Cost Audit Report

Departmental Knowledge Defeats the Extended Period: Calcutta High Court Quashes a Central Excise Demand Founded on the Assessee's Own Cost Audit Report

Hindalco Industries faced a Central Excise demand of Rs. 6,29,920 built entirely on its own Cost Audit Report, three years after departmental officers had personally witnessed the very stock shortages now called suppression. The Calcutta High Court held the extended period of limitation unavailable: what the proviso to Section 11A requires is a deliberate act of concealment by the assessee, not the mere absence of departmental knowledge, and a demand cannot simultaneously rest on a statutory record and be founded on its suppression.