2010 (9) TMI 120 - HC - Income Tax

Creditor - not traceable - at the address provided by the respondent-assessee (under Section 68 of Act, 1961) - assessee had duly provided all evidences including the PAN number and details of the Wards where the parties were assessed, as also the details of the party with the Registrar of the Companies Held that - legality and validity of the Agreement to Sell had not been questioned by the AO and as the respondent-assessee had provided all the evidence - it cannot be said that the alleged creditor was not a genuine party - appeal is dismissed.

Summary

Issues Involved:
Challenge to order of Income Tax Appellate Tribunal under Section 260A of the Income Tax Act, 1961 for Assessment Year 2003-2004. Deletion of addition of '30 lacs made by Assessing Officer under Section 68 of the Act due to untraceable creditor and failure to produce creditor for examination.

Analysis:

1. The appeal was filed challenging the Tribunal's order deleting the addition of '30 lacs under Section 68 of the Income Tax Act, 1961. The Revenue contended that the creditor was untraceable at the provided address and the respondent-assessee failed to produce the creditor for examination despite opportunities.

2. However, upon review, it was found that the addition was deleted by the Commissioner of Income Tax (Appeals) and the Tribunal based on the fact that the '30 lacs was an advance under an Agreement to Sell forfeited by the respondent-assessee. The agreement was executed with a registered company, M/s. Fair N. Square, which had a Permanent Account number and was a regular Income Tax assessee.

3. The Tribunal noted that all necessary documents, including the agreement, were provided to the Assessing Officer. Even though M/s. Fair N. Square could not be served a notice or summons as it was not found at the given address, the Tribunal emphasized that this alone did not make the transaction non-genuine. The Commissioner of Income Tax (Appeals) considered all evidence, including the PAN number and company details, and concluded that the addition made by the AO was rightly deleted.

4. The High Court agreed that the legality and validity of the Agreement to Sell were not questioned by the AO. The respondent-assessee had provided sufficient evidence establishing the identity of M/s. Fair N. Square, including PAN number and company details. Therefore, the alleged creditor was deemed genuine.

5. The Court determined that the issue raised in the appeal was purely factual, and no legal question arose for consideration. Consequently, the appeal was dismissed in limine, affirming the deletion of the '30 lacs addition as a forfeited advance under the Agreement to Sell.