Principal Commissioner Of Income Tax, Surat 1 v. Jugal Kishore Mahendra Biyani

C/TAXAP/1000/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1000 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT 1VersusJUGAL KISHORE MAHENDRA BIYANI ========================================================== Appearance:MR.VARUN PATEL, ADVOCATE for MRS KALPANAK RAVAL(1046) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 14/08/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 14.02.2018 raising following questions for our consideration: “[A] Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT was justified in deleting the addition made on accountofbogusopeningstock Rs.6,51,00,020/- despite the fact that assessee had manipulated the stock and bogus opening stock was reported in the books of account and in ROI ? [B] Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT was justified in deleting the addition made on account of bogus credits of M/s.Khushi of Rs.1,21,34,503/- despite the fact that assessee failed to prove the genuineness of the creditors in spite of being provided with ample opportunities ? [C] Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT was justified in deleting the addition made on account of bogus credits of M/s.Sanket Export of Rs.1,83,89,471/- despite the fact that assessee failed to prove the genuineness of the creditors in respect of new purchase in spite of being provided with ample opportunity to do so ? [D] Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT was justified in confirming the deletion made by the Ld. CIT(A) of Rs.93,673/-, out of disallowance of various expenses of Rs.1,87,346/-, in spite of the facts that assessee has failed to prove that the expenses incurred were wholly made for business purpose?” 2.Question-A relates to assessee's declaration of opening stock of Rs.6.51 crores (rounded off) of fabric as on 01.04.2013 which the assessee claimed to have purchased from 24 suppliers. Assessing Officer doubted such declaration and carried out further inquiries. He noted that CENVAT provisions were introduced for the first time to the Textile Industries and all traders had to make declaration of stock as on 31.03.2003 to ascertain the CENVAT credit available in their accounts. The Assessing Officer did not find such stock declaration genuine and therefore made consequential additions. In appeal, the assessee produced further materials including a certificate from the Superintendent of Central Excise, Surat, of the stock position of the assessee. Commissioner of Income Tax (Appeals) called for the remand report and noted that the assessee had made such a declaration before the Income Tax as well as Central Excise Authorities of his stock position as on 31.03.2003. He therefore believed that such stock was actually in existence. He noted that such stock was subsequently sold by making proper declarations with the Excise Authorities. Monthly returns of claiming CENVAT credit were also filed. the assessee produced further materials including a certificate from the Superintendent of Central Excise, Surat, of the stock position of the assessee. Commissioner of Income Tax (Appeals) called for the remand report and noted that the assessee had made such a declaration before the Income Tax as well as Central Excise Authorities of his stock position as on 31.03.2003. He therefore believed that such stock was actually in existence. He noted that such stock was subsequently sold by making proper declarations with the Excise Authorities. Monthly returns of claiming CENVAT credit were also filed. 3.In further appeal, the Tribunal also held in favour of the assessee. It was noted that the assessee had shown sale of such stock after May 2003, and the sale proceeds were also received during the year under consideration. The Tribunal noted that in the declaration before the Excise Authorities, the assessee had shown the stock of the same value pertaining to different kinds of gray fabric admeasuring 17,57,165 meters. The Tribunal also noted that such stock was cleared in subsequent period, for which, monthly declarations were filed. C/TAXAP/1000/2018 ORDER 4.It can thus be seen that the entire issue is based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held on facts that the assessee's declaration was genuine. No question of law arises. 5.Questions-B and C pertained to the additions made by the Assessing Officer on account of his belief that the assessee had shown bogus creditors. In this context, the Tribunal while confirming the view of the Commissioner of Income Tax (Appeals), noted that there was sufficient evidence of the genuineness of the creditors. Further, such addition of the purchases would give distorted gross profit rate as compared to gross profit rate disclosed in similar type of business,inter-alia,on such grounds, the Tribunal dismissed the Revenue's appeal. 6.Here also, the issues are entirely based on appreciation of record. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held in favour of the assessee. No question of law arises. 7.Question-D pertains to disallowance of various expenses. The total of such expenses comes to barely Rs.1.86 lakhs. In any case, the question is factual. 8.In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) ANKIT SHAH (B.N. KARIA, J)