2012 (3) TMI 715 - HC - Income Tax

Summary

Issues involved: Appeal u/s 260A of the Income Tax Act challenging deletion of addition u/s 68 made by Assessing Officer.

Summary:
The High Court of Gujarat heard an appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal regarding the addition of Rs.1,92,50,000 under Section 68 of the Income Tax Act for the Assessment Year 2005-06. The main contention was whether the Tribunal erred in law by deleting the said addition. The deposit in question was received by the assessee from a private limited company, M/s.G.M.P.L., through an account payee cheque, with confirmation and PAN details provided to the Assessing Officer. The Assessing Officer doubted the genuineness and creditworthiness of the transaction without verifying with the Assessing Officer of M/s.G.M.P.L. However, the Commissioner of Income Tax (Appeals) and the Tribunal found the transaction genuine based on the creditor's profit and loss account and balance sheet. The High Court emphasized that the Assessing Officer should have first verified with the coordinating Assessing Officer of the lender before disputing the genuineness of the transaction. Since there was no evidence that the transaction was disbelieved by the lender's Assessing Officer or not reflected in their account, the Court concluded that there was no basis to question the transaction's credibility. Consequently, the Court dismissed the appeal, stating that no substantial question of law was involved.