ITO, Khanna V. M/s Regal Steel Rolling Mills, Khanna

ITA 218/CHANDI/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6531 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Income from undisclosed sources; Opportunity of being heard
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.218/CHD/2013 (ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER, VS. M/S REGAL STEEL ROLLING MILLS, WARD-III, KHANNA. VILL. ALOUR, GT ROAD, KHANNA. PAN: AAAFR9904L AND ITA NO.247/CHD/2013 (ASSESSMENT YEAR : 2009-10) M/S REGAL STEEL ROLLING MILLS, VS. THE INCOME TAX OFFICER, VILL. ALOUR, GT ROAD, KHANNA. WARD-III, KHANNA. PAN: AAAFR9904L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.MEENAKSHI VOHRA, SR. DR RESPONDENT BY : SHRI PARIKSHIT AGGARWAL, CA DATE OF HEARING : 05.09.2017 DATE OF PRONOUNCEMENT : 04.12.2017 ORDER PER ANNAPURNA GUPTA, A.M. : BOTH THE APPEALS, BY THE ASSESSEE AND THE REVENUE, HAVE BEEN FILED AGAINST THE ORDER OF LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 28.12.20 12 RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ISSUE IN BOTH THE APPEALS ARISES FROM THE SA ME SET OF FACTS AND ARE INTER-RELATED. BRIEFLY STATED THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF TMT BARS AND AN GLES. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED MONTH WISE DETAIL OF RAW MATERIALS CONSUMED AND ELECTRICI TY CONSUMPTION. THE ASSESSING OFFICER FOUND FROM THE S AME THAT THERE WAS WIDE VARIATION IN THE ELECTRICITY CO NSUMPTION 2 PATTERN VIZ-A-VIZ CONSUMPTION OF RAW MATERIAL VARYI NG FROM 87 UNITS OF ELECTRICITY CONSUMED PER METRIC TON (PM T) OF RAW MATERIAL CONSUMED IN THE MONTH OF MARCH 2009 TO 224.88 UNITS PMT OF RAW MATERIALS CONSUMED IN THE M ONTH OF JUNE, 2008. THESE FACTS WERE CONFRONTED TO THE A SSESSEE AND AFTER CONSIDERING THE ASSESSEES REPLY ON THIS ISSUE THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE WAS MANUFACTURING GOODS OUTSIDE THE BOOKS OF ACCOUN TS. HE, THEREFORE, HELD THAT PRODUCTION AND SALES WERE SUPPRESSED. THE ASSESSING OFFICER RECOMPUTED THE TO TAL PRODUCTION OF THE ASSESSEE BY TAKING AVERAGE CONSU MPTION OF ELECTRICITY AT 114 UNITS PMT OF RAW MATERIAL, W HICH WAS THE SECOND LEAST CONSUMPTION RATE (DURING THE MONT H OF JANUARY, 2009). BY APPLYING THIS RATE OF 114 UNITS PMT, THE ASSESSING OFFICER ARRIVED AT THE TOTAL CONSUMPTION OF RAW MATERIAL AT 9536.289 METRIC TON(MT) AS AGAINST 7209 .03 MT SHOWN BY THE ASSESSEE. THE DIFFERENCE OF 2327.259 M ETRIC TONS OF RAW MATERIAL WAS HELD TO BE ROLLED OUTSIDE THE BOOKS OF ACCOUNTS. THE YIELD ON THIS WAS COMPUTED AT THE RATE OF 94.594 WHICH CAME TO 2201.447 MT OF ANGLES AND 45 M ETRIC TONS OF MELTING SCRAP. ON THIS BASIS, THE ASSESSING OFFICER CALCULATED THE SALES MADE OUTSIDE THE BOOKS OF ACCO UNTS TO THE EXTENT OF RS.7,62,03,377/- AND ADDED THE SAME T O THE TURNOVER OF THE ASSESSEE. THE ASSESSING OFFICER FUR THER NOTED THAT THE ASSESSEE HAD DECLARED GROSS PROFIT R ATE OF 1.43% IN THE IMPUGNED YEAR, WHILE IN THE IMMEDIATEL Y PRECEDING YEARS I.E. A.YS. 2007-08 AND 2006-07 IT H AD SHOWN G.P. RATE 2.72% AND 2.19% RESPECTIVELY. THE 3 ASSESSING OFFICER ALSO FOUND THAT IN THE CASE OF A COMPARABLE COMPANY I.E. M/S. PARAM STEEL INDUSTRIES , MANDI, GOBINDGARH, G.P. RATE AT 4.07% WAS SHOWN. TH ESE FACTS WERE CONFRONTED TO THE ASSESSEE AND AFTER CON SIDERING THE ASSESSEES REPLY ON THE ISSUE THE ASSESSING OFF ICER HELD THAT IT WOULD BE REASONABLE TO TAKE G.P. RATE OF LA ST 2 YEARS IN THE ASSESSEES OWN CASE WHICH WORKED OUT TO 2.44 5%. THIS G.P. RATE WAS APPLIED TO THE TURNOVER AS ENHAN CED BY THE SALES FOUND TO HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ADDITION OF RS. 42,36, 612/- WAS MADE TO THE INCOME OF THE ASSESSEE. ADDITION WA S ALSO MADE ON ACCOUNT OF UNDERVALUATION OF MELTING SCRAP TO THE TUNE OF RS.2,97,900/-.FURTHER THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED U/S 145(3) OF THE INCOME TAX ACT,1961,ON ACCOUNT OF THE AFORESAID DISCREPANCIE S. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LEAR NED CIT(APPEALS) WHO UPHELD THE REJECTION OF BOOKS OF ACCOUNTS BUT DELETED THE ENHANCEMENT MADE TO THE TURNOVER OF THE ASSESSEE AND THE CONSEQUENT ADDITION MADE TO THE I NCOME BY COMPUTING G.P. @ 2.445 % THEREON. AT THE SAME TI ME, HE UPHELD THE ADDITION MADE BY APPLYING G.P. RATE OF 2 .445 % ON THE DECLARED TURNOVER AS AGAINST G.P RATE OF 1. 43% SHOWN BY THE ASSESSEE. FURTHER VIS A VIS THE ADD ITION MADE ON ACCOUNT OF UNDERVALUATION OF STOCK OF MELTI NG SCRAP, THOUGH THE LD.CIT(A) AGREED THAT THE ASSESSE E HAD UNDERVALUED THE SAME BUT THE ADDITION MADE WAS DELE TED 4 TELESCOPING IT IN THE TOTAL ADDITION MADE ON ACCOUN T OF ESTIMATION OF GP RATE. 4. AGGRIEVED BY THE SAME BOTH THE ASSESSEE AND THE REVENUE HAVE COME UP IN APPEAL BEFORE US. THE REVEN UE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(APPEALS) I N DELETING THE ENHANCEMENT MADE TO THE TURNOVER OF TH E ASSESSEE ON THE BASIS OF SUPPRESSED SALES AND THE CONSEQUENT DELETION OF THE ADDITION MADE BY APPLYI NG G.P. RATE OF 2.445% THEREON RAISING THE FOLLOWING GROUND S IN ITS APPEAL IN ITA NO. 218/CHD/2013 :- 1.(A) THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-LL , LUDHIANA, ON FACTS AS WELL AS IN LAW, HAS ERRED IN DELETING THE ADDITION OF RS.7,62,03,377/- TO THE GROSS TURNOVER OF THE ASSESSEE, WHICH WAS COMPUTED ON THE BASIS OF CONSUMPTION OF ELECTRICITY UNITS. (B) THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-LL, LUDHIANA HAS FAILED TO APPRECIATE THAT CONSUMPTION OF ELECTRIC ITY IS ONE OF THE MAJOR INPUTS AND IS A VALID BASIS FOR ESTIMATION OF PRODUCTION AND TURNOVER. 2. THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL)-LL,LUDHIANA BE SET ASIDE AND THAT OF THE A. O. BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED. 5. THE ASSESSEE, ON THE OTHER HAND, HAS CHALLENGED THE ACTION OF THE LEARNED CIT(APPEALS) IN UPHOLDING THE APPLICATION OF G.P. RATE OF 2.445% TO THE DECLARED TURNOVER OF THE ASSESSEE AS AGAINST 1.43% SHOWN BY THE ASSES SEE AND THE VALUATION OF STOCK OF MELTING SCRAP, RAISING TH E FOLLOWING GROUNDS IN ITS APPEAL IN ITA NO. 247/CHD/2013: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN UPHOLDING THE ACTION OF LD AO TO APPLY THE ENHANCED G.P (GROSS PROFIT) RAT E OF 2.445% INSTEAD OF ACTUAL RATE OF 1.43% CONTRARY T O 5 PRECEDENTS CITED SQUARELY APPLICABLE TO PRESENT FAC T SITUATION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT-A ERRED IN UPHOLDING THE ACTION OF LD AO TO APPLY THE ENHANCED G.P (GROSS PROFIT) RAT E OF 2.445% INSTEAD OF ACTUAL RATE OF 1.43% WITHOUT A NY 'SUBSTANTIAL' AND 'MATERIAL' ERROR IN 'AUDITED' BOOKS MAINTAINED BY ASSESSEE AND FULLY VOUCHED SALES AND PURCHASES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN UPHOLDING THE ACTION OF LD AO FOR ADJUSTMENT OF ALLEGED INCORRECT STOCK VALUATION OF MELTING SCRAPE AGAINST PRINCIPLE SETTLED BY SUPREME COURT IN CHAINRUP SAMPATRAM CASE 24 ITR 281, AND ERRONEOUSLY TELESCOPING THE SAME INTO ENHANCED GP RATE ADDITION. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AME ND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT TH E TIME OF HEARING OF THIS APPEAL. 6. DURING THE COURSE OF HEARING BEFORE US, OUR ATTE NTION WAS DRAWN TO THE FACT THAT IDENTICAL ISSUE OF ADDI TION MADE ON ACCOUNT OF UNACCOUNTED PRODUCTION AND SALES ON T HE BASIS OF DISPARITY IN ELECTRICITY CONSUMPTION PATTE RN IN THE CASE OF ROLLING MILLS HAS BEEN DEALT BY THE CHANDIG ARH BENCH OF ITAT IN THEIR ORDER IN THE GROUP OF CASES, WITH THE LEAD CASE BEING THE CROSS APPEALS IN M/S MODI OIL A ND GENERAL MILLS LTD. IN ITA NO. 149/CHD/2016 AND IN I TA NO. 112/CHD/2016 DATED 14.2.2017. THE COPY OF THE SAID ORDER WAS PLACED BEFORE US. REFERRING TO THE SAID ORDER, IT WAS POINTED OUT TO THE BENCH THAT THE ISSUE IN THE CASE WAS IDENTICAL WHEREIN ON ACCOUNT OF DISPARITY IN CONSUM PTION OF ELECTRICITY VIZ-A-VIZ RAW MATERIALS, THE BOOKS OF A CCOUNTS WERE REJECTED AND THEREAFTER TAKING THE LOWEST VALU E OF ELECTRICITY CONSUMPTION, THE ACTUAL PRODUCTION OF T HE ASSESSEE WAS