ITO, Sirhind V. M/s Jai Sidh Yogi Steel Rolling Mills, Khanna

ITA 383/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6701 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMLESH ITO SH K S BAIS
• Assessee Lawyers: AMAN BHALLA
• Keywords: Rejection of books of accounts; Unexplained investment
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 383/CHD/2017 ASSESSMENT YEAR : 2012-13 THE ITO, VS M/S JAI SIDH YOGI STEEL, WARD 2, ROLLING MILLS, MANDI GOBINDGARH KHANNA SIRHIND PAN: AABFJ8752B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAMLESH, ITO (FOR SH. K.S.BAIS ADDL. CIT(DR) RESPONDENT BY : SH. AMAN BHALLA DATE OF HEARING : 26.10.2017 DATE OF PRONOUNCEMENT : 31.10.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 09.12.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)], PATI ALA. THOUGH A COMMON APPLICATION HAS BEEN MOVED BY THE L D. DR FOR ADJOURNMENT OF ALL THE CASES ENTRUSTED TO HIM, HOWEVER, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INV OLVED IN THIS APPEAL IS SQUARELY COVERED BY THE VARIOUS DECISIONS OF THE TRIBUNAL. WE FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN D ECIDED BY THE 2 TRIBUNAL IN VARIOUS OTHER CASES. IN VIEW OF THE ABO VE, THE ADJOURNMENT APPLICATION IS REJECTED AND WE PROCEED TO DECIDE THE CASE ON MERITS. 2. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MAN UFACTURING OF IRON & STEEL GOODS. DURING THE ASSESSMENT PROCEEDINGS, T HE ASSESSING 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. THE ASSESSING OFFICER FURTHER OBSERVED TH AT THE AMOUNT OF ELECTRICITY CONSUMED WAS DIRECTLY RELATED TO THE PR ODUCTION OF FINISHED GOODS. IN ORDER TO CO-RELATE THE CONSUMPTI ON OF ELECTRICITY VIS--VIS PRODUCTION SHOWN, THE ASSESSING OFFICER G ATHERED INFORMATION REGARDING THE CONSUMPTION OF ELECTRICIT Y FROM THE ELECTRICITY BOARD. THE ASSESSING OFFICER ANALYZED T HE CONSUMPTION DATA OF ELECTRICITY VIS-A VIS THE PRODUCTION OF FIN ISHED GOODS AND OBSERVED THAT THERE WERE WIDE VARIATION IN RATIO OF ELECTRICITY UNITS CONSUMED TO PER METRIC TONS OF FINISHED GOODS PRODU CED DURING THE YEAR. HE FURTHER OBSERVED THAT ON SOME DAYS, ELECTR IC UNITS CONSUMED WERE VERY LOW WHEREAS FINISHED GOODS PRODUCED WERE VERY HIGH GIVING A VERY LOW VALUE OF ELECTRIC UNITS CONSUMED TO PER TON OF FINISHED GOODS, WHEREAS ON SOME OTHER DAYS, ELECTRI C UNITS CONSUMED WERE VERY HIGH WHEREAS THE FINISHED GOODS PRODUCED WERE VERY LESS GIVING A VERY HIGH VALUE OF ELECTRIC UNITS CONSUMED PER METRIC UNIT OF FINISHED GOODS. HE FURTHER OBSERVED THAT EVEN ON SO ME DAYS THOUGH THERE WAS ELECTRICITY CONSUMPTION YET NO PRODUCTION WAS SHOWN. HE FURTHER NOTED THAT OTHERWISE ON OTHER DAYS, THERE W AS ALSO A BALANCE 3 AND CONSISTENCY IN CONSUMPTION OF ELECTRIC UNITS VI S-A-VIS PRODUCTION OF FINISHED GOODS. HE, THEREFORE, OBSERVED THAT IT INDICATED 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 NOT BEEN MAINT AINED 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 REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSING OFFI CER, HOWEVER, WAS 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 UNACCOUNTED SALES AND PURCHASES. HE, THEREFORE, HELD THAT THE SALE AND PURCHASE FIGU RES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT CORRECT AND HE ACC ORDINGLY REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING T HE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT') AND PROCEEDED TO FRAME THE ASSESSMENT IN THE MANNER AS PROVIDED U/S 144 OF THE ACT. HE THEREAFTER WORKED OUT THE UNACCOUNT ED INCOME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED PRODUCTION AT RS . 5909335.74 AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED FROM THE ABOVE ORDER OF THE ASSE SSING OFFICER THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 4. 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 ASSESSMENT ORDER, A DETAILED STUDY WAS CARRIED OUT BY A COMMITTEE HEADED BY THE ADDITIONAL 4 COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE ASSESSING OFFICERS OF THE RANGE AS ITS MEMBERS. THE COMMITTEE WAS ASSISTED BY THE EXPERTS FROM THE NISST (NATIONA L INSTITUTE OF THE SECONDARY STEEL TECHNOLOGY) AND ALSO THE INDUSTRY R EPRESENTATIVES. 