ASSISTANT COMMISSIONER OF INCOME-TAX, JALANA CIRCLE , , JALNA vs. M/S. GAJALAXMI STEEL PVT .LTD,, JALNA

This appeal by the Revenue against the order dated 02-08-2017 passed by the Commissioner of Income Tax (Appeals)-1, Aurangabad [„CIT(A)‟] for assessment year 2013-14.

The only issue is to be decided is as to whether the CIT(A) justified in deleting the addition made on account of suppressed production on the basis of electricity consumption in the facts and circumstances of the case.

The brief facts of the case are that the assessee is a company engaged in the business of manufacturing of MS Billets. The said MS Billets are mainly used by Re-Rolling Mills for manufacturing of MS Bars. The main raw materials are sponge iron and MS Scrap. During the course of hearing, the assessee was asked to furnish the details of raw materials consumption, finished goods, consumption of electricity and unit consumption per MT with its month-wise details, in response to which the assessee furnished the details which are reproduced in Page No. 6 of the assessment order.

After verification of the said production details the AO worked out the average month-wise sale and purchase and also month-wise consumption of raw material and electricity. He analyzed the facts and figures from the month-wise of electricity consumption and opined the electricity consumption was lowest in the month of February, 2013 at 1141 Units PMT and it was highest in the month of April, 2012 at 1368 Units PMT. The AO asked the assessee to show cause as to why the basis of production should not be adopted at 1026 Units PMT as adopted by the Directorate General of Central Excise Intelligence (DGCEI). In response the assessee contended that the electricity consumption varies only due to some special circumstances. The variation may be due to various factors in the manufacturing process and the quality of raw material available with the assessee and the variation may be due to that the assessee consumed raw material as old scrap lying with it for year or so, which consumed electricity units at large and the electricity is consumed in large proportions. The said submissions were found not acceptable to the AO and accordingly, excess consumption of electricity was made basis for estimating the gross profit and net suppressed production to an extent of Rs.7,65,23,877/- was added to the total income of the assessee. The assessee challenged the order of AO before the CIT(A), the contention of which are reflected in Page No. 3 of the impugned order. It was also pleaded before the CIT(A) the similar issue was the subject matter before the ITAT, Pune Benches in the cases of M/s. Nilesh Steel & Alloys Pvt. Ltd. and Bhagyalaxmi Steel Alloys Pvt. Ltd. Considering the same, the CIT(A) deleted the addition made on account of suppressed production.

The ld. DR, Shri Deepak Garg relied on the order of AO.

The ld. AR, Shri S.N. Puranik referred to an order dated 19-09-2019 passed by this Tribunal in assessee‟s own case for A.Y. 2014-15 in at Page No. 3 of the paper book and argued that the AO without having any supporting material for estimating the gross profit, and the addition made thereon on account of suppressed production is bad under law. He relied on the order of ITAT in assessee‟s own case and referred to Para No.

Further, in assessee‟s own case as relied by the ld. AR at Page No. 3 of the paper book we note that this Tribunal in Revenue‟s appeal held the order of CIT(A) is fair and reasonable on the issue where the AO proceeded to estimate the net profit on alleged suppressed production. The relevant portion in Para Nos. 7 to 9 in is reproduced here- in-below : “7. We heard both the sides on this issue and perused the facts and orders of the revenue authorities and the decision of the Tribunal placed before us. Considering the same, we find there is no dispute on the fact that the Assessing Officer made addition based on the estimation with reference to the consumption of electricity. This is a case where the DGCEI scrutinized the accounts of the assessee. We further find on similar facts in the case of Bhagyalaxmi Steel Alloys Pvt. (supra), the relief was granted by the Tribunal to the assessee. Aggrieved with the said relief granted by the CIT(A), the Revenue filed the present appeal informing that the Revenue already filed an appeal before the Hon’ble Jurisdictional High Court for the earlier assessment years and, therefore, this is the intention of the Revenue to file the present appeal is to keep the issue alive on this issue .

Considering the same, in our view, such reasons for filing the appeal is unsustainable. Further, we perused the order of the CIT(A) and find the contents of para 5 of the order of the CIT(A) are relevant in this regard and the same are extracted hereunder :- “5. ………. Since the facts were identical to that of the case decided by the Tribunal, therefore, following the decision of the Coordinate Bench of the Tribunal in the case of Bhagyalaxmi Steel Alloys Pvt. Ltd. ITA Nos.1292/PN/2012 and in absence of any contrary material brought to its notice, the grounds raised

In the result, the appeal of Revenue is dismissed.