High Court Dismisses Revenue’s Appeal in ITAT/243/2022 Regarding Addition of Income Tax and Disallowance of Interest

Case Name:

Principal Commissioner of Income Tax -2, Kolkata vs. M/S. OVERTOP MARKETING PVT. LTD. (High Court of Calcutta)

Key Takeaways:

1. The Court allowed the condonation of delay in filing the appeal due to sufficient cause shown.

2. The appeal filed by the revenue under section 260A (of Income Tax Act, 1961), was directed against the order passed by the Income Tax Appellate Tribunal “C” Bench, Kolkata, for the assessment year 2015-16.

3. The substantial questions of law raised by the revenue for consideration were related to the addition of Rs.4.51 crores u/s 68 (of Income Tax Act, 1961) and disallowance of interest of Rs.53,70,163, which the Court found to be examined in depth by the assessing officer and the tribunal.

4. The Court noted that the creditworthiness of the lenders of the respondent/ assessee had been established, and there was no substantial question of law arising for consideration in this appeal.

5. The appeal was dismissed by the Court.

Case Synopsis:

In the High Court at Calcutta, Special Jurisdiction (Income Tax), the case of ITAT/243/2022 involved an appeal filed by the Principal Commissioner of Income Tax -2, Kolkata against M/S. OVERTOP MARKETING PVT. LTD. The appeal was directed against the order passed by the Income Tax Appellate Tribunal “C” Bench, Kolkata, for the assessment year 2015-16. The appeal raised substantial questions of law related to the addition of Rs.4.51 crores u/s 68 (of Income Tax Act, 1961), and the disallowance of interest of Rs.53,70,163. The Hon’ble Justice T.S. Sivagnanam and The Hon’ble Justice Hiranmay Bhattacharyya presided over the case.

Delay Condonation:

The Court heard the appeal regarding the delay of 370 days in filing the appeal. After perusing the affidavit filed in support of the condone delay petition, the Court found sufficient cause for the delay and allowed the application, thereby condoning the delay in filing the appeal.

Substantial Questions of Law:

The substantial questions of law raised by the revenue for consideration were related to the decision of the tribunal in deleting the addition of Rs.4.51 crores u/s 68 (of Income Tax Act, 1961) and disallowance of interest of Rs.53,70,163. The Court carefully examined the factual findings of the assessing officer and the documents submitted by the lenders of the respondent/assessee.

Court’s Decision:

After elaborately hearing the learned advocates for the parties and perusing the orders passed by the Commissioner of Income Tax [Appeals] –2, Kolkata and that of the learned tribunal, the Court found that the creditworthiness of the lenders of the respondent/assessee had been examined in depth, and all the lenders had directly submitted documents before the assessing officer. The Court noted that both the CIT[A] and the tribunal had independently assessed the factual position and arrived at a decision. The tribunal had given elaborate reasons as to how the creditworthiness of the lenders had been established. Consequently, the Court found no substantial question of law arising for consideration in this appeal and dismissed the appeal.

FAQ:

Q1: What was the outcome of the appeal filed by the revenue in ITAT/243/2022?

A1: The appeal filed by the revenue was dismissed by the High Court at Calcutta, as no substantial question of law was found to arise for consideration in this appeal.

Q2: What were the substantial questions of law raised by the revenue for consideration?

A2: The substantial questions of law raised by the revenue were related to the addition of income tax and disallowance of interest, specifically regarding the creditworthiness of the lenders of the respondent/assessee.

Heard Mr. Tilak Mitra, learned Advocate for the appellant and Ms. Swapna Das, learned Advocate for the respondent.

There is a delay of 370 days in filing the appeal.

We have perused the affidavit filed in support of the condone delay petition and we find sufficient cause has been shown for not preferring the appeal within the period of limitation. Hence, the application is allowed and the delay in filing the appeal is condoned.

ITAT/243/2022

This appeal filed by the revenue under section 260A (of Income Tax Act, 1961) [the Act] is directed against the order dated 15.3.2021 passed by the Income Tax Appellate Tribunal “C” Bench, Kolkata [Tribunal] in ITA No.686/Kol/2019 for the assessment year 2015-16. The revenue has raised the following substantial question of law for consideration :

1. WHETHER in the fact and the circumstances of the case and in law, the decision of the tribunal is erroneous in deleting the addition of Rs.4.51 crores u/s 68 (of Income Tax Act, 1961) and disallowance of interest of Rs.53,70,163 ignoring the factual finding of the assessing officer on dubious existence of loan creditors and genuineness of related transaction?

2. WHETHER the Learned tribunal has erred in law as well as in fact in not considering the facts brought on record by the assessing officer on physical non-existence of the companies extending loans ?

3. WHETHER learned Tribunal has erred in holding that the criteria of identify, creditworthiness and genuineness of the transaction of the loan creditors have been established on the basis of documents alone in this case?

We have heard Mr. Tilak Mitra, learned Advocate for the appellant and Ms. Swapna Das, learned Counsel for the respondent.

After elaborately hearing the learned advocates for the parties and carefully perusing the order passed by the Commissioner of Income Tax [Appeals] –2, Kolkata [CIT(A)] and that of the learned tribunal we find that the creditworthiness of the lenders of the respondent/assessee have been examined in depth the factual details have been noted and all the lenders of the respondent/assessee have directly submitted documents before the assessing officer. However, the assessing officer proceeded to hold the Company under the control of Shri Raj Kumar Kothari to be sold company only by referring to certain answers given by the selected questions. The said answers have been recorded by the said Mr. Kothari and also specifically alleged that it was obtained under threat and coercion. In any event, both the CIT[A] as well as the tribunal had independently assessed the factual position and arrived at a decision.

The CIT[A] had also noted the decision of this court in the case of CIT vs. M/s. Dataware Private Limited in ITAT/263/2011 dated 21.9.2011 and allowed the appeal filed by the assessee. The tribunal while affirming the said order has given elaborate reasons as to how the creditworthiness of the lenders have been established. Thus, we find there is no substantial question of law arising for consideration in this appeal.

Accordingly, the appeal is dismissed.

(T.S. SIVAGNANAM, J.)

(HIRANMAY BHATTACHARYYA, J.)