2017 (5) TMI 488 - HC - Income Tax

High Court affirms ITAT decision on fictitious vehicle bookings, emphasizing need for credible evidence

The High Court upheld the ITAT's decision to delete additions related to booking vehicles in fictitious names for Assessment Years 1993-94 and 1994-95. ... Addition on account of booking of vehicles-in the bogus/fictitious names - Held that:- Having heard Mr Zoheb Hussein, learned counsel for the Revenue the Court is not persuaded to hold that the ITAT erred in appreciating the evidence before it or that its conclusions on that basis. The findings have turned purely on facts and the view taken was certainly a probable one. The AO's additions, which were upheld by the CIT (A) appeared to have proceeded on surmises and conjectures. As rightly pointed out by the ITAT without some cogent and credible material that the bookings were in fact made by the Assessee for itself, the additions ought not to have been made. - Decided in favour of the Assessee Issues:1. Appeal against the common order of the Income Tax Appellate Tribunal for Assessment Years 1993-94 and 1994-95.2. Question of law regarding the addition of amounts on account of booking vehicles in fictitious names.3. Treatment of bookings made in abbreviated names and premium earned on sale of vehicles.4. Deletion of additions made by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals).5. ITAT's decision to delete the additions for both Assessment Years.Analysis:1. The Revenue filed appeals against the ITAT's order for AYs 1993-94 and 1994-95. The main question was the correctness of deleting additions related to booking vehicles in fictitious names.2. The Assessee, a car dealer, faced scrutiny for booking vehicles in fictitious names without complete details. The AO added amounts to the Assessee's income for AY 1993-94, alleging undisclosed investments and premium earnings.3. For AY 1994-95, the AO initially added an amount to taxable income, which was later reduced during re-assessment to consider only cash-received bookings. The CIT (A) upheld a portion of the addition for this year.4. The CIT (A) held that not all bookings in abbreviated names belonged to the Assessee, and only a percentage of the bookings and premium should be treated as the Assessee's income.5. The ITAT deleted the additions for both years, citing lack of evidence linking the bookings to the Assessee and emphasizing the need for credible material before making such additions.6. The High Court upheld the ITAT's decision, noting that the AO's additions lacked substantial evidence and were based on assumptions. The Court found the ITAT's conclusions reasonable and dismissed the Revenue's appeals in favor of the Assessee.This comprehensive analysis covers the issues raised in the legal judgment, detailing the background, arguments, decisions, and final outcome of the case without disclosing any party names.