2013 (9) TMI 873 - HC - Income Tax

Allowance of expenses Held that - AO has wrongly recorded the fact that on the date of hearing dated 27.12.2010 the assessee/Authorised Representative did not appear before the A.O whereas the fact is that the assessee/Authorised Representative appeared before the A.O and the A.O himself recorded statement of some parties which are filed in the paper book. The A.O has recorded blind in correct fact which is not appreciable. Merely mentioning that the case is going to be barred by limitation on 31.12.2010 the A.O has taken shelter and on the basis of incorrect fact made the assessment under Section 144 of the Act. Such a practice is not in accordance with law, therefore, such action of the AO is not sustainable As regards claim of expenditure and addition to the extent of Rs.5,00,000/-, it has been sustained for want of verification of expenditure and others It has been rightly allowed relief of Rs.45,46,166/- as sustaining 50% of expenses and running a business with remaining 50% expenses is impossible. Addition on account of creditors Held that - AO has accepted the document filed by the assessee containing copy of bank statement and confirmation and the AO did not doubt about the genuineness of those parties. The AO himself recorded the fact in the remand report that he has also accepted the statement of almost all the creditors recorded on 27.12.2010 except creditor for the amount of Rs.40,998/- - When the AO himself accepted the genuinness of the creditors, there is no error in the order of CIT (A) in deleting the addition of Rs.1,25,69,815/- Books of account were produced and were relied upon to allow the expenses Decided against the Revenue.

Summary

Issues:
Income Tax Appeal under Section 260-A of the Income Tax Act arising from an order of Income Tax Appellate Tribunal, Agra Bench, Agra dated 22.2.2013 in ITA No.211/Agra/2012 for assessment year 2006-07.

Analysis:
The appeal raised substantial questions of law regarding the deletion of unconfirmed creditors, reliance on PAN for upholding orders, disallowance of expenses, and addition on account of unconfirmed creditors. The AO did not have sufficient opportunity to counter additional evidence before the CIT (A). The ITAT upheld the CIT (A) order, allowing relief for expenses and deleting the addition of unconfirmed creditors based on factual verification. The CIT (A) found books of account produced by the assessee, supported by vouchers, justifying the relief granted. The AO's acceptance of the genuineness of credits and lack of doubt regarding transactions led to the deletion of the addition to the income of the assessee.

The appellant argued that the CIT (A) and ITAT erred in law by granting relief for expenses and believing in the genuineness of the credits. However, the High Court found that the findings recorded by the CIT (A) and ITAT were factual and did not raise any substantial questions of law for consideration. The Court dismissed the Income Tax Appeal, affirming the decisions of the lower authorities based on factual findings and lack of legal issues raised in the appeal.

In conclusion, the High Court upheld the decisions of the lower authorities, emphasizing that the findings were based on factual verification and did not warrant any legal interference. The appeal was dismissed, affirming the relief granted for expenses and deletion of the addition on account of unconfirmed creditors, as supported by the factual record and lack of legal merit in the appellant's arguments.