The present Appeal by the Revenue preferred under section 260-A of the Income Tax Act, 1961 is directed against the order dated 07.01.2011 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' in ITA No. 828 of 2009. 1.1 Following two questions are sought to be raised by the appellant proposing them as substantial questions of law.
“[1] Whether the Appellate Tribunal is right in law and on facts in deleting the additions of Rs. 32,92,485/- made by the Assessing Officer on account of cost of unaccounted purchase of castor seeds [2] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 6,81,686/- made by Assessing Officer on account of gross profit on unaccounted sale?”
2. We heard learned advocate Mr. Varun K. Patel for the appellant.
3. The relevant facts which may be noticed first, are that while assessing the income of the respondent-assessee, who is engaged in the business of manufacturing and trading of castor oil, for the Assessment Year 2005-06, the Assessing Officer passed assessment order dated 06.12.2007 under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for sake of brevity). The Assessing Officer made two additions. First was for Rs.32,92,485/- in respect of unaccounted purchases. The second addition was with regard to gross profit on unaccounted sales for Rs. 6,81,868/-. The Assessing Officer was of the view that the average consumption of electricity per quintal exceeded and therefore there was unaccounted production of castor oil. Consequentially, the aforementioned two additions came to be made.
3.1 In the assessee’s appeal, the Commissioner of Income-tax (Appeals) set aside the additions. The CIT(A) accepted the explanation of the assessee that the production was dependent upon several factors. It was submitted by the assessee that the electricity consumption would be double during the period when fresh castor seeds were purchased because they would contain moisture resulting into more consumption of electricity. At the time when the moisture content was less, there would be less electricity consumption.
3.2 Against the decision of CIT(A), the Department went in appeal which culminated into the impugned order. After considering the facts of the case and the orders of the authorities below, the Tribunal recorded its findings and dismissed the appeal. It was observed by the Tribunal as under.
“Admitted factual position is that merely on the basis of some variation in few months in the electricity consumption, the Assessing Officer had made the impugned presumptive addition by wrongly holding that there ought to be corresponding unaccounted purchases. In this regard, a specific query has been raised by the Bench during the course of hearing that whether before making an addition, the Assessing Officer has found any defects in the books of account or whether the provisions of section 145(3) were invoked for rejection of books of account. From the side of the Revenue, no satisfactory reply was submitted.”
“Once the books have been prepared on the basis of the bills and vouchers and there is no allegation that either the purchase of raw-material or production was found unrecorded, then there was no reason for an addition, that too on presumptions. Considering the totality of the book result it can also be opined that if no discrepancy is found in the average consumption of production and the book results are based upon the details of manufacturing activity, etc. then also there was no reason for such a presumptive addition.”
“In the result, considering the totality of the circumstances of the case as also the case laws referred hereinabove, we are of the conscientious view that the learned CIT (Appeals) has rightly reversed the findings of the Assessing Officer”
4. The aforesaid findings are arrived at by the Tribunal on the basis of relevant material before it. It is the finding of the Tribunal that some variation during few months in the electricity consumption cannot be a ground and the addition made by the Assessing Officer on that premise was on presumption. It is in the realm of appreciation. No error was committed by the Tribunal in arriving at such finding. The finding being in nature of finding of fact, the present appeal does not raise any substantial question of law for consideration. It is well settled that the appeal under section 260A of the Act cannot be entertained when the order of the Tribunal rests on fining of facts.
5. Accordingly, the appeal is dismissed.
[V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi