2019 (7) TMI 1224 - HC - Income Tax

Court upholds tribunal's decision on burning loss estimation in steel business, dismissing revenue's appeal.

The High Court dismissed the appeal filed by the revenue under section 260(A) of the Income Tax Act, 1961, challenging the order of the Income Tax ... Addition on account of the excess burning loss - loss shown by the assessee ranging from 7.64% to 10% - AO estimated the burning loss @2% of the total input of the raw material - Tribunal deleted this addition but confirmed addition based on GP rate of earlier year - HELD THAT:- Having heard Ms.Mauna Bhatt, learned Senior Standing counsel appearing for the revenue and having gone through the materials on record, we are of the view that no error not to speak any error of law could be said to have been committed by the tribunal in recording the aforesaid findings. The matter is substantially on facts much less on any question of law. In view of the concurrent findings of fact recorded by two revenue authorities against the revenue, we are not inclined to disturb such finding. In the result, this appeal fails and is hereby dismissed. Issues:1. Appeal under section 260(A) of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal.2. Dispute over the burning loss estimation in the business of Rerolling of Steel.3. Consideration of previous orders and findings in the assessment.Analysis:1. The appeal was filed by the revenue under section 260(A) of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal for the Assessment Year 2012-13. The primary issue raised was whether the tribunal erred in upholding the order of CIT(A) and not appreciating the findings of the Assessing Officer regarding the burning loss estimation at 2% of the total input of the raw material.2. The dispute revolved around the burning loss shown by the assessee, engaged in the business of Rerolling of Steel, which ranged from 7.64% to 10%. The revenue contended that this percentage was on the higher side, considering the nature of the business and electricity consumption. The tribunal considered the order passed by the Co-ordinate Bench in the assessee's own case for the A.Y. 2010-12, where a rational method was adopted to compute the GP addition based on the latest profitable assessment year as the standard GP.3. The tribunal's findings highlighted the rejection of the books of account under section 145(3) of the Income Tax Act, 1961. The tribunal upheld the addition of Rs. 5,25,667 for the A.Y. 2012-13, while deleting the initial addition of Rs. 1,79,12,777 made by the Assessing Officer. The tribunal emphasized the decline in the GP ratio over the years and the need for a rational method to calculate the addition, considering the turnover and GP for the immediate preceding years.4. After hearing the arguments, the High Court concluded that no error of law was committed by the tribunal in its findings. The court noted that the matter primarily involved factual considerations, and since two revenue authorities had concurrently upheld the findings against the revenue, there was no basis to disturb the decision. Consequently, the appeal was dismissed, affirming the tribunal's order.This detailed analysis of the judgment provides insights into the legal issues involved, the arguments presented, and the court's reasoning leading to the final decision to dismiss the appeal.