COMMISSIONER OF INCOME TAX, GANDHINAGAR vs. M/S. SHAIFALI STEELS LIMITED

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   23.03.2018 raising following questions for our consideration: “[A] Whether the Appellate Tribunal has erred in law and on facts of the case in deleting the addition of Rs.5,28,94,800/­ on account of   Unexplained   investment   in   the   closing stock? [B] Whether the Appellate Tribunal has erred in law and on facts of the case in upholding the order of CIT(A) in deleting the addition of Rs.79,00,000/­ on account of unexplained addition in share capital?

Question­A   pertains   to   additions   made   by   the Assessing Officer of Rs.5.28 crores (rounded off) on account of mismatch in closing stock.   Commissioner of Income Tax (Appeals) and the Tribunal deleted the same.  The Tribunal while confirming the view of the Commissioner of Income Tax (Appeals), noted that the Commissioner of Income Tax (Appeals) had called for three remand reports.  The assessee had explained the discrepancy pointing out that the statement given to the   bank   pertained   to   the   stock   which   was   already shown in the books of accounts.  It was also pointed out   that   a  portion   pertained   to   cause   of   job­work done by third party for which material was sent to them.  This was included in the statement supplied to the   bank.     The   entire   issue   is   thus   fact   based. Commissioner of Income Tax (Appeals) and the Tribunal appreciated   the   material   on   record   to   delete   the C/TAXAP/1241/2018 ORDER addition.

Question­B pertains to deletion of Rs.79 lakhs which   was   made   by   the   Assessing   Officer   towards unexplained   investment   in   share   capital. The Tribunal confirmed the view of the Commissioner of Income Tax (Appeals) observing that the assessee had filed the necessary confirmation and details from the investors,   remand   report   was   called   by   the Commissioner of Income Tax (Appeals).   The assessee had   thus   proved   the   identity,   genuineness   and creditworthiness of the investors.   It can thus be seen that the Commissioner of Income Tax (Appeals) was   on   facts,   convinced   that   the   assessee   has   not made any unexplained investment in the shares.

Question­C  pertains  to   restriction   of  addition under section 68 of  the Income Tax Act, 1961 ('the Act' for short) which also is a similar issue as the previous one.   No separate discussion is therefore necessary.

Question­D   pertains   to   addition   of   Rs.60.62 lakhs   on   account   of   interest   expenditure.     The Tribunal   while   confirming   the   view   of   the C/TAXAP/1241/2018 ORDER Commissioner   of   Income   Tax   (Appeals),   noted   that though before the Assessing Officer full details were not provided, in the appeal proceedings the same had come on record.

The   last   question   pertains   to   disallowance   of commission expenses of Rs.14.96 lakhs.   Here also, the Tribunal noted that at the appellate stage, the assessee   has   produced   full   details   justifying   such expenditure.  Remand report was also called for.  No question of law arises.

Tax Appeal is dismissed.