Commissioner of Income Tax vs Hanuman Oil and General Mills

Adarsh Kumar Goel, J.—The revenue has preferred this appeal u/s 260A of Income Tax Act, 1961 against the order of learned Income Tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh passed in ITA No. 248/Chd./2006, dated 18-5-2007 for the assessment year 2003-04 proposing to raise following substantial question of law:

(i) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition of Rs. 29,50,950 made on account of value of excess stock of Narma/Kapas found by the Market Committee authorities during the course of surveys carried out on the assessee''s business premises not only once but on different dates i.e., 18-12-2002, 7-1-2003, 13-3-2003 which was not found entered in the account books and investment for purchase thereof outside the account books?

(ii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition referred to above by recording an erroneous finding contrary to record, that there was no adverse material especially when the Assessing Officer disbelieved the books of account maintained by the assessee by recording specifically?

In the course of assessment, the Assessing Officer held that at the time of inspection, excess stock of cotton was found by the representative of Market Committee, over and above the stock entered in the books of account. The said stock was liable to be added to the income. The assessee explained that there was no excess stock and even the Market Committee did not assess fee on the alleged excess stock, though by way of compromise, the assessee paid the sum of Rs. 13,200 towards market fee. The partners of the firm were residing in Bangalore and Bhubneshwar and there may be some discrepancies in maintenance of record.

The CIT(A) had accepted the explanation of the assessee. This view has been affirmed by the Tribunal.

We have heard learned Counsel for the revenue.

Finding recorded by CIT(A) on the issue in question is as under:

I have carefully gone through the facts and circumstances of the case and results of enquiries conducted by the Assessing Officer during remand proceeding and find as under:

The purchases of 103 quintals (vide bill No. 43) of M/s. Singla Enterprises, figure at purchase book on 18-12-2002 and appears at unnamed Sr. Nos. of weight purchased 33.60,39.80,29.60 quintals at top, bottom, end of page dated 18-12-2002 of gate inward register (inward serial No. of mandi missing, goods having not purchased through auction). Similarly, the purchases of 770.20 quintals and 671.80 quintals are entered as purchases from M/s. Singla Enterprises at purchase book on 24-12-2002 and 25-12-2002. The entries in gate book of date 24-12-2002 and 25-12-2002 (with no serial number of auction etc.) are found. Accordingly, I am of the opinion that in view of the fact that the purchases have been found entered in the books and that there is no adverse inference in respect of such purchases from the Assessing Officer and the fact that the books of account have not been rejected by the Assessing Officer, the addition made by the Assessing Officer of Rs. 2,11,150 + Rs. 27,39,800 does not deserve to be sustained. Appellant gets a relief of Rs. 29,50,950. However, the additions of Rs. 38,400 and Rs. 76,000 are hereby confirmed in view of the stock having been found by the market authorities and no explanation forthcoming from the appellant.

The Tribunal affirmed the above observations.

View taken in the said order is a possible view and is not shown to be perverse. We are unable to hold that the questions raised are substantial questions of law.

The appeal is dismissed.