2020 (4) TMI 333 - HC - Income Tax

Court upholds Tribunal's decision on unexplained expenditure & liability additions in assessment year 2009-10

The Principal Commissioner Of Income Tax-2 Versus Mohmed Shakil Mohmed Shafi Mutwali

The High Court dismissed the appeal challenging the Tribunal's order regarding the addition of unexplained expenditure and unexplained current liability ... Unexplained expenditure under section 69C - allegation that, assessee had shown inward quantity of 142090 kilograms of wheat flour and 18340 kilograms of wheat flour was purchased from the open market and had not shown the purchase cost of 123750 kilograms of wheat flour - Commissioner (Appeals), who deleted the addition also confirmed by ITAT - HELD THAT:- Assessee along with the month-wise details of purchase and sale of wheat and wheat atta (flour) showed that the atta that was sold by the assessee was converted from the stock of wheat that was already available with it. Therefore, the purchase of stock of such atta was reflected in the wheat purchase account and not in the atta purchase account. The Commissioner (Appeals) noted that the assessee had submitted documentary evidence to demonstrate the same, which was found to be correct and it was seen that the quantity records and closing stock of wheat and atta confirms the explanation. Conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded after appreciating the material on record. The learned Senior Standing Counsel for the appellant is not in a position to point out any material to the contrary so as to dislodge the findings of fact recorded by the Tribunal nor has it been pointed out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Under the circumstances, the conclusion arrived at by the Tribunal being based upon a pure finding of fact recorded after appreciating evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by it, the said ground of appeal does not give rise to any question of law. Unexplained current liability - Commissioner (Appeals), who deleted the addition also confirmed by ITAT - HELD THAT:- The record of the case reveals that the assessee had been purchasing goods from GASPL and was also getting job work from them. The Assessing Officer called for the contra accounts of GASPL and compared them with corresponding accounts in the assessee’s books of account which showed a difference of ₹ 1,59,184/-. It appears that such difference was because of the fact that the assessee maintained two accounts of GASPL one in respect of job work and the other in respect of goods purchased, whereas GASPL kept only one account for both items. Such mistake in accounting on the part of GASPL was subsequently rectified by them by passing necessary entries. Thus, as a matter of fact there was no difference in the books of account of the assessee and GASPL. Under the circumstances, this ground of appeal also does not give rise to any question of law. Issues:- Challenge to order under section 260A of the Income Tax Act, 1961- Addition of unexplained expenditure under section 69C of the Act- Addition of unexplained current liability for goodsAnalysis:Challenge to Order under Section 260A:The appellant, revenue, challenged the order passed by the Income Tax Appellate Tribunal, Ahmedabad, regarding the addition of unexplained expenditure and unexplained current liability. The Tribunal had upheld the deletion of these additions made during reassessment proceedings for the assessment year 2009-10.Addition of Unexplained Expenditure under Section 69C:The Assessing Officer added Rs. 19,54,012 as unexplained expenditure due to discrepancies in the purchase cost of wheat flour. However, the Commissioner (Appeals) deleted this addition after considering documentary evidence provided by the assessee, which demonstrated that the atta sold was converted from existing wheat stock. The Tribunal concurred with this finding, noting that the wheat was converted from the stock already available with the assessee. The Tribunal's decision was based on factual findings and evidence, and no error was found to challenge it.Addition of Unexplained Current Liability for Goods:Regarding the addition of Rs. 1,59,184 as unexplained current liability for goods, the Assessing Officer had noted a difference in the accounts with Gujarat Agro Sortex Pvt. Ltd. The Commissioner (Appeals) deleted this addition after the assessee submitted a reconciliation explaining the difference, attributing it to a mistake by Gujarat Agro Sortex Pvt. Ltd. The Tribunal upheld this decision, emphasizing that the difference was due to accounting discrepancies, which were rectified by the company. As there was no actual difference in the accounts of the assessee and Gujarat Agro Sortex Pvt. Ltd., no legal question arose from this issue.In conclusion, the High Court dismissed the appeal, finding no substantial question of law arising from the Tribunal's order. The Tribunal's decisions regarding the deletion of additions were upheld based on factual evidence and reconciliations provided by the assessee, demonstrating no legal errors in the assessments.