High Court Upholds Tribunal's Findings on Tax Evasion and Transfer of Claims

The High Court dismissed the appeal as no substantial question of law was found. The Tribunal's findings on the transfer of actionable claims, genuineness of transactions, tax evasion through colorable devices, and recognition of factual and legal positions were upheld. The appeal was deemed meritless.

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Issues Involved:
1. Validity of the transfer of actionable claims without written consent.
2. Genuineness of the transactions involving the transfer of actionable claims.
3. Whether the transactions were colourable devices to evade tax liability.
4. Recognition of the factual and legal position regarding the transfer of actionable claims and its tax implications.

Summary:

Issue 1: Validity of the Transfer of Actionable Claims
The Tribunal held that the transfer of actionable claims by the assessee to BPL under an instrument of transfer dated December 14, 1981, involved a breach of clause 5(a) of the General Conditions of the Contract, which required written consent from HSCL for any assignment. The Tribunal did not focus on the validity of the transaction but rather on the genuineness and tax implications.

Issue 2: Genuineness of the Transactions
The Tribunal concluded that the transactions involving the transfer of actionable claims from the assessee to BPL, and subsequently to DRBBL and MEL, were not genuine. It was permissible to lift the corporate veil to ascertain the true nature of the transactions, which were found to be colourable devices to evade tax. The Tribunal noted that the transfer of claims worth more than Rs. 50 lakhs for only Rs. 50,000 was suspicious and lacked supporting material.

Issue 3: Colourable Devices to Evade Tax
The Tribunal found that the series of transactions were colourable devices adopted by the assessee to evade tax liability. The assessee remained the main party behind the transactions, and the companies involved were under the same management with common shareholders. The Tribunal upheld the Revenue's action, concluding that the income belonged to the assessee.

Issue 4: Recognition of Factual and Legal Position
The Tribunal observed that the assessee's claim of divestment of rights and interest in the actionable claims was not supported by evidence. The assessee continued to be an active party in the proceedings and received the amount from HSCL. The Tribunal held that the amount of Rs. 71.89 lakhs received by the assessee was assessable to tax as the income of the assessee.

Conclusion:
The High Court dismissed the appeal, stating that no substantial question of law was involved. The Tribunal's findings were based on factual aspects and were in order. The appeal was found to be without merit.

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