2015 (7) TMI 765 - AT - Income Tax

Validity of re-opening of assessments - additions of Gross Profit made by the AO towards suppressed sales on account of suppression of electricity charges - ITAT deleted the addition - whether the Tribunal has deleted the addition on wrong appreciation of facts and the same has resulted in a mistake apparent from record? - Held that - The power given to the Tribunal u/s 254(2) can be exercised by the Tribunal, even if the order passed by the Tribunal u/s 254(1) has been challenged u/s 260A of the Act before the High Court. We notice that the Tribunal has deleted the addition sustained by ld CIT(A) by considering the facts relating the Power theft case, which in our view, is a mistake apparent from record. The Tribunal, as pointed out by the Revenue, has proceeded to dispose of the issue on wrong appreciation of facts. Hence, we find merit in the miscellaneous applications filed by the revenue. Accordingly, we recall all the grounds relating to the addition of Gross profit made on account of suppression of production/sales. In the miscellaneous petitions, the revenue has not pointed out any mistake on the decision rendered on the issues relating to validity of reopening of assessments. Hence the grounds relating to validity of reopening of assessments need not be recalled - Decided in part in favour of revenue.

Summary

Issues Involved:
1. Validity of re-opening of assessments.
2. Addition of Gross Profit towards suppressed sales.
3. Alleged power theft and its impact on assessments.
4. Suppression of electricity charges.
5. Jurisdiction of the Tribunal under section 254(2) of the Income Tax Act.

Detailed Analysis:

1. Validity of Re-opening of Assessments:
The Tribunal confirmed the order of the CIT(A) in upholding the validity of re-opening of the assessments for the assessment years 2000-01 to 2004-05. The Tribunal did not find any mistake apparent from the record regarding the re-opening of assessments and thus did not recall this part of the order.

2. Addition of Gross Profit towards Suppressed Sales:
The Tribunal initially deleted the addition of Gross Profit made towards suppression of sales for the years 2000-01 to 2004-05. The revenue pointed out that the assessing officer had estimated the production suppressed by the assessee based on power consumption details and added the suppressed Gross Profit. The Tribunal's deletion was based on the reasoning that mere alleged disparity in electricity consumption cannot be a reason for estimating turnover, as production quantity depends on various factors. However, the Tribunal acknowledged that it had erroneously considered the acquittal in the power theft case as a basis for deleting the additions, which was a mistake apparent from the record.

3. Alleged Power Theft and Its Impact on Assessments:
The revenue highlighted that the power theft reported by the Electricity department pertained to the period from February 2001 to November 2003. The Tribunal initially deleted the additions related to power theft, considering the assessee's acquittal in the power theft case by the Additional District Judge. However, the revenue clarified that the addition pertaining to power theft was already deleted by the CIT(A), and the Tribunal mistakenly deleted the Gross Profit addition on the wrong assumption that it was related to power theft.

4. Suppression of Electricity Charges:
The revenue pointed out that the assessee had suppressed actual electricity payments in its books. For instance, in the assessment year 2000-01, the assessee paid Rs. 4,99,363/- but accounted only Rs. 50,000/-. The Tribunal initially deleted the addition of Gross Profit on suppressed production/sales, considering the acquittal in the power theft case. However, the revenue clarified that the addition was related to the suppression of electricity charges, not power theft, which the Tribunal had erroneously overlooked.

5. Jurisdiction of the Tribunal under Section 254(2) of the Income Tax Act:
The Tribunal's power under section 254(2) is limited to correcting mistakes apparent from the record. The Tribunal acknowledged that the revenue's miscellaneous petitions pointed out mistakes apparent from the record, as the Tribunal had proceeded on an erroneous appreciation of facts. The Tribunal referred to the Bombay High Court's decision, which clarified that the Tribunal could rectify mistakes even if the order is challenged in the High Court. The Tribunal found merit in the revenue's applications and recalled the grounds relating to the addition of Gross Profit made on account of suppression of production/sales.

Conclusion:
The Tribunal partly allowed the revenue's miscellaneous applications, recalling the grounds relating to the addition of Gross Profit on suppressed production/sales due to mistakes apparent from the record. The Tribunal did not recall the grounds relating to the validity of re-opening of assessments. The registry was directed to post these appeals for hearing in the normal course. The order was pronounced in the open court on 8th July 2015.