The ITO, Ward-6(2), Surat V. M/s. Govinda Processers, Surat

ITA 3307/AHD/2007

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2058 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 03-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KAUAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.3307/AHD/2007 ASSESSMENT YEAR :2004-05 DATE OF HEARING:6.1.11 DRAFTED:7.1.11 INCOME TAX OFFICER, WARD-5(2), ROOM NO.615, 6 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S . M/S GOVIND PROCESSORS, 27, RESHAMWALA MARKET, RING ROAD, SURAT PAN NO.AACFG5272G (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SMT. SUMIT KAUAR, DR RESPONDENT BY:- SHRI MEHUL SHAH, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT IN APPEAL NO.CAS-IV/ 291/06-07 DATED 11-06- 2007. THE ASSESSMENT WAS FRAMED BY ITO WARD-6(2), S URAT U/S143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 26-12-2006 FOR ASSESSMENT YEAR 2004-05. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF SUPPRESSION OF JOB CHARGES. FOR THIS, REVENUE HAS RAISED THE FOLLO WING GROUND NO.1 :- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION ON ACCOUNT OF SUPPRESSION OF JOB CHARGES AMOUNTING TO RS.1,22,40, 997/- 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSEE IS ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF ART SILK FABRICS ON JOB WORK BASIS. THE ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 2 ASSESSEE FILED ITS RETURN OF INCOME ON 09-07-2004 D ECLARING NIL INCOME. THE ASSESSING OFFICER NOTICED THAT ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS DECLARED JOB CHARGES AT RS.5,69,28,447/- ON WHI CH GROSS PROFIT HAS BEEN DECLARED AT 14.73% AND NET PROFIT AT 0.71%. THE AO FURTHER NOTED FROM DETAILS OF PRODUCTION AND CONSUMPTION OF FUEL LIKE COAL, GA S AND ELECTRICITY, VIS--VIS CONSUMPTION AND PRODUCTION OF AUG.03, AND NOTED TH AT THERE IS SUPPRESSION OF PRODUCTION IN OTHER MONTHS. THE AO NOTED FROM THE A CCOUNTS OF THE ASSESSEE THAT IN THE MONTH OF AUG03 THERE IS TOTAL CONSUMPT ION OF ELECTRICITY AT 1,74,748 UNITS AS AGAINST THE PRODUCTION SHOWN BY ASSESSEE A T 15,41,839 MT. AND IN TERMS OF RATIO OF CONSUMPTION OF ELECTRICITY THE PR ODUCTION COMES TO 11.54%. THE AO FURTHER NOTED THAT ASSESSEE HAS NOT MAINTAIN ED DAY-TO-DAY CONSUMPTION OF COLOUR & CHEMICAL AND IT IS POSSIBLE TO MAINTAIN DAY-TO-DAY CONSUMPTION OF COLOUR & CHEMICALS AND IN THE ABSENC E OF THE SAME, HE REJECTED THE BOOK RESULTS BY GIVING FOLLOWING FINDI NG IN PARA-5.4 OF HIS ASSESSMENT ORDER:- 5.4 THEREFORE, CONSIDERING THE DEFECTIVE MAINTENAN CE OF BOOKS OF ACCOUNTS AND SUPPRESSION OF PRODUCTION THEREBY SUPP RESSION OF JOB CHARGES BY THE ASSESSEE, SUCH BOOKS OF ACCOUNTS CLA IMED TO BE MAINTAINED REGULARLY IS FOUND UNRELIABLE, INCOMPLET E AND INCORRECT. HENCE, BY EXERCISE OF POWER U/S.145(3) OF THE INCOM E-TAX ACT, SUCH BOOKS OF ACCOUNTS ARE REJECTED AND ASSESSMENT IN TH E CASE IS GOING TO BE MADE ON THE BASIS OF MATERIAL FACTS AND VARIOUS REFERENTIAL EVIDENCES IN THE COMING PARAGRAPHS. 