2017 (10) TMI 1547 - 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 - HELD THAT - The issue is squarely covered by the above referred to decision of the Tribunal in the case of ITO vs Shri Harpreet Singh 2017 (8) TMI 1621 - ITAT CHANDIGARH wherein, while dismissing the identical appeals of the Revenue held 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. He has also observed that pursuant to the report of committee, the AO have also followed this norm while making assessment in similar type of cases and have accepted the book results shown by the assesses. No infirmity in the order of the CIT(A) while directing the Assessing officer to accept the books results shown by the assessee for this year also and to delete the additions made by the Assessing officer on account of unaccounted profits / unaccounted investment made on estimation basis - Decided in favour of assessee.

Summary

Issues:
Assessment of unaccounted production leading to unaccounted sales and purchases, rejection of books of accounts under section 145(3) of the Income-tax Act, 1961, appeal before CIT(A) challenging the Assessing officer's order, acceptance of book results based on committee report allowing 15% variation in electricity consumption, consistency in assessment approach in similar cases, appeal by Revenue against CIT(A) decision, comparison with similar ITAT Chandigarh Bench judgment.

Analysis:

The case involved the assessment of unaccounted production leading to unaccounted sales and purchases by the assessee firm engaged in manufacturing iron & steel goods. The Assessing officer rejected the books of accounts under section 145(3) of the Income-tax Act, 1961, due to discrepancies in electricity consumption and finished goods production data. The Assessing officer estimated unaccounted income and added it to the assessee's income.

The assessee appealed before the CIT(A), presenting detailed submissions and referring to a committee report allowing a 15% variation in electricity consumption. The CIT(A) relied on the committee report and the principle of consistency, directing the Assessing officer to accept the book results and deleting the additions made on estimation basis. The CIT(A) emphasized that once an issue was decided on merits in a subsequent year, a different view should not be taken for the year under consideration.

The Revenue appealed against the CIT(A) decision, arguing that similar issues were deliberated by the ITAT Chandigarh Bench in another case where the order of the CIT(A) was upheld. The ITAT noted the consistency in approach, upheld the CIT(A) decision based on the committee report allowing 15% variation, and dismissed the Revenue's appeal. The ITAT found no infirmity in the CIT(A) order and upheld it, concluding that the appeal was identical to a previous judgment.

In conclusion, the ITAT dismissed the Revenue's appeal, upholding the CIT(A) decision based on the committee report allowing a 15% variation in electricity consumption and emphasizing consistency in assessment approach in similar cases. The judgment highlighted the importance of following established norms and principles in tax assessments to ensure fair treatment across cases with similar facts and issues.