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 CONSUMPTION OF POWER, THE BOOK RESULTS SHOULD BE ACCEPTED. ACCORDINGLY, ITS BOOK RESULTS W ERE ACCEPTED FOR THE ASSESSMENT YEAR 2013-14. IT WAS, THEREFORE, PLE ADED THAT ITS BOOK RESULTS FOR THE ASSESSMENT YEAR 2012-13 SHOULD ALSO BE ACCEPTED AND CONSEQUENTLY, THE ADDITION SHOULD BE DELETED. THE L D. CIT(A) GOT VERIFIED FROM THE ASSESSING OFFICER THE ABOVE CONTE NTIONS OF THE ASSESSEE WHICH WAS REPORTED TO BE CORRECT BY THE AS SESSING OFFICER. THE LD. CIT(A) THEREAFTER HELD THAT ONCE AN ISSUE HAS BEEN DECIDED ON MERITS IN A SUBSEQUENT YEAR, IT WOULD NOT BE APP ROPRIATE TO TAKE A DIFFERENT VIEW FOR THE YEAR UNDER CONSIDERATION. HE , THEREFORE, RELYING UPON THE REPORT OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, PATIALA HELD THAT AS DE CIDED BY THE COMMITTEE, THE ASSESSEE WAS ENTITLED TO BENEFIT OF 15% VARIATION IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISH ED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS AND THE VARIATION UP TO 15% WOULD NOT WARRANT ANY ADVERSE COGNIZANCE. HE AC CORDINGLY 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 CIRCUMSTANCES H AS ACCEPTED THE BOOKS RESULTS SHOWN BY THE ASSESSEE WHICH INCLUDED THE ASSESSEE AS 5 WELL, HENCE, HE FOLLOWING THE PRINCIPLE OF CONSISTE NCY LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT VS. RIETA BISCUITS CO. (P) LTD [2009] 309 ITR 154 (P&H) HELD THAT THE BOOKS RESULTS SHOWN BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION NEED TO BE ACCEPTED, AS WELL. HE THER EFORE, SET ASIDE THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BO OKS OF ACCOUNT AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE BOOK R ESULTS SHOWN BY THE ASSESSEE AND DELETED THE ADDITIONS SO MADE BY T HE ASSESSING OFFICER ON ESTIMATION BASIS. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE REVENUE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES. IT HAS BEEN BROUGHT TO OUR KNOWLEDGE THAT IN SIMILAR FAC TS AND CIRCUMSTANCES AND ON IDENTICAL ISSUES, THE MATTER H AS BEEN DELIBERATED BY THE ITAT CHANDIGARH BENCH OF THE TRI BUNAL IN THE CASE OF ITO V SHRI HARPREET SINGH, MANDI GOBINDGARH , WHEREIN THE TRIBUNAL VIDE ORDER DATED 1.8.2017, HAS UPHELD THE ORDER OF THE CIT(A), OBSERVING AS UNDER:- 6. ..AT THE OUTSET, THE LD. DR HAS BROUGHT TO O UR KNOWLEDGE THAT ON IDENTICAL ISSUES, WHEREIN THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ESTIMATI ON BASIS AS DISCUSSED ABOVE WERE UPHELD BY THE CONCERN ED CIT(A), THE ASSESSEES PREFERRED APPEALS BEFORE THIS TRIBUNAL AND THIS TRIBUNAL VIDE ITS COMMON 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 OTHERS IN ITA NO. 149/CHD/2016 AND OTHERS WHILE OBSERVING THAT CONSEQUENT TO THE 6 REPORT OF THE COMMITTEE CONSTITUTED BY THE PRINCIPA L, COMMISSIONER OF INCOME TAX, PATIALA SOME INTERNAL GUIDELINES REGARDING ACCEPTABILITY OF VARIATION UPT O 15% HAVE BEEN ISSUED AND FURTHER THAT NO ADDITIONS HAVE BEEN MADE ON SIMILAR ISSUE IN SUBSEQUENT YEARS BY THE ASSESSING OFFICER, HAS REMANDED THE MATTER T O THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E ISSUE AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE INTERNAL GUIDELINES ISSUED BY THE PRINCIPAL, COMMISSIONER OF INCOME TAX, PATIALA. 7. FURTHER, IN OUR VIEW THIS MATTER NEED NOT TO BE RESTORED IN THE PRESENT APPEALS AS THE LD. CIT(A) W HILE DECIDING THE ABOVE APPEALS IN FAVOUR OF THE ASSESSE E HAS ALREADY FOLLOWED THE INTERNAL GUIDELINES OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMMISSIONE R OF INCOME TAX, PATIALA. THE COMMITTEE SO CONSTITUTE D WAS A BROAD BASED MULTI MEMBER BODY HAVING ADDITIONAL COMMISSIONER OF INCOME TAX, MANDI GOBINDGARH AS ITS HEAD AND ALL THE ASSESSING OFFICE RS OF THE RANGE AS ITS MEMBERS. IT WAS ALSO ASSISTED B Y THE EXPERTS OF THE NATIONAL INSTITUTE OF THE SECOND ARY STEEL TECHNOLOGY (NISST) AND THE INDUSTRY REPRESENTATIVES. THE LD. CIT(A) HAS ACCEPTED THE VARIATION OF 15% IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISHED GOODS AS PER THE REPORT OF T HE COMMITTEE. HE HAS ALSO OBSERVED THAT PURSUANT TO TH E REPORT OF COMMITTEE, THE ASSESSING OFFICERS HAVE A LSO FOLLOWED THIS NORM WHILE MAKING ASSESSMENT IN SIMIL AR TYPE OF CASES AND HAVE ACCEPTED THE BOOK RESULTS SH OWN BY THE ASSESSES. CONSIDERING THE ABOVE FACTS 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 FOR THIS YEAR ALSO AND TO DELETE THE ADDIT IONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF 7 UNACCOUNTED PROFITS / UNACCOUNTED INVESTMENT MADE O N ESTIMATION BASIS AS DISCUSSED ABOVE. THE ORDER OF T HE CIT(A) IS, THEREFORE, UPHELD. 7. SINCE THE FACTS AND ISSUE INVOLVED IN THIS APPEA L IS IDENTICAL TO THAT IN THE CASE OF ITO VS. SHRI HARPREET SINGH, ITA NO. 912/CHD/2017 (SUPRA), THEREFORE, WE NOT FIND ANY IN FIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS HERE BY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2017 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31.10.2017 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR