Search Additions Need Year-Specific Incriminating Material: ITAT Jabalpur

ACIT Vs Kalindi Ispat Pvt. Ltd. (ITAT Jabalpur)

Search Evidence Cannot Travel Across Six Years: ITAT Saves Earlier Assessments but Restores Search-Year Additions

One Search, Seven Years and Different Results

A search may uncover suppressed production, but can that evidence justify similar additions across every earlier assessment year?

The Jabalpur Tribunal drew a clear distinction in the case of Kalindi Ispat Pvt. Ltd. It upheld relief for six earlier years because the Revenue failed to establish year-specific incriminating material. For the search year, however, it restored additions relating to suppressed production and stock valuation.

The result was a split verdict: six Revenue appeals dismissed and the seventh allowed.

Search Reveals Transactions Outside the Books

The assessee manufactured sponge iron. A search under section 132 was conducted on 16 October 2014 in the Singhania Group, covering the assessee’s business premises, registered office and connected residential premises.

The seized material indicated cash purchases of raw materials, production and sales outside the regular books.

An employee stated that weighbridge data was erased daily on the instructions of the general manager. Documents recovered from a director’s residence also contained transactions which, according to the Tribunal, were not reflected in the accounting records verified from mirrored computer data.

The Department subsequently gathered information from railway authorities, the electricity distribution company and coal suppliers, and examined government reports concerning sponge iron production.

Electricity Consumption Becomes the Estimation Tool

The Assessing Officer adopted a benchmark of 45 electricity units per metric tonne of sponge iron to estimate production from actual electricity consumption.

The difference between estimated production and recorded production was treated as suppressed production. Its value was calculated using the assessee’s average selling price, and net profit at 3.85% was applied to determine the additions.

For the six earlier years, the additions ranged from approximately ₹1.59 crore to ₹4.33 crore. For AY 2015-16, the assessment order recorded a suppressed-production profit addition of ₹4,98,31,227.

A separate addition of ₹88,94,688 was made in the search year for the difference in stock valuation.

The CIT(A) deleted the production-related additions and granted substantial relief against the stock addition. The Revenue challenged those decisions.

Search-Year Addition Restored

For AY 2015-16, the Tribunal found that the seized documents, unrecorded transactions and deletion of weighbridge records supported the conclusion that production and sales had been understated.

It also considered the director’s retraction, filed on 30 August 2016, almost two years after the search. The Tribunal viewed this as an afterthought unsupported by corroborative evidence, reconciliation or an adequate explanation.

The assessee had not effectively displaced the Assessing Officer’s estimation method or reconciled the seized transactions with its books.

The Tribunal accepted the approach of taxing the profit element at 3.85%, rather than the entire estimated suppressed sales value. It therefore reversed the CIT(A)’s relief and restored the assessment order on this issue for the search year.

Earlier Years Require Their Own Incriminating Material

The position was different for AYs 2009-10 to 2014-15.

The Tribunal found that the Revenue had not produced similar incriminating material attributable to each of those six years. The material relied upon did not establish the required connection with the earlier unabated assessments.

It held that the contents of the seized documents could not simply be extrapolated backwards across the entire six-year period.

The Tribunal relied on CIT v. Kabul Chawla, 380 ITR 573, referred to the Meeta Gutgutia litigation, and applied the Supreme Court’s decision in PCIT v. Abhisar Buildwell (P.) Ltd., 454 ITR 212.

For these completed assessments, the absence of incriminating material relating to the particular year prevented the Revenue from disturbing the returned income through the impugned additions.

Accordingly, the Tribunal upheld the deletion of the production-related additions for all six earlier years.

Stock Quantity and Stock Value Are Different Questions

The Tribunal separately examined the search-year stock addition.

The stock’s book value was ₹12,82,80,312, while the DVO’s valuation was ₹13,71,75,000. The Assessing Officer added the difference of ₹88,94,688.

The CIT(A) granted relief based on an apparent discrepancy concerning the quantity of coal considered by the Assessing Officer.

However, after examining the excise register, the Tribunal found that the disputed addition concerned valuation of the physical stock, rather than a discrepancy in its quantity.

It concluded that the CIT(A) had focused on quantitative details without addressing the valuation difference underlying the addition. The Tribunal therefore restored the stock addition in terms of the assessment order.

Author’s Comments

The decision shows why proof of suppression and its attribution to a particular year must be examined separately. Evidence accepted for the search year did not automatically justify additions in six earlier completed assessments.

At the same time, the ruling offers no general protection against production estimates based on electricity consumption. Here, the Tribunal accepted the method for the search year alongside seized records, accounting discrepancies and statements.

The order also contains an apparent numerical inconsistency between its production-value table and the stated application of the 3.85% rate. The operative direction nevertheless restores the assessment order for AY 2015-16. The underlying computation merits careful reconciliation when giving effect to the order.

For stock disputes, the practical lesson is equally clear: an explanation about quantity must address a quantity dispute; a valuation addition requires a valuation explanation.

Cases Discussed

• CIT v. Kabul Chawla, 380 ITR 573 (Delhi High Court).
• PCIT v. Meeta Gutgutia, 257 Taxman 441 (Supreme Court).
• PCIT v. Abhisar Buildwell (P.) Ltd., 454 ITR 212 (Supreme Court).
• Nagpal Steel v. CCE, Chandigarh, 2000 (125) E.L.T. 1147.
• R.A. Casting (supra).
• Nitesh Kasliwal v. ITO, (2014) 24 ITJ 561 (Trib.-Indore).
• CIT v. Woodward Governor India (P.) Ltd., [2009] 179 Taxman 326 (Supreme Court).
• CIT v. Margadarsi Chit Funds (P.) Ltd., [1985] 155 ITR 442 (Andhra Pradesh).
• International Forest Co. v. CIT, [1975] 101 ITR 721 (J&K).
• A.S. Sivan Pillai v. CIT, [1958] 34 ITR 328 (Madras).
• Jai Steel (India) v. Asst. CIT, (2014) 24 ITJ 85 (Rajasthan): (2013) 259 CTR 281.
• Anant Steel Pvt. Ltd. v. Asst. CIT, (2016) 28 ITJ 47 (Trib.-Indore).

