2009 (12) TMI 22 - HC - Income Tax

Deletion of addition made u/s 40A(3) deletion of addition of Rs. 3,71,530/- which include Rs. 82,500/- on account of Sales Tax and Royalty held that - , it has been found by the two authorities concurrently that no purchases of Rs. 6,23,625/- were made by the assessee during the year. The assessee made the purchases to the tune of Rs.2,86,197/- and the payment was made through cross demand draft, even not by order drafts. The Tribunal has rightly noticed that this aspect of the case was considered by the CIT(Appeal) who found that amount of Rs. 5,34,000/- was withdrawn from the bank through 12 bearer cheques, were utilised by the assessee for purchasing demand draft for coal and for other expenses. The authorities below have accepted the explanation furnished by the assessee and the learned Standing Counsel could not point out any error legal or factual therein. Deletion of additions upheld

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act, 1961 against the ITAT order for the Assessment Year 1991-92.
2. Deletion of additions made by the Assessing Officer under Section 40-A(3) and Sales Tax and Royalty for the same assessment year.

Analysis:
1. The appeal was filed against the ITAT order dated 31st January, 2000 for the Assessment Year 1991-92. The respondent, a brick kiln owner engaged in manufacturing and selling bricks, had additions made by the Assessing Officer based on Sales Tax matter orders. However, the CIT (A) allowed the appeal and deleted the additions, a decision upheld by the Tribunal. The questions raised in the appeal were whether the Tribunal was justified in deleting the additions made by the Assessing Officer under Section 40-A(3) and Sales Tax and Royalty for the said assessment year.

2. The High Court found that the questions raised did not arise from the Tribunal's order. Regarding the first question, it was established that the purchases made by the assessee were lower than initially claimed, and the payments were made through cross-demand drafts, not order drafts. The CIT (Appeal) had accepted the explanation provided by the assessee, which was further supported by the Tribunal's findings. The Court noted that no error, legal or factual, was pointed out by the Revenue's counsel. As for the second question, the Tribunal observed that the net profit rates disclosed for previous assessment years were consistent at 15%, and no addition was warranted for the relevant assessment year based on this history.

3. The Court concluded that the findings were based on facts and dismissed the appeal accordingly. The order was dated 7th December 2009.