The Commissioner Of Income Tax, Central Ii, Mumbai v. M/S.kraftware (India) P. Limited

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2362 OF 2009 The Commissioner of Income Tax, Central II, Mumbai ..Appellant. Versus M/s.Kraftware (India) P. Limited ..Respondent. Mr.B.M. Chatterjee with Mrs.Padma Divakar for the appellant.Mr.J.D. Mistry with Mr.Atul K. Jasani for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 3[rd] February, 2010 P.C. : 1.The following questions of law have been formulated in the appeal by the revenue against the judgment of the Income Tax Appellate Tribunal dated 26[th ] November 2007. The appeal pertains to assessment year 1997-1998. a)Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in law in upholding the deletion of addition of Rs.40,46,700/- made on account of suppression of value of finished goods by the assessee ? b)Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in law, in not considering the evidentiary value of the statements recorded during search action on the ground that the statements of the employees and partners of the assessee firm varied from each other ? 2.The assessing officer made additions in the amount of Rs.40,46,700/- on the assumption that the scrap and wastage resulting from the manufacturing process of the assessee was 8.5% and that the difference between the scrap as recorded in the books of accounts of the assessee and the figure of 8.5% would have to be treated as suppressed finished goods of the assessee. In appeal, the Commissioner of Income Tax (Appeals) ordered deletion of this amount, which was made by the assessing officer. The Commissioner of Income Tax (Appeals) noted that a block assessment order was passed in the case of the assessee on 30[th] March 1999 under Section 158BC. During the course of block assessment, an addition was made by the assessing officer on the same basis which was however deleted by the Commissioner of Income Tax (Appeals). 3.The Tribunal had dismissed the appeal filed by the revenue. The Tribunal has observed, while dismissing the appeal of the revenue, that the books of account of the assessee were audited; excise records were maintained and no discrepancy has been pointed out by the excise authorities. Moreover, the assessing officer has not furnished any scientific basis to take 8.5% as a rate for wastage and for the generation of scrap. The scrap sales were found to be duly recorded in the books of account. Besides, during the course of block assessment, as already noted earlier, the case of the assessee has been accepted. 4.Having considered the judgment of the Tribunal, we are of the view that the decision entirely turns on an appreciation of material on record and does not raise any substantial question of law. The assessing officer confined the generation of scrap / waste to 8.5%. The Commissioner of Income Tax (Appeals) held that there was no basis for the decision of the assessing officer and the Tribunal has also observed that there was no scientific basis made out by the assessing officer for taking the percentage of waste / scrap at 8.5%. The reasons in the order of the Tribunal are adequate for this Court to form a view that the matter turns on an appreciation of facts of the case and would not give rise to any substantial question of law. The appeal is accordingly dismissed. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)