2018 (3) TMI 1590 - HC - Income Tax

Unexplained expenditure U/Sec. 69 - amount found in the accounts of one Mr. Satishchand G. Mittal as his income received from the assessee - Held that - Mr. S. G. Mittal had shown the income of ₹ 3,61,500/as his income by way of interest received from the appellant and as such authorities have safely concluded that the company had in fact paid this amount to Shri S. G. Mittal during assessment year 2008-2009 out side its books of account. It tantamounts to unexplained expenditure. The theory that interest was not paid, cannot be accepted. No substantial question of law arises.

Summary

Issues:
Assessment of unexplained expenditure under Sec. 69 of the Income Tax Act for assessment year 2008-2009 based on addition of ?3,61,500 shown as income received from Mr. S. G. Mittal.

Analysis:
The assessing officer made an addition of ?3,61,500 as unexplained expenditure under Sec. 69 of the Income Tax Act for the assessment year 2008-2009. This addition was confirmed by the Commissioner Appeals and the Income Tax Appellate Tribunal. The amount was found in the accounts of Mr. S. G. Mittal, who claimed it as income received from the appellant. The appellant contended that the amount was shown as interest receivable by Mr. Mittal and was not actually paid. The appellant argued that the interest income was only receivable and not paid, citing a judgment of the Delhi High Court. On the other hand, the respondent argued that all authorities had consistently held that the interest amount was paid by the appellant to Mr. Mittal.

The Commissioner Appeals observed that circumstantial evidence contradicted the appellant's claim of non-payment of interest. It was noted that the company had received a loan of ?50 lakh in cash with interest, which was repaid as per a letter from Mr. Mittal. Mr. Mittal had offered the interest of ?3,61,500 for taxation in his return, indicating that the company had indeed paid this amount to him outside its regular books of accounts. The Commissioner Appeals concluded that the assessing officer was justified in treating the expenditure as unexplained, as the company had effectively paid the interest amount to Mr. Mittal. The addition was confirmed based on these findings.

The High Court, after reviewing the judgments and assessment order, upheld the decision that the company had paid the interest amount to Mr. Mittal. It was determined that the appellant's theory of non-payment of interest was not acceptable based on the evidence and concurrent findings. The court agreed with the conclusion that the amount constituted unexplained expenditure and dismissed the appeal, stating that no substantial question of law arose in this case. The appeal was dismissed without costs.