2008 (11) TMI 218 - HC - Income Tax

Disallowance of depreciation Rs. 22,67,980 expenditure on purchase of plant and machinery Rs. 39,46,250 unexplained expenditure - Commissioner of Income-tax (Appeals) came to the conclusion that the Assessing Officer had erred in treating the value of the said purchases as unexplained expenditure by the assessee - The Commissioner of Income-tax (Appeals) concluded the evidence produced by the assessee in the form of relevant invoices, correspondence with the supplier as well as sales tax declaration form given by the said supplier, and also, the fact that transactions were duly reflected in the books of account of the assessee lent credence to the stand taken by the assessee C(A) deleted both the additions ITAT upheld the order of C(A) held that - There is no question of any perversity in the findings of fact. There is, in our opinion, no question of law, much less a substantial question of law, which has arisen for our consideration revenue appeal dismissed.

Summary

Issues:
1. Deletion of addition made by Assessing Officer for depreciation claim on machinery items.
2. Deletion of addition made by Assessing Officer for unexplained expenditure on machinery purchase.

Analysis:
1. The appeal under section 260A of the Income-tax Act, 1961 was filed by the Revenue against the Tribunal's judgment regarding the assessment year 1997-98. The first issue raised was the deletion of the addition of Rs. 22,67,980 for the depreciation claim on machinery items supplied by a specific company. The Assessing Officer relied on a statement denying the supply of machinery, leading to the addition. The Commissioner of Income-tax (Appeals) disagreed, noting credible evidence of payments made to the supplier, which the Assessing Officer failed to consider. The Tribunal dismissed the Revenue's appeal, highlighting contradictions in the supplier's statements and lack of opportunity for cross-examination.

2. The second issue involved the deletion of an addition of Rs. 39,46,250 for unexplained expenditure on machinery purchase. The Assessing Officer rejected evidence provided by the assessee, leading to the addition. However, the Commissioner of Income-tax (Appeals) found the supplier's statements unreliable and accepted the evidence provided by the assessee, including bills, invoices, and bank details. The Tribunal upheld the deletion of this addition, emphasizing discrepancies in the bills and the lack of proper verification by the Assessing Officer.

3. The High Court, after reviewing the orders and evidence, supported the Tribunal's decision. It found the Tribunal's conclusions reasonable, highlighting the contradictory nature of the supplier's statements, lack of opportunity for cross-examination, and failure to consider crucial evidence by the Assessing Officer. The Court concluded that there was no legal issue or substantial question of law warranting further consideration, ultimately dismissing the Revenue's appeal.