2024 (10) TMI 365 - HC - Income Tax

Maintainability of appeal filed u/s 260A - Rejection of books of accounts - Addition of low GP - substantial question of law or fact - maximum sales are in cash and many of them were made without proper invoices - stock register was never produced negative stock was in the stock - HELD THAT - ITAT as noticed that the assessee had produced stock statement where no negative stock had been shown and, therefore, it was concluded that how the AO had noted that the negative stock was not clear. The record produced showed that evidence was part of the account books furnished in support of the assessee's contention and the evidence had also been filed before the first Appellate Authority. Accordingly, it was held that it was not justified for rejecting the accounts simply because the names of the buyers were not mentioned in the bills of cash sales and it would not go to disbelieve the books of accounts since the assessee was trading in gold bullion. The day-to-day rates would have also been ascertainable from the rates declared by National market, Sarrafa Bazaars etc. Resultantly, a finding was recorded that the Assessing Officer was not justified in rejecting the book version of the assessee and to apply the profit rate of 0.54% without any good reason and no comparable instance had been given and there was no valid reason to doubt the record of the assessee and the assessee had maintained quantitative tally of the stock. Revenue had not been, thus, able to make out a case that the assessee had not adopted consistent method of accounts and the profit and gains earned by the assessee could easily be detected from the books of accounts. The appeal as such was dismissed. The above said discussion would go on to show that no substantial question of law as such arises for consideration and the present appeal is totally based on the factual matrix whereby the documents have been examined by the two authorities below, in detail. In such circumstances, we are of the considered opinion that the findings recorded by the Assessing Officer were against the record as everything had been produced before it by the assessee, as has also been observed by the Commissioner of Income Tax and the Tribunal. We dismiss the present appeal in the absence of any question of law arising which is the necessary pre-requisite for entertaining the appeal under Section 260A.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Appeal filed under Section 260A of the Income Tax Act, 1961.
3. Substantial questions of law raised in the appeal.
4. Addition made by the Assessing Officer.
5. Commissioner (Appeals) order.
6. Tribunal's order and examination of evidence.
7. Justification for rejecting accounts by Assessing Officer.
8. Dismissal of the appeal based on factual matrix.

Condonation of Delay:
The application for condonation of a 10-day delay in filing the appeal was allowed by the court based on the averments made in the application supported by an affidavit.

Appeal under Section 260A:
The appeal was filed under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal. The Tribunal had upheld the order dismissing the appeal of the Revenue against the order of the Commissioner of Income Tax for the assessment year 2011-12.

Substantial Questions of Law:
The appeal raised substantial questions of law regarding the application of legal cases, deletion of addition made by the Assessing Officer, and the method of valuing closing stock. The questions challenged the correctness of the ITAT's decision and the AO's addition based on gross profit calculations.

Addition Made by Assessing Officer:
The Assessing Officer had made an addition to the respondent-assessee's income based on gross profit calculations and the absence of a stock register. The AO's decision was challenged by the appellant, leading to further examinations by higher authorities.

Commissioner (Appeals) and Tribunal's Orders:
The Commissioner (Appeals) and the Tribunal examined the evidence presented by the assessee, including stock registers, sales and purchase details, and trading accounts. They found discrepancies in the AO's calculations and concluded that the addition made was unjustified. The Tribunal dismissed the Revenue's appeal based on the evidence provided by the assessee.

Justification for Rejecting Accounts:
The Assessing Officer's rejection of the accounts was deemed unjustified by the Tribunal, as the evidence provided by the assessee was found to be sufficient to support their trading activities. The AO's decision to apply a profit rate without valid reasons was also criticized by the Tribunal.

Dismissal of Appeal Based on Factual Matrix:
The court dismissed the appeal, stating that no substantial question of law arose for consideration. The decision was based on the detailed examination of documents by the lower authorities, including the Commissioner of Income Tax and the Tribunal. The court found no reason to interfere with the well-reasoned orders of the lower authorities, leading to the dismissal of the appeal under Section 260A.