2003 (4) TMI 86 - HC - Income Tax

The Revenue has filed this appeal under section 260A of the Income-tax Act, 1961 (for short, the Act ), for determination of what it has described as substantial questions of law. - 1. Whether the learned Income-tax Appellate Tribunal has erred in law and on the facts in deleting the addition made at Rs. 1,88,480 being un explained investment in the manufacturing process of the bricks and profits earned on the unrecorded sales thereof? - 2. Whether the learned Income-tax Appellate Tribunal was justified in law in holding that the assessee maintained complete record of manufacturing process especially when admitted by the assessee that no books of account and other record whatsoever was maintained in respect of kiln owned under the name and style of Shiv Shakti Gram Udyog Larth? - we hold that the questions framed by the Revenue cannot be treated as substantial questions of law within the meaning of section 260A

Summary

Issues:
1. Whether the deletion of the addition made for unexplained investment in the manufacturing process of bricks and profits earned on unrecorded sales was justified?
2. Whether the assessee maintained complete records of the manufacturing process?
3. Whether the material evidence regarding the purchase of coal was sufficient?
4. Whether the legal heir's contention regarding the fabricated bills was admissible?

Analysis:

Issue 1: The Revenue appealed under section 260A of the Income-tax Act, challenging the deletion of an addition made for unexplained investment in brick manufacturing and unrecorded sales profits. The Tribunal overturned the addition of Rs. 1,88,480, emphasizing discrepancies in the evidence provided by the Assessing Officer. The High Court found that the Tribunal's decision was legally sound, as the assessee disputed the bills' genuineness, and no concrete evidence supported the Assessing Officer's stance. The Court upheld the Tribunal's ruling, stating that a different view alone was insufficient for restoration of the additions.

Issue 2: The question of whether the assessee maintained complete records of the manufacturing process was raised. The Tribunal noted that the details of bricks manufactured and sold were furnished to the sales tax authorities, which were accepted as accurate. The High Court concurred with the Tribunal's findings, emphasizing that the Tribunal's assessment of the facts did not exhibit any legal flaws. The Court upheld the Tribunal's decision, highlighting the lack of evidence supporting the Assessing Officer's claims regarding the manufacturing process.

Issue 3: The adequacy of material evidence concerning the purchase of coal was disputed. The Assessing Officer made additions based on the statement of Jeet Singh and bills produced, indicating unaccounted coal purchases. However, the Tribunal rejected the presumed manufacture of bricks from the alleged coal, citing discrepancies in consumption and production figures. The High Court agreed with the Tribunal's reasoning, emphasizing the lack of legal infirmity in the Tribunal's assessment of the evidence. The Court upheld the Tribunal's decision, noting the insufficiency of evidence supporting the Assessing Officer's assertions.

Issue 4: The contention regarding the fabricated bills and absence of the assessee's signatures was raised by the legal heir. The Tribunal rejected the Assessing Officer's estimation of investments and profits, highlighting inconsistencies in the evidence. The High Court supported the Tribunal's decision, stating that the mere possibility of an alternative view was not grounds for overturning the Tribunal's ruling. The Court dismissed the appeal, affirming the Tribunal's judgment on the fabricated bills issue.