2014 (12) TMI 564 - HC - Income Tax

Inclusion of the amount of ₹ 17,23,400 - Whether the amount of ₹ 17,23,400/-, the addition of which is deleted by Tribunal could be termed as undisclosed investment Held that - A sum of ₹ 17,23,400 was not reflected in the books of accounts - AO as well as CIT was of the view that once the transaction involving such huge amount has taken place, it ought to have been reflected in one form or the other in the books of account and non-disclosure of the same would enable them to treat it as unexplained investment but, the Tribunal took the view that the purchase of groundnut of the value of ₹ 17,23,400/- is part of ₹ 30,80,270/- for the AY 1989-90 and 1990-91, which was treated as unexplained income and the amount cannot be the subject matter of the taxation for the second time revenue is not able to point out that the reason assigned by the Tribunal is not factually correct - once it emerges that the amount of ₹ 17,23,400/- is nothing but part of larger figure, which was brought under the purview of the Act, there was no basis for inclusion of the same in a different AY thus, the order of the Tribunal is upheld as it was on pure appreciation of facts and no question of law arises for consideration Decided against revenue.

Summary

Issues:
1. Addition made on account of undisclosed investment of Rs. 17,23,400.
2. Justification of the estimate of 3% of sales turnover for deletion of unaccounted investment.
3. Deletion of addition without a finding that sales are related to accounted purchases of groundnut seeds.

Analysis:

Issue 1:
The respondent, a dealer in groundnut seeds, had an undisclosed investment of Rs. 17,23,400 not reflected in the books of account. The Assessing Officer and Commissioner treated it as unexplained investment due to non-disclosure. However, the Tribunal found that this amount was part of a larger figure already under assessment for previous years, hence cannot be taxed again. The Tribunal's decision was based on factual correctness, and no legal question arose for consideration. Therefore, the appeal was dismissed.

Issue 2:
The Tribunal justified the deletion of the undisclosed investment based on the fact that it was already part of a larger figure assessed in previous years. The Tribunal's decision was not based on a 3% estimate of sales turnover but on the understanding that the amount in question had already been accounted for in a prior assessment. This reasoning was found to be factually correct, and no legal error was identified.

Issue 3:
The controversy arose as to whether the undisclosed investment should be included in the assessment for the current year. The respondent argued that the amount was part of a larger figure previously assessed and should not be taxed again. The Tribunal agreed with this argument, stating that the amount in question had already been considered in a prior assessment and could not be taxed twice. The Tribunal's decision was upheld, and the appeal was dismissed with no costs awarded.

In conclusion, the judgment focused on the treatment of an undisclosed investment in the context of previous assessments, emphasizing that the amount in question had already been included in a prior assessment and could not be taxed again. The Tribunal's decision was upheld based on factual correctness, with no legal errors identified.