4. THE ASSESSING OFFICER FURTHER ESTIMATED THE SUPP RESSION OF JOB WORK CHARGES BY GIVING FOLLOWING FINDINGS IN PARA 6.7 & 6.8 OF HIS ASSESSMENT ORDER:- 6.7 NOW THE ASSESSABILITY OF THE MATTER HAS TO BE DECIDED WITH REFERENCE TO THE TOTALITY OF THE FACTS AND CIRCUMST ANCES OF THE CASE. IN THIS REGARD IT IS WORTHWHILE TO MENTION THAT RATIO OF CONSUMPTION OF DIESEL, COAL AND GAS ARE ALSO THE REASONABLE BASIS TO ASCERTAIN THE SUPPRESSION OF PRODUCTION AND THEREBY SUPPRESSION O F JOB CHARGES BUT THE CONSUMPTION OF ELECTRICITY HAS BEEN FOUND MUCH MORE SUITABLE TO ASCERTAIN THE SUPPRESSION OF QUANTITY BECAUSE INSTE AD OF ESTIMATING THE QUANTITY IN GENERAL WAY, IT IS IN THE INTEREST OF J USTICE AND REASONABLE TO ASCERTAIN THE SUPPRESSION OF JOB CHARGES ON THE BAS IS OF THE FACTOR WHICH CAN BE CONVINCING TO EVERYBODY. THAT IS WHY C ONSIDERING THE ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 3 CONSUMPTION OF GAS, LIGNITE AND DIESEL, RATIO OF CO NSUMPTION OF ELECTRICITY IS FOUND MOST SUITABLE TO ASCERTAIN THE JOB CHARGES SUPPRESSED. IN THAT SEQUENCE, THE PRODUCTION OF MONTH OF AUGUST 03 HAS BEEN TAKEN AS CORROBORATIVE EVIDENCE. DURING THE COURSE OF HEARIN G PROCEEDINGS THE MATTER WAS DISCUSSED ABOUT THE VARIATION OR FLUCTUA TION OF ELECTRICITY AND THAT IS WHY IT IS CONSIDERED MOST REASONABLE TO GIV E DUE BENEFIT TO THE ARGUMENTS OF THE ASSESSEE THAT THERE IS SOME FLUCTU ATION OR VARIATION OR STAGNATION IN THE PROCESS OF PRODUCTION THOUGH THE SAME HAS NO BEEN PROVED BY THE ASSESSEE BUT POSSIBILITY OF THE SAME IS PRESUMED TO BE THERE. SUCH FACTOR IS TO BE TAKEN AS VARIABLES INHE RENT TO THE CONSUMPTION OF RAW MATERIAL OR FUELS. THEE IS A POS SIBILITY OF FLUCTUATION OF ELECTRICITY, SUDDEN INTERRUPTION OF ROUTINE NATU RE HENCE, TAKING INTO CONSIDERATION THE TOTALITY OF THE CIRCUMSTANCES OF VARIOUS KNOWN AND UNKNOWN FACTORS, FLUCTUATIONS, STAGNATION IN THE PR OCESS, INTERRUPTION IN THE NORMAL PROCESS OF THE MACHINERY, DAY TO DAY REP AIRING, SOME OTHER KNOWN OR UNKNOWN FACTORS LIKE LEAVE OF EMPLOYEES, S UDDEN CHANGE OF REQUIREMENT, MAINTENANCE OF TEMPERATURE OR WANT OF SOME TECHNICAL ALTERATION OR MODIFICATION IN DYEING AND PRINTING, IT IS THOUGHT REASONABLE TO TAKE 50% AS VARIABLES SO THAT IT CAN MEET THE GE NERAL ARGUMENTS OF THE ASSESSEE AND GIVE JUSTIFICATION OF VARIOUS ABOV E ACTORS. IN THE INTEREST OF JUSTICE ON THE ISSUE THIS VARIABLE IS C ONSIDERED MOST REASONABLE BECAUSE THE4E IS NO UNIFORMITY IN SUPPRE SSION OF PRODUCTION IN VARIOUS MOTHS AND THERE IS VARIATION FROM 25% TO 86%. ACCORDING TO THIS FINDING THE SUPPRESSION OF PRODUCTION AND THER EBY SUPPRESSION OF JOB CHARGE IS ASCERTAINED. ACCORDINGLY, SUPPRESSION OF PRODUCTION AFTER GIVING BENEFIT OF VARIABLE @ 50% COMES TO 2381517 M ETERS (4763034 2381597) HERE WITH A VIEW TO REMOVER DOUBT IT IS RE LEVANT TO MENTION THAT THESE VARIABLES HAVE BEEN CONSIDERED GIVING SO ME WEIGHTAGE TO THE GENERABLE ARGUMENTS AND INHERENT INVISIBLE CIRC UMSTANCES, BUT SAME CAN BE CAPITALIZED TO JUSTIFY THE UNSUPPORTED CLAIM OR ARGUMENTS. 