2016 (6) TMI 848 - HC - Income Tax

Addition under Section 68 - Addition of a sum of was made on the basis that the assessee had allegedly taken loan from the corpus fund, which the assessee has denied - Held that - C.I.T.(A) has correctly held that there is no knowledge as to what the corpus fund is. The C.I.T. also opined that there was no material on the basis of which the aforesaid addition could be made and on that basis the C.I.T. deleted the addition. The learned Tribunal correctly concurred with such finding of the C.I.T.(A). As regards other sum the addition was found altogether unmeritorious because all these amounts are paid by cheque out of accounted fund in the regular books of accounts. A copy of the confirmation along with the bank statement in respect of the assessee s accounts with Bharat Overseas Bank is filed, duly confirmed by Shri A E Medhora on behalf of M/s. Novrojee & Co. A copy of the bank account disclosed and the regular books of accounts were filed before the Ld.CIT(A) which were also made available before the AO. Based on these submissions, the ld.CIT(A) has correctly deleted the same also confirmed by ITAT - Decided against revenue.

Summary

Issues:
1. Addition of ?33.90 lakhs under Section 68 of the Income Tax Act, 1961.
2. Addition of ?72,57,686 under Section 68 of the Income Tax Act, 1961.

Analysis:
1. The first issue pertains to the addition of ?33.90 lakhs under Section 68 of the Income Tax Act, 1961, based on the alleged loan from the corpus fund, which the assessee denied. The assessing officer made this addition, but the C.I.T.(A) held that there was no clarity on what the corpus fund entailed. The C.I.T. further stated that there was insufficient evidence to support the addition, leading to its deletion. The learned Tribunal supported this decision, indicating a lack of grounds for the addition.

2. The second issue involves the addition of ?72,57,686 under Section 68 of the Income Tax Act, 1961. This addition was deemed unjustified as the amounts were paid by cheque from accounted funds in the regular books of accounts. Supporting documents, including a confirmation copy and bank statement from Bharat Overseas Bank, confirmed by Shri A E Medhora on behalf of M/s. Novrojee & Co., were submitted. The C.I.T.(A) deleted this addition based on the evidence provided. The Court criticized the assessing officer for the clear abuse of power in this case.

In conclusion, the Court dismissed the appeal against the order dated 31st March, 2009, which had initially dismissed the revenue's appeal. The Court found in favor of the assessee, highlighting the lack of merit in the additions made under Section 68 of the Income Tax Act, 1961. Despite considering imposing costs on the revenue for the abuse of power by the assessing officer, the Court refrained from doing so due to the absence of the respondent during the proceedings.