ITO, Sirhind V. M/s Rajshree Ispat (India) Pvt. Ltd., Mandi Gobindgarh

ITA 385/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6942 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• 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
• Assessee Lawyers: RAJIV DUTTA
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R KUMAR, ACCOUNTANT MEMBER ITA NO. 385/CHD/2017 ASSESSMENT YEAR: 2012-13 THE ITO, WARD-2, VS. M/S RAJSHREE ISPAT (INDIA) PV T. LTD., MANDI GOBINDGARH MANDI GOBINDGARH HQ SIRHIND PAN NO. AABCR6405Q (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. CHANDERKANTA RESPONDENT BY : SH. RAJIV DUTTA DATE OF HEARING : 22.08.2017 DATE OF PRONOUNCEMENT : 23.08.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 23.12.2016 OF THE COMMISSIONER OF INCOM E TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)], PATIALA. 2. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT THE ASSESSEE COMPANY IS A STEEL ROLLING MILL ENGAGED IN MANUFACTURING OF IRON & STEEL PRODUCTS VIZ FLATS & BARS. DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DET AILS OF DAILY PRODUCTION 2 OF FINISHED GOODS AS WELL AS THE DETAILS OF THE MAN UFACTURING 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 CONSUMPTION OF ELE CTRICITY VIS--VIS PRODUCTION SHOWN, THE ASSESSING OFFICER GATHERED IN FORMATION REGARDING THE CONSUMPTION OF ELECTRICITY FROM THE ELECTRICITY BOA RD. THE ASSESSING OFFICER ANALYZED THE CONSUMPTION DATA OF ELECTRICIT Y VIS-A VIS THE PRODUCTION OF FINISHED GOODS AND OBSERVED THAT THER E WERE WIDE VARIATION IN RATIO OF ELECTRICITY UNITS CONSUMED TO PER METRI C TONS OF FINISHED GOODS PRODUCED DURING THE YEAR. HE FURTHER OBSERVED THAT ON SOME DAYS, ELECTRIC UNITS CONSUMED WERE VERY LOW WHEREAS FINISHED GOODS PRODUCED WERE VERY HIGH GIVING A VERY LOW VALUE OF ELECTRIC UNITS CONS UMED 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 METR IC UNIT OF FINISHED GOODS. HE FURTHER OBSERVED THAT EVEN ON SOME DAYS T HOUGH THERE WAS ELECTRICITY CONSUMPTION YET NO PRODUCTION WAS SHOWN . HE FURTHER NOTED THAT OTHERWISE ON OTHER DAYS, THERE WAS ALSO A BALANCE A ND CONSISTENCY IN CONSUMPTION OF ELECTRIC UNITS VIS-A-VIS PRODUCTION OF FINISHED GOODS. HE, THEREFORE, OBSERVED THAT IT INDICATED THAT THE DAIL Y PRODUCTION RECORDED BY THE ASSESSEE OF THE FINISHED GOODS WAS NOT CORRECT AND, HENCE, NOT RELIABLE. HE OBSERVED THAT THE DATA RELATING TO THE DAILY PRO DUCTION HAD NOT BEEN MAINTAINED AS PER ACTUAL PRODUCTION. WHEN CONFRONTE D IN THIS RESPECT, THE ASSESSEE EXPLAINED THAT THE CONSUMPTION OF ELECTRIC ITY WAS DEPENDENT ON VARIOUS FACTORS AS DETAILED IN HIS REPLY WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSE SSING OFFICER, HOWEVER, 3 WAS NOT SATISFIED WITH THE ABOVE REPLY OF THE ASSES SEE. 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 FIGURES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT CORRECT AND HE ACCORDINGLY RE JECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND P ROCEEDED TO FRAME THE ASSESSMENT IN THE MANNER AS PROVIDED U/S 144 OF THE ACT. HE THEREAFTER WORKED OUT THE UNACCOUNTED INCOME OF THE ASSESSEE O N ACCOUNT OF UNACCOUNTED PRODUCTION OF RS. 58,05,630/- 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) THAT SUBSEQUENT TO THE PASSING OF THE ABOVE STATED IMPUGNED ASSESSMENT ORD ER, A DETAILED STUDY WAS CARRIED OUT BY A COMMITTEE HEADED BY THE ADDITI ONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE ASSESSING OFFICERS OF THE RANGE AS ITS MEMBERS. THE COMMITTEE WAS ASSISTE D BY THE EXPERTS FROM THE NISST (NATIONAL INSTITUTE OF THE SECONDARY STEE L TECHNOLOGY) AND ALSO THE INDUSTRY REPRESENTATIVES. ON THE BASIS OF THE R EPORT OF THE COMMITTEE, IT WAS DECIDED THAT IF THE VARIATION IN THE CONSUMPTIO N OF THE ELECTRICITY IS WITHIN THE RANGE OF 15% OF THE YEARLY AVERAGE CONSU MPTION OF POWER, THE BOOK RESULTS SHOULD BE ACCEPTED. ACCORDINGLY, ITS B OOK RESULTS WERE 4 ACCEPTED FOR THE ASSESSMENT YEAR 2013-14. IT WAS, T HEREFORE, PLEADED THAT ITS BOOK RESULTS FOR THE ASSESSMENT YEAR 2012-13 SH OULD ALSO BE ACCEPTED AND CONSEQUENTLY, THE ADDITION SHOULD BE DELETED. T HE LD. CIT(A) GOT VERIFIED FROM THE ASSESSING OFFICER THE ABOVE CONTE NTIONS OF THE ASSESSEE WHICH WAS REPORTED TO BE CORRECT BY THE ASSESSING O FFICER. THE LD. CIT(A) THEREAFTER HELD THAT ONCE AN ISSUE HAS BEEN DECIDED ON MERITS IN A SUBSEQUENT YEAR, IT WOULD NOT BE APPROPRIATE TO TAK E A DIFFERENT VIEW FOR THE YEAR UNDER CONSIDERATION. HE, THEREFORE, RELYIN G UPON THE REPORT 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 ELECTRIC ITY PER METRIC TON OF FINISHED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS AND THE VARIATION UP TO 15% WOULD NOT WARRANT ANY ADVER SE COGNIZANCE. HE ACCORDINGLY HELD THAT SINCE PURSUANT TO THE REPORT OF THE COMMITTEE, THE ASSESSING OFFICER HAS ALREADY FOLLOWED THIS NORM WH ILE MAKING THE ASSESSMENT IN SIMILAR CASES AND IN SAME SET OF CIRC UMSTANCES HAS ACCEPTED THE BOOKS RESULTS SHOWN BY THE ASSESSEE WHICH INCLU DED THE ASSESSEE AS WELL, HENCE, HE FOLLOWING THE PRINCIPLE OF CONSISTE NCY LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE 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 CO NSIDERATION NEED TO BE ACCEPTED, AS WELL. HE THEREFORE, SET ASIDE THE ACTI ON OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND DIREC TED THE ASSESSING OFFICER TO ACCEPT THE BOOK RESULTS SHOWN BY THE ASSESSEE AN D DELETED THE ADDITIONS SO MADE BY THE ASSESSING OFFICER ON ESTIMATION BASI S. 5 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE REVENUE HAS COME IN APPEAL BEFORE US. 6. AT THE OUTSET, LD. REPRESENTATIVES OF BOTH THE PARTIES HAVE BROUGHT TO OUR KNOWLEDGE THAT ON IDENTICAL ISSUES WHEREIN T HE ADDITIONS MADE BY THE ASSESSING OFFICER ON ESTIMATION BASIS AS DISCUS SED ABOVE WERE UPHELD BY THE CONCERNED CIT(A), THE ASSESSEES PREFERRED AP PEALS BEFORE THIS TRIBUNAL AND THIS TRIBUNAL VIDE ITS COMMON ORDER DA TED 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 REPORT OF TH E COMMITTEE CONSTITUTED BY THE PRINCIPAL, COMMISSIONER OF INCOME TAX, PATIA LA SOME INTERNAL GUIDELINES REGARDING ACCEPTABILITY OF VARIATION UPT O 15% HAVE BEEN ISSUED AND FURTHER THAT NO ADDITIONS HAVE BEEN MADE ON SIM ILAR ISSUE IN SUBSEQUENT YEARS BY THE ASSESSING OFFICER, HAS REMA NDED THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE IS SUE AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE INTERNAL GUIDELINES IS SUED 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) WHILE DECIDING THE ABOVE APPEALS IN FAVOUR OF THE ASSESSEE HAS ALREADY FOLLOWED THE INTERNAL GUID ELINES OF THE COMMITTEE CONSTITUTED BY THE PRINCIPAL COMMISSIONER OF INCOM E TAX, PATIALA. THAT THE COMMITTEE SO CONSTITUTED WAS A BROAD BASED MULT I MEMBER BODY HAVING ADDITIONAL COMMISSIONER OF INCOME TAX, MANDI GOBINDGARH AS ITS HEAD AND ALL THE ASSESSING OFFICERS OF THE RANGE AS ITS MEMBERS. IT WAS 6 ALSO ASSISTED BY THE EXPERTS OF THE NATIONAL INSTIT UTE OF THE SECONDARY STEEL TECHNOLOGY (NISST) AND THE INDUSTRY REPRESENTATIVES . THE LD. CIT(A) HAS ACCEPTED THE VARIATION OF 15% IN CONSUMPTION OF ELE CTRICITY PER METRIC TON OF FINISHED GOODS AS PER THE REPORT OF THE COMMITTE E. HE HAS ALSO OBSERVED THAT PURSUANT TO THE REPORT OF COMMITTEE, THE ASSE SSING OFFICERS HAVE ALSO FOLLOWED THIS NORM WHILE MAKING ASSESSMENT IN SIMIL AR TYPE OF CASES AND HAVE ACCEPTED THE BOOK RESULTS SHOWN BY THE ASSESSE S. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY I NFIRMITY 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 AN D TO DELETE THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOU NTED PROFITS / UNACCOUNTED INVESTMENT MADE ON ESTIMATION BASIS AS DISCUSSED ABOVE. THE ORDER OF THE CIT(A) IS, THEREFORE, UPHELD. 8 IN THE RESULT, THE APPEAL OF THE REVENUE IS HEREB Y DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.08.2017 SD/- SD/- (DR. B.R.R KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :23 RD AUGUST, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR