2011 (4) TMI 859 - HC - Income Tax

Unaccounted Cash credit - additions confirmed - Held that - The amount of Rs.30,000/- had been received through encashment of FDRs in the name of Shri Harbans Lal and Rs.15,000/- has been separately received by draft - Calcutta High Court in the case of Shankar Industries v. CIT 1978 (3) TMI 91 - CALCUTTA High Court , mere identity of the creditor is not enough, capacity of the creditor and genuineness of the transaction have also to be proved - Accordingly decided against the assessee Disallowance of bardana loss at Rs.1,15,490/- Held that - As this bardana was not used in closing stock of rice superfine because the stock was damaged and remained in stock out of old husking and it was packed in used bags - As regards collusive transaction with M/s Prahlad Bhagat & Co. for purchase of rice @ Rs.900/- and sale @ Rs.750/-, the reasons for such transactions, the assessee explained the reasons for the same that good quality rice had been purchased from them and poor quality supplied - The only addition that can be sustained in this regard was with regard to supply made by M/s Prahlad Bhagat & Co. at Rs.771/- for which bags had been charged at Rs.2/- which is to be taken as loss of M/s Prahlad Bhagat & Co. and not that of the assessee - Decided against the assessee

Issues Involved:
- Valuation of closing stock of rice superfine
- Diversion from own views without basis
- Addition on account of cash credit
- Addition of excess loss claimed in Bardana account
- Validity of orders based on presumption

Valuation of Closing Stock of Rice Superfine:
The appeal was filed against the order passed by the Income Tax Appellate Tribunal regarding the valuation of closing stock of rice superfine. The appellant questioned the addition made by the authorities on the valuation of the closing stock, arguing that the authorities ignored the evidence provided by the appellant. The Tribunal examined the facts and circumstances and concluded that the action of the authorities in making the addition was legally sustainable as the necessary evidence to prove the valuation was not provided by the appellant. The Tribunal upheld the decision of the lower authorities regarding the valuation of the closing stock.

Diversion from Own Views Without Basis:
The appellant raised an issue regarding the authorities diverting from their own views without any basis or appropriate reasons. However, the Tribunal found that the actions taken by the authorities were legally sustainable based on the evidence and facts presented. The Tribunal did not find any merit in the appellant's argument of diversion from own views without a valid basis.

Addition on Account of Cash Credit:
The Tribunal examined the issue of a cash credit of Rs.45,000 in the name of a creditor and found that the capacity and genuineness of the creditor were not proven by the appellant. Despite the appellant's submission that the loan was received through a bank draft, the Tribunal held that the necessary elements of identity, capacity, and genuineness were not established by the appellant. Therefore, the Tribunal upheld the addition made on account of the cash credit.

Addition of Excess Loss Claimed in Bardana Account:
The Tribunal also considered the addition of excess loss claimed in the Bardana account. The appellant had claimed a loss on transactions with a specific entity, which the Tribunal found to be collusive. The Tribunal analyzed the details of the transactions and concluded that the addition made on account of excess loss was legally sustainable. However, the Tribunal provided partial relief to the appellant by deleting a portion of the addition, resulting in a reduced amount of the excess loss claimed in the Bardana account.

Validity of Orders Based on Presumption:
The Tribunal addressed the validity of orders based on presumption in the context of the appellant's case. The Tribunal reviewed the evidence and facts related to the orders and found that the decisions made by the authorities were legally sustainable. The Tribunal dismissed the appellant's appeal, stating that there was no merit in challenging the orders based on presumption. The Tribunal emphasized that the findings were based on a thorough evaluation of the evidence on record, and no interference was warranted by the Court.

In conclusion, the High Court dismissed the appeals filed by the appellant, upholding the decisions made by the lower authorities and the Tribunal regarding the issues of valuation of closing stock, cash credit, excess loss claimed in the Bardana account, and the validity of orders based on presumption. The Court found no grounds to interfere with the Tribunal's findings, emphasizing the importance of providing adequate evidence to support claims in tax matters.

← Previous Next →