The Principal Commissioner Of Income Tax-2 v. Mohmed Shakil Mohmed Shafi Mutwali

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 758 of 2019 ======================================THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 Versus MOHMED SHAKIL MOHMED SHAFI MUTWALI ======================================Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ====================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANIandHONOURABLE MS. JUSTICE SANGEETA K. VISHENDate : 10/12/2019 ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1.By this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the appellant – revenue has challenged the order dated 18.06.2019 passed by the Income Tax Appellate Tribunal, Ahmedabad, Bench 'A', Ahmedabad (hereinafter referred to as 'the Tribunal') in ITA No. 3389/Ahd/2015 by, proposing the following two questions, stated to be substantial questions of law: “(A) Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) deleting the addition of Rs.19,54,012/- made on account of unexplained expenditure under section 69C of the Act without properly appreciating the facts of the case and the material brought on record? (B)Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) deleting the addition of Rs.1,59,184/- made on account of unexplainedcurrentliability withoutproperly appreciating the facts of the case and the material brought on record?” 2.The assessment year is 2009-10 and the relevant accounting period is the previous year, 01.04.2008 to 31.03.2009. 3.The respondent – assessee is engaged in the business of wheat flour manufacturing. The assessee filed its return of income on 31.08.2009 declaring total income of Rs.2,99,420/-. The original assessment proceedings under section 143(3) of the Act came to be completed on 01.12.2011 determining the assessed income at Rs.6,53,680/-. The case was reopened and assessment was framed under section 143(3) read with section 147 of the Act on 15.10.2014 after making addition of Rs.19,54,012/- on account of disallowance of unexplained expenditure and Rs.1,59,184/- on account of unexplained current liability for goods, thereby, determining total income at Rs.24,77,620/-. 4.Insofar as proposed question (A), which relates to addition of Rs.19,54,012/- made on account of unexplained expenditure under section 69C of the Act is concerned, during re-assessment proceedings, the Assessing Officer noticed that the assessee had shown inward quantity of 142090 kilograms of wheat flour and 18340 kilograms of wheat flour was purchased from the open market and had not shown the purchase cost of 123750 kilograms of wheat flour. The Assessing Officer treated the difference of 123750 kilograms of wheat flour at the rate of Rs.15.79 per kilogram amounting to Rs.19,54,012/- as unexplained expenditure and added the same to the total income of the assessee. The assessee carried the matter in appeal before the Commissioner (Appeals), who deleted the addition. The revenue carried the matter in appeal before the Tribunal but did not succeed. 4.1As can be seen from the order passed by the Commissioner (Appeals), she has found that the assessee along with the month-wise details of purchase and sale of wheat and wheat atta (flour) showed that the atta that was sold by the assessee was converted from the stock of wheat that was already available with it. Therefore, the purchase of stock of such atta was reflected in the wheat purchase account and not in the atta purchase account. The Commissioner (Appeals) noted that the assessee had submitted documentary evidence to demonstrate the same, which was found to be correct and it was seen that the quantity records and closing stock of wheat and atta confirms the explanation. 4.1As can be seen from the order passed by the Commissioner (Appeals), she has found that the assessee along with the month-wise details of purchase and sale of wheat and wheat atta (flour) showed that the atta that was sold by the assessee was converted from the stock of wheat that was already available with it. Therefore, the purchase of stock of such atta was reflected in the wheat purchase account and not in the atta purchase account. The Commissioner (Appeals) noted that the assessee had submitted documentary evidence to demonstrate the same, which was found to be correct and it was seen that the quantity records and closing stock of wheat and atta confirms the explanation. 4.2The Tribunal, in the impugned order, has recorded thus: “5.We have heard the rival contentions and perusal the material on record carefully. With the assistance of ld. Representatives, We have gone through the material on record and it is noticed that assessee has processed wheat which was converted into wheat flour for 123750 kg. besides purchasing of 18340 kg. of wheat flour from outside sources as a result total wheat flour was shown was at 142090 kg. out of which 138395 kg. wheat flour was sold and remaining quantity of 4632 kg. of wheat flour was reflected in the closing stock as per the wheat flour account placed at page no. 22 of the paper book. It is also discerned from page no. 23 of the paper book submitted by the ld. counsel that there was transfer of wheat quantity for the manufacturing of wheat flour on monthly basis. The total of such wheat flour manufactured out of wheat purchased by the assessee was to the quantity 123750 kg. on perusal of the aforesaid material, it is noticed that there was transfer of wheat out of quantity wheat sold towards conversion of the same into wheat flour. In the light above facts and circumstances, we do not find and error in the decision of ld. CIT(A) after perusal of the material placed in the paper book that the wheat was converted from the stock of wheat was already available with the assessee. Therefore, we do not find any merit in the ground of appeal of the revenue. Therefore, the same is dismissed.” 4.3Thus, the conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded after appreciating the material on record. The learned Senior Standing Counsel for the appellant is not in a position to point out any material to the contrary so as to dislodge the findings of fact recorded by the Tribunal nor has it been pointed out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Under the circumstances, the conclusion arrived at by the Tribunal being based upon a pure finding of fact recorded after appreciating evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by it, the said ground of appeal does not give rise to any question of law. 5.As regards proposed question (B), during the course of re-assessment proceedings, the Assessing Officer noticed that the assessee had shown current liability for goods at Rs.1,77,215/- standing in the name of Gujarat Agro Sortex Pvt. Ltd. and the company had shown balance at Rs.3,36,399/-. Since, the assessee had failed to reconcile the balance shown in the account of Gujarat Agro Pvt. Ltd., the Assessing Officer added the differential amount of Rs.1,59,184/- to the total income of the assessee. The assessee went in appeal before the Commissioner (Appeals) who deleted addition. The revenue failed in its appeal before the Tribunal. 5.As regards proposed question (B), during the course of re-assessment proceedings, the Assessing Officer noticed that the assessee had shown current liability for goods at Rs.1,77,215/- standing in the name of Gujarat Agro Sortex Pvt. Ltd. and the company had shown balance at Rs.3,36,399/-. Since, the assessee had failed to reconcile the balance shown in the account of Gujarat Agro Pvt. Ltd., the Assessing Officer added the differential amount of Rs.1,59,184/- to the total income of the assessee. The assessee went in appeal before the Commissioner (Appeals) who deleted addition. The revenue failed in its appeal before the Tribunal. 5.1As can be seen from the order passed by the Commissioner (Appeals), she has noted that before the Assessing Officer, the assessee was not able to furnish any explanation or reconciliation in respect of the difference between the assessee's account with Gujarat Agro Sortex Pvt. Ltd. (GASPL). However, during the course of appellate proceedings, the assessee had submitted a copy of its account from the books of GASPL which showed that the difference was on account of a mistake on the part of GASPL and the same has been rectified by them by passing necessary entries in the subsequent year, that is, accounting year 2009-10 (relevant to assessment year 2010-11). In view of the fact that the assessee had been in a position to submit reconciliation as regards difference between its accounts with Gujarat Agro Sortex Pvt. Ltd., the Commissioner (Appeals) deleted the addition. The Tribunal, in the impugned order, has concurred with the findings recorded by the Commissioner (Appeals). 5.2The record of the case reveals that the assessee had been purchasing goods from GASPL and was also getting job work from them. The Assessing Officer called for the contra accounts of GASPL and compared them with corresponding accounts in the assessee’s books of account which showed a difference of Rs.1,59,184/-. It appears that such difference was because of the fact that the assessee maintained two accounts of GASPL one in respect of job work and the other in respect of goods purchased, whereas GASPL kept only one account for both items. Such mistake in accounting on the part of GASPL was subsequently rectified by them by passing necessary entries. Thus, as a matter of fact there was no difference in the books of account of the assessee and GASPL. Under the circumstances, this ground of appeal also does not give rise to any question of law. 6.For the forgoing reasons, in the absence of any question of law, much less, any substantial question of law arising out of the impugned order, the appeal fails and is, accordingly summarily dismissed. [Harsha Devani, J.] hiren [Sangeeta K. Vishen, J.]