FULL TEXT OF THE ORDER OF ITAT JABALPUR

This bunch of seven appeals filed u/s 253(2) of the Income Tax Act, 1961 [‘the Act’] by the Revenue challenges separate orders passed u/s 250 of the Act by the Commissioner of Income Tax, Appeals-1, Jabalpur which dealt with consolidated order of assessment dt. 23/12/2016 passed u/s 153A r.w.s. 143(3)/143(3) of the Act in relation captioned assessment years [‘AY’].

2. Since facts of these cases & issues raised therein are arising out of common & consolidated assessment order for captioned assessment years, upon rival party’s concurrent request and for the sake brevity & completeness, this bunch of appeals are heard together for being disposed off by a common & consolidated order. In view thereof, our adjudication laid hereinafter with reference to lead case in ITA 80/JAB/2018 shall mutatis-mutandis apply to remaining appeals.

3. Pithily stated pertinent common facts arising out of the case records are that;

3.1 The assessee is a private limited company engaged in the business of manufacturing of sponge Iron etc. On 16/10/2014, a Search & Seizure action u/s 132 (1) of Act, was carried out at Singhania Group, Shahdol (MP), which covered 27 locations/premises pertaining to Group including the assessee company and its directors/key employee’s residential premises etc., wherein certain incriminating material were found & seized.

3.2 The assessee’s business premises namely, Plot No. 11-14, Sector-B, Sirgitti Industrial Area, Bilaspur, Chhattisgarh and the registered office situated at 50, Weston Street, Kolkata (WB), was also covered by such search action. During the said search action, in the light of certain incriminating material found & seized thereat, a statement of the directors of the assessee company were recorded u/s 132(4) of the Act.

3.3 Pursuant thereto, the case of the assessee was subjected to re-assessment for a block period of six years from AY 2009-10 to 2014-15 and vide notice u/s 153A of the Act called upon to file returns therefore. In response thereto, the assessee filed returns in line with the original return filed by it u/s 139 of the Act.

3.4 For the search year i.e. AY 2015-16 the assessee filed return u/s 139 of the Act declaring loss of ₹94,23,422/-. The said return in view of search action subjected to compulsory scrutiny vide notice dt. 19/07/2016 143(2) of the Act along-with other assessment years falling within the block of six years and the consequential assessment/reassessments were completed by a common & consolidated assessment order dt. 23/12/2016 framed u/s 143(3)/153A r.w.s. 143(3) of the Act by the Dy. Commissioner of Income Tax, Central Circle-Jabalpur [‘Ld. AO’] wherein following additions were respectively made to the returned of income;

IT(SS)A No.	Asstt. Year	Asstt. framed 153A r.w.s. 143(3) of the Act for block of six years
		Additions made on estimation basis @ 3.85% of estimated differential production (in ₹)
017/JAB/2018	2009-10	₹1,58,94,681/-
018/JAB/2018	2010-11	₹3,60,90,455/-
019/JAB/2018	2011-12	₹3,53,15,978/-
020/JAB/2018	2012-13	₹4,32,96,731/-
021/JAB/2018	2013-14	₹3,92,36,188/-
022/JAB/2018	2014-15	₹3,65,37,060/-
ITA No.	Asstt. Year	Asstt. 143(3) of the Act for search year
		Additions made on estimation basis @ 3.85% of estimated differential production (in ₹)	Addition on account of variation in the valuation of closing stock (in ₹)
080/JAB/2018	2015-16	₹4,98,31,227/-	₹88,94,688/-

3.5 Aggrieved by aforestated additions and per-se consolidated assessment order, the assessee preferred separate appeals u/s 246A r.w.s. 249 of the Act before the Ld. CIT(A) who allowed the assessee’s appeals by vacating former additions by separate orders of even date. [‘impugned order’]

3.6 Aggrieved thereby the Revenue after ensuring compliance of s/s (2) of section 253 of the Act has set this bunch of appeals for reversal of impugned orders with a prayer to restoring back common & consolidated assessment order on following first common ground as laid in search assessment year (AY 2015-16) appeal; Grounds in ITA No 080/JAB/2018

On the facts and in the circumstances of the case, the Ld CIT(A) has erred in;

1. Deleting the addition of Rs 4,98,31,227/- made by AO on account of unaccounted production/sale of sponge iron by applying standard consumption rate of 45 units per m.t. based on the comprehensive report submitted by the Govt. Agency and then estimating the net profit @3.85% on the value of such unaccounted production.

For Lead year in addition to above common ground;

2. Granting relief of Rs 88,59,014/- out of the total addition of Rs 88,94,688/- made by the AO on account of excess stock of raw material found during the course of search & seizure operation.

4. We have heard the rival party’s submission and subject to rule 18 of ITAT-Rules, 1963 perused the material placed on record and considered the facts in the light of settled position of law which are forewarned to the parties for their rebuttal.

Ground 1. Addition based on estimation of differential production / sales, thus estimated income/net profit;

5. The primary ground of the Revenue in present bunch of appeals relates to disapproval of estimation of unaccounted or suppressed production / sales, which was computed by the Ld. AO on the basis of standard rate of electricity consumption qua actual units of electricity consumed by the respondent assessee company. In this regards we note that;

5.1 It is an admitted fact that, during search action several incriminating materials showing the evidence of out of books production, out of books sales, excess stock of raw material/goods and corresponding out of books purchase were found & seized. A statement recorded therein of Mr Aman Singh Baghel who confirmed to have erased weigh bridge data regularly on daily basis on very next day on the instruction of assessee’s General Manager Mr RK Singh so as to destroy data relating to out of books purchase of raw material, production and sales etc which never pulled back. It is also on record that, the incriminating documents found & seized at searched residential premise of director Mr Rajendra Singhania [‘RS’], which clearly contained out of books (i) cash purchase of raw material, (ii) daily production, and (iii) sales data etc., which when was confronted, to him, he expressed his inability to recollect/clarify as to whether all such transaction were reflected in the books assessee company but admitted the fact of making cash purchases from parties listed IM & made disclosure to certain extent. The transactions from IM when cross verified with books of accounts from hard-disk mirrored from a computer seized at corporate office in survey proceeding u/s 133A of the Act, which revealed that those transactions were never entered the books but kept outside.

5.2 In view thereof, the Ld. AO conducted post search enquiries with railway authorities, Chhattisgarh Power Distribution Co. Ltd. electricity department[‘CPDCL’], South Eastern Coalfields Ltd. [‘SECL’] and also obtained reports from Central Pollution Control Board [‘CPCB’]. These documents/reports then were vetted with reference to IM seized in the course of search/survey proceedings for finding out assessee’s actual (i) corresponding cash purchase of raw material/consumables, (ii) consumption etc., so as to determine level of actual production over production of sponge iron claimed to produced/manufactured by the assessee, and thus the suppressed/unaccounted production & out of books thereof. Collating the data gathered in the course of search and post search inquires with that of IMs, the Ld. AO came to conclusion that, the assessee was indulged into out of books (i) cash purchases of raw material, (ii) production therefrom & (iii) sales thereof. These finding were concretised on the basis of excessive unit of electricity used/consumed by the assessee in relation to sponge iron claimed to have produced/manufactured. On the basis of reports, the average standard rate of electricity unit required in producing per metric ton [‘MT’] was worked out to 45unit/MT. With the application this average standard rate of electricity unit consumption, actual production of sponge iron was cross worked out from the actual electricity consumption reported by the assessee & CPDCL. In this way the Ld. AO worked out the unaccounted/supressed differential production of sponge iron and valued their sales at the average selling price adopted by the assessee for the respective years and in consequence added to the income in the respective years were accordingly made, as under;

Asstt. Year	Yearly production of sponge Iron as recorded	Actual Power Consumption		Estimated Production @ 45 units/MT of Sponge Iron Production	Differential prodouction over disclosed production	Average Selling Price as applied for recorded	Value of unaccounted/s uppressed production
		Total Units of electricity Consumed	Units Consumed/ MT of Sponge Iron Produced
1	2	3	4 (3/2)	5 (3/45)	6 (5-2)	7	8 (6 x 7)
2009-10	20647	3672640	178	81614	60967	21230	1,29,43,17,609
2010-11	19392	3815555	197	84790	65398	14510	94,89,36,631
2011-12	16804	3090350	184	68674	51870	19648	1,01,91,21,769
2012-13	17006	2820020	166	62667	45661	24629	1,12,45,90,435
2013-14	16491	2388880	145	53086	36595	25066	91,72,98,148
2014-15	22433	2877960	128	63955	41522	22576	93,74,14,439
2015-16	14336	1468050	102	32623	18287	22576	41,28,48,877

6. When matter travelled in first appeal, wherein the Ld. CIT(A) vide para 7.1 dismissed all legal grounds/contention raised in relation to framing of assessment u/s 153A r.w.s. 143(3)/143(3) of the Act and the assessee neither in appeal thereagainst nor pressed rule 27 of ITAT-Rules. Insofar as merits of this addition is concerned, the ground number 8 to 13 raised by the assessee in first appeals were dealt from pg 74 to 195 of the impugned order. We note that, after a threadbare analysis the Ld. CIT(A) giving his finding from pg 159 to 195 that, disapproved addition & thus deleted as under;

7.4.3. DECISION:-I have carefully considered the facts of the case, the findings of the Assessing Officer and the submissions put forth on behalf of the appellant company and the material placed on record.

7.4.4 The only issue, which has led to addition to the disclosed income/loss is in respect of estimate profit from sale of unaccounted production of sponge iron in all the assessment years of the search period under consideration. As already mentioned above, para 8.2 of the assessment order deals with the issue. In Para 8.2.2 of the assessment order, the Assessing Officer observed that during the search and seizure proceedings in the group covering various premises and persons, certain loose papers were seized and statements of important persons were recorded on oath which indicated unaccounted purchase and sales by the company. The Assessing Officer noted that there are several reference of cash transactions which lead to the conclusion that the company is running parallel production activity which is not recorded in the books of account. In this regard, the Assessing Officer referred to statement of one Aman Singh Baghel recorded on 17/10/2014 weigh bridge data was being erased regularly the very next day at the behest of the General Manager. Then, the Assessing Officer found from LPS-1 pages 5,6,7,8 evidencing cash purchase of raw material as well as documents in the form of daily production, purchases and sales data sheets maintained by the Director of the company. The director, Shri Anand Singhania, in his statement expressed inability to clarify whether such documents seized and inventorized as LPS-2 and LPS-3 were reflected in the books of account. According to the Assessing Officer, these loose sheets were not found recorded in the tally accounts of the company. In para 8.2.6. of the assessment order, it mentioned that when confronted with LPS-1 (Page 5,6,7,8, Shri Rajendra Singhania admitted that the company is making cash purchases from the parties mentioned in those loose papers and he also made certain disclosures against the cash expenses.

7.4.5. Based on the reasons as discussed above, post search enquiries were carried out to ascertain the actual level of production by the company during the past years. Since raw materials like iron ore and coal and power are the major factors of sponge iron production, information was gathered from

i. Railway authorities regarding iron ore at Uslapur siding;

ii. Coal purchases from SCEL; and

iii. electric power from Chattisgarh Power Distribution Co. Ltd.

Thereafter, the Assessing Officer verified the monthly consumption of electricity for the financial years 2008-09 to 2014-15 and found that the yearly average consumption was in the range of 102-197 units per ton of sponge iron produced. It was also found that in the month of July, 2009, the consumption level had gone upto 535 units/ton. Looking to the unreasonable variation in the electricity consumption, the Assessing Officer gathered information from various sources to know the ideal consumption of units of power for producing one ton of sponge iron. From 122 pages report on Sponge Iron Industry (Comprehensive Industry Documents Series: COINDS/66/2006-07) by Central Pollution Control Board, Ministry of Environment & Forests the month of March 2007 was obtained form the Government website i.e. www.cpcb.nic.in/upload/NewItems/NewItem_102_SPONGE_IRON.p dfthe Assessing Officer found that –

4.03.17 Power Consumption

The power consumption ranges from 130 units / ton DRI (kwhr = unit) in Tata Sponge, 55unit/ton DRI in Jindal and 45 units / ton DRI in small plant. The high power consumption in Tata Sponge is due to Wet Dust Cleaning System and sludge handling.

The Assessing Officer further noted that for the definition of small plant, it is mentioned in para no. 4.03.11 (Scanned image given) of the report that plants having more than two 100 tpd kilns, producing more than 60,000 tonnes/annum of DRI are categorized as large DRI plants. Therefore, assessee’s plant can be categorized as Small Plant.

Referring to another report on sponge iron industry has been obtained from the website of Ministry of Science & Technology, Department of

Scientific & Industrial Research (www.dsir.gov.in/reports/techreps/tsr062.pdf ) wherein comparative analysis of production and raw material consumption by different sponge iron plants (like Sponge Iron India Ltd., Orissa Sponge Iron Ltd., Ipitata Sponge Iron Ltd., Bihar Sponge Iron Ltd., Sunflag Iron & Steel Company Ltd.) which were running on different methods of production is given. The Assessing Officer noted that this report pertains to early 1990’s, when technology was still far behind what is existing today. On page (xii), he states, it is clearly mentioned that even during late 1980s and early 1990s, average power consumption was in the range of 80 to 170 depending upon the technology adopted. There have been significant advances in technology, since these decades and there has been significant production in power consumption as per data given in para 4.03.17 of the report reproduced above (45 units per MT for small plant).The Assessing Officer observed that it was surprising that even after so much advancement in production technology and evolvement of sponge iron industry in India, Kalindi Ispat Private Limited is still showing consumption in the range of 102-197/ units ton and that too when the plant was set up in the last decade of this century. By using the information gathered from the Railways, SECL and electricity distribution company, and by adopting average consumption of power of 45 units per ton, the Assessing Officer calculated the value of unaccounted production of the different assessment years as given in the chart in the assessment order and reproduced hereinabove and required the appellant to show cause as to why the net profit @3.85%, which is the average net profit in its own case for the A.Yrs. 2009-10 to 2014-15 on the unaccounted production be not added to the total income. According to the Assessing Officer, the appellant in its written submissions compared itself to some other companies, namely, Geetanjali Ispat, Phil Ispat, Satya Power & Ispat, Mangal Sponge Iron, which are based in Bilaspur showing higher consumption of power. The Assessing Officer found the reply of the appellant not acceptable as in the absence of details, the cases could not be considered as comparable. The Assessing Officer held that the consumption of 45 units per ton on the basis of report submitted by a Government agency being more reliable and authentic is being taken in the absence of any reply on the merits of the case. Thereafter, the Assessing Officer adopting net profit rate of 3.85% on the value of unaccounted production in the seven assessment years as under:

S r	Asstt. Year	Value of Unaccounted Production (In Rs.)	Net Profit (In Rs.) @3.85% average rate of NP for last 6 years i.e. 2009- 10 to 2014-15Addition made (In Rs.)
1	2009-10	41,2878,877	1,58,94,681
2	2010-11	93,74,14,439	3,60,90,455
3	2011-12	91,72,98,148	3,53,15,978
4	2012-13	112,45,90,435	4,32,96,731
5	2013-14	101,91,21,769	3,92,36,188
6	2014-15	94,89,36,631	3,65,37,060
7	2015-16	129,45,27,908	4,98,31,227

Thus, following additions are made to the total income of the assessee in addition to the income shown in the returns of income for the respective years.

S.No	Asstt. Year	Addition made (In Rs.)
1	2009-10	1,58,94,681
2	2010-11	3,60,90,455
3	2011-12	3,53,15,978
4	2012-13	4,32,96,731
5	2013-14	3,92,36,188
6	2014-15	3,65,37,060
7	2015-16	4,98,31,227

Thus, the Assessing Officer made an addition of Rs. 1,58,94,681/- on account of profit on the sale value of unaccounted production of sponge iron for assessment year 2009-10, which is under consideration.

7.4.6. The Assessing Officer has apparently summarily rejected the written submissions with regard to the show cause notice for the proposed addition on account of unaccounted production. From the written submissions of the appellant company, it is apparent that it had already retracted the disclosures, if any, on the basis of the seized documents marked as LPS-1 pages 5,6,7 & 8, LPS-2 and LPS-3.In the written submissions, which are reproduced here-in- above, it is stated that-

(i) the paper marked as LPS-1, was received by the appellant company from Mangal Trading Co. for confirmation purpose. It is further stated that “It was not the final status of the account. In fact we had confirmed them that the entries dated 12.10.2008 and 31.12.2008, are only related to us and subsequent entries are not related to us. Therefore, we have not given confirmation to them. At the time of search I had just saw this page and without perusal of books of accounts, which were not readily available at my residential premises, had believed that the entries reflected in it were pertaining to purchase of iron ore in cash. Also, I was in tension and fatigue of travel and hence could not analyse the paper with full concentration and therefore, I had surrendered additional undisclosed income of Rs.4000000/- in FY 2008-09 on the basis of entries shown in this page. But later on, on scrutiny of books of accounts I came to know the actual status as mentioned above, therefore, I have already backed out from my initial statement which was given under duress and stress of search vide submission date 30.8.2016.”

(ii) The other issue related to the figure of Rs. 2.45 Crores as mentioned in show cause notice. In written submissions, it is stated that “however, it appears that this is the total of debit and credit side of page no. 8 of LPS-1, which comes to Rs.2,45,71,899. In this regard we would like to submit that the entries, except those mentioned in reply no. 1 i.e. regarding Rs. 40 Lakhs, are duly reflected in our books of accounts seized by department during the course of search proceedings. We hereby enclose in ‘Annexure I’ the ledger of Harbilas Bhaiya Imprest a/c and Shri Mangal Trading Co. a/c as appearing in our books, for cross reference. Therefore, no addition on this point is warranted, and if any addition is made it will be unjustified.”

(iii) During the recording of statement at the time of search proceedings, Shri Rajendra Singhania was confronted with page no. 6 & 7 of LPS-1 and was asked specifically for following entries –

22.05.2009 – 200000

25.11.2009 – 700000

01.02.2010-1000000

The written submission on behalf of the appellant is that “at the time of search I had just saw this page and without perusal of books of accounts, which were not readily available at my residential premises, had believed that the entries reflected in it were pertaining to purchase of iron ore in cash. Also, I was in tension and fatigue of travel and hence could not analyse the paper with full concentration and therefore, I had surrendered additional undisclosed income of Rs. 1900000/-in FY 2009-10 on the basis of entries shown in this page. But later on, on scrutiny of books of accounts we came to know that this page pertains to Harbilas Bhaiya and Shree Banke Bihari Ispat Pvt. Ltd. and the entries are duly reflected in our books of accounts seized by department during the course of search proceedings. The entries in question are the entries of return of cash by Harbilas Bhaiya in his statement and the same are appearing as credit entries in our books of accounts in the ledger of Harbilas Bhaiya Imprest a/c on the same dates. The ledger of Harbilas Bhaiya Imprest a/c as appearing in our books is annexed in ‘Annexure I’, for cross reference.”

