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TMI Blog2021 (7) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Rs. 72,42,835/- on account of investment in alleged unaccounted production, though telescoped with last year investment. 5. That the appellant craves leave to add. amend or delete any of the grounds of appeal before the same is finally heard & disposed off. 2. The present appeal has come up for hearing in the background where the issues were stated by the ld. AR to be fully covered in favour of the assessee. For this claim, reliance had been placed upon the order of the ITAT dated 11.11.2020 in ITA 818/CHD/2019 and ITA 879/CHD/2019 M/s. Kripalu Strips Vs ITO wherein the cross appeals of the Assessee and the Revenue were decided by the Co-ordinate Bench where similar issue came up for consideration. For the said purpose, the ld. AR had drawn specific attention to the issues as considered and decided by the ITAT wherein the assessee's grievance on rejection of books of account addressed in page 2 para 2 was raised before the ITAT and was decided in its favour. 3. Accordingly, in the background of the said submissions when the appeal came up for hearing, ld. AR reiterating his earlier position drew attention to ground No. 2 addressed by the assessee in M/s. Kripalu Strip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the issue is covered in his favour. 5. The ld. AR referring to these arguments made on the earlier date, drew attention to the fact that time was given to the ld. Sr. DR Ms. M. Vohra to go through the order of the ITAT dated 11.11.2020 in M/s. Kripalu Strips Vs ITO ITA No. 818 & 879/CHD/2019 relied upon and considered the submissions. 6. Ms. Vohra on the next date on perusal of the record submitted that facts in the present case indeed remain identical as considered in M/s. Kripalu Strips Vs ITO (supra). On the issue of information sought by the assessee to cross examine the information/Report etc. relied upon, she agreed it was not addressed. In the absence of any discussion thereon, she placed reliance on the respective orders of the ITAT. The position of law as canvassed in M/s. Kripalu Strips Vs ITO (supra) and reliance on R.A. Castings Pvt. Ltd. decision of the Apex Court latest in point of time and found considered as opposed to the case of Melton India (supra) was not disputed. 7. The ld. AR in reply summed up the position of law as argued and relying on the same it was his submission that ground No. 2 following the proposition of law as considered by the ITAT in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee to furnish details of daily production of finished goods as well as the details of the manufacturing process involved. On examination of the details, the Assessing officer observed that the amount of electricity consumed was directly related to the production of finished goods. In order to co-relate the consumption of electricity vis-à-vis production shown, the Assessing officer gathered information regarding the consumption of electricity from the Electricity Board. The Assessing officer analyzed the consumption data of electricity vis-à-vis the production of finished goods and observed that there were wide variation in ratio of electricity units consumed to per metric tons of finished goods produced during the year. He further observed that on some days, electric units consumed were very low whereas finished goods produced were very high giving a very low value of electric units consumed to per ton of finished goods, whereas on some other days, electric units consumed were very high whereas the finished goods produced were very less giving a very high value of electric units consumed per metric unit of finished goods. He further observed that even on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the Committee, the Assessing Officers have followed this norm while making assessment in similar cases and has accepted the book results if the variation is within 15% window. It was, therefore, pleaded that the book results of the assessee for the assessment year 2012-13 should also be accepted and consequently, the addition should be deleted. The Ld. CIT(A) got verified from the Assessing officer the above contentions of the assessee which was reported to be correct by the Assessing officer. The Ld. CIT(A) thereafter held that once an issue has been decided on merits in a subsequent year, it would not be appropriate to take a different view for the year under consideration. He, therefore, relying upon the report of the Committee constituted by the Principal Commissioner of Income Tax, Patiala held that as decided by the Committee, the assessee was entitled to benefit of 15% variation in consumption of electricity per metric ton of finished goods produced from the average worked out on yearly basis and the variation up to 15% would not warrant any adverse cognizance. He accordingly held that since pursuant to the report of the committee, the Assessing officer has already fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was directly related to the production of finished goods. In order to co-relate the consumption of electricity vis-à-vis production shown, the Assessing officer gathered information regarding the consumption of electricity from the Electricity Board. The Assessing officer analyzed the consumption data of electricity vis-à-vis the production of finished goods and observed that there were wide variation in ratio of electricity units consumed to per metric tons of finished goods produced during the year. He observed that the lowest units consumed for production of one metric ton of finished goods were 1117.17 units and the highest electric units consumed for production of one metric ton of finished goods were 1188.12 units. He further observed that on some days, electric units consumed were very low whereas finished goods produced were very high giving a very low value of electric units consumed to per ton of finished goods, whereas on some other days, electric units consumed were very high whereas the finished goods produced were very less giving a very high value of electric units consumed per metric unit of finished goods. He further observed that even on some days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee out of the unaccounted production at Rs. 86,88,365/- and added back the same to the income of the assessee." 4.1 Perusal of the impugned order shows that facts have been considered in the following manner: 5.2 The report of the AO was called for on the written submissions of the appellant. In the report, sent vide letter No. ITO/W-l/MGG/2016-17/2227 dated 02.12.2016, the A.O. has tried to defend the rejection of books of account on the basis of reasoning given in the assessment order. However, regarding appellants contention w.r.t. the extent of variation in the consumption of electricity pmt of finished goods, the AO conveyed as under: "a) The assesses in its written submission has contended that 15% variation on yearly average consumption of power for production of each metric tone of finished goods was accepted in the A.Y. 2013-14. The contention of the assesses is correct as a committee was constituted by the worthy Pr. Commissioner of Income Tax, Patiala to verify the normal variation in consumption of electricity for manufacturing each metric tonne of finished goods. On the basis of report of the committee which was headed by Addl. Commissioner of Income Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as quoted above, he has reported it correct. There is a decision of the Hon'ble Punjab and Haryana High Court in the case of a CIT vs. Rieta Biscuits Co. (P) Ltd. (2009) 309 ITR 154 wherein their Lordships have held that "keeping in view the principles of consistency once the issue on the merits has been decided against the revenue on the same issue during the subsequent assessment years, we do not deem it appropriate to take a different view on a technical reason. Accordingly, without specifically opining on the issue on the merits, the reference is decided against the revenue". On a careful consideration of the totality of facts and circumstances on record, I'm of the view that the plea of the appellant company merits consideration. It is a matter of fact that a detailed study has been conducted by a Committee, constituted by the Principal CIT Patiala, with a view to examine the variation in the consumption of electricity vis-à-vis the production of finished goods in the rolling mills and induction furnaces of the area. The committee, a broad-based multimember body, had the additional Commissioner of Income Tax, Range, Mandi Gobindgarh as its head and all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO on account of unaccounted profits and unaccounted investment are also deleted as a consequence. 4.3 In the facts, as they stand, it is evident that the point at issue is fully covered in favour of the assessee. Accordingly, in the absence of any change in facts, circumstances or position of law, the impugned order is upheld and the departmental appeal is dismissed." 9. Coupled with this, it is also noticed that the CIT(A)'s order itself hold the assessee to have already succeeded on the same issue in the preceding assessment year (supra) which has attained finality. We hold in these facts and circumstances that both of the assessee's substantive grounds challenging correctness of the lower authorities' action rejecting its books of account as well as adding gross profit element on alleged unaccounted production of Rs. 13,04,677/- deserve to be accepted. Same reasoning follows in Revenue's cross appeal ITA No. 879/Chd/2019 as well raising the sole substantive issue of unaccounted investment in stock of Rs. 1,62,54,188.78 being the necessary consequence of our foregoing details. The assessee's appeal in ITA No. 818/Chd/2019 is accepted and Revenue's c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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