M/s Kirpalu Strips, Gobindgarh V. ITO, W-1, Mandi Gobindgarh

ITA 818/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3475 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-11-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Rule of consistency; Additional evidence; Onus to prove; Set aside
• Section: 143(3); 201; 13; 145(3); 22; 144

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES A, CHANDIGARH .. , #$ %& '(, ) (* BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SATBE ER SINGH GODARA, JUDICIAL MEMBER ./ ITA NO. 818/CHD/2019 / ASSESSMENT YEAR : 2010-11 M/S KIRPALU STRIPS, LOHA BAZAR, MANDI GOBINDGARH. INCOME TAX OFFICER, WARD-1, MANDI GOBINDGARH. ./ PAN NO: AAJFK 7532 Q / APPELLANT / RESPONDENT ./ ITA NO. 879/CHD/2019 / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD-2, MANDI GOBINDGARH, HQ. NEW LIBRA KOTHI, RAILWAY ROAD, SIRHIND, DISTT. FATEHGARH SAHIB- 140406. M/S KIRPALU STRIPS, C/O- RADHEY SHYAM TRADERS, LOHA BAZAR, MANDI GOBINDGARH. ./ PAN NO: AAJFK 7532 Q / APPELLANT / RESPONDENT / ASSESSEE BY: SHRI PARIKSHIT AGARWAL (CA) ! / REVENUE BY: SMT. MEENAKSHI VOHRA (ADDL.CIT) ' #$ / DATE OF HEARING : 09/11/2020 %&'($ / DATE OF PRONOUNCEMENT: 11/11/2020 / ORDER PER: SATBEER SINGH GODARA, J.M. : THESE ASSESSEES AND REVENUES CROSS APPEALS FOR TH E A.Y. 2010-11 ARISE AGAINST THE CIT(A)S PATIALA ORDER DA TED 27/03/2019 PASSED IN APPEAL NO. 25/IT/CIT(A)/PTA/13-14 INVOLVI NG PROCEEDING U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, T HE ACT). ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 2 HEARD BOTH THE PARTIES. CASE FILE/RECORDS PERUSED. 2. THE ASSESSEES APPEAL IN ITA NO. 818/CHD/2019 RA ISES THE FOLLOWING SUBSTANTIVE GROUNDS: 1. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POS ITION OF THE CASE, THE WORTHY CIT(A) IN ITS ORDER DATED 27/03/2019 HAS ERR ED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF SE CTION 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF LD.AO WHEREIN HE HAD REJECTED THE BOOKS OF ACCOUNTS OF THE APPELLANT MER ELY ON SUSPICION OF HIGHER PRODUCTION ON THE BASIS OF ELECTRICITY CO NSUMPTION. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N HE HAD MADE ADDITION OF RS. 13,04,677/- ON ACCOUNT OF ALLEGED U NACCOUNTED GROSS PROFIT ON ALLEGED UNACCOUNTED PRODUCTION. 3. THE REVENUES CROSS APPEAL NO. 879/CHD/2019 CANV ASSES THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS CORRECT IN DELETING THE ADDITION OF RS. 1 ,62,54,188/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT IN UNACCOUNTED PRODUCTION. 2. THAT IT IS PRAYED THAT THE ORDER OF LD. CIT(A), PATIALA BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CON TENDED DURING THE COURSE OF HEARING THAT BOTH THE LOWER AU THORITIES HAVE ERRED IN LAW AND ON FACTS IN REJECTING THE ASSESSEE S BOOKS OF ACCOUNT FOLLOWED BY THE ALLEGED GROSS PROFIT IN THE NATURE OF THE ALLEGED UNACCOUNTED GROSS PROFIT ELEMENT OF RS. 13, 04,677/- MADE IN THE COURSE OF ASSESSMENT DATED 08/03/2013 AS UPH ELD IN THE CIT(A)S ORDER. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 3 5. THE REVENUES CASE; GOING BY ITS AVERMENTS ON TH E GROUND RAISED IN CROSS APPEAL IN ITA NO. 879/CHD/2019, IS THAT THE CIT(A) OUGHT TO HAVE UPHELD THE UNACCOUNTED INVESTMENT IN STOCK ADDITION OF RS. 1,62,54,188.78 MADE IN THE COURSE O F ASSESSMENT. IT VEHEMENTLY HIGHLIGHTED THE FACT THAT SINCE THE A SSESSING OFFICER HAD NOTICED VARIATION IN THIS TAXPAYERS POWER CONS UMPTION EXCEEDING 15% TOLERANCE MARGIN THEREOF, THE SAME SU FFICIENTLY INDICATED IT TO HAVE BEEN INVOLVED IN UNACCOUNTED P RODUCTION AND SALE OF THE MANUFACTURED ITEMS. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS. WE NOTICE THAT THE CIT(A) COMMON DISCUSS ION QUA THE ASSESSEES TWIN GRIEVANCES AS WELL AS REVENUES SOL E SUBSTANTIVE GROUND HEREINABOVE READS AS UNDER: 05. THE APPELLANT FIRM FILED A RETURN OF INCOME O N 27.09.2010 DECLARING INCOME OF RS. 2,62,388/- AND ASSESSMENT WAS CONCLUD ED IN THE CASE UNDER SECTION 143(3) ON 08.03.2013 AT AN ASSESSED I NCOME OF RS 1,78,21,250/- INTER-ALIA MAKING AN ADDITION OF RS. 13,04,676.90 ON ACCOUNT OF UNDISCLOSED PRODUCTION AND RS. 1,62,54,1 88.78/- ON ACCOUNT OF INVESTMENTS IN STOCK FOR THE. AGGRIEVED BY THE A DDITIONS THE APPELLANT IS IN APPEAL. 5.1 BRIEF FACTS OF THE CASE: THE APPELLANT FIRM WA S ONE OF THE MANY MANUFACTURERS OF STEEL AND SIMILAR INDUSTRIES IN TH E MANDI GOBINDGARH AND SURROUNDINGS REGION WHICH WERE INVESTIGATED WIT H REGARDS TO ALLEGED UNDISCLOSED PRODUCTION BASED, IN PART, ON T HE INCONSISTENT CONSUMPTION OF ELECTRICITY QUA THE UNIT PRODUCTION OF FINISHED GOODS. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 4 THE ISSUE HAS ELICITED CONSIDERABLE DEBATE AND A ' SCIENTIFIC STUDY' OF THE PROCESSES WAS ALSO CONDUCTED AS SHALL BE DISCUS SED INFRA. 5.2. GROUNDS OF APPEAL: GROUNDS OF APPEAL 1 AND 6 IS GENERAL ; GROUND NO. 5 IS CONSEQUENTIAL; ARE NOT ADJUDICATED UPON; GROUN DS OF APPEAL 2 TO 4 ARE TAKEN TOGETHER; THESE RELATE TO THE REJECTION O F PRODUCTION RECORD, REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF UN ACCOUNTED PRODUCTION. 