Grover Fabrics (India) Pvt. Ltd v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.860 of 2008 (O&M)Date of decision: 04.11.2009 Grover Fabrics (India) Pvt. Ltd. Vs. Commissioner of Income Tax. -----Appellant -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE GURDEV SINGHHON'BLE MR. JUSTICE GURDEV SINGH Present:-Mr. Pankaj Jain, Advocate for the assessee.for the assessee. ----- ORDER: 1. The assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) againstthe order of Income Tax Appellate Tribunal, Chandigarh Bench inI.T.A. No.738/CHD/2007 for the assessment year 2004-05, dated 18.1.2008, proposing to raise following substantial question oflaw:- “I) Whether on the true and correct interpretation ofprovisions of Section 254 r.w. Rule 18 of theAppellate Tribunal Rules, 1963, the tribunalorder is sustainable where the merits ofsustaining the Trading addition has remainedunexamined?”provisions of Section 254 r.w. Rule 18 of theAppellate Tribunal Rules, 1963, the tribunalorder is sustainable where the merits ofsustaining the Trading addition has remainedunexamined?” 2. During the course of hearing, learned counsel for theassessee proposes to revise the said question as under:- “Whether on the true and correct interpretation ofSection 145 once the trading addition has been made,then whether a separate addition u/s 68 towards suchcredit is sustainable?” 3. The assessee derived income from trading inhandloom products. The Assessing Officer did not accept thetrading results reflected in the books of account and accordingly,made addition to the declared income. Apart from making thesaid addition, the Assessing Officer made further addition inrespect of credit entries from bogus entities. The CIT(A) deletedthe trading addition after giving the benefit of telescoping againstaddition in respect of unexplained credit entries. On furtherappeal by both sides, the Tribunal remanded the matter to theAssessing Officer by observing that there was contradiction in thedocuments submitted by the assessee. 4. We have heard learned counsel for the appellant. 5. Only contention which has been put forward is thatonce addition in respect of trading results was deleted, additionon account of unexplained credit entries should have also beenautomatically deleted. Reliance for this submission has beenplaced on judgment of Allahabad High Court in CITv. SinghalIndustrial Corporation(2008) 303 ITR 225. 6. We are unable to accept the submission.Unexplained credit entries may or may not have nexus with thetrading results, as assessed. The CIT(A) deleted additions inrespect of trading results after giving benefit of telescoping. Itwill, thus, be a question of fact in each case whether addition onaccount unexplained credit entries was justified, inspite ofaddition made to the declared trading results. Judgment reliedupon by learned counsel for the assessee is on a different factsituation and cannot be read as laying down any norm ofuniversal application that once addition was made in the tradingresults, no addition could ever be made on account ofunexplained credit entries. 7. Thus, we are of the view that no substantial questionof law arises. 8. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE November 04, 2009ashwani ( GURDEV SINGH ) JUDGE