PRINCIPAL COMMISSIONER OF INCOME TAX-5, vs. SURENDRA MANGALDAS SHAH (HUF)

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TAXAP/378/2018HC GujaratGJHC24011231201825 April 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was primarily fact-based. The Court noted that both the Commissioner of Income Tax (Appeals) and the Tribunal had concurrently found the deposits in question to be genuine. The CIT(A) had allowed the assessee to submit additional evidence under Rule 46A, and after considering this evidence, restricted the disallowance to a few cases where PAN details did not match, finding the majority of deposits genuine. The High Court concluded that no substantial question of law arose from the concurrent findings of fact by the lower appellate authorities. Therefore, the Tax Appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue has filed these appeals against the order of the Tribunal concerning the assessment year 2007-08. The assessee, a HUF engaged in money lending, had shown substantial deposits treated as unsecured loans in its return. The Assessing Officer (AO) doubted the genuineness of these loans and added them to the assessee's income as unexplained cash credits under Section 68 of the Income Tax Act, 1961, disallowing the related interest expenditure. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), who allowed the assessee to submit details of depositors as additional evidence. The CIT(A) restricted the disallowance to a few cases where PAN details did not match, finding the majority of deposits genuine as they were through banking channels and depositors were assessed to tax with valid PANs.

What were the issues?

1. Whether the Tribunal erred in confirming the order of the CIT(A) which allowed the assessee to furnish additional evidence of depositors under Rule 46A of the Income Tax Rules, 1962, and subsequently held the deposits to be genuine? Assessee's Contention: The assessee argued that the CIT(A) correctly permitted the production of additional evidence, and upon considering this evidence, the CIT(A) and subsequently the Tribunal correctly found the deposits to be genuine, as they were supported by banking channels and PAN details of assessed depositors. Revenue's Contention: The Revenue contended that the AO had rightly treated the deposits as unexplained cash credits under Section 68 of the Act due to the assessee's initial failure to provide necessary details. The Revenue likely argued that the subsequent admission of additional evidence by the CIT(A) was improper or that the evidence itself was insufficient to establish genuineness.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

C/TAXAP/376/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 376 of 2018 With R/TAX APPEAL NO. 378 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX-5, Versus SURENDRA MANGALDAS SHAH (HUF) ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 25/04/2018

COMMON ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These   appeals   filed   by   the   Revenue   arise   in similar background involving same assessee.   We may notice the facts and documents from Tax Appeal No.378 of   2018   which   is   treated   as   a   lead   matter. Respondent­assessee   is   the   HUF   and   engaged   in   the business of lending money.   For the assessment year 2007­08, the assessee had filed the return of income which   showed   sizable   deposits   made   by   the individuals.   These were treated as unsecured loans by the assessee.   The Assessing Officer doubted the genuineness of such deposits/loans.   He called upon Page 1 of 3

C/TAXAP/376/2018 ORDER the   assessee   to   provide   necessary   details   of   the depositors such as their income tax details, PAN card etc.     Since   the   assessee   failed   to   supply   such details, the Assessing Officer added such amounts in the income of the assessee as unexplained cash credit in terms of section 68 of the Income Tax Act, 1961, ('the   Act'   for   short).     The   Assessing   Officer disallowed   corresponding   interest   expenditure   in relation to such loans. 2. Assessee carried the matter in appeal.   Before the   Commissioner   of   Income   Tax   (Appeals),   the assessee   presented   necessary   details   of   the depositors and sought permission to produce the same as additional evidence.   Commissioner of Income Tax (Appeals) granted such permission in terms of rule 46A of the Income Tax Rules and also called for the remand   report   from   the   Assessing   Officer.     After considering   such   materials,   he   restricted   the disallowance to only a few depositors where the PAN details did not match. For the remaining, he noted that all deposits were through banking channel.  The majority   of   the   depositors   were   assessed   to   tax. Their PAN details were also produced.  In short, the Page 2 of 3

C/TAXAP/376/2018 ORDER Commissioner of Income Tax (Appeals) in relation to such deposits and depositors found that the same were genuine. 3. It is this view of the Commissioner of Income Tax (Appeals) which the Tribunal confirmed in further appeal by the Revenue.  From the documents on record, we can gather that the entire issue was fact based. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held that the deposits in question were genuine.  No question of law arises.  Tax Appeals are dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 3 of 3

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