2011 (1) TMI 163 - HC - Income Tax

High Court affirms Tribunal's decision on Income-tax Department's appeal for fixed assets, assessment year 1997-98.

The High Court upheld the Tribunal's decision in an appeal by the Income-tax Department concerning additions in fixed assets for the assessment year ... Addition in income on account of unverified fixed assets - inspection of factory as evidence of existence of assets - findings of fact by appellate tribunalAddition in income on account of unverified fixed assets - inspection of factory as evidence of existence of assets - findings of fact by appellate tribunal - Validity of the assessing officer's addition to income on account of alleged unverified additions to fixed assets in the Dadra unit. - HELD THAT: - The Tribunal recorded that the machinery was physically found on inspection of the factory premises and that the assets were reflected in the audited accounts. On that factual foundation the Tribunal concluded there was no justification for making the impugned addition. The High Court held that this conclusion is a finding of fact and found no illegality in the Tribunal's approach or conclusion, thereby upholding the deletion of the addition.The addition made by the assessing officer was not sustained; the Tribunal's finding deleting the addition is upheld and the appeal is dismissed.Final Conclusion: The Department's appeal is dismissed; the Tribunal's factual finding that the assets existed and were reflected in audited accounts warranted deletion of the addition for assessment year 1997-98, and no illegality has been shown. Issues:Appeal by Income-tax Department against Tribunal's order for assessment year 1997-98 regarding additions in fixed assets.Analysis:The case involves an appeal by the Income-tax Department against the order of the Income-tax Appellate Tribunal concerning additions in fixed assets for the assessment year 1997-98. The assessee had filed a return for the relevant year, after which a search was conducted by the Department at two units of the assessee - one at Dadra and the other at Ghaziabad. Significant additions in fixed assets were reported in both units. The assessing officer added a substantial sum to the income, considering the unverified additions in the fixed assets. Subsequently, the assessee appealed to the Commissioner of Income-tax (Appeals) at Ghaziabad, resulting in the deletion of the added amount. Dissatisfied, the Department filed an appeal before the Tribunal, which was dismissed on 19.1.2007, leading to the current appeal before the High Court.Upon reviewing the case, the High Court noted that the Tribunal had found the machinery in the premises during inspection and recorded it in the audited accounts. Consequently, the Tribunal concluded that there was no justification for making the addition in question. The High Court observed this as a factual finding, devoid of any legal infirmity. Consequently, the Court held that the appeal lacked merit and dismissed it accordingly. The judgment affirms the Tribunal's decision, emphasizing the factual basis for the conclusion reached regarding the additions in the fixed assets.