2003 (9) TMI 15 - HC - Income Tax

Addition made on account of unexplained investment representing unrecorded sales Additions being the profit earned on the undisclosed investment - Assessing Officer came to the conclusion that the assessee had concealed its sales and had received back the amounts from various parties after discounting the drafts -Commissioner deleted both the additions holding that since no evidence was on record to suggest that the alleged unaccounted money brought from Coimbatore, had been invested anywhere, there was no need to have the drafts issued by involving various persons Tribunal uphold the order of Commissioner - The conclusion of the Tribunal is purely based on appreciation of evidence and is essentially one of fact - Revenue appeal dismissed

Summary

Issues:
1. Appeal by Revenue under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal.
2. Assessment year 1990-91 - Concealment of sales and unexplained investments.
3. Discrepancies in accounts, undisclosed income, and unaccounted profits.
4. Commissioner of Income-tax (Appeals) deleting additions based on evidence analysis.
5. Tribunal's reliance on Commissioner's order and substantial questions of law raised.

Analysis:
1. The appeal by the Revenue under section 260A of the Income-tax Act, 1961 was directed against the order passed by the Income-tax Appellate Tribunal pertaining to the assessment year 1990-91. The appellant highlighted discrepancies in the accounts of a registered firm deriving income from the purchase and sale of goods, leading to suspicions of unaccounted sales and remittance of money to Delhi through bank drafts. The Assessing Officer concluded that the assessee concealed sales and received unexplained amounts, making additions to the returned income under section 69 of the Act.

2. The Commissioner of Income-tax (Appeals) analyzed the evidence and statements, finding no adverse comments against the appellant. The Commissioner observed contradictions in the statements relied upon by the Assessing Officer and deleted both additions, stating that no incriminating evidence linked the assessee to undisclosed income. The Tribunal affirmed the Commissioner's decision, prompting the Revenue to appeal, alleging non-application of mind by the Tribunal and raising substantial questions of law.

3. The High Court emphasized the limited jurisdiction under section 260A, requiring substantial questions of law for appeal consideration. Referring to legal tests for determining substantial questions of law, the Court found no such question in the present case. The Tribunal's decision was based on the appreciation of evidence, concluding that no application of legal principles was involved, making it a factual determination. The Court noted the Tribunal's awareness of the issues and evidence, supporting the Commissioner's findings.

4. Ultimately, the High Court declined to entertain the appeal, dismissing it due to the absence of substantial questions of law. The Court upheld the Tribunal's decision, highlighting that the conclusions were factual and based on evidence analysis, not legal principles. The order did not raise any substantial question of law, leading to the dismissal of the appeal by the Revenue.

This detailed analysis of the judgment highlights the issues involved, the assessment process, the decisions of the Commissioner and Tribunal, and the High Court's final ruling based on the application of legal tests for substantial questions of law.