2014 (5) TMI 747 - HC - Income Tax

Deletion of addition Unexplained income, investment and purchase of agricultural land Held that - No substantial question of law worth consideration in the case - The concurrent findings recorded by the CIT(A) and ITAT are essentially the findings of facts and have obviously been rendered after due appreciation of the material on record, as also on the relevant considerations - The Tribunal appears justified in observing that Shri Jessa Ram was neither examined in the presence of the assessee nor was allowed to be cross-examined by the assessee and hence, his statement could not have been relied upon against the assessee. The deposits made by Shri Jessa Ram in his bank account cannot be taken as proof of the receipt from the assessee on that particular date - the procedure and system of accounting of a third party was not a matter within the control of the assessee and merely with reference to the entries made by a third party, conclusion could not have been drawn against the assessee-respondent - the CIT(A) and the Tribunal have set aside the additions made by the AO after being satisfied that all the payments and receipts were fully explained - the matter only relates to the findings of facts and rests on appreciation of evidence -The appellate authorities have recorded the findings of facts concurrently after due and proper appreciation of evidence Decided against Revenue.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal (ITAT) affirming the deletion of additions by the Commissioner of Income Tax (Appeals) on alleged unexplained income, unexplained investment, and unexplained purchase of agricultural land for Assessment Year 2005-06.

Analysis:
The appellant, an individual deriving income from agricultural activities, filed a return of income declaring long term capital gain, other sources income, and agricultural income. The Assessing Officer (AO) made additions primarily due to lack of documentary evidence regarding payments to Shri Jessa Ram and receipt of payment from Shri Ashok Kumar Goyal. The Commissioner of Income Tax (Appeals) found the AO's approach unjustified, deleted the additions, and noted the appellant's denial of payments to Shri Jessa Ram and disclosed receipts from Shri Ashok Kumar Goyal. The CIT(A) also found the addition for investment in agricultural land unjustified, as it was based solely on Shri Jessa Ram's statement, which was adequately explained by receipts from Shri Ashok Kumar Goyal and the appellant's agricultural income.

The ITAT upheld the CIT(A)'s decision, stating that Shri Jessa Ram's statement, not confronted or cross-examined by the appellant, held no legal value. The ITAT emphasized that the deposits in Shri Jessa Ram's bank account did not prove receipt from the appellant. The ITAT confirmed the deletion of all questioned payments, including the investment in agricultural land, as adequately explained. The appellant contended that the AO's additions were justified, supported by Shri Jessa Ram's statement and lack of explanation for the agricultural land purchase source. However, the High Court found no substantial legal question, upholding the concurrent findings of the CIT(A) and ITAT based on proper evidence appreciation.

The High Court agreed with the ITAT that Shri Jessa Ram's statement, untested by cross-examination, could not inculpate the appellant. The Court noted that the appellant's lack of control over a third party's accounting system made conclusions based on third-party entries unjust. The CIT(A) and ITAT's deletion of additions was deemed appropriate after satisfactory explanations were provided for all questioned transactions. The Court concluded that the matter revolved around factual findings, devoid of legal issues, and upheld the dismissal of the appeal.