06 GROUNDS OF APPEAL 2 TO 4 DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE LD. A.O. HAS SOUGHT TO ESTABLISH THAT ONE OF THE MAJOR FACTORS O F PRODUCTION IN THE MANUFACTURING PROCESS OF THE APPELLANT ELECTRIC POW ER. THE LD. AO ANALYZED THE SPECIFIC PRODUCTION PROCESS OF THE APP ELLANT AND THE ISSUE OF ALLEGED UNACCOUNTED PRODUCTION (PARA 4.0 OF THE ASSESSMENT ORDER) AND HIS FINDINGS ARE SUMMARIZED AS UNDER: I. THE PROCESS INVOLVES HEATING OF RAW MATERIAL A D PASSING THE SAME THROUGH VARIOUS ROLLERS TO GET FINAL FINISHED GOODS THAT MAY VARY AS PER REQUIREMENT OF SIZES/ SECTIONS. II. POWER PRODUCTION IS DIRECTLY PROPORTIONAL TO THE PRODUCTION III. TO MAKE FINER SIZES/ SECTIONS MORE POWER PER M ETRIC TONNE (HEREINAFTER PMT) IS USED. 6.1 THE LD. AO HAS FURTHER SOUGHT TO ESTABLISH THA T THE PRODUCTION OF FINISHED GOODS IS DIRECTLY PROPORTIONAL TO THE UNIT S OF ELECTRICITY CONSUMED. IN ORDER TO CO-RELATE THE CONSUMPTION OF ELECTRICITY VIS-A-VIS THE PRODUCTION SHOWN, THE LD. A.O. COLLECTED THE GR ANULAR DATA REGARDING METERED ELECTRICITY CONSUMPTION FROM THE ELECTRICITY BOARD. THE A.O. FURTHER ANALYZED THIS DATA; THE DATA AND A NALYSIS FINDS REPRODUCTION IN FIVE ANALYTICAL REPORTS THAT FORM P ART OF THE ASSESSMENT ORDERS AS ANNEXURE A TO E. ANNEXURE-A INTER-ALIA DE PICTS THE QUANTITY IN METRIC TONS OF FINISHED GOODS PRODUCED ON A GIVEN D AY, ELECTRICITY UNITS CONSUMED ON THAT DAY AS WELL AS THE PMT OF ELECTRIC ITY UNITS CONSUMED ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 5 WITH RESPECT TO THE FINISHED GOODS PRODUCED ON THAT PARTICULAR DAY AS PER THE PRODUCTION RECORDS OF THE APPELLANT. IT WAS OBSERVED THAT THE ELECTRICITY CONSUMPTION PMT. OF FINISHED GOODS VARI ES FROM 1.46 UNITS TO 725.74 UNITS WHILE THE AVERAGE FOR THE ENTIRE YEAR IS 305.81 UNITS/PMT. THE ANNEXURE-B EXTRACTS THE DATA WITH REGARDS TO TH E SPECIFIC DATES ON WHICH PER METRIC TON OF FINISHED GOODS ELECTRICITY CONSUMED IS LOW, WHILE THE PRODUCTION OF FINISHED GOODS IS VERY HIGH . ANNEXURE-C SHOWS THE DAYS ON WHICH THE PER METRIC TON OF FINISHED GO ODS ELECTRICITY UNITS CONSUMED IS VERY HIGH WHEREAS THE RESULTANT PRODUCT ION OF FINISHED GOODS IS VERY LOW. FURTHER, THERE ARE CERTAIN DAYS WHEN THERE IS HIGH CONSUMPTION OF ELECTRICITY, BUT NO PRODUCTION OF FI NISHED GOODS HAS BEEN REPORTED AS PER THE PRODUCTION RECORDS. THE DE TAILS ARE REPRODUCED IN THE ASSESSMENT ORDER. IT WAS ALSO OBS ERVED THAT CLOSE TO THESE DAYS ELECTRICITY CONSUMPTION IS ALMOST SAME W ITH HIGH PRODUCTION OF FINISHED GOODS. ANNEXURE-D SHOWS THE DETAILS OF DAYS WHERE THE FACTORY WAS CLOSED ON WHICH THERE WAS LOW CONSUMPTI ON OF ELECTRICITY AND NO PRODUCTION OF FINISHED GOODS. THE ANNEXURE-E SHOWS THE ELECTRICITY UNITS CONSUMED PER METRIC TON OF FINISH ED GOODS PRODUCED OVER 30 DAY PERIODS. 6.2 THE LD. AO'S SOUGHT THE APPELLANT'S EXPLANATION OF THE GLARING ANOMALIES AND THE APPELLANT VIDE HIS REPLY DATED 12 .0.2013 AND 05.03.2013 MADE A SUBMISSION REPRODUCED IN PARA 4.3 .1 OF THE ASSESSMENT ORDER. TO SUMMARIZE IN BRIEF THE APPELLA NT SUBMITTED THAT THAT THE CONSUMPTION OF ELECTRICITY DEPENDS ON VARI OUS FACTORS AS UNDER: I. FREQUENT POWER FAILURE POWER CUTS, GRID FAILURE S, VOLTAGE FLUCTUATIONS AND HUGE CONSUMPTION OF POWER TO REHEA T THE RAW MATERIAL II. DELAY OR TIME LAG IN THE RECORDING OF PRODU CTION IN THE BOOKS, III. DIFFERENCE IN TYPE AND QUALITY OF RAW MATERI AL USED, ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 6 IV. THE END PRODUCT REQUIRED AND THE HIGHER THE N UMBER OF STANDS USED; THE MORE THE POWER CONSUMPTION V. IF THE SCALE OF PRODUCTION IS TAKEN AT THE PER METRIC TONNE LEVEL, THERE IS NEGLIGIBLE POWER VARIATION VI. MILL CONDITION, MOTOR, BREAK-DOWN OF MACHINERY , VII. DIFFERENT LOAD TAKEN BY OTHER MACHINES NOT RE LATED WITH PRODUCTION, AND LABOUR EFFICIENCY ETC. VIII. THE APPELLANT MAINTAINS A SIZE WISE PRODUCTIO N REGISTER AND THE SAME IS VERIFIABLE WITH REFERENCE TO THE PRODUCTION / SALE INVOICES. IX. THAT EXCISE REGISTERS ARE AUDITED BY EXCISE AG ENCIES AND NO ANOMALY HAS BEEN POINTED OUT. 6.3 THE LD. AO HAS ANALYZED THE REPLY OF THE APPEL LANT AND NOT ACCEPTED IT IN TOTO (PARA 4.3.2 TO 4.4 OF THE ASSESSMENT ORDER ). THE ANALYSES IS SUMMARIZED AS UNDER: I. NO EVIDENCE OF DAILY RECORD OF PRODUCTION OF FINISHED GOODS DETAILING SIZE/QUALITY HAVE BEEN FURNISHED II. THE VARIATIONS CANNOT BE EXPLAINED WITH REF ERENCE TO DIFFERENTIAL POWER CONSUMED FOR DIFFERENT SIZES III. NO EVIDENCE THAT THINNER SECTIONS PRODUCED O N DAYS OF HIGHER POWER CONSUMPTION OR LARGER SECTION ON DAYS OF LOW POWER CONSUMPTION PRODUCED IV. THE ONUS LIES ON THE APPELLANT TO PROVE THAT P ARTICULAR CLASS OF RAW MATERIAL USED ON A PARTICULAR DAY. A. NO DAILY RECORD OF TYPE OF RAW MATERIAL USED/ FINISHED GOOD PRODUCED B. FORM IV DOES NOT RECORD SIZE/ QUALITY V. THE MISCELLANEOUS REASONS CITED APPLY TO ALL DAYS WHETHER HAVING NORMAL HIGH OR LOW CONSUMPTION VI. THE REASONS DO NOT EXPLAIN THE LARGE VARIATI ON ESPECIALLY WHERE THERE ARE DAYS WHEN THERE IS NO PRODUCTION THOUGH S IGNIFICANT POWER CONSUMPTION ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 7 VII. EXCISE AUDIT HAS NOT BEEN CONDUCTED ON A D AILY BASIS AND EACH HAS TO MAKE THEIR OWN DECISION BASED ON DATA AVAILABLE. 6.4 THE LD. AO AFTER REBUTTING THE SUBMISSIONS OF THE APPELLANT WENT ON THE REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT HOLDING THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE BOOKS OF ACCOUNT OF THE APPELLANT FOR DETERMINATION OF THE PROFIT OF THE BU SINESS FOR THE REASONS DETAILED IN THE ASSESSMENT ORDER. THE LD AO HAS REL IED UPON A NUMBER OF SALUTARY JUDICIAL PRECEDENTS INCLUDING MELTON IN DIA VS. COMMISSIONER OF TRADE OF TAX (UP) APPEAL NO. (CIVIL) 373 OF 2007 (SC), SH. GANPATI EMBROIDERY PVT. LTD. VS. CIT 16 DTR (P & H) AND KAN CHWALA GEMS VS. JCIT 288 ITR 10 (SC). THE A.O., THEREAFTER, ADOPTED THE VALUE OF ELECTRIC ITY CONSUMED PMT. ON THE BASIS OF MINIMUM AVERAGE VALUE FOR A PERIOD OF 30 DAYS ASSUMING THAT WITHIN A PERIOD OF 30 DAYS VARIOUS TY PES OF RAW MATERIALS WOULD HAVE BEEN USED AND OTHER FACTORS CONTRIBUTING TO THE VARIATION IN CONSUMPTION OF ELECTRICITY PMT OF FINISHED GOODS WO ULD HAVE BEEN TAKEN CARE OF. FURTHER, THE LD AO REMOVED FROM CONS IDERATION THE ELECTRIC CONSUMPTION FOR THE DAYS THE UNIT REMAINED CLOSED. THE LD. A.O. THEREAFTER TOOK THE MINIMUM UNITS CONSUMED I.E . 198.38 UNITS. USING THIS AS THE 'REAL PRODUCTION' BASIS', THE LD. A.O. ESTIMATED THE UNACCOUNTED PRODUCTION. THE A.O. GAVE SOME RELIEF F OR THE ELECTRICITY UNITS NOT RELATED TO PRODUCTION DUE TO CLOSED DAYS AND, THEREAFTER, COMPUTED THE ACTUAL ELECTRICITY CONSUMED FOR 12 MON THS ON THE BASIS OF 198.38 UNITS PMT. OF PRODUCTION AS PER CHART REPROD UCED IN THE ASSESSMENT ORDER. THE A.O. ESTIMATED THE QUANTUM OF FINISHED GOODS PRODUCED AND, THEREAFTER, ESTIMATED THE UNACCOUNTED PRODUCTION FOR EACH MONTH AFTER DEDUCTING THE FINISHED GOODS PRODU CED DURING THE MONTHS SHOWN IN THE BOOKS OF ACCOUNTS. THEREAFTER, ON THE BASIS OF AVERAGE SALES RATE TOTAL UNACCOUNTED PRODUCTION OF RS. 16254188.78 WAS ESTIMATED IN MONETARY TERMS AND THEN ADOPTING T HE GROSS PROFIT RATE SHOWN BY THE APPELLANT, THE UNACCOUNTED PROFIT OUT OF THE UNACCOUNTED PRODUCTION WAS WORKED OUT AS RS. 130467 6.9. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 8 THAT A NUMBER OF UNITS WITH A MANUFACTURING PROCESS SIMILAR TO THE APPELLANT AND WHERE SUBJECTED TO INVESTIGATION HAS BEEN STATED SUPRA ; TO EXAMINE THE ISSUE OF LEGITIMATE VARIATION IN CON SUMPTION A DETAILED STUDY HAS BEEN CONDUCTED BY A COMMITTEE, CONSTITUTE D BY THE PRINCIPAL CIT PATIALA, WITH A VIEW TO EXAMINE THE VARIATION I N THE CONSUMPTION OF ELECTRICITY VIS-A-VIS THE PRODUCTION OF FINISHED GO ODS IN THE ROLLING MILLS AND INDUCTION FURNACES OF THE AREA. THE COMMITTEE, A BROAD-BASED MULTIMEMBER BODY, HAD THE ADDITIONAL COMMISSIONER O F INCOME TAX, RANGE, MANDI GOBINDGARH AS ITS HEAD AND ALL THE AO' S OF THE RANGE AS ITS MEMBERS. IT WAS ASSISTED BY THE EXPERTS FROM TH E NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLOGY (NISST) AND THE I NDUSTRY REPRESENTATIVES. I HAVE ACCESSED ITS REPORT FROM TH E ADDL. CIT, RANGE, MANDI GOBINDGARH. ITS RELEVANT EXCERPT READS AS UND ER: 'THEREAFTER, TO ASCERTAIN THE AMOUNT OF VARIATION I N CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISHED GOODS PRO DUCED OF SIMILAR SIZES AND ODD SIZES, THE AOS CARRIED OUT ON THE SPO T VERIFICATION BY RUNNING SOME OF THE ROLLING MILLS ON A FIX PERIOD O F TIME AND NOTICED QUITE APPRECIABLE VARIATION IN THE CONSUMPT ION OF ELECTRICITY PER METRIC TON OF FINISHED GOODS IN SIM ILAR SIZES AS WELL AS ODD SIZES. THE TECHNICAL EXPERTS FROM NATIONAL I NSTITUTE OF SECONDARY STEEL TECHNOLOGY (NISST), MANDI GOBINDGAR H ALSO OPINED THAT GIVEN THE NATURE OF TECHNOLOGY, RAW MATERIALS AND FINISHED GOODS, SUBSTANTIAL VARIATION IN THE NUMBER OF ELECT RICITY UNITS FOR PRODUCTION OF ONE METRIC TON OF FINISHED GOODS INTE R DAY BASIS, ARE BOUND TO BE THERE. ' BASED ON ITS FINDING OF FACTS, THE COMMITTEE HAS DE CIDED 'TO GIVE BENEFIT OF 15% VARIATION IN CONSUMPTION OF ELECTRIC ITY PER METRIC TON OF FINISHED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS'. MEANING, THEREBY THAT 15% VARIATION IN THE NUMBER O F ELECTRICITY UNITS CONSUMED PER METRIC TON OF FINISHED GOODS AS COMPAR ED TO THE AVERAGE CONSUMPTION OF ELECTRICITY UNITS PER METRIC TON OF FINISHED GOODS IS THE INDUSTRIAL NORM WARRANTING NO ADVERSE COGNIZANCE. H ENCE, BECAUSE OF THE REASON OF VARIATION OF ELECTRICITY OF LESS THAN 15% ALONE, BOOKS OF ACCOUNT MAY NOT BE REJECTED. PURSUANT TO THE REPORT OF THE COMMITTEE, ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 9 THE AO'S HAVE FOLLOWED THIS NORM WHILE MAKING ASSES SMENTS IN SIMILAR CASES AND IN SIMILAR SET OF CIRCUMSTANCES AND ACCEP TED THE BOOK RESULTS SHOWN BY THE ASSESSEES WHICH INCLUDES THE APPELLANT AS WELL IF THE VARIATION IS WITHIN THE 15% WINDOW. 6.5 DURING THE APPELLATE PROCEEDINGS THE LD AR FOR THE APPELLANT SUBMITTED WRITTEN SUBMISSIONS ON 29.05.2014 WHICH IS NOT REPR ODUCED HERE FOR THE SAKE OF BREVITY. THE APPELLANT'S SUBMISSION WAS SHARED WITH THE LD. AO AND REMAND REPORT WAS SOUGHT FROM THE LD AO WHO POINTED OUT TH AT IN THE APPELLANT'S CASE THE VARIATION IS GREATER THAN 15% DISCUSSION & DETERMINATION 6.6 THE LD. AO HAS PLACED CONSIDERABLE RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF MELTON INDIA VS. COMMISSI ONER OF TRADE OF TAX (UP) APPEAL NO. (CIVIL) 373 OF 2007 (SC) CITED SUPR A. A DISCUSSION OF THE CASE WOULD BE IN ORDER. 6.6.1 IN LINE WITH THE APPELLANT'S SUBMISSION IN TH IS CASE, IN THE MELTON CASE THE CONCERNED APPELLANT HAS ARGUED THAT POWER CONSUMPTI ON FOR DIFFERENT END PRODUCTS/ RAW MATERIAL WERE DIFFERENT. THE CONC ERNED APPELLANT: EXPLAINED THAT DURING THE PERIOD IN QUESTION IT HAD SWITCHED OVER FROM PRODUCTION OF 23 MICRON GOODS TO PRODUCTION OF 12 MICRON GOODS. ACCORDING TO IT, ELECTRICITY CONSUMPTION IN THE MANUFACTURING OF 23 MICRON GOODS WAS LESS THAN THAT IN MANUFACTURING 12 MICRON GOODS. IT WAS EXPLAINED THA T THE APPELLANT WAS NOW MANUFACTURING GOODS OF 12 MICRON, WHICH REQUIRES MORE ELECTRICITY CONSUMPTION AS COMPARED T O THE GOODS OF 23 MICRON AS THE LENGTH OF 12 MICRON IS MORE THAN T HE LENGTH OF 23 MICRON. THE WEIGHT OF 23 MICRON IS 33 GM. PER SQ. M ETER, WHEREAS THE WEIGHT OF 12 MICRON IS ALMOST HALF I.E. 17 GRAM PER SQ. METER, AND THEREFORE TO MANUFACTURE 1 KG. GOODS OF 12 MICR ON THE CONSUMPTION OF ELECTRICITY IS ALMOST DOUBLE THAN TH E CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 KG. OF 23 MICRO N. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 10 6.2 THE HON'BLE APEX DID NOT ACCEPT THE CONTENTION OF THE APPLICANT AND STATED AS UNDER: ORDINARILY, WHEN ELECTRICITY CONSUMPTION GOES UP, A REASONABLE INFERENCE CAN BE DRAWN THAT THE PRODUCTION WILL ALS O HAVE GONE UP. IF THE ELECTRICITY CONSUMPTION IS GOING UP BUT THE PRODUCTION IS SEEN TO BE GOING DOWN, A REASONABLE INFERENCE CAN, PRIMA FACIE, BE DRAWN THAT THERE WAS SUPPRESSION OF PRODUCTION AND CONSEQUENTLY SUPPRESSION OF SALES IN ORDER TO AVOID SALES TAX. THE APPELLANT ALSO HAD NOT MAINTAINED SEPARATE ACCO UNTS FOR ITS OWN MANUFACTURING AND THE JOB WORK, AND IT COULD NO T INFORM WHICH RAW MATERIALS HAVE BEEN USED IN THE MANUFACTU RING OF JOB WORK AND WHICH GOODS HAVE BEEN USED ON THE ASSESSEE 'S OWN MANUFACTURING. IN VIEW OF THE ABOVE, WE AGREE WITH THE HIGH COURT THAT EXCESSIVE POWER CONSUMPTION, PRIMA FACIE, ESTABLISHES THE ASS ESSEE'S INTENTION TO SUPPRESS THE PRODUCTION AND THE TURN O VER. 6.3 THE FACT IN THE INSTANT CASE ARE SIMILAR TO TH E MELTON CASE AND IN MY CONSIDERED VIEW THE REJECTION OF PRODUCTION RECORDS AND CONSEQUENTLY THE BOOKS OF ACCOUNTS APPEARS SOUND. THE A.O MAY PR OCEED UNDER SECTION 145(3) UNDER ANY OF THE FOLLOWING CIRCUMSTA NCES: (A) WHERE HE IS NOT SATISFIED ABOUT THE CORRECTNES S OR COMPLETENESS OF THE ACCOUNTS (B) WHERE METHOD OF ACCOUNTING CASH OR MERCANTILE HAS NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE. (C) ACCOUNTING STANDARDS AS NOTIFIED BY THE CENTRA L GOVERNMENT HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE. 6.4 HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGA PPA CEMENT PVT. LTD. VS. CEGAT & CCE, TRICHY (2010-TIOL-770-HC-MAD-CX)HA S HELD THAT THE REVENUE CANNOT BE FAULTED FOR DEMANDING DUTY ON THE STEEL INGOTS WHICH COULD HAVE BEEN MANUFACTURED BY CONSUMING EXC ESS QUANTITY OF ELECTRICITY. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 11 6.5 THE LD.,AO HAS CLEARLY ESTABLISHED THAT THE DA Y TO DAY RECORDS OF PRODUCTION QUALITY AND SIZE WISE WERE NOT MAINTAINE D OR PRODUCED. CASES WHERE DAY-TO-DAY MANUFACTURING OR PRODUCTION ACCOUNT IS NOT MAINTAINED BECOMES A FIT CASE FOR REJECTION OF BOOK S OF ACCOUNTS. RELIANCE IS PLACED ON THE FOLLOWING OTHER JUDICIAL PRECEDENTS :- I. THE DECISION OF THE HON'BLE ALLAHABA D HIGH COURT BHARAT MILK PRODUCTS V. COMMISSIONER OF INCOME TAX 128 ITR 682, ALLAHABAD; AND II. PUNJAB TRADING CO. LTD V. CIT53 ITR 335 PUNJA B; 6.6 IN THE CASE OF BRIJBHUSHAN LAL PRADUMAN KUMAR V CIT[1978] 115 ITR 524 THE APEX COURT HELD THAT ESTIMATE AFTER REJECTI ON OF BOOKS MUST BE FAIR AND HONEST. THE AUTHORITY MAKING BEST JUDGEMENT, ALTHOUGH ARBI TRARINESS CANNOT BE AVOIDED IN SUCH AN ESTIMATE, THE SAME MUS T NOT BE CAPRICIOUS BUT SHOULD HAVE A REASONABLE NEXUS TO TH E AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CASE.' 6.7 FURTHER, IN A BEST JUDGMENT CASE THE INDIAN EV IDENCE ACT HAS TO BE PARTICULARLY ADHERED TO IN WHILE ESTIMATING PRODUCT ION /GP. IN THE INSTANT CASE IT IS MY CONSIDERED VIEW THAT: I. FACTS HAVE BEEN PROPERLY MARSHALLED AND INFER ENCE DRAWN FROM SUCH FACT IS REASONABLE. II. THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN OBSERVED AS THE APPELLANT HAS BEEN OFFERED A REASONABLE OPPORTUNITY TO EXPLAIN ITS CASE BOTH DURING ASSESSMENT / APPELLATE PROCEED INGS III. THE DAYS OF PRODUCTION HAVE BEEN REMOVED AND THE AVERAGE OF THE HIGHER AND LOWER PRODUCTION PMT HAS BEEN TAKEN, IN ADDITION THE SAFE HARBOR OF 15 % HAS BEEN KEPT IN ACCOUNT. IT IS THEREFORE, MY CONSIDERED VIEW THAT THE BURDEN OF PROOF ON THE DEPARTMENT TO ESTABLISH THAT THE PRODUCTION RECORDS ARE UNRELIABLE HAS SQUARELY BEEN DISCHARGED AND THE ONUS SHIFTED ON TH E APPELLANT WHO HAS FAILED TO DISCHARGE THE SAME. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 12 THE METHOD OF COMPUTING THE SUPPRESSED PRODUCTION I S NOT BASED ON COGENT REASONS AND HAS SCIENTIFIC BASIS. ALLOWANCE OF 15% VARIATION IS NOT ARBITRARY. THE LD. ASSESSING OFFICER HAS EXAMIN ED THE ENTIRE MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE A ND EXAMINED THE STATED ISSUE OF QUALITY OF RAW MATERIALS, BY SHIFTI NG THE FRAME OF REFERENCE TO A MONTH; THERE IS NEAR EQUAL PROBABILI TY OF THE FACTORS IS SUCH AS RAW MATERIAL VARIATION/ POWER FAILURE, BREA KDOWN ETC. FURTHER THE APPELLANT'S ADDITIONAL EVIDENCE WITH REGARDS TO THE DETAILED PHYSICAL RECORDS SEEN BY THE EXCISE AND VAT DEPARTM ENTS HAS ALSO BEEN CONSIDERED SUPRA. FINDING 1. THAT ELECTRICITY IS AN IMPORTANT FACTOR OF PROD UCTION IS IN THE MANUFACTURING PROCESS OF THE APPELLANT IS ESTABLISH ED BEYOND A SHRED OF DOUBT. 2. FURTHER THE APPELLANT HAVING A TURNOVER IN EXCE SS OF RS 1 CRORE AND GETTING ITS BOOKS AUDITED WAS SUBJECT TO MAINTAININ G PRODUCTION RECORDS ADEQUATE TO THE BUSINESS OF THE APPELLANT AND THAT THE AUDITOR WAS REQUIRED TO GIVE FINDINGS SIMILAR TO CARO, 2004 ( EVEN THOUGH THE APPELLANT IS NOT A COMPANY). IN ADDITION, THE PROFI T AND LOSS ACCOUNTS OF THE APPELLANT ARE DERIVED FROM THE PRIMARY PRODUCTI ON REGISTERS. IN THE EVENT THE PRODUCTION REGISTERS DO NOT INSPIRE CONFI DENCE THE CONFIDENCE IN THE VERACITY OF THE BOOKS GETS SEVERELY DENTED 3. THE PRINCIPLE STATED ABOVE HAS BEEN UPHELD BY T HE HON'BLE SUPREME COURT IN THE CASE OF MELTON INDIA VS. COMMISSIONER OF TRADE OF TAX (UP) APPEAL NO. (CIVIL) 373 OF 2007 (SC) AND KANCHWALA G EMS VS. JOT 288 ITR 10 (SC) AND FOLLOWED BY THE JURISDICTIONAL HIGH COURT SH. GANPATI EMBROIDERY PVT. LTD. VS. CIT 16 DTR (P & H). 