2010 (10) TMI 812 - HC - Income Tax

Addition made on account of excess consumption of furnace oil - attempt was made by assessee for reappreciation of evidence which is not permissible. As noticed earlier all the three authorities have concurrently come to the conclusion that in the stock of consumption of furnace oil in the pre-survey period as compared to post-survey period there was substantial difference and the assessee could not offer any satisfactory explanation for the said difference. Once that was so the addition made by the Assessing Officer and sustained by the appellate authorities cannot be faulted substantial question of law is answered against the assessee appeal is dismissed.

Summary

Issues:
Determining whether the authorities rightly added Rs.2,73,000 to the income of the assessee on account of excess consumption of furnace oil.

Analysis:
The case involved an appeal regarding the addition of Rs.2,73,000 in the income of the assessee due to excess consumption of furnace oil. The assessee, engaged in manufacturing and selling malleable iron pipe fittings, underwent a survey dividing the financial year into pre and post-survey periods. The Assessing Officer made additions for excess stock, bogus purchases, and excess consumption of furnace oil. The CIT(A) and the Tribunal upheld these additions, leading to the present appeal.

The main issue for determination was whether the addition of Rs.2,73,000 on account of excess consumption of furnace oil was justified. The Tribunal, aligning with the Assessing Officer and the CIT(A), upheld the addition based on the significant increase in furnace oil purchases post-survey compared to the pre-survey period. The assessee failed to provide a satisfactory explanation for this substantial difference, leading to the addition being deemed appropriate.

The authorities' concurrent finding of a notable difference in furnace oil consumption pre and post-survey, without a satisfactory explanation from the assessee, was considered valid. The learned counsel for the assessee attempted to challenge this finding but failed to demonstrate any perversity or error in the authorities' conclusion. Since all three authorities agreed on the substantial difference in consumption and the lack of a reasonable explanation, the addition made by the Assessing Officer was deemed correct and upheld.

Ultimately, the substantial question of law was answered against the assessee, resulting in the dismissal of the appeal. The judgment highlighted the importance of providing adequate explanations for significant discrepancies in financial records to avoid adverse additions to income during tax assessments.