On the basis of above submission, Shri Rajendra Singhania backed out from his initial statement which was given under duress and stress during the search operations.

(iv) As regards page nos. 6 & 7 of LPS 1, it has been stated that the same related to Harbilas Bhaiya and his firm, Shree Banke Bihari Ispat Pvt. Ltd. It is stated that this statement was given by Harbilas Bhaiya to us for verification with our books of accounts. The entries shown in this page, totaling to Rs. 91,16,104, are duly reflected in respective accounts of the parties named above in appellant’s books of accounts seized by department during the course of search proceedings and a copy of ledger of both the parties has been furnished in ‘Annexure I & II’. It was thus contended that no addition on this point was warranted, and if any addition in this regard would be unjustified.

(v) As regards amounts surrendered during the financial years 2008-09 and 2009-10, it is stated that the amounts of Rs. 7071280/- in FY 2008-09 and Rs.1500000/- in FY 2009-10 were surrendered on the basis of entries in the referred page pertaining to Harbilash Bhaiya. In the written submission, it was contended that at the time of search, the page was just seen by Shri Rajendra Singhania and without perusal of books of accounts had believed that the entries reflected in it were pertaining to purchase of iron ore in cash. It was further submitted that “Also, I was in tension and fatigue of travel and hence could not analyse the paper with full concentration and therefore, I had declared the total of the entries of the page as undisclosed income. But on rescrutiny of the page I found that there was one entry of Rs.300000/- in FY 2008-09 and three entries of Rs.500000/- each totaling Rs.1500000/- in FY 2009-10, which were through bank and not cash. Also, on scrutiny of books of accounts seized by department during the course of search proceedings I came to know that the entries shown in cash were also reflected in the books of accounts in the name of Harbilash Bhaiya imprest account.” A copy of the ledger of the same has been filed in ‘Annexure I’. It was stated thatShri Rajendra Singhania, in the circumstances, backed out from my initial statement which was given under duress and stress of search, vide submission date 30.08.2016.

(vi) The submission put forth on behalf of the appellant has been that the transactions reflected in LPS-1, P.No. 5-8 were found properly reflected in their books of accounts. This fact was also presented in detail with copies of ledger accounts of relevant parties in our submission dated 21/12/2016 before the A.O. It has been contended that from the LPS itself which has already been explained during the assessment proceeding before the A.O. and in pursuant to that the A.O. could not point out any specific defects neither bringing any corroborating and cogent material on record, also, he has not made any adverse inference on sole basis of these LPS and preferred to make the addition merely on surmises and conjectures and at his whims and fancies. Rather he made the basis for addition on the report obtained from website of pollution control board. It is also pointed out that the disclosures made by Shri Rajendra Singhania during search operations on the basis of these papers were subsequently retracted, as all the entries were found to be recorded in the books of accounts.

(vii) The LPS-2 and LPS-3 are summary of daily receipt, production and dispatch, therefore, these loose papers could not be found in tally data because tally data contains detailed entries of each and every transactions of the company. However, the detailed entries of transactions which constitute the summary contained in these papers can be found in tally. Furthermore, on the basis of these loose papers the A.O. could not have drawn any adverse inference against the assessee.

(viii) Again, the A.O. has pointed out that there were certain factors which prompted them for initiating post search enquiries in this matter. The first point as mentioned by him is the statement of Aman Singh Baghel. The appellant submitted that his statement does not point out that company is involved in out of books production or in any other irregularity. It simply states that he had been instructed to erase computer data of weigh bridge. It is further submitted that there is a practice of taking print out of the weigh slip at the time of weighment itself. As the hard copy of the record generated is available, therefore, the data from system was erased so that chances of duplicacy were avoided. Also, the processing was slowed down due to unrequired data in the system, which again called for cleaning of data.

(ix) Out of book production/Sale:As regards query Rs.19,00,000, it was pointed out that excess production of 3,20,301 MT was calculated on the basis of consumption of 45 units of electricity per MT production of sponge iron. A request was also made to the Assessing Officer to provide them any audited and authentic data of the units of sponge iron plant at par to appellant’s unit, so that they could compare the same and make appropriate submission to by properly comparing all the component of the units relied upon by the Assessing Officer.

It has also been pointed out that there are four units in Bilaspur of 100 MT Kiln capacity (DIC Certificate attached), namely –

a. Geetanjali Ispat

b. Phil Ispat

c. Satya Power & Ispat

d. Mangal Sponge Iron

The data of production from concerned excise department and electricity consumption for the same period from department of CSEB for above mentioned units were also provided by the appellant company for the purpose of comparison of average consumption of electricity and production of sponge iron.

(x) It has been pointed out on behalf of the appellant that the appellant company is having two kilns in their factory having installed capacity of 30000 MT per kiln whereas as per excise record maximum time our one of the kiln was non operative due to shortage of raw material i.e. iron ore. The appellant furnished copy of letter filed with excise department as proof of non operation of one kiln in ‘Annexure III’, which showed that they were running only one kiln during the period under consideration with an installed capacity of 30000 MT per annum. It is further pointed out that if average 70% of the installed capacity is take at 70%, then it comes to 21000 MT per annum. Average of our actual production during the period under consideration come to 20206 MT per annum, which again substantiates their submission, as against the average of total production assumed by you comes to 68487 MT per annum, which is more than the installed capacity of both the kilns. The registration certificate of installed capacity obtained from district industry centre (DIC) has also been filed in this regard.

(xi) The appellant had also pointed out that they have been using low grade iron ore (from M.P. and Orissa having Fe content less than 60) and low grade coal (F grade from SECL). The quality of raw material to be consumed to give ideal production is Iron Ore of 65 Fe content and Coal of B grade i.e. 45 Fc and above. Due to the fact that it had used inferior raw material, our production is less than normal capacity utilization. The list of grade wise procurement of raw material each year is enclosed in ‘Annexure V’.

The above annexure also shows that 80% of iron ore consumed by us is of size 10/30mm or lumps 250 mm, which have to be crushed to size of 5/18mm. This again requires power input for running of crusher, which is quite substantial.

(xii) In the written submission, it was also pointed out that as a matter of fact also, during the course of search proceedings, no such incriminating document have been found and seized so as to establish the presumption of the A.O. Furthermore, this is a settled principle of law that on the basis of consumption of electricity on production no adverse inference could be drawn against the assessee. The assessee also finds support in the settled cannon of law that on the basis of mere suspicion no addition could be made. The suspicion, however strong, it may be, does not take the place of proof. On the basis of above submissions, it was submitted that the figures of out of books production arrived by the Assessing Officer is purely imaginary and far away from reality and is without any documentary basis. Therefore, no addition on this point is warranted, and if any addition is made it will be unjustified.

7.4.7. As already mentioned, the Assessing Officer summarily rejected the reply to the show cause notice and the documents and data furnished during the course of assessment proceedings. He has not offered any comments the explanation on the loose papers/documents marked as LPS pages 5,6,7,& 8 as also LPS-2 & LPS-3 coupled with the retraction of disclosures made during search proceedings. The summary rejection of the explanation did not by itself question the reasonability or sufficiency of the said explanation along with the acceptance of retraction of the disclosures. Therefore, the finding of the Assessing Officer that information gathered from the aforesaid loose papers pointed to the unaccounted production of sponge iron becomes without any foundation.

7.4.8. It is further noted that the Assessing Officer had called for information from three organizations, namely – Railway Authorities, SECL (South astern Coalfields Limited) and CGPDCL (Chhattisgarh Power Distribution Company Limited). However the data of CGPDCL is only used in further analysis regarding the power consumption, but the data supplied by other two authorities have not been put under the doubt and the A.O. has not made any adverse inference on it. There is no finding regarding procurement of material outside books of account. He has not pointed out any mis-match of data collected from the SECL & Railways regarding procurement of iron ore and coal. The appellant submitted that in normal/standard circumstances the electricity consumption of these types of plants is around 120-190 units per ton of sponge iron. However, the appellant attributed variation in consumption of electricity to numerous factors, such as

(i) When the electric load of power supply is low i.e. voltage fluctuation is regretted, the consumption of power automatically increases. And due to this even if all other factors of production remain unchanged, per unit consumption of electricity will always vary.

(ii) In this plant large number of motors, conveyors, rollers etc. are being used and if any or some of them are not running smooth i.e. are in a jam condition, then it’s obvious that consumption of electricity will increase drastically.

(iii) The size of the raw material used is also a very big factor in electric consumption. If the raw material is of larger size than ideal, it obviously will require more electricity to make it of desired size and if raw material is already of desired size, then it would require less electricity consumption.

(iv) The quality of raw material used is again a very big factor for electricity consumption. If good ideal quality raw material is used then consumption of electricity would be less and vice versa. The reason being, in good quality raw material production yield would be high i.e. with same quantity of raw material more production would be achieved. The consumption of electricity depends on quantity of raw material processed. Hence, by using good quality raw material, electricity consumption per ton of production would be reduced and vice versa.

(v) Sometimes due to power cut, we have to use D.G. Set. Due to this factor, in some months the average electricity consumption of the plant is little less than average.

(vi) During the rainy season the raw material received in the plant i.e. iron ore and coal are fully drenched in mud and slurry. To process this raw material it is obvious that the plant has to overwork to make it suitable for consumption. Hence, more electricity would be consumed.

It has thus been the contention on behalf of the appellant that there could be no set parameters for electricity consumption in this type of industry and it is bound to vary from time to time.

7.4.9.The Assessing Officer has solely relied upon a 122 page report on Sponge Iron Industry (Comprehensive Industry Documents Series: COINDS/66/20006-07) by Central Pollution Control Board, Ministry of Environment & Forests the month of March 2007 by obtaining it from government website i.e. www.cpcb.nic.in / upload/ NewItems/ NewItem_102 SPONGE_ IRON. pdf., and considering that it is a Government published report, he held that the said report is applicable to the case of the appellant company and held that consumption of power in respect of small plant in the appellant’s plant also should be in the rage of 45 units per MT of sponge iron produced. As per Para 4.03.17 of the report on power consumption as referred to by the Assessing Officer is that “the power consumption ranges from 130 units/ton DRI (kwhr = unit) in Tata Spone, 55 unit/ton DRI in Jindal and 45 units/ton in small plant. The high power consumption in Tata Sponge is due to Wet Dust Cleaning System and sludge handling. The Assessing Officer has not considered the second sentence of part of the report regarding high consumption of TATA sponge due to wet dust cleaning system and sludge handling. The appellant pointed out that in their plant, they had to provide this facility due to requirement raised by pollution control board. A copy of permission letter of pollution control board, with above mentioned condition, is placed on record as “Annexure I” to the written submission.

7.4.10. The appellant has also pointed out various technical reasons affecting the power consumption, which include use of low quality material, such as iron ore and coal in its plant. It has been pointed out that the appellant company has been using low grade iron ore (from M.P. and Orissa having Fe content less than 60) and low grade coal (F grade from SECL). The quality of raw material to be consumed to give ideal production is stated to be Iron Ore of 65 Fe content and Coal of B grade i.e. 45 Fe and above. The party-wise and grade-wise details of purchases of raw material have also been placed on record to support the claim. It has also been pointed out that 80% of iron ore consumed by the appellant is of size 10/30mm or lumps 250 mm, which have to be crushed to size of 5/18mm. This again requires power input for running of crusher, which is quite substantial. There is substance in the contention of the appellant that the inferior quality of raw materials as also production less than the installed capacity resulted in variation of power consumption

7.4.11. Now, a perusal of the assessment order would show that the Assessing Officer relied upon a portion of the report of Pollution Control Board to apply the standard consumption of 45 units/m.t. in respect of small plants, and in fact, he overlooked the other relevant portions of the said report. The Assessing Officer, on the other hand, did not rely on the report of Department of Scientific and Industrial Research, which he himself has quoted. Further, the Assessing Officer has not considered the details of the local comparable cases cited by the appellant company, where there has been excessive variation in consumption of power.

7.4.12. From the foregoing discussion of facts, it is evident that the addition on account unrecorded/unaccounted production in any of the seven assessment years 2009-10 to 2015-16 is not based on any documents, whether it is incriminating or otherwise. There is no documentary proof regarding purchases of raw material outside books of account. There is no iota of evidence to remotely establish that there has been production of sponge iron beyond the installed capacity. The addition has been solely based on study report available in Government web-site published by Pollution Control Board where the standard consumption of power in normal circumstances in respect of production of sponge iron is reported at 45 units per m.t. Case study of comparable cases would show that the standard consumption could vary depending upon the raw materials and condition of the plant and machinery. In the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.LT. 1147, relied upon on behalf of the appellant, where consumption had been shown at 851 units/MT, after perusal of these reports, Tribunal opined that wide variations in the consumption electricity have been reported for the manufacture of one MT of steel ingot &, 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 been dismissed, in R,A, Casting (supra) there was no reason for the Commissioner in the instant cases to consider the norm of 1026 units allegedly as per report of Dr. Batra, for arriving at deemed production.

