2010 (2) TMI 120 - HC - Income Tax

Unexplained cash credit book adjustment sham transaction The assessee company during the relevant year was engaged in the sale and purchase of shares held as investment. According to the assessee it had sold shares of Vikas Fitting Ltd to Ramesh Chand Industries Ltd and shares of M/s Ocean Infrastructure Ltd to M/s Silver Streaks Trading Pvt. Ltd. These shares had been purchased during the financial year 1997-98 by the assessee and were reflected in the audited financial statements. According to the assessee, since M/s Ramesh Chand Industries Ltd was having a current account with M/s Silver Streaks Trading Pvt. Ltd., both companies agreed to adjust the amount internally. As a result of this adjustment, the entire amount towards sale of the shares became payable to the assessee by M/s Silver Streaks Trading Pvt. Ltd. - The Assessing Officer, however, treated the amounts as unexplained cash credit and, therefore, added the amount to the income of the assessee company as unexplained cash credit. held that - the Tribunal came to the conclusion that it was clear that the assessee company had been holding the shares which were sold by it during the year and that it was on this basis that the learned Commissioner of Income Tax (Appeals) had arrived at a conclusion that there was no reason to hold that the assessee company did not own these shares. Therefore, the Tribunal observed that there was no reason to hold these transactions to be sham transactions or the credits to be unexplained cash credits - The findings arrived at by the Tribunal are pure findings of fact and we do not find any error in them decided in favor of assessee

Summary

Issues:
1. Whether the judgment should be reported in the Digest?

Analysis:
The case involves an appeal by the Revenue against an order regarding the treatment of amounts as unexplained cash credit by the Assessing Officer. The assessee company had sold shares to different entities and the Revenue added the amount to the company's income. However, the Commissioner of Income Tax (Appeals) deleted the addition, and the Income Tax Appellate Tribunal upheld this decision. The Tribunal noted various pieces of evidence provided by the assessee, including confirmation letters, ledger accounts, balance sheets, and payment details through cheques. Based on these facts, the Tribunal concluded that the transactions were genuine and not sham, and the credits were not unexplained cash credits. The High Court, in its judgment, found no errors in the Tribunal's factual findings and dismissed the appeal, stating that no substantial question of law arose for consideration.

This issue primarily focuses on whether the judgment should be reported in the Digest. The judgment itself provides a detailed analysis of the case, highlighting the factual findings of the Tribunal and the subsequent decision of the High Court. The case revolves around the treatment of amounts as unexplained cash credit by the Revenue, the assessee's sale of shares, and the evidence presented to support the genuineness of the transactions. The judgment emphasizes the importance of factual findings in such cases and the lack of legal errors warranting interference by the High Court. The decision ultimately upholds the Tribunal's conclusion that the transactions were legitimate, leading to the dismissal of the Revenue's appeal.