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Informist, Wednesday, May 6, 2026

 

NEW DELHI – The Supreme Court has rejected the income tax department's plea to make an addition of INR 166.19 million to Mahamaya Steel Industries Ltd.'s income for allegedly suppressing its yield and indulging in unaccounted production and sales in the company's steel melting shop division. "We do not find a good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed," said a bench of Justice Manoj Misra and Justice Manmohan.

 

Mahamaya Steel is engaged in the manufacturing of re-rolled products such as heavy steel structural, joist and girder. The income tax department had conducted search and seizure on the premises of Mahamaya Steel in 2011 and the assessment of income was completed in 2014 for the assessment year 2010-11. Thereafter, the assessing officer made an addition on account of unaccounted sales by Mahamaya Steel based on an estimated production yield of 89% in its steel melting shop division. The assessing officer had adopted an estimated yield ratio and proceeded to calculate alleged unaccounted production and consequential sales, resulting in substantial additions over multiple years. 

 

The income tax department said that during the search and seizure action, a short stock of finished goods and raw material was found. The actual production shown by Mahamaya Steel was much less than the installed capacity and even the capacity utilisation varied from year to year, it said.

 

Thereafter, the Chattisgarh High Court held that while making the assessment, the income tax officer was not entitled to make a pure guess and an assessment without reference to any evidence or any material at all. The rejection of books of accounts by the income tax department was invalid and addition made by the assessing officer on account of alleged suppression of yield was based upon mere guess work, the high court said. 

 

At 1328 IST, shares of Mahamaya Steel Industries Ltd. were down 5% at INR 820.00 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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