2019 (7) TMI 1054 - HC - Income Tax

High Court upholds Tribunal decision on income tax appeal, citing lack of evidence for goods valuation discrepancy.

PRINCIPAL COMMISSIONER OF INCOME TAX-3 Versus WAVES FOOD PVT. LTD.

The High Court dismissed the Revenue's appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for ... Addition on account of loss shown in the Gross Profit - Tribunal upholding the order of CIT(A) in deleting the addition - HELD THAT:- It appears from the materials on record that the Appellate Tribunal concurred with the findings recorded by the CIT(A) and took the view that there was evidence to substantiate the claim of the assessee that he had to sell his goods at the agreed price which was lesser than the cost of purchase. There is a finding of fact arrived at by the two Revenue authorities that the assessee was able to furnish copies of the sales bill and nothing was found suspicious about the transaction. There is a concurrent finding recorded by the two Revenue authorities that there is nothing to indicate that the assessee had sold the goods at a higher value, but had deliberately declared the same at a lesser value in the books. In view of the concurrent findings arrived at by the two revenue authorities, we are not inclined to disturb the same. There is no perversity in the factual findings recorded by the Revenue authorities. Appeal dismissed. Issues:Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the assessment year 2008-09. The main question is whether the Tribunal erred in upholding the deletion of an addition made by the Assessing Officer for a loss shown in the Gross Profit.Analysis:The Tax Appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal for the assessment year 2008-09. The main issue raised was whether the Tribunal was correct in deleting the addition made by the Assessing Officer for a loss shown in the Gross Profit. The Tribunal observed that the assessee had made sales at a price lower than the purchase price, incurring a gross loss in the trading account. The assessee claimed that the goods were sold at an agreed price despite an increase in raw material costs. The Tribunal noted that if the assessee had committed to supply goods at an agreed price without an escalation clause, any resulting loss would be eligible as a business expense. The Tribunal found that the assessee had provided copies of sales bills to the Assessing Officer, which were not disproved. The Tribunal also noted that there was no evidence to suggest that the goods were sold at a higher value but declared at a lesser value in the books.The Appellate Tribunal concurred with the findings of the CIT(A) and held that there was evidence supporting the claim that the goods were sold at an agreed price lower than the cost of purchase. Both Revenue authorities found no suspicious transactions and no indication that the goods were sold at a higher value but declared at a lower value in the books. The Court upheld the concurrent findings of the Revenue authorities, stating that there was no perversity in the factual conclusions reached. Consequently, the appeal was dismissed.In conclusion, the judgment focused on whether the Tribunal erred in upholding the deletion of an addition made by the Assessing Officer for a loss shown in the Gross Profit. The Tribunal and the CIT(A) found evidence to support the assessee's claim, leading to the dismissal of the Revenue's appeal by the High Court.