2015 (9) TMI 752 - HC - Income Tax

Estimation of GP - ITAT reducing the estimation of GP made by the AO and upheld the rejection of books of accounts - Held that - Tribunal in the impugned judgment has found that the Commissioner (Appeals) has observed that the Assessing Officer had compared the appellant s gross profit with four different turnovers and that in case of three of the companies, the turnover was comparable to the case of the assessee company and they were also in similar line of business. That the revenue had not controverted the said finding of fact and accordingly did not find any reason to interfere with the order passed by the Commissioner (Appeals). From the facts noted hereinabove, it is evident that the conclusions arrived at by the Tribunal as well as the Commissioner (Appeals) are based upon concurrent findings of fact recorded after appreciating the evidence on record and hence, do not give rise to any question of law. - Decided against revenue Unaccounted cash credit - addition u/s 68 deleted by ITAT - Held that - This court finds substance in the submissions advanced by the learned counsel for the appellant, hence, admit. The following substantial question of law arises for consideration - Whether the Income Tax Appellate Tribunal has substantially erred in upholding the deletion of addition of ₹ 39,43,083/- made under section 68 of the Income Tax Act, 1961 in case of credits received from Abloom Investment Private Limited, even though the identity, genuineness and creditworthiness was not proved?

Summary

Issues involved:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding deletion of addition under section 68 of the Income Tax Act.
2. Challenge to the estimation of Gross Profit made by the Assessing Officer.

Issue 1: Deletion of addition under section 68 of the Income Tax Act
The appellant revenue challenged the order of the Income Tax Appellate Tribunal regarding the deletion of an addition of Rs. 39,43,083 made under section 68 of the Income Tax Act. The Tribunal upheld the decision of the Commissioner (Appeals) in deleting the addition despite the lack of proof of identity, genuineness, and creditworthiness. The Assessing Officer had rejected the books of accounts and calculated the gross profit based on comparable companies' data. The Commissioner (Appeals) corrected the gross profit margin calculation and directed the Assessing Officer to compare with three comparable companies. The Tribunal found no reason to interfere with the decision, as the conclusions were based on concurrent findings of fact after evaluating the evidence. The High Court admitted the challenge, finding substance in the appellant's submissions, and framed the substantial question of law regarding the Tribunal's decision on the deletion of the addition.

Issue 2: Estimation of Gross Profit
Regarding the estimation of Gross Profit made by the Assessing Officer, the appellant challenged the Tribunal's decision to uphold the reduction in the estimation of Gross Profit. The Assessing Officer rejected the books of accounts and calculated the gross profit based on comparable companies' data, resulting in a total addition of Rs. 4,30,19,408. The Commissioner (Appeals) corrected the gross profit margin calculation and directed a comparison with three comparable companies, leading to a reduction in the gross profit disclosed by the assessee. The Tribunal found no reason to interfere with the decision, as it was based on concurrent findings of fact after evaluating the evidence. The High Court disallowed the challenge on this issue, as the conclusions reached by the Tribunal and the Commissioner (Appeals) were based on factual findings and did not give rise to any question of law.

In summary, the High Court addressed the challenges raised by the appellant revenue regarding the deletion of addition under section 68 of the Income Tax Act and the estimation of Gross Profit. The Court admitted the challenge related to the deletion of the addition, framing a substantial question of law for consideration. However, the challenge regarding the estimation of Gross Profit was disallowed, as the conclusions were based on concurrent findings of fact and did not raise any legal questions.