Supreme Court dismisses Review Petitions on tax threshold issue, emphasizes lack of verification and denial of cross-examination

Commissioner of Income Tax-7, New Delhi Versus M/s Odeon Builders Pvt. Ltd.

Commissioner of Income Tax-7, New Delhi Versus M/s Odeon Builders Pvt. Ltd. - [2019] 418 ITR 315 (SC) Issues:
Tax effect threshold for review petition.

Analysis:
The Supreme Court, comprising Hon'ble Mr. Justice Rohinton Fali Nariman and Hon'ble Ms. Justice Indu Malhotra, considered a review petition where the tax effect exceeded Rs. 1 crore, specifically amounting to Rs. 6,59,27,298. Initially, the Court would have recalled its previous order based on the tax effect being less than Rs. 1 crore. However, upon examining the judgments of the CIT, ITAT, and the High Court, it was noted that a substantial disallowance of Rs. 19,39,60,866 was solely based on third-party information without further scrutiny. The CIT (Appeals) allowed the appeal of the assessee, emphasizing the lack of independent verification by the AO and denial of cross-examination opportunity to the appellant. The ITAT and the High Court upheld this decision based on factual findings, deeming the disallowance deletion as acceptable and dismissing the revenue's appeal.

In light of the above, the Supreme Court found that the disallowance was primarily founded on third-party information without adequate verification, leading to the deletion of the disallowance amounting to Rs. 19,39,60,866. The judgments of the lower courts were upheld based on the absence of perversity in their factual findings. Consequently, the Review Petitions were dismissed by the Supreme Court.