2013 (3) TMI 460 - HC - Income Tax

Unexplained share capital - burning loss - Provisions of law u/s. 145 of the Act - Held that - Although, the Tribunal has not, in so many words, doubted the book results, nor it had rejected the book results, but at the same time, it has taken into consideration overall picture of burning loss of subsequent years and computation of deduction by the audit of percentage of Hard Coke so as to conclude the estimated figure of 30% of burning loss instead of 38.39%. It would not be necessary for the Tribunal to hold in so many terms that it does not accept the book results nor is it required of this Court in the Appeal u/s 260-A of the Income Tax Act, 1961 to scrutinize the facts when there is no question of law at all arising, much less a substantial question of law. Estimated figure work out by the Tribunal is broadly based on factual matrix which was presented before it and there is no infirmity that could be pointed out not to sustain the impugned order of the Tribunal. - Therefore, this Tax Appeal fails and is dismissed.

Summary

Issues involved:
1. Disregard of book results and Section 145 provisions by Income Tax Appellate Tribunal
2. Disregard of previous and subsequent Assessment Years' orders regarding burning loss

Analysis:

Issue 1: Disregard of book results and Section 145 provisions
The appellant-Revenue challenged the Income Tax Appellate Tribunal's order, questioning the rejection of book results and non-compliance with Section 145 of the Income Tax Act. The Tribunal had partly allowed the revenue's claim regarding burning loss, reducing it from 38.39% claimed by the assessee to an estimated figure of 30%. The appellant argued that the Tribunal did not follow Section 145 provisions as there was no doubt on the correctness or completion of accounts. However, the Tribunal considered various factors, including the nature of raw materials used in manufacturing, consistency in book results, and the exclusion of Hard Coke from the calculation of burning loss. The Tribunal's decision was based on a detailed analysis of the facts and explanations provided, leading to the conclusion that the estimated figure of 30% for burning loss was appropriate for the year under consideration.

Issue 2: Disregard of previous and subsequent Assessment Years' orders regarding burning loss
The CIT(Appeals) had allowed the appeal of the assessee with regard to burning loss claimed, emphasizing the lack of evidence for unaccounted sales or production and the company's first-year operational challenges. The Tribunal, however, partly allowed the revenue's claim on burning loss, considering the burning loss figures of subsequent years and the exclusion of Hard Coke from the calculation. The Tribunal's decision to disallow 8.39% of the burning loss claimed by the appellant was based on a comparative analysis of the burning loss percentages and the nature of raw materials used in manufacturing. The Tribunal's reasoning was supported by the fact that the burning loss figures varied in subsequent years, indicating a need for a more accurate estimation. The Tribunal's decision was deemed fair and justifiable to meet the ends of justice, considering the overall factual matrix presented before it.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the estimated figure of 30% for burning loss was based on a thorough analysis of facts and did not require further scrutiny in the absence of a substantial question of law. The Tax Appeal was dismissed, affirming the Tribunal's order regarding the burning loss claim.