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TMI Blog2014 (2) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for fluctuation in productivity, the assessee could have easily demonstrated from the books of accounts and other literature - Merely suggesting that the Gujarat Electricity Board would issue the bills for minimum contracted units without full consumption, is merely stating the obvious – thus, the ground does not involve any substantial question of law – Decided against Assessee. Addition on account of gross profit ratio – Both Revenue and Assessee are in appeal regarding the estimation of GP ratio – Held that:- In the absence of any satisfactory explanation, the fact provides a reasonable basis for working out the suppressed production on the basis of units of power consumed in remaining months of the year – thus, the additions made were sustained by the Tribunal - The issue is based on appreciation of material on record - The Tribunal having given its consideration and having adopted the GP rate of 2% by giving its own reasons – thus, no substantial question of law arises for consideration – Appeal Rejected for both revenue and assessee. - Tax Appeal No.1153 of 2013 - - - Dated:- 3-2-2014 - Akil Kureshi And Sonia Gokani, JJ. For the Appellant : Mr B S Soparkar, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volving similar questions for earlier assessment years are admitted and pending before the Court. (ii) The Assessing Officer as well as Tribunal committed a serious error in rejecting the book results only on the ground of irregular pattern of consumption of electricity. He relied on the following decisions in support of his contention: 1. St. Teresa's Oil Mills v. State of Kerala, reported in 76 ITR 365. 2. Commissioner of Income-tax v. Sulabh Marbles (P) Ltd., reported in 73 ITR 224. 3. N. Raja Pullaiah v. Deputy Commercial Tax Officer, Kurnool and another, reported in 205 CTR 464. (iii) The Tribunal has not given any reasons for adopting the GP rate of 2% though the High Court has provided specifically in the remand order. 5. Having heard the learned counsel for the assessee and having perused the material on record, we do not find that the appeal gives rise to any substantial question of law. 5.1 Tax Appeal Nos.269 and 270 of 2012 filed by the Revenue pertain to the earlier assessment years and their admission per se would not convince us to admit this appeal as well. More importantly, the questions framed in such admission order pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of 20,441 kgs of groundnut oil, 35,353 kgs of groundnut refined oil and 2,82,871 kgs of cotton seed oil against 11999 units of power consumed resulting in average production of 28.22 kgs. against each unit of power consumed. Similarly, production (in kg.) of oil against each unit of power consumed in the month of August worked out to 5.99 kgs. The figures as supplied by the assessee and reproduced in paragraph 3 of the assessment order give a clear indication that the production recorded by the assessee in its books of account is completely inconsistent with the pattern of power consumed. There can be some fluctuations in the consumption of power on day-to-day basis but such fluctuations have got to be within reasonable limits. Once the average for the whole month is taken as it has been taken by the assessee-firm itself, the day-to-day fluctuations or asymmetrical consumption of power at times are automatically taken care of. The consumption of power is directly linked with the production. Consumption of power is recorded and charged by the Electricity Board/ power supplying company and therefore the assessee cannot change those figures of units which have actually been consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded by the ld.CIT(A) that there is no defect in the books of account is therefore unsustainable. Having held that the assessee has not recorded work-in-progress in its books and consequently made addition of Rs.9,57,432/on that basis, it was not open to the CIT(A) to hold that there were no defects in the books of account. The decision of the CIT(A) in this behalf therefore deserves, on the facts of the case, to be vacated and is accordingly vacated. 5.3 From the above, it can be seen that the average production from using of power consumption widely fluctuated from month to month. The explanation rendered by the assessee was not accepted. It was, therefore, that the Tribunal agreed to reject the book results. Significantly, the Tribunal noted that in addition to such fluctuation in the output ratio, the assessee also did not record the work in progress in its books of accounts. It is because of this that the CIT (Appeals) who substantially allowed the assessee s appeal, was still persuaded to make addition of Rs.5.72 lakh on this score. 5.4 The Tribunal has, therefore, in our opinion, rightly recorded that the CIT (Appeals) thus effectively and essentially rejected the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of quantum of electricity expenses holding that such observations were based on relevant material on record and, therefore, no question of law arises. These observations are based on different facts and, therefore, distinguishable. 5.8 Coming to the question of estimation of gross profit, the Tribunal has given the following reasons for adopting the rate of 2% : 23. The assessee-firm itself has reported average production/ yield of 28.81 kgs of oil against each unit of power consumed in the month of April 2004. In the absence of any satisfactory explanation, the aforesaid fact provides a reasonable basis for working out the suppressed production on the basis of units of power consumed in remaining months of the year. Calculated in the aforesaid manner, the quantity of suppressed production of oil in the year under appeal works out to about 31,84,708 kgs of oil. According to the assessee-firm, the average selling price of oil was about Rs.800 per 15 kg. in the year under appeal. Suppressed value of sale thus works out to about Rs.16.98 crores. Even if modest margin of 2% (being consumed) is applied on such suppressed sales, the resultant addition on account of suppressed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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