2022 (5) TMI 177 - HC - Income Tax

Unexplained cash credit and income from undisclosed sources - ITAT deleted the addition - department has challenged the order of the ITAT on the ground that the Tribunal has failed to appreciate that the assessee had deposited Rs.5,01,90,000/- in cash on different dates in his bank account maintained with Axis Bank - HELD THAT - Tribunal has minutely examined the case and marshaled the facts well. It may be noted that the ITAT is final arbiter of the facts and appeal can be entertained by the High court only if there is a substantial question of law.

Summary

Issues Involved:
Challenge to order of ITAT regarding addition of unexplained cash credit and income from undisclosed sources.

Analysis:
1. The appellant challenged the order of the ITAT deleting the addition of Rs.4,63,18,300 as unexplained cash credit and income from undisclosed sources. The department argued that the cash deposited in the bank account was not substantiated by evidence, leading to its treatment as unexplained credit under Section 68 of the Income Tax Act.

2. The department contended that the ITAT's reliance on the cash flow statement and the report of DIT (Systems) was misplaced, emphasizing the need for additional substantial evidence to corroborate the transactions. The appellant highlighted the failure of the assessee to provide formal corroborative evidence of receiving the amounts mentioned in the cash flow statement.

3. The department further challenged the ITAT's decision, asserting that the assessee did not fulfill the legal obligation to prove the receipt of money to the satisfaction of the Assessing Officer. The appellant argued that the ITAT failed to grasp the true intent of Section 68 of the Act, emphasizing the necessity of genuine transactions and creditworthiness verification.

4. The ITAT upheld the CIT (A)'s decision regarding the addition under Section 68 of the Act. The CIT (A) examined the contentions of the assessee and found the identity, creditworthiness, and genuineness of certain entities above suspicion. The CIT (A) scrutinized the financial accounts of these entities and accepted the genuineness of transactions based on the evidence provided.

5. The ITAT meticulously analyzed the case, considering the findings of the Assessing Officer and the CIT (A). The tribunal concluded that there was no substantial question of law warranting interference by the High Court. The High Court affirmed the ITAT's decision, emphasizing the finality of the tribunal's factual determinations and dismissing the appeal.

6. Ultimately, the High Court found no substantial question of law and no perversity in the ITAT's order. The appeal challenging the deletion of the addition was dismissed, highlighting the settled principle that the High Court should refrain from intervening in the ITAT's findings unless there are specific legal grounds for doing so.