2017 (11) TMI 396 - HC - Income Tax

Stock valuation - ITAT remitted the matter on the question of stock verification for the previous years 1996-1997, 1997-1998 and 1998- 1999, having regard to the stock statements of the hypothecated finished goods - Held that - This Court is of the opinion that the exercise undertaken by the CIT(A) is based upon sound principles he did not base himself merely upon Bank stock statement furnished to the Bank but rather went into detail and examined the excise returns and the other audited documents. The appreciation of this evidence is in no way unreasonable and the findings are in accordance with law. The ITAT did not fall into any error in affirming the CIT s order.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal confirming Appellate Commissioner's orders regarding assessment of taxable income for AY 1999-2000 based on stock statements.

Analysis:
The appeal under Section 260A of the Income Tax Act challenged the order of the Income Tax Appellate Tribunal, which upheld the Appellate Commissioner's decision regarding the assessment of taxable income for the assessment year 1999-2000 based on stock statements. The Assessing Officer initially determined a higher taxable income compared to the declared amount by the assessee, amounting to ?13,54,38,651. The CIT (A) affirmed this order. Upon further appeal, the Income Tax Appellate Tribunal remitted the matter for stock verification for previous years 1996-1997, 1997-1998, and 1998-1999, based on stock statements and relevant records. The CIT (A), after verification, accepted the assessee's contentions regarding stock availability, leading to the appeal being allowed and confirmed by the ITAT.

The crux of the matter revolved around the stock verification process and the credibility of the stock statements. The appellant contended that the CIT (A) misinterpreted the circumstances, leading to a flawed decision. However, the Court observed that the CIT's findings were based on a comprehensive review of various records, including bank stock statements, RG-I Registers, and audited documents accepted by the Excise Department. The Court emphasized that the CIT did not solely rely on bank statements but thoroughly examined all relevant evidence to determine the true state of affairs regarding stock details. The Court found the CIT's approach reasonable and in accordance with the law, concluding that the ITAT did not err in affirming the CIT's order.

In the final analysis, the Court determined that no question of law arose in the case, leading to the dismissal of the appeal. The judgment highlighted the importance of a meticulous examination of all relevant documents and records in assessing taxable income, emphasizing the need for consistency and thorough verification processes to ensure accuracy in financial assessments.