2015 (7) TMI 19 - HC - Income Tax

Addition to the appellant s income in terms of Section 28(iv) read with Section 41(1) - ITAT deleted the addition - Held that - From the ledger account of the concern, it was seen that ₹ 65,66,686/- have been transferred to the appellant s account for the reason that the amount was received on appellant s behalf from M/s.Hi-Tech Trading, Oman. The same was credited to the account of M/s.Hi-Tech Trading, Oman as on 31.3.2000 in the appellant s books which had continued from 2000 to 2006 as Current Liability. This was confirmed by M/s.Hi-Tech Inspection Services LLC, Oman vide their letter dated 30.11.2009. Though the work was done in or around 1996-97, the sales remained to be accounted. However, the sum was not taxable in the relevant assessment year. No substantial question of law for our consideration

Summary

Issues: Appeal challenging deletion of addition to income under Section 28(iv) read with Section 41(1) of the Income Tax Act, 1961 for the assessment year 2006-07.

Analysis:
1. The revenue contested the Tribunal's decision upholding the deletion of an addition of Rs. 64.29 lacs to the appellant's income under Section 28(iv) read with Section 41(1) of the Act. The Assessing Officer had noted that the limitation period for the amount shown as sundry creditors by the appellant in earlier years had expired, resulting in the addition of the same income for the subject assessment year.

2. The respondent-assessee argued before the Commissioner of Income Tax (Appeals) that the transaction with M/s. Hi-Tech Trading Company was completed in 1998-99, and the payment received was credited towards advance instead of sales. The Assessing Officer's remand report highlighted that the amount in question had been treated as 'Liabilities No Longer Payable' and deemed as income under Section 41(1) of the Act due to lack of details. The appellant provided evidence showing that the amount was not taxable in the assessment year 2006-07.

3. The Commissioner of Income Tax (Appeals) relied on the remand report and deleted the addition after considering the evidence provided by the appellant. The Tribunal, based on the Assessing Officer's report, found no reason to overturn the Commissioner's decision regarding the deletion of Rs. 64.29 lacs from the appellant's income.

4. The High Court observed that both the Commissioner of Income Tax (Appeals) and the Tribunal based their decisions on the factual findings of the Assessing Officer, who concluded that the amount in question was not taxable in the relevant assessment year. The Court found no grounds to consider the Assessing Officer's finding as arbitrary or perverse, leading to the dismissal of the appeal. No costs were awarded in this matter.