2018 (9) TMI 803 - HC - Income Tax

Addition u/s 68 on account of unexplained cash credits - Held that - The assessee had explained that she was a member of International Air Transport Association. She used to book domestic and international air tickets of various national and international airlines. She had voluminous turnover from which she earned sizeable commission. She had employed several employees for booking the tickets and looking after the financial transactions. She had several customers for whom she would make such bookings. The commission was paid by the Airlines through the banking channel. There was thus no cash element or scope of any cash transactions. She was maintaining her books of account which were duly audited. During the survey, the Revenue authority had a chance upon some such papers in which jottings were made by the employees with regard to financial details with the assessee. They merely contain certain receivable amounts from the customers which could not be construed as cash transactions. The Tribunal accepted such explanation and endorsed substantially the view of CIT A who also looked into these very papers and transactions. The entire issue is thus based on factual considerations. With respect to deletion of addition of ₹ 36.50 Lakhs to which second proposed question of law relates, the CIT A in particular had come to a conclusion that such addition was already made in the earlier year and second time, this cannot be added.

Summary

Issues:
1. Whether the Appellate Tribunal erred in law in deleting the addition made by the Assessing Officer under Section 68 of the Income-tax Act on account of "unexplained cash credits"?
2. Whether the Appellate Tribunal erred in law in deleting the addition of ?36,50,978/= despite the voluntary disclosure by the assessee before DDIT [Investigation]-2, Rajkot?

Analysis:

Issue 1:
The respondent-assessee, an individual owning M/s. Shree Divya Travels, faced scrutiny assessment resulting in an addition of ?5.10 Crores under Section 68 of the Income-tax Act. Out of this, ?36.50 lakhs was linked to disclosures made during survey operations. The CIT [A] partially deleted the additions, leading to appeals from both the assessee and the Revenue. The Tribunal, however, completely removed the additions, prompting the Revenue's appeal. The High Court noted the Tribunal's detailed discussion, emphasizing the assessee's legitimate business activities, including booking air tickets and earning commissions through banking channels. The Tribunal and CIT [A] accepted the explanations based on factual evidence, ruling out any cash transactions. As the conclusions were factual and well-supported, the High Court found no legal question to address.

Issue 2:
Regarding the deletion of the ?36.50 Lakhs addition, the CIT [A] had previously concluded that this amount was already accounted for in the previous year, precluding its inclusion again. The High Court upheld this reasoning, affirming that the addition was not valid for the current assessment year. Consequently, the Tax Appeals were dismissed by the High Court.

In summary, the High Court dismissed the Tax Appeals, upholding the Tribunal's decision to delete the additions based on factual considerations and the CIT [A]'s previous treatment of the disputed amount. The judgment emphasized the importance of factual analysis in tax matters and the need for clear evidence to support any additions or deletions in assessments.