2015 (1) TMI 478 - HC - Income Tax

Differential stock statement as recorded in the books of accounts as against the same submitted before the bank - Appellate Tribunal deleted the addition made by the Assessing Officer - Held that - The issue involved in these appeals is already concluded by a decision of this Court in the case of Commissioner of Income-tax, Ahmedabad-III v. Riddhi Steel and Tubes (P) Ltd., 2013 (10) TMI 291 - GUJARAT HIGH COURT wherein held that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. In favour of assessee.

Summary

Issues:
Challenge to Income Tax Appellate Tribunal's orders regarding addition of differential stock statement to total income.

Analysis:
The judgment involves multiple appeals challenging the orders of the Income Tax Appellate Tribunal regarding the addition of a differential stock statement to the total income of the assessee. The facts revolve around an assessee-firm engaged in printing work and manufacturing packing materials. The assessee had shown discrepancies in the stock value between the statement submitted to the bank and the stock as per its books of accounts. The Assessing Officer added the differential amount to the total income, which was later deleted by the CIT(A) in an appeal. The Revenue then filed an appeal before the ITAT, which was dismissed, leading to the current Tax Appeals.

The key substantial question of law in these appeals was whether the ITAT was justified in deleting the addition made by the Assessing Officer regarding the differential stock statement. The High Court referred to a previous decision in the case of Commissioner of Income-tax, Ahmedabad-III v. Riddhi Steel and Tubes (P) Ltd., where it was held that inflated statements furnished to banking authorities for credit facilities do not warrant additions to income if there is a difference between stock shown in books of account and statements to banking authorities. The Court emphasized the genuineness of the assessee's books of account supported by vouchers and held that no addition should be made solely based on inflated stock statements for credit purposes.

Based on the precedent and principles established in the aforementioned case, the High Court concluded that the appeals would be governed by the decision and reasoning provided in that case. The Court concurred with the view taken by the coordinate Bench and rejected the appeals in favor of the assessee and against the Revenue. The judgment provided a detailed analysis of the legal principles involved and the application of those principles to the facts of the present cases, ultimately leading to the rejection of the appeals.