4. FURTHER THE VARIATION IN POWER CONSUMPTION IS I N EXCESS OF THE 15% WINDOW MENTIONED SUPRA. 5. IN CONTRA TO THE ABOVE, THERE ARE ARGUMENTS THA T THE STATISTICAL BENCHMARK OF 15% IS ARBITRARY AND THAT A SUSTAINED VARIATION OF 14% MAY BE A GREATER RISK TO REVENUE THAT ABOVE 15% DAY S FOR A LIMITED NUMBER OF DAYS DURING AN ASSESSMENT YEAR. FURTHER I T MAY ALSO BE ARGUED THAT SUCH A STATISTICAL MODEL PUNISHES THOSE WHO REPORT A ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 13 HIGHER GP AGAINST THOSE WHO UNDER REPORT. ALTERNATE LY UNMETERED POWER CONSUMPTION IS ALSO A REALITY IN THIS COUNTRY WHILE THESE ARGUMENTS DO MERIT ATTENTION IN GENERAL; THE IMPUGN ED APPEAL HAS TO BE DECIDED BASED ON THE FACTS AVAILABLE. 6. THE LD AR HAS ALSO CITED A DECISION OF MY PREDE CESSOR WHERE IN HIS ORDER ON SIMILAR FACTS THE MY LD. PREDECESSOR HAS A SKED THE AO TO RESTRICT THE VARIATION AND UNDISCLOSED PRODUCTION T O THE MONTHS/CYCLES WHERE THE VARIATION IN POWER IS IN EXCESS OF 15%. I HUMBLY BEG TO DIFFER WITH THE DECISION OF THE LD PREDECESSOR. IT IS MY C ONSIDERED VIEW THAT WHERE THE VARIATION EXCEED THE SAFE HARBOUR OF 15% THE ENTIRE BOOKS DO NOT INSPIRE CONFIDENCE. IN MY CONSIDERED VIEW THAT THE ANOMALIES IN THE POWER CONSUMPTION VIS-AVIS PRODUCTION DO NOT INSPIR E CONFIDENCE IN THE PRODUCTION RECORDS AND SUBSEQUENTLY THE BOOKS OF AC COUNTS OF THE APPELLANT. I UPHOLD THE DECISION OF THE APPELLANT T O REJECT THE BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE ESTIMATION OF PRODUCTION AND INCOME THEREAFTER, TOO DESERVES TO BE UPHELD AS THE LD AO HAS JUDICIALLY GIVEN CREDIT FOR THE HOLIDAYS. 7. THE ESTIMATE TAKEN FOR DETERMINING GP IS ALSO I N MY CONSIDERED VIEW FAIR AND REASONABLE. THE APPELLANT DOES NOT SUCCEED ON GROUNDS OF APPEAL 2 AND 3 THE REJECTION OF BOOKS U/S 145(3) AND CONSEQUENT ESTIMA TION OF GROSS PROFIT AND THE ADDITION OF RS. 13,04,676.90 IS CONFIRMED. 07. GROUND OF APPEAL NO. 4 : THIS GROUND OF APPEAL AGITATES THE ADDITION REGARDS TO THE UNDECLARED INVESTMENT IN STOCK OF TH E APPELLANT. THE SUBMISSION OF THE APPELLANT ON THIS GROUND OF APPEA L IS AS UNDER: 'THE LD AO HAS CALCULATED THE UNACCOUNTED INCOME OF RS. 175.59 LACS DURING THE YEAR UNDER CONSIDERATION. BUT WE AR E SORRY TO SAY THAT LD AO HAS FAILED TO ESTABLISH WHERE THIS MONEY IS LYING. IT IS ONLY A HYPOTHETICAL FIGURE THAT WAS NEITHER EARNED NOR INVESTED IN ANY ASSET THE LD AO HAS FAILED TO ESTABLISH THAT TH E ASSESSEE INVESTED SUCH A HUGE AMOUNT IN ANY NEW OR EXISTING ASSET. IT IS WORTHWHILE TO MENTION THAT THE EXCISE AND VAT OFFIC IALS WHO VISITED THE FACTORY PREMISES FROM TIME TO TIME DID NOT FIND ANY ABNORMALITY IN THE RAW MATERIAL OR FINISHED GOODS. IT MEANS THE ABOVE PROFITS IF SO EARNED MUST HAVE BEEN INVESTED IN ANY NEW ASSET AND IF THE LD AO HAS ANY KNOWLEDGE ABOUT THAT ASSET THEN HE IS AT LIBERTY TO SELL THE PROPERTY BUT HE IS REQUES TED TO PAY THE DUE ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 14 TAXES LEVIED ON THE FIRM AND KEEP THE SURPLUS AS A REWARD FOR HIS SERVICES TO THE DEPARTMENT 10. LAST BUT NOT THE LEAST, THE LD AO HAS MADE AN A DDITION OF UNACCOUNTED INVESTMENTS USED FOR UNACCOUNTED PRODUC TION. UNACCOUNTED INVESTMENT MEANS, THE ASSESSEE FIRM PUR CHASED THE RAW MATERIAL AND DID NOT DISCLOSE THE LIABILITY OF SUNDRY CREDITORS IN ITS BOOKS OF ACCOUNTS. AFTER PRODUCTION, SOLD THE M ATERIAL AND NOT ENTERED THE RECOVERIES OF SUNDRY DEBTORS IN HIS REG ULAR BOOKS OF ACCOUNTS. ULTIMATELY, IT IS THE NET AMOUNT (SUNDRY DEBTORS-SUNDRY CREDITORS) OR AMOUNT OF GROSS PROFIT AS ACCEPTED BY THE LD AO ON THIS UNACCOUNTED PRODUCTION AMOUNTING TO RS. 13,04, 676.90 IS TAXABLE AND NOT THE RS.175.59 LACS. THE LD AO FAILE D TO APPRECIATE THE FACT THAT IT IS THE OWN UNACCOUNTED MONEY THAT NEEDS TO BE TAXED. IN THIS CASE, THE UNACCOUNTED MONEY MEANS UN ACCOUNTED SUNDRY DEBTORS {MINUS(-)} UNACCOUNTED SUNDRY CREDIT ORS OR IT REPRESENTS THE UNACCOUNTED PROFITS..' I FIND CONSIDERABLE FORCE IN THE SUBMISSION OF THE LD AR; I HAVE ALSO EXAMINED THE RECORDS AND IT IS CLEAR THAT THE MINIM UM STOCK OF RAW MATERIAL AS PER THE BOOKS OF ACCOUNTS WAS MUCH MORE THAN THE PEAK STOCK NEEDED FOR UNACCOUNTED PRODUCTION. THUS GIVIN G THE BENEFIT OF TELESCOPING, IN MY CONSIDERED VIEW NO ADDITION IS C ALLED FOR ON THIS GROUND OF APPEAL. APPELLANT'S REQUEST FOR TELESCOPI NG IS FOUND REASONABLE AND ACCEPTED, RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ANANTHARAM VEER SINGH AIAH & CO. VS. CIT 980 AIR 1146. THE APPEAL ON THIS GROUND OF APPEAL I S ALLOWED. 7. AFTER GIVING THOUGHTFUL CONSIDERATION TO THE ABO VE STATED RIVAL ARGUMENTS, WE FIND NO MERIT IN THE REVENUES STAND THAT THE ASSESSING OFFICERS THREE FOLDED ACTION INTER ALIA IN REJECTING THE ASSESSEES BOOKS OF ACCOUNT FOLLOWED BY GROSS PROFI T ELEMENT ON ALLEGED UNACCOUNTED PRODUCTION OF RS. 13,04,677/- A S 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 REL EVANT PREVIOUS ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 15 YEAR TURNING ACT TO BE EXCESSIVE THAN THE SO CALLED TOLERABLE LIMIT OF 15% IS NO MORE RES-INTGRA. THIS TRIBUNALS COORD INATE BENCH DECISION ITO VS M/S BABA BALAK NATH STEELS PVT. LTD . IN ITA NO. 44/CHD/2019 DATED 06/08/2019 HAS REJECTED REVENUES IDENTICAL STAND AS FOLLOWS: 3. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CO NSIDERATION ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTUR ING OF STEEL PRODUCTS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DET AILS OF DAILY PRODUCTION OF FINISHED GOODS AS WELL AS THE D ETAILS OF THE MANUFACTURING PROCESS INVOLVED. ON EXAMINATION OF THE DETAILS, THE ASSESSING OFFICER OBSERVED THAT THE AM OUNT OF ELECTRICITY CONSUMED WAS DIRECTLY RELATED TO THE PR ODUCTION OF FINISHED GOODS. IN ORDER TO CO-RELATE THE CONSUM PTION OF ELECTRICITY VIS--VIS PRODUCTION SHOWN, THE ASSESSI NG OFFICER GATHERED INFORMATION REGARDING THE CONSUMPTION OF ELECTRICITY FROM THE ELECTRICITY BOARD. THE ASSESSI NG 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 CONSUM ED TO PER METRIC TONS OF FINISHED GOODS PRODUCED DURING THE Y EAR. 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, 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 UNIT OF FINISHED GOODS. H E FURTHER OBSERVED THAT EVEN ON SOME DAYS THOUGH THERE WAS ELECTRICITY CONSUMPTION YET NO PRODUCTION WAS SHOWN . HE ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 16 FURTHER NOTED THAT OTHERWISE ON OTHER DAYS, THERE W AS ALSO A BALANCE AND CONSISTENCY IN CONSUMPTION OF ELECTRIC UNITS VIS- A-VIS PRODUCTION OF FINISHED GOODS. HE, THEREFORE, 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 NOT BEEN MAINTAINED AS PER ACTUAL PRODUCTION. WHEN CONFRONTED IN THIS RESPECT, THE AS SESSEE EXPLAINED THAT THE CONSUMPTION OF ELECTRICITY WAS D EPENDENT ON VARIOUS FACTORS AS DETAILED IN HIS REPLY WHICH H AS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER. THE ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIED W ITH THE ABOVE REPLY OF THE ASSESSEE. HE ULTIMATELY HELD THA T THE ASSESSEE COMPANY WAS INVOLVED IN UNACCOUNTED PRODUC TION OF FINISHED GOODS WHICH RESULTED IN UNACCOUNTED SALES AND PURCHASES. HE, THEREFORE, HELD THAT THE SALE AND PU RCHASE FIGURES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WER E NOT CORRECT AND HE ACCORDINGLY REJECTED THE BOOKS OF AC COUNTS 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 UNACCOUNT ED INCOME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED PRODUCTION AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED FROM THE ABOVE ORDER OF THE ASS ESSING OFFICER THE ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A). 5. BEFORE LD. CIT(A), THE ASSESSEE FILED DETAILED SUBMISSIONS. IT WAS ALSO BROUGHT INTO THE KNOWLEDGE OF THE CIT(A) T HAT SUBSEQUENT TO THE PASSING OF THE ABOVE STATED IMPUG NED ASSESSMENT ORDER, A DETAILED STUDY WAS CARRIED OUT BY A ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 17 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 ASSISTED BY THE EXPERTS FROM THE NISST (NATIONAL IN STITUTE OF THE SECONDARY STEEL TECHNOLOGY) AND ALSO THE INDUST RY REPRESENTATIVES. ON THE BASIS OF THE REPORT OF THE COMMITTEE, IT WAS DECIDED THAT IF THE VARIATION IN THE CONSUMP TION OF THE ELECTRICITY IS WITHIN THE RANGE OF 15% OF THE YEARL Y AVERAGE CONSUMPTION OF POWER, THE BOOK RESULTS SHOULD BE AC CEPTED. THAT PURSUANT TO THE REPORT OF THE COMMITTEE, THE A SSESSING OFFICERS HAVE FOLLOWED THIS NORM WHILE MAKING ASSES SMENT IN SIMILAR CASES AND HAS ACCEPTED THE BOOK RESULTS IF THE VARIATION IS WITHIN 15% WINDOW. IT WAS, THEREFORE, PLEADED THAT THE BOOK RESULTS OF THE ASSESSEE FOR THE ASSES SMENT YEAR 2012-13 SHOULD ALSO BE ACCEPTED AND CONSEQUENTLY, T HE ADDITION SHOULD BE DELETED. THE LD. CIT(A) GOT VERI FIED FROM THE ASSESSING OFFICER THE ABOVE CONTENTIONS OF THE ASSESSEE WHICH WAS REPORTED TO BE CORRECT BY THE ASSESSING O FFICER. THE LD. CIT(A) THEREAFTER HELD THAT ONCE AN ISSUE H AS BEEN DECIDED ON MERITS IN A SUBSEQUENT YEAR, IT WOULD NO T BE APPROPRIATE TO TAKE A DIFFERENT VIEW FOR THE YEAR U NDER 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 COM MITTEE, THE ASSESSEE WAS ENTITLED TO BENEFIT OF 15% VARIATI ON IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FINISH ED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASI S 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 WHILE MAKING THE ASSESSMENT IN S IMILAR CASES AND IN SAME SET OF CIRCUMSTANCES HAS ACCEPTED THE ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 18 BOOKS RESULTS SHOWN IN OTHER CASES, HENCE, FOLLOWIN G THE PRINCIPLE OF CONSISTENCY, HE HELD THAT THE BOOKS RE SULTS 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 REJECT ING 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 ESTIM ATION BASIS. 8. LEARNED AUTHORIZED REPRESENTATIVE NEXT SUBMITS T HAT YET ANOTHER COORDINATE BENCH IN 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 HAS ALSO DECLINED THE REVENUES IDENTICAL ARGUMENTS AS FOLLOWS: 3. SINCE THE PRESENT APPEALS ARE FILED BY THE REVE NUE, THE LD. SR.DR WAS REQUIRED TO ADDRESS THE ISSUE. RELIANCE WAS PLACED ON THE AS SESSMENT ORDER, THE LD. AR SUBMITTED THAT THE ISSUE IS COVERED IN HIS FAVOU R BY A GROUP OF NINE CASES WHEREIN A CONSOLIDATED ORDER DATED 28.04.2017 IN IT A 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 ASSESSMENT YEARS WAS RELIED UPON. IN THE FACTS OF THE PRESENT CASE ALSO, REFERRING TO PARA 5.2 OF THE IMPUGNED ORDER, ATTENTION WAS INVITED TO THE REFERENCE MADE TO THE COMMITTEE CONSTITUTED BY PR. CIT, PATIALA WHICH, IT WAS NOTED , HAD BEEN DIRECTED TO VERIFY THE NORMAL VARIATION IN CONSUMPTION OF ELECT RICITY FOR MANUFACTURING EACH METRIC TON OF FINISHED GOODS. THE ORDERS, IT W AS SUBMITTED HAVE BEEN PASSED ADHERING TO THE SAID DIRECTIONS IN BOTH THE APPEALS. 