M/S Bhoday Steel Rolling Mills, Mandi Gobindgarh V. Income Tax Officer, W-1, Mandi Gobindgarh

ITA 248/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1096 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-06-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA CIT
• Keywords: Rejection of books of accounts; Unexplained investment; Income from undisclosed sources; Rule of consistency; Set aside
• Section: 13; 145(3); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 248/CHD/2019 / ASSESSMENT YEAR : 2011-12 M/S BHODAY STEEL ROLLING MILLS, G.T. ROAD, KHANNA SIDE, MANDI GOBINDGARH. VS THE ITO, WARD 1, MANDI GOBINDGARH. ./ PAN NO: AABFB1257H / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI TEJ MOHAN SINGH # ! ' / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT $ % ! &/ DATE OF HEARING : 24.06.2021 '()* ! &/ D ATE OF PRONOUN CEMENT : 05.07.2021 HEARING CONDUCTED VIA WEBEX $%/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 17.12.2018 OF CI T(A)-I PATIALA PERTAINING TO 2011-12 ASSESSMENT YEAR IS ASSAILED O N THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST THE FAC TS OF THE CASE AND IS BAD IN LAW. 2. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE,THE I D.CIT(A) HAS ERRED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS SOLELY ON THE BASIS OF VARIATION IN ELECTRIC CONSUMPTION. 3. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE.THE L D.CIT(A) HAS ERRED IN DRAWING ADVERSE INFERENCE FROM SLIGHTLY HIGHER VARI ATION IN ELECTRIC COMSUMPTION IN TWO CYCLES ONLY,THAN THE ARBITRARILY CONSIDERED BENCHMARK OF 15% . ITA 248/CHD/2019 A.Y. 2011-12 PAGE 2 OF 14 4. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.9,75,098/- ON ACCOUNT OF GROSS PROFIT ON THE ALLEGED UNACCOUNTED SALES AND RS.72,42,835/-ON ACCO UNT OF INVESTMENT IN ALLEGED UNACCOUNTED PRODUCTION,THOUGH TELESCOPED WI TH LAST YEAR INVESTMENT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD. AMEND OR DE LETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS FINALLY HEARD & DISPOS ED OFF. 2. THE PRESENT APPEAL HAS COME UP FOR HEARING IN TH E BACKGROUND WHERE THE ISSUES WERE STATED BY THE LD. AR TO BE FULLY COVERED IN FAVOUR OF THE ASSESSEE. FOR THIS CLAIM, RELIANCE HAD BEEN PLACED UPON THE ORDER OF THE ITAT DATED 11.11. 2020 IN ITA 818/CHD/2019 AND ITA 879/CHD/2019 M/S KRIPALU STRIPS VS ITO WHEREIN THE CROSS APPEALS OF THE ASSESSEE AND THE R EVENUE WERE DECIDED BY THE CO-ORDINATE BENCH WHERE SIMILAR ISSUE CAME UP FOR CONSIDERATION. FOR THE SAID PURPOSE, THE LD. AR HAD DRAWN SPECIFIC ATTENTION TO THE ISSUES AS CONSIDERED AND DECIDED BY THE ITAT WHEREIN THE ASSESSEE'S GRIEVANCE ON REJECTION OF BOOKS OF ACCOUNT ADDRESSED IN PAGE 2 PARA 2 WAS RAISED BEFOR E THE ITAT AND WAS DECIDED IN ITS FAVOUR. 3. ACCORDINGLY, IN THE BACKGROUND OF THE SAID SUBMI SSIONS WHEN THE APPEAL CAME UP FOR HEARING, LD. AR REITERA TING HIS EARLIER POSITION DREW ATTENTION TO GROUND NO. 2 ADD RESSED BY THE ASSESSEE IN M/S KRIPALU STRIPS VS ITO ITA NO. 818 & 879/CHD/2019 NAMELY; THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, THE WORTHY CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE ACTION OF LD. AO WHEREIN HE HAD REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT MERELY ON SUSPICION OF HIGHER PRODUCTION ON THE BAS IS OF ELECTRICITY ITA 248/CHD/2019 A.Y. 2011-12 PAGE 3 OF 14 CONSUMPTION. THE ISSUE, IT WAS SUBMITTED, WAS DECIDED IN ASSESSE E'S FAVOUR. SPECIFIC FINDING ARRIVED AT IN PAGE 14 PAR A 7 WAS RELIED UPON WHEREIN RELIANCE HAD BEEN PLACED UPON THIS TRI BUNALS COORDINATE BENCH DECISION IN ITO VS M/S BABA BALAK NATH STEELS PVT. LTD . IN ITA NO. 44/CHD/2019 DATED 06.08.2019 AND VARI OUS OTHER DECISIONS REFERRED TO IN PAGE 18 PARA 18 NAME LY ITO VS M/S HANSCO IRON & STEEL P LTD. IN ITA NO. 397/CHD/2017 AND ITO VS M/S KAILASH STEEL ROLLING MILLS IN ITA NO. 398/CHD/2017 DATED 03.10.2017, CONSIDERING WHICH THE APPEAL OF THE REV ENUE WAS DISMISSED AND THE ASSESSEE'S APPEAL WAS ALLOWED. P AGE 23 PARA 9 OF THE ORDER OF THE ITAT WAS RELIED UPON. 4. APART FROM THAT, IT HAD ALSO BEEN HIS SUBMISSION THAT CONSISTENTLY THE ASSESSEE HAS BEEN ASKING FOR AN OP PORTUNITY TO CROSS EXAMINE THE PERSONS ON WHOM RELIANCE HAS BEEN PLACED BY THE DEPARTMENT. 4.1 SPECIFIC REFERENCE WAS MADE TO PAGE 14-15 OF TH E ASSESSMENT ORDER WHEREIN THE ASSESSEE'S SUBMISSIONS TO THE SAID EXTENT HAS BEEN EXTRACTED BY THE AO HIMSELF. 4.2 ATTENTION WAS ALSO INVITED TO A SIMILAR PRAYER MADE BEFORE THE CIT(A) AND THE SUBMISSIONS HAVE BEEN EXTRACTED IN PARA 4.6 AT PAGE 7 AND 8. 4.3 ARGUMENTS HAVE BEEN ADVANCED THAT THE DECISION OF THE APEX COURT IN THE CASE OF MELTON INDIA VS CIT (CIVI L APPEAL NO. ITA 248/CHD/2019 A.Y. 2011-12 PAGE 4 OF 14 372 OF 2007) IS NOT APPLICABLE TO FACTS HAS ALSO BE EN ARGUED BEFORE THE CIT(A) AND THE ARGUMENT IS EXTRACTED AT PAGE 11. VARIOUS OTHER DECISIONS OF THE ITAT ADDRESSING SIMI LAR ISSUE HAD BEEN REFERRED TO. 4.4 RELIANCE HAD ALSO BEEN PLACED ON A LATEST DECIS ION OF THE APEX COURT IN THE CASE OF CIT VS M/S R.A. CASTINGS PVT. LTD. 2011( 269) E.L.T. 337 (ALL.) AND IN THE DECISION CITED AT PAGE 16 OF THE IMPUGNED ORDER I.E. ITO V. ARORA ALLOYS LTD., L UDHIANA IN ITA NO. 78/CHD/2012 OF THE CHD BENCH) [ 17 ITR AT SECTI ON 133- 424), REFERENCE HAS BEEN MADE TO SIMILAR LEGAL POSI TION OF RELYING ON INFORMATION SOUGHT AT THE BACK OF THE ASSESSEE W ITHOUT AFFORDING AN OPPORTUNITY TO CROSS EXAMINE STANDS AD DRESSED. THE ACTION HAS BEEN DEPRECATED. 4.5 ACCORDINGLY, IT WAS BEEN HIS PRAYER THAT THE IS SUE IS COVERED IN HIS FAVOUR. 5. THE LD. AR REFERRING TO THESE ARGUMENTS MADE ON THE EARLIER DATE, DREW ATTENTION TO THE FACT THAT TIME WAS GIVE N TO THE LD. SR.DR MS. M. VOHRA TO GO THROUGH THE ORDER OF THE I TAT DATED 11.11.2020 IN M/S KRIPALU STRIPS VS ITO ITA NO. 818 & 879/CHD/2019 RELIED UPON AND CONSIDERED THE SUBMISS IONS. 6. MS. VOHRA ON THE NEXT DATE ON PERUSAL OF THE R ECORD SUBMITTED THAT FACTS IN THE PRESENT CASE INDEED REM AIN IDENTICAL AS CONSIDERED IN M/S KRIPALU STRIPS VS ITO (SUPRA). ON THE ITA 248/CHD/2019 A.Y. 2011-12 PAGE 5 OF 14 ISSUE OF INFORMATION SOUGHT BY THE ASSESSEE TO CROS S EXAMINE THE INFORMATION/REPORT ETC. RELIED UPON, SHE AGREED IT WAS NOT ADDRESSED. IN THE ABSENCE OF ANY DISCUSSION THERE ON, SHE PLACED RELIANCE ON THE RESPECTIVE ORDERS OF THE ITAT. THE POSITION OF LAW AS CANVASSED IN M/S KRIPALU STRIPS VS ITO (SUPRA) A ND RELIANCE ON R.A. CASTINGS PVT. LTD. DECISION OF THE APEX CO URT LATEST IN POINT OF TIME AND FOUND CONSIDERED AS OPPOSED TO TH E CASE OF MELTON INDIA (SUPRA) WAS NOT DISPUTED. 7. THE LD. AR IN REPLY SUMMED UP THE POSITION OF LA W AS ARGUED AND RELYING ON THE SAME IT WAS HIS SUBMISSION THAT GROUND NO. 2 FOLLOWING THE PROPOSITION OF LAW AS CONSIDERED BY T HE ITAT IN IDENTICAL CASES DESERVES TO BE ALLOWED AND IN THE C IRCUMSTANCES, FOLLOWING THE PRECEDENT THE ADDITIONS MADE WHICH AR E ADDRESSED IN GROUND NOS. 3 AND 4 ARE NOT MAINTAINABLE AS AFTE R UPHOLDING THE SAID GROUND, ADDITIONS CANNOT BE SUSTAINED. 8. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. IN THE FACTS OF THE PRESENT, IT IS SEEN TH AT TO THE RETURNED INCOME OF THE ASSESSEE OF RS. 4,98,332/-, ADDITION OF RS. 9,75,098/- WAS MADE ON ACCOUNT OF UNDISCLOSED PRODU CTION AND INVESTMENT IN STOCK ARRIVED AT ON THE BASIS OF VARI ATION IN ELECTRICITY CONSUMPTION AND CALCULATIONS AS CONSIDE RED IN VARIOUS IDENTICAL CASES. IT IS SEEN THAT SIMILAR ISSUES HAV E BEEN CONSIDERED BY THE ITAT IN ITS LATEST ORDER DATED 11 .11.2020 IN ITA ITA 248/CHD/2019 A.Y. 2011-12 PAGE 6 OF 14 818 & 879/CHD/2019 IN THE CASE OF M/S KRIPALU STRIPS VS ITO (SUPRA). IT IS SEEN THAT BEFORE THE CO-ORDINATE BENCH IN S IMILAR SET OF FACTS AND CIRCUMSTANCES FOLLOWING GROUND NO. 2 HAD BEEN RAISED BY THE ASSESSEE : THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION O F LD. AO WHEREIN HE HAD REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT MERELY ON SUSPICION OF HIGHER PRODUCTION ON THE BAS IS OF ELECTRICITY CONSUMPTION. 