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TAXAP/122009/2009 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 12 of 2009
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COMMISSIONER
OF INCOME TAX-I - Appellant(s)
Versus
M
ALPS INFOSYS LTD - Opponent(s)
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Appearance :
MRS
MAUNA M BHATT for Appellant(s) : 1,
None for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 01/02/2010
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA)
The
present Appeal has been filed by the Appellant Income Tax
Department under Section 260A of the Income Tax Act, 19961,
proposing to raise the following question of law:
Whether
the Appellate Tribunal is right in law and on facts in confirming
the order passed by the CIT(A) deleting the addition of
Rs.10,70,896/- made on account of excess stock?
Heard
learned Standing Counsel Mrs. Mauna M. Bhatt for the Appellant.
Mrs.
Bhatt referred to the order passed by the Tribunal dated 10.6.2008
and submitted that the Tribunal has failed to appreciate while
confirming the order of CIT(A) about the variation in the stock.
She further submitted that CIT(A) was not justified in dealing with
the addition of Rs.10,70,896/- on account of difference in the
valuation of the stock submitted to the Bank and stocks as per books
of assessee. She emphasized that the books of account were prepared
and maintained by the assessee and he has admittedly furnished the
statement to the Bank showing the value of stock more than reflected
in the books of accounts of the assessee. She therefore strenuously
submitted that this aspect ought to have been considered as it has
not been appreciated properly. She therefore strenuously submitted
that the asessee has deliberately either given a false statement to
the Bank regarding the stock, or the books of accounts are not
reflecting the correct position when it is not reconciled. She
therefore submitted that the CIT(A) and the Tribunal have committed
an error in appreciating this and therefore the present Appeal may
be entertained for consideration of the question of law proposed to
be raised.
Though
this submission has been made by the learned Standing Counsel Mrs.
Mauna M. Bhatt, the perusal of the order passed by CIT(A) and
confirmed by the Tribunal would make it very clear that this aspect
has been considered. The moot question therefore is whether the
deletion is justified in view of the submissions made about
difference in the valuation of the stock as reflected in the books
of account and as per the statement furnished to the Bank. This
aspect has been dealt with by the CIT(A) and the CIT(A) has clearly
observed:
There
is nothing available on record to show that the assessee was having
higher stock than the disclosed stock in books of accounts. It is
also noticed that the A.O. did not controvert the explanation of the
assessee vide letter submitted to him that the stock statement to
the bank were based on rough estimate and not on actual / physical
verification and the same were inflated to avail the bank overdraft
facility.
The
CIT (A) has also referred to the reply furnished by the assessee
vide letter dated 25.3.2003 clarifying on this aspect with regard to
the difference in the quantity and there is a specific reference
with regard to the total quantity which would reconcile as explained
in the said letter which has been referred to in the order of
CIT(A).
The
Tribunal also after referring to this aspect has confirmed and
observed:
We
find that in the instant case the value of stock shown by the
assessee in the statement furnished to the bank is more than the
value reflected in the books of account of the assessee. The total
difference was Rs.11,02,279/- which comprise of difference of
Rs.31,487/- on account of quantity and difference on account of
valuation Rs.10,70,896/-. The AO added the entire amount of
Rs.11,02,279/- to the income of the assessee and the CIT(A) deleted
Rs.10,70,896/- out of the same which was on account of difference in
valuation. The CIT(A) deleted this addition following the order of
the Ahmedabad Bench of the Tribunal in the case of Jaydip Kanjibhai
(supra). In the above circumstances we are of the considered view
that the difference between the stock submitted to the bank and the
books of account of the assessee was on account of valuation only.
The contention of the assessee is that it had shown stock at the
higher value in order to obtain over draft facilities from the bank
against hypothecation of stocks. We find that the assessee had
produced the books of account and other relevant documents
before the AO. The valuation as per the books of account of the
assessee was verifiable from the details and vouchers
maintained by the assessee. The AO after verifying the same has not
brought any material on record to show how the assessee has under
valued its stock in order to show Jess profit. In absence of any
such evidence in our considered opinion the addition cannot be made
to the income of the assessee. Hence, we find no error in the order
of the CIT(A). It is confirmed and the ground of appeal of the
Revenue is dismissed.
In
light of the aforesaid discussion and in light of the concurrent
findings given by the CIT(A) as well as the Tribunal, we are not
inclined to entertain the present Appeal raising the proposed
question of law only on the ground that there is difference in the
value of stock as reflected in the books of accounts and the
statement furnished to the Bank. Therefore the present Appeal is
dismissed.
(K.A.Puj,J)
(Rajesh
H. Shukla,J)
Jayanti*
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