Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 6980 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-08-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
23-02-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.359/CHD/2017 ASSESSMENT YEAR: 2012-13 THE DCIT VS. KUBER CASTINGS PVT. LTD. CIRCLE-1 BEHIND MODERN STEELS LTD. MANDI GOBINDGARH MANDI GOBINDGARH PAN NO. AACCK4810D (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. BHUPINDER SHARMA REVENUE BY : SH. RAVI SARANGAL DATE OF HEARING : 12/07/2017 DATE OF PRONOUNCEMENT : 02/08/2017 ORDER PER B.R.R. KUMAR A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. CIT(A) DT. 13/12/2016. 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) IS CORRECT IN DELETING THE ADDITION MADE BY THE ASSESS ING OFFICER MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT AND UNACCOUNTED PROFIT OU T OF UNACCOUNTED PRODUCTION. 2. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT THE ASSESSEE COMPANY IS A STEEL RE-ROLLING MIL L ENGAGED IN MANUFACTURING OF IRON AND STEEL PRODUCTS VIZ STRUCT URAL STEEL LIKE ANGLES, CHANNELS, FLATS, JOISTS, H.BEAMS ETC. DURIN G THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO FURNISH DETAILS OF DAILY PRODUCTION OF FINISHED GOODS AS WE LL AS THE DETAILS OF THE MANUFACTURING PROCESS INVOLVED. THE ASSESSING O FFICER 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--VIS PRODUCTION SHO WN, THE ASSESSING OFFICER GATHERED INFORMATION REGARDING THE CONSUMPT ION OF ELECTRICITY FROM THE ELECTRICITY BOARD. THE ASSESSI NG OFFICER ANALYZED 2 THE CONSUMPTION DATA OF ELECTRICITY VIS-A VIS THE P RODUCTION OF FINISHED GOODS AND OBSERVED THAT THERE WERE WIDE VA RIATION IN RATIO OF ELECTRICITY UNITS CONSUMED TO PER METRIC TONS OF FINISHED GOODS PRODUCED DURING THE YEAR. HE OBSERVED THAT THE ELE CTRICITY CONSUMPTION PMT OF FINISHED GOODS VARIES FROM 64.32 UNITS TO 114.06 UNITS WHILE THE AVERAGE FOR THE ENTIRE YEAR IS 84.1 6 UNITS. HE FURTHER OBSERVED THAT ON SOME DAYS, ELECTRIC UNITS CONSUMED WERE VERY LOW WHEREAS FINISHED GOODS PRODUCED WERE VERY HIGH GIVI NG A VERY LOW VALUE OF ELECTRIC UNITS CONSUMED TO PER TON OF FINI SHED GOODS, WHEREAS ON SOME OTHER DAYS, ELECTRIC UNITS CONSUMED WERE VERY 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 WAS ALSO A BALANCE AND CONSISTENCY IN CONSUMPTION OF ELECTRIC UNITS VIS-A- VIS PRODUCTION OF FINISHED GOODS. HE, THEREFORE, OBSERVED THAT IT IND ICATED THAT THE DAILY PRODUCTION RECORDED BY THE ASSESSEE OF THE FI NISHED GOODS WAS NOT CORRECT AND, HENCE, NOT RELIABLE. HE OBSERVED T HAT THE DATA RELATING TO THE DAILY PRODUCTION HAD BEEN MAINTAINE D AS PER ACTUAL PRODUCTION. WHEN CONFRONTED IN THIS RESPECT, THE AS SESSEE EXPLAINED THAT THE CONSUMPTION OF ELECTRICITY WAS DEPENDENT O N VARIOUS FACTORS AS DETAILED IN HIS REPLY WHICH HAS BEEN REP RODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASS ESSING OFFICER, HOWEVER, WAS NOT SATISFIED WITH THE ABOVE REPLY OF THE ASSESSEE. HE ULTIMATELY HELD THAT THE ASSESSEE COMPANY WAS INVOL VED IN UNACCOUNTED PRODUCTION OF FINISHED GOODS WHICH RESU LTED IN UNACCOUNTED SALES AND PURCHASES. HE, THEREFORE, HEL D THAT THE SALE AND PURCHASE FIGURES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE 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 ELECTRIC UNITS CONSUMED FOR 12 MONTHS AS PER CHART REPRODUCED IN THE ASSESSMENT ORDER. HE COMPARED THE SAME WITH THA T SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED THE UNACCOUNTED PRODUCTION FOR EACH MONTH. THEREAFTER, ON THE BASIS OF AVERAGE SALES 3 RATE, THE VALUE OF TOTAL UNACCOUNTED PRODUCTION WAS ESTIMATED IN MONETARY TERMS AND THEN ADOPTING THE GROSS PROFIT R ATE SHOWN BY THE ASSESSEE, THE UNACCOUNTED PROFIT OUT OF THE UNA CCOUNTED PRODUCTION WAS WORKED OUT. SECONDLY, THE PEAK UNACC OUNTED PRODUCTION FOR THE RELEVANT MONTH WAS DETERMINED AN D BY MULTIPLYING THE AVERAGE SALE RATE OF FINISHED GOODS , THE UNACCOUNTED INVESTMENT WAS WORKED OUT. THE ASSESSI NG OFFICER IN THIS WAY WORKED OUT THE TOTAL UNACCOUNTED INVESTMEN T OF THE ASSESSEE IN THE UNACCOUNTED PRODUCTION AT RS. 86,9 9,784/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED FROM THE ABOVE ORDER OF THE ASSE SSING OFFICER THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. BEFORE LD. CIT(A), THE ASSESSEE FILED DETAILED S UBMISSIONS. IT WAS ALSO BROUGHT INTO THE KNOWLEDGE OF THE CIT(A) T HAT SUBSEQUENT TO THE PASSING OF THE ABOVE STATED IMPUGNED ASSESSM ENT ORDER, A DETAILED STUDY WAS CARRIED OUT BY A COMMITTEE HEADE D BY THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE ASSESSING OFFICERS OF THE RANGE AS I TS MEMBERS. THE COMMITTEE WAS ASSISTED BY THE EXPERTS FROM THE NISS T (NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLOGY) AND AL SO 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 RANGE OF 15% OF THE YEARLY AVERAGE CONSU MPTION OF POWER, THE BOOK RESULTS SHOULD BE ACCEPTED. ACCORDI NGLY, ITS BOOK RESULTS WERE ACCEPTED FOR THE ASSESSMENT YEAR 2013- 14. IT WAS, THEREFORE, PLEADED THAT ITS BOOK RESULTS FOR THE AS SESSMENT 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 REPORTE D TO BE CORRECT BY THE ASSESSING OFFICER. THE LD. CIT(A) THEREAFTE R HELD THAT ONCE AN ISSUE HAS BEEN DECIDED ON MERITS IN A SUBSEQUENT YE AR, IT WOULD NOT BE APPROPRIATE TO TAKE A DIFFERENT VIEW FOR THE YEA R UNDER CONSIDERATION. HE, THEREFORE, RELYING UPON THE REPO RT OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, PATIALA HELD THAT AS DECIDED BY THE COMMITTEE, THE ASSESSEE WAS ENTITLED TO BENEFIT OF 15% VARIATION IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISHED GOODS PRODUCED FROM THE AVER AGE WORKED OUT ON YEARLY BASIS AND THE VARIATION UP TO 15% WOULD N OT WARRANT ANY 4 ADVERSE COGNIZANCE. HE ACCORDINGLY HELD THAT SINCE PURSUANT TO THE REPORT OF THE COMMITTEE, THE ASSESSING OFFICER HAS ALREADY FOLLOWED THIS NORM WHILE MAKING THE ASSESSMENT IN SIMILAR CA SES AND IN SAME SET OF CIRCUMSTANCES HAS ACCEPTED THE BOOKS RESULTS SHOWN BY THE ASSESSEE WHICH INCLUDED THE ASSESSEE AS WELL, HENCE , HE FOLLOWING THE PRINCIPLE OF CONSISTENCY LAID DOWN BY THE HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RIETA BI SCUITS CO. (P) LTD [2009] 309 ITR 154 (P&H) HELD THAT THE BOOKS RESULT S SHOWN BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION N EED TO BE ACCEPTED, AS WELL. HE THEREFORE, SET ASIDE THE ACTI ON OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE BOOK RESULTS SHOWN BY THE ASSESSEE AND DELETED THE ADDITIONS SO MADE BY THE ASSESSING OFFICER ON ESTIMATION BASIS. 6. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE REVENUE HAS COME IN APPEAL BEFORE US. 7. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGHT TO OUR KNOWLEDGE THAT ON IDENTICAL ISSUES, WHEREIN THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ESTIMATION BASIS AS DIS CUSSED ABOVE WERE UPHELD BY THE CONCERNED CIT(A), THE ASSESSEES PREFE RRED APPEALS BEFORE THIS TRIBUNAL AND THIS TRIBUNAL VIDE ITS COM MON ORDER DATED 14.2.2017, PASSED IN A BUNCH OF ABOUT 85 APPEALS IN THE CASE OF M/S MODI OIL & GENERAL MILL, MANDI GOBINDGRH AND OT HERS IN ITA NO. 149/CHD/2016 AND OTHERS WHILE OBSERVING THAT CONSEQ UENT TO THE REPORT OF THE COMMITTEE CONSTITUTED BY THE PRINCIPA L, COMMISSIONER OF INCOME TAX, PATIALA SOME INTERNAL GUIDELINES REG ARDING ACCEPTABILITY OF VARIATION UPTO 15% HAVE BEEN ISSUE D AND FURTHER THAT NO ADDITIONS HAVE BEEN MADE ON SIMILAR ISSUE I N SUBSEQUENT YEARS BY THE ASSESSING OFFICER, HAS REMANDED THE MA TTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE IS SUE AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE INTERNAL GU IDELINES ISSUED BY THE PRINCIPAL, COMMISSIONER OF INCOME TAX, PATIALA . 8. FURTHER, IN OUR VIEW THIS MATTER NEED NOT TO BE RESTORED IN THE PRESENT APPEALS AS THE LD. CIT(A) WHILE DECIDING TH E ABOVE APPEALS IN FAVOUR OF THE ASSESSEE HAS ALREADY FOLLOWED THE INTERNAL GUIDELINES OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMM ISSIONER OF 5 INCOME TAX, PATIALA. THE COMMITTEE SO CONSTITUTED W AS A BROAD BASED MULTI MEMBER BODY HAVING ADDITIONAL COMMISSIO NER OF INCOME TAX, MANDI GOBINDGARH AS ITS HEAD AND ALL TH E ASSESSING OFFICERS OF THE RANGE AS ITS MEMBERS. IT WAS ALSO A SSISTED BY THE EXPERTS OF THE NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLOGY (NISST) AND THE INDUSTRY REPRESENTATIVES. THE LD. C IT(A) HAS ACCEPTED THE VARIATION OF 15% IN CONSUMPTION OF ELE CTRICITY PER METRIC TON OF FINISHED GOODS AS PER THE REPORT OF T HE COMMITTEE. THE SAME HAS ALREADY BEEN FOLLOWED BY THE ASSESSING OFF ICER IN SUBSEQUENT ASSESSMENT YEAR. CONSIDERING THE ABOVE F ACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHILE DIRECTING THE ASSESSING OFFICER TO ACCEPT THE BOOKS RESULTS SHOWN BY THE ASSESSEE AND TO DELETE THE ADDITIONS M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED PROFITS / UNACCOUNTED INVESTMENT MADE ON ESTIMATION BASIS AS DISCUSSED AB OVE. THE ORDER OF THE CIT(A) IS, THEREFORE, UPHELD. 9. SINCE THE FACTS AND ISSUE INVOLVED IN ALL THE OT HER CAPTIONED APPEALS ARE IDENTICAL, HENCE, IN VIEW OF OUR FINDIN GS GIVEN ABOVE, WE DO NOT FIND ANY MERIT IN ALL THE APPEALS OF THE REVENUE AND THE SAME ARE ACCORDINGLY DISMISSED. 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2017 (SANJAY GARG) (B.R.R.KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02/08/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR
