The Madhya Pradesh High Court in a recent case held upheld the order deleting the addition made under section 68 of the Income Tax Act, 1961 due to lack of substantial question.
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.
Mukul Kakar, the assessee 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 under section 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 under section 68 of the act.
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The Bench noted that the impugned case involves obtaining loans from various shell companies. The Bench 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. The Bench stated that Writ Court should refrain from entertaining any appeal if there is no perversity in the order passed by the last fact- finding authority i.e., the ITAT.
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The Division Bench of Justice Sushrut Arvind Dharmadhikari and Justice Anuradha Shukla observed that in the absence of demonstrated perversity in Tribunal’s finding, interference with the concurrent findings of the CIT(A) as well as the ITAT therewith by this Court is not warranted.
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.
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The bench held 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.
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