2020 (4) TMI 332 - HC - Income Tax

Addition on account of unaccounted sales - Tribunal upholding the decision of CIT(A) in deleting the addition - HELD THAT - While the assessee had not maintained a stock register, the Assessing Officer had accepted the books of account maintained by the assessee. On a perusal of the order passed by the Commissioner (Appeals), it is evident that the Commissioner (Appeals) has made lump-sum disallowance of ₹ 6,00,000/- after recording a finding that the book results have been accepted. Having regard to the fact that the Assessing Officer has accepted the books of account maintained by the assessee, no infirmity can be found in the approach adopted by the Commissioner (Appeals) in making a lump-cum disallowance after appreciating the material on record. The finding of the Commissioner (Appeals) is basically a finding of fact, to which, the Tribunal has concurred. Under the circumstances, the conclusion arrived at by the Tribunal being based upon a concurrent finding of fact recorded after appreciating the material on record, cannot be stated to give rise to any question of law. Addition made on account of power and fuel expenses - Tribunal upholding the decision of CIT(A) in deleting the addition - HELD THAT - Commissioner (Appeals) has based his conclusion on the findings recorded by him that the Assessing Officer has not proved that the expenditure was not incurred for business purpose; nor had it been proved that the assessee had made any bogus claim; and that the Assessing Officer had also not given any reason for making such a huge disallowance. The Tribunal, in the impugned order, has concurred with the findings recorded by the Commissioner (Appeals). The conclusion arrived at by the Tribunal being based upon concurrent findings of fact recorded after appreciating the material on record, in the absence of any perversity being pointed out in such concurrent findings of fact, it is not possible to state that the impugned order gives rise to any question of law, much less, a substantial question of law.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding deletion of unaccounted sales and power/fuel expenses.
2. Addition made on account of unaccounted sales of ?2,98,78,393.
3. Addition made on account of power and fuel expenses of ?23,76,828.

Analysis:

Issue 1: Challenge to the Tribunal's Order
The appellant-revenue challenged the Income Tax Appellate Tribunal's order regarding the deletion of unaccounted sales and power/fuel expenses. The Tribunal upheld the decision of the Commissioner (Appeals) in deleting the additions made by the Assessing Officer. The appellant proposed two substantial questions of law related to these deletions.

Issue 2: Addition on Unaccounted Sales
Regarding the addition made on account of unaccounted sales, the Assessing Officer estimated sales based on the ratio of material consumption to sales. The Commissioner (Appeals) partly allowed the appeal, reducing the addition. The Tribunal concurred with the Commissioner's findings, noting that the Assessing Officer accepted the books of accounts despite the absence of a stock register. The Tribunal upheld the decision based on concurrent findings of fact.

Issue 3: Addition on Power and Fuel Expenses
Concerning the addition made on power and fuel expenses, the Assessing Officer disallowed expenses related to gas and other fuel store items. The Commissioner (Appeals) deleted the addition, finding no proof of bogus claims or improper accounting methods. The Tribunal agreed with the Commissioner's findings, emphasizing that the Assessing Officer failed to disprove the business purpose of the expenses. The Tribunal upheld the deletion based on concurrent factual findings.

In conclusion, the High Court found no legal infirmity in the Tribunal's order to warrant interference. The appeal was summarily dismissed, affirming the Tribunal's decision on both issues.