2019 (1) TMI 1051 - AT - Income Tax

Addition as undisclosed sales - Held that - CIT(A) in his order has given a factual finding that the assessee has an opening stock of ₹ 93,41,400/-, as on 01/04/2007 and this was disclosed under the head owned stock in the balance sheet filed along with the income tax return for the Assessment Year 2007-08. What was sold by the assessee during the year was from this opening stock. D/R could not controvert these factual findings of the CIT(A). CIT(A) held that the Assessing Officer s finding in the remand report as well as in the assessment order were perverse and against the facts of the case. We find no infirmity in such findings. Thus we dismiss all these grounds of the revenue.

Summary

Issues:
1. Appeal against order of Commissioner of Income Tax (Appeals) for Assessment Year 2008-09.
2. Addition on account of undisclosed investment, violation of Section 40A(3), and unexplained sales.
3. Benefit of opening peak balance as on 01/04/2007.
4. Appeal by both assessee and revenue.

Issue 1: Appeal against Commissioner of Income Tax (Appeals) Order
The appeal was directed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2008-09. The Assessing Officer had completed the assessment, making additions on account of undisclosed investment, violation of Section 40A(3), and unexplained sales. The assessee appealed against this decision.

Issue 2: Addition on Account of Undisclosed Investment, Violation of Section 40A(3), and Unexplained Sales
The Commissioner of Income Tax (Appeals) had deleted the addition made on the grounds of unaccounted sales. Regarding unaccounted investment, the Commissioner directed the addition to be limited to the peak amount. Additionally, it was held that payments made for purchasing potatoes were covered under Rule 6DD(e)(i) of the Income Tax Rules, thus no disallowance could be made under Section 40A(3).

Issue 3: Benefit of Opening Peak Balance
The sole issue in the assessee's appeal was the benefit of the opening peak balance as on 01/04/2007. The Tribunal directed the Assessing Officer to delete a specific amount from the peak credit, providing relief to the assessee.

Issue 4: Appeal by Both Assessee and Revenue
Both the assessee and the revenue were aggrieved and appealed before the Tribunal. The revenue's appeal included issues related to undisclosed investment, disallowance under Section 40A(3), and deletion of an addition made for undisclosed sales.

In conclusion, the Tribunal allowed the assessee's appeal, providing relief regarding the opening peak balance. The revenue's appeal was dismissed concerning undisclosed investment, disallowance under Section 40A(3), and deletion of the addition for undisclosed sales. The Tribunal upheld the decisions based on factual findings and legal principles, dismissing the grounds raised by the revenue.