Ajay Kumar Mittal, J. - (1.) THIS appeal has been filed by the Revenue under section 260A of the Income -tax Act, 1961 (in short "the Act"), against the order dated August 20, 2013 (annexure A -3), passed by the Income -tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (hereinafter referred to as "the Tribunal"), in I.T.A. No. 707/Chd/2012 for the assessment year 2005 -06, claiming the following substantial questions of law: "(i) Whether, in the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income -tax (Appeals) in not sustaining the addition made by the Assessing Officer on account of suppressed production, without appreciating the fact that consumption of electricity is a good measure of suppressed produced, as held by the Hon'ble Supreme Court in the case of Melton India v. Commissioner of Trade Tax, U.P. (Appeal (Civil) No. 373 of 2007, dated January 31, 2007 : : [2007] 5 VST 613 (SC)? (ii) Whether, in the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income -tax (Appeals) in not sustaining the addition made by the Assessing Officer on account of suppressed production, by accepting unsubstantiated argument regarding consumption of electricity for purposes other than production and without appreciating the fact that the operations to which increased consumption of electricity is attributed would have been existing at the time when meter reading was taken by the Assessing Officer and also without appreciating the fact that the Assessing Officer had allowed deduction of 30 per cent in consumption of electricity while computing the addition on account of unrecorded production of the assessee? (iii) Whether, in the facts and in the circumstances of the case, the order of the Income -tax Appellate Tribunal is not perverse inasmuch as it has applied or approved different rates of gross profit in four different cases of similar nature, vide its orders dated August 20, 2013 (in three cases) and May 24, 2013 (in one case) without pointing out the specific reason for applying these different rates in similar case even though the Assessing Officer has applied a common yardstick in all these four cases for estimating production and income - Put short, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The original assessment was completed by the Assessing Officer under section 143(3) of the Act, vide order dated October 26, 2007, at an income of Rs. 13,46,201 by making an addition of Rs. 12,95,975 on account of suppressed sale of finished goods. Later on, the Commissioner of Income -tax (CIT), vide order dated August 10, 2009, cancelled the assessment under section 263 of the Act and directed the Assessing Officer to pass a fresh assessment order. Against the order of the Commissioner of Income -tax dated August 10, 2009, the assessee filed an appeal before the Tribunal who, vide order dated February 28, 2011, dismissed the appeal. In pursuance of the order dated August 10, 2009, passed by the Commissioner of Income -tax, the Assessing Officer, vide order dated December 28, 2010 (annexure A -1) framed assessment under section 143(3) of the Act at an income of Rs. 68,28,690 by making further addition of Rs. 54,82,489 on account of suppressed production on the basis of consumption of electricity. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income -tax (Appeals) (for brevity "the CIT(A)") who, vide order dated April 27, 2012 (annexure A -2), directed the Assessing Officer to apply the gross profit at 23 per cent on the total turnover of Rs. 93,26,096 for the purpose of determining income from manufacturing against the gross profit shown by the assessee at 8.78 per cent and confirmed the addition of Rs. 13,25,728. Against the order dated April 27, 2012 (annexure A -2), the assessee as well as the Revenue filed appeals before the Tribunal. The Tribunal, vide order dated August 20, 2013 (annexure A -3), upheld the order of the Commissioner of Income -tax (Appeals) and dismissed both the appeals. Hence, the present appeal by the Revenue.
(2.) LEARNED counsel for the Revenue submitted that the Assessing Officer on the basis of consumption of electricity relying upon the decision of the apex court in Melton India v. Commissioner of Trade Tax, U.P. (Appeal (Civil) No. 373 of 2007, decided on January 31, 2007) : [2007] 5 VST 613 (SC), had rightly made the addition. The Commissioner of Income -tax (Appeals) as well as the Tribunal have erred in reversing the order of the Assessing Officer and wrongly applied the gross profit rate of 23 per cent on the total turnover of Rs. 93,26,096. After hearing learned counsel for the appellant, we do not find any merit in the aforesaid contention.
(3.) NO doubt, the power consumption is one of the factors of production where there can be large variance and in the given facts and circumstances, the basis of power consumption can be taken to be a factor for determining the income of the assessee. However, in the absence of any corroborative evidence to support that, it cannot conclusively be taken to form the basis for assessing the income as the consumption of power necessarily may not be in respect of production process only. In the present case, the sample of electricity consumption which was taken was for one hour and was of very small dimension. It was not carried out during the period relating to the assessment year in question whereas it was in respect of subsequent period for assessment year 2007 -08. The Commissioner of Income -tax (Appeals), after considering the facts and circumstances and rejecting the books of account and taking into consideration the production results of comparable business turnover and specific circumstances of the assessee, adopted gross profit rate of 23 per cent and sustained the addition to that extent.;