2007 (7) TMI 236 - HC - Income Tax

Source of loans and advances not proved AO treated these deposits as unexplained credits u/s 68 - Tribunal has accepted the explanation offered by the assessee regarding the amount deposited by various persons - source and the genuineness of the deposits has also accepted - finding of the Tribunal, in our opinion, are pure findings of fact based on appreciation of evidence and material on record and therefore assessee appeal is allowed

Summary

Issues Involved:
1. Addition of Rs. 3,38,000 under section 68 of the Income-tax Act and interest thereon.
2. Admissibility of additional evidence under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.

Analysis:

Issue 1: Addition of Rs. 3,38,000 under section 68 of the Income-tax Act and interest thereon.

The case pertains to the assessment year 1990-91, where the assessee-firm, engaged in the purchase and sale of supari and kattha, raised funds of Rs. 6,50,000 to release seized goods by the Forest Department and the Sales Tax Department. The Assessing Officer found the source of these funds unproved, treating them as unexplained credits under section 68 of the Income-tax Act. The Tribunal, after hearing both parties, accepted the explanation provided by the assessee regarding the deposits and found the source and genuineness of the deposits satisfactory. The High Court upheld the Tribunal's decision, stating that the assessee had successfully proven the genuineness, nature, and source of the deposits, thereby ruling in favor of the assessee and against the Revenue.

Issue 2: Admissibility of additional evidence under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.

The Tribunal admitted additional evidence presented by the assessee through a letter dated April 24, 1995. The High Court examined whether this admission was in accordance with rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The Tribunal justified admitting the additional information as it was not strictly additional evidence but additional information already on record, providing sufficient reasons for its acceptance. The High Court found no legal infirmity in the Tribunal's decision to admit the additional information, thereby ruling in favor of the assessee and against the Revenue.

In conclusion, the High Court decided both issues in favor of the assessee, upholding the Tribunal's decision and dismissing the Revenue's appeal. The judgment did not award any costs to either party.