2013 (12) TMI 423 - HC - Income Tax

Unexplained investment - Held that - there is no material in possession of the Department to show that during the previous year relating to the Assessment year 1980-81, the assessee has made any investment in the business - The finding recorded by the First Appellate Authority is essentially a finding of fact and calls for no interference in this appeal - Decided against Revenue.

Summary

Issues:
1. Addition of Rs. 40,000 as unexplained investment in silver business.
2. Deletion of interest charged under sections 139(8), 215, and 217 of the Income Tax Act, 1961.
3. Consideration of grounds of appeal by the Income Tax Appellate Tribunal.
4. Legality of upholding the deletion of interest under sections 139(8), 215, and 217 of the Income Tax Act, 1961.

Analysis:

1. The dispute in this case revolved around the addition of Rs. 40,000 as unexplained investment in the silver business by the Assessing Officer. The Appellate Authority, CIT(Appeals), partly allowed the appeal and deleted the addition along with the interest levied. The First Appellate Authority found no material to support the Department's claim of fresh investment by the assessee during the relevant assessment year, which was not challenged before the Tribunal or the High Court. The absence of evidence of any new investment led to the conclusion that the addition was unjustified, as upheld by the High Court.

2. The next issue concerned the deletion of interest charged under sections 139(8), 215, and 217 of the Income Tax Act, 1961. The Department argued against the deletion, citing a Supreme Court decision in K. Govindan & Sons Vs. Commissioner of Income Tax. However, the High Court noted that the Supreme Court's decision was based on an Explanation inserted post the relevant assessment year. As the Explanation was not applicable for the year in question, the Tribunal's decision to delete the interest was found to be legally sound.

3. The Tribunal's handling of the grounds of appeal was also questioned. The Department contended that the Tribunal did not give proper consideration to one of the grounds of appeal. However, the High Court found that the Tribunal's decision was justified as the order of assessment under section 148 was made for the first time, making the other grounds consequential and not requiring specific consideration.

4. Lastly, the legality of upholding the deletion of interest under sections 139(8), 215, and 217 of the Income Tax Act, 1961 was discussed. The High Court affirmed the Tribunal's decision, stating that no illegality was committed in deleting the addition and interest. The appeal was deemed lacking in merit and subsequently dismissed by the High Court.