2019 (7) TMI 1276 - HC - Income Tax

Court allows delayed appeals questioning ITAT order on incriminating material search. Deletions upheld, additions dismissed.

Pr. Commissioner of Income Tax (Central) - 2 Versus M/s. Meroform India Pvt. Ltd.

The High Court condoned the delay in re-filing appeals, allowing them. The main issue was the correctness of the ITAT order upholding the CIT(A) decision ... Assessment u/s 153A - ITAT upholding the order of CIT (Appeals) that there was no incriminating material recovered against the Assessee during the course of the search warranting re-opening of assessments and making the additions u/s 153A - addition based on third party statement - cross examination - HELD THAT:- ITAT has in the impugned order taken note of the fact that before the AO, the Assessee produced various documents which showed that there was litigation between the Assessee and M/s Nitin Enterprises which ended in a settlement. These documents were before the AO who took no adverse view thereof. The ITAT noted that the statement had been recorded behind the Assessee’s back and the person making the statement was not subjected to cross-examination. In the circumstances, the ITAT concurred with the detailed findings rendered by the CIT(A) on this issue. A similar view was taken by the ITAT in respect of purchases made from one M/s Kiran Furnitures. The ITAT has in the impugned order examined the documents and evidence afresh and has given detailed reasons in support of its concurrence with view expressed by the CIT (A). The additions made by the AO for AY 2011-2012, which have been deleted by the CIT (A), have also been discussed in detail by the ITAT in the impugned order and findings concurring with the views expressed by the CIT(A) have been rendered. Both the CIT(A) and ITAT on facts, the Court finds that in the present cases, no substantial question of law arises from the impugned common order of the ITAT. Issues:Delay in re-filing appeals, correctness of ITAT order upholding CIT(A) decision, incriminating material for re-opening assessments, additions under Section 153A of the Income Tax Act, 1961, applicability of CIT v. Kabul Chawla judgment, expenses incurred during the normal course of business, statement recorded during survey under Section 133A, purchases from specific entities, cross-examination of witnesses, concurrence of CIT(A) and ITAT findings, substantial question of law.Delay in re-filing appeals:The High Court condoned the delay in re-filing the appeals as explained in the applications, allowing them.Correctness of ITAT order upholding CIT(A) decision:The Revenue filed appeals against a common impugned order regarding Assessment Years 2006-07 to 2011-12. The main issue raised was the correctness of the ITAT order upholding the CIT(A) decision that no incriminating material was found against the Assessee during the search, hence not warranting re-opening of assessments under Section 153A of the Income Tax Act, 1961.Incriminating material for re-opening assessments:The ITAT found that no incriminating material was found during the search, leading to the conclusion that the additions made under Section 153A for certain Assessment Years were beyond the scope of assessment.Applicability of CIT v. Kabul Chawla judgment:The judgment in CIT v. Kabul Chawla was cited, and it was held that since no incriminating material was found, the additions made by the Revenue for certain Assessment Years were not valid under Section 153A of the Act.Expenses incurred during the normal course of business:For specific Assessment Years, the ITAT found that the expenses shown in the Assessee's books were incurred during the normal course of business, leading to the deletion of these additions by the CIT(A).Statement recorded during survey under Section 133A:A statement recorded during a survey under Section 133A regarding the Assessee issuing bogus bills was brought to the Court's attention. However, the ITAT noted that the statement was made behind the Assessee's back without cross-examination, leading to concurrence with the CIT(A)'s findings.Purchases from specific entities:The ITAT examined purchases from specific entities, such as M/s Nitin Enterprises and M/s Kiran Furnitures, and concurred with the CIT(A)'s decision to delete the additions made by the AO for certain Assessment Years.Concurrence of CIT(A) and ITAT findings:Both the CIT(A) and ITAT provided detailed reasons for their findings, leading to the Court concluding that no substantial question of law arose from the impugned order.Substantial question of law:Based on the concurrent findings of the CIT(A) and ITAT, the Court dismissed the appeals as no substantial question of law was found to arise from the impugned order.