Income Tax Appellate Tribunal - Chandigarh
Deputy Commissoner Of Income Tax, vs Dhiman Indusitres, on 2 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER &
DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No. 356/Chd/2017
Assessment Year: 2012-13
The DCIT, Circle, Vs. M/s Bhambri Steel Pvt. Ltd.,
Mandi Gobindgarh Village Tooran, Mandi Gobindgarh
PAN No. AAACB6965C
&
ITA No. 355/Chd/2017
Assessment Year: 2012-13
The DCIT, Circle, Vs. M/s Rajdhani Iron Products Pvt Ltd.,
Mandi Gobindgarh Village Kukbh, Mandi Gobindgarh
PAN No. AACCR7955A
Appellant By : Sh. Ravi Sarangal
Respondent By : Sh. Bhupinder Sharma
ITA No. 357/Chd/2017
Assessment Year: 2012-13
The DCIT, Circle, Vs. M/s Vardhman Adarsh Ispat Pvt.Ltd.,
Mandi Gobindgarh Village Ambhay Majra,
Mandi Gobindgarh
PAN No. AABCV2853Q
Appellant By : Sh. Ravi Sarangal
Respondent By : Sh. Tej Mohan Singh
(for Sh. Ashwani Kumar)
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ITA No. 358/Chd/2017
Assessment Year: 2012-13
The DCIT, Circle, Vs. M/s Prayag Steel Rolling Mills,
Mandi Gobindgarh Behind Modern Steels,
Mandi Gobindgarh
PAN No. AAJFP2983L
Appellant By : Sh. Ravi Sarangal
Respondent By : Sh. Ashok Goyal
Date of hearing : 12.07.2017
Date of Pronouncement : 02.08.2017
&
ITA No. 360/Chd/2017
Assessment Year: 2012-13
The DCIT, Circle, Vs. M/s Dhiman Industries,
Mandi Gobindgarh Guru Ki Nagri,
Mandi Gobindgarh
PAN No. AABFD7123J
Appellant By : Sh. Ravi Sarangal
Respondent By : Sh. Tej Mohan Singh
(for Sh. Rajiv Dutta)
Date of hearing : 13.07.2017
Date of Pronouncement : 02.08.2017
ORDER
Per Sanjay Garg, Judicial Member:
The above captioned appeals relating to different assessees are arising from separate orders of Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)] Patiala.
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2. Since facts and issue involved in all the appeals are identical, these are being disposed off by this common order. For the sake of convenience, the facts have been taken from ITA No.356/Chd/2017.
3. The brief facts relating to the issue under consideration are that the assessee company is a steel Re-Rolling Mill engaged in manufacturing of iron and Steel Products viz Structural Steel like angles, channels, flats, joists, h.beams etc. During the assessment proceedings, the Assessing officer asked the assessee to furnish details of daily production of finished goods as well as the details of the manufacturing process involved. The Assessing officer further 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-a 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 electricity consumption pmt of finished goods varies from 64.32 units to 114.06 units while the average for the entire year is 84.16 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 4 value of electric units consumed per metric unit of finished goods. He further observed that even on some days though there was electricit y consumption yet no production was shown. He further noted that otherwise on other days, there was also a balance and consistency in consumption of electric units vis-a-vis production of finished goods. He, therefore, observed that it indicated that the daily production recorded by the assessee of the finished goods was not correct and, hence, not reliable. He observed that the data relating to the daily production had been maintained as per actual production. When confronted in this respect, the assessee explained that the consumption of electricity was dependent on various factors as detailed in his reply which has been reproduced by the Assessing officer in the assessment order. The Assessing officer, however, was not satisfied with the above reply of the assessee. He ultimately held that the assessee company was involved in unaccounted production of finished goods which resulted in unaccounted sales and purchases. He, therefore, held that the sale and purchase figures in the books of account of the assessee were not correct and he accordingly rejected the books of account of the assessee by invoking the provisions of section 145(3) of the Income- tax Act, 1961 (in short 'the Act') and proceeded to frame the assessment in the manner as provided u/s 144 of the Act. He thereafter estimated the income of the assessee on the basis of electric units consumed for 12 months as per chart reproduced in the assessment order. He compared the same with that shown in the books of account of the assessee and estimated the unaccounted production for each month. Thereafter, on the basis of average sales rate, the value of total unaccounted production was estimated in monetary terms and then adopting the gross profit rate shown by the 5 assessee, the unaccounted profit out of the unaccounted production was worked out. Secondly, the peak unaccounted production for the relevant month was determined and by multiplying the average sale rate of finished goods, the unaccounted investment was worked out. The Assessing officer in this way worked out the total unaccounted investment of the assessee in the unaccounted production at Rs. 2,64,17,372/- and added back the same to the income of the assessee.
4. Being aggrieved from the above order of the Assessing officer the assessee preferred appeal before the CIT(A).
5. Before Ld. CIT(A), the assessee filed detailed submissions. It was also brought into the knowledge of the CIT(A) that subsequent to the passing of the above stated impugned assessment order, a detailed stud y was carried out by a Committee headed by the Additional Commissioner of Income Tax, Range, Mandi Gobindgarh having all the Assessing officers of the Range as its members. The committee was assisted by the experts from the NISST (National Institute of the Secondary Steel Technology) and also the industry representatives. On the basis of the report of the committee, it was decided that if the variation in the consumption of the electricity is within the range of 15% of the yearly average consumption of power, the book results should be accepted. Accordingly, its book results were accepted for the assessment year 2013-14. It was, therefore, pleaded that its book results 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 6 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 followed this norm while making the assessment in similar cases and in same set of circumstances has accepted the books results shown by the assessee which included the assessee as well, hence, he following the principle of consistency laid down by the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. RIETA Biscuits Co. (P) Ltd [2009] 309 ITR 154 (P&H) held that the books results shown by the assessee company for the year under consideration need to be accepted, as well. He therefore, set aside the action of the Assessing officer in rejecting the books of account and directed the Assessing officer to accept the book results shown by the assessee and deleted the additions so made by the Assessing officer on estimation basis.
6. Being aggrieved by the above order of the Assessing officer, the Revenue has come in appeal before us.
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7. At the outset, the Ld. Counsel for the assessee has brought to our knowledge that on identical issues, wherein the additions made by the Assessing officer on estimation basis as discussed above were upheld by the concerned CIT(A), the assessees preferred appeals before this Tribunal and this Tribunal vide its common order dated 14.2.2017, passed in a bunch of about 85 appeals in the case of M/s Modi Oil & General Mill, Mandi Gobindgrh and Others in ITA No. 149/Chd/2016 and Others while observing that consequent to the report of the Committee constituted by the Principal, Commissioner of Income Tax, Patiala some internal guidelines regarding acceptability of variation upto 15% have been issued and further that no additions have been made on similar issue in subsequent years by the Assessing officer, has remanded the matter to the Assessing officer with a direction to decide the issue afresh in accordance with law in the light of the internal guidelines issued by the Principal, Commissioner of Income Tax, Patiala.
8. Further, in our view this matter need not to be restored in the present appeals as the Ld. CIT(A) while deciding the above appeals in favour of the assessee has already followed the internal guidelines of the committee constituted by the Principal Commissioner of Income Tax, Patiala. The Committee so constituted was a Broad based Multi Member body having Additional Commissioner of income Tax, Mandi Gobindgarh as its Head and all the Assessing officers of the Range as its Members. It was also assisted by the experts of the National Institute of the Secondary Steel Technology (NISST) and the Industry representatives. The Ld. CIT(A) has accepted the variation of 15% in consumption of electricity per metric ton 8 of finished goods as per the report of the Committee. The same has alread y been followed by the Assessing officer in subsequent assessment year. Considering the above facts and circumstances, we do not find any 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.
9. Since the facts and issue involved in all the other captioned appeals are identical, hence, in view of our findings given above, we do not find any merit in all the appeals of the Revenue and the same are accordingly dismissed.
10. In the result, all the appeals of the Revenue are hereby dismissed.
Order pronounced in the Open Court on 02.08.2017
Sd/- Sd/-
(DR. B.R.R KUMAR) (SANJAY GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 02 August, 2017
Rkk
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR