2020 (12) TMI 673 - HC - Income Tax

High Court dismisses Revenue's appeal on Section 68 addition, finding lack of substantial questions of law

The High Court dismissed the Revenue's appeal challenging the deletion of an addition made under Section 68 of the Income Tax Act. The Court found that ... Addition u/s. 68 - assessee has not produced the Name, Address & PAN of the so called parties/Commission agents during the assessment proceedings - ITAT deleted - assessee has not proved the cash deposit but changed its stand that the payments were received from various parties and commission agents when such ledger accounts were not maintained by the assessee - HELD THAT:- Substantial Questions of Law raised before us are only with regard to the deletion of the addition made u/s 68 and technically, we are not required to go into the aspect, whether the appeal filed by the Revenue was maintainable before the Tribunal. With regard to the deletion of the addition made under Section 68 as pointed out earlier, the CIT(A) granted partial relief to the assessee. This relief was granted to the assessee based upon an elaborate remand report filed by the AO which has been extracted in the order passed by the CIT(A) dated 31.07.2018 - CIT(A) / the First Appellate Authority has re-examined the entire factual position and granted relief to the assessee to the extent warranted. The assessee was not on appeal as against the disallowed portion and it was only the Revenue which challenged the order before the Tribunal to consider the factual scenario. There is no question of law much less Substantial Question of Law, arising for consideration in this appeal and consequently, the appeal should fail. With regard to the issue regarding the maintainability of the appeal before the Tribunal, we refrain from expressing any opinion on the said issue as in our considered opinion, it is an arguable issue and the Revenue having not raised any Substantial Questions of Law on the said issue, we proposed to leave the said question open. Issues:1. Deletion of addition made under Section 68 by the Assessing Officer.2. Maintainability of the appeal filed by the Revenue before the Tribunal.Analysis:Issue 1: Deletion of addition made under Section 68 by the Assessing OfficerThe appeal was filed by the Revenue challenging the order passed by the Income Tax Appellate Tribunal, Chennai, regarding the addition made under Section 68 of the Income Tax Act, 1961. The Assessing Officer found cash deposits in the bank account of the assessee and sought explanations. The assessee claimed to have received the cash deposits from a cooperative society but failed to provide necessary documentation like confirmation or ledger accounts. Consequently, the Assessing Officer treated the sum as unexplained credit under Section 68. The Commissioner of Income Tax (Appeals) partially allowed the appeal, deleting a portion of the addition based on a remand report. The Tribunal dismissed the Revenue's appeal on the grounds of maintainability. The High Court noted that the appeal before them pertained only to the deletion of the addition under Section 68. The Court observed that the CIT(A) had granted relief to the assessee after re-examining the factual position based on the remand report. As the assessee did not appeal against the disallowed portion, only the Revenue challenged the order before the Tribunal. The High Court concluded that no substantial question of law arose for consideration in this appeal, and therefore, the appeal was dismissed.Issue 2: Maintainability of the appeal filed by the Revenue before the TribunalThe High Court refrained from expressing a definitive opinion on the issue of the maintainability of the appeal before the Tribunal. While the Revenue argued on the question of maintainability, the High Court focused solely on the deletion of the addition under Section 68. The Court emphasized that the substantial questions of law raised were limited to the deletion of the addition and did not delve into the aspect of appeal maintainability. The High Court decided to leave the question of appeal maintainability open, as it was not a substantial question of law raised by the Revenue. Ultimately, the High Court dismissed the Tax Case Appeal on the grounds that no substantial questions of law framed by the Revenue were pertinent to the appeal, and no costs were awarded in this regard.This comprehensive analysis of the judgment highlights the key issues, legal arguments, and the ultimate decision rendered by the Madras High Court in this case.