2015 (11) TMI 125 - HC - Income Tax

Addition made in respect of undisclosed stock - ITAT deleted the addition - Held that - Tribunal has recorded concurrent findings of fact to the effect that the revenue had failed to establish that there was in fact any difference in the quantity of stock and has thereafter merely applied the decision of the jurisdictional High Court in the case of CIT v. Veerdip Rollers (P.) Ltd. 2007 (10) TMI 376 - GUJARAT HIGH COURT wherein in a similar set of facts it had been held that there was no justification for making any addition on the allegation of inflated stock shown to the bank, to the facts of the present case. Under the circumstances, the conclusion of the Tribunal being based upon concurrent findings of fact recorded by it after appreciation of the evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by it, it cannot be said that the impugned order gives rise to any question of law, much less, a substantial question of law, so as to warrant interference. - Decided against revenue.

Summary

Issues:
Challenge to order deleting undisclosed stock addition

Analysis:
The appellant revenue challenged an order passed by the Income Tax Appellate Tribunal regarding the addition made in respect of undisclosed stock. The assessment year was 2005-06, and the appellant contested the deletion of an addition of Rs. 32,42,815 made by the Assessing Officer. The Commissioner (Appeals) deleted the addition based on the lack of quantity details in the stock statement submitted to the bank. The appellant argued that the stock value submitted to the bank was higher than what was shown in the books of accounts. However, the Commissioner (Appeals) found no quantity difference in the stock details and deleted the addition. The Tribunal upheld the Commissioner's decision, noting that there was no discrepancy in the quantitative details of the stock items. The Tribunal relied on a decision of the jurisdictional High Court and concluded that there was no reason to interfere with the deletion of the addition.

The appellant contended that the Assessing Officer had specifically mentioned that the assessee understated the stock value to defraud the revenue. The appellant argued that the stock statement submitted to the bank was without verification and that there was a significant difference in the stock value reported to the bank compared to the books of accounts. However, the Commissioner (Appeals) found that the stock statement lacked quantity details and was based on estimates. The Commissioner considered various submissions by the assessee, including the creation of a new entity and the estimation of stock value without reference to quantitative records. The Commissioner concluded that there was no discrepancy in quantity and relied on previous decisions to delete the addition.

The Tribunal concurred with the Commissioner's findings and noted that there was no discrepancy in the quantitative details of the stock items. The Tribunal referenced a decision of the jurisdictional High Court and found no reason to interfere with the deletion of the addition. The Tribunal emphasized that the revenue failed to establish any difference in the quantity of stock and applied the decision of the High Court to the present case. The Tribunal dismissed the appeal, stating that there was no question of law arising from the concurrent findings of fact and no justification for interference with the order deleting the addition.