2013 (4) TMI 518 - HC - Income Tax

Discrepancies and shortage in stock during survey u/s 133A - CIT(A) restricted the addition - CIT(A) observed that, the assessee had declared gross profit of 10.27% during the year, and applying the same rate of gross profit, the profit of the appellant on the lesser stock of the CRC would work-out to Rs. 61,917/- on the basis of 10.27% gross profit to the shortfall figure of Rs. 6,02,883/-. The assessee had admitted excess stock of Rs. 14,000/- on account of steel cupboard. Accordingly, the CIT (A) restricted the addition the total of Rs. 75,916/- (Rs. 61916/- plus Rs. 14,000/). - ITAT confirmed the action of CIT(A) - held that - The aforesaid findings by the Tribunal and by the CIT(A) are the concurrent findings of fact. The Tribunal while confirming the order of CIT(A), has appreciated the relevant facts, figures and material relating to the issue, which were before it. - Decided against the revenue. Genuineness of unsecured loans - ddition made on account of undisclosed cash deposit in bank - CIT(A) has reduced the addition - ITAT uphold the decision of CIT(A) - held that - Tribunal did not commit any error in law in dismissing the appeal. - Decided against the revenue.

Summary

Issues:
1. Reduction of gross profit addition by the Appellate Tribunal
2. Deletion of addition on account of unsecured loan by the Appellate Tribunal
3. Deletion of addition on account of undisclosed cash deposits in bank by the Appellate Tribunal

Issue 1: Reduction of Gross Profit Addition
The appellant, engaged in manufacturing and trading of educational material, faced discrepancies in stock during a survey. The Assessing Officer estimated gross profit at a higher rate, resulting in an addition to the income. The Commissioner of Income Tax (Appeals) partially granted relief, reducing the addition. The Tribunal upheld this decision, noting the agreed shortfall in stock and the sales made to Government agencies, dismissing the appeal by confirming the order of CIT(A).

Issue 2: Deletion of Addition on Account of Unsecured Loan
The Assessing Officer added an amount to the income due to unexplained deposits received from various parties. The CIT(A) upheld the addition partially but allowed the telescoping effect, reducing the addition. The Tribunal affirmed this decision, allowing the set-off against unaccounted income introduced as loans, leading to the dismissal of the Revenue's appeal.

Issue 3: Deletion of Addition on Account of Undisclosed Cash Deposits
The explanation provided by the assessee regarding the undisclosed cash deposits was verified by the CIT(A), who allowed the additions. The Tribunal accepted the CIT(A)'s findings, noting the verification of accounts and deleted the additions made by the Assessing Officer. The Tribunal held that the additions were found to be illegal and dismissed the Revenue's appeal, concurring with the CIT(A)'s view and the legality of the deletions.

In conclusion, the High Court upheld the Tribunal's findings on all three issues, determining that no substantial question of law was raised. Therefore, the appeal was dismissed based on the proper conclusions reached by the Tribunal regarding the reduction of gross profit addition, deletion of addition on account of unsecured loans, and deletion of addition on account of undisclosed cash deposits in the bank.