THE PR. COMMISSIONER OF INCOME TAX vs. SMT. GRACY KUTHUMKAL THOMAS PROP. OF M/S JINNY MARINE TRADERS

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TAXAP/1087/2018HC GujaratGJHC24050535201804 September 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the order of the ITAT. The Court noted that both the CIT(Appeals) and the Tribunal had minutely examined the materials on record. They had concurrently held that part of the additions made by the Assessing Officer were not sustainable. The Court observed that the issues involved were purely fact-based. Therefore, the Tax Appeal filed by the Revenue was dismissed. The operative direction was the dismissal of the appeal, meaning the ITAT's order stood.

What were the facts?

The Revenue is in appeal against the Income-tax Appellate Tribunal's (ITAT) order dated March 1, 2018. The Assessing Officer (AO) rejected the assessee's books of accounts under Section 145(3) of the Income-tax Act, 1961, due to the valuation of stock at a realizable price lower than the sale price, contrary to Accounting Standard (AS)-2. The AO made additions based on this rejection. The CIT(A) granted partial relief. Both the assessee and the Revenue filed appeals before the ITAT, which dismissed both appeals. The Revenue has now appealed to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the order of the AO where the books of accounts were rejected under Section 145(3) of the Act because the assessee did not value stock at cost price or market price as per AS-2, but at an assumed realizable price lower than the sale price? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue contended that the Tribunal erred in not upholding the AO's order. The AO had rejected the assessee's books of accounts under Section 145(3) because the assessee had valued its stock at a realizable price assumed by the assessee, which was lower than the sale price, and this valuation did not adhere to Accounting Standard (AS)-2, which mandates valuation at cost price or market price. The Revenue argued that the Tribunal should have sustained the AO's action.

Which sections of the Income-tax Act were involved?

Section 145(3)

AI-generated summary — verify with the full judgment below

C/TAXAP/1087/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1087 of 2018 ========================================================== THE PR. COMMISSIONER OF INCOME TAX Versus SMT. GRACY KUTHUMKAL THOMAS PROP. OF M/S JINNY MARINE TRADERS ========================================================== Appearance: MR MR BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 04/09/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

Revenue is in appeal against the judgment of the   Income­tax   Appellate   Tribunal   dated 01.03.2018   raising   following   substantial question of law for our consideration :­ “Whether on facts and circumstances of the case and in law the Tribunal is justified in   not   upholding   the   order   of   the   A.O. Wherein   the   books   of   accounts   were rejected   u/s.145(3)   of   the   Act   on   the ground   that   the   assessee   has   not   valued either at the cost price or market price as per AS­2 but valued at realizable price assumed   by   the   assessee   lower   than   the sale price ?”

2.

The Assessing Officer after rejecting the Page 1 of 2

C/TAXAP/1087/2018 ORDER book   results   of the  assessee   under  Section 145(3)   of   the   Income­tax   Act,   1961   made certain additions which were subject matter of appeal before the CIT (Appeal) who made detailed   examination   of   the   materials   on record   and   granted   partial   relief   to   the assessee.   Both   sides   filed   cross­appeals before the Tribunal. Tribunal dismissed both the appeals. The department has carried the issue further before us. 3.  We   have   perused   the   documents   on   record produced by the assessee. Heard the learned counsel  for  the  Revenue.   CIT  (Appeals)  and the Tribunal minutely examined the materials on record and concurrently held that part of the additions made by the Assessing Officer were   not   sustainable.   No   question   of   law arises.  Issues  are  purely  facts  based.  Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) K.K. SAIYED Page 2 of 2

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