2019 (7) TMI 1392 - HC - Income Tax

High Court affirms Tribunal's decision on tax additions for unexplained transactions & expenses.

The High Court upheld the Income Tax Appellate Tribunal's decision to delete additions of Rs. 3.28 crores for unexplained cash transactions, Rs. 6 crores ... Addition u/s 69 - unexplained cash transactions between the Assessee and the Amrapali Group - HELD THAT:- ITAT had found that “the Assesee was never found to be in possession of any real money. The addition having been made only on the strength of some notings found in some file extracted from the computer of Sh. Rohtash, clearly establish that the provisions of section 69A of the Act do not apply.” It was further found that on the date of receipt of the impugned amount, the same was returned to the Amrapali Group by the M/s Bihari Ji Group. The determination by the ITAT is based on facts and there is nothing to indicate that it is perverse. Unexplained share application money u/s 68 - CIT (A) accepted the explanation offered by the Assessee and came to the conclusion that the Assessee had satisfactorily explained to the AO that was in the normal course of business and nothing adverse was found so as to conclude that the source of money used for payment to the Assessee was unaccounted. This again is a factual determination and does not give rise to any substantial question of law. Disallowance of “bogus‟ expenses - ITAT deleted the addition - HELD THAT:- ITAT noted that the said addition was made on the premise that the Assessee had claimed rent payment to M/s Trinity Shipping and Allied Services Pvt. Ltd. which according to the AO was not properly explained. The CIT (A), however, deleted the addition after finding that no rent or hire charges were in fact paid to either of the above entities. Before the ITAT, the Revenue was unable to show anything to the contrary. This too being a purely factual determination concurrently by the CIT (A) and the ITAT in favour of the Assessee - No substantial question of law. Issues:1. Deletion of addition of Rs. 3.28 crores on the ground of unexplained cash transactions.2. Deletion of addition of Rs. 6 crores on account of unexplained share application money.3. Deletion of addition of Rs. 5 lakhs on account of disallowance of 'bogus' expenses.Analysis:1. The first issue revolves around the deletion of an addition of Rs. 3.28 crores by the Income Tax Appellate Tribunal (ITAT) concerning unexplained cash transactions between the Assessee and the Amrapali Group. The ITAT analyzed Section 69A of the Income Tax Act and concluded that the Assessee was not the owner of the money in question, as no real money was found in possession. The addition was made based on notings from a computer file, and the money was returned to the Amrapali Group by another entity. The High Court found the ITAT's determination to be factual and not perverse.2. The second issue involves the deletion of an addition of Rs. 6 crores by the Assessing Officer under Section 68 of the Act related to unexplained share application money. The Commissioner of Income Tax (Appeals) accepted the Assessee's explanation, stating that the money was part of normal business operations and the source was not unaccounted for. Both the CIT (A) and ITAT made factual determinations in favor of the Assessee, leading to the conclusion that no substantial question of law arises from this issue.3. The third issue pertains to the deletion of an addition of Rs. 5 lakhs due to disallowance of 'bogus' expenses. The addition was initially made based on rent payments claimed by the Assessee to a specific entity. However, the CIT (A) found that no rent or hire charges were actually paid to the entity in question. The Revenue failed to provide evidence to the contrary before the ITAT. As both the CIT (A) and ITAT made concurrent factual determinations in favor of the Assessee, the High Court held that no substantial question of law arises from this issue. Ultimately, the appeal by the Revenue was dismissed based on the above analysis.