2008 (6) TMI 171 - HC - Income Tax

High Court affirms Tribunal's decision denying depreciation to shop owner dealing in brass & metal

The High Court upheld the Tribunal's decision to disallow the loss and deny depreciation claimed by the assessee, a shop owner dealing in brass and metal ... Assessee claimed loss of value of goods on transfer - goods stated to have been transferred from one business concern to another were not found on inspection and the assessee’s manager gave statement confirming the same - assessee not maintaining proper bills or vouchers for the purchase or sales – AO was justified in taking the transfer value as unaccounted sale and consequently disallowing the loss claimed by the assessee Issues involved:1. Disallowance of loss confirmed by the Tribunal2. Denial of depreciation confirmed by the Tribunal3. Restoration of cross objection along with appeal before the TribunalAnalysis:1. The tax reference arose from the Tribunal's order for the year 1990-91. The assessee raised questions regarding the disallowance of loss and denial of depreciation, which were confirmed by the Tribunal. The Tribunal dismissed the cross objection initially, leading to the assessee filing an original petition seeking restoration of the cross objection and a fresh decision on the matter.2. The main contention was that the Tribunal did not consider the documents presented by both the Department and the assessee during the hearing. The assessee, a shop owner dealing in brass and metal articles, claimed to transfer vessels to another business. However, a survey revealed discrepancies, with the manager stating that the goods were not transferred as claimed. The assessing officer disallowed the loss claimed by the assessee due to lack of proper documentation. Despite initial success in the first appeal, the Tribunal reversed the decision based on evidence from the survey and the manager's statement, upholding the assessment.3. The High Court found no substantial question of law justifying interference with the Tribunal's decision. The rejection of the books of accounts was deemed appropriate given the discrepancies found during the survey. The lack of proper vouchers and bills supporting the business transactions further weakened the assessee's case. The Court concluded that no further evidence or inquiry was necessary, upholding the Tribunal's order in favor of the Department.4. As the Tribunal had already decided the appeal on merits and the High Court upheld the decision, there was no basis to interfere with the dismissal of the cross objection. Therefore, both the Income Tax Reference and the Original Petition were disposed of, ruling against the assessee and in favor of the Department.