2017 (9) TMI 2057 - HC - Income Tax

Addition of profit on sale of shares: Commissioner and Tribunal deleted AO's addition; HC found no substantial question of law.

Addition of profit on sale of shares was challenged because the assessing officer derived opening stock and sale/purchase figures from multiple sources ... Addition of profit on sale of shares - AO has computed the holding of shares from the information collected from different sources - ITAT deleted addition HELD THAT:- As argument before the Commissioner was that the working of opening stock is borrowed from the working given in the Assessment Year 1992-­93, without any break­up and without any basis. That is how the Commissioner faulted the exercise of the AO. He held that how the figures of sales and purchases were derived by him has not been explained by the AO. AO in the remand proceedings submitted a report, details of which are referred in para 9.8 of the Commissioner's order impugned before the Tribunal by the Revenue. It is clear that the Commissioner followed the findings in the case of Mr. Hitesh Mehta for the Assessment Year 1993­-94 and deleted the addition. To our mind, therefore, the Tribunal committed no error in refusing to interfere with the Commissioner's order. On facts, the Commissioner was justified in making the observations and reaching the above conclusion. To our mind, such an exercise being upheld by the Tribunal does not raise any substantial question of law. Issues: Whether the Revenue has raised any substantial question of law warranting interference with the Tribunal's refusal to disturb the Commissioner of Income Tax (Appeals)'s deletion of additions made by the Assessing Officer for Assessment Year 1993-94, and whether the Revenue may be allowed to reframe the substantial question of law to remit the matter to the Assessing Officer.Analysis: The Tribunal and Commissioner examined the Assessing Officer's exercise of computing share holdings and making additions based on information obtained from sources such as RBI, Custodian, and the Stock Exchange; the Commissioner concluded that the Assessing Officer had not adequately explained how figures for sales and purchases were derived and followed the findings in a related assessment (Hitesh Mehta) to delete the addition. The Tribunal considered whether the Books of Account, admitted as additional evidence earlier, required fresh scrutiny and remanded limited factual issues (reconciliation of opening and closing balances) to the Assessing Officer for verification. The Revenue sought to reframe the substantial question of law and to have the matter restored on parity with another year's findings, but the Court found no justification to permit additional grounds where the Assessing Officer's methodology lacked inquiry or evidential foundation and where earlier parallel proceedings did not sustain a substantial question of law. The Court also noted prior orders in related matters where identical questions were not held to raise substantial questions of law.Conclusion: The Revenue's appeal does not raise any substantial question of law; there is no justification to reframe additional grounds or to interfere with the Commissioner of Income Tax (Appeals)'s deletion of the addition. The appeal is dismissed and the decision stands in favour of the assessee.