ESTIMATED AND REDUCING THEREFROM THE F INISHED 6 GOODS AS SHOWN TO HAVE BEEN PRODUCED BY THE ASSESSE E, THE UNACCOUNTED PRODUCTION WAS CALCULATED. APPLYING THE REON THE AVERAGE SALE RATE, TOTAL UNACCOUNTED PRODUCTION WAS ESTIMATED IN MONETARY TERMS AND ADOPTING G.P. RATE SHOWN BY THE ASSESSEE UNACCOUNTED PROFIT WAS WORKED OUT A ND ADDED TO THE INCOME OF THE ASSESSEE. IT WAS POINTED OUT THAT THE AFORESAID FACTS IN THE PRESENT CASE ARE IDENTIC AL TO THAT IN M/S. MODI OIL AND GENERAL MILLS LTD. (SUPRA). TH EREAFTER, REFERRING TO THE ORDER IN THE CASE OF M/S. MODI OIL AND GENERAL MILLS LTD. (SUPRA), IT WAS POINTED OUT THAT ATTENTION HAD BEEN DRAWN TO THE BENCH IN THOSE GROUP CASES, T HAT AFTER PASSING OF THE ASSESSMENT ORDER, THE PR.CIT, PATIALA HAD CONSTITUTED A COMMITTEE TO VERIFY NORMAL VARIAT ION IN CONSUMPTION OF ELECTRICITY FOR MANUFACTURING OF EAC H METRIC TON OF FINISHED GOODS AND THE COMMITTEE HAD GIVEN A REPORT ON 25.5.2016 ON THE BASIS OF WHICH THE PR.CIT HAD I SSUED INTERNAL GUIDE LINES REFERRING ACCEPTANCE OF VARIAT ION UP TO 15%. IT WAS FURTHER POINTED OUT FROM THE ORDER THAT THE DR IN THE SAID CASES HAD VERIFIED THE STAND OF THE DEP ARTMENT BY SEEKING EXPLANATION FROM THE OFFICE OF THE PR. C IT, WHICH IN TURN, HAD AGREED TO THE SAME BY SUBMITTING LETTE R AS REPRODUCED IN THE ORDER AS UNDER:- OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOM E TAX AAYKAR BHAWAN. PATIALA PH:0175-221 4883/FAX: [phone] F.NO.PR. CIT/PTA/TECH/CONSP. OF ELECT/90/16-17 DATED : 30.01.2017 TO THE COMMISSIONER OF INCOME TAX (D.R.-1), INCOME TAX APPELLATE TRIBUNAL, ROOM NO. 402, 4 TH FLOOR, AAYKAR BHAWAN, HIMALAYA MARG, 7 SECTOR 17-E, CHANDIGARH-160017. SIR, SUB: APPEALS BEFORE THE ITAT IN RESPECT OF CASES OF CONSUMPTION OF ELECTRICITY VIZ-Z-VIZ SUPPRESSION/ UNACCOUNTED P RODUCTION OF MANDI GOBINDGARH- REGARDING - ********** KINDLY REFER TO YOUR OFFICE LETTER NO. 1064 DATED 24.01.2017 ON THE SUBJECT CITED ABOVE. 2. AS DESIRED, I HAVE BEEN DIRECTED TO INT IMATE THAT THE PARAWISE COMMENTS ON THE ARGUMENTS OF THE ASSESSEES , WHOSE CASES ARE PENDING BEFORE THE ITAT, CHANDIGARH, ARE BEING SENT AS UNDER:- I ) IT IS CONTE NDED THAT PR.COMMISSIONER OF INCOME TAX, PATIALA HAS ALREADY SUBSEQUENT TO PASSING OF ORDERS U/S 143(3) ISSUED SOME INTERNAL GUIDELINES REGARDING ACCEPTABILITY OF VARIATION UPTO 15% AND NO ADDITION HAVE BEEN MADE ON SIMILAR ISSUE IN SUBSEQUENT YEARS BY THE AO IN THE SAME CASES OF ASSESSEE ON SIMILAR ISSUES IN FAVOUR OF ASSESSEE. IN THIS REGARD, IT IS SUBMITTED THAT WITH REGARD TO PENDENCY OF APPEALS BEFORE THE HON'BLE ITAT PERTAINING TO ASSESSMENT YEARS 2010-11 TO 2012-13, ON THE ISSUE OF ELECTRICITY, THE DEPARTMENT HAS ESTIMATED THE UNACCOUNTED PRODUCTION AFTER REJECTING THE BOOKS OF ACCOUNTS BECAUSE THERE WAS WIDE VARIATION IN THE CONSUMPTION OF ELECTRICITY UNITS PER METRIC TON PRODUCTION OF FINISHED GOODS. THEREAFTER, FOR ESTIMATION U/S 144, IN CASE OF ROLLING MILLS, THE AVERAGE OF 30 DAYS AND IN CASE OF INDUCTION FURNACES 10 DAYS AVERAGE INVOLVING THE LEAST CONSUMPTION OF ELECTRICITY UNITS FOR PRODUCTION OF ONE METRIC TON WAS TAKEN TO WORK OUT THE ALLEGED UNACCOUNTED PRODUCTION ON WHICH GROSS PROFIT WAS APPLIED TO DETERMINE THE UNACCOUNTED INCOME. SIMILARLY, BY ADOPTING NUMBER OF HOLDING DAYS, UNEXPLAINED INVESTMENT IN THE ALLEGED UNACCOUNTED PRODUCTION WAS ESTIMATED. THEREAFTER, TAKING INTO CONSIDERATION THE GRIEVANCES AMONGST THE TAX PAYERS, A COMMITTEE WAS CONSTITUTED BY THE PR. COMMISSIONER OF INCOME TAX, PATIALA. THE SAID COMMITTEE WAS REQUIRED TO EXAMINE THE ACTUAL BUSINESS STATE OF AFFAIRS OF THE ASSESSEES ENGAGED IN PRODUCTION I.E. STEEL ROLLING MILLS AND FURNACES. THE COMMITTEE BY VISITING VARIOUS UNITS FOUND THAT VARIATION IN CONSUMPTION OF ELECTRIC UNITS OF DIFFERENT SIZES OF FINISHED GOODS PRODUCED ARE THERE. THEREFORE, THE COMMITTEE ONLY IN THOSE CASES WHERE THERE WAS WIDE VARIATION CONSIDERED THEIR CASES FOR THE PURPOSES OF REJECTION OF BOOKS OF ACCOUNTS. FURTHER, ON THE BASIS OF FINDING GIVEN BY VISITING VARIOUS UNITS, IT WAS DECIDED THAT UPTO 15% VARIATION IN THE CONSUMPTION OF ELECTRICITY UNITS PER MT OF FINISHED GOODS PRODUCED ARE JUSTIFIABLE AND 8 REASONABLE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF EACH CASE IN THE IRON & STEEL INDUSTRY BECAUSE ZERO VARIATION CANNOT BE VISUALIZED OR ACHIEVED BY ANY LEVEL OF TECHNOLOGY GIVEN THE DIFFERENT NATURE OF RAW MATERIAL, MACHINERY AND FINISHED GOODS. HOWEVER, IN THE EARLIER YEARS ONLY THE CYCLE INVOLVING MINIMUM NUMBER OF CONSUMPTION OF ELECTRICITY UNIT WAS CONSIDERED FOR ESTIMATION OF UNACCOUNTED PRODUCTION/INCOME WHICH WAS CULLED FROM ASSESSEES BOOKS OF ACCOUNT T O EXTRAPOLATE THE ALLEGED UNACCOUNTED PRODUCTION WHICH LED TO UNREASONABLE/UNJUSTIFIED ADDITIONS NOT BASED ON THE ACTUAL FACTS AND CIRCUMSTANCES OF THE ASSESSEES BECAUSE WHILE EXTRAPOLATING UNACCOUNTED PRODUCTION, THE AVERAGE INDUSTRIAL NORM OF NUMBER OF ELECTRICITY UNITS CONSUMED PER MT OF FINISHED GOODS WAS NOT TAKEN INTO CONSIDERATION. THERE ARE NUMBER OF CASES WHERE UNACCOUNTED PRODUCTION WAS EXTRAPOLATED EVEN BY TAKING 15 TO 20 UNITS OF ELECTRICITY FOR PRODUCTION OF PER MT FINISHED GOODS, WHICH IS IMPOSSIBLE. IN ORDER TO MAKE THE ESTIMATION U/S 144 MORE FAIR AND REASONABLE, IT WAS DECIDED TO ADOPT AVERAGE OF MINIMUM AND MAXIMUM NUMBER OF UNITS CONSUMED PER CYCLE OF 30 DAYS/10 DAYS ON THE BASIS OF BOOK'S OF ACCOUNT MAINTAINED BY EACH ASSESSES. THE IDEA WAS TO CONSIDER BOTH THE EXTREMES TO ARRIVE AT FAIR AND JUDICIOUS ESTIMATION OF INCOME. HOWEVER, THE DEPARTMENT HAS KEPT THE MAIN ISSUE ALIVE I.E. REJECTION OF BOOKS OF ACCOUNTS BY MODIFYING THE BASIS OF ESTIMATION OF UNACCOUNTED PRODUCTION ON THE BASIS OF MINIMUM AND MAXIMUM VALUE OF AVERAGE ELECTRICITY CONSUMED PER MT FOR A CONTINUOUS PERIOD OF 30 DAYS IN THE CASE OF ROLLING MILLS AND 10 DAYS IN THE CASE OF FURNACES, ALONGWITH UNEXPLAINED INVESTMENT IN UNACCOUNTED PRODUCTION. IT IS WORTHWHILE TO MENTION HERE THAT EVERY YEAR IS AN INDEPENDENT ASSESSMENT YEAR. HOWEVER; CONSIDERING THE FACTS & CIRCUMSTANCES OF EACH CASE, THE APPEALS MAY BE DECIDED ON MERITS. II) IT IS ALSO CONTENDED THAT IN SOME CASES OF SUBSEQUENT ASSESSMENT YEARS OF THESE ASSESSEES, THE ASSESSING OFFICERS HAVE MADE ADDITIONS THE DECISION OF THE LD. CIT(A), PATIALA IN ESTIMATING TOTAL UNDISCLOSED INVESTMENT IN RESPECT OF THAT UNACCOUNTED PRODUCTION AT HALF OF THE PEAK UNACCOUNTED PRODUCTION COMPUTED ON MONTHLY BASIS I.E. 15 DAYS WAS 9 YOURS FAITHFULLY, SD/- ( BALDEV SINGH ) INCOME TAX OFFICER HQ.)(TECH.),PATIALA 7. THE BENCH AFTER CONSIDERING THE ABOVE SUBMISSION RESTORED THE ENTIRE CASE TO THE ASSESSING OFFICER F OR RECONSIDERATION IN ACCORDANCE WITH THE INTERNAL GUI DE LINES ISSUED BY THE PR. CIT AND OUR ATTENTION WAS DRAWN T O THE RELEVANT FINDING OF THE ITAT AT PARA 10 OF THE ORDE R GIVING THE AFORESAID DIRECTION AS UNDER: 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE INTERNAL GUIDELINES ISSUED BY THE PR. COMMISSIONER OF INCOME TAX, PATIALA BY FORMING A COMMITTEE TO CONSIDER THE GRIEVANCE OF THE TAX PAYERS, IT IS CLEAR THAT REVENUE DEPARTMENT HAS TAKEN SOME REASONABLE BASIS TO COMPUTE THE INCOME OF THE ASSESSEE ON THE BASIS OF THE POWER CONSUMPTION. IT IS ADMITTED FACT THAT IN SUBSEQUENT YEARS, SOME FAVOURABLE VIEW HAVE BEEN TAKEN IN FAVOUR OF THE ASSESSEES BY FOLLOWING THE SAME GUIDELINES. IT MAY BE NOTED HERE THAT THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE REJECTION OF THE BOOKS OF ACCOUNT UNDER SECTION 145(3)/144 OF INCOME TAX ACT ALONGWITH UPHOLDING OF THE ADDITION OF RS. 55,78,521/- ON ACCOUNT OF UNACCOUNTED INVESTMENT AGAINST ADDITION OF RS. 1,29,13,563/-. IN THE GROUND OF APPEAL ALSO, ASSESSEE HAS STATED THAT LD. CIT(APPEALS) HAS ERRED IN NOT GIVING ANY AFTER CONSIDERING FAVORABLY ONE THIRD OF SUCH VARIATION INSTEAD OF HALF PERCENT AS ALLOWED BY THE CIT(APPEALS), PATIALA IN CASES UNDER APPEAL. NOT ACCEPTED BY THE DEPARTMENT AS THE AOS HAVE ADOPTED THE QUANTUM OF ELECTRICITY CONSUMED PER MT ON THE BASIS OF MINIMUM VALUE OF AVERAGE