL INCOME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. ALL T HIS INFORMATION WAS AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE C OURSE OF ASSESSMENT 35 ITA NOS.1730 1828 1826 & 1829/PN/2014 PROCEEDINGS BUT NO OTHER INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT I N THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER ON THE OTHER HAND WAS OF THE VIEW THAT THE ASSESSEE HAD NOT CORRECTLY DISCLOSED THE PRODUCTION OF INGOTS / BILLETS. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSU MPTION FOR WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE REPORT OF DR. BATRA AND ORDER OF CCE AURANGABAD. THE ASSESSING OFFICER APPLYING TH E FORMULA WORKED OUT THE SUPPRESSED PRODUCTION AND SALES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSU E THAT NO ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION / SALES ON SUCH AC COUNT COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON T HE OTHER HAND STRESSED THAT WHERE THE ASSESSING OFFICER HAD THE INFORMATIO N OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFI CER THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED IN THE HA NDS OF THE ASSESSEE. HE STRESSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTIN E REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF I NCOME WAS FOUND FOR THE PART OF THE YEAR THEN THE ASSESSING OFFICER CA N ESTIMATE THE ADDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BECAUSE THE A SSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY OF SUPPRESSION THE ADD ITION IN THE HANDS OF THE ASSESSEE COULD BE SUSTAINED ON THE BASIS OF EXT RAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ADMISSION OF THE ASSESSEE OF C LANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRES SION OF INCOME. 44. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE AUTHORITIES DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS HO WEVER NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSES SEE. IN ORDER TO BUY PEACE OF MIND THE ASSESSEE DECLARED THE SAID AMOUN T VIDE PETITION BEFORE THE SETTLEMENT COMMISSION WHICH HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION WAS TO BUY PEACE OF MIND BUT WE FIND N O MERIT IN THE SAME SINCE THE OBJECT OF MOVING PETITION BEFORE THE SETT LEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS THE AUTHORITIES HAVE THE POWER TO RE-VIS IT THE OFFER MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAILABL E AGAINST THE PERSON MAKING THE OFFER THEN THE FIGURES OF SETTLEMENT CA N BE INCREASED. HOWEVER IN THE CASE OF THE ASSESSEE OFFER OF THE ASSESSEE HAS BEEN ACCEPTED FOR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO BE RE STRICTED TO THE NUMBER OF DAYS FOR WHICH IT WAS OFFERED. THE BASIS OF ANY SE TTLEMENT IS THE OFFER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST T HE PERSON OFFERING THE SETTLEMENT AND WHERE THE EVIDENCE HAS BEEN FOUND FO R PART OF THE YEAR SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATION. IN CASES WHERE THE PETITION IS ACCEPTED IN THE HANDS O F THE ASSESSEE BY THE SETTLEMENT COMMISSION THEN NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDESTINE R EMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESSED SALES FOR THE BALANCE PERIOD IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE AS SESSEE FOR THE BALANCE PERIOD. 45. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSIO N WAS BEFORE THE ASSESSING OFFICER EVEN ADDITIONAL INCOME ON SUCH O FFER OF SETTLEMENT WAS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICE R HOWEVER NO FURTHER INQUIRY INVESTIGATION OR ACTION WAS TAKEN BY ASSES SING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME THE ISSUE RAIS ED IN THE PRESENT APPEAL IS 36 ITA NOS.1730 1828 1826 & 1829/PN/2014 WHETHER ANY EXTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIE D OR NOT. THE ANSWER IN OUR OPINION HAS TO BE IN NEGATIVE. 46. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 627 WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH C OURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE T RIBUNAL IN ASSESSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON THE BASIS OF SEARCH AND SEIZURE ACTION CARR IED OUT BY THE INCOME- TAX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE C OURSE OF SEARCH WHICH WERE ADMITTED BY THE ASSESSEE TO REFLECT SUPP RESSION OF SALES. ON THE BASIS OF AFORESAID DOCUMENTS THE INCOME FOR THE YE AR WAS EXTRAPOLATED WHICH ORDER OF THE TRIBUNAL WAS APPROVED BY THE HON BLE BOMBAY HIGH COURT. HOWEVER FOR THE YEAR UNDER CONSIDERATION THERE WAS NO SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME-TAX DEP ARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS M ADE BY THE ASSESSING OFFICER AS STATED EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSESSEE MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE IN A PRECEDING YEAR WE FIND NO MERIT IN T HE SUBMISSIONS OF THE ASSESSEE THAT FOLLOWING THE SAME RATIO EXTRAPOLATI ON OF SALES FOR THE ASSESSMENT YEAR 2007-08 SHOULD BE MADE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE