2017 (12) TMI 66 - HC - Income Tax

Difference and discrepancy in the stock - Held that - The assessee sole proprietor of M/s Deshraj Ashutosh involved in the business of sale and purchase of foodgrains on commission basis, was saddled with petitioner s liability on account of difference and discrepancy in the stock. The AO was of the opinion that an addition of ₹ 8,67,87,925/- was justified on account of the discrepancy. The Appellate Commissioner was satisfied with the assessee s explanation with respect to inflated statement of stock with the bankers and noted that no discrepancy in the stock statements as appearing from the physical verification and that apparent from the books of account emerged. The amount was, therefore, deleted. The ITAT upheld the findings of the CIT(A). No substantial question of law

Summary

Issues:
1. Addition in the course of search assessment
2. Justification of the addition based on stock discrepancy
3. Applicability of substantial question of law

Analysis:

1. Addition in the course of search assessment:
The appellant filed an appeal under Section 260A of the Income Tax Act, 1961, challenging the addition of ?8,67,87,925 in the search assessment conducted for M/s Gee Ispat Group of companies. The search was completed under Section 143(3) of the Act, resulting in substantial additions. The ITAT considered this issue, leading to subsequent legal proceedings.

2. Justification of the addition based on stock discrepancy:
The case involved the sole proprietor of M/s Deshraj Ashutosh, engaged in the sale and purchase of foodgrains on a commission basis. The Assessing Officer (AO) contended that the addition of ?8,67,87,925 was warranted due to a discrepancy in the stock. However, the Appellate Commissioner accepted the assessee's explanation regarding inflated stock statements with the bankers, finding no actual discrepancy during physical verification or in the books of account. Consequently, the amount was deleted, a decision upheld by the ITAT.

3. Applicability of substantial question of law:
The High Court, after reviewing the case and considering the concurrent findings of fact, concluded that no substantial question of law arose from the issues at hand. The Court emphasized that the matters in dispute primarily involved the factual assessment of the situation rather than legal interpretations. Consequently, the appeal was dismissed based on this analysis.

In summary, the judgment dealt with the addition made during a search assessment, the justification for such addition based on alleged stock discrepancies, and the determination that no substantial question of law arose from the factual assessments conducted by the authorities. The decision ultimately led to the dismissal of the appeal.