×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This is an appeal filed by the revenue against the order of the CIT(A),1, Bhubaneswar dated 30.3.2017 for the assessment year 2012- 2013.
2. The sole issue raised by the revenue in this appeal is that the CIT(A) is not justified in law as well as on facts in deleting addition of Rs.1,84,25,409/- on account of suppression of production.
3. The facts in brief are that the assessee is a company engaged in the manufacturing and sale of M.S.Rods, M.S Structural, M.S.Ingots, M.S.Wire and M.S.Scraps. During the course of assessment proceedings, the Assessing Officer noticed that the consumption in respect of raw material, electricity power consumptions units, labour wage sand manufacturing expenses decreased accompanied with decreased in production and the overall ratio with the finished products has been reduced as compared to that of the preceding year. The Assessing Officer found that on electricity consumption charges of Rs.1,00,000/-, the production to the tune of 19.5 MT has been made whereas on the same unit of electricity consumption, the production was to the tune of 24.45 MT in the preceding assessment year 2011-12. The Assessing Officer analysed the over all calculation and observed that production to the extent of 25.38% has been reduced. Further on over all comparison of manufacturing expenses per unit production and consumption of electricity per unit production, the assessee has incurred excess expenses in the two heads at 25.3% and 11.6%, respectively. The Assessing Officer noted that the assessee has not brought any evidence in support of its claim that production has not been suppressed by the assessee. The assessee has debited total expenditure on account of manufacturing at Rs.16,66,66,434/- and total production has been shown at 10520. Thus, the cost of production per MT shown by the assessee at Rs.15,842.82 per MT. Accordingly, the Assessing Officer calculated the suppressed production at 1163 MT and arrived at the value of Rs.1,84,25,409/- (i.e. 1163 MT x Rs.15,843) and added the same to the income of the assessee.
4. Aggrieved by the said assessment order, the assessee preferred appeal before the first appellate authority. The CIT(A) after considering the written submission of the assessee as well as the assessment order deleted the addition made by the Assessing Officer.
5. Hence, the department is in appeal before us.
6. We have heard the rival submissions and perused the relevant material placed on the record of the Tribunal
7. Ld Departmental Representative (DR) supporting the addition made by the Assessing Officer, submitted that in the written submission filed by the assessee during assessment proceedings, no reason explaining the excess of consumption of manufacturing cost and electricity consumption had been furnished. Ld D.R. further contended that the assessee was using power since many years and it was noticed by the Assessing Officer that the trading expenses shows a marked increase by way of increase in consumption oil and fuel and no plausible explanation was filed by the assessee explaining the higher consumption of electricity, manufacturing cost and consumption of oil and fuel, etc. Ld D.R. pointed out that it was noticed from the assessee’s own production unit, the production was compared with the last year wherein, the input and the expenditure used is more or less same and the assessee has not brought any evidence in support of its claim that the production has not been suppressed by the assessee. Therefore, the addition made by the Assessing Officer should have been confirmed. Ld D.R. strenuously contended that the CIT(A) has granted relief to the assessee without any basis merely by following its own order dated 6.1.2017 in first appeal no.266/15-16 for the assessment year2011-12 in assessee’s own case, which cannot be a basis for granting relief to the assessee. Ld D.R. lastly submitted that keeping in view the sustainability and correctness of the assessment order, the order of the CIT(A) may kindly be set aside by restoring the order of the Assessing Officer.
8. Replying to above, ld A.R submitted a copy of the order of the CIT(A) dated 6.1.2017 for assessment year 2011-12 in assessee’s own case and submitted that as per the observation of the Assessing Officer at page 5 of the assessment order for the present assessment year 2012-13, the Assessing Officer wrote that “Thus, it is found that the assessee has not brought any evidence in support of its claim that production has not been suppressed by the assessee”. Ld A.R. vehemently pointed out that the assessee cannot be asked to prove a negative thing and when the totality of the facts and circumstances for the assessment year 2011-12, the CIT(A) after considering the allegation of the AO and submission alongwith explanation of the assessee, has found that the addition is made entirely on the basis of suspicion and surmises and the Assessing Officer has built an entire castle in the air which has no foundation. Ld counsel for the