THE COMMR. OF INCOME TAX, PANCHKULA vs. M/S CHAUHAN PAPERS PVT LTD. YAMUNANAGAR

ITA/358/2006HC Punjab & HaryanaPHHC01075069200612 October 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the finding recorded by the ITAT was a pure finding of fact. The counsel for the revenue could not point out any perversity in the Tribunal's findings. The Court noted that the ITAT had affirmed the CIT(A)'s view that the AO's addition was not justified merely on the ground of variation between the stock statement furnished to the bank and the closing stock in the account books, especially when the AO had accepted the gross profit rate and had not identified any suppressed sales, inflated purchases, or other discrepancies in the books of account. The Court found no substantial question of law arising from the ITAT's order. It also referred to a previous dismissal of a similar appeal. The appeal was dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax, Panchkula) has appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated November 17, 2005, concerning assessment year 2000-01. The appeal challenges the ITAT's affirmation of the Commissioner of Income Tax (Appeals) [CIT(A)] order, which deleted an addition made by the Assessing Officer (AO). The AO had added to the assessee's (M/s Chauhan Papers Pvt. Limited) returned income based on a discrepancy between the closing stock in the account books and the stock statement provided to the bank. The CIT(A) had set aside this addition, deeming the bank hypothecation statement to be an estimate and insufficient grounds for addition without further evidence of suppressed sales or inflated purchases.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that the learned CIT(A) had rightly deleted the addition made on account of investment in excess stock of goods? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the assessee can take advantage of higher figures of closing stock hypothecated to the bank, which was duly verified by the bank authorities physically, and at the same time disown the same for the purpose of its assessment to income tax? (Question of mixed law and fact) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The revenue argued that the ITAT erred in upholding the deletion of the addition. The AO had made the addition due to a variation in closing stock figures between the assessee's books and the stock statement furnished to the bank, which was physically verified by the bank. The revenue questioned whether the assessee could rely on the higher bank figures for one purpose while disowning them for tax assessment.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITA No.358 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.358 of 2006 Date of decision:12.10.2006 The Commissioner of Income Tax, Panchkula ...Appellant versus M/s Chauhan Papers Pvt. Limited, Chhoti Line, Yamunanagar ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate, for the appellant.

JUDGMENT:

1.

The revenue has preferred this appeal against the order of the Income Tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh (in short, 'the ITAT') dated 17.11.2005 in ITA No.377/Chand/2005, in respect of assessment year 2000-01, proposing following substantial questions of law:- “1. Whether, on the facts and in the circumstances of the case, the ld. ITAT was right in law in holding that ld. CIT(A) had rightly deleted the addition made on account of investment in excess stock of goods.

2.

Whether, on the facts and in the circumstances of the case, the assessee can take advantage of higher figures of closing stock hypothecated to the bank, which was duly verified by the bank authorities physically, and at the same time disown the same for the

The order continues below.

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