4. I HAVE HEARD SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. IT IS SEEN THAT THE CO-ORDINATE BENCH IN THE AFORESAID OR DER OF THE ITAT HAD AN OCCASION TO CONSIDER THE FACTS AS UNDER : ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 19 4. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CO NSIDERATION ARE THAT THE ASSESSEE COMPANY RUN A FURNACE UNIT AND IS ENGAGED IN THE PRODUCTION OF INGOTS. DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF DAILY PROD UCTION OF FINISHED GOODS AS WELL AS THE DETAILS OF THE MANUFACTURING P ROCESS INVOLVED. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE AMOUNT OF ELECTRICITY CONSUMED WAS DIRECTLY RELATED TO THE PRODUCTION OF FINISHED GOODS. IN ORDER TO CO-RELATE THE CONSUMPTION OF ELECTRICITY V IS--VIS PRODUCTION SHOWN, THE ASSESSING OFFICER GATHERED INFORMATION R EGARDING 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 METRIC TONS OF FINISHED GOODS PRODUCED DURING THE YEAR. HE OBSERVE D THAT THE LOWEST UNITS CONSUMED FOR PRODUCTION OF ONE METRIC TON OF FINISHED GOODS WERE 1117.17 UNITS AND THE HIGHEST ELECTRIC UNITS CONSUM ED FOR PRODUCTION OF ONE METRIC TON OF FINISHED GOODS WERE 1188.12 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 VE RY 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 SOME DAYS THOUGH THERE WAS EL ECTRICITY 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 CORRE CT AND, HENCE, NOT RELIABLE. HE OBSERVED THAT THE DATA RELATING TO THE DAILY PRODUCTION HAD BEEN MAINTAINED AS PER ACTUAL PRODUCTION. WHEN CONF RONTED IN THIS RESPECT, THE ASSESSEE EXPLAINED THAT THE CONSUMPTIO N OF ELECTRICITY WAS DEPENDENT ON VARIOUS FACTS AS DETAILED IN HIS REPLY DATED 16.3.2015 WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 26.3.2015. THE ASSESSING OFFICER, HOWEV ER, WAS NOT SATISFIED WITH THE ABOVE REPLY OF THE ASSESSEE. HE ULTIMATELY HELD THAT THE ASSESSEE COMPANY WAS INVOLVED IN UNACCOUNTED PR ODUCTION 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 ACC ORDINGLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE BY INVOKING TH E PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT') AND ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 20 PROCEEDED 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 U NIT CONSUMED PER METRIC TON OF FINISHED GOODS PRODUCED FOR OVER THE PERIOD OF 10 DAYS. HE TOOK THE LOWER AVERAGE VALUE OF ELECTRIC UNITS C ONSUMED PER METRIC TON OF AVERAGE FINISHED GOODS OVER A PERIOD OF 10 D AYS AND ON THIS BASIS, AND CALCULATED THE ACTUAL MONTH WISE PRODUCT ION OF THE ASSESSEE. HE COMPARED THE SAME WITH THAT SHOWN IN THE BOOKS O F ACCOUNT OF THE ASSESSEE AND ESTIMATED THE UNACCOUNTED PRODUCTION F OR 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 FINISHED GO ODS, THE UNACCOUNTED INVESTMENT WAS WORKED OUT. THE ASSESSING OFFICER IN THIS WAY WORKED OUT THE TOTAL UNACCOUNTED INCOME OF THE ASSESSEE OU T OF THE UNACCOUNTED PRODUCTION AT RS. 86,88,365/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 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 VIDE LETTER NO. ITO/ W-L/MGG/2016- 17/2227 DATED 02.12.2016, THE A.O. HAS TRIED TO DEF END THE REJECTION OF BOOKS OF ACCOUNT ON THE BASIS OF REASONING GIVEN IN THE ASSESSMENT ORDER. HOWEVER, REGARDING APPELLANTS CONTENTION W.R .T. THE EXTENT OF VARIATION IN THE CONSUMPTION OF ELECTRICITY PMT OF FINISHED GOODS, THE AO CONVEYED AS UNDER: 'A} THE ASSESSES IN ITS WRITTEN SUBMISSION HAS CON TENDED THAT 15% VARIATION ON YEARLY AVERAGE CONSUMPTION OF POWER FOR PRODUCTI ON OF EACH METRIC TONE OF FINISHED GOODS WAS ACCEPTED IN THE A.Y. 201 3-14. THE CONTENTION OF THE ASSESSES IS CORRECT AS A COMMITTEE WAS CONST ITUTED BY THE WORTHY PR. COMMISSIONER OF INCOME TAX, PATIALA TO VERIFY T HE NORMAL VARIATION IN CONSUMPTION OF ELECTRICITY FOR MANUFACTURING EAC H METRIC TONNE OF FINISHED GOODS. ON THE BASIS OF REPORT OF THE COMMI TTEE 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 TH AT 15% VARIATION FROM AVERAGE CONSUMPTION OF POWER FOR PRODUCING OF EACH METRIC TONNE ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 21 OF FINISHED GOODS SHOULD BE ACCEPTED. AS SUCH THE C ASES OF FOR THE A. Y. 2013-14 WERE DECIDED BY FOLLOWING THESE GUIDELINES. B) THE CONTENTION OF THE ASSESSES THAT HIS CASE FO R 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 AL SO THE SUBMISSIONS AND THE REPORT OF THE LD. AO. UNDOUBTEDLY, THE ONLY REA SON LEADING TO THE REJECTION OF THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY, WHICH RUNS AN FURNACE UNIT, WAS DESPERATE CONSUMPTION OF ELECTRICITY VIS-A- VIS THE PRODUCTION OF FINISHED GOODS. THEREAFTER, A S DETAILED EARLIER, THE AO, ON THE BASIS OF AVERAGE PURCHASE RATE, WENT ON TO ESTIMATE UNACCOUNTED PRODUCTION IN MONETARY TERMS AND THEN A DOPTING THE GROSS PROFIT RATE SHOWN BY THE APPELLANT WORKED OUT UNACCOUNTED PROFIT OUT OF UNACCOUNTED PRODUCTION ON THE BASIS O F AVERAGE SALE RATE. BESIDES, THE PEAK UNACCOUNTED PRODUCTION FOR THE RELEVANT MONTH WAS DETERMINED AND BY MULTIPLYING WITH THE AV ERAGE PURCHASE RATE OF FINISHED GOODS THE UNACCOUNTED INVESTMENT W AS 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 ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE, MANDI GOBINDGARH HAVING ALL THE AO'S OF THE RANGE AS ITS MEMBERS. THE COMMITTEE WAS ASSISTED BY THE EXPERTS FROM THE NISST [NATIONAL INSTITUTE OF T HE SECONDARY 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 ELECTRICITY IS WITHIN THE RANGE OF 1 5% OF THE YEARLY AVERAGE CONSUMPTION OF POWER, THE BOOK RESULTS SHOU LD BE ACCEPTED. ACCORDINGLY, ITS BOOK RESULTS WERE ACCEPTED 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 COU RT IN THE CASE OF A CIT VS. RIETA BISCUITS CO. (P) LTD (2009) 309 ITR 154 WHEREIN THEIR LORDSHIPS HAVE HELD THAT 'KEEPING IN VIEW THE PRINC IPLES OF ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 22 CONSISTENCY ONCE THE ISSUE ON THE MERITS HAS BEEN D ECIDED AGAINST THE REVENUE ON THE SAME ISSUE DURING THE SUBSEQUENT ASS ESSMENT YEARS, WE DO NOT DEEM IT APPROPRIATE TO TAKE A DIFFERENT V IEW ON A TECHNICAL REASON. ACCORDINGLY, WITHOUT SPECIFICALLY OPINING O N THE ISSUE ON THE MERITS, THE REFERENCE IS DECIDED AGAINST THE REVENU E'. ON A CAREFUL CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMSTANCES ON RECORD, I'M OF THE VIEW THAT THE PLEA OF THE APP ELLANT COMPANY MERITS CONSIDERATION. IT IS A MATTER OF FACT THAT A DETAILED STUDY HAS BEEN CONDUCTED BY A COMMITTEE, CONSTITUTED BY THE P RINCIPAL CIT PATIALA, WITH A VIEW TO EXAMINE THE VARIATION IN TH E CONSUMPTION OF ELECTRICITY VIS-A-VIS THE PRODUCTION OF FINISHED GO ODS IN THE ROLLING MILLS AND INDUCTION FURNACES OF THE AREA. THE COMMITTEE, A BROAD-BASED MULTIMEMBER BODY, HAD THE ADDITIONAL COMMISSIONER O F INCOME TAX, RANGE, MANDI GOBINDGARH AS ITS HEAD AND ALL THE AO' S OF THE RANGE AS ITS MEMBERS. IT WAS ASSISTED BY THE EXPERTS FROM TH E NATIONAL INSTITUTE OF THE SECONDARY STEEL TECHNOLOGY (NISST) AND THE INDUSTRY REPRESENTATIVES. I HAVE ACCESSED ITS REPORT FROM TH E 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 FINISHED GOODS PRODUC ED OF SIMILAR SIZES AND ODD SIZES, THE AOS CARRIED OUT ON THE SPOT VERI FICATION BY RUNNING SOME OF THE ROLLING MILLS ON A FIX PERIOD OF TIME A ND NOTICED QUITE APPRECIABLE VARIATION IN THE CONSUMPTION OF ELECTRI CITY PER METRIC TON OF FINISHED GOODS IN SIMILAR SIZES AS WELL AS ODD S IZES. THE TECHNICAL EXPERTS FROM NATIONAL INSTITUTE OF SECONDARY STEEL TECHNOLOGY (NISST), MANDI GOBINDGARH ALSO OPINED THAT GIVEN THE NATURE OF TECHNOLOGY, RAW MATERIALS AND FINISHED GOODS, SUBSTANTIAL VARIA TION IN THE NUMBER OF ELECTRICITY UNITS FOR PRODUCTION OF ONE METRIC T ON OF FINISHED GOODS INTER DAY BASIS, ARE BOUND TO BE THERE.' BASED ON ITS FINDING OF FACTS, IT HAS DECIDED 'TO GIVE BENEFIT OF 15% VARIATION IN CONSUMPTION OF ELECTRICITY PER METRIC TON OF FIN ISHED GOODS PRODUCED FROM THE AVERAGE WORKED OUT ON YEARLY BASIS'. MEANING, T HEREBY THAT 15% VARIATION IN THE NUMBER OF ELECTRICITY UNITS CONSUM ED PER METRIC TON OF FINISHED GOODS AS COMPARED TO THE AVERAGE CONSUMPTI ON OF ELECTRICITY UNITS PER METRIC TON OF FINISHED GOODS IS THE INDUSTRIAL NORM WARRANTING NO ADVERSE COGNIZANCE. HENCE, BECAUSE OF THAT REASON A LONE, BOOKS OF ACCOUNT SHOULD NOT BE REJECTED. INDEED, AS STATED ABOVE, PU RSUANT TO THE REPORT OF THE COMMITTEE, THE AO'S HAVE FOLLOWED THIS NORM WHI LE MAKING ASSESSMENTS IN SIMILAR CASES AND IN SIMILAR SET OF CIRCUMSTANCES AND ACCEPTED THE BOOK RESULTS SHOWN BY THE ASSESSEES WH ICH INCLUDES THE APPELLANT AS WELL. IN VIEW OF THIS AND ALSO PLACING RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL PUNJAB AND HARYANA HIGH COURT IN THE CASE OF A ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 23 CIT VS. RIETA BISCUITS CO. (P) LTD (2009) 309 ITR 1 54,1 AM OF THE VIEW THAT THE BOOK RESULTS SHOWN BY THE APPELLANT COMPANY FOR THE YEAR UNDER CONSIDERATION NEED TO BE ACCEPTED AS WELL. CONSEQUE NTLY, THE ACTION OF THE AO IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT BY R ESORTING 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 THA T THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, IN THE ABSE NCE OF ANY CHANGE IN FACTS, CIRCUMSTANCES OR POSITION OF LAW, THE IMPUGNED ORDE R IS UPHELD AND THE DEPARTMENTAL APPEAL IS DISMISSED. 9. COUPLED WITH THIS, IT IS ALSO NOTICED THAT THE C IT(A)S ORDER ITSELF HOLD THE ASSESSEE TO HAVE ALREADY SUCCEEDED ON THE SAME ISSUE IN THE PRECEDING ASSESSMENT YEAR (SUPRA) WHIC H HAS ATTAINED FINALITY. WE HOLD IN THESE FACTS AND CIRCUMSTANCES THAT BOTH OF THE ASSESSEES SUBSTANTIVE GROUNDS CHALLENGING CORRECTN ESS OF THE LOWER AUTHORITIES ACTION REJECTING ITS BOOKS OF AC COUNT AS WELL AS ADDING GROSS PROFIT ELEMENT ON ALLEGED UNACCOUNTED PRODUCTION OF RS.13,04,677/- DESERVE TO BE ACCEPTED. SAME REASONI NG FOLLOWS IN REVENUES CROSS APPEAL ITA NO 879/CHD/2019 AS WELL RAISING THE SOLE SUBSTANTIVE ISSUE OF UNACCOUNTED INVESTMENT IN STOCK OF RS.1,62,54,188.78 BEING THE NECESSARY CONSEQUENCE O F OUR FOREGOING DETAILS. THE ASSESSEES APPEAL IN ITA NO. 818/CHD/2019 IS ACCEPTED AND REVENUES CROSS APPEAL IN ITA NO.87 9/CHD/2019 FAILS THEREFORE. 10. THE ASSESSEES APPEAL IN ITA NO. 818/CHD/2019 I S ALLOWED AND REVENUES CROSS APPEAL IN ITA NO.879/CHD/2019 I S DISMISSED. ORDERED ACCORDINGLY. ITA 818 & 879/CHD/2019 M/S KIRPALU STRIPS VS ITO 24 A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPEC TIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2020. SD/- SD/- .. , #$ %'& '( (N.K. SAINI) (SATBEER SINGH GODARA) )(* / JUDICIAL MEMBER )& / DATED: 11/11/2020 *RANJAN &* +,-, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' . / CIT 4. ' . ( )/ THE CIT(A) 5. ,/0 1 , $ 1 , 23405 / DR, ITAT, CHANDIGARH 6. 046# / GUARD FILE &* ' / BY ORDER, / ASSISTANT REGISTRAR