2010 (4) TMI 1070 - HC - Income Tax

Summary

Issues Involved: Appeal against deletion of addition of cash received in bank account, nexus of deposit to source of income, disagreement with Assessing Officer, factual findings by appellate authorities, challenge to findings, treatment of cash sales as undisclosed income.

In the present case, the revenue appealed against the order of the Income-tax Appellate Tribunal regarding the addition of an amount in the bank account for the assessment year 2006-07. The revenue contended that the Commissioner of Income-tax (Appeals) erred in deleting the addition as the nexus of the deposit to any source of income was not established by the assessee.

Upon review of the orders by the Assessing Officer, the Commissioner of Income-tax (Appeals), and the Tribunal, it was observed that both lower appellate authorities disagreed with the Assessing Officer and deleted the addition. They found that the cash sales were properly recorded in the books and reflected in the profit and loss account.

The Commissioner of Income-tax (Appeals) specifically mentioned that the stock and cash found during search were compared with the entries in the books, which were accepted by the Assessing Officer. No discrepancies were identified in the books of accounts provided by the appellant. The Assessing Officer had raised doubts on the sales but both the Commissioner of Income-tax (Appeals) and the Tribunal found otherwise based on factual evidence.

The Tribunal highlighted that the departmental representative failed to challenge the factual findings of the Commissioner of Income-tax (Appeals) and could not provide substantial arguments in support of the appeal. It was noted that the cash amount in question was included in the profit disclosed by the assessee, and therefore, could not be considered as undisclosed income warranting additional addition.

Considering the factual findings of the appellate authorities and the lack of any substantial legal question, the High Court dismissed the appeal, upholding the decision to delete the addition related to the cash sales.