TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1064
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.... The assessee has raised following grounds of appeal:- "1. The Learned CIT (Appeals) erred in confirming addition on account of Gross Profit made by the Assessing Officer due to alleged theft of electricity. 2. The Learned CIT (Appeals) erred in holding that there was a fall in Gross Profit despite the fact that the case filed by the firm against MGVCL was decided in its favour and the court had held that no theft of electricity had taken place. 3. The Learned CIT (Appeals) erred in confirming addition on account of Gross Profit despite the fact that no defects were found in the books of accounts produced during the course of assessment proceedings. It is prayed that addition of Rs. 15,85,372/- be deleted. 4. The appellant firm ....
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....follows:- "4.3.1. I have considered the submissions of the learned Authorized Representative and the order of the Assessing Officer. In this case, there is sharp decline in the G.P. as well as N.P. rate. This phenomenon is coupled with the proceedings by MGVCL who levied penalty of Rs. 15,52,725/- for theft electricity. The instance of this levy of penalty in itself is not conclusive proof of unaccounted production. However, the assessee could not justify the reasons for sharp decline in the G.P. as well as N.P. rate. This has led to the application of net profit rate on the basis of average profit rate shown by the appellant himself in the past several years. These facts have not been disputed by the appellant. In respect of allegation ....
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.... proceedings which was probably done only to preempt rigours of penalty proceedings as the assessee was not sure of any relief in the pending case of electricity theft. In respect of this unaccounted production, in rejoinder, the assessee firm has explained that the said working was done only in relation to the additions purported to be made by the Ld. Assessing Officer in his show cause notice dated 09.12.2010. In this connection, Assessing Officer has pointed to page 6 on which the assessee firm has explained that considering the calculation error made by MGVCL, the unaccounted production works out to only 2125 MT in excess on excess consumption of electricity (alleged theft) of 22598 units in the preceding para. It is also submitted that....
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....e relevant year @ 10.26% considering the GP rate of relevant year and preceding year. Thus, it is very clear that during the relevant year, the firm has disclosed lower Gross profit in comparison to preceding years as well subsequent year. Considering all the aspects, the addition made by the Assessing Officer is confirmed and the ground of appeal is disallowed." 6. Now the assessee is in appeal before the Tribunal against the finding of the Ld. CIT(A) confirming the addition of Rs. 15,85,372/-. 7. Ld. Counsel for the assessee submitted that the AO has made the addition merely on the basis of the amount paid to the electricity department and the case against the assessee was not finalized. Further, books of account are audited and Ld. A....
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....d only 140736 active units during F.Y. 2006-07 relevant to A.Y. 2007-08. Thus the excess consumption of units if any should not exceed in any case 47850 units. (iv) The working of the excess unit as per the formula is only 22590 units. (v) The firm has filed a case against MGVCL and the hearing for the same is fixed on 19.12.2009. (vi) Assuming without admitting the firm has consumed the electricity the additions can be made the average of Gross Profit and not of the entire sales. (vii) The average sale price is only Rs. 905/- per M.T. and not 1323 per M.T. (viii) The average rate of Gross Profit is 8.87% per year and the average Gross Profit for last three years is 11.28%. (ix) The electricity consumption can be made a ba....