SETTLEMENT PETITION BY THE ASSESSEE BEF ORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSESSMENT ORDER AN D THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKING THE A DDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. UNDOUBTEDLY BOTH THE ASPECTS I.E. THE PETITION MAD E BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUC TED BY THE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMPTION OF EL ECTRICITY WERE BEFORE THE ASSESSING OFFICER. HOWEVER THE ASSESSING OFFICER ADOPTED THE SECOND ISSUE IN THE HANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION WHICH WE IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OUT THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS O NE OF THE METHODOLOGIES FOR WORKING OUT THE ADDITIONAL INCOME OF THE ASSESS EE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGAT ION OR INQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER AND MERELY ON THE BASI S OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION WHICH IN TURN HAS BEEN A CCEPTED NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE I N THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD . 47. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE HYDERABAD (SUPRA). IN THE FACTS OF THE SAID CASE CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPA RTMENT PURSUANT TO SEARCH AND SEIZURE ACTION WHICH INDICATED CLEARANC E IN SALES ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. THE SAID INFORMATION WAS FORWARDED TO THE CENTRAL EXCIS E DEPARTMENT PURSUANT TO WHICH ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND F ROM THE POSSESSION OF THE ASSESSEE BY THE EXCISE AUTHORITIES. 37 ITA NOS.1730 1828 1826 & 1829/PN/2014 48. FOLLOWING THE SAME ANALOGY OF REASONING WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD THE SAME COUL D NOT BE RELIED UPON AS EVIDENCE WHILE EXTRAPOLATING THE SALES AND THE ADD ITIONAL INCOME THEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME-TAX PROCEEDINGS. THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SU PPRESSED PRODUCTION AND EVEN AFTER THE ORDER OF SETTLEMENT COMMISSION THE ASSESSING OFFICER HAD NOT INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTA BLISHING SUPPRESSED PRODUCTION AND / OR ITS SALE OUTSIDE THE BOOKS OF A CCOUNT. 49. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THI S WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFORE THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WHICH WAS RELATABLE TO THE CLANDESTINE RE MOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSESSEE COMPANY WAS RECORDED EITH ER BY ASSESSING OFFICER OR CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDIN G. ACCORDINGLY WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPE CIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRICTED TO THE ADD ITIONAL INCOME OFFERED BY THE ASSESSEE. 50. IN OUR CONSIDERED OPINION THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER AND CIT( A) AND THE TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A). ADMITTEDLY THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRI BUNAL JUSTIFYING THE ADDITION. HOWEVER THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FACTS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS BASIS TO MAKE THE ADDITION WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AN D DISMISSED THE SAME. 51. NOW WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITIO N VIS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 52. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CON FESSIONAL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVI DENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY TH E HONBLE SUPREME COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STA TE OF KERALA AND ANOTHER (SUPRA) BUT THE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO THE AMOUNTS SURRENDERED VIDE THE SAID SE TTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE FOR E XTRAPOLATING THE SAME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REGARD WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGALORE BENCH OF TRIBUNAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA) WHEREIN IT HAS BEEN HE LD THAT MERE EXISTENCE OF EVIDENCE OF CONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESSMENT YEARS . 38 ITA NOS.1730 1828 1826 & 1829/PN/2014 53. FURTHER BEFORE THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA) THE ISSUE WAS IN RELATION TO THE EVIDENCE FOUND OF UNACCOUNTED SALES FOR PART OF THE PERIOD DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOU NTED SALES DURING THE ENTIRE YEAR WHICH WAS DELETED BY THE CIT(A) AND TH E TRIBUNAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESS ING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISC REPANCY. 54. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 55. FURTHER THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION AVAILABLE WITH THE CENTRAL EXCISE DEPARTMENT WHERE IN UNACCOUNTED SALES WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR THE REMAINING PERIOD. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESSEE AND WAS RESTRICTED TO THE INCOME DECLARED BY THE AS SESSEE ON THE BASIS OF PAPERS SEIZED FOR WHICH THE ASSESSEE HAD FILED A P ETITION BEFORE THE SETTLEMENT COMMISSION AND INCOME ON THAT ACCOUNT WA S DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD THAT NO FURTHER ADDITI ON COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE PERIOD. THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESUMPTION WAS NOT SUSTAINABLE I N LAW. NO DETAILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUC H FIGURE OR HAD THERE BEEN ANY CONCEALED SALES FOR 9 MONTHS IT COULD HAVE BEE N DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. T HEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GU ESS WORK PRESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL F OUND DURING THE COURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCI SE AUTHORITIES. SUCH ADDITION BASED ON HYPOTHETICAL CALCULATION OF TURNO VER AND ESTIMATION OF GP ON PRESUMPTION AND SURMISES WERE NOT SUSTAINABLE. THE TRIBUNAL DISTINGUISHED THE RATIO LAID DOWN IN CST VS. H.M. E SUFALI H.M. ABDULALI (SUPRA). THE LD. SPECIAL AR RELIED ON THE SAID DEC ISION AND IN VIEW OF THE DECISION OF COORDINATE BENCH ON SIMILAR ISSUE AS BE FORE US WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 56. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY STEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED THE ISSUE OF EXTRA POLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAF TER FILING A PETITION BEFORE THE SETTLEMENT COMMISSION. 57. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMEN T DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER IN THE INTERES T OF JUSTICE THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATE D BY THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE IN THE INTEREST OF J USTICE WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SU PPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE . ADMITTEDLY DURING THE COURSE OF SEARCH AND SEIZURE OPERATION O N CERTAIN BROKERS EVIDENCES OF CLANDESTINE REMOVAL OF MATERI AL WITHOUT 39 ITA NOS.1730 1828 1826 & 1829/PN/2014 PAYMENT OF EXCISE DUTY WAS FOUND AGAINST THE ASSES SEE. HOWEVER NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGA INST THE ASSESSEE BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND IT HAD DECLARED THE SAID AMOUNT BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOTO. IT MAY BE NOTED THAT THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE ASSESSE E IN CASE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MA KING THE OFFER. IT MAY ALSO BE NOTED THAT THE SETTLEMENT ACCEPTED IN T HE HANDS OF THE ASSESSEE IS FOR THE FINANCIAL YEAR AND IS NOT RESTR ICTED TO THE NUMBER OF DAYS FOR WHICH IT HAS OFFERED. IN OTHER WORDS ONCE A PERSON MAKES A SETTLEMENT PETITION FOR A PARTICULAR YEAR ON ACCO UNT OF THE EVIDENCE FOUND FOR PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE NO FURTHER A DDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF G OODS OR SUPPRESSED SALES IN THE ABSENCE OF EVIDENCE FOR TH E BALANCE PERIOD. THE ABOVE SAID RATIOS HAVE BEEN LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA) HONBLE DELHI HIGH COU RT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGUING THE ISSUE NO. 2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBL E BOMBAY HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XIV-B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSED INCOME OF THE BLOCK PERIOD A ND NOT THE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULAR ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAST TO THE EXERCISE UNDER TAKEN BY THE ASSESSING OFFICER UNDER CHAPTER XIV-B WHERE THE AS SESSING OFFICER HAD TO ASSESS ONLY THE UNDISCLOSED INCOME. HOWEVER THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER CHAPTER X IV-B THE ASSESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED I NCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAIS ED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 42. EVEN ON MERITS THE REVENUE HAS NO CASE AGAINST THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR ON T HE RATIO LAID DOWN IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 IS MISPLACED AS THE ADDITION IN THE HANDS OF THE ASSES SEE IN THAT YEAR WAS MADE ON ACCOUNT OF SEARCH AND SEIZURE OPERATION S CARRIED OUT BY THE INCOME-TAX DEPARTMENT WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS. HOWEVER NO INDEPENDENT INVEST IGATION / INQUIRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE C OMPLETING ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTH ER ASPECT OF THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT CO MMISSION HAS BEEN MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2007-08 ONL Y AND NO SUCH PETITION FOR CLANDESTINE REMOVAL OF MATERIAL WITHOU T PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008- 09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOU NT OF SUCH CLANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING O FFICER FOR ASSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILABLE WITH THE ASSESSING OFFICER WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEED INGS BUT THE 40 ITA NOS.1730 1828 1826 & 1829/PN/2014 ADDITION HAVING BEEN MADE ON ONLY ON THE ISSUE OF E RRATIC CONSUMPTION OF ELECTRICITY WHICH IS THE BASIS OF O RDER PASSED BY CCE AURANGABAD WHO WAS ALSO IN KNOWLEDGE OF THE CLANDE STINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED OUT BY TH E DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMISSION EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCEEDINGS BUT S INCE THE SETTLEMENT PETITION FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMENT COMMISSION NO FURTHER ADDITION COUL D BE MADE IN THE HANDS OF THE ASSESSEE ON THIS GROUND IN THE ABSENC E OF ANY INQUIRY OR INVESTIGATION BY THE ASSESSING OFFICER. ACCORDINGL Y THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN ASSESSEES OWN CASE REPORTED IN 137 TTJ 627 [PUNE] IS MIS-PLACED AND THERE IS NO ME RIT IN THE ARGUMENTS OF THE LD. SPECIAL AR IN THIS REGARD. 58. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDERANCE IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL V S. CIT (SUPRA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS . D. BHOORMULL (SUPRA) WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING THE COURSE OF HEARING THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT MA Y BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREADY BEEN CONSIDERED. 59. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLA NDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAY S WHICH IN TURN HAS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETI TION BEFORE THE SETTLEMENT COMMISSION WHICH IN TURN HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. MERELY BECAUSE THE SETTLEME NT COMMISSION ACCEPTED THE CLAIM OF THE ASSESSEE OF ADDITIONAL EX CISE DUTY PAYABLE ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMEN T OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE SAID FIGURES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY THE ASSE SSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FAIRLY ADMITTED THAT IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADD ED WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECT IVE YEARS THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECT IVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY WE DIRECT THE ASSESSING OFFICE R TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE AD DITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLANDESTINE REMOVAL OF MAT ERIAL WITHOUT PAYMENT OF EXCISE DUTY BY THE ASSESSEE EITHER BEFORE THE S ETTLEMENT COMMISSION OR BEFORE THE EXCISE AUTHORITIES IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS THERE IS NO ADM ISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTIGAT ION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OFFIC ER HAS FAILED TO COLLECT ADDITIONAL EVIDENCE NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE BY WAY OF EXTRAPOLATION OF SALES FOR 300 DAYS ON AC COUNT OF ANY EVIDENCE FOUND IN ANY PRECEDING OR SUCCEEDING YEARS. FURTHE R NO ADDITION CAN BE 41 ITA NOS.1730 1828 1826 & 1829/PN/2014 MADE IN THE HANDS OF THE ASSESSEE WHERE NO PETITIO N HAS BEEN FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AUTHORITIES. IN THE CASE OF BHAG YALAXMI STEEL ALLOYS PVT. LTD. THERE IS NO INVESTIGATION BY DGCEI AND HENCE NO ADDITION ON ACCOUNT OF EXTRAPOLATION CAN BE MADE IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE. 60. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC C ONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUN D FOR THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAY MENT OF EXCISE DUTY NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E . ALLEGED INVESTMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMOVED IS NOT SUSTAINABLE. ACCORDINGLY WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALL EGED INVESTMENT IN PURCHASES UNDER SECTION 69C OF THE ACT. 61. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SU PPRESSED PRODUCTION/SALES THE SAID ISSUE IS DISMISSED AS AC ADEMIC. 62. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENUE I.E. AGAINS T APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 13. THE LD. SPECIAL AR FOR THE REVENUE BEFORE US POI NTED OUT THAT ANOTHER ASPECT OF THE ADDITION IS EXTRAPOLATION OF SAL ES TO BE MADE IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR ON THE BASIS INF ORMATION RECEIVED FOR PART OF THE YEAR. IT MAY BE PUT ON RE CORD THAT IN ASSESSMENT YEAR 2009-10 IN THE HANDS OF VARIOUS FURNACE COMPANIE S NO SUCH INVESTIGATION WAS MADE BY DGCEI. IN THE ABSENCE OF AN Y INFORMATION GATHERED BY THE EXCISE AUTHORITY OF CLANDESTINE REMOV AL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY AND IN THE ABSENCE OF THE ASSE SSEE DECLARING ANY ADDITIONAL INCOME IN ITS HAND NO SUCH ADDITION IS WA RRANTED IN THE HANDS OF THE ASSESSEE. HOWEVER IN CASE ANY OF THE ASSESSEE HAVE ADMITTED TO CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY THEN ADDITIONAL INCOME RELATABLE TO SUCH TURNOVER IS TO BE ADDED IN THE HANDS OF THE SAID ASSESSEE. WE HAVE ALREADY DEALT WITH THIS I SSUE IN DETAIL BY ORDER OF EVEN DATE IN THE BUNCH OF APPEALS AS REFERRE D EARLIER. 14. FOLLOWING THE SAME PARITY OF REASONING AS PER OUR ORDER OF EVEN DATE IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LT D. & OTHERS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 AND IN VIEW OF THE P HYSICAL VERIFICATION CARRIED OUT BY THE AUTHORITIES AS REFERR ED TO BY US IN THE PARAS HEREINABOVE AND THE CONSEQUENT ORDER OF DIVISION BENC H OF CESTAT IN THE CASE OF PRESENT ASSESSEES BEFORE US RELATING TO ASSESSMENT YEAR 2009- 10 WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BEL OW AND WE REVERSE THE ORDER OF CIT(A). WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQUENT TO ERRATIC CONSUMPTION OF ELECTRICITY. 15. THE APPEALS OF THE REVENUE AGAINST THE ADOPTION O F GP RATE OF 4% AND THE DELETION OF WORKING CAPITAL REQUIRED FOR IN VESTMENT IN SUPPRESSED PRODUCTION IS ALSO DELETED BY US BY FOLLOWING ORDER IN THE CASE OF ASSESSEE AND OTHERS IN EARLIER YEARS AND FOLLOWING THE SAME PAR ITY OF REASONING WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 42 ITA NOS.1730 1828 1826 & 1829/PN/2014 11. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO T HE FACTS OF THE CASES ALREADY DECIDED BY THE TRIBUNAL IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. (SUPRA) AND BUNCH OF OTHER APPEALS T HEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL THE GROUNDS RAISED BY THE REV ENUE ARE DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.1829/PN/2014 (M/S. RAM RITESH ISPAT PVT. LTD. ) : 12. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN ESTIMATING THE 800 UNITS OF ELECTRICIT Y PER METRIC TON FOR MANUFACTURING OF FINISHED GOODS OF TMT BARS AS AGAINST 1 88 UNITS ESTIMATED BY THE AO IGNORING THE FACT THAT METALLIC PROPERTIES REQUIRES FOR HEATING THE SIMILAR TEMPERATURE WHICH INVOLVED I DENTICAL PROCESS AND THE CONSUMPTION BY SMALL AND BIG MILLS . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE PROFIT ON SUPP RESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE BOOKS OF A CCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED BY THE A O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE P RODUCTION SHOWN IN THE BOOKS OF ACCOUNT? 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE W ORKING CAPITAL IS REQUIRED FOR PURCHASES OF RAW MATERIAL AND DAY TO D AY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR. 5. THE ORDER OF THE AO BE RESTORED AND THAT THE CIT( A) BE VACATED . 6. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY GROUNDS OF APPEAL . 13. AFTER HEARING BOTH THE SIDES WE FIND THE GROUNDS RAIS ED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS RAISED BY THE REVE NUE IN ITA NO.1828/PN/2014. WE HAVE ALREADY DECIDED THE ISSUE IN TH E SAID APPEAL AND THE GROUNDS RAISED BY THE REVENUE HAVE BE EN DISMISSED. 43 ITA NOS.1730 1828 1826 & 1829/PN/2014 FOLLOWING THE SAME REASONINGS THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.1826/PN/2014 (M/S. DURGA RE-ROLLING MILLS PVT . LTD.) : 14. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN ESTIMATING THE 800 UNITS OF ELECTRICIT Y PER METRIC TON FOR MANUFACTURING OF FINISHED GOODS OF TMT BARS AS AGAINST 1 88 UNITS ESTIMATED BY THE AO IGNORING THE FACT THAT METALLIC PROPERTIES REQUIRES FOR HEATING THE SIMILAR TEMPERATURE WHICH INVOLVED I DENTICAL PROCESS AND THE CONSUMPTION BY SMALL AND BIG MILLS . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE PROFIT ON SUPP RESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE BOOKS OF A CCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED BY THE A O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE P RODUCTION SHOWN IN THE BOOKS OF ACCOUNT? 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE W ORKING CAPITAL IS REQUIRED FOR PURCHASES OF RAW MATERIAL AND DAY TO D AY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR. 5. THE ORDER OF THE AO BE RESTORED AND THAT THE CIT( A) BE VACATED . 6. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY GROUNDS OF APPEAL . 15. AFTER HEARING BOTH THE SIDES WE FIND THE GROUNDS RAIS ED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS RAISED BY THE REVE NUE IN ITA NO.1828/PN/2014. WE HAVE ALREADY DECIDED THE ISSUE IN TH E SAID APPEAL AND THE GROUNDS RAISED BY THE REVENUE HAVE BEE N DISMISSED. FOLLOWING THE SAME REASONINGS THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 44 ITA NOS.1730 1828 1826 & 1829/PN/2014 16. IN THE RESULT ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-10-2016 SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; ' DATED : 21 ST SEPTEMBER 2016. ) *# ! -!/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. THE CIT(A) AURANGABAD THE CIT AURANGABAD 5. $ ''( ( / DR ITAT B PUNE; 6 . + / GUARD FILE. / BY ORDER // TRUE COPY // // $ ' //TRUE -. ' ( / SR. PRIVATE SECRETARY ( / ITAT PUNE