The Delhi High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) in deleting the addition of Rs. 4 crore for unexplained investments under Section 69 of the Income Tax Act, 1961.
This appeal pertained to the Assessment Year (AY) 2010-11 and challenged the order dated 18.04.2023 issued by the ITAT. The Tribunal’s examination centred around the order dated 13.11.2017 from the Commissioner of Income Tax (Appeals) [CIT(A)], addressing A.Ys 2010-11 to 2012-13.
The main issue before the Tribunal was whether the CIT(A) had erred on facts and in law in deleting the addition made under Section 69 of the Income Tax Act, on account of unexplained investments by the appellant/respondent in the JP Minda Group of companies. The total investment amounted to Rs. 4,05,00,000/-.
Notably, the addition in the hands of the respondent/assessee was made on a protective basis, with the substantive addition made in the hands of the JP Minda Group.
It is established that a coordinated bench had previously addressed the challenge related to the JP Minda Group in a judgment dated 26.09.2023, particularly in the case of ITA 358/2022 titled “Pr. Commissioner of Income Tax (Central)-2 vs. Ws JPM Tools Ltd.” This judgment also covered ITA 360/2022, titled “Pr. Commissioner of Income Tax (Central)-2 vs. Jay FE Cylinder Ltd.“
The essence of the judgment dated 26.09.2023 was the dropping of the substantive addition made in the hands of the JP Minda Group, based on merits.
Mr. Sanjay Kumar, the senior standing counsel representing the appellant/revenue, correctly emphasised that the addition was dropped relying on a judgment by a coordinate Bench in “Commissioner of Income Tax vs. Kabul Chawla“. Importantly, this judgment was affirmed by the Supreme Court in “Principal Commissioner of Income Tax vs. Abhisar Buildwell”.
Considering that the Tribunal, the bench of Justice Rajiv Shakdher and Justice Girish Kathpalia dismissed the appeal due to the dropping of the substantive addition on merits, and the addition in the hands of the respondent/assessee was only on a protective basis, it is concluded that no substantial question of law necessitates consideration by the court.
The bench stated that “In these circumstances, we are of the view that no substantial question of law arises for consideration by this court. The appeal is, accordingly, closed.”
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