2017 (7) TMI 1200 - HC - Income Tax

Unexplained investment in stock found during search - tribunal deleted addition said valuation of stock was made on the basis of rates provided by the assessee himself and the valuation was even accepted by the assessee in his deposition u/s.132(4) - Held that - Taking into account the concurrent finding of both the Courts below the appeal deserves to be dismissed. Apart from that the judgments cited by the counsel for the appellant will not apply in the facts of the present case. Tribunal was justified in deleting the addition of 1, 72, 77, 262/- made by the Assessing Officer on account of unexplained investment in stock found during search - Decided in favour of assessee

Summary

Issues:
1. Addition of unexplained investment in stock during search
2. Deletion of addition based on assessee's averments without supporting documents

Analysis:
1. The High Court was presented with the issue of whether the Tribunal was justified in deleting the addition of ?1,72,77,262/- made by the Assessing Officer on account of unexplained investment in stock found during search. The appellant argued that the stock valuation was based on rates provided by the assessee and accepted by the assessee during deposition under section 132(4) of the Act. The appellant referred to statements confirming surrenders made for investment in stock, property, jewellery, and cash, emphasizing the binding nature of these statements on the assessee. The CIT (Appeal) considered the submissions and material on record, concluding that the explanation of ?7.50 lacs in addition to ?3.75 lacs made by the A.O. as unaccounted cash was not satisfactorily explained. The Tribunal accepted the stock register produced by the assessee, leading to the deletion of the addition. The High Court upheld the decision in favor of the assessee, dismissing the appeal based on the concurrent findings of both lower courts.

2. The second issue revolved around whether the Tribunal could have deleted the addition solely based on the assessee's averments without supporting documents. The appellant cited legal precedents to argue against the Tribunal's decision. However, the High Court noted that the second question was not a question of law requiring a decision. Ultimately, the first question was answered in favor of the assessee and against the department, leading to the dismissal of the appeal. The High Court emphasized that the judgments cited by the appellant's counsel were not applicable to the facts of the present case.