Commissioner of Income Tax-VI V. Sri Taraka Jewellers

ITTA/274/2013

AI Insights

The case involves the Commissioner of Income Tax-VI, Hyderabad as the appellant and M/s. Sri Taraka Jewellers as the respondent. The appeal was directed against the judgment and order of the learned Tribunal which had deleted the additions made by the department regarding unexplained investments and estimated profits from unaccounted sales for the assessment year 2007-2008. The main contention was the discrepancy between the stock statement furnished to the bank and the books of account. The Tribunal found no evidence of stock variation beyond the recorded amounts, and the High Court agreed, citing established legal precedents that such discrepancies alone do not warrant additions to income.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719108 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 12-07-2013
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Pioneer Breeding Farms, CIT Vs. Udaipur Chemicals & Fertilizers (P) Ltd., Coimbatore Spinning & Weaving Co. Ltd. Vs. CIT, Dhansiram Agarwalla V. CIT, Century Foams (P) Ltd. Vs. CIT, V.Rajan V. CIT, S.Murugappa Chettiar V. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment Year 2007-2008; Stock variation; Unexplained investment; Concealment of stock
• Section: 295 ITR 78; 211 CTR 191; 95 ITR 375; 111 CTR 39; 123 CTR 342; 96 ITR 64; 71 CTR 154

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD FRIDAY, THE TWELFTH DAY OF JULY TWO THOUSAND AND THIRTEEN PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SEN GUPTA AND THE HON'BLE MS. JUSTICE G.ROHINI I.T.T.A. No. 274 OF 2013 Between: Commissioner of Income Tax-VI, Hyderabad ..... Appellant AND M/s. Sri Taraka Jewellers, New Parkasham Bazar, Nalgonda .....Respondent The Court made the following : JUDGMENT: (per the Hon’ble the Chief Justice Sri K.J. Sengupta) This appeal is preferred and sought to be admitted on the following suggested questions of law against the judgment and order of the learned Tribunal dated 10.05.2012 in relation to the assessment year 2007- 2008. 1. On the facts and in the circumstances of the case, the Appellate Tribunal is justified in deleting the addition of Rs.1,19,43,361/- being unexplained investment on account of concealment of stock as reflected from the statement furnished to the Banker by the assessee? 2. Whether, on the facts and in the circumstances of the case, the finding of the Appellate Tribunal that the department could not bring on record to evidence stock variation in excess of what is recorded in the books of accounts can be said to be based on material on record? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in deleting the addition of Rs.1,19,43,361/- being unexplained investment and Rs.5,89,677/- being the estimated profit on the said unaccounted sales? Upon reading of the suggested questions of law, it appears the appeal is directed in relation to the Tribunal’s finding on the statement of account furnished to the bank. It is settled position of law by virtue of decision of both the Tribunal and the High Court that there cannot be any addition of difference in the stock statement furnished to the bank and the one shown in the books of account. In this case, during survey, nothing is found or brought on record to show that on physical verification, the stock found was in excess of the stock recorded in the books of account. It was explained by the assessee that the stock statement furnished to the bank was on estimate basis but the stock shown in the assessment proceedings was based on actual physical verification. As such, there was no reason to reject the books of account of the assessee and no addition is called for solely on account of the difference in value of the stock submitted to the bank and the value of the stock shown in the accounts presented for assessment. The learned Tribunal has relied on the following decisions. a) CIT Vs. Pioneer Breeding Farms (295 ITR 78) (Mad.) b) CIT Vs. Udaipur Chemicals & Fertilizers (P) Ltd., 211 CTR 191 c) Coimbatore Spinning & Weaving Co. Ltd., Vs. CIT (95 ITR 375) (Mad) d) Dhansiram Agarwalla V. CIT (111 CTR 39) (Gau) e) Century Foams (P) Ltd., Vs. CIT (123 CTR 342) (All) f) V.Rajan V. CIT (96 ITR 64)(Mad) g) S.Murugappa Chettiar V. CIT (71 CTR 154) (Ker) Therefore, we do not find any reason to admit the appeal to decide the settled issue. Therefore, we dismiss the appeal. No order as to costs. ______________________ Kalyan Jyoti Sengupta, CJ. __________ G.Rohini, J. July 12, 2013 MAS "