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TMI Blog2021 (4) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricity and unit consumption per MT with its month-wise details, in response to which the assessee furnished the details which are reproduced in Page No. 6 of the assessment order. 4. After verification of the said production details the AO worked out the average month-wise sale and purchase and also month-wise consumption of raw material and electricity. He analyzed the facts and figures from the month-wise of electricity consumption and opined the electricity consumption was lowest in the month of February, 2013 at 1141 Units PMT and it was highest in the month of April, 2012 at 1368 Units PMT. The AO asked the assessee to show cause as to why the basis of production should not be adopted at 1026 Units PMT as adopted by the Directora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout having any supporting material for estimating the gross profit, and the addition made thereon on account of suppressed production is bad under law. He relied on the order of ITAT in assessee‟s own case and referred to Para No. 7. We note that the AO considered the manufacturing process of assessee in detailed manner and noticed that the electricity was one of the major cost input in the manufacturing, also accounted for major share of expenditure. He found huge deviation in the electricity consumption and presumed that the production disclosed in the books was substantially suppressed. We note that one of the reasons for rejecting the books of account by the AO was inconsistent electricity consumption and proceeded to compute the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable on the issue where the AO proceeded to estimate the net profit on alleged suppressed production. The relevant portion in Para Nos. 7 to 9 in ITA No. 1434/PUN/2018 is reproduced herein- below : 7. We heard both the sides on this issue and perused the facts and orders of the revenue authorities and the decision of the Tribunal placed before us. Considering the same, we find there is no dispute on the fact that the Assessing Officer made addition based on the estimation with reference to the consumption of electricity. This is a case where the DGCEI scrutinized the accounts of the assessee. We further find on similar facts in the case of Bhagyalaxmi Steel Alloys Pvt. (supra), the relief was granted by the Tribunal to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsubstantiated and it is nothing more than a sweeping statement. The production of the assessee company is liable to Central Excise Duty and hence, the assessee has also maintained records and register as prescribed under Central Excise Act. Considering the judicial ratios, it is clear that no addition can be made merely on basis of electricity consumption formula. This view is also supported by the decisions of various Tribunals such as Janta Tiles Vs. ACIT (66 TTJ 695) (Jurisdictional Pune Bench); DCIT Kolapur Vs. J. D. Thote Dairies (Jurisdictional Pune Bench in ITA No 115/PN/2000 decision dated 31/05/2011); Roop Niketan Vs. ACIT (90 TTJ 1097) (Mumbai Bench) and ITO Vs. Gurubachansingh Juneja (55 ITD 75). Respectfully following the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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