Commissioner of Income Tax-III vs Hemant Hasmukhlal Shah

Sonia Gokani, J.—Revenue has preferred this appeal u/s 260A of the income tax Act 1961 (" Act " for short) challenging the order of the income tax Appellate Tribunal, Ahmedabad Bench in ITA No. 437/AHD/2005, raising following substantial question of law for our determination:-

Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) deleting the addition of Rs. 3,28,46,319/- made on account of cash credit from Kakani Enterprise ?

The respondent assessee, for the Assessment Year 2001-02, had filed the return declaring the loss. On the scrutiny assessment, certain additions were made by the Assessing Officer. The addition on account of "unexplained cash credit" to the tune of Rs. 7,56,24,914/- was made u/s 68 of the Act.

Assessee, when challenged it before the CIT (A), the CIT [A] on determining the net profit of the assessee at Rs. 4.86 lakhs on the estimation of the gross profit at 1.5% instead of 10% assessed by the Assessing Officer, deleted the entire addition.

When challenged before the Tribunal, the Tribunal concurred with the CIT [A], and therefore, the present Appeal.

Heard learned counsel Ms. Paurami Sheth for the Revenue.

As can be noted from the record, the CIT [A] on realizing that the loans were received from the bank account of Kikani Brothers, in which the money from the sister concerns of the assessee were found deposited before issuance of the cheques by the assessee, was on satisfaction having been arrived at satisfaction of genuineness of the credit.

The Tribunal confirmed the said findings by holding thus -

In respect of amount borrowed from Kakani Enterprise, the learned CIT [Appeals] found that loans were received from the bank account of Kakani Brothers, in which money from the sister-concerns of the assessee were deposited before issue of cheques to the assessee. Thus, the ld. CIT (Appeals) being satisfied with regard to the genuineness of the credit and the creditworthiness of the creditor deleted the addition made in this respect. No error in this findings of the ld. CIT (Appeals) could be pointed out by the Ld. Departmental Representative. We, therefore, confirm the deletion of addition made in respect of loan borrowed from Kakani Enterprise by the ld. CIT (Appeals). In respect of balance loan taken from five parties of Pittaliya Group, the ld. CIT (Appeals) deleted the addition by observing that "I have gone through the confirmation letters filed by the appellant from pittaliya group. As the credits have been confirmed by them and they have explained source of credits, the said credits are accepted as genuine" We, thus, find that no discussion was made in the order by the ld. CIT (Appeals) about the source of the credits as explained before him. In absence of the discussion recorded in the appellate order about the explanation of the source of credits, we are not in a position to adjudicate upon the same. Both the parties present before us also could not state what was the explanation of source of credit issues before the Assessing Officer for fresh adjudication, hereinabove, in our considered opinion, it shall be in the interest of the justice to restore the issue regarding these unexplained cash credits also to the file of the Assessing Officer for adjudication afresh as per law. We, therefore, set aside this part of the order of the ld. CIT (Appeals) and direct the Assessing Officer to re-adjudicate the same after allowing proper opportunity of hearing of the assessee. Thus, this ground of appeal of the Revenue is partly allowed for statistical purposes as stated above.

The issue is essentially based on factual matrix presented before both the authorities. We see no error in the findings arrived at by them. Predominantly, the question having been based on facts, no question of law arises, much less a substantial question of law. Tax Appeal is, therefore, dismissed.