DCIT-2(1) Vs Mahamaya Steel Industries Ltd. (Chhattisgarh High Court)
No Addition for Suppressed Production Without Evidence; Chhattisgarh HC Rejects Tax Addition Based on Arbitrary 89% Production Yield Estimate; Income Tax Addition Set Aside as AO Failed to Prove Unaccounted Sales; Chhattisgarh HC Upholds ITAT Order Deleting Addition for Alleged Low Production Yield; Rejection of Books Invalid Without Tangible Evidence; Chhattisgarh HC Says Tax Assessments Cannot Rest on Bare Suspicion; Estimated Yield Comparison With Other Units Insufficient for Tax Addition: Chhattisgarh HC
The appeal before the Chhattisgarh High Court arose under Section 260A of the Income Tax Act, 1961. The Revenue challenged the order of the Income Tax Appellate Tribunal (ITAT), which had deleted an addition of ₹15,94,08,394 made by the Assessing Officer (AO) against the assessee company engaged in manufacturing re-rolled steel products such as heavy steel structural, joist, and girder.
Read SC Judgment in this case: Additions for Unaccounted Sales Cannot Be Based on Mere Suspicion or Estimated Production Yield: SC
A search and seizure operation was conducted at the assessee’s premises on 21 June 2011. Pursuant to this, assessment proceedings for Assessment Year 2016-17 were completed under Section 153A read with Section 143(3) of the Income Tax Act on 27 December 2018. The AO alleged that the assessee had suppressed production and indulged in unaccounted sales in its Steel Melting Shop (SMS) Division by declaring a lower production yield.
