912.ITXA.394.13.sxw IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 394 OF 2013 Commissioner of Income Tax 6 Appellant Vs. M/s Hindustan Polyamides and Fibres Ltd. Respondent Mr. Suresh Kumar, Advocate for Appellant. Ms. A. Vissanji a/w Mr. S.J. Mehta, Advocates for Respondent. CORAM : M.S. SANKLECHA & G.S. KULKARNI, JJ. DATED : 18 FEBRUARY 2015 P.C.: 1. This appeal by revenue under Section 260 of Income Tax Act, 1961 (the 'Act') challenges order dated 22 August 2012 passed by Income Tax Appellate Tribunal (the 'Tribunal') relating to block period 1 April 1987 to 23 October 1997. 2. appellant/revenue has raised following question of law for our consideration: (a) Whether on facts and in circumstances fo case and in law ITAT is right in deleting addition made at Rs.61,89,292/ on account of stock of finished goods, work in progress and raw material on ground that same does not come under purview of S.S.DESHPANDE 1 / 5 Uploaded on - 16/03/2015 Downloaded on - 18/04/2020 16:52:06 912.ITXA.394.13.sxw Chapter XIV B of Income Tax Act, 1961 without appreciating facts that there were excess stock found, as inventorised during search vis vis stock as per registers and therefore, order of ITAT is perverse? (b) Whether on facts and in circumstances of case and in law ITAT is right in deleting addition made at Rs.61,89,292/ on account of stock of finished goods, work in progress and raw material stating that difference was only on account of valuation of stock at various stages in line of production and that no excess stock was found at time of search whereas, in fact, excess stock of finished goods, excess stock of raw material and excess stock of goods in progress were found and inventorised and there stock were not reflected in books of accounts maintained by assessee? 3. On 23 October 1997 there was search operation under Section 132(1) of Act upon respondent assessee. Consequent to search, assessment order was passed on 29 October 1999 interalia holding that quantity of closing stock of raw material, work in progress and finished products to extent of Rs.62.07 Lakhs were not correctly reflected and form part of undisclosed income subjected to tax under Chapter XIV B of Act. 4. In appeal, Commissioner of Income Tax (Appeals) (the 'CIT(A)') by order dated 13 February 2002 upheld order of assessment dated 29 October 1999. On further appeal, Tribunal on S.S.DESHPANDE 2 / 5 Uploaded on - 16/03/2015 Downloaded on - 18/04/2020 16:52:06 912.ITXA.394.13.sxw analysis of facts as available on record deleted additions on account of stock of finished goods and work in process and raw material aggregating to Rs.61.89 Lakhs. Moreover, with regard to valuation difference in stock as on 31 March 2007 for amount of Rs. 6.55 Lakhs is also deleted. However, revenue is not in appeal in respect of deletion on account of valuation of stock as on 31 March 2007. 5. We find that impugned order of Tribunal is well reasoned order considering fact as pointed out by respondent assessee during assessment proceedings itself. So far as demand based on undisclosed income aggregating to Rs.61.35 Lakhs relating to stock of finished products and work in progress is concerned, respondent assessee had during course of search itself explained that stock register of finished products is kept for central excise purpose discrepancy in quantity in register and on taking of inventory arose as goods were not 100% pure and would require further processing. Similarly, though finished products which according to assessee are ready for export are recorded for purpose of management information system, same are not recorded in central excise register as it may require further processing in case sample sent for approval did not meet necessary standards. discrepancy S.S.DESHPANDE 3 / 5 Uploaded on - 16/03/2015 Downloaded on - 18/04/2020 16:52:06 912.ITXA.394.13.sxw was thus explained. Tribunal also records fact that finished products were exported within three weeks of search and details of same duly accounted in assessee's regular books of accounts. Moreover, impugned order records that aforesaid record of export as submitted by respondent assessee has not been disputed by revenue. Further order also records no other incriminating material of any sales outside books and/or purchase were noticed. In view of above factual determination, entire amount of Rs.61.35 Lakhs sought to be added as undisclosed income was deleted. So far as stock of raw material is concerned, impugned order records fact that after examining documents placed on record it was satisfied that stock of imported catalyst was duly accounted to extent of 50.9 Kg. (Rs.25,450/ ) and stock of HCO of 1120 Kg. (Rs.28,000/ ). However, impugned order did not dispute addition of 730 Kgs. of HCO by Assessing Officer and confirmed by CIT(A). This not challenged by assessee. 6. In view of above factual findings rendered by Tribunal on basis of record after detailed analysis which was available before Assessing Officer conclusion reached by Tribunal cannot be found fault as it is possible view on basis of facts on record. S.S.DESHPANDE 4 / 5 Uploaded on - 16/03/2015 Downloaded on - 18/04/2020 16:52:06 912.ITXA.394.13.sxw revenue is unable to show findings in impugned order are perverse and/or arbitrary. 7. Accordingly, no substantial question of law arises for our consideration. 8. Thus appeal dismissed. No order as to costs. [G.S. KULKARNI, J] [M.S. SANKLECHA, J.] S.S.DESHPANDE 5 / 5 Uploaded on - 16/03/2015 Downloaded on - 18/04/2020 16:52:06 Commissioner of Income-tax-6 v. Hindustan Polyamides and Fibres Ltd