2003 (4) TMI 7 - HC - Income Tax

Additions - True nature of profits - Tribunal deleting the trading addition made on account of sale of spices excessively claimed by the assessee as grinding loss - impugned order of the Tribunal does not involve any substantial question of law requiring our consideration. We find that while deleting the trading addition in toto the Tribunal has noted that in the immediately preceding two assessment years namely the assessment years 1991-92 and 1992-93 the first appellate authority had deleted the trading additions made on account of rate difference and further in respect of the assessment year 1994-95 the assessee had declared grinding loss at 14.30 per cent. which was accepted by the Department as such under section 143(1) Revenue s appeal dismissed

Summary

Issues involved:
- Appeal by Revenue under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal pertaining to the assessment year 1993-94.
- Deletion of trading addition by the Income-tax Appellate Tribunal.
- Consideration of the true and correct profits in the accounts maintained by the assessee.
- Deletion of trading addition made by the Assessing Officer based on independent enquiry.
- Allegation of perversity in the order of the Income-tax Appellate Tribunal for not considering facts found by the Assessing Officer.

Analysis:
The case involved an appeal by the Revenue under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal concerning the assessment year 1993-94. The primary issues revolved around the deletion of a trading addition by the Tribunal, which was challenged by the Revenue. The Revenue contended that the Tribunal's findings were perverse as it allegedly failed to consider the material presented by the Assessing Officer while making the addition. On the other hand, the respondent-assessee argued that the Assessing Officer was unjustified in considering the grinding loss, as the assessee was only accounting for grinding charges received from a related entity.

The Tribunal had deleted the entire addition made by the Assessing Officer, prompting the Revenue to file the present appeal. During the proceedings, the Revenue asserted that the Tribunal's order involved a substantial question of law due to its alleged perversity. However, the Tribunal justified its decision by referencing past assessment years where similar grinding losses were accepted by the Revenue without challenge. The Tribunal highlighted that consistency in treatment across assessment years was crucial, citing the principle that changing positions in subsequent years without challenging previous orders would be inappropriate.

Ultimately, the High Court found no perversity in the Tribunal's order and declined to entertain the appeal, stating that no question of law, especially a substantial one, arose from the impugned order. The appeal was dismissed based on the Tribunal's consistent treatment of grinding losses in previous assessment years and the lack of justification for changing positions for the present assessment year.