2020 (2) TMI 1288 - HC - Income Tax

Addition u/s 68 - Unexplained cash credit - HELD THAT - Investor company, namely, M/s. Epic Developers Pvt. Ltd. was one of the group entities of Benda Amtek Ltd. and Amtek Auto Ltd. and both had substantial returned income in the year in question of ₹ 1,28,24,076/- and ₹ 10,93,50,350/-. Therefore, there was no reason to doubt either the credit worthiness of the investor or the genuineness of the transaction. The aforesaid findings are purely factual in nature and do not raise any substantial question of law for consideration of this Court.

Summary

Issues: Delay in filing appeal, Addition under Section 68 of the IT Act

Delay in Filing Appeal:
The High Court addressed the delay of 142 days in filing the appeal. The Revenue's appeal was against the ITAT order rejecting the appeal related to Assessment Year 2005-06. The Tribunal had rejected the addition of ?20 crores against the assessee under Section 68 of the IT Act. The Assessing Officer had made an addition of ?14.5 crores as a loan from M/s Epic Developers Pvt. Ltd. due to alleged lack of creditworthiness. The CIT (A) reversed this, emphasizing that creditworthiness and genuineness of the transaction cannot solely rely on the return of income filed. The ITAT concurred with this finding, noting that Epic Developers Pvt. Ltd. was a group entity of Benda Amtek Ltd. and Amtek Auto Ltd., both having substantial returned income. The High Court declined to interfere with the ITAT's order due to the factual nature of the findings and the absence of a substantial question of law.

Addition under Section 68 of the IT Act:
The issue revolved around the addition of ?14.5 crores received as a loan from M/s Epic Developers Pvt. Ltd. The Assessing Officer had questioned the genuineness of the transaction due to Epic Developers Pvt. Ltd. filing a Nil return and no business transactions. However, the CIT (A) and ITAT found that the source of the loan from Epic Developers Pvt. Ltd. was credible, as it originated from Benda Amtek Ltd. and Amtek Auto Ltd., both showing substantial income. The High Court upheld the lower authorities' findings, emphasizing the lack of doubt on the creditworthiness of the investor company and the genuineness of the transaction. The Court dismissed the appeal, concluding that no substantial question of law arose for consideration.

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