M/S SHRI SALASAR STEEL STRUCTURALS PVT. LTD.,MANDI GOBINDGARH vs. ITO, W-2, MANDI GOBINDGARH

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ITA 666/CHANDI/2019Status: DisposedITAT Chandigarh01 March 2022AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that a similar issue for a prior assessment year was set aside to the AO for re-adjudication. Following this precedent, the Tribunal also set aside the current issue to the AO for fresh adjudication after providing a reasonable opportunity of being heard to the assessee.

What were the facts?

The assessee, engaged in an iron and steel rolling mill business, declared a loss. The Assessing Officer (AO) made an addition of Rs. 16,00,510/- on account of alleged unaccounted profit from unaccounted production, based on variations in electric consumption. The CIT(A) sustained this addition.

What were the issues?

Whether the rejection of books of accounts and subsequent additions based solely on variations in electric consumption are justified. The validity of adverse inferences drawn from electricity consumption variations.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 144

AI-generated summary — verify with the full judgment below

आदेश/Order

PER N.K. SAINI, VICE PRESIDENT

This is an appeal by the Assessee against the order of the Ld. CIT(A)-1, Ludhiana dt. 11/03/2019.

2.

Following grounds have been raised in this appeal:

1.

That the order of the Ld.CIT(A) is against the facts of the case and is bad in law.

1.

2. That on the facts & circumstances of the case, the Id.CIT(A) has erred in upholding the rejection of books of accounts solely on the basis of variation in electric consumption. 3. That on the facts & circumstances of the case, the Ld.CIT(A) has erred in drawing adverse inference from slightly higher variation in electric consumption in two cycles only, than the arbitrarily considered benchmark of 15%

4. That on the facts & circumstances of the case the Ld.CIT(A) has erred in confirming the addition of Rs. 1600510/- on account of gross Profit on the alleged unaccounted sales and Rs.23918764/-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.

From the aforesaid grounds it is gathered that the grievance of the assessee relates to the sustenance of addition of Rs. 16,00,510/- by drawing adverse inference from higher variation in electric consumption and determining the gross profit on alleged unaccounted sales.

3.

The facts related to this issue in brief are that the assessee company was engaged in the business of running an iron and steel rolling mill which manufactures flats of different sizes and sections. The assessee furnished return of income declaring a loss of Rs. 2,65,10,301/- on 28/09/2012 later on the case was selected for scrutiny. The A.O. made the addition of Rs. 16,00,510/- on the basis of unaccounted profit out of unaccounted production.

4.

Being aggrieved the assessee carried the matter to the Ld. CIT(A) who sustained the addition made by the A.O.

5.

Now the assessee is in appeal.

6.

Ld. Counsel for the Assessee at the very outset stated that an identical issue having similar fact was a subject matter of the assessee’s appeal for the A.Y. 2011-12 in wherein vide order dt. 14/02/2017 the issue was set aside to the Ld. CIT(A). It was further submitted that the A.O. while framing fresh assessment on the direction of the ITAT did not make any addition in the preceding A.Y. 2011-12. Copy of the aforesaid order dt. 14/02/2017 was furnished which is placed on record.

7.

In her rival submissions the Ld. Sr. DR strongly supported the orders passed by the authorities below and reiterated the observations made in their respective orders.

8.

We have considered the submissions of both the parties and perused the material available on the record. It is noticed that a similar issue having identical facts was a subject matter of the assessee’s appeal in for the A.Y 2011- 12 alongwith other appeals of different assessee’s and the cross appeals by the Department wherein vide order dt. 14/02/2017 the issue was set aside to the file of the A.O., the relevant findings have been given at para 12 of the order dt. 14/02/2017 which read as under:

12.

In the remaining cross appeals, the issues are same as have been considered in the cross appeals of M/s Modi Oil & General Mills (supra). In some of the appeals of the assessee, some other small grounds have also been raised which have not been pressed by ld. counsels for the assessees. Therefore, following the reasons for decision in the case of M/s Modi Oil &General Mills (supra), we set aside the orders of authorities below and restore the entire issue to the file of Assessing Officer i.e. rejection of the books of account under section 145(3)/144, unaccounted production of finished goods, unaccounted profit and unaccounted investment out of unaccounted production with reference to consumption of electricity units per metric ton production of finished goods with direction to re-decide the entire issue in accordance with law in the light of the internal guidelines issued by the ld. Pr. Commissioner of Income Tax, Patiala. The Assessing Officer shall give reasonable sufficient opportunity of being heard to the assessees and assessees shall be at liberty to raise any contention before Assessing Officer for completion of the assessment in accordance with law. So respectfully following the aforesaid referred to order dt. 14/02/2017 this issue is setaside to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

9.

In the result, appeal of the Assessee is allowed for statistical purposes.

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