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2021 (4) TMI 216 - AT - Income TaxAddition on account of suppressed production on the basis of electricity consumption - huge deviation in the electricity consumption and presumed that the production disclosed in the books was substantially suppressed - HELD THAT:- One of the reasons for rejecting the books of account by the AO was inconsistent electricity consumption and proceeded to compute the net profit of suppressed production. The AO did not give the cogent reasons for method of computing suppressed production and he went by supposition but not by actual detention which is not justified as rightly held by the CIT(A). The factors responsible for variation in electricity consumption has been explained by the assessee in his detailed written submissions before the AO - As pointed by the CIT(A) that this Tribunal held the consumption of the electricity for the manufacturing of mild steel ingots/billets depend on various factors like quality of raw material which was the major input, voltage of the supply, power interruptions, mechanical and electrical breakdowns and the chemical composition of the liquid metal. In the present case having explained all the above in assessment proceedings, the AO failed to appreciate these facts and did not attempt to establish a direct nexus between the production and electricity consumed for the manufacturing and arrived at a conclusion that there was an excess consumption of electricity resulting in suppressed production, in our opinion, has no basis for computing alleged suppressed production on estimation. Addition made on account of suppressed production on the basis of electricity consumption is liable to be deleted. We find no infirmity in the order of CIT(A) and it is justified. Accordingly, the only ground raised by the Revenue is dismissed.
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