SC Upholds Section 68 Relief as Concurrent Findings Were Not Perverse

PCIT Vs Hi-Tech Residency Pvt. Ltd. (Supreme Court of India)

The matter arose from the Revenue’s challenge to the Income Tax Appellate Tribunal (ITAT) order for Assessment Year 2009-10 relating to additions made under Section 68 of the Income-tax Act. The issues concerned deletion of an addition of ₹1.30 crore towards share capital, reduction of an addition relating to unsecured loans of ₹1,00,01,000 to ₹5,01,000, and deletion of an addition of ₹15 lakh received as earnest money.

Read Delhi HC Judgment: Delhi HC Dismisses Section 68 Appeal as Revenue Failed to Show Findings Were Perverse

The Delhi High Court examined the orders of the Assessing Officer, the Commissioner of Income Tax (Appeals) [CIT(A)] and the ITAT. It found that the CIT(A) had undertaken a detailed examination of the identity, genuineness and creditworthiness of the investors in the share capital as well as the lenders. The CIT(A) had also obtained comments from the Assessing Officer before concluding that the assessee had discharged its burden of establishing the identity, genuineness and creditworthiness of both the investors and the lenders. The ITAT concurred with these findings through a detailed order.

The High Court observed that the CIT(A) and the ITAT had recorded concurrent findings of fact and that the Revenue had failed to demonstrate that these findings were perverse. Noting that the matter had already reached virtually the fourth stage of litigation, the Court answered all the substantial questions of law in favour of the assessee. It held that the ITAT had not erred in deleting the addition of ₹1.30 crore under Section 68, upholding the reduction of the addition relating to unsecured loans to ₹5,01,000, or deleting the addition of ₹15 lakh received as earnest money. Consequently, the Revenue’s appeal was dismissed.

The Revenue thereafter filed a Special Leave Petition before the Supreme Court challenging the High Court’s judgment. The Supreme Court held that it did not find any ground to interfere with the impugned order. Accordingly, the Special Leave Petition was dismissed, and all pending applications were also disposed of.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

We do not find any ground to interfere with the impugned order.

The special leave petition is accordingly dismissed.

Pending applications, if any, shall also stand disposed of.