(PER : HONOURABLE Ms. JUSTICE SONIA GOKANI) Aggrieved by the order of the Income Tax Appellate Tribunal, Rajkot Bench [ Tribunal for short] dated 21st September 2012, Revenue has challenged its order by proposing the following substantial question of law for our consideration :-
{A} "Whether in law and in facts, the ITAT is right in deleting the addition to the tune of Rs. 57,04,983/- out of total addition of Rs. 62,20,098/= made by the A.O under the provisions of Sections 143 and 144 of the Act on account of opening stock, purchases and trading expenses ?
{B} "Whether in law and in facts, the ITAT is right in deleting the addition to the tune of Rs. 23,30,814/= out of total addition of Rs. 26,64,814/= made by the Assessing Officer under the provisions of Sections 143 and 144 of the Act on account of loan from Jivan Bank and Kotak Bank ?
{C} "Whether in law and in facts, the ITAT is right in holding that without rejecting the books of account the expenses and the stocks and purchases cannot be disturbed or rejected ?
{D} "Whether in law and in facts, the ITAT is right in holding that the order u/s. 144 of the Act being the base judgment order in the instant case is not honest and fair estimate and the same is arbitrary ?
Although, the questions raised are four in number, in essence, there are two questions. Questions {C} & {D} are argumentative in nature.
We have heard learned counsel Shri Desai for the Revenue and also examined the material on record produced by the Revenue.
The first question pertains to addition made by the Assessing Officer of Rs. 62,20,098/= and deletion to an extent of Rs. 57,04,983/= made by both CIT [A] and the Tribunal. The Assessing Officer, during the course of assessment, made additions without rejecting the books of accounts. CIT [A] in terms held that the Assessing Officer ignored the basic facts by making addition for opening stock, purchases and other expenses in as much as the opening stock and purchases are part of trading account, as shown in the audited accounts and that therefore, they cannot be rejected without rejecting the books of account. CIT [A] relied on the decision of the Supreme Court in case of Brij Bhushan Lal Parduman Kumar v. CIT, reported in 115 ITR 524 (SC) which says that the best judgment assessment must make an honest and fair estimate of income of the assessee and though arbitrariness cannot be avoided in such estimate, the same must not be capricious but should have a reasonable nexus to the available material and the circumstances of the case. CIT [A] confirmed the addition to an extent of Rs. 5,15,115/=, however, the amount of Rs. 57,04,983/= was directed to be deleted. When approached before the Tribunal, it concurred with the findings of the CIT [A]. Since the Tribunal has chosen to deal with both these issues together, it would be appropriate at this stage to also discuss the second question proposed before us.
The issue concerns deletion of addition made to the tune of Rs. 23,30,814/= out of the total addition of Rs. 26,64,814/=. The assessee had taken loan from Kotak Bank and Jivan Bank. The Assessing Officer added a sum of Rs. 21,11,674/= - the loan taken from Jivan Bank and a sum of Rs. 2,19,140/=, the loan taken from Kotak Bank and unsecured loans of Rs. 3,32,800/= from various parties and other liabilities without rejecting the books of account. CIT [A] on the ground that the assessee failed to discharge the burden under Section 68 in case of unexplained cash credit, allowed the unsecured loan of Rs. 3,32,800/= to be added to the income of the assessee-respondent, however, the amount of loan taken from two banks were held to be part of the balance-sheet and the audited accounts and therefore, rejected such additions.
The Tribunal concurred with CIT [A] on both the issues, by holding thus-
Having heard the learned DR, we have carefully gone through the orders of the authorities below. It is pertinent to note that the A.O in the assessment order added all the thinks like opening stock, total purchases, total trading and P & L Account, expenses, secured and unsecured loans without giving any estimation of giving any reason. The books of accounts of the assessee are audited. With the return of income, the assessee has filed audited P&L Account, balance sheet and audit report. The ld. CIT [A] called the remand report from the Assessing Officer, this remand report was forwarded to the assessee for his comments and after considering the comments of the assessee, in our opinion, the ld. CIT [A] is legally and factually correct in deleting the additions to the tune of Rs. 57,04,983/= and Rs. 23,30,814/= out of total addition of Rs. 62,20,098/= and Rs. 26,64,814/= made by the Assessing Officer in the assessment order. We are, therefore, inclined to uphold the order of the learned CIT [A].
Both the authorities, since have concurrently held in favour of the assessee-respondent on the issues, which is predominantly factual in nature, no perversity is pointed out as the reasonings are sound based on evidence adduced before these authorities, no question of law much less substantial question of law arises. Tax Appeal is therefore, dismissed.
(AKIL KURESHI, J.) (Ms. SONIA GOKANI, J.) Prakash* Page 5 of 5