2015 (4) TMI 59 - HC - Income Tax

Reduction in profit - ITAT upholding the decision of the CIT(Appeals) in reducing the profit of the assessee from 30% to 10% in respect of profit from M/s.Lameens Entertainment and from 30% to 15% in the case of Dress Designer account - Held that - Commissioner of Income Tax (Appeals) and the Tribunal, both, has reached the concurrent finding of fact that the profits has restricted to 10% of the gross receipts received from M/s.Lamee's Entertainment Factory, and on account of dress designing. This finding of fact has not been shown to be perverse or arbitrary. Guinness of gift - ITAT deleted addition - Capacity and creditworthiness of the donor who gifted ₹ 9.60,000/- to the assessee - Held that - Gift of ₹ 9.60 lakhs which was received by the respondent-assessee from her sister in U.S.A. was found to be the gift given by close relative who was a capable donor on the basis of the evidence produced before the Authorities by the respondent-assessee. The aforesaid concurrent finding of the Authorities are finding of fact and have not been shown to be perverse or arbitrary in any manner. The conclusion reached by the Authorities under the Act are reasonable, we see no reason to interfere with the same - Decided against revenue.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding profit reduction and estimation of income.
2. Capacity and creditworthiness of the donor for a gift received by the assessee.

Analysis:
1. The appellant, the Revenue, challenged the Tribunal's order concerning the reduction of profit and income estimation for the Assessment Year 2003-04. The first issue raised was whether the Tribunal was justified in upholding the decision to reduce the profit of the assessee from 30% to 10% in the case of M/s. Lameens Entertainment and from 30% to 15% in the case of Dress Designer account. The Assessing Officer had estimated the profit based on gross receipts, disregarding claimed expenses, and added a gift amount to the assessee's income under Section 68 of the Income Tax Act, 1961.

2. The respondent-assessee, engaged in dress designing and TV serial productions, did not attend the Assessing Officer's office despite notices. The Commissioner of Income Tax (Appeals) restricted the profit to 10% of gross receipts from Lameens Entertainment Factory and dress designing, considering unaccounted expenditures. The Commissioner also accepted the gift of Rs. 9.60 lakhs received from the assessee's sister, citing a compensation source. The Tribunal upheld the Commissioner's order on all grounds, dismissing the Revenue's appeal.

3. The Tribunal and the Commissioner reached a concurrent finding that the profit reduction and gift acceptance were reasonable based on evidence presented. The Tribunal found no perversity or arbitrariness in these decisions. The Authorities' conclusions were deemed reasonable, leading to the dismissal of questions (A) and (B) as they did not raise substantial legal issues. Question (C) regarding the admission of additional evidence by the CIT (Appeals) was dismissed as the Revenue did not raise this grievance before the Tribunal.

4. In conclusion, the High Court upheld the Tribunal's decision, finding no substantial legal questions raised by the Revenue's appeal. The appeal was dismissed with no order as to costs.