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TMI Blog2014 (10) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... f a manufacturing company. In the order of assessment, which runs into 31 closely typed pages, such instances are galore. Obviously, to analyse and understand the approach of the Assessing Officer, the Tribunal discussed the matter at length. The order passed by it runs into 48 pages. At more places than one, it was pointed out that the stock available on ground, cannot be compared or verified with reference to the RG-I register. It was also pointed out that by-products or waste materials, such as slag, was treated by the Assessing Officer as the main product or an income yielding material and the conclusions were arrived at, only on the basis of assumptions. We agree with the findings recorded and view expressed by the Tribunal. An Income-tax Officer cannot carry out the functions of an authority under the Central Excise Act and arrogate to himself the power to determine the quantity of production, or to utter a final word on the intricacies of the manufacturing process, that too, without referring to any reliable material. The Assessing Officer, in the instant case, was totally unsuited for undertaking the activity of determining the exact production of the material, which itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998, to the effect that the assessee has undisclosed income of ₹ 1.78 crores, in the form of suppression of production of the material. 6. The assessee filed an appeal before the Tribunal. It was pleaded that most of the figures were arrived at by the Assessing Officer, on the basis of surmises and imaginations, and for all practical purposes, the Assessing Officer acted as though he is an authority under the Central Excise Act. The Revenue opposed the appeal and supported the order of assessment. The Tribunal partly allowed the appeal, deleting a sum of ₹ 89,45,465, being the cost of the alleged stock of finished products, noticed through discrepancies, and a sum of ₹ 23,80,000 representing the alleged unexplained share capital. The order of assessment in respect of other items was upheld. While the Department felt aggrieved by the said deletion, the assessee is of the view that the order of assessment ought to have been set aside, in its entirety. 7. Sri S. R. Ashok, learned senior counsel for the Revenue, submits that the search of the premises of the said concern has yielded valuable information, and on the basis of the same, the block assessment order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of excise duty. For all industries, that undertake the activity of processing or manufacturing metals, the Central Excise Department, insists on maintenance of registers, to monitor the activity of manufacture and the removal of finished products. This is obviously because, they cannot be expected to remain in the premises of the factory throughout. One such register is RG-I. 11. Even where the authorities of the Central Excise Department doubt the accuracy of figures mentioned in the registers, or if they find it difficult to understand the complexity of the manufacturing process, they seek the help of the experts. Sometimes experts are on the rolls of the Department itself, and on the other occasions, the service of experts outside the Department are availed of. The Assessing Officer under the Act can certainly look into various records of the assessee, to satisfy himself about the correctness of the facts and figures, or to come to his own conclusions about the income of the assessee. If it is a case of mere verification of books of account, or the registers that reflect the sale of any product, the Income-tax Officer can undertake the exercise by himself. Where, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss was claimed in the return of income. In its reply dated February 27, 1998, the assessee made similar sub missions as in the case of M/s. Srinivasa Ferro Alloys Ltd. the assessee claimed that the burning losses was within reasonable limits. It may be mentioned here that the burning loss of 56.33 per cent. the A3/24 register. The production processes for the production of manganese based alloys are same in the case of the assessee company and M/s. SFAL. There is no reason why the burning loss should be higher in the case of the assessee. Therefore, the objection of the assessee for the adoption of the same standard of burning loss as in the case of its sister company does not hold good. The higher claim of burning loss is on account of the fact that the assessee has carried out unaccounted production which is also evidenced by the existence of excess stocks of finished products as discussed above. In the background of the above discussion, the unaccounted production owing to the higher claim of burning loss of manganese ore is arrived at in the same method as was adopted in the case of M/s. Srinivasa Ferro Alloys Ltd. F.Y. Manganese ore consumed Production Recovery (%) (II/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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