2010 (1) TMI 24 - HC - Income Tax

Undisclosed Turnvoer Benami Concerns ITAT deleted the addition of Rs.3,73,640/- relating to undisclosed turnover of milk at Rs.93,40,998/- even though in the course of search the main partner of the Firm admitted that the four concerns were benami concerns of the assessee firm and one of employees deposed in the course of search that the excessive milk used to be sold in different names of benami dairies tun in the names of the employees ITAT deleted the addition of Rs.8,68,000/- relating to unexplained investment in purchase of milk for sale in benami names of the firms/employees ITAT deleted the addition of Rs.8,02,460/- relating to the income in benami name of M/s National Dairy, Proprietor Shri Ram Gopal held that - questions raised are concluded by finding of fact and not the substantial questions of law

Summary

Issues:
1. Addition of undisclosed turnover of milk.
2. Addition of unexplained investment in purchase of milk for sale in benami names.
3. Addition of income in benami name of a dairy.
4. Deletion of addition due to discrepancies in accounts and business relations.

Analysis:
1. The first issue pertains to the addition of Rs.3,73,640/- relating to undisclosed turnover of milk. The Tribunal, assessing authority, and Commissioner of Income Tax (Appeals) reviewed the case and found that the main partner of the firm admitted to benami concerns and excessive milk sales in different names. Despite this, the Income Tax Appellate Tribunal deleted the addition. The High Court concluded that this was a finding of fact and not a substantial question of law, leading to the dismissal of the appeal.

2. The second issue involves the addition of Rs.8,68,000/- for unexplained investment in purchasing milk for sale in benami names. Similar to the first issue, the Income Tax Appellate Tribunal deleted this addition after considering the facts and circumstances. The High Court concurred with the lower authorities that this was not a substantial question of law, resulting in the dismissal of the appeal.

3. Moving on to the third issue, concerning the addition of Rs.8,02,460/- related to income in the benami name of a dairy, M/s National Dairy, owned by Shri Ram Gopal. Again, the Income Tax Appellate Tribunal decided to delete this addition. The High Court, after reviewing the orders of the lower authorities, agreed that this issue did not raise a substantial question of law, leading to the dismissal of the appeal.

4. Lastly, the fourth issue revolves around the deletion of an addition of Rs.12,52,547/- by the Commissioner of Income Tax (Appeals) due to discrepancies in accounts and the denial of business relations by a partner during a search operation. The Income Tax Appellate Tribunal upheld this deletion. The High Court, after examining the findings of fact, concurred that this issue did not present a substantial question of law, resulting in the dismissal of the appeal on this ground as well.

In conclusion, the High Court of Allahabad dismissed the Income Tax Appeal due to the lack of substantial questions of law in the issues raised regarding various additions and deletions in the assessment related to undisclosed turnover, unexplained investments, benami income, and discrepancies in accounts and business relations. The order was passed on 6th January 2010.