2024 (1) TMI 610 - HC - Income Tax

Addition u/s 68 - unexplained money - AO has observed that the amount in question has been received in the bank account of the assessee company from the account of two persons and thus, in absence of any other material found that the credit entry is remained unexplained - ITAT deleted addition - HELD THAT - One of the offshoot proceedings in connection with the present transaction has reached to this Court by way at the instance of the Revenue against Ambe Tradecorp (P). Ltd. 2022 (11) TMI 22 - GUJARAT HIGH COURT This Court had an occasion to consider almost an identical proposed substantial questions of law and the said appeal was at the instance of the Revenue came to be dismissed on 11th July 2022. In the said judgement, the assessee therein has received money from the present assessee company once the source of fund in the hands of above company was held as explained by learned CIT(A) then amount received by the assessee from that company cannot be held as unexplained under section 68 of the Act in the absence of contrary information. Likewise, there cannot be addition of one item in the hands of two different person. Keeping in mind the aforesaid decision as well as keeping in mind that Smt. Hansaben Manilal Patel has already been substantially taxed and Ramesh G. Thakor s addition also deleted by the learned CIT(A) as the source was clearly proved by the assessee. In our considered opinion, the appellate authority as well as the Income Tax Appellate Tribunal concurrently reversed the findings of the Assessing Officer on the said count, and thus, it could not be said that any question much less any substantial question of law arises.

Summary

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act.
2. Charging of interest under Sections 234A, 234B, and 234C.
3. Initiation of penalty proceedings under Section 271(1)(c).

Summary:

Issue 1: Deletion of Addition under Section 68
The appellant, Revenue, challenged the deletion of an addition of Rs. 28,68,50,000/- made under Section 68 of the Income Tax Act by the Income Tax Appellate Tribunal. The Assessing Officer had made the addition on the basis of unexplained money received by the assessee company from two individuals, Ramesh G. Thakor and Smt. Hansaben M. Patel, without filing a return for the Assessment Year 2010-11. The CIT(A) partially allowed the appeal by the assessee, finding that the identity, genuineness, and creditworthiness of the loan-givers were proved beyond doubt. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had provided sufficient evidence to substantiate the source of the funds and that parallel assessments on the same income for different persons were not permissible. The High Court dismissed the Revenue's appeal, referencing a similar case where the source of funds was adequately explained and taxed.

Issue 2: Charging of Interest under Sections 234A, 234B, and 234C
The appeal against charging interest under Sections 234A, 234B, and 234C was dismissed as these charges are mandatory and consequential to the determination of total income.

Issue 3: Initiation of Penalty Proceedings under Section 271(1)(c)
The appeal against the initiation of penalty proceedings under Section 271(1)(c) was dismissed as premature.

Conclusion:
The High Court upheld the Tribunal's decision to delete the addition made under Section 68, dismissed the appeal against charging of interest as mandatory, and did not entertain the premature appeal against the initiation of penalty proceedings. The appeal by the Revenue was found to be devoid of merit and was dismissed.