2017 (1) TMI 1011 - HC - Income Tax

Addition u/s 68 - Held that - The inquiries made from searched parties or the statements were made available to the assessee. In these circumstances, the mere assumption that some of the parties were bogus and that the amounts attributed to them were suspect could not be sustained. So far as M/s Stalwarts Realtors Pvt. Ltd. and the amount of ₹ 50 lacs added to its account was concerned, the ITAT concluded that since the amount was shown by M/s Stalwarts Realtors Pvt. Ltd. and in fact accounted for, the question of it being bogus or suspect in the hands of the assessee did not arise. No substantial question of law - Decided against revenue

Summary

Issues:
Deletion of amounts under Section 68 of the Income Tax Act, 1961 - Erroneous deletion of amounts - Assessment Year (AY) 2009-10 - Addition of amounts based on search and seizure proceedings - Appeal before the Income Tax Appellate Tribunal (ITAT) - Disputed amounts - Evidentiary value of seized material - Inquiries made by Assessing Officer (AO) - Investigation of third parties - Suspect payments - Factual findings - Manifest perversity - Dismissal of appeal.

Analysis:
The case involved the deletion of two amounts, &8377; 50 lacs and &8377; 47.02 lacs, added during the assessment under Section 68 of the Income Tax Act, 1961. These amounts were added based on search and seizure proceedings related to an unrelated party. The Assessing Officer (AO) added &8377; 47.02 lacs due to suspect and allegedly bogus transactions identified from materials seized. Additionally, &8377; 50 lacs was added concerning a suspect payment attributed to M/s Stalwarts Realtors Pvt. Ltd.

The assessee appealed before the Income Tax Appellate Tribunal (ITAT) and succeeded in challenging the additions. Regarding the amount of &8377; 47.02 lacs, the ITAT observed that the evidentiary value of the material seized from a third party was not conclusive, emphasizing the need for further inquiries by the AO and other parties involved. The ITAT also noted that the chart seized contained details of cheque payments by third parties that were not investigated, and the statements made during the search were not provided to the assessee. Consequently, the assumption that some parties were bogus and their attributed amounts were suspect could not be upheld.

Regarding the amount of &8377; 50 lacs attributed to M/s Stalwarts Realtors Pvt. Ltd., the ITAT relied on its previous order and concluded that since the amount was assessed to income and accounted for by the company, it could not be considered bogus or suspect in the hands of the assessee. The High Court, after considering the submissions and grounds of appeal, found the ITAT's findings to be entirely factual. Without any manifest perversity in the findings, the Court declined to interfere with the ITAT's final order. Consequently, the appeal was dismissed, and no substantial question of law was found to arise from the case.