Punjab & Haryana H.C : addition in respect of trading results was deleted, addition on account of unexplained credit entries can not be automatically deleted

High Court Of Punjab And Haryana

Grover Fabrics (India) (P.) Ltd. Vs. CIT

Assessment Year : 2004-05

Section : 68

Adarsh Kumar Goel And Gurudev Singh, JJ.

IT Appeal No. 860 Of 2008 (O&M)

November  4, 2009

JUDGMENT

1. The assessee has preferred this appeal under section 260A of the Income-tax Act, 1961 (for short, “the Act”) against the order of the Income-tax Appellate Tribunal, Chandigarh Bench in ITA. No. 738/Chd./2007 for the assessment year 2004-05, dated 18-1-2008, proposing to the raise following substantial question of law:

“(i) Whether on the true and correct interpretation of the provisions of section 254 read with rule 18 of the Appellate Tribunal Rules, 1963, the Tribunal’s order is sustainable where the merits of sustaining the trading addition has remained unexamined?”

2. During the course of hearing, learned counsel for the assessee proposes to revise the said question as under:

“Whether on the true and correct interpretation of section 145 once the trading addition has been made, then whether a separate addition under section 68 towards such credit is sustainable ?”

3. The assessee derived income from trading in handloom products. The Assessing Officer did not accept the trading results reflected in the books of account and accordingly, made an addition to the declared income. Apart from making the said addition, the Assessing Officer made a further addition in respect of credit entries from bogus entities. The Commissioner of Income-tax (Appeals) deleted the trading addition after giving the benefit of telescoping against the addition in respect of unexplained credit entries. On further appeal by both sides, the Tribunal remanded the matter to the Assessing Officer by observing that there was contradiction in the documents submitted by the assessee.

4. We have heard learned counsel for the appellant.

5. Only contention which has been put forward is that once addition in respect of trading results was deleted, addition on account of unexplained credit entries should have also been automatically deleted. Reliance for this submission has been placed on the judgment of the Allahabad High Court in CIT v. Singhal Industrial Corpn. [2006] 150 Taxman 466/[2008] 303 ITR 225.

6. We are unable to accept the submission. Unexplained credit entries may or may not have nexus with the trading results, as assessed. The Commissioner of Income-tax (Appeals) deleted the additions in respect of trading results after giving the benefit of telescoping. It will, thus, be a question of fact in each case whether addition on account of unexplained credit entries was justified, in spite of addition made to the declared trading results. The judgment relied upon by learned counsel for the assessee is on a different fact situation and cannot be read as laying down any norm of universal application that once addition was made in the trading results, no addition could ever be made on account of unexplained credit entries.

7. Thus, we are of the view that no substantial question of law arises.

8. The appeal is dismissed.

[Citation : 332 ITR 312]

Leave a Reply

Your email address will not be published. Required fields are marked *