2017 (10) TMI 66 - HC - Income Tax

Court upholds Income Tax Act Section 68 treatment of unexplained cash credit, rejects review application

M/s. Kerala Sponge Iron Ltd Versus The Commissioner of Income Tax

The court dismissed the review application in an Income Tax Appeal case, upholding the original judgment favoring the Revenue. The court found that ... Unexplained cash credit under Section 68 - whether receipts by the assessee from M/s Vatika Merchants Private Limited were through banking channels? - Held that:- It is obvious from the judgment under review that before the Assessing Officer itself, M/s Vatika Merchants Private Limited had confirmed the transactions between the assessee and M/s Vatika. This was considered by the Assessing Officer and the Assessing Officer treated the receipts as unexplained cash credit for the reason that M/s National Multi Commodity Exchange of India had confirmed that M/s Vatika Merchants (supra) was expelled from the exchange long prior to the transactions in question. Further, it was also confirmed that the assessee is a non-existent client under any member of the exchange. Taking into account, these facts and the fact that the assessee had not produced any material to contradict the statement of the exchange, the Assessing Officer held the claim of generation of commodity trading profit as a sham and a bogus one. Therefore, Annexure-R series of documents now relied on would not improve the case of the assessee in any manner. In any event, the judgment contains the reasons for the conclusions of this Court and if the assessee is aggrieved by those conclusions, the remedy of the assessee is to challenge the judgment before the appellate forum. Issues: Review of judgment in Income Tax Appeal - Treatment of receipts as unexplained cash credit under Section 68 of the Income Tax Act.Analysis:1. The respondent sought a review of the judgment dated 19.08.2015, which set aside the order of the Tribunal and favored the Revenue. The contention raised was that the receipts from M/s Vatika Merchants Private Limited were through banking channels and should not have been treated as unexplained cash credit under Section 68 of the Income Tax Act.2. The court noted that M/s Vatika Merchants Private Limited had confirmed the transactions with the assessee, but the Assessing Officer had treated the receipts as unexplained cash credit based on information that M/s Vatika Merchants had been expelled from the exchange and the assessee was a non-existent client under any exchange member. The court found that the documents produced did not contradict this information, leading to the rejection of the contention raised by the petitioner.3. The court emphasized that the judgment provided reasons for its conclusions, and if the assessee disagreed, the proper recourse was to challenge the judgment before the appellate forum. The court concluded that the review was not maintainable and dismissed the application, upholding the original judgment in favor of the Revenue.