2014 (12) TMI 105 - HC - Income Tax

Estimation of income - Telescopic benefit not considered Books of accounts not maintained - Whether the investment in assets and expenditure had been incurred out of disclosure made after search operation - Held that - When both the receipts and withdrawals from the Bank Account have been taxed the Tribunal found that this is a case of double taxation and which could not have been permitted in the given facts and circumstances - the Assessee approached the CIT(A) and though it raised several grounds including liability of M/s. Sonal Fin. Cap. Pvt. Ltd. and addition of on account of unexplained stock these were not pressed and withdrawn - the balance sum and in relation to which the claim for telescopic has been examined reveals that there is no substance in the contention of Mr. Ahuja that without any application of mind or materials the claim of telescopic benefit has been allowed. The Tribunal has extensively referred to the AO s order and the exercise carried out by him - with regard to expenses relating to service apartment at Hotel Hilton a similar exercise is carried out and the assessee s contentions have been accepted - with regard to expenditure on household items that aspect also has been considered and the Tribunal concluded that the declaration of income is more than sufficient to take care of the expenditure - every single item or addition has been considered and with extensive reference to the findings of the Assessing Officer and that of the Commissioner - The finding of double taxation has been rendered after examining the matter in details namely, scrutiny of the bank accounts - either the inflows have been explained with evidence and then the question of taxing the withdrawals will not arise or because there is no evidence, the taxing of the deposits in the bank was justified Decided against revenue.

Summary

Issues:
Appeal challenging Tribunal's order on Income Tax Appeal No.1971/Mum/2009 for assessment year 2006-2007 - Telescopic benefit, lack of books of accounts, investment in assets, expenditure after search operation, Benami Bank Accounts, D.P. Accounts, off-market transactions, penny stocks, manipulation of script prices, impounded documents, undisclosed income, Assessment Order under section 153A, additional income determination, Commissioner of Income Tax (Appeals) decision, cross Appeals to Tribunal, relief granted to Assessee, double taxation, inflows and outflows taxation, factual findings review.

Detailed Analysis:
The appeal before the Bombay High Court involved a challenge to the Income Tax Appellate Tribunal's order regarding two appeals, one by the Revenue and the other by the Assessee, related to the assessment year 2006-2007. The key contentions revolved around the telescopic benefit of Rs. 3.52 Crores, absence of maintained books of accounts, and the validity of claims granted without supporting evidence. The Tribunal's order was scrutinized for alleged perversity in granting benefits without proper consideration of facts (Para 3).

The Assessee's advocate argued that the Tribunal's findings were based on facts, considering the Assessing Officer's order and relevant documents. The Tribunal's examination of bank accounts, deposits, and withdrawals aimed to prevent double taxation, especially in cases where both receipts and withdrawals from the same account were taxed. The appeal raised no substantial legal questions and deserved dismissal (Para 4).

The Tribunal's order extensively detailed the search operation on the Jalaj Batra Group, involving off-market transactions of penny stocks and manipulation of script prices. The Assessee's failure to provide supporting documents led to the final assessment by the Assessing Officer, resulting in additional income determination under relevant sections of the Income Tax Act, 1961 (Para 5-6).

Upon approaching the Commissioner of Income Tax (Appeals), certain grounds were withdrawn, and specific additions were deleted or allowed, leading to cross-appeals to the Tribunal. The Tribunal's review of facts, including the lack of maintained books of accounts and the nexus between bank account transactions, guided its decision to grant relief to the Assessee based on factual materials and findings (Para 7-9).

The Tribunal's detailed examination of each addition, inflows, outflows, and expenses led to the conclusion that double taxation was unjustified. The Tribunal's decision reflected a reasonable view based on factual evidence, with no substantial legal errors noted. Consequently, the High Court dismissed the appeal, emphasizing the Tribunal's factual findings and lack of merit in the challenge (Para 9).