2000 (9) TMI 206 - AT - Income Tax

Summary

Issues:
Appeal against the order of CIT(A) deleting the addition of unaccounted stock of fabrics found at the assessee's premises. Department's challenge regarding ownership of stock and pending RA filed by the Department against Tribunal's decision in a similar case.

Analysis:
1. The Department contested the CIT(A)'s decision to delete the addition of unaccounted stock of fabrics found at the assessee's premises. The Department argued that the stocks were indeed unaccounted and challenged the assessee's claim that they were post-search paid for in cash. The Departmental Representative heavily relied on the AO's orders to support their stance.

2. On the other hand, the assessee's counsel emphasized that the stocks in question were not unaccounted as alleged by the AO. The counsel pointed out that the purchases were duly reflected in subsequent returns and the suppliers were paid in cash after the search. The counsel also highlighted that receiving goods 'on approval' basis is a common trade practice, supported by the Tribunal's past decisions in similar cases involving the present assessees.

3. The Tribunal examined the submissions from both sides along with the evidence on record. The main dispute revolved around whether unaccounted money was used to purchase the stocks found during the search. The CIT(A) passed a detailed order, noting that the fabrics found were on 'approval basis,' a common practice in the trade. The AO's failure to act upon statements and cross-examine witnesses was highlighted. The CIT(A) found the appellants' explanations satisfactory, especially regarding the payments made to weavers, and decided to delete the additions made by the AO.

4. The Tribunal, after reviewing the CIT(A)'s order and the arguments presented, upheld the decision to dismiss the appeal. Citing the well-reasoned order of the CIT(A) and the Tribunal's past decisions, the Tribunal found no grounds to interfere with the CIT(A)'s order. Consequently, the appeal was dismissed, affirming the deletion of additions made by the AO regarding the unaccounted stock of fabrics.