ELECTRICITY CONSUMED PER MT FOR A CONTINUOUS PERIOD OF 30 DAYS ASSUMING THAT WITHIN A PERIOD OF 30 VARIOUS TYPES AND SIZES OF FINISHED GOODS WOULD HAVE BEEN PRODUCED. THE DEPARTMENT IS ALREADY IN APPEAL BEFORE THE ITAT ON THE DECISION OF THE CIT(APPEALS). FURTHER, THE AOS EXAMINED THE ISSUES HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF EACH CASE AS AGAINST APPLYING ANY UNIFORM CRITERIA. ALL THE ISSUES INVOLVED THEREIN WERE EXAMINED BY THE RESPECTIVE AOS ON CASE TO CASE BASIS. 10 FINDING AGAINST ADDITION OF RS. 60,88,005/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED PROFIT OUT OF UNACCOUNTED PRODUCTION. THE REVENUE DEPARTMENT IN THEIR APPEAL HAS CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN RESTRICTING THE ADDITION OF RS. 1,90,01,568/- TO THE EXTENT OF RS. 1,16,66,526/-. SINCE ALL THE RESPECTIVE GROUNDS OF APPEAL IN CROSS APPEALS ARE CONNECTED WITH ESTIMATION OF THE UNACCOUNTED PRODUCTION BASED UPON POWER CONSUMPTION BY ESTIMATING UNACCOUNTED INVESTMENT AND UNACCOUNTED PROFIT OUT OF UNACCOUNTED PRODUCTION AND ON THE SAME, REVENUE DEPARTMENT HAS CONSTITUTED THE COMMITTEE TO CONSIDER THE GRIEVANCES OF THE ASSESSEES/TAX PAYERS AND LD. PR. COMMISSIONER OF INCOME TAX ISSUED THE ABOVE GUIDELINES BY MODIFYING THE BASIS OF ESTIMATION OF UNACCOUNTED PRODUCTION AND SAME GUIDELINES HAVE BEEN ADOPTED IN SUBSEQUENT YEARS BY THE RESPECTIVE ASSESSING OFFICERS, THEREFORE, IN OUR CONSIDERED VIEW, ENTIRE MATTER REQUIRES RE- CONSIDERATION AT THE LEVEL OF THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE ENTIRE ISSUE TO THE FILE OF ASSESSING OFFICER I.E. REJECTION OF THE BOOKS OF ACCOUNT UNDER SECTION 145(3)/144, UNACCOUNTED PRODUCTION OF FINISHED GOODS, UNACCOUNTED PROFIT AND UNACCOUNTED INVESTMENT OUT OF UNACCOUNTED PRODUCTION WITH REFERENCE TO CONSUMPTION OF ELECTRICITY UNITS PER METRIC TON PRODUCTION OF FINISHED GOODS WITH DIRECTION TO RE-DECIDE THE ENTIRE ISSUE IN ACCORDANCE WITH LAW IN THE LIGHT OF THE INTERNAL GUIDELINES ISSUED BY THE LD. PR. COMMISSIONER OF INCOME TAX, PATIALA. THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ASSESSEE SHALL BE AT LIBERTY TO RAISE ANY CONTENTION BEFORE ASSESSING OFFICER FOR COMPLETION OF THE ASSESSMENT IN ACCORDANCE WITH LAW. 8. IT WAS SUBMITTED, THEREFORE, THAT SINCE THE ISS UE IN THE PRESENT CASE WAS IDENTICAL, THE MATTER BE RESTORED BACK TO THE ASSESSING OFFICER TO BE CONSIDERED AFRESH IN TH E LIGHT OF THE INTERNAL GUIDE LINES ISSUED BY THE PR. CIT REGA RDING ACCEPTABLE VARIATION IN ELECTRICITY CONSUMPTION PAT TERN. 9. BOTH THE PARTIES AGREED BEFORE US THAT THE FACT S AND THE ISSUE IN THE PRESENT CASE WERE IDENTICAL TO THA T IN M/S. 11 MODI OIL AND GENERAL MILLS LTD. (SUPRA) AND ALSO AGREED TO THE RESTORATION OF THE ISSUE TO THE ASSESSING OFFIC ER TO REDECIDE THE ISSUE IN ACCORDANCE WITH LAW IN THE LI GHT OF THE INTERNAL GUIDELINES OF THE PR.CIT, PATIALA VIS A VI S ACCEPTABLE VARIATION IN ELECTRICITY AS DIRECTED IN THE GROUP OF CASES IN M/S MODI OIL AND GENERAL MILLS LTD. (SU PRA). 10. HAVING HEARD BOTH THE PARTIES AND AFTER HAVING GONE THROUGH THE ORDER OF THE ITAT CHANDIGARH BENCH IN M /S MODI OIL AND GENERAL MILLS LTD. (SUPRA), WE ARE CONVINCED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS ID ENTICAL TO THAT IN THE CASE OF M/S. MODI OIL AND GENERAL MILLS LTD. (SUPRA). THE ADDITION IN THE PRESENT CASE OF THE ASSESSEE, BEING IN THE BUSINESS OF ROLLING MILLS PRODUCING TM T BARS AND ANGLES, HAS BEEN MADE ON ACCOUNT OF DISPARITY I N CONSUMPTION OF ELECTRICITY PATTERN VIZ-A-VIZ RAW MA TERIALS CONSUMED, WITH THE AO HAVING ARRIVED AT A FINDING O N THIS BASIS THAT THE ASSESSEE HAS SUPPRESSED/ PRODUCED AN D SOLD GOODS OUTSIDE THE BOOKS OF ACCOUNTS. AS SUBMITTED B EFORE THE BENCH IN THE CASE OF MODI MILLS (SUPRA), ON ACC OUNT OF REPRESENTATION FROM VARIOUS ROLLING MILL OWNERS WHO HAD BEEN AFFECTED BY ADDITIONS MADE ON THIS ACCOUNT, A COMMITTEE HAD BEEN CONSTITUTED TO DETERMINE THE NOR MAL VARIATION IN THE PATTERN OF ELECTRICITY CONSUMPTION , WHICH IN ITS REPORT HAD SUBMITTED ACCEPTABLE VARIATION OF 15 %. IT WAS ALSO OBSERVED IN THE SAID ORDER THAT THE REVENUE AU THORITIES IN SUCCEEDING YEARS HAD BEEN DECIDING CASES ON IDEN TICAL ISSUE FOLLOWING THESE GUIDE LINES WHICH HAD BEEN AC CEPTED 12 BY THE DEPARTMENT ITSELF AND ON THIS BASIS THE ITAT HAD RESTORED THE MATTER BACK TO THE ASSESSING OFFICER T O REDECIDE THE ISSUE IN ACCORDANCE WITH LAW IN THE L IGHT OF THE GUIDELINES ISSUED BY THE PR.CIT, PATIALA IN TH IS REGARD AND ACCEPTED BY THE REVENUE IN LATER YEARS. 11. IN VIEW OF THE SAME SINCE THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO M/S. MODI OIL AND GENERAL MILLS LT D. (SUPRA), WE ACCORDINGLY, FOLLOWING THE ORDER OF THE ITAT IN THE SAID CASE, RESTORE THE MATTER DENOVO TO THE ASS ESSING OFFICER TO RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE INTERNAL GUIDELINES ISSUED BY THE PR. CIT IN THIS R EGARD AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH THE LAW. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF BEING HEARD IN THIS REGARD AND IS FREE TO ADDUCE AL L EVIDENCES WHICH IT WISHES TO RELY UPON IN SUPPORT O F ITS CONTENTIONS. IN VIEW OF THE ABOVE, THE CROSS APPEAL S OF THE ASSESSEE AND THE REVENUE STAND ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 4 TH NOVEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 13