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2009 (7) TMI 64 - HC - Income TaxRejection of books of accounts - AO on the basis of photocopy of the stock statement, came to the conclusion that the assessee was having 732.21 qtls stock of paddy basmati as on 31st March, 1997 while the stock was shown nil in the books of account - AO did not point out any mistake in the books of account maintained by the assessee - The method of accounting was followed consistently by the assessee and there was no change in the method of accounting, no instance of suppressed sale was pointed out by the Assessing Officer - In such type of cases, the stock register is the subject matter of verification by the Excise authorities, in the present case, the said authorities had also not pointed out any mistake in the stock register maintained by the assessee order of ITAT deleting the addition maintained.
Issues:
1. Addition of Rs.1,21,943 on account of suppression of yield of various products and by-products of paddy milled. 2. Addition of Rs.3,94,075 on account of low yield of rice and other by-products from paddy milled. 3. Addition of Rs.9,73,620 on account of difference in the value of stock of Basmati hypothecated with the bank. 4. Whether the decision of the Tribunal deleting the additions made by the AO is perverse and bad in law. Analysis: Issue 1 - Suppression of Yield: The Assessing Officer made additions to the income by rejecting the books of accounts due to the lack of separate details of yield of rice and other products from paddy milled. The AO compared the results of the assessee with other rice shellers and made additions for suppression of yield of various products. The CIT(A) upheld the additions, but the Tribunal reversed the decision. The Tribunal found no evidence of suppressed sales or inflated purchases and criticized the AO for making assumptions without justification. The Tribunal's decision was based on the lack of material to support the additions, leading to the conclusion that the AO's actions were unjustified. Issue 2 - Low Yield of Rice: Similar to the first issue, the AO made additions for low yield of rice and other products from paddy milled, belonging to Government agencies, due to lack of proper records. The Tribunal, however, found no mistakes in the assessee's books of accounts and criticized the AO for not providing valid reasons for the additions. The Tribunal emphasized the consistent accounting method followed by the assessee and the lack of evidence supporting the AO's claims of suppressed sales or inflated purchases. Issue 3 - Discrepancy in Stock Value: Regarding the discrepancy in the value of Basmati stock hypothecated with the bank, the AO relied on a photocopy of the stock statement to make additions. However, the original stock statement was not presented, and the AO did not allow the assessee to cross-examine bank officials. The Tribunal emphasized the importance of the stock register, which was consistent and verified by Excise authorities. The Tribunal favored the stock register over the photocopy of the stock statement, as the original copy was not provided at any stage. Overall Decision: The High Court dismissed the appeal, stating that no substantial question of law arose. The Court highlighted that the Tribunal's decision was based on the appreciation of evidence and not shown to be perverse. The judgment emphasized that if two views are possible, the Tribunal's decision cannot be deemed as perverse. Therefore, the Tribunal's decision to delete the additions made by the AO was upheld, and the appeal was dismissed.
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