2017 (10) TMI 110 - HC - Income Tax

Addition u/s 68 - booking advances received from the prospective customers - tribunal confirmed part addition - Held that - Tribunal allowed the assessee to produce further evidence at second appellate stage. To the extent, the additions were explained through such further evidence, the Tribunal remanded the issue before the Assessing Officer for verification. Only to the extent where there was no further material, the Tribunal confirmed the disallowance of ₹ 96.60 lakhs. It can thus be seen that the entire issue is based on appreciation of evidence and essentially a factual one. No question of law arises. We did not discern any ratio that section 68 of the Act cannot be applied in case of advances received for plot bookings. If all the ingredients of section 68 exist, nothing would prevent the Revenue from invoking the said provision. With respect to the addition of ₹ 26.32 lakhs confirmed by Commissioner of Income Tax (Appeals), we primafacie find that the counsel for the appellant is correct in pointing out that the Tribunal failed to give any finding on this issue. The Tribunal has neither confirmed nor deleted the addition. Let there be NOTICE for final disposal, returnable on 04.10.2017.

Summary

Issues:
1. Application of section 68 of the Income Tax Act on booking advances
2. Confirmation of addition under section 68 for booking advances
3. Sustainability of addition despite income offered in a subsequent assessment year
4. Allegations of perversity in the ITAT's order

Analysis:
1. The case involves the application of section 68 of the Income Tax Act on booking advances received by the assessee. The Assessing Officer made an addition of the entire sum of booking advances as unaccounted credit due to the assessee's failure to provide details regarding the identity, genuineness, and creditworthiness of the depositors.

2. The Commissioner of Income Tax (Appeals) partially allowed the appeal, retaining sums of ?2.52 crores and ?26.32 lakhs, stating that the assessee failed to produce PAN details of certain investors, leading to doubts about their identity, genuineness of the transaction, and creditworthiness. The appellate Commissioner found the evidence insufficient in these cases.

3. The Tribunal allowed the assessee to produce additional material, remitting the issue back to the Assessing Officer for verification based on the new evidence. However, the Tribunal confirmed the addition of ?96.60 lakhs where no further material was provided by the assessee, leading to the current appeal before the High Court.

4. The High Court upheld the Tribunal's decision on the ?96.60 lakhs addition, emphasizing the lack of basic documentation initially provided by the assessee and the failure to establish the genuineness of the transactions. The Court noted that the issue primarily revolves around factual evidence and does not raise any legal questions.

5. The Court also addressed the addition of ?26.32 lakhs, noting that the Tribunal did not provide any findings on this specific amount. As a result, the Court issued a notice for final disposal on this particular issue, indicating a need for further examination.

6. The Court referenced a previous judgment to clarify that section 68 of the Act can be applied to advances received for plot bookings if the statutory requirements are met, reinforcing the validity of the provision for such transactions.

In conclusion, the judgment delves into the nuances of applying section 68 of the Income Tax Act to booking advances, emphasizing the importance of providing adequate documentation to establish the legitimacy of transactions. The decision highlights the significance of factual evidence in tax matters and the necessity of meeting statutory requirements to avoid additions based on unexplained credits.