COMMISSIONER OF INCOME TAX AP-I HYD V. M/S.BHARAT RICE AND OIL MILLS SHAMSHERGUNJ

ITTA/34/2001

AI Insights

The case involves the Commissioner of Income Tax, A.P.-1, Hyderabad as the appellant and M/s Bharat Rice & Oil Mill, Hyderabad as the respondent. The dispute centered on the assessment year 1991-92, where the Income Tax Department added Rs.47,72,953 to the respondent's income, citing discrepancies between the stock declared to the bank for an overdraft facility and the stock recorded in the books. The Assessing Officer and the Commissioner of Income Tax (Appeals) upheld this addition, but the Tribunal deleted it, referencing similar cases where it was held that such discrepancies do not justify the rejection of books of account. The High Court upheld the Tribunal's decision, dismissing the appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719116 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 03-07-2013
• Assessment Year: misc
• Other Referred Cases: ACIT Vs. M/s Gopal Khandasari Sugar Mills, Jai Sharda Rice Mills vs. ITO, CIT vs. Ramakrishna Mills (Coimbatore) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Addition; Books of account; Discrepancy; Income from other sources; Stock
• Section: 143(3)

Judgement Text

"HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.34 of 2001 Date: 03.07.2013 Between: The Commissioner of Income Tax, A.P.-1, Hyderabad. .....Appellant AND M/s Bharat Rice & Oil Mill, Hyderabad. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.34 of 2001 JUDGMENT: (per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is directed against the judgment and order of the learned Tribunal dated 25.07.2000 in relation to the assessment year 1991-92, on the following substantial questions of law: (A) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in deleting the addition of Rs.47,72,953/- in spite of there being admitted discrepancy between accounts disclosed to the department and the banker? (B) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in deleting an addition of Rs.47,72,953/- without there being any material to show that entries in the books of accounts are genuine? (C) Whether on the facts and in the circumstances of the case, the findings of Appellate Tribunal to the extent of deletion can be justified without assessee discharging its obligation of proving that there is no discrepancy between the physical stocks and the stocks shown in the books of accounts? (D) Whether there was any material before the ITAT to hold that the addition made on account of variation of stock is not sustainable? We have heard the learned Counsel for the parties and gone through the judgment and order of the learned Tribunal. The short fact is that the assessee is a registered firm carrying on business of extraction and refining of various oils and as such maintaining the stock and stock register and while filing returns, the assessee furnished the stock particulars supported by the stock register. But, such particulars were at variance with the particulars given to the bank while obtaining overdraft facility. The Assessing Officer, after physical verification of the stock register, held that the excess stock declared to the bank was liable to be added back as income from other sources. On appeal, the Commissioner of Income Tax (Appeals) has agreed with the finding of the Assessing Officer. The learned Tribunal, however, deleted the addition of amount sustained by the Commissioner of Income Tax (Appeals). After hearing the learned Counsel for the parties and considering the judgment and order of the learned Tribunal, it appears that the learned Tribunal has deleted the addition as the similar issue was decided likewise in the case of ACIT Vs. M/s Gopal Khandasari Sugar Mills, wherein it was held that the discrepancy in particular in situation like this should not result in rejection of the books of account of the assessee. Similar view was taken by the learned Tribunal of Amritsar Bench in the case of Jai Sharda Rice Mills vs. ITO, 36 ITD 254, in which it was held that it is now well settled that the department cannot rely merely on the bank statements and they have to consider all other relevant materials. This view is also accepted by the decision of the Madras High Court in CIT vs. Ramakrishna Mills (Coimbatore) Ltd., 93 ITR 49 and decisions of other High Courts reported in 158 ITR 567, 163 ITR 436 and 181 ITR 198. In view of the consistent view taken by the Madras High Court and the learned Tribunal, we are of the view that the learned Tribunal has decided the matter on correct legal conclusion. Therefore, the deletion of the addition on account of unexplained investment in excess stock is justified. We affirm the judgment and order of the learned Tribunal. Accordingly, the appeal is dismissed. Miscellaneous petitions, if any pending, shall stand dismissed. No order as to costs. ___________________ K.J. SENGUPTA, CJ _______________ G.ROHINI, J 03.07.2013 Gsn. "