2003 (7) TMI 27 - HC - Income Tax

Tribunal has noted that the assessee had furnished detailed reconciliation before the Assessing Officer during the course of assessment proceedings in which no specific discrepancy was pointed out by the Assessing Officer. Thus while affirming the view taken by the Commissioner the Tribunal has held that both the additions were made on estimate and hypothetical grounds without any concrete material or evidence and the assessee has specifically and convincingly explained and reconciled the stock. No material has been brought on record by the Revenue to controvert the said findings of the Tribunal. Having regard to these concurrent findings of fact recorded by both the appellate authorities below the decision of the Tribunal cannot be said to be giving rise to a question of law.

Summary

Issues:
1. Addition of unexplained investment in stocks and packing material.
2. Reconciliation of discrepancies in valuation of stocks.
3. Double addition on account of unrecorded sales.

Analysis:

Issue 1: Addition of unexplained investment in stocks and packing material
The case involved a dispute regarding the addition of Rs. 6,64,527 as unexplained investment in stocks and Rs. 1,78,314 as unexplained investment in packing material by the Assessing Officer. The Commissioner initially set aside the assessment, but the additions were repeated by the Assessing Officer. The Commissioner later deleted the additions after finding discrepancies in the method of valuation of stocks. The Tribunal upheld the Commissioner's decision, leading to the appeal by the Revenue. The appellant argued that the Tribunal's order was perverse as it ignored the material provided by the Assessing Officer. However, the court held that no substantial question of law was involved, as the additions were made on estimate and hypothetical grounds without concrete evidence. The Tribunal's decision was based on detailed reconciliation provided by the assessee and no contradictory material was presented by the Revenue.

Issue 2: Reconciliation of discrepancies in valuation of stocks
The Commissioner observed discrepancies in the method of valuation of stocks, particularly regarding the gross profit rate applied and the calculation of the value of finished products. The Commissioner found that the additions were made without sufficient evidence and deleted the addition of Rs. 6,64,527. As for the packing material, the Commissioner accepted the assessee's explanation that the material was received before the search date, and all relevant transactions were duly recorded. The Tribunal concurred with the Commissioner's findings, emphasizing that the additions were made on estimate and hypothetical grounds without concrete material or evidence. The Tribunal highlighted that the assessee had provided detailed reconciliation, which was not refuted by the Revenue.

Issue 3: Double addition on account of unrecorded sales
The appellant contended that the additions on account of discrepancies in stocks amounted to double addition due to unrecorded sales. However, the court did not find any substantial question of law in this regard. The Tribunal's decision was based on the lack of concrete evidence supporting the additions and the detailed reconciliation provided by the assessee. The court emphasized that the mere appreciation of facts or documents does not give rise to a substantial question of law. Consequently, the court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's order.