2017 (3) TMI 891 - HC - Income Tax

Appeal dismissed on Section 80IA deduction challenge for block period 1996-2002. No bogus sales found.

The appeal challenging the Tribunal's order regarding the deduction under Section 80IA for the block and part period from 1996-97 to 2001-02 was ... Deduction under Section 80IA - Block assessment under Chapter XVIB - Undisclosed income reflected in regular books - Bogus sales - Reliance on statements recorded during search - Section 158BC - completion of block assessment - Findings of fact not perverse - Precedent that income shown in accounts cannot be treated as undisclosed for block assessmentBogus sales - Reliance on statements recorded during search - Findings of fact not perverse - Sales of Attar Hina (AH) claimed by the assessee were not bogus and the Assessing Officer's reliance on a statement recorded during search was not sustained. - HELD THAT: - Both the Commissioner of Income Tax (Appeals) and the Tribunal found on the facts that sales of AH to M/s. Jaywant Products Ltd. and M/s. Jaywant Industries Ltd. were genuine. The Tribunal recorded that both recipient companies had recorded purchase transactions from the assessee and that evidence such as transportation charges was produced; accordingly the Tribunal rejected reliance on the statement of the director recorded during search. The High Court finds these concurrent findings of fact to be neither perverse nor arbitrary and therefore not susceptible to interference in exercise of the present jurisdiction. [Paras 3, 4, 5]Findings that the sales were not bogus are upheld as factual conclusions and are not disturbed.Block assessment under Chapter XVIB - Undisclosed income reflected in regular books - Section 158BC - completion of block assessment - Precedent that income shown in accounts cannot be treated as undisclosed for block assessment - Chapter XVIB block assessment provisions could not be invoked because the income alleged to be undisclosed was reflected in the assessee's regular books and assessments. - HELD THAT: - The Tribunal, agreeing with the CIT(A), held that the alleged undisclosed income had been disclosed in the accounts and reflected in regular assessments; on that basis the requirements for invoking block assessment under Section 158BC were not satisfied. The Tribunal relied on this Court's precedents holding that where the alleged undisclosed income is shown in the accounts filed for the respective assessment years, it cannot be treated as undisclosed income for the purpose of block assessment. The High Court accepts the application of those precedents to the facts and records that the findings are conclusions of fact supported by the material on record. [Paras 4, 5]Block assessment under Chapter XVIB cannot be sustained as the income was reflected in regular books and assessments.Final Conclusion: The Revenue's appeal is dismissed: the Tribunal's factual findings that sales were not bogus and that the income was disclosed in regular books (precluding block assessment under Chapter XVIB) are upheld and the substantial question of law proposed is not entertained. Issues:Challenge to order of Income Tax Appellate Tribunal regarding deduction under Section 80IA for block period and part period from 1996-97 to 2001-02.Analysis:1. The appeal challenges the order of the Income Tax Appellate Tribunal (the Tribunal) concerning the deduction under Section 80IA for the block period and part period from 1996-97 to 2001-02. The Revenue raises a substantial question of law questioning the correctness of allowing the deduction without considering the factual evidence of bogus sales.2. During a search and seizure operation under Section 132 of the Income Tax Act on March 14, 2002, no incriminating documents were found at the premises of the respondent. The Assessing Officer relied on a statement by Mr. N.C. Mehta to allege that sales claimed for deduction under Section 80IA were bogus. Subsequently, the assessment was completed under Section 158BC of the Act based on this statement.3. The Commissioner of Income Tax (Appeals) found, by order dated May 11, 2012, that the sales were not bogus, leading to the allowance of the respondent's appeal.4. The Tribunal upheld the CIT (A)'s order, stating that there were no bogus sales to the related companies. The order emphasized that the income was disclosed in regular books of accounts during the regular assessment, hence not qualifying for block assessment under Section 158BC. The Tribunal relied on previous court decisions to support its findings.5. Both the CIT (A) and the Tribunal concluded that there were no bogus sales and that the alleged undisclosed income was reflected in the filed accounts for the respective assessment years. The findings were deemed not perverse or arbitrary, and the reliance on previous court decisions was considered appropriate. As the issue was one of fact and not shown to be perverse, no substantial question of law arose, leading to the dismissal of the appeal.6. In conclusion, the appeal challenging the order of the Tribunal regarding the deduction under Section 80IA for the specified period was dismissed, with no order as to costs.