2018 (9) TMI 1562 - HC - Income Tax

Addition 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 decided in PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT 1 VERSUS JUGAL KISHORE MAHENDRA BIYANI 2018 (9) TMI 717 - GUJARAT HIGH COURT 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 - these 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.

Summary

Issues:
- Appeal against the judgment of the Income Tax Appellate Tribunal regarding the addition made on account of bogus opening stock
- Appeal against the deletion of addition made on account of bogus credits of M/s. Khushi
- Appeal against the deletion of addition made on account of bogus credits of M/s. Sanket Export
- Appeal against the deletion made by the Ld. CIT(A) of certain expenses

Analysis:
1. The first issue pertains to the addition made on account of bogus opening stock. The Tribunal, Commissioner of Income Tax (Appeals), and the High Court examined the genuineness of the stock declaration. The Assessing Officer doubted the declaration, but subsequent inquiries and evidence provided by the assessee, including a certificate from the Superintendent of Central Excise, supported the authenticity of the stock. The stock was sold with proper declarations, and monthly returns were filed for claiming CENVAT credit. Both lower authorities and the High Court concluded that the declaration was genuine based on the record. Thus, no question of law arose, and the appeal was dismissed.

2. The second and third issues involve the addition made on account of bogus credits of M/s. Khushi and M/s. Sanket Export. The Assessing Officer believed these creditors were bogus, but the Tribunal, following the Commissioner of Income Tax (Appeals), found sufficient evidence of the creditors' genuineness. The Tribunal noted that adding these purchases as bogus would distort the gross profit rate. Both lower authorities concurred in favor of the assessee based on the record, and the High Court found no question of law, leading to the dismissal of the appeals.

3. The final issue concerns the deletion of certain expenses by the Ld. CIT(A). The total expenses amounted to a nominal sum, and the issue was deemed factual. The High Court did not find any legal question to consider, resulting in the dismissal of the appeal.

In conclusion, the High Court dismissed the appeals concerning the addition of bogus opening stock, bogus credits of M/s. Khushi and M/s. Sanket Export, and the deletion of certain expenses, as no legal questions were found based on the concurrent findings of the lower authorities.