2015 (3) TMI 891 - HC - Income Tax

Difference in value of closing stock - difference reckoned on the basis of the value determined by the bank and the value disclosed by the books of account as furnished to the commercial taxes department - Tribunal deleted the addition - Held that - This Court is not inclined to entertain this appeal on the question of law raised at this point of time in view of the subsequent decision of this Court, which is also on the same issue, rendered in the case of Commissioner of Income Tax Vs Smt. Sakuntala Devi Khetan (2013 (3) TMI 270 - MADRAS HIGH COURT), wherein it has been clearly held that the Assessing Officer has to adopt the figures and turnover finally assessed by the sales tax authorities. Similar issue was also considered in the case of CIT Vs - Anandha Metal Corporation (2004 (7) TMI 49 - MADRAS High Court ), and held in favour of the assessee, which decision has been followed by the Tribunal in assessee's own case for the earlier year, wherein the matter was remanded back. - Decided against revenue.

Summary

Issues:
1. Discrepancy in valuation of closing stock between bank and books of account.
2. Allegations of suppression of stock by the assessee.
3. Appeal against the order of the Tribunal based on the valuation of closing stock.

Detailed Analysis:
1. The case involved a dispute regarding the difference in the valuation of closing stock as per the bank's records and the books of accounts submitted to the commercial taxes department. The Assessing Officer found discrepancies and issued notices to the assessee for explanation. The stock valuation discrepancy was significant, leading to allegations of suppression of stock by the assessee.

2. The Assessing Officer concluded that the assessee had suppressed stock worth a substantial amount, adding it back to the income as unaccounted investment. Additionally, an underreported gross profit was also noted and added to the income. The CIT (Appeals) later ruled in favor of the assessee, citing precedents and decisions supporting the assessee's position.

3. The Department, dissatisfied with the CIT (Appeals) order, appealed to the Tribunal. The Tribunal, considering previous decisions and the lack of concrete evidence of erroneous stock submission, ruled in favor of the assessee. The Tribunal highlighted the burden of proof on the Revenue to show inaccuracies in the stock declaration. The Tribunal's decision was based on the lack of substantial evidence to support the Department's claims of stock suppression.

4. The Department further appealed to the High Court, questioning the relevance of sales figures assessed by the sales tax authority in determining the turnover of the assessee. The High Court, after considering previous judgments and maintaining consistency in decisions, ruled in favor of the assessee. The High Court emphasized the importance of adopting figures assessed by sales tax authorities and dismissed the Department's appeal.

In conclusion, the High Court upheld the Tribunal's decision in favor of the assessee, emphasizing the importance of following sales tax authorities' assessed figures and maintaining consistency in legal interpretations. The appeal by the Department was dismissed, and no costs were awarded in the case.