Substantial Question Is Absent To Entertain Appeal U/s 260A: Madhya Pradesh HC Confirms Deletion Of Addition U/s 68

Finding that the legal principles have been properly applied by the Tribunal in appreciating the evidence and no substantial question has arisen for consideration, the Madhya Pradesh High Court confirmed the action of the Tribunal in deleting the additions made u/s 68. As per Section 68 of Income tax Act, where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income-tax as the income of assessee of that previous year. While deleting the addition, the High Court clarified that a finding of fact may give rise to a substantial question of law, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence was not taken into consideration or inadmissible evidence has been taken into consideration. The Division Bench of Justice Sushrut Arvind Dharmadhikari and Justice Anuradha Shukla observed that “The Tribunal being a final fact-finding authority, in the absence of demonstrated perversity in its finding, interference with the concurrent findings of the CIT(A) as well as the ITAT therewith by this Court is not warranted”. Facts of the case The assessee individual, had filed his return declaring his total income of Rs.3,49,810/-. During assessment, the AO noticed that assessee was rising loans from several parties. For examining those loans, the AO issued notices u/s 133(6) to the creditors, but did not get reply from 15 creditors. The assessee submitted that he had repaid the loans to almost all the creditors prior to the commencement of assessment. The AO refused to accept the submission and made addition u/s 68. Observation of the High Court The Bench noted that the impugned case involves obtaining loans from various shell companies. The Bench also found that as per Section 105 of the Companies Act, no person can be a Director of more than 20 companies, however, in the present case, various shell companies were formed and amount were drawn from them. The Bench observed that Revenue Department have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. This Bench therefore stated that Writ Court should refrain from entertaining any appeal if there is no perversity in the order passed by the last fac- finding authority i.e., the ITAT. Since the ITAT has dealt with all the grounds raised by the Revenue Department and has passed a well-reasoned and speaking order taking into consideration all the material available on record, the Bench refused to entertain the Revenue's submission. Hence, concluding that the present case does not involve any substantial question of law so as to meet the provisions of Section 260(A) for admitting the appeal, the High Court dismissed the Revenue's appeal in limine. Counsel for Appellant / Revenue: Siddharth Sharma Counsel for Respondent/ Assessee: None Case Title: Pr. Commissioner of Income Tax Central versus Mukul KakarCitation: 2024 LiveLaw (MP) 203 Case Number: ITA No. 124 of 2024 Click here to read/ download the Order

Substantial Question Is Absent To Entertain Appeal U/s 260A: Madhya Pradesh HC Confirms Deletion Of Addition U/s 68

Pankaj Bajpai

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