2017 (10) TMI 1545 - AT - Income Tax

Unaccounted investment and unaccounted profit out of unaccounted production - variation of consumption of electricity was more than 15% - Rejection of books of accounts - income estimation - HELD THAT - As decided in M/s Dhiman Steel Rolling Mills 2017 (4) TMI 1310 - ITAT CHANDIGARH CIT(A) has accepted the variation of 15% in consumption of electricity per metric ton of finished goods as per the report of the Committee. The same has already been followed by the Assessing officer in subsequent assessment year. No infirmity in the order of the CIT(A) while directing the Assessing officer to accept the books results shown by the assessee and to delete the additions made by the Assessing officer on account of unaccounted profits / unaccounted investment made on estimation basis as discussed above. The order of the CIT(A) is, therefore, upheld. - Decided against revenue

Summary

Issues:
Appeal by Revenue challenging deletion of addition made on account of unaccounted investment and unaccounted profit out of unaccounted production.

Analysis:
The judgment pertains to two appeals filed by the Revenue, both involving a common issue related to unaccounted investment and profit in the case of different assessees. The parties agreed that the issue had been considered in previous ITAT orders, and arguments remained the same. The Revenue contended that the CIT(A) erred in deleting the addition, relying on a group of cases and a consolidated order. The Assessing Officer had rejected the books of account due to discrepancies in electricity consumption and production of finished goods. The AO estimated unaccounted production and profit, resulting in additions to the income of the assessee.

The CIT(A) considered the factual background and the appellant's contentions regarding a committee's study on electricity consumption variations. The committee, comprising tax officials, technical experts, and industry representatives, recommended accepting a 15% variation in electricity consumption per metric ton of finished goods. The CIT(A) referred to a High Court decision emphasizing consistency in judgments. Based on the committee's report and industry norms, the CIT(A) concluded that the books of account should be accepted, leading to the deletion of additions made by the AO.

The judgment highlighted that the issue was fully covered in favor of the assessee and upheld the CIT(A)'s decision to delete the additions. The Tribunal dismissed the Revenue's appeals as no change in facts or law warranted a contrary view. The judgment emphasized the importance of following industry norms and previous decisions for consistency in tax assessments.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the additions related to unaccounted investment and profit, based on the committee's findings and industry norms regarding electricity consumption variations. The judgment emphasized the significance of consistency in tax assessments and the acceptance of book results in line with established norms and previous decisions.