7.4.13. The Assessing Officer while estimating the unaccounted production of sponge iron in the case of the appellant has not rejected the books of account or pointed out any specific defects therein under sec. 145 of the Act. Nitesh Kasliwal v. ITO (2014) 24 ITJ 561 (Trib.-Indore) – This is an undisputed fact that estimate is always an estimate; estimate howsoever strong may be but cannot take place of actual. Accounting method followed by an assessee continuously for a given period of time needs to be presumed to be correct till Assessing Officer comes to conclusion for reasons to be given that said system does not reflect true and correct profits – CIT v. Woodward Governor India (P.) Ltd. [2009] 179 Taxman.326 (SC). The ITO must refer to the inherent defect in the system and record a clear finding that the system of accounting followed by the assessee is such that correct profits cannot be deduced from the books of account maintained by the assessee. It is not open to the ITO to intervene and substitute a different system of accounting from the one which is followed by the assessee, on the ground that the system which commends to the ITO is better CIT v. Margadarsi Chit Funds (P.) Ltd. [1985] 155 ITR 442 (AP). Even if the ITO considered the material placed before him by the assessee to be unreliable keeping in view the comparative statement of accounts of the previous years, he cannot proceed to make an arbitrary addition and base his conclusion purely on guess-work. He ought to have related his estimate to some evidence or material on the record as it is now well-settled that if the profits shown by the assessee in his return are not accepted, it is for the taxing authorities to prove that the assessee has made more profits than returned – International Forest Co. v. CIT [1975] 101 ITR 721 (J & K). Estimation by the ITO of the assessee’s gross profit on the basis of the fact that the other dealers doing the same business as that of assessee had made profits by selling goods in black market would not be justified unless the ITO proves that the assessee has also sold goods in black market – A.S. Sivan Pillai v. CIT [1958] 34 ITR 328 (Mad.).

7.4.14 In Jai Steel (India) v. Asst. CIT(2014) 24 ITJ 85 (Rajasthan): (2013) 259 CTR 281, and in other cases cited on behalf of the appellant, it has been held that “the scope of section 153A is limited to incriminating material, where the assessment has already completed.. Information could be sufficient for starting investigation but that cannot substitute all sort of evidence. The information could be sufficient for starting investigation but that cannot substitute all sort of evidence. Anant Steel Pvt. Ltd. v. Asst. CIT (2016) 28 ITJ 47 (Trib.-Indore).

7.4.15. Taking into account the totality of facts and circumstances of the case, the submissions put forth on behalf of the appellant, and the legal position emerging from the cases cited supra, I am of the view that the Assessing Officer was not justified in working out the unaccounted production of sponge iron by applying the standard consumption rate of 45 units per m.t. and then estimating the net profit @3.85% on the value of such estimated unaccounted production. The addition of Rs. 1,58,94,681/- is, therefore, deleted.”

ITA No 80/JAB/2018 AY-2015-16 (Search Asstt. Year)

7. Now coming to adjudication there arisen two points consideration viz (1) necessity incriminating material in relation to search assessment year and (2) authenticity & veracity of basis adopted in estimating the income for the purpose of addition.

7.1 We observed from the notings made drawn from the contents of seized material referred in consolidated order of assessment and impugned orders that, the seized incriminating material relating to out of books purchases of raw material, production and sales. The deletion of daily weighing records supports by the ropes the conclusion drawn from the seized material. But for the solitary year in which search action was carried out i.e. for assessment year 2015-16. A statement of employee who confirmed to have erased weigh bridge data regularly on daily basis on very next day on the instruction of assessee’s General Manager Mr RK Singh so as to destroy data relating to out of books purchase of raw material, production and sales etc which never pulled back. Insofar as the incriminating documents found & seized at searched residential premise of director Mr RS it from the entries therein it was clearly established that the assessee company was indulged into out of books (i) cash purchase of raw material, (ii) daily production, and (iii) sales data etc. The admission by the director in the course of search action which was retracted after considerable lapse of time of two years was afterthought action to nullify the findings & undo the declaration as such it was forwarded without any corroborative evidences, reconciliation and explanation etc.

7.2 Thus the incriminating material played a key role in coming to conclusion that the production/sales declared by the assessee have been understated, suppressed or unaccounted.

Method & Basis of estimation

7.3 Since the transactions from IM were never found recorded in books of accounts maintained by the assessee company as verified from hard-disk mirrored from a computer seized at corporate office in survey proceeding u/s 133A of the Act, it was reasonably conclusive that those were out of books transaction undertaken by the assessee company. For the purpose of finding out the exact Revenue leakage, the Ld. AO collated the data gathered in the course of search and post search inquires with that of IMs, and after analysis came to a reasonable conclusion that, the assessee was indulged into out of books (i) cash purchases of raw material, (ii) production therefrom & (iii) sales thereof. These finding were concretised on the basis of excessive unit of electricity used/consumed by the assessee in relation to sponge iron claimed to have produced/manufactured. On the basis of reports, information and details gathered, the average standard rate of electricity unit required in producing per metric ton [‘MT’] was worked out to 45unit/MT. With the application this average standard rate of electricity unit consumption, actual production of sponge iron was cross worked out from the actual electricity consumption reported by the assessee & CPDCL.

7.4 In this way the Ld. AO worked out the unaccounted/supressed differential production of sponge iron and valued their sales at the average selling price adopted by the assessee for the respective years and in consequence added to the income in the search year. The assessee could hardly displace rational in adopting former method in the absence of actual figures of production, reconciliation of contents of incriminating material with that of books transactions etc. The only plea that, the admission made by Mr RS was subsequently retracted could hardly be of any help to pull to piece the presumption drawn u/s 292C of the Act. For search year, the Ld. AO having computed unrecorded or suppressed production/sales on the basis of standard electricity consumption (in units) required & certified by competent authority, did not slackly made of addition of entire value of suppressed production/sales but adopted a reasonable & prudent basis while making additions of profit element computed @ 3.85% being average rate of net profit earned by the assessee.

