2015 (10) TMI 753 - HC - Income Tax

Payment out of undisclosed sources - Tribunal upholding the decision of the CIT(A) in deleting the addition of ₹ 4 lakhs made by the AO - Held that - CIT(A) and the Tribunal by their orders have rendered finding of fact to the effect that the sum of ₹ 4 lakh mentioned in the impounded document had in fact been canceled along with the narration. Thus no cognizance of the same was taken as two authorities under the Act. This was on the basis of concurrent finding of fact holding that there is no such payment of ₹ 4 lakhs as mentioned in the impounded document as it has been canceled by the respondent assessee by drawing a line across the amount and the narration there much before impounding of the document. In view of the concurrent finding of facts not shown to be perverse and/or arbitrary, no substantial question of law arises for our consideration. Prorata deduction u/s 80IB(10) - Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in upholding the decision of the CIT(A) who allowed a prorata deduction u/s 80IB(10) of the Act ignoring the fact that the said section does not allow a prorata deduction u/s. 80IB(10) of the Act? - Appeal admitted on Question No.1.

Summary

Issues:
1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961
2. Addition of Rs. 4 lakhs as income from undisclosed sources

Interpretation of Section 80IB(10) of the Income Tax Act, 1961:
The appellant challenged the order of the Income Tax Appellate Tribunal (the 'Tribunal') for the Assessment Year 2004-05 under Section 260A of the Income Tax Act, 1961. The primary contention raised was whether the Tribunal was correct in allowing a prorata deduction under Section 80IB(10) of the Act, despite the section not explicitly permitting such a deduction. The learned Counsel for the appellant presented this question for consideration. However, the Court did not entertain this question for further examination.

Addition of Rs. 4 lakhs as income from undisclosed sources:
The Assessing Officer had added Rs. 4 lakhs as income of the respondent-assessee based on an entry found in an impounded document during assessment. The respondent-assessee's explanation was deemed unsatisfactory, leading to the addition of this amount as income from undisclosed sources. Upon appeal, the Commissioner of Income Tax (Appeals) observed that the figures and narration related to the Rs. 4 lakhs payment were canceled in the impounded document. The CIT(A) concluded that since the entire narration was canceled, no cognizance of the same could be taken, and therefore, deleted the addition of Rs. 4 lakhs. The revenue appealed to the Tribunal, which upheld the CIT(A)'s decision, emphasizing that the amount of Rs. 4 lakhs had been canceled by the assessee, and no evidence was produced by the revenue to challenge this finding. The Court noted that both the CIT(A) and the Tribunal had concurred that the Rs. 4 lakh mentioned in the impounded document was canceled by the assessee, and no payment was made. As there was no evidence to suggest otherwise, the Court found no substantial question of law and did not entertain this issue for further consideration.

In conclusion, the Court admitted the appeal only on Question No.1 related to the interpretation of Section 80IB(10) of the Income Tax Act, 1961. The detailed analysis of the judgment highlighted the specific issues raised by the appellant and the subsequent decisions made by the authorities, ultimately leading to the Court's determination not to entertain the second question regarding the addition of Rs. 4 lakhs as income from undisclosed sources.