TMI Blog2017 (2) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... count under section 145(3)/144, unaccounted production of finished goods, unaccounted profit and unaccounted investment out of unaccounted production with reference to consumption of electricity units per metric ton production of finished goods with direction to re-decide the entire issue in accordance with law in the light of the internal guidelines issued by the ld. Pr. Commissioner of Income Tax, Patiala. - Decided in favour of assessee for statistical purposes. - ITA No.149,112,261,247,920,926,38,39, 531,586,401,335,87,616,268,275,269,271, 315,449,316,89,152,147,150,333,346,129,151,49,45,345,445,917,924,347,617,88,114,400,494,237,273,238,274,281, 248,393,453,288,414,450,459,418 /Chd/2016 - - - Dated:- 14-2-2017 - ITA No.,153,918,925,348,497,249, 452,627,660,30,40,31,927,575,585,419,615,532,594,511,534,299,272,198,206,447,113,305,328,334,/Chd/2016 CO No 19 /Chd/ 2015 in ITA No 447 /chd/2016 BHAVNESH SAINI AND Ms. ANNAPURNA GUPTA ORDER This order shall dispose off all the above cross appeals which are involving the identical issue. 2. We have heard ld. Representatives of all the assessees, ld. CIT-DR Shri Ravi Sarangal. Shri Pradeep Kumar Goyal, DCIT and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant submitted that the consumption of electricity depends on various factors. The appellant is manufacturing different types of products namely M.S. Rounds and bars etc. from steel ingots, and billets etc. and that too of different sizes. Further the consumption of electricity depends on the quality of raw material and furnace oil, supply of electricity, machinery breakdown, labour problems, over heating etc. Further there was mismatch in period of recording of finished products and recording of consumption of electricity. Detailed submission of the appellant is reproduced in the assessment order. 5(ii) The A.O., however, did not accept the submission of the appellant. The A.O. concluded that there was no evidence on record relating to the types, sizes and quality of finished goods produced on daily basis. The A.O. further noted that even on monthly basis there is a large variation in the consumption of electricity units pmt. of finished goods as reproduced in the assessment year. The A.O., thereafter, rejected the books of accounts u/s 145(3) of the IT Act'61. The A.O. relied on the case of Melton India vs. Commissioner of Trade of Tax (UP) Appeal No. (Civil) 373 of 2007 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 and reproduced the same in the impugned order in which the estimation of consumption of electric per metric ton of production was upheld and the profit estimated by the Assessing Officer on the unaccounted production was confirmed. The ld. CIT(Appeals), however, accepted the argument of the assessee regarding circulation of the stock as only part of the stock will keep on circulating in the chain of production and subsequent sales. The ld. CIT(Appeals), ultimately sustained the addition of ₹ 55,78,821/- on account of unaccounted investment subject to verification by the Assessing Officer and appeal of the assessee was partly allowed. 7. It may be noted here that the assessee in this appeal has challenged the rejection of the books of account under section 145(3)/144 of Income Tax Act alongwith upholding of the addition of ₹ 55,78,521/- on account of unaccounted investment against addition of ₹ 1,29,13,563/-. In the ground of appeal also, assessee has stated that ld. CIT(Appeals) has erred in not giving any finding against addition of ₹ 60,88,005/- made by Assessing Officer on account of unaccounted profit out of unaccounted production. The Revenue De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders u/s 143(3) issued some internal guidelines regarding acceptability of variation upto 15% and no addition have been made on similar issue in subsequent years by the AO in the same cases of assessee on similar issues in favour of assessee. In this regard, it is submitted that with regard to pendency of appeals before the Hon'ble ITAT pertaining to Assessment Years 2010-11 to 2012-13, on the issue of electricity, the department has estimated the unaccounted production after rejecting the books of accounts because there was wide variation in the consumption of electricity units per metric ton production of finished goods. Thereafter, for estimation u/s 144, in case of rolling mills, the average of 30 days and in case of induction furnaces 10 days average involving the least consumption of electricity units for production of one metric ton was taken to work out the alleged unaccounted production on which gross profit was applied to determine the unaccounted income. Similarly, by adopting number of holding days, unexplained investment in the alleged unaccounted production was estimated. Thereafter, taking into consideration the grievances amongst the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity consumed per MT for a continuous period of 30 days in the case of Rolling Mills and 10 days in the case of furnaces, alongwith unexplained investment in unaccounted production. It is worthwhile to mention here that every year is an independent assessment year. However; considering the facts circumstances of each case, the appeals may be decided on merits. ii) It is also contended that in some cases of subsequent assessment years of these assessees, the Assessing Officers have made additions after considering favorably one third of such variation instead of half percent as allowed by the CIT(Appeals), Patiala in cases under appeal. The decision of the Ld. CIT(A), Patiala in estimating total undisclosed investment in respect of that unaccounted production at half of the peak unaccounted production computed on monthly basis i.e. 15 days was not accepted by the department as the AOs have adopted the quantum of electricity consumed per MT on the basis of minimum value of average electricity consumed per MT for a continuous period of 30 days assuming that within a period of 30 various types and sizes of finished goods would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessees by following the same guidelines. It may be noted here that the assessee in this appeal has challenged the rejection of the books of account under section 145(3)/144 of Income Tax Act alongwith upholding of the addition of ₹ 55,78,521/- on account of unaccounted investment against addition of ₹ 1,29,13,563/-. In the ground of appeal also, assessee has stated that ld. CIT(Appeals) has erred in not giving any finding against addition of ₹ 60,88,005/- made by Assessing Officer on account of unaccounted profit out of unaccounted production. The Revenue Department in their appeal has challenged the order of ld. CIT(Appeals) in restricting the addition of ₹ 1,90,01,568/- to the extent of ₹ 1,16,66,526/-. Since all the respective grounds of appeal in cross appeals are connected with estimation of the unaccounted production based upon power consumption by estimating unaccounted investment and unaccounted profit out of unaccounted production and on the same, Revenue Department has constituted the Committee to consider the grievances of the assessees/tax payers and ld. Pr. Commissioner of Income Tax issued the above guidelines by modifying the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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