Gujrat High Court Dismisses Appeal Lacking Any Substantial Question Of Law

Gujrat High Court Dismisses Appeal Lacking Any Substantial Question Of Law

The Court observed that the Income Tax Appellate Authority could have passed order using better and accurate language

The Gujrat High Court dismissed an appeal u/S 260A of the Income-Tax Act, 1961 on the ground that it did not involve any substantial question of law.

A Division Bench of the High Court of Gujrat, comprising Justices Bela M. Trivedi and Dr Ashokkumar C. Joshi, dealt with this matter titled Principal Commissioner of Income-Tax, Vadodara 3 v M/s Bell Ceramics Ltd.

The factual background was that the Assessing Officer on considering the value of the raw material consumed as per the reports and workings submitted in the assessment proceedings in case of the Respondent – Assessee had held that the discrepancy in respect of the two units i.e. Dora Unit and Hoskote Unit was ₹4,09,60,104, which was to be added to the total stock on account of discrepancy. The Commissioner of Income Tax (Appeals), on the other hand, deleted certain additions made by the Assessing Officer and this order of Commissioner was challenged by the Appellant – Authority before the Income Tax Appellate Authority (ITAT) but was dismissed. Therefore, this present tax appeal was filed by the Appellant – Authority.

The Appellant – Authority contended that the order of the Income Tax Appellate Authority suffered from non-application of mind and that it was also a nonspeaking order.

The Court noted that the addition with regard to the value of discrepancy of stock by the Assessing Officer was based on the arithmetic calculation and conversion of stock maintained in Metric tonne into sq. mtrs.

The Court further noted the observation of the Income Tax Appellate Authority that the Assessing Officer had not brought out any defects in the maintenance of books of accounts and therefore, a mere arithmetic calculation made was not sufficient for making addition.

The bench made remarks on the language of the order of the Income Tax Appellate Authority and opined that it could have been passed using better and accurate language and noted that all the findings recorded by the Income Tax Appellate Authority were findings of facts. Therefore, the Court concluded that the appeal could not be entertained in absence of any substantial question of law being involved.

The Court made the following observation on this issue:

"It may be noted that the Appeal under Section 260A could be admitted only on the High Court being satisfied that the case involves a substantial question of law."

Therefore, the appeal was dismissed as it did not involve any substantial question of law.