2013 (11) TMI 527 - HC - Income Tax

Addition in respect of bogus purchase of JCB Held that - Assessee in his return submission dated 6.11.2009 had explained that the purchase of 2 JCB machines were made from Yantraman Automac Pvt.Ltd., Baroda and both these purchases were on hypothecation with Centurion Bank of Punjab. The purchase bills also reflected hypothecation with the Bank - Books of accounts were audited under section 44AB and the Tax Audit Report under the said provision had been duly furnished before the Assessing Officer, which was also evident from the assessment order - Tax Auditor did not point out any discrepancy in the entire report. Not only the purchase bills filed by the assessee reflected such hypothecation with the Bank but the repayment schedule also was furnished before the Assessing Officer Decided against the Revenue. Addition on account of capital introduced by the partners Addition on account of credited in the bank account Both these additions in view of the no books of account produced before the Assessing Officer Held that - In respect of capital introduced by the partners amounting to Rs.7,60,000/-, the assessee has furnished the necessary evidence which is evident from the written submissions dated 6.11.2009 which is reproduced by the AO in the assessment order Relying upon the judgment of the Hon ble Gujarat High Court in the case of Pankaj Dyestuff Industries 2005 (7) TMI 601 - GUJARAT HIGH COURT , deleted the addition Decided against the Revenue. Deposit in bank account of Rs.8,90,000/- stood explained as capital introduced by the partners. The receipt of contract work amounting to Rs.13,73,671/- is also stood explained as AO himself estimated profit at the rate of 8% on this civil contract receipt of Rs.13,73,671/-- Ld. Counsel of the assessee explained that Rs.2,34,329/- is out of opening balance of Rs.10,64,074/- - Books of accounts are audited - Deposit of Rs.24,98,000/- is stood fully explained Decided against the Revenue.

Summary

Issues:
1. Justification of ITAT in deleting addition for purchase of JCB
2. Justification of ITAT in deleting addition for capital introduced by partners
3. Justification of ITAT in deleting addition for credited amount in bank account

Issue 1: Justification of ITAT in deleting addition for purchase of JCB

The appellant challenged the addition made by the Assessing Officer for the purchase of JCB machines, totaling Rs.39,34,358, due to lack of books of accounts and supporting evidence. The CIT(A) upheld the addition. However, the ITAT noted that the purchases were made from a legitimate company with hypothecation to a bank, supported by audited accounts under section 44AB. The Tribunal found no discrepancies and deleted the addition, stating the Assessing Officer could have further verified the details. The High Court agreed with the ITAT, emphasizing the audited accounts and genuine documents provided, concluding no perversity in the decision.

Issue 2: Justification of ITAT in deleting addition for capital introduced by partners

The Assessing Officer added Rs.7,60,000 as unexplained income for capital introduced by partners, which was challenged before the CIT(A) and upheld. The ITAT, after reviewing written submissions and evidence, deleted the addition citing a judgment and explanation provided by the partners. Regarding the addition of Rs.24,98,000 credited in the bank account, the ITAT found it fully explained with detailed evidence, including audited accounts and contract work receipts. The High Court concurred with the ITAT's decision, emphasizing the explanations provided and the absence of substantial questions of law, leading to the dismissal of the Tax Appeal.

Issue 3: Justification of ITAT in deleting addition for credited amount in bank account

The ITAT's decision to delete the addition of Rs.24,98,000 credited in the bank account was based on the detailed explanations and evidence provided by the assessee, including audited accounts and contract work receipts. The Tribunal found the amount fully explained and stood convinced of the legitimacy of the transactions. The High Court upheld the ITAT's decision, highlighting the substantial evidence presented and the factual nature of the issues, leading to the dismissal of the Tax Appeal.