7.5 On an appeal, the Ld. CIT(A) simply deleted the entire addition on the basis of retraction statement, which was filed on 30/08/2016 that is most two years after admitting the contents in the course of search action on 16/10/2014. The Ld. CIT(A) in our considered view erred in deleting the addition blanketly without appreciating the fact, information, analysis, report and rational brought on record by the Ld. AO. In view thereof, we set-aside the impugned order and restore the assessment order for the search year in very terms. Thus, the sole & substantive ground of the Revenue is allowed

IT(SS)A No 17 to 22/JAB/2018 (Other than Search Asstt. Year)

8. Now coming to adjudication there arisen two points consideration viz (1) presence of incriminating material in relation to all seven assessment years under consideration and (2) authenticity & veracity of basis adopted in estimating the income for the purpose of addition.

8.1 We observed from the notings made drawn from the contents of seized material referred in consolidated order of assessment and impugned orders that, the seized incriminating material relating to out of books purchases of raw material, production and sales. The deletion of daily weighing records supports by the ropes the conclusion drawn from the seized material. But for the solitary year in which search action was carried out i.e. for assessment year 2015-16.

8.2 We find there is nothing on record to reasonably & effectively to suggest any finding & seizure of like incriminating material for each year falling within the block of six years for which re-assessment u/s 153A of the Act was initiated by the Revenue. On the other hand, the Revenue could hardly bring out like incriminating material i.e. LPS-1 to LPS-3 which could be read pertaining to any of the six years falling the period of block from AY 2009-10 to 2014-15. Thus, except for AY 2015-16, there was no incriminating material found & seized in the course of search so as to entitle the Revenue to alter the retuned income of the assessee in such unabated years.

8.3 Firstly in context of addition in any unabated or completed assessment year is concerned, such is permissible subject to discovery of incriminating material has been dealt with in a celebrated case ‘CIT Vs Kabul Chawla [2016, 380 ITR 573 (Delhi)], wherein their Hon’ble lordships have emphasised that in the absence of ‘incriminating material’, only abated proceedings are to be assessed, and unabated assessments must remain untouched. Thus, hon’ble Court categorically confined the Revenue’s intervening completed assessments only when such ‘incriminating material’ relating to such completed assessment is discovered. Further, a SLP against the decision of Hon’ble Delhi High Court in ‘PCIT Vs Meeta Gutgutia’ [2018, 257 Taxman 441] was dismissed by the Hon’ble Apex Court thereby upholding ratio laid in limiting the scope of reassessment u/s 153A subject to ‘incriminating material’ found during a search.

8.4 The incriminating material found & seized in search year i.e. AY 2015-16 wherein there mentioned nothing about the date of transactions or year of transaction to which it pertains, then in view of provisions of section 292C of the Act can constitute incriminating only for the year in which such material was found & seized. To our mindful consideration the is no provision in the statute to allow extrapolation of contents of incriminating document to multiple years. Therefore the Revenue was unlawful in drawing extrapolated presumption about the incriminating material for the block of six assessment years of assessment to extrapolate to block years.

8.5 The Hon’ble Supreme Court’s ruling in the case of ‘PCIT Vs Abhisar Buildwell (P.) Ltd.’ [2023, 454 ITR 212 (SC)] settled the dispute by putting a quietus to issue any that assessments stemming from search action must invariably be grounded on the basis of ‘incriminating material’ with a direct and year-wise connection, where an assessing officer must pinpoint which abated & unabated assessment years are tied-up to or tied with such ‘incriminating material’ found & seized during the course of search, and accordingly only those years individually & discretely be subjected to reassessment u/s 153A/153C of the Act.

8.6 In view of the foregoing judicial precedents(supra), it must be judicially concluded that, in the absence of incriminating material qua each of the assessment years falling within block of six assessment years, no addition is permissible in the instant bunch of first six appeals filed by the Revenue. For the aforestated reasons, we concur with the conclusion drawn by the Ld. CIT(A) in the impugned order in deleting the sole addition in relation to block period of six assessment years. In consequence, the solitary addition made on the basis of estimation of net profit attributable to unaccounted or suppressed production/sale is set-aside, ergo quashed the six assessment in very terms. The sole & substantive ground by the Revenue accordingly stands dismissed.

8.7 In result, the Revenue’s six appeals i.e. IT(SS)A No 17 to 22/JAB/2018 are dismissed.

Ground 2. Addition based on excess stock valuation found in the course of search/survey action (ITA No. 80/JAB/2018)

9. In relation to search asstt. year we note that,

9.1 in the course of search & seizure action on a physical verification of inventory/stock at the assessee’s factory premises a stock of raw material and finished good was found which whose value as per books were found recorded at ₹12,82,80,312/- by the assessee. The Ld. AO referred the same to DVO for valuation. It was observed in the course of assessment that, the net realisable value of such physical stock as per the Ld. DVO valuation was ₹13,71,75000/- as against the value carried in the books by the assessee. The discrepancies were confronted and assessee’s explanation were sought in the course of assessment. In the absence of any effective explanation about the nature & source of such excess valuation, the Ld. AO after according reasonable opportunity added the difference in value to the total income for the search year i.e. AY 2015-16.

9.2 On appeal by the assessee company, vide impugned adjudication laid in relation to ground 6 &7 the Ld. CIT(A) however deleted the addition turning down the Ld. AO findings on the premise that. ‘The AO has taken the stock as per books as 1378,476 MT, whereas actual coal stock as per books on specified date was 3367.866MT.

9.3 We have gone through the excise register maintained inform RG-1 register for the month of Oct, 2014 (Placed on pg 349/627 of the PB submitted by the assessee) and find that, the Ld. AO noted no discrepancies in the qty of stock but the value recorded in the books qua physical qty verified as on the date of search. The discrepancy was with reference to valuation that was referred to Ld. DVO and upon receipt thereof, the differential value of physical qty of raw material / finished stock etc., was added to the income as unexplained. Therefore we see no error in the action of Ld. AO bringing the supressed value / under valuation of inventory held but one with the impugned adjudication which was oversighted & carried away with the quantitative details narrated by the assessee.

9.4 In view thereof, we set-aside the impugned adjuration deleting the addition of differential value of stock as devoid of facts & merits of the case and restore the addition in very terms of assessment order. The second ground of the Revenue’s appeal thus also stands allowed.

9.5 In result, the Revenue’s ITA No 80/JAB/2018 stands allowed.

10. In result, the first six appeals of the Revenue are dismissed and seventh appeal is allowed.