2016 (8) TMI 510 - HC - Income Tax

Addition u/s 68 - Held that - The assessee had produced all relevant details in its possession, namely, names, permanent account numbers, income tax returns, and bank statements of all the investors. The amounts in question had been received by way of account payee cheques. Having regard to the fact that the permanent account numbers and the income tax returns of all the investors had been furnished by the assessee, the Assessing Officer could have easily verified the same. He, however, placed reliance upon the fact that the summons issued to the parties under section 137 of the Act could not be served and hence, did not accept the genuineness of the transactions. In the opinion of this court, taking into account the concurrent findings of fact recorded by the Commissioner (Appeals) and the Tribunal, it cannot be said that the conclusion arrived at by the Tribunal is, in any manner, contrary to the record or that the same suffers from any legal infirmity so as to give rise to any question of law, much less a substantial question of law warranting interference.

Issues:
- Appeal against the common order dated 24.06.2015 passed by the Income Tax Appellate Tribunal
- Deletion of addition made under section 68 of the Income Tax Act in A.Y. 2006-07 and A.Y. 2007-08
- Justification of doubts regarding serving of summons by the Department
- Verification of genuineness of transactions and creditworthiness

Analysis:
1. The appeals under section 260A of the Income Tax Act were filed by the revenue against the common order of the Income Tax Appellate Tribunal. The issues revolved around the deletion of additions made under section 68 of the Act for A.Y. 2006-07 and A.Y. 2007-08. The primary questions of law raised were related to the justification for deleting the additions and doubting the serving of summons by the Department.

2. The respondent-assessee was involved in land development and construction and had shown advances from various individuals towards investments in land. The Assessing Officer raised concerns about the genuineness of these transactions and issued summons to the investors. The assessee provided details such as names, addresses, PAN, income tax returns, and bank statements of the investors to prove the legitimacy of the transactions.

3. The Commissioner (Appeals) found that the assessee had fulfilled its primary obligation by providing necessary details, as confirmed by the Supreme Court's decision in Commissioner of Income Tax v. Orissa Corporation. The Commissioner emphasized that physical presence of investors was not mandatory if all relevant information was available. He also referred to the National Textiles case, stating that unproved explanations do not necessarily indicate falsity.

4. The Tribunal upheld the Commissioner's findings, noting discrepancies in the Department's attempts to serve notices and the lack of specific evidence supporting their claims. The Tribunal considered the evidence provided by the assessee, including bank statements, PAN copies, and account payee cheques, as sufficient proof of the transactions' genuineness.

5. The court concluded that the assessee had adequately presented all relevant details, including PAN numbers, income tax returns, and bank statements of the investors. The Assessing Officer's reliance on failed summons service was deemed insufficient to discredit the transactions. The court upheld the Tribunal's decision, stating that the conclusion was based on factual findings and did not warrant any legal intervention.

6. In light of the above analysis, the court dismissed the appeals, emphasizing that the Tribunal's decision was supported by the evidence presented and did not indicate any legal deficiencies or substantial questions of law that required interference.

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