2008 (9) TMI 950 - HC - Income Tax

Addition on unaccounted investment - rejection of Books of Account - Whether the Appellate Tribunal rightly deleted the addition, confirmed by the CIT(A)?- HELD THAT - Admittedly, there was no evidence to disbelieve or disprove the fact that sufficient cash was available in the cash book on the two dates for making the deposits and there was no reason found by the Tribunal for disbelieving the Books of Account maintained by the Assessee. These are pure findings of fact recorded after appreciation of evidence and do not give rise to any question of law, much less a substantial question of law. Addition on withdrawal in cash - No dispute that the amount having been withdrawn in cash from the Bank Account of the Assessee by Shri Manubhai Bhavsar who has stated that the same was deposited with M/s. J.B. Upadhyay. In this factual scenario the Tribunal was justified in coming to the conclusion that there was no question of treating the deposit in question as unexplained and no addition was warranted. In the result, in absence of any legal infirmity in the impugned order of Tribunal the Appeal is dismissed as none of the questions, as proposed or otherwise, can be termed to be questions of law, much less substantial questions of law.

Summary

Issues:
1. Addition of Rs. 2,55,685 made under section 68 for unexplained cash deposits.
2. Addition of Rs. 30,00,000 as unaccounted investment with M/s.J.B.Upadhyay.

Analysis:

*Issue 1: Addition of Rs. 2,55,685 under section 68 for unexplained cash deposits*

The Assessing Officer added Rs. 2,55,685 to the total income of the assessee due to unexplained cash deposits made during the Assessment Year 2003-04. This addition was based on the rejection of Books of Account for the earlier Assessment Year 2002-03. The Commissioner (Appeals) upheld this addition, but the Tribunal allowed the appeal of the assessee. The Tribunal found that there was no reason to disbelieve the Books of Account maintained by the assessee and that there was sufficient cash available for the deposits. The Tribunal's decision was based on factual findings and did not raise any legal questions.

*Issue 2: Addition of Rs. 30,00,000 as unaccounted investment with M/s.J.B.Upadhyay*

The Assessing Officer added Rs. 30,00,000 as unexplained investment made with M/s.J.B.Upadhyay under section 69 of the Income Tax Act. The Tribunal, however, overturned this addition. The Tribunal noted that the cash withdrawal of Rs. 30,00,000 from the assessee's bank account was accepted, and it was deposited with M/s.J.B.Upadhyay by a third party. The Tribunal concluded that there was no basis to consider this deposit as unexplained, especially when the cash withdrawal and subsequent deposit were accounted for. The Tribunal's decision was based on the factual scenario and the lack of legal grounds for sustaining the addition.

In conclusion, the High Court dismissed the appeal, stating that there were no substantial questions of law raised by the proposed questions or otherwise. The Tribunal's decisions on both issues were upheld, emphasizing the importance of factual findings and the lack of legal infirmities in the impugned order.