2016 (11) TMI 1026 - HC - Income Tax

High Court Upholds Tribunal Decision on Trading Liabilities, Rejects Revenue's Appeal

Pr. Commissioner of Income Tax, Jaipur-3, Statute Circle, Jaipur Versus Rakesh Construction Company

The High Court upheld the Tribunal's decision, dismissing the Revenue's appeal challenging the Tribunal's judgment. The Court agreed that the trading ... Addition u/s 68 - genuineness of the claim of sundry creditors - Held that:- Most of the liabilities were of the current year or immediately preceding year and the accounts were active in nature and the transactions were being carried out for the current year as well as in the subsequent year. Considering these facts and circumstances of the case, we are of the view that the addition was rightly deleted and find no infirmity in his order which is sustained. - Decided in favour of assessee Issues:Challenge to Tribunal's judgment and order.Analysis:The appellant challenged the Tribunal's decision, questioning the perversity of the order on factual grounds. The appellant raised substantial questions of law regarding the rejection of books of accounts under section 145(3) and the genuineness of sundry creditors' claims. The CIT (Appeal) highlighted that the trading liabilities were current and not old, emphasizing that the AO failed to provide evidence of remission of liabilities through any agreement with creditors. The AO's failure to discharge the onus of proving trading liabilities as deemed income under section 41(1) was noted. The Tribunal upheld the CIT (Appeal)'s decision, emphasizing that the liabilities were active and current, leading to the dismissal of the Revenue's appeal. The High Court concurred with the Tribunal's decision, finding no substantial question of law for consideration and ultimately dismissing the appeal.