“Mahamaya Steel Industries” Tangible Corroborative Evidence Required

The dispute arose from search proceedings conducted on a steel manufacturing company where the Assessing Officer alleged suppression of production and unaccounted sales based on estimated production yield of 89% in the Steel Melting Shop division. 

The assessment order relied heavily upon variations in electricity consumption, sponge iron usage, furnace oil consumption, and production trends to reject the books of account and make additions exceeding Rs. 16.61 crores.

Both the Commissioner (Appeals) and the Tribunal deleted the additions after concluding that the Revenue had failed to produce any direct evidence of suppressed sales, clandestine production, or unaccounted removals. 

The appellate authorities observed that suspicion arising from fluctuating consumption patterns or theoretical yield assumptions cannot substitute evidentiary proof.

The Chhattisgarh High Court affirmed the concurrent factual findings and held that rejection of books under Section 145(3) cannot be sustained merely on guesswork or hypothetical production assumptions.