2017 (11) TMI 74 - HC - Income Tax

Unexplained investments - Held that - Commissioner estimated the availed funds likely to have been available with the assessee as a result of ₹ 15,00,000/-. In appeal the Revenue said there was no proof. The Bench found that the Commissioner had followed well-settled principles. In regard to non-proving of expenditure, the Commissioner found that all transactions were banked. The ITAT held that the Revenue in appeal was unable to dislodge the findings that the so-called assets in the hands of the assessee were agricultural land and not capital assets. It also found that there were known sources of income and these were for specific purposes where the assessee had functioned as a contractor or mediator on behalf of or at the request of two commercial entities. Having taken into account the actual status of the accounts, records, bills and vouchers, the ITAT came to the conclusion that the appeal of the Revenue called for no interference. We are unable to see any infirmity in the order of the ITAT and certainly we are unable to see how it raises any question of law at all. This is not a matter of a complete misappreciation of the records or evidence. The Commissioner in the appeal before him took a view. The ITAT held that view to be plausible. It noted no perversity. We find no perversity either in the order of the ITAT. Certainly it cannot be said that on these facts it was not possible for any body, authority or Tribunal to come to the conclusion to which the ITAT did.

Summary

Issues:
1. Estimation basis for relief without documentary evidence
2. Expenditure on construction and land cost without supporting evidence
3. Relief on estimate basis without proper books of accounts

Analysis:
1. The judgment involves a dispute regarding the Hon'ble ITAT's decision to allow relief on estimation basis without documentary evidence to support the investments made by the assessee. The Hon'ble ITAT granted relief of ?10,43,000 to the assessee based on a hypothetical cash balance presentation. The High Court found that the ITAT's decision was not based on substantial questions of law and dismissed the appeal, emphasizing that the ITAT's decision was plausible and not perverse.

2. Another issue in the judgment pertains to the Hon'ble ITAT allowing expenditure on construction and land cost amounting to ?1,51,82,300 without the submission of supporting evidence by the assessee. The High Court noted that the ITAT's decision was based on known sources of income and specific purposes for which the assessee acted as a contractor or mediator. The ITAT's decision was upheld, as it found no infirmity in the order and concluded that the Revenue's appeal did not warrant any interference.

3. The third issue discussed in the judgment relates to the Hon'ble ITAT granting relief on an estimate basis despite the assessee's failure to maintain proper books of accounts and provide documentary evidence for expenses. The High Court observed that the Commissioner had followed established principles in estimating the funds available to the assessee, considering the individual's history as a government employee. The ITAT's decision to uphold the relief granted was deemed reasonable, with the High Court finding no perversity in the ITAT's order.

In conclusion, the High Court dismissed the appeal, stating that there was no question of law raised in the case. The judgment highlights the importance of maintaining proper documentation and the application of established principles in tax assessments, ultimately upholding the ITAT's decisions in the matter.