2014 (9) TMI 888 - HC - Income Tax

Disallowance of 50% of expenses on making charges paid to karigars Held that - The AO in the remand report could not point out and controvert the documents and details provided - Genuineness of the documents was not doubted - The similar expenditure had been allowed in the earlier years also there was no reason to interfere with the order passed by the Tribunal - The submission that the Tribunal has not gone into specific details and the order requires interference is without merit Decided against revenue. Additions u/s 68 of the Act and other additions unverified or unexplained cash credit - failure to substantiate and file confirmation of loans - Held that - Due to paucity of time and the fact that many cases were taken up simultaneously, relevant details and confirmations could not be furnished - The additional evidences were then furnished to the Assessing Officer for his comments, who in the remand report, given by the Deputy Commissioner of Income Tax, Central Circle-XXIII, stated that in view of the additional evidence furnished, credit/loan was genuine - this would not affect and should not be construed as a positive finding by the High Court on question of telescoping surrender and the impact or effect. Notice u/s 153A Held that - The AO in the second remand report on several accounts/additions accepted that the additional evidence placed on record was sufficient to show that the transactions were genuine and addition could not be sustained - In respect of other amounts/transactions, not accepted by the AO in the remand report, Revenue was aggrieved by the order passed by the CIT(A) and was the appellant before the Tribunal thus, the order fo the Tribunal is upheld Decided against revenue.

Summary

Issues Involved:
1. Disallowance of 50% expenditure on making charges.
2. Additions under Section 68 of the Income Tax Act for unexplained cash credits.
3. Other specific additions and disallowances for each assessment year.

Issue-wise Detailed Analysis:

1. Disallowance of 50% Expenditure on Making Charges:
The Assessing Officer (AO) disallowed 50% of the making charges paid to Karigars due to insufficient details and incomplete addresses. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted these additions after the assessee provided relevant details and confirmations, stating that paying making charges in cash is customary in the jewellery business. The Tribunal affirmed this decision, noting that similar expenditures had been accepted in previous years and that the AO could not point out specific defects in the remand report. The High Court found no substantial question of law in the Revenue's appeal and upheld the Tribunal's order.

2. Additions under Section 68 of the Income Tax Act:
The AO made several additions under Section 68 for unexplained cash credits across different assessment years. These additions were contested, and the CIT(A) admitted additional evidence and called for remand reports. The Tribunal affirmed the CIT(A)'s decisions, and the High Court upheld these findings, noting that the AO, in remand reports, had accepted the genuineness of many transactions.

Assessment Year 2000-01 (ITA No. 457/2014):
- Addition of Rs. 26,67,188/- under Section 68, with Rs. 24,84,868/- received from M/s Sheenu Finance Company deleted and Rs. 1,82,320/- from Rekha Goyal upheld. The AO accepted the genuineness of the loan from Sheenu Finance Company in the remand report.

Assessment Year 2001-02 (ITA No. 456/2014):
- Addition of Rs. 1,00,000/- from Raju Bhutani under Section 68 was upheld. The AO accepted the genuineness of the loan from Ashok Kumar Khanna but not from Raju Bhutani.

Assessment Year 2002-03 (ITA No. 459/2014):
- Addition of Rs. 10,14,947/- under Section 68 was deleted after the AO accepted the genuineness of loans from Shyam Arora, Suman Girdhar, and M/s Ashish Impex in the remand report.

Assessment Year 2003-04 (ITA No. 455/2014):
- Addition of Rs. 10,00,000/- from Renu Pruthi under Section 68 was deleted after proving sufficient opening balance. Addition of Rs. 7,00,000/- for unexplained capital credited by Mukta Chaudhary was partly deleted, with Rs. 5,00,000/- accepted as a genuine gift from her father.

Assessment Year 2004-05 (ITA No. 460/2014):
- Addition of Rs. 2,62,292/- for unexplained credit from Anita Saini and Naresh Girdhar was partly deleted. Addition of Rs. 5,26,446/- for discrepancy in jewellery weight was deleted after explaining weight loss due to conversion into ornaments.

Assessment Year 2006-07 (ITA No. 458/2014):
- Addition of Rs. 32,34,250/- under Section 68 was partly deleted after the AO accepted the genuineness of loans from several creditors. Addition of Rs. 1,23,225/- for exhibition expenses was not contested.

3. Other Specific Additions and Disallowances:
The High Court noted that the issues raised were factual and that the Revenue had failed to provide sufficient evidence to challenge the findings of the CIT(A) and the Tribunal. The Court emphasized that factual findings can only be challenged if they are perverse or based on irrelevant material, which was not demonstrated by the Revenue in this case.

Conclusion:
The High Court dismissed the appeals, affirming the decisions of the CIT(A) and the Tribunal, and found no reason to interfere with the factual findings. The Court also noted that the Revenue could file an application under Section 254(2) before the Tribunal if they believed any issue was not adjudicated.