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2011 (1) TMI 941 - ITAT COCHINEstimating the suppressed trading profit - Stock transfer - CIT(A) has, with reference to the assessee's accounts, found the same to be duly accounted for in its books - Held that:- Non-reflection of the same in the P&L account would not imply it being unaccounted, as the said account is essentially to be debited only for the cost of the goods sold, so that the stock not forming part of the said cost could be directly taken to the Balance-Sheet, as has been the case. In fact, had it been not so, and the stock actually unaccounted, the transfer at a higher value would lead to a surplus (credit) of Rs. 21.48 lakhs in the assessee's accounts, which is not the case - The charge of tax can only be on the real, and not notional, income, i.e., what it might or ought to have been. The law in the matter, i.e., of only the real income/actual income being liable to tax, is well settled. The actual accruing/earning of income being a matter of fact, which would include inferential findings based on the surrounding facts and circumstances as well, it is the genuineness of the stock transfer which is being essentially questioned by the Revenue. However, it disputes the business decision of re-organization of the operations within the group companies, of which the stock transfer is an integral part, on the basis of peculiar, undisputed circumstances, without any valid/cogent basis - The finding of suppression of income can only be validated on the basis of strong circumstantial evidence/s. There is no case of any tax avoidance, as (say) on account of differential rate of tax or there being losses in one firm which could be adjusted through the transfer of profits, or the transferee concern being exigible to a lower rate of tax, etc. In fact, there is no charge of tax avoidance in any manner. There is no basis to support a finding of accrual/earning of profit and, consequently, no case for suppression of income obtains so that we have no hesitation in reversing the findings of the ld. CIT(A) in the matter. In favour of assessee.
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