6.8 AS REGARDS JOB CHARGES ON THIS SUPPRESSED PRODU CTION, IT IS RELEVANT TO MENTION THAT AVERAGE CHARGE HAVE BEEN SHOWN BY T HE ASSESSEE @ OF RS.5.14 PER METER. SINCE THERE IS NO MAINTENANCE OF SEPARATE ACCOUNT OF CONSUMPTION OF MATERIAL WITH REFERENCE TO PRODUC TION OF DYED CLOTH OR PRINTED CLOTH INDEPENDENTLY, IT IS IN THE FITNESS O F THING TO ASCERTAIN THE SUPPRESSION OF JOB CHARGES AS PER THE AVERAGE CHARG ES SHOWN BY THE ASSESSEE OR BY THE COMPARABLE CASES. HERE THE ASSES SEES OWN CASE IS FOUND TO BE MOST REASONABLE BASE SO FAR AS APPLICAT ION OF AVERAGE JOB CHARGE IS CONCERNED. THE ASSESSEE HAS SHOWN AVERAGE JOB CHARGES @ 5.14 PER METER, HENCE ACCORDINGLY SUPPRESSION OF JO B CHARGE IS FOUND TO BE OF RS.12240997 (2381517 X 5.14). THEREFORE THIS AMOUNT OF SUPPRESSION OF JOB CHARGE BASED ON THE SUPPRESSION OF PRODUCTION IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. FOR THIS ADDITION PENALTY PROCEEDINGS U/S.271(1) IS INITIATED SEPARATELY BEC AUSE THERE IS ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 4 FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME. ( ADDITION RS.12240997) . 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A) AGAINST THE REJECTION ON BOOK RESULTS AS WELL AS ESTIMATION OF SUPPRESSION OF JOB WORK CHARGES ON THE BASIS OF PRODUCTION. THE CIT(A) ACCE PTED BOOK RESULTS AS WELL AS DELETED THE ADDITION OF SUPPRESSION OF JOB WORK CHARGES ON THE BASIS OF PRODUCTION BY GIVING FOLLOWING FINDINGS AT PAGES 5- 7 OF HIS APPELLATE ORDER:- I HAVE DIRECTED THE SUBMISSIONS AND GONE THROUGH T HE DETAILS FILED BY THE APPELLANT. THE AO HAS CONSIDERED THE MONTH OF A UGUST, 2003 AS THE BENCHMARK FOR WORKING OUT THE PRODUCTION DURING THE OTHER MONTHS OF THE YEAR. IT APPEARS THAT THE SUBMISSIONS FILED BY THE APPELLANT AND THE REASONS FOR LOW PRODUCTION IN OTHER MONTHS HAS NOT BEEN FULLY APPRECIATED BY THE AO BUT HE HAS ALSO ADMITTED THAT A VARIATION OF 50% IS POSSIBLE ON ACCOUNT OF FLUCTUATION OF ELECTRICI TY, DAY TO DAY REPAIRING OF THE MACHINERY, MODIFICATION IN DYEING & PRINTING ETC. THE MAIN ARGUMENT OF THE AO IS BASED ON CONSUMPTION OF UNIT OF ELECTRICITY VIS-- VIS PRODUCTION IN METERS. IT IS ALSO SEEN THAT THE AO HAS TAKEN INTO ACCOUNT THE QUANTITY OF FINISHED GOODS WHICH WERE D ISPATCHED FROM THE FACTORY DURING THE MONTH AND NOT THE ACTUAL PRODUCT ION. FURTHER, I AM INCLINED TO AGREE WITH THE APPELLANT THAT THE CONSU MPTION OF ELECTRICITY WORKED OUT BY THE AO IS NOT ACTUALLY THE CONSUMPTIO N DURING THE MONTH BUT THE BILL WHICH WAS RAISED FOR THE MONTH WHICH C OULD MAKE A DIFFERENCE IN ELECTRICITY USED AND THE PRODUCTION O F FINISHED GOODS