2017 (11) TMI 390 - HC - Income Tax

Trading addition - defect pointed out by the Assessing Officer that the assessee had failed to produce details of stock despite have been provided repeated opportunities - assessee had changed its stand before the appellate authorities to explain the decline of GP & NP - rejection of books of accounts - Held that - ITAT was justified in deleting the trading addition and in accepting the books of accounts of the assessee - Decided against revenue Disallowance in view of Section 36(1)(va) r.w.s. 2(24)(x) - Held that - With regard to this question the same is now covered by the decision of this Court in Tax Appeal 2014 (5) TMI 222 - RAJASTHAN HIGH COURT and the same will be subject to SLP pending before the Supreme Court, therefore, this issue is also not entertained subject to SLP.

Summary

Issues:
- Discrepancies in books of accounts observed during assessment proceedings
- Substantial questions of law framed by the counsel for the appellant
- Contention of the appellant-department regarding the issue of GP
- Tribunal's view and decision on the issues raised

Discrepancies in Books of Accounts:
During the assessment proceedings, the Assessing Officer noted several discrepancies in the books of accounts of the assessee. These included the failure of the assessee to provide a satisfactory explanation for the decline in trading results, the absence of journal books, store ledgers, and stock registers, as well as the inability to reconcile accounts of certain creditors. The genuineness of transactions with specific suppliers could not be verified due to incomplete information provided by the assessee.

Substantial Questions of Law:
The counsel for the appellant framed substantial questions of law related to the Tribunal's decision. These questions primarily focused on whether the Tribunal was justified in deleting trading additions despite the assessee's failure to produce stock details, changing its stand on GP & NP decline, and discrepancies pointed out by the Assessing Officer. Additionally, the issue of disallowance under Section 36(1)(va) r.w.s. 2(24)(x) of the IT Act, 1961 was raised.

Contention of the Appellant-Department:
The appellant-department contended that the issue of GP should be decided in their favor based on the concurrent findings and reasoning adopted by the judicial member and accepted by the third member. However, the High Court opined that the Tribunal's view was just and proper, indicating agreement with the Tribunal's decision on the matter.

Tribunal's View and Decision:
The High Court upheld the Tribunal's decision, stating that the view taken by the Tribunal was appropriate. Regarding one of the substantial questions of law, the Court mentioned that the issue was already covered by a previous decision and subject to a Special Leave Petition (SLP) pending before the Supreme Court, hence not entertained. Consequently, the Court concluded that no substantial question of law arose in the appeal, leading to the dismissal of the appellant's appeal.