1994 (7) TMI 60 - HC - Income Tax

Summary

Issues:
1. Whether the Tribunal was justified in upholding the deletion of additions made under section 69 of the Income-tax Act for undisclosed hundi sales not recorded in the books of account.
2. Whether the Tribunal was justified in confirming the findings that the hundis were only accommodation hundis with no genuine sales.
3. Whether there was sufficient material or evidence to justify the findings that there were no genuine sales.
4. Whether the Tribunal was justified in upholding the deletion of the addition made for unpaid bonus despite following the cash system of accounting.

Analysis:

Issue 1: The assessment revealed substantial amounts debited for interest and commission on hundis not reflected in the books. The assessee claimed these were accommodation hundis for bank finance, but the Assessing Officer added undisclosed sales profits. The Commissioner of Income-tax deleted the additions, stating there were no undisclosed sales. The Tribunal upheld this decision, finding the practice was to raise temporary finances with fake hundis, not resulting in profits from sales. The Tribunal concluded there was no evidence to take a contrary view, affirming the deletion.

Issue 2: The Revenue contended that the Tribunal merely upheld the first appellate authority's findings without independent assessment. However, the Tribunal had its own findings, stating the practice was raising temporary finances with fake hundis, leading to no profits from sales. The Tribunal confirmed the deletion based on the record and materials presented, rejecting the Revenue's claim of lack of independent findings.

Issue 3: The Revenue argued that the first appellate authority did not apply its mind but merely recorded the assessee's arguments. However, the first appellate authority did record findings after considering the arguments presented. The High Court found that the findings by the Commissioner of Income-tax, as upheld by the Tribunal, were factual, and no question of law arose from the Tribunal's order. Therefore, the application under section 256(2) of the Income-tax Act was rejected.

Conclusion: The High Court dismissed the Revenue's application, upholding the Tribunal's decision to delete the additions related to undisclosed hundi sales and unpaid bonus. The court found that the findings were based on factual assessments and no legal questions arose from the Tribunal's order.