1997 (8) TMI 111 - AT - Income Tax

Summary

Issues:
1. Deletion of addition under section 68 of the IT Act
2. Justification for deletion of addition without explaining cash credit sources
3. Creditworthiness of shareholders and application of Delhi High Court decision
4. Permission to raise additional ground regarding depreciation on hotel building

Deletion of Addition under Section 68 of the IT Act:
The Tribunal discussed the issue of deletion of an addition of Rs. 8,49,000 made by the Assessing Officer under section 68 of the IT Act. The Tribunal found that the assessee had provided detailed information about the shareholders, including their investments and financial status, to establish the case. Affidavits, confirmation letters, and replies were submitted, demonstrating the existence of shareholders and the legitimacy of the credits. The Tribunal concluded that the assessee had fulfilled the onus of explaining the cash credits as required by law. This finding was supported by the decision of the Delhi High Court in the case of CIT vs. Sophia Finance Ltd. and another ITAT decision. Therefore, no questions of law were found to arise in this regard.

Justification for Deletion of Addition without Explaining Cash Credit Sources:
Regarding the deletion of an addition of Rs. 18,575, the Tribunal based its decision on the fact that the individual who had advanced the money to the assessee was assessed to income tax and had affirmed the transaction through an affidavit and a recorded statement. Since this was a factual finding, no question of law was deemed to arise in this matter.

Creditworthiness of Shareholders and Application of Delhi High Court Decision:
The Tribunal also addressed the issue of the creditworthiness of shareholders and the application of the Delhi High Court decision. It was held that the assessee had adequately proven the creditworthiness of the shareholders through the documents and evidence provided, in line with the requirements of the law. The Tribunal's decision was supported by legal precedents, and no questions of law were found to be present.

Permission to Raise Additional Ground Regarding Depreciation on Hotel Building:
Regarding the permission granted to the assessee to raise an additional ground concerning depreciation on the hotel building, the Tribunal allowed this based on existing facts and materials on record. The additional ground was sought in line with a legal position established by the Supreme Court, and the Tribunal's decision was guided by a relevant High Court case. As no new facts were introduced, and the issue was decided based on existing materials, no question of law was identified in this matter.

In conclusion, the reference application by the Revenue was dismissed by the Tribunal, as no questions of law were found to arise in the issues presented before the ITAT Jabalpur.