2022 (5) TMI 1283 - HC - Income Tax

Addition on account of under valuation of stock - valuation of the product sold by the assessee which was sarees - admission of the Director of the assessee in this regard made twice in a gap of about one month - survey operation under Section 133A - ITAT deleted the addition - HELD THAT - The issue as to whether the said statement could have been made the sole basis for revision of assessment or to conclude that there was under valuation of the stock elaborately discussed by the CIT(A). CIT(A) also took note of the decision in the case of CIT Vs. Khader Khan Son 2007 (7) TMI 182 - MADRAS HIGH COURT which was affirmed as reported in 2013 (6) TMI 305 - SC ORDER it has been held that the Department should not insist on making any disclosure and further such disclosure made in the course of survey should not be relied upon and the assessment should be based on the papers found and impounded during the course of survey. After noting the said decision, the CIT(A) has, in our view, thoroughly examined the factual position including the reply given by the assessee to the remand report called for from the assessing officer. Ultimately, the appeal was allowed in favour of the assessee by order dated 11th July, 2014. Tribunal on its part re-examined the particulars and took note of the stand taken by the assessee during the assessment proceedings as well as before the CIT(A) and the factual findings recorded by the CIT(A) and dismissed the appeal filed by the impugned order. Thus, we find that the entire issue is fully factual and the first appellate authority as well as the tribunal have appreciated and re-appreciated the findings on record and granted relief to the assessee. Thus, we find that there is no question of law much less the substantial question of law arising for consideration in this appeal.

Issues:
1. Delay in filing the appeal and its condonation.
2. Appeal under Section 260A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal.
3. Substantial questions of law raised by the revenue regarding under valuation of stock during a survey operation.
4. Assessment based on a statement recorded during survey proceedings.
5. Consideration of relevant evidences and legal precedents by the Commissioner of Income Tax (Appeals).
6. Tribunal's re-examination of facts and dismissal of the appeal.

1. Delay in filing the appeal and its condonation:
The High Court considered a delay of 189 days in filing the appeal and was satisfied with the reasons provided for the delay. Consequently, the delay was condoned, and the application for condonation was allowed.

2. Appeal under Section 260A of the Income Tax Act, 1961:
The appeal was filed by the revenue under Section 260A against an order of the Income Tax Appellate Tribunal concerning the assessment year 2011-12. The substantial questions of law raised by the revenue pertained to the under valuation of stock without considering relevant pieces of evidence recorded during a survey operation.

3. Substantial questions of law regarding under valuation of stock:
The revenue raised substantial questions of law related to the under valuation of stock, including the erred consideration by the Tribunal in deleting the addition on this account. The questions focused on the Tribunal's alleged errors in law and facts in overlooking relevant evidences and the director's admission regarding the under valuation.

4. Assessment based on a statement recorded during survey proceedings:
The assessment was completed based on a statement recorded from the director of the assessee company during a survey operation under Section 133A of the Income Tax Act. The CIT(A) thoroughly examined the factual position and legal precedents, including the decision in the case of CIT Vs. Khader Khan Son, to determine the validity of relying solely on such a statement for the assessment.

5. Consideration of relevant evidences and legal precedents by the Commissioner of Income Tax (Appeals):
The CIT(A) considered elaborate submissions, documents, affidavits, and sale bills presented by the assessee to justify the valuation of the product sold. The CIT(A) also analyzed the validity of relying on a statement made during survey proceedings as the sole basis for assessing under valuation, in line with legal precedents and the assessment process.

6. Tribunal's re-examination of facts and dismissal of the appeal:
The Tribunal re-examined the particulars, the stand taken by the assessee, and the factual findings recorded by the CIT(A). After thorough consideration, the Tribunal dismissed the appeal, concluding that the issue was primarily factual. Both the CIT(A) and the Tribunal had evaluated the findings on record, leading to the grant of relief to the assessee, with no substantial question of law arising for consideration.

In conclusion, the High Court dismissed the appeal, affirming the decisions of the lower authorities, and closed the application for stay.

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