TMI Blog2017 (10) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee by: Shri Parikshit Aggarwal,CA ORDER Both these appeals filed by the Revenue in the case of different assessees are being decided by a common order as identical issue is agitated in both the appeals. It was a common stand of the parties before the Bench that the issue stands considered by various orders of the ITAT as such the arguments would remain the same. 2. Accordingly, for ready reference, ground of ITA 397/CHD/ 2017 is reproduced as under : In the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer made on account of unaccounted investment and unaccounted profit out of unaccounted production. 3. Since the present appeals are filed by the Revenue, the ld. Sr.DR was required to address the issue. Reliance was placed on the assessment order, The ld. AR submitted that the issue is covered in his favour by a group of nine cases wherein a consolidated order dated 28.04.2017 in ITA 392/CHD/2017 in the case of ITO, Ward-1 Vs M/s Dhiman Steel Rolling Mills and eight other assessees pertaining to 2011-12, 2012-13 assessment years was relied upon. In the facts of the present case also, referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of finished goods. He, therefore, observed that it indicated that the daily production recorded 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 been maintained as per actual production. When confronted in this respect, the assessee explained that the consumption 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, however, was not satisfied with the above reply of the assessee. He ultimately held that the assessee company was involved in unaccounted production 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 accordingly rejected the books of account of the assessee by invoking the provisions of section 145(3) of the Income-tax Act, 1961 (in short 'the Act') and proceeded to frame the assessment in the manner as provided u/s 144 of the Act. He, thereafter estimated the income of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucing of each metric tonne of finished goods should be accepted. As such the cases of for the A. Y. 2013-14 were decided by following these guidelines. b) The contention of the assesses that his case for 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 also the submissions and the report of the Ld. AO. Undoubtedly, the only reason 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, as detailed earlier, the AO, on the basis of average purchase rate, went on to estimate unaccounted production in monetary terms and then adopting the gross profit rate shown by the appellant worked out unaccounted profit out of unaccounted production on the basis of average sale rate. Besides, the peak unaccounted production for the relevant month was determined and by multiplying with the average purchase rate of finished goods the unaccounted investment was wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the JOT, Range, Mandi Gobindgarh. It's relevant excerpt reads as under: Thereafter, to ascertain the amount of variation in consumption of electricity per metric ton of finished goods produced of similar sizes and odd sizes, the AOs carried out on the spot verification by running some of the rolling mills on a fix period of time and noticed quite appreciable variation in the consumption of electricity per metric ton of finished goods in similar sizes as well as odd sizes. 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 variation in the number of electricity units for production of one metric ton 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 finished goods produced from the average worked out on yearly basis . Meaning, thereby that 15% variation in the number of electricity units consumed per metric ton of finished goods as compared to the average consumption of electricity units per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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