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2018 (9) TMI 717 - HC - Income TaxAddition made on account of bogus opening stock - assessee had manipulated the stock and bogus opening stock was reported in the books of account and in ROI - ITAT deleted the addition - Held that - As noted that the assessee had shown sale of such stock after May 2003, and the sale proceeds were also received during the year under consideration. The Tribunal noted that in the declaration before the Excise Authorities, the assessee had shown the stock of the same value pertaining to different kinds of gray fabric admeasuring 17,57,165 meters. The Tribunal also noted that such stock was cleared in subsequent period, for which, monthly declarations were filed. It can thus be seen that the entire issue is based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held on facts that the assessee s declaration was genuine. No question of law arises. Addition made on account of bogus credit - ITAT deleted the addition - Held that - Tribunal while confirming the view of the Commissioner of Income Tax (Appeals), noted that there was sufficient evidence of the genuineness of the creditors. Further, such addition of the purchases would give distorted gross profit rate as compared to gross profit rate disclosed in similar type of business, interalia, on such grounds, the Tribunal dismissed the Revenue s appeal. Thus the issues are entirely based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held in favour of the assessee. No question of law arises.
Issues Involved:
1. Addition of bogus opening stock 2. Addition of bogus credits from M/s. Khushi 3. Addition of bogus credits from M/s. Sanket Export 4. Deletion of expenses disallowance Issue 1: Addition of Bogus Opening Stock The Revenue appealed against the Income Tax Appellate Tribunal's judgment deleting the addition made on account of bogus opening stock. The Assessing Officer doubted the authenticity of the declared opening stock of fabric worth &8377; 6.51 crores by the assessee. However, the Commissioner of Income Tax (Appeals) and the Tribunal found the declaration to be genuine based on evidence provided by the assessee, including a certificate from the Superintendent of Central Excise. The Tribunal noted that the stock was subsequently sold, and monthly returns for CENVAT credit were filed. The Tribunal concluded that the assessee's declaration was valid, and no question of law arose. Issue 2: Addition of Bogus Credits from M/s. Khushi The Assessing Officer made additions on the belief that the assessee had shown bogus credits from M/s. Khushi. However, the Tribunal, upholding the Commissioner of Income Tax (Appeals) decision, found sufficient evidence of the genuineness of the credits. The Tribunal highlighted that adding such purchases as income would distort the gross profit rate. Consequently, the Tribunal dismissed the Revenue's appeal, as both lower authorities had ruled in favor of the assessee based on the evidence presented. Issue 3: Addition of Bogus Credits from M/s. Sanket Export Similar to the previous issue, the Assessing Officer added amounts from M/s. Sanket Export as bogus credits. However, the Tribunal, in line with the Commissioner of Income Tax (Appeals) decision, found evidence supporting the genuineness of the credits. The Tribunal emphasized that disallowing these purchases would distort the gross profit rate, consistent with the business's norms. Consequently, the Tribunal rejected the Revenue's appeal, as both lower authorities had already ruled in favor of the assessee based on the evidence presented. Issue 4: Deletion of Expenses Disallowance The final issue revolved around the disallowance of various expenses totaling &8377; 1.86 lakhs. The Tribunal found this to be a factual matter, not warranting any legal question. The Tribunal did not find sufficient grounds to challenge the lower authorities' decisions regarding the expenses disallowance. In conclusion, the High Court dismissed the Tax Appeal, upholding the Tribunal's decisions on all the issues raised by the Revenue. The judgment was based on the appreciation of the evidence presented, with the lower authorities consistently ruling in favor of the assessee.
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