TaxTMI 
TaxTMI 
2021 (6) TMI 724
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stood covered in favour of the assessee vide the order of the ITAT in the case of ITO, Ward- 1 Vs. M/s Service Iron & Steel Rolling Mills in ITA No.251 /Chd/ 2019 dated 28. 02.2020. Copy of the order was placed before us. The Ld. DR fairly agreed to the same, but he was directed by the Bench to submit in writing showing how the issues are the same in both the cases and hence covered by the aforesaid decision of the ITAT in the case of M/s Service Iron & Steel Rolling Mills (supra). The submissions in writing were filed before us dated 25.03.2021 , bring out the facts of the case and the basis on which the Ld.CIT(A) had adjudicated the appeal of the assessee and further stating that on similar line the appeal of the Revenue was dismissed in the case of M/s Service Iron & Steel Rolling Mills (supra). The contents of the submissions of the Ld. DR are reproduced hereunder: "Brief note in the case of DCIT Mandi Gobindgarh vs. M/s Sahil Concast Pvt. Ltd., for A.Y. 2O12-13 in ITA No. 959/chdy2019 The assessee firm submitted the return of income for the A.Y. 2012-13 on 29.09.2012. The income returned was Rs. 63,667/-. The assessee firm manufactures MS INGOTS. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment order. The A.O., thereafter, adopted the value of electricity consumed pint, on the basis of minimum average value for a period of 10 days assuming that within a period of 10 days various types of raw materials would have been used and other factors contributing to the variation in consumption of electricity PMT of finished goods would have been taken care of. Thereafter, on the basis of average sales rate total unaccounted-production of Rs. 18556408.08/- was estimated in monetary terms and then adopting the gross profit rate shown by the appellant, the unaccounted profit of out of the unaccounted production was worked out as Rs. 2597880.00/-. During the course of appellate proceedings, the CIT (Appeals) after considering the submissions of the appellant, the remand report and counter comments and considering the same observed that the AR's reworking of annexure E demonstrating lowest SPC of 916.269 units inspires more confidence and is more scientific as the A.O's. benchmarked period of 19.10.2011 to 29.10.2011 includes non-production days also. That the reworked SPC (Annexure E) shows no variation in excess of 15% is a matter of record and the Ld. A.O. has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rities, was a manufacturer of steel and one among many such industries in Mandi Gobindgarh which had been investigated with regards to alleged undisclosed production, based in part on the inconsistent consumption of electricity qua the unit production of finished goods. During the assessment proceedings the AO had analyzed the production of the assessee and had found that the process involved heating of raw material, passing the same through various rollers to get finished goods and that the production of the final product was in direct proportion of the power consumed. The AO collected the granular data regarding metered electricity consumed from the Electricity Board and analyzed this data with the quantity in metric tons from f inished goods produced on a given day, arriving thus at the per metric ton of electricity consumed with regard to the finished goods produced on that particular day, as per the production records of the assessee. This analysis data is reproduced in five reports which form part of the assessment order, as Annexure A to E. From the same, the AO found that the average consumption of electricity per MT of finished goods produced varied from 108.13 units to 29....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., to determine the legitimate variation in the consumption vis- à- vis the production of finished goods in rolling mills and induction furnaces of the area. The Ld.CIT(A) noted that the Committee was a broad- based multi member body with the Addl.CIT, Range Mandi Gobindgarh as its head and all the AOs of the range as its members. He noted that the Committee was assisted by experts from National Institute of Secondary Steel Technology and industries representatives. The Ld.CIT(A) accessed the report of the Committee from the Addl.CIT, Range Mandi Gobindgarh and noted from the same that the Committee had decided to give benefit of 15 % variation in consumption of electricity per MT of finished goods produced from the average worked out on yearly basis. He noted that this 15 % variation in power consumption per MT of finished goods was the industrial norm warranting no adverse cognizance and, therefore, any variation within this range did not warrant rejection of books of account. He noted that the AOs had followed this norm while making assessments in similar cases and in similar set of circumstances and accepted the book results where the variation was within 15 % window. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....23 micron. The Hon'ble Apex did not accept the contention of the applicant and stated as under: Ordinarily, when electricity consumption goes up, a reasonable inference can be drawn that the production will also have gone up. If the electricity consumption is going up but the production is seen to be going down, a reasonable inference can, prima facie, be drawn that there was suppression of production and consequently suppression of sales in order to avoid sales tax. The appellant also had not maintained separate accounts for its own manufacturing and the job work, and it could not inform which raw materials have been used in the manufacturing of job work and which goods have been used on the assessee's own manufacturing. In view of the above, we agree with the High Court that excessive power consumption, prima fade, establishes the assessee's intention to suppress the production and the turn over. Under such circumstances A.O. may proceed under Section 145(3) under any of the following circumstances: (a) Where he is not satisfied about the correctness or completeness of the accounts (b) Where method of accounting ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Ld. AO has given an allowance of 9.45 units/ day non- manufacturing load is a matter of record. It is my considered view that with non-production electric load of 200 kw, the allowance is not based on scientific estimation. That during the period 24/12/2011 to 02/01/2012 the minimum SPS was 916.269 units and therefore the scientific basis of the AO calculation is subject to questioning. That there are a number of inconsistencies between the units consumed as given in Annexure C and Annexure of the Assessment Order is amply demonstrated by the Ld. AR. There is considerable merit in the Ld. AR's submission that data in annexure E and annexure B, C and D are predicated upon alternate readings/ different footing and there is more than one version of statistical information and truth which the Ld. AO has failed to reconcile. That the Ld. AO has while determining Annexure E taken cognizance of non-production days thereby distorting the comparables is in my considered view amply demonstrated by the Ld. AR. The Ld. ARs reworking of the Annexure E demonstrating a lowest SPC of 916.269 units inspires more confidence and is more scientific as the Ld. AO's benchma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e submitted that average SPC should be taken at average of highest SPC and Lowest SPC as contained in annexure -E, The calculation comes to as under- The minimum spc as per new annexure E comes to 933.569 units and maximum spc comes to 1250.425 units. Average SPc i.e average of two values comes to 1091.997 units. The calculation is as under:- Min. SPC 933,569 units Max. SPC 1250,425 units Average SPC 2183.994/2 =1091.997 units Leverage as per CCIT committee 15% Maximum acceptable level 1091.997+15% =1255.80 units Minimum acceptable level 1091.997-15% =928.19 units In various appeals/assessment this formula has applied. Hence in this way no cycle is outside acceptable level hence no adverse view should be taken in the matter. So in this way the observations given by the assessing officer is factually incorrect Hence can not be a base to reject books of accounts under section 145(3) of the act and to estimate income of the appellant company so it is requested that the assessee has shown genuine profits in this books, so no Gross Profit addition in the absence of any comparable cases or enquiry by the assessing of....