9. THE ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH IN PARA 7 PAGE 14 OF ITS ORDER. THE DETAILED REASONIN G FOR THE SAKE OF COMPLETENESS IS EXTRACTED HEREUNDER: 7. AFTER GIVING THOUGHTFUL CONSIDERATION TO THE ABOVE STATED RIVAL ARGUMENTS, WE FIND NO MERIT IN THE REVENUE'S STAND THAT THE AS SESSING OFFICER'S THREE FOLDED ACTION INTER ALIA IN REJECTING THE ASSESSEE' S BOOKS OF ACCOUNT FOLLOWED BY GROSS PROFIT ELEMENT ON ALLEGED UNACCOUNTED PROD UCTION OF RS. 13,04,677/- AS WELL AS UNACCOUNTED INVESTMENT IN STOCK OF RS. 1 ,62,54,188.78. CASE RECORDS INDICATE THAT THIS ISSUE OF REJECTION OF BO OKS OF ACCOUNT BASED ON DIFFERENCE IN POWER CONSUMPTION OF THE RELEVANT PRE VIOUS YEAR TURNING ACT TO BE EXCESSIVE THAN THE SO CALLED TOLERABLE LIMIT OF 15% IS NO MORE RES-LNTGRA. THIS TRIBUNAL'S COORDINATE BENCH DECISION ITO VS M/ S BABA BALAK NATH STEELS PVT. LTD. IN ITA NO. 44/CHD/2019 DATED 06/08 /2019 HAS REJECTED REVENUE'S IDENTICAL STAND AS FOLLOWS: '3. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CON SIDERATION ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURI NG OF STEEL PRODUCTS. DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF DA ILY PRODUCTION OF FINISHED GOODS AS WELL AS THE DETAILS OF THE MANUFA CTURING PROCESS INVOLVED. ON EXAMINATION OF THE DETAILS, THE ASSESS ING OFFICER OBSERVED THAT THE AMOUNT OF ELECTRICITY CONSUMED WA S DIRECTLY RELATED TO THE PRODUCTION OF FINISHED GOODS. IN ORD ER TO CO-RELATE THE CONSUMPTION OF ELECTRICITY VIS-A-VIS PRODUCTION SHOWN, THE ASSESSING OFFICER GATHERED INFORMATION REGARDING TH E CONSUMPTION OF ELECTRICITY FROM THE ELECTRICITY BOARD. THE ASSE SSING OFFICER ANALYZED THE CONSUMPTION DATA OF ELECTRICITY VIS-A VIS THE PRODUCTION OF FINISHED GOODS AND OBSERVED THAT THER E WERE WIDE VARIATION IN RATIO OF ELECTRICITY UNITS CONSUMED TO PER METRIC TONS OF FINISHED GOODS PRODUCED DURING THE YEAR. HE FURT HER OBSERVED ITA 248/CHD/2019 A.Y. 2011-12 PAGE 7 OF 14 THAT ON SOME DAYS, ELECTRIC UNITS CONSUMED WERE VER Y LOW WHEREAS FINISHED GOODS PRODUCED WERE VERY HIGH GIVING A VER Y LOW VALUE OF ELECTRIC UNITS CONSUMED TO PER TON OF FINISHED G OODS, WHEREAS ON SOME OTHER DAYS, ELECTRIC UNITS CONSUMED WERE VE RY HIGH WHEREAS THE FINISHED GOODS PRODUCED WERE VERY LESS GIVING A VERY HIGH VALUE OF ELECTRIC UNITS CONSUMED PER METRIC UN IT OF FINISHED GOODS. HE FURTHER OBSERVED THAT EVEN ON SOME DAYS T HOUGH THERE WAS ELECTRICITY CONSUMPTION YET NO PRODUCTION WAS S HOWN. HE FURTHER NOTED THAT OTHERWISE ON OTHER DAYS, THERE W AS ALSO A BALANCE AND CONSISTENCY IN CONSUMPTION OF ELECTRIC UNITS VISA-VIS PRODUCTION OF FINISHED GOODS. HE, THEREFORE, OBSERV ED THAT IT INDICATED THAT THE DAILY PRODUCTION RECORDED BY THE ASSESSEE OF THE FINISHED GOODS WAS NOT CORRECT AND, HENCE, NOT RELI ABLE. HE OBSERVED THAT THE DATA RELATING TO THE DAILY PRODUC TION HAD NOT BEEN MAINTAINED AS PER ACTUAL PRODUCTION. WHEN CONF RONTED IN THIS RESPECT, THE ASSESSEE EXPLAINED THAT THE CONSU MPTION OF ELECTRICITY WAS DEPENDENT ON VARIOUS FACTORS AS DET AILED IN HIS REPLY WHICH HAS BEEN REPRODUCED BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER, HOWEVER, W AS NOT SATISFIED WITH THE ABOVE REPLY OF THE ASSESSEE. HE ULTIMATELY HELD THAT THE ASSESSEE COMPANY WAS INVOLVED IN UNACCOUNT ED PRODUCTION OF FINISHED GOODS WHICH RESULTED IN UNAC COUNTED SALES AND PURCHASES. HE, THEREFORE, HELD THAT THE SALE AN D PURCHASE FIGURES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WER E NOT CORRECT AND HE ACCORDINGLY REJECTED THE BOOKS OF ACCOUNTS O F THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND PROCEEDED TO FRA ME THE ASSESSMENT IN THE MANNER AS PROVIDED U/S 144 OF THE ACT. HE THEREAFTER WORKED OUT THE UNACCOUNTED INCOME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED PRODUCTION AND ADDED THE SAM E TO THE INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED FROM THE ABOVE ORDER OF THE ASSESSI NG OFFICER THE ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A). 5. BEFORE ID. CIT(A), THE ASSESSEE FILED DETAILED SUBM ISSIONS. IT WAS ALSO BROUGHT INTO THE KNOWLEDGE OF THE CIT(A ) THAT SUBSEQUENT TO THE PASSING OF THE ABOVE STATED IMPUG NED ASSESSMENT ORDER, A DETAILED STUDY WAS CARRIED O UT BY A COMMITTEE HEADED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE ASSESSI NG OFFICERS OF THE RANGE AS ITS MEMBERS. THE COMMITTEE WAS ASSI STED BY THE EXPERTS FROM THE NISST (NATIONAL INSTITUTE OF THE S ECONDARY STEEL TECHNOLOGY) AND ALSO THE INDUSTRY REPRESENTATIVES. ON THE BASIS OF THE REPORT OF THE COMMITTEE, IT WAS DECIDED THAT IF THE VARIATION IN THE CONSUMPTION OF THE ELECTRICITY IS WITHIN THE RA NGE OF 15% OF THE YEARLY AVERAGE CONSUMPTION OF POWER, THE BOOK R ESULTS SHOULD BE ACCEPTED. THAT PURSUANT TO THE REPORT OF THE COM MITTEE, THE ASSESSING OFFICERS HAVE FOLLOWED THIS NORM WHILE MA KING ITA 248/CHD/2019 A.Y. 2011-12 PAGE 8 OF 14 ASSESSMENT IN SIMILAR CASES AND HAS ACCEPTED THE BO OK RESULTS IF THE VARIATION IS WITHIN 15% WINDOW. IT WAS, THEREFO RE, PLEADED THAT THE BOOK RESULTS OF THE ASSESSEE FOR THE ASSES SMENT YEAR 2012- 13 SHOULD ALSO BE ACCEPTED AND CONSEQUENTLY, THE AD DITION SHOULD BE DELETED. THE LD. CIT(A) GOT VERIFIED FROM THE AS SESSING OFFICER THE ABOVE CONTENTIONS OF THE ASSESSEE WHICH WAS REP ORTED TO BE CORRECT BY THE ASSESSING OFFICER. THE LD. CIT(A) TH EREAFTER HELD THAT ONCE AN ISSUE HAS BEEN DECIDED ON MERITS IN A SUBSEQUENT YEAR, IT WOULD NOT BE APPROPRIATE TO TAKE A DIFFERE NT VIEW FOR THE YEAR UNDER CONSIDERATION. HE, THEREFORE, RELYING UP ON THE REPORT OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMMI SSIONER OF INCOME TAX, PATIALA HELD THAT AS DECIDED BY THE COM MITTEE, THE ASSESSEE WAS ENTITLED TO BENEFIT OF 15% VARIATION I N CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISHED GOODS PRO DUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS AND THE VARIATIO N UP TO 15% WOULD NOT WARRANT ANY ADVERSE COGNIZANCE. HE ACCORD INGLY HELD THAT SINCE PURSUANT TO THE REPORT OF THE COMMITTEE, THE ASSESSING OFFICER HAS ALREADY FOLLOWED THIS NORM WHILE MAKING THE ASSESSMENT IN SIMILAR CASES AND IN SAME SET OF CIRC UMSTANCES HAS ACCEPTED THE BOOKS RESULTS SHOWN IN OTHER CASES, HE NCE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, HE HELD THAT THE BOOK S RESULTS SHOWN BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDER ATION NEED TO BE ACCEPTED, AS WELL. HE THEREFORE, SET ASIDE THE A CTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE BOOK RESULTS SH OWN BY THE ASSESSEE AND DELETED THE ADDITIONS SO MADE BY THE A SSESSING OFFICER ON ESTIMATION BASIS.' 