OBTAINED PER MONTH. THE AO HAS ALSO NOT APPRECIATED THE FACTS THAT THE PRODUCTION WOULD BE SEVERELY EFFECTED IN THE FIRST THREE MONTHS OF THE YEAR DUE TO STRIKE IN THE WEAVING INDUSTRY WHEN THE APPELLANT COULD NOT GET SUFFICIENT RAW MATERIAL BUT THE EXPENDITURE IN TERMS OF FIXED OVERHEADS LIKE ELECTRICITY, LABOUR CHARGES ETC. WOU LD NOT BE REDUCED TO THAT EXTENT. FURTHER, THE CONSUMPTION OF ELECTRICIT Y WOULD FORM AN IMPORTANT FACTOR IN A CASE WHERE A SINGLE PROCESS F OR PRODUCTION IS USED BUT IN A DYEING & PRINTING HOUSE, THE PROCESS ITSEL F IS COMPLEX AND COMPRISES A NUMBER OF SUB-PROCESSES EACH OF WHICH W OULD CONSUME DIFFERENT AMOUNT OF ELECTRICITY. IT COULD BE POSSIB LE THAT BY CONSUMPTION OF MORE ELECTRICITY IN A SUB-PROCESS, LOWER QUANTIT Y OF MATERIAL IS PROCESSED WHEREAS IN OTHER SUB-PROCESS LOWER CONSUM PTION OF ELECTRICITY COULD YIELD BETTER PRODUCTION. I ALSO D O NOT UNDERSTAND AS TO WHY ONE PARTICULAR MONTH OF THE YEAR, I.E. AUGUST, 2003 HAS BEEN ADOPTED AS THE BENCHMARK FOR WORKING OUT HYPOTHETIC AL PRODUCTION IN THE OTHER MONTHS OF THE YEAR. IT APPEARS THAT THIS MONTH HAS BEEN SELECTED BY THE AO, SINCE TAKING ANY OTHER MONTH AS THE BENCHMARK WOULD NOT HAVE GIVEN THE RESULTS DESIRED BY THE AO. IT IS ALSO SEEN THAT THE PRODUCTION RECORD OF THE APPELLANT IS SUBJECT T O CHECK BY THE EXCISE ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 5 AUTHORITIES, WHO HAVE NOT POINTED OUT ANY ABNORMALI TY OR ANY CLEARANCE OF GOODS ILLICITLY FROM THE FACTORY PREMISES NOR HA S THE AO BEEN ABLE TO FIND ANY SALES OUTSIDE THE BOOKS OF ACCOUNTS. FURTH ER, I AM ALSO INCLINED TO AGREE WITH THE APPELLANT THAT THE CONSUMPTION O F ELECTRICITY AND OTHER ITEMS LIKE GAS AND DIESEL WOULD DEPEND ON ACCOUNT O F NUMBER OF FACTORS, LIKE QUALITY OF DYEING & PRINTING, COLOUR & SHADE OF THE PRINT MATERIAL, SPECIAL PROCESS REQUIRED FOR SOME FABRICS AND POWER CONSUMPTION IN NON-PRODUCTIVE ACTIVITIES. THESE ASP ECTS HAVE PROBABLY WHO HAS SIMPLY WORKED OUT THE SO-CALLED SUPPRESSION OF PRODUCTION ON THE BASIS OF PRODUCTION IN ONLY ONE MONTH OF THE YE AR WHICH IS NOT AT ALL JUSTIFIED. I HAVE ALSO GONE THROUGH THE VARIOUS CAS E LAWS CITED BY THE APPELLANT SPECIALLY THE CASE OF PIGEON TEXTILES (SU PRA) WHEREIN THE HONBLE ITAT, AHMEDABAD HAVE UPHELD THE ORDER OF CI T(APPEALS) DELETING THE ADDITION MADE BY THE AO BY WORKING OUT AVERAGE PRODUCTION OF CLOTH ON THE BASIS OF ELECTRICITY CON SUMED. THE HONBLE ITAT IN THIS CASE HELD THAT THE ASSESSEE WAS ENGAGE D ONLY IN JOB WORK AND WAS NOT ENGAGED DOING ANY PRODUCTION OF ITS OWN AND KEEPING IN VIEW OF THE SUBMISSIONS OF THE ASSESSEE AND ALSO TH E FACT THAT THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSES SEE WAS ENGAGED IN THE ACTIVITY OF DOING JOB WORK OUTSIDE THE BOOKS OF ACCOUNT THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED. IT IS ALSO A FACT THAT THE COURT HAVE VERY CLEARLY HELD THAT UNRELIABILITY, INCORRECTNESS AND INCOMPLETENESS OF ACCOUNTS HAS TO BE SHOWN BY THE DEPARTMENT BEFORE R EJECTING THE BOOK RESULTS AND STRONG AND SUFFICIENT REASONS MUST BE G IVEN TO INDICATE THAT THE ACCOUNTS WERE UNRELIABLE. THE COURTS HAS ALSO H ELD (THE HONBLE KERALA HIGH COURT IN THE CASE OF ST. TERESA OIL MIL LS 76 ITR 365) THAT THE MERE FACT THAT THERE WAS A DISPARITY IN CONSUMP TION OF ELECTRICITY WOULD NOT JUSTIFY THE REJECTION OF BOOK RESULTS BEC AUSE SUCH VARIOUS COULD BE DUE TO VARIOUS FACTORS BEYOND THE CONTROL OF THE ASSESSEE. I AM ALSO OF THE VIEW THAT IT WAS NOT PROPER FOR THE AO TO WORK OUT THE AVERAGE PRODUCTION ON THE BASIS OF PER UNIT CONSUMP TION OF ELECTRICITY AND GAS. FURTHER, THE AO HAS NO WHERE DOUBTED THE C ONSUMPTION OF OTHER MATERIALS LIKE COLOUR & CHEMICALS, LABOUR CHA RGES ETC. WHICH WOULD BE THE MOST IMPORTANT CRITERION FOR WORKING OUT THE SUPPRESSION OF JOB WORK CHARGES. IT IS ALSO IMPORTANT TO NOTE THAT THE ENTIRE PROCESS SIN THE APPELLANTS FACTORY IS OVER SEEN BY THE EXCISE AUTH ORITIES AND ALSO THE FACT THAT THE RESULTS WERE ACCEPTED BY THE DEPARTME NT IN THE EARLIER YEARS. TAKING THE ENTIRETY OF FACTS OF THE CASE INT O ACCOUNT, I AM OF THE CONSIDERED VIEW THAT THE ACTION OF THE AO IN MAKING AN ADDITION ON ACCOUNT OF SUPPRESSION OF JOB CHARGES IS NOT IN ORD ER AND THE SAME IS DIRECTED TO BE DELETED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE TRIBUNAL. ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS ACCEPTED THE BOOK RESULTS REJECTED BY THE ASSESSING OFFICER. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS REJECTED THE BOOK RE SULTS ONLY ON THE BASIS THAT THERE SUPPRESSION OF PRODUCTION AND UNDERSTATEMENT OF JOB WORK CHARGES, I.E. BASED ON THE FINDING THAT THE DETAILS OF PRODUCTION AND CONSUMPTION OF FUEL LIKE COLA, GAS & ELECTRICITY REVEALED THAT THERE HAS BEE N SUPPRESSION OF PRODUCTION WHEN COMPARED THE SAME WITH THE MONTH OF AUG. HE NO TED THAT IN THE MONTH OF AUG03 THE TOTAL CONSUMPTION OF ELECTRICITY 1,74 ,748 UNITS OF TOTAL PRODUCTION SHOWN BY THE ASSESSEE AT 15,14,839 MT. THAT COMES T O 11.53% OF RATIO OF CONSUMPTION OF ELECTRICITY AND PRODUCTION IN TERMS OF PERCENTAGE. HE NOTED THAT THE ASSESSEE IS NOT MAINTAINING DAY-TO-DAY CON SUMPTION OF COLOUR CHEMICALS AND ACCORDINGLY IT IS NOT POSSIBLE TO DED UCE CORRECT PROFIT OF THE ASSESSEE. BUT THE CIT(A) ACCEPTED THE BOOKS OF ACCO UNT BY STATING THE REASONS THAT THE AO HAS TAKEN INTO ACCOUNT OF THE F INISHED GOODS WHICH WERE DISPATCHED FROM THE FACTORY DURING THE MONTH AND NO T THE ACTUAL PRODUCTION. HE FOUND THAT THE CONSUMPTION OF ELECTRICITY WORKED OUT BY THE AO IS NOT ACTUALLY BEEN CONSUMPTION DURING THE MONTH BUT THE BILL WHICH WAS RAISED FOR THE MONTH IN WHICH SALE IS MADE. THE ASSESSEE CONTE NDED BEFORE THE LOWER AUTHORITIES THAT THE PRODUCTION WAS SEVERELY EFFECT ED IN THE FIRST THREE MONTHS OF THE YEAR DUE TO STRIKE IN THE WEAVING INDUSTRY A ND THE ASSESSEE COULD NOT GET SUFFICIENT RAW MATERIALS DURING THAT PERIOD BUT THE OVERHEAD EXPENDITURE LIKE ELECTRICITY LABOUR CHARGES WOULD NOT REDUCE TO THAT EXTENT. WE ALSO FIND THAT CONSUMPTION OF ELECTRICITY NO DOUBT FORMS AN I MPORTANT FACTOR BUT WHERE A SINGLE PRODUCTION WAS USED AND IN A DYEING AND PRIN TING HOUSE THE PROCESS ITSELF IS COMPLEX AND COMPRISES A NUMBER OF SUB-PRO CESSES, EACH OF WHICH WOULD CONSUME DIFFERENT AMOUNT OF ELECTRICITY. WE A LSO AGREE WITH THE LOWER AUTHORITIES AS WELL AS THE ARGUMENT OF THE ASSESSEE THAT WHY THE AO HAS TAKEN ONE PARTICULAR MONTH OF THE YEAR I.E. AUG03 AS A BENCHMARK FOR WORKING OUT HYPOTHETICAL PRODUCTION IN THE OTHER MONTHS OF THE YEAR, PARTICULARLY, WHEN THE AO COULD NOT POINT OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT. IN VIEW OF ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 7 THESE FACTS, THE CIT(A) HAS ACCEPTED THE BOOK RESUL TS AND NOW REVENUE HAS NOT CHALLENGED THE SAME. EVEN OTHERWISE, THE ASSESS ING OFFICER CANNOT REJECT THE BOOK RESULTS MERELY BECAUSE THE ASSESSEE COULD NOT MAINTAIN DAY-TO-DAY CONSUMPTION REGISTER OF COLOUR AND CHEMICALS. IN TH E PRESENT CASE THE AO COULD NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCO UNT EXCEPT NON- MAINTENANCE OF DAY-TO-DAY RECORDS IN RESPECT OF CON SUMPTION OF INTERMEDIATE RAW MATERIAL I.E. COLOUR AND CHEMICALS. THE FACT TH AT THERE IS NO STOCK REGISTER OR CONSUMPTION REGISTER, ONLY CAUTIONS THE ASSESSIN G OFFICER AGAINST THE FALSITY OF THE RETURN MADE BY THE ASSESSEE BUT HE CANNOT SA Y THAT MERELY BECAUSE THERE IS NO STOCK REGISTER OR CONSUMPTION REGISTER THE ACCOUNTS OF BOOK ARE FALSE. IT IS A FACT THAT THE ASSESSEE HAS SUBMITTED COMPLETE DETAILS OF PURCHASE AND SALE TO THE ASSESSING OFFICER AND THERE IS NO I OTA OF EVIDENCE THAT THERE IS DEFECT IN THE BOOKS OF ACCOUNT AND IN THE ABSENCE O F SAME, THE AO CANNOT REJECT THE BOOKS OF ACCOUNT. EVEN THE ASSESSEES GR OSS PROFIT FOR THE YEAR UNDER CONSIDERATION HAS INCREASED TO 14.74% FROM 13 .45% FROM THE IMMEDIATE PRECEDING YEAR AND WHEN THE GP IS BETTER FROM EARLIER YEAR THERE IS NO REASON FOR REJECTION OF BOOK RESULTS. ACCORDINGL Y, WE ARE F THE VIEW THAT CIT(A) HAS RIGHTLY ACCEPTED THE BOOK RESULTS AND WE CONFIRM THE SAME. ACCORDINGLY, WE ACCEPT THE FINDINGS OF CIT(A) EVEN THOUGH THE REVENUE HAS NOT FILED ANY GROUND FOR ACCEPTANCE OF BOOK RESULTS BY CIT(A). ONCE THE BOOKS ARE FOUND TO BE IN ORDER NO GP CAN BE ADDED OR SUPP RESSION OF JOB WORK CHARGES ADDED TO RETAIN OF THE ASSESSEE. ACCORDINGL Y, THIS APPEAL OF REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18/02/2011 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 18/02/2011 ITA NO.3307/AHD/2007 A .Y. 2004-05 ITO WD-5(2) SRT V. M/S GOVINDA PROCESSOR PAGE 8 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-IV, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD