9911796707
TMI Blog1995 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... and "Rolling Division". 3. The licensed capacity of Conductor Division is 8492 MT against which the assessee-company has installed machines of 1000 MT capacity. The raw material required for manufacturing conductors are Aluminium Rod and Steel Wire. Though the Aluminium Wire is not a controlled item yet its supply is regulated by the Aluminium Controller, Govt. of India. The producers and suppliers of Aluminium Rods include Hindustan Aluminium Corporation Ltd., Renukoot (HACL), Bharat Aluminium Co. Ltd., Korba (BACL), Indian Aluminium Co. Ltd. (IACL), Madras Aluminium Co. Ltd. (MACL), which are Govt. or Semi Govt. Undertakings. The buyers are State Electricity Boards. The finished goods is subject to re-winding process before sales and is an Excisable item. 4. The raw material required for manufacture of cables in the Rolling Division are Aluminium & Steel/Iron. This Division has 300 Bobins on which wire is wrapped for strandering purposes. The wrapping process on all the 300 Bobins require 7 days time. Strandering is done in different sizes. It takes 3 to 4 hours for making 4-5 kilometre of wires. The manufacturing process involves drawing of the melted material into wire and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ---------------------------------------------------------------- 1. 1,10,492 1,122 1,105 --- 2. 1,23,455 955 1,134 279 3. 86,519 954 864 --- 4. 71,957 303 720 416 ---------------------------------------------------------------- 7. In this behalf the AO proceeded on the footing that the consumption of units in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as subsequent years were accepted and no such addition was ever made. The ld. Counsel further submitted that the consumption of units and the production of finished goods was subject to supervision, checks and verification by the Officers of the Excise, Electricity and Sales-tax Departments and the assessee had maintained the relevant accounts and submitted the required statements/ retums to their satisfaction. It was further submitted that the purchase of raw material from open market, though not prohibited, was a costly affair and could not have been adopted for the sole reason that the buyers of the conductors were quite limited. That apart, there is no evidence to raise a presumption or assumption in that behalf. Mr. Jhanwar explained the variance of unit consumption vis-a-vis production in the IInd & IVth quarters and submitted that such variance cannot afford a good basis for making a trading addition. In this behalf reliance was placed on Kerala High Court decision in the case of St Teresa's OilMills v. State of Kerala [1970] 76 ITR 365 and Andhra Pradesh High Court decision in the case of N. Raja Pullaiah v. Dy. CTO [1969] 73 ITR 224. 11. Mr. Jhanwar further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned authorities. It is established on record that the main item of raw material, i,e., Aluminium is supplied by Govt. agencies to the manufacturers of Conductors on allocation basis at rates below the market rates. It is not challenged that an Officer from the Excise Department is stationed at assessee's factory to keep a watch on production and the officers of the Electricity Board do visit assessee's factory quite occasionally to check the consumption of electric energy. We further find that, save the variance between consumption of units vis-a-vis production no other material defect in the maintenance of the books of account or the system of accounting, have been pointed out by the assessing authorities. With these established facts we have to consider whether the basis adopted by them for making the addition in question can be approved of as good basis and the addition of Rs. 5 lacs can be sustained. 15. Production of its finished goods by the assessee involves manufacturing process through consumption of electric energy. Electric energy is supplied to it either by the Electricity Board or the generators in the event of failure of the supply of energy by the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is affected by various factors. 18. There is, therefore, sufficient support for the view that the variance between the consumption of electric energy and production of goods is not a good basis for making addition on account of suppression of production. 19. In the instant case, we find that there was undoubtedly vast variance between the consumption of energy and production of goods in different months and particularly in quarter IInd and IVth and such variance should not have gone and, in fact did not go, unnoticed. The variation noticed naturally necessitated explanation from the assessee. The explanation offered by the assessee was that in the Conductor Division the officer ask the assessee to rewind the Conductor with a view to measure the length of the wire. This process involves consumption of energy without giving proportionate production. Similarly, in the manufacture of cables and iron rods in the Rolling Division the sudden failure of energy supply necessitated the help of generator to produce energy and maintain the temperature at 7000 for strandering purposes as the melted raw material, if got frozen or solidified, will require more energy for remelting. What situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned. Once the conduct of that person is relevant in the given proceedings, the similarity of his prior or subsequent conduct may afford a corroborative piece of evidence in such proceedings. For, it cannot be either assumed or presumed in law that if a person has committed a particular type of default or offence at particular point of time, prior or subsequent to the commission of the default or offence in question, he must or might have committed the default or offence in question also. Our law proceeds on the presumption, though rebuttable, that every one is innocent until and unless the contrary is proved. Therefore, unless some evidence to the contrary is adduced, the normal presumption should be given due weight. 22. In the instant case we find that evidence of the subsequent conduct of the assessee relied upon by the ld. CIT(A) for sustaining the addition in question, cannot be accepted for more than one reason. Firstly, no such evidence was referred to by the AO in his order. Secondly, the ld. CIT(A) does not appear to have given any opportunity to the assessee before using such evidence against him. Thirdly, save the variance in the consumption of electric energy and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
