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2010 (7) TMI 833 - AT - Income TaxAdditions based on electricity consumption - addition made by the Assessing Officer, by taking aid of complex methodology to arrive at the number of units consumed ; he (Assessing Officer) assumed that it was run on 3 shifts basis (40% discount factor considered towards possible use for one shift, load shedding etc.,) and thereafter it was further assumed that the machinery used by the assessee was of a higher quality on which assessee would have obtained 2.5 kg of wool per unit of electricity consumed and again assumed a specific sale value and the percentage of G.P. so as to ultimately arrive at the suppressed income. Held that:- There is no evidence on record to show that the assessee’s machinery was an imported machinery having 50 HP motor capacity. There is nothing on record to suggest that machine could be run with four persons for three shifts. Even going by the standard prescription in the brochure of the machine manufacturers, 3 workers are required to run the machine for one shift and the Income Tax Inspector having reported to the Assessing Officer that only 4 workers were employed at assessee’s factory, it is strange to notice that the Assessing Officer proceeded on the assumption that the factory would have worked for 3 shifts (after considering over all discount factor on various counts). There is no evidence on record to show that the assessee has either suppressed sales or purchased raw material without reflecting the same in its books. Having regard to the fact that there was no evidence to prove that 50 HP motor was not utilised by the assessee, learned CIT(A) proceeded on the assumption that 40 HP was used to produce steel wool. It was not a case of pilferage of electricity in which event the very basis for making the addition falls to ground. Mere alleged disparity in consumption of electricity cannot be a reason for estimating the turnover since production depends upon various factors and any addition made to estimate suppressed sales, on the basis of consumption of electricity, deserves to be deleted since it has no scientific basis. - Additions deleted - Decided in favor of assessee.
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