INCOME TAX OFFICER vs. BHAGWATI PRASAD RAIKA
What did the High Court hold?
The High Court held that the CIT(A) and the Tribunal, after considering the explanation of the assessee that the inflated stock was shown in the bank statement by reducing the sales figure and that there was no discrepancy if sales and stock were considered together, had remanded the matter to the AO. The AO subsequently confirmed this position. The Court relied on the Delhi High Court's decision in Commissioner of Income Tax vs. Prem Singh & Co., which held that where the stock indicated by the assessee's account books has been accepted by the Tribunal, it is a conclusion of fact from which no question of law arises. In the present case, both appellate forums, after considering the assessee's books of accounts, accepted the assessee's explanation and recorded a finding of fact that there was no excess stock. This finding does not give rise to any substantial question of law. Therefore, the appeal was dismissed.
What were the facts?
The Revenue, represented by the Income Tax Officer, Ward 4, Bhilai, filed an appeal against an order of the Income Tax Appellate Tribunal, Nagpur Bench. The appeal pertains to Assessment Year 2002-03. The Assessing Officer (AO) made an addition to the assessee's income based on a discrepancy between the stock shown in the assessee's books of accounts and the stock statements submitted monthly to the bank for a CC loan facility. The assessee is a trader in iron and steel and maintained regular books of accounts. The AO obtained stock statements from the bank and quantitative details of stock from the assessee. The AO found a difference between the stock as per the assessee's records and the stock returned to the bank.
What were the issues?
1. Whether the learned CIT(A) and the Tribunal were justified in deleting the addition made by the Assessing Officer on the ground that the excess stock, as returned to the bank, was corresponding to the sales not declared to the bank in the form of sundry debtors, and the assessee had only availed extra credit facility, which did not relate to the discrepancy in stock? Assessee's Contention: The assessee argued that the inflated stock was shown in the statement before the bank by reducing the sales figure. There was no discrepancy in the stock if the sales figure and balance of stock were considered together in the bank statement and the books of accounts. The assessee contended that the CIT(A) and Tribunal were justified in deleting the addition. Revenue's Contention: The Revenue argued that the AO made an addition based on the difference in stock as per the books of accounts and the monthly statements made to the bank. The Revenue contended that the CIT(A) and Tribunal were not justified in deleting the addition.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER (Passed on2swJanuary, 2010) PerDhirendra Mishra. J \. This income tax appeal under Section 260A of the Income Tax Act, 1961 (in short "the Act") preferred by the revenue againsl the order (Annexure A/3) of the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur (in shot "Tribunal") has been admitted on 20th March, 2006. The only question, which arises for adjudication of this appeal, is whetherthe leamed CIT(A)} and the Tribunal were justified in deie^ng ffie addition made by the Assessing Offscer on ffte ground that the excess stock, as retumed to the bank, was corresponding to the sales not declafed to the bank in the form of swdry debtors, the assessee hss onfy availed extra credtt facility, which dkl not relate to the discrepancy in stocf^? Briefly stated, facts of the case, as projected in the impugned order of the Tribunal, are that the assessee is a trader in iron and steel. The assessee maintained regular books of accounts including stock register ete. on computer. Books of accounts were also produced before the Assessing Officer (in short "AO") for examination. The AO enquired from the bankers/ of the assessee and obtained copy of stock statements submitted monthly by the assessee to the bankeragainst the facility of CC toan. The AO also obtained quantitative details of stock from the assessee as per the records of the assessee. The AO compared stock position as per records of the assessee with that —— w E8 B ili Bl [^s^ i^
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.} f\(o\ conciusion that there was no excess stock avaiiabie with the assessee at any point of time. The aforesaid finding of CIT(A) and the Tribunal is a finding of fact and no question of law, much iess any substantial question of faw, arises for adjudicatjon of this appeai.
Reiying upon the decision of the Deihi High Court in the matter of Coinmtssioner of fncome Tax Vs. Prem Smgh & Co., reported in (1986) 51 CTR (Def) 275 : (1987) 163 fTR 434 (Del), it is argued that where the stock indicated by the assessee's account books have been accepted by the Tribunai, this is a conciusion of fact from which no question of iaw arises.
We have heard iearned counsei for the parties and perused the orders ofthe AO, CiT(A) and impugned OT^er passed bythe Tribunal. The undisputed facts, as detailed above, are that the AO made addition on the basis of difference in stock as appeared in the books of accounts and the rnonthly statemenfvfriade by the assessee to the bank in CC account. CiT(A) considering the expianation of the assessee that the inflated stock was shown in the statement before the bank by reducing the sales figure and there was no discrepancy in the stock ifthe saies figure and baiance of stock are considered in the bank statement as woii as in the books of accounts, rernanded the rnatter aiong vvith copy orsubmission made by the assessee before CIT(A) to the AO as per order under Section 250(4) of the Act, and this fact was. subsequentiy, confirmed by the AO. 11. in Prem Singh & Co. (supra), an identicai question arose before the Deihi High Court. wherein the Tribunai deieted the addition made on the basis of difrerence in the position of stock as disciosed by books of accounts and as shown in tne account of stock hypothecated with the bank, after considering the prevaiiing practice of fiiing inflated iists for th©purpose of g^tting a Ipan and afso considering that for the purpose of a ioan, the stock wouid be vaiued at market price, whereas in the books it wouid be vaiued at cost, fhe High Court heid that no question of law arises as the stock indicated by the assessee's account books have been accepted by the Tribunai and this is a conciusion of fact from which no question of iaw arises. . 12. in tne instant also, we are of the opinion that both the appeiiate forums. after considerina the books of accounts of the assessee. heid 9M\ Kl' B Kll 11
the expianation offered by the assessee as proper, and recorded a findtng of fact that there was. no excess stock avaiiabie with the assessee. The finding, so recorded by both the forums below, does not give rise to any question of law. much tess any substantiai question of law.
The appeal is without any substence; the same desen/es to be dismissed and is, accordingly, dismissed. No order as to costs. A . k DHBUENDRA MBHRA Judge R.N. Chandrakar Judge ^
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