M. Ambalal & Co v. The Commissioner Of Income-Tax, City-Xv, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 331 OF 2006 M. Ambalal & Co....Appellant Versus The Commissioner of Income-tax, City-XV, Mumbai ...Respondent Ms. Aasifa Khan for the Appellant Mr. Vinod Gupta for the Respondent. CORAM:B ILAL NAZKIand S.S. SHINDE, JJ. DATE: JUNE 27, 2008 P.C.:- Heard the learned counsel for the parties. 2.Following questions have been framed:- “(1) Whether, on the facts and in the circumstances of thecase and in law the ITAT erred in setting aside the issue ofaddition of Rs.88,72,947/-, made u/s. 69 of the Act, to the fileof the Assessing Officer directing him to verify the stock onthe basis of the existence of the stock register found at thetime of search, without considering the fact that theAppellant was maintaining two stock registers(manufacturing and trading division) and the stock register ofManufacturing division was seized by the CustomsDepartment? (2) Whether, on the facts and in the circumstances of thecase and in law the ITAT failed to appreciate that theAppellant had recorded the seizure of diamonds ofRs.88,72,947/- by the Customs Department in its books ofaccount as the closing stock, as such the same have beenaccounted and considered while computing the income andtherefore, once again making the addition u/s.69 of the Actby the Assessing Officer amounts to double addition? (3) Whether, on the facts and in the circumstances of thecase and in law the ITAT failed to consider the fact that theCustoms Department had seized the diamonds with differentpurpose and object and therefore, the findings andpresumption made by them for the seizure of the diamondsare not available to the Income Tax Department whileassessing the income of the Appellant when, in fact, all theevidence in support of the possession and ownership of thediamonds was produced at the time of assessment? (4) Whether, on the facts and in the circumstances of thecase and in law the ITAT was right in setting aside, to the fileof the Assessing Officer, the issue of addition made inrespect of the rough, cut and polished diamonds of themanufacturing division when the Assessing Officer has notdoubted the genuineness of the entries in the stock registerof the manufacturing division? (5) Whether, on the facts and in the circumstances of thecase and in law the ITAT erred in setting aside the issue tothe file of the Assessing Officer only on the ground ofverification of stock register, without considering theevidence or documents produced before it regarding thestock of diamonds of the manufacturing and trading divisionand those received from the karigars? (6) Whether, on the facts and in the circumstances of thecase and in law the order passed by the ITAT, withoutconsidering the facts of the case, is perverse? (7) Whether, on the facts and in the circumstances of thecase and in law the ITAT was right in holding that anyaddition made u/s.69 of the Act is not the income derivedfrom the export and therefore, it is not eligible for deductionu/s. 80HHC of the Act? (8) Whether, on the facts and in the circumstances of thecase and in law the ITAT failed to appreciate that theAppellant was dispossessed of the stock of diamonds by theCustoms Department from the day of the search and onlythe confiscation order was passed, later therefore, the claimof Rs.88,72,947/- ought to be allowed as business loss?” (6) Whether, on the facts and in the circumstances of thecase and in law the order passed by the ITAT, withoutconsidering the facts of the case, is perverse? (7) Whether, on the facts and in the circumstances of thecase and in law the ITAT was right in holding that anyaddition made u/s.69 of the Act is not the income derivedfrom the export and therefore, it is not eligible for deductionu/s. 80HHC of the Act? (8) Whether, on the facts and in the circumstances of thecase and in law the ITAT failed to appreciate that theAppellant was dispossessed of the stock of diamonds by theCustoms Department from the day of the search and onlythe confiscation order was passed, later therefore, the claimof Rs.88,72,947/- ought to be allowed as business loss?” 3.These questions are basically framed by the appellant on anassumption that the facts, as mentioned in the Tribunal's order, are notcorrect. Certain questions are sought to be justified to be substantialquestions of law on the ground that the appellant has produced stockregisters; but in question No.1 itself, it is stated that the appellant wasmaintaining two stock registers, and the stock register of ManufacturingDivision was seized by the Customs Department. Therefore, theTribunal was right in holding, against the learned Deputy Registrar' sorder, that there is no stock register, as mentioned by the AssessingOfficer. At least, nothing was produced before him. If therewas any, it must have been seized by the Customs Department. No such evidence has been produced. In absence of genuine stockregister of Manufacturing Division, the CIT(A) was not justified indeleting the addition. The appellant relied on certain papersfrom the assessee's paper book, but which were admitted to be not thestock register. Therefore, the conclusion drawn was based on facts,and the appellant has not been even able to produce the stock registerbefore the authorities concerned. Therefore, it could not be said thatthe appellant had recorded the seizure of diamonds by the CustomsDepartment in its books of account as the closing stock. Since no stockregister was maintained, there was no question of coming to aconclusion other than to which the Tribunal came. 4.The next challenge relates to addition made under Section 69of the Income Tax Act. The Tribunal came to the factual conclusion,and, therefore, applied Section 69. 5.In the facts and circumstances, we do not think that anyquestion of law arises for our consideration. The appeal is accordinglydisposed of. BILAL NAZKI, J. S.S. SHINDE, J.