8. LEARNED AUTHORIZED REPRESENTATIVE NEXT SUBMITS T HAT YET ANOTHER COORDINATE BENCH IN ITO VS M/S HANSCO IRON & STEEL P LTD. IN I TA NO. 397/CHD/2017 AND ITO VS M/S KAILASH STEEL ROLLING MILLS IN ITA NO. 3 98/CHD/2017 DATED 03/10/2017 HAS ALSO DECLINED THE REVENUE'S IDENTICA L ARGUMENTS AS FOLLOWS: 3. SINCE THE PRESENT APPEALS ARE FILED BY THE REVENUE, THE ID. SR.DR WAS REQUIRED TO ADDRESS THE ISSUE. RELIANCE W AS PLACED ON THE ASSESSMENT ORDER, THE ID. AR SUBMITTED THAT THE ISSUE IS COVERED IN HIS FAVOUR BY A GROUP OF NINE CASES WHER EIN A CONSOLIDATED ORDER DATED 28.04.2017 IN ITA 392/CHD/ 2017 IN THE CASE OF ITO, WARD-1 VS M/S DHIMAN STEEL ROLLING MIL LS AND EIGHT OTHER ASSESSEES PERTAINING TO 2011-12, 2012-13 ASSE SSMENT YEARS WAS RELIED UPON. IN THE FACTS OF THE PRESENT CASE A LSO, REFERRING TO PARA 5.2 OF THE IMPUGNED ORDER, ATTENTION WAS INVIT ED TO THE REFERENCE MADE TO THE COMMITTEE CONSTITUTED BY PR. CIT, PATIALA WHICH, IT WAS NOTED, HAD BEEN DIRECTED TO VERIFY TH E NORMAL VARIATION IN CONSUMPTION OF ELECTRICITY FOR MANUFAC TURING EACH METRIC TON OF FINISHED GOODS. THE ORDERS, IT WAS SU BMITTED HAVE BEEN PASSED ADHERING TO THE SAID DIRECTIONS IN BOTH THE APPEALS. ITA 248/CHD/2019 A.Y. 2011-12 PAGE 9 OF 14 4. I HAVE HEARD SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE CO-ORDINAT E BENCH IN THE AFORESAID ORDER OF THE IT AT HAD AN OCCASION TO CON SIDER THE FACTS AS UNDER: '4. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONSIDERATION ARE THAT THE ASSESSEE COMPANY RUN A FURNACE UNIT AND IS ENGAGED IN THE PRODUCTION OF INGOTS. DURING THE ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF DAILY PRODUCTION OF FINISHED GOODS AS WELL AS THE D ETAILS OF THE MANUFACTURING PROCESS INVOLVED. THE ASSESSING OFFIC ER FURTHER OBSERVED THAT THE AMOUNT OF ELECTRICITY CONSUMED WA S DIRECTLY RELATED TO THE PRODUCTION OF FINISHED GOODS. IN ORD ER TO CO-RELATE THE CONSUMPTION OF ELECTRICITY VIS-A-VIS PRODUCTION SHOWN, THE ASSESSING OFFICER GATHERED INFORMATION REGARDING TH E CONSUMPTION OF ELECTRICITY FROM THE ELECTRICITY BOA RD. THE ASSESSING OFFICER ANALYZED THE CONSUMPTION DATA OF ELECTRICITY VIS-A VIS THE PRODUCTION OF FINISHED GOODS AND OBSE RVED THAT THERE WERE WIDE VARIATION IN RATIO OF ELECTRICITY U NITS CONSUMED TO PER METRIC TONS OF FINISHED GOODS PRODUCED DURIN G THE YEAR. HE OBSERVED THAT THE LOWEST UNITS CONSUMED FOR PROD UCTION OF ONE METRIC TON OF FINISHED GOODS WERE 1117.17 UNITS AND THE HIGHEST ELECTRIC UNITS CONSUMED FOR PRODUCTION OF O NE METRIC TON OF FINISHED GOODS WERE 1188.12 UNITS. HE FURTHER OB SERVED THAT ON SOME DAYS, ELECTRIC UNITS CONSUMED WERE VERY LOW WHEREAS FINISHED GOODS PRODUCED WERE VERY HIGH GIVING A VER Y LOW VALUE OF ELECTRIC UNITS CONSUMED TO PER TON OF FINISHED G OODS, WHEREAS ON SOME OTHER DAYS, ELECTRIC UNITS CONSUMED WERE VE RY HIGH WHEREAS THE FINISHED GOODS PRODUCED WERE VERY LESS GIVING A VERY HIGH VALUE OF ELECTRIC UNITS CONSUMED PER METR IC UNIT OF FINISHED GOODS. HE FURTHER OBSERVED THAT EVEN ON SO ME DAYS THOUGH THERE WAS ELECTRICITY CONSUMPTION YET NO PRO DUCTION WAS SHOWN. HE FURTHER NOTED THAT OTHERWISE ON OTHER DAY S, THERE WAS ALSO A BALANCE AND CONSISTENCY IN CONSUMPTION OF EL ECTRIC UNITS VIS-A-VIS PRODUCTION OF FINISHED GOODS. HE, THEREFO RE, OBSERVED THAT IT INDICATED THAT THE DAILY PRODUCTION RECORDE D BY THE ASSESSEE OF THE FINISHED GOODS WAS NOT CORRECT AND, HENCE, NOT RELIABLE. HE OBSERVED THAT THE DATA RELATING TO THE DAILY PRODUCTION HAD BEEN MAINTAINED AS PER ACTUAL PRODUC TION. WHEN CONFRONTED IN THIS RESPECT, THE ASSESSEE EXPLA INED THAT THE CONSUMPTION OF ELECTRICITY WAS DEPENDENT ON VARIOUS FACTS AS DETAILED IN HIS REPLY DATED 16.3.2015 WHICH HAS BEE N REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER DATED 26.3.2015. THE ASSESSING OFFICER, HOWEVER, WA S NOT SATISFIED WITH THE ABOVE REPLY OF THE ASSESSEE. HE ULTIMATELY HELD THAT THE ASSESSEE COMPANY WAS INVOLVED IN UNACCOUNT ED PRODUCTION OF FINISHED GOODS WHICH RESULTED IN UNAC COUNTED SALES AND PURCHASES. HE, THEREFORE, HELD THAT THE S ALE AND PURCHASE FIGURES IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE WERE ITA 248/CHD/2019 A.Y. 2011-12 PAGE 10 OF 14 NOT CORRECT AND HE ACCORDINGLY REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND PROCE EDED TO FRAME THE ASSESSMENT IN THE MANNER AS PROVIDED U/S 144 OF THE ACT. HE, THEREAFTER ESTIMATED THE INCOME OF THE ASSESSEE ON THE BASIS OF MINIMUM VALUATION OF AVERAGE OF ELECTRIC UNIT CONSU MED PER METRIC TON OF FINISHED GOODS PRODUCED FOR OVER THE PERIOD OF 10 DAYS. HE TOOK THE LOWER AVERAGE VALUE OF ELECTRIC U NITS CONSUMED PER METRIC TON OF AVERAGE FINISHED GOODS O VER A PERIOD OF 10 DAYS AND ON THIS BASIS, AND CALCULATED THE ACTUAL MONTH WISE PRODUCTION OF THE ASSESSEE. HE COMPARED THE SAME WITH THAT SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSE SSEE AND ESTIMATED THE UNACCOUNTED PRODUCTION FOR EACH MONTH . THEREAFTER, ON THE BASIS OF AVERAGE SALES RATE, THE VALUE OF TOTAL UNACCOUNTED PRODUCTION WAS ESTIMATED. THEN ADOPTING THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE, THE UNACCOUNTED PROFIT OUT OF THE UNACCOUNTED PRODUCTION WAS WORKED OUT. SECONDLY THE PEAK UNACCOUNTED PRODUCTION FOR THE RELEVANT MONTH WAS D ETERMINED AND BY MULTIPLYING THE AVERAGE SALE RATE OF FINISHE D GOODS, THE UNACCOUNTED INVESTMENT WAS WORKED OUT. THE ASSESSIN G OFFICER IN THIS WAY WORKED OUT THE TOTAL UNACCOUNTED INCOME OF THE ASSESSEE OUT OF THE UNACCOUNTED PRODUCTION AT RS. 8 6,88,365/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESS EE.' 4.1 PERUSAL OF THE IMPUGNED ORDER SHOWS THAT FACTS HAVE BEEN CONSIDERED IN THE FOLLOWING MANNER: 5.2 THE REPORT OF THE AO WAS CALLED FOR ON THE WRIT TEN SUBMISSIONS OF THE APPELLANT. IN THE REPORT, SENT V IDE LETTER NO. ITO/W-L/MGG/2016-17/2227 DATED 02.12.2016, THE A.O. HAS TRIED TO DEFEND THE REJECTION OF BOOKS OF ACCOUNT O N THE BASIS OF REASONING GIVEN IN THE ASSESSMENT ORDER. HOWEVER, R EGARDING APPELLANTS CONTENTION W.R.T. THE EXTENT OF VARIATIO N IN THE CONSUMPTION OF ELECTRICITY PMT OF FINISHED GOODS, T HE AO CONVEYED AS UNDER: 'A} THE ASSESSES IN ITS WRITTEN SUBMISSION HAS CONT ENDED THAT 15% VARIATION ON YEARLY AVERAGE CONSUMPTION OF POWER FO R PRODUCTION OF EACH METRIC TONE OF FINISHED GOODS WAS ACCEPTED IN THE A .Y. 2013-14. THE CONTENTION OF THE ASSESSES IS CORRECT AS A COMMITTE E WAS CONSTITUTED BY THE WORTHY PR. COMMISSIONER OF INCOME TAX, PATIALA TO V ERIFY THE NORMAL VARIATION IN CONSUMPTION OF ELECTRICITY FOR MANUFAC TURING EACH METRIC TONNE OF FINISHED GOODS. ON THE BASIS OF REPORT OF THE COMMITTEE WHICH WAS HEADED BY ADDL. COMMISSIONER OF INCOME TAX, RANGE M ANDI GOBINGARH HAVING ALL THE AO'S OF MANDI GOBINDGARH AS MEMBER A ND TECHNICAL PERSON OF NISST. IT WAS DECIDED BY THE COMMITTEE THAT 15% VARIATION FROM AVERAGE CONSUMPTION OF POWER FOR PRODUCING OF EACH METRIC TONE OF ITA 248/CHD/2019 A.Y. 2011-12 PAGE 11 OF 14 FINISHED GOODS SHOULD BE ACCEPTED. AS SUCH THE CASE S OF FOR THE A. Y. 2013- 14 WERE DECIDED BY FOLLOWING THESE GUIDELINES. B) THE CONTENTION OF THE ASSESSES THAT HIS CASE FOR THE A. Y. 2012-13 FALLS WITHIN 15% VARIATION HAS BEEN VERIFIED FROM RECORD AND FOUND TO BE CORRECT.' 4.2 CONSIDERING THE FACTUAL BACKGROUND, THE CIT(A) DELETED THE ADDITION HOLDING AS UNDER: '5.3 I HAVE CONSIDERED THE FACTS OF THE CASE AS ALS O THE SUBMISSIONS AND THE REPORT OF THE LD. AO. UNDOUBTEDLY, THE ONLY REASON LEADING TO THE REJECTION OF THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY, WHICH RUNS AN FURNACE UNIT, WAS DESPERATE CONSUMPTION OF ELECTRICITY VIS- AVIS THE PRODUCTION OF FINISHED GOODS. THEREAFTER, AS DETAILED EARLIER, TH E AO, ON THE BASIS OF AVERAGE PURCHASE RATE, WENT ON TO ESTIMATE UNACCOUN TED PRODUCTION IN MONETARY TERMS AND THEN ADOPTING THE GROSS PROFIT R ATE SHOWN BY THE APPELLANT WORKED OUT UNACCOUNTED PROFIT OUT OF UNAC COUNTED PRODUCTION ON THE BASIS OF AVERAGE SALE RATE. BESIDES, THE PEAK U NACCOUNTED PRODUCTION FOR THE RELEVANT MONTH WAS DETERMINED AND BY MULTIPLYIN G WITH THE AVERAGE PURCHASE RATE OF FINISHED GOODS THE UNACCOUNTED INV ESTMENT WAS WORKED OUT THIS FINALLY RESULTED INTO ADDITIONS ON THE BASIS U NACCOUNTED INVESTMENT AND UNACCOUNTED PROFIT AT RS.57,93,183/-. THE APPELLANT COMPANY HAS NOW CONTENDED THAT RECENT LY, A DETAILED STUDY WAS CARRIED OUT BY A COMMITTEE HEADED BY THE ADDITI ONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE AO'S OF THE RANGE AS ITS MEMBERS. THE COMMITTEE WAS ASSISTED BY THE EXPE RTS FROM THE NISST [NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLO GY] AND ALSO THE INDUSTRY REPRESENTATIVES. ON THE BASIS OF THE REPORT OF THE COMMITTEE, IT WAS DECIDED THAT IF THE VARIATION IN THE CONSUMPTION OF ELECTRI CITY IS WITHIN THE RANGE OF 15% OF THE YEARLY AVERAGE CONSUMPTION OF POWER, THE BOOK RESULTS SHOULD BE ACCEPTED. ACCORDINGLY, ITS BOOK RESULTS WERE ACCEPT ED FOR THE A.Y. 2013-14. THEREFORE, ITS BOOK RESULTS FOR THE A.Y. 2012-13 SH OULD ALSO BE ACCEPTED AND CONSEQUENTLY, THE ADDITIONS SHOULD BE DELETED. THE CONTENTION OF THE APPELLANT COMPANY HAS BEEN VE RIFIED FROM THE AO AND AS QUOTED ABOVE, HE HAS REPORTED IT CORRECT. THERE IS A DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F A CIT VS. RIETA BISCUITS CO. (P) LTD (2009) 309 ITR 154 WHEREIN THE IR LORDSHIPS HAVE HELD THAT 'KEEPING IN VIEW THE PRINCIPLES OF CONSISTENCY ONCE THE ISSUE ON THE MERITS HAS BEEN DECIDED AGAINST THE REVENUE ON THE SAME ISSUE DURING THE SUBSEQUENT ASSESSMENT YEARS, WE DO NOT DEEM IT APPR OPRIATE TO TAKE A DIFFERENT VIEW ON A TECHNICAL REASON. ACCORDINGLY, WITHOUT SPECIFICALLY OPINING ON THE ISSUE ON THE MERITS, THE REFERENCE I S DECIDED AGAINST THE REVENUE'. ON A CAREFUL CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMSTANCES ON RECORD, I'M OF THE VIEW THAT THE PLEA OF THE APPELL ANT COMPANY MERITS CONSIDERATION. IT IS A MATTER OF FACT THAT A DETAIL ED STUDY HAS BEEN CONDUCTED ITA 248/CHD/2019 A.Y. 2011-12 PAGE 12 OF 14 BY A COMMITTEE, CONSTITUTED BY THE PRINCIPAL CIT PA TIALA, WITH A VIEW TO EXAMINE THE VARIATION IN THE CONSUMPTION OF ELECTRI CITY VIS-A-VIS THE PRODUCTION OF FINISHED GOODS IN THE ROLLING MILLS A ND INDUCTION FURNACES OF THE AREA. THE COMMITTEE, A BROAD-BASED MULTIMEMBER BODY , HAD THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH AS ITS HEAD AND ALL THE AO'S OF THE RANGE AS ITS MEMBERS. IT WAS ASSIST ED BY THE EXPERTS FROM THE NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLOG Y (NISST) AND THE INDUSTRY REPRESENTATIVES. I HAVE ACCESSED ITS REPOR T FROM THE JOT, RANGE, MANDI GOBINDGARH. IT'S RELEVANT EXCERPT READS AS UN DER: 'THEREAFTER, TO ASCERTAIN THE AMOUNT OF VARIATION I N CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISH ED GOODS PRODUCED OF SIMILAR SIZES AND ODD SIZES, THE AOS CA RRIED OUT ON THE SPOT VERIFICATION BY RUNNING SOME OF THE ROL LING MILLS ON A FIX PERIOD OF TIME AND NOTICED QUITE APPRECIABLE VARIATION IN THE CONSUMPTION OF ELECTRICITY PER METRIC TON OF FI NISHED GOODS IN SIMILAR SIZES AS WELL AS ODD SIZES. THE TECHNICA L EXPERTS FROM NATIONAL INSTITUTE OF SECONDARY STEEL TECHNOLO GY (NISST), MANDI GOBINDGARH ALSO OPINED THAT GIVEN THE NATURE OF TECHNOLOGY, RAW MATERIALS AND FINISHED GOODS, SUBST ANTIAL VARIATION IN THE NUMBER OF ELECTRICITY UNITS FOR PR ODUCTION OF ONE METRIC TON OF FINISHED GOODS INTER DAY BASIS, A RE BOUND TO BE THERE.' BASED ON ITS FINDING OF FACTS, IT HAS DECIDED 'TO G IVE BENEFIT OF 15% VARIATION IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISH ED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS'. MEANING, THERE BY THAT 15% VARIATION IN THE NUMBER OF ELECTRICITY UNITS CONSUMED PER METRIC TON OF FINISHED GOODS AS COMPARED TO THE AVERAGE CONSUMPTION OF ELECTRICITY UNITS PER METRIC TON OF FINISHED GOODS IS THE INDUSTRIAL NORM WARRANTING NO ADVERSE COGNIZANCE. HENCE, BECAUSE OF THAT REASON ALONE, BOOKS OF ACCOU NT SHOULD NOT BE REJECTED. INDEED, AS STATED ABOVE, PURSUANT TO THE REPORT OF THE COMMITTEE, THE AO'S HAVE FOLLOWED THIS NORM WHILE MAKING ASSESSMENTS IN SIMI LAR CASES AND IN SIMILAR SET OF CIRCUMSTANCES AND ACCEPTED THE BOOK RESULTS SHOWN BY THE ASSESSEES WHICH INCLUDES THE APPELLANT AS WELL. IN VIEW OF TH IS AND ALSO PLACING RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL PUNJA B AND HARYANA HIGH COURT IN THE CASE OF A CIT VS. RIETA BISCUITS CO. (P) LTD (2009) 309 ITR 154,1 AM OF THE VIEW THAT THE BOOK RESULTS SHOWN BY THE APPELLA NT COMPANY FOR THE YEAR UNDER CONSIDERATION NEED TO BE ACCEPTED AS WELL. CO NSEQUENTLY, THE ACTION OF THE AO IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT BY RESORTING TO SEC. 145(3) OF THE IT. ACT IS NOT UPHELD. THE AO IS DIRECTED TO AC CEPT THE BOOK RESULTS SHOWN BY THE APPELLANT. THE TWIN ADDITIONS MADE BY THE AO ON ACCOUNT OF UNACCOUNTED PROFITS AND UNACCOUNTED INVESTMENT ARE ALSO DELETED AS A CONSEQUENCE. 4.3 IN THE FACTS, AS THEY STAND, IT IS EVIDENT THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, IN THE ABSENCE OF ANY CHANGE IN FACTS, CIRCUMSTANCES OR POSITION OF LAW, THE IMPUGNED ORDER IS UPHELD AND THE DEPARTMENTAL APPEAL IS DISMISSED.' ITA 248/CHD/2019 A.Y. 2011-12 PAGE 13 OF 14 9. COUPLED WITH THIS, IT IS ALSO NOTICED THAT THE CIT( A)'S ORDER ITSELF HOLD THE ASSESSEE TO HAVE ALREADY SUCCEEDED ON THE SAME ISSU E IN THE PRECEDING ASSESSMENT YEAR (SUPRA) WHICH HAS ATTAINED FINALITY. WE HOLD I N THESE FACTS AND CIRCUMSTANCES THAT BOTH OF THE ASSESSEE'S SUBSTANTIVE GROUNDS CHA LLENGING CORRECTNESS OF THE LOWER AUTHORITIES' ACTION REJECTING ITS BOOKS OF ACCOUNT AS WELL AS ADDING GROSS PROFIT ELEMENT ON ALLEGED UNACCOUNTED PRODUCTION OF RS. 13 ,04,677/- DESERVE TO BE ACCEPTED. SAME REASONING FOLLOWS IN REVENUE'S CROSS APPEAL ITA NO 879/CHD/2019 AS WELL RAISING THE SOLE SUBSTANTIVE ISSUE OF UNACC OUNTED INVESTMENT IN STOCK OF RS. 1,62,54,188.78 BEING THE NECESSARY CONSEQUENCE OF O UR FOREGOING DETAILS. THE ASSESSEE'S APPEAL IN ITA NO. 818/CHD/2019 IS ACCEPT ED AND REVENUE'S CROSS APPEAL IN ITA NO.879/CHD/2019 FAILS THEREFORE. 10. IT IS SEEN THAT ALL THE ISSUES STAND ADDRESSED BY THE ABOVE ORDER OF THE ITAT. IT IS FURTHER SEEN THAT THE ISS UE OF VARIATION IN ELECTRICITY CONSUMPTION STANDS ADDRESSED BY M/S R.A . CASTINGS PVT. LTD. (SUPRA) WHEREIN THE COURT WAS PLEASED TO HOLD, THEREFORE, NO UNIVERSAL AND UNIFORMLY ACCEPTABLE ST ANDARD OF ELECTRICITY CONSUMPTION CAN BE ADOPTED FOR DETERMIN ING THE EXCISE DUTY LIABILITY THAT TOO ON THE BASIS OF IMAGINARY P RODUCTION ASSUMED BY THE REVENUE WITH NO OTHER SUPPORTING REC ORD, EVIDENCE OR DOCUMENT TO JUSTIFY ITS ALLEGATIONS. SIMILARLY IT IS SEEN THAT THE DEFICIENCY OF THE REVENUE AUTHORITIES IN NOT CONFRO NTING THE INCRIMINATING STATEMENTS RELIED UPON AND MAKING THO SE PERSONS AVAILABLE FOR CROSS EXAMINATION PERSISTS. IN THE F ACTS OF THE PRESENT CASE, REPEATEDLY REQUEST TO THIS EXTENT HAS BEEN MADE BY THE ASSESSEE ALL ALONG AND FOR UNSTATED REASONS, IT REMAINS UNADDRESSED, SUCH AN ACTION AGAIN IS UNSUSTAINABLE IN LAW. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE ADDITIONS SUSTAINED ARE DIRECTED TO BE DELETED. SAI D ORDER WAS ITA 248/CHD/2019 A.Y. 2011-12 PAGE 14 OF 14 PRONOUNCED AT THE TIME OF VIRTUAL HEARING ITSELF IN THE PRESENCE OF THE PARTIES VIA WEBEX. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 5 TH JULY,2021. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR