2024 (8) TMI 1488 - HC - Income Tax

Appeal dismissed as no substantial question of law arose under Section 260-A regarding assessment proceedings

Pr. Commissioner of Income Tax (Central), Versus Shri Kalyanika Infra Mega Ventures Pvt. Ltd.

Pr. Commissioner of Income Tax (Central), Versus Shri Kalyanika Infra Mega Ventures Pvt. Ltd. - 2024:MPHC - JBP:43243 Issues Involved:1. Justification of ITAT in annulling the Section 143(3) assessment.2. Determination of incriminating nature of seized financial documents.3. Validity of assessment under Section 143(3) versus Section 153C.4. Justification of ITAT in quashing the assessment order and deleting the addition of unsecured loan.5. Perversity in ITAT's findings.Detailed Analysis:1. Justification of ITAT in Annuling the Section 143(3) Assessment:The appellant-Revenue challenged the ITAT's decision to annul the assessment framed under Section 143(3) on the grounds that the assessment should have been conducted under Section 153C. The ITAT's annulment was based on the premise that the seized documents were not of an incriminating nature, thus rendering the assessment under Section 143(3) invalid. The Revenue contended that the annulment did not appreciate the legal bar on framing assessments under Section 153C in the absence of incriminating material, as confirmed by the Supreme Court in the case of Abhishar Buildwell P. Ltd.2. Determination of Incriminating Nature of Seized Financial Documents:The ITAT held that the mere financials of an entity, which were seized during the search action, are incriminating material. The Revenue argued that the seized documents were not incriminating and thus should not have necessitated an assessment under Section 153C. The ITAT's interpretation was contested on the grounds that the jurisdictional requirement for Section 153C was not met, as no incriminating material was found related to the assessee during the search.3. Validity of Assessment under Section 143(3) versus Section 153C:The ITAT annulled the assessment under Section 143(3) on the basis that it should have been framed under Section 153C. The Revenue argued that in the absence of incriminating material, the assessment under Section 153C would have been invalid, as confirmed by the Supreme Court in Abhisar Buildwell P. Ltd. The ITAT's decision was challenged on the grounds that the AO's satisfaction was not recorded, and the mere handing over of seized material did not justify an assessment under Section 153C.4. Justification of ITAT in Quashing the Assessment Order and Deleting the Addition of Unsecured Loan:The ITAT quashed the assessment order made under Section 143(3) and deleted the addition of Rs. 3,68,00,000/- made on account of an unsecured loan from M/s Little State Securities Pvt. Ltd. The Revenue contended that this lender was a bogus company providing accommodation entries, and the loan was received in contravention of the Companies Act 2013. The ITAT's decision was challenged for failing to appreciate the facts brought on record by the AO.5. Perversity in ITAT's Findings:The Revenue argued that the ITAT's findings were perverse as they failed to consider relevant facts, misread evidence, and misunderstood the legal position. The ITAT's decision was claimed to suffer from perversity, thus giving rise to a substantial question of law.Conclusion:The High Court concluded that no substantial question of law arises from the order of the Tribunal. The Tribunal is the final fact-finding authority, and its findings can only be challenged if they