2015 (2) TMI 633 - HC - Income Tax

Difference of stock - amount of closing stock differ in the books and as per the statement given to the bankers - unaccounted fabrication work - Held that - The Assessing Officer and the Commissioner of Income-tax (Appeals) had discussed the material on record in detail and had come to the conclusion that there was difference of stock amounting to ₹ 28,73,640 as per the books of account of the assessee and as shown in the inflated stock statement given to the bank. The Tribunal affirmed the aforesaid findings. Similarly, the addition made by the Assessing Officer of ₹ 5,20,889 due to unaccounted fabrication work was affirmed by the Commissioner of Income-tax (Appeals) and the Tribunal. Learned counsel for the appellant has not been able to point out any illegality or perversity in the findings recorded by the Tribunal while affirming the findings recorded by the Assessing Officer and the Commissioner of Income-tax (Appeals). - Decided against assessee.

Summary

Issues:
1. Addition of closing stock difference
2. Addition of unaccounted fabrication work
3. Confirmation of authorities' orders

Analysis:

Issue 1: Addition of Closing Stock Difference
The appellant challenged the addition of Rs. 28,73,640 on account of the difference in closing stock as per books and bank statements. The appellant argued that the addition was unjustified as there was a plausible explanation for the difference, citing the accounting principle that the closing stock of one year becomes the opening stock of the following year. The High Court noted that the Assessing Officer and the Commissioner of Income-tax (Appeals) had thoroughly examined the details and upheld the addition. The Tribunal affirmed these findings, stating that the Assessing Officer's decision was based on a detailed analysis of the stock details. The Court found no reason to interfere with the lower authorities' findings and upheld the addition of Rs. 28,73,640.

Issue 2: Addition of Unaccounted Fabrication Work
The appellant contested the addition of Rs. 5,20,889 for unaccounted fabrication work. The Assessing Officer made this addition after examining the bills issued by the appellant for fabrication work done on a job work basis for various parties. The Commissioner of Income-tax (Appeals) upheld this addition, stating that the appellant had not accounted for all the fabrication charges in the regular books of account. The High Court observed that the Assessing Officer's decision was supported by evidence of discrepancies in the bills issued by the appellant. The Court upheld the Commissioner's findings, concluding that there was no basis to interfere with the decision to add Rs. 5,20,889 for unaccounted fabrication work.

Issue 3: Confirmation of Authorities' Orders
The Tribunal partly allowed the appeal, upholding the findings on the first two issues but remanding the issue of depreciation claimed on machinery for further inquiry. The High Court noted that the Tribunal had properly considered the submissions and evidence presented by the appellant. The Court agreed with the Tribunal's decision to remand the depreciation issue to the Assessing Officer for fresh adjudication based on additional evidence provided by the appellant. Overall, the Court found no legal grounds to challenge the decisions of the lower authorities on the issues of closing stock difference and unaccounted fabrication work.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose from the case. The Court upheld the additions made by the authorities regarding the closing stock difference and unaccounted fabrication work, emphasizing the importance of following accounting principles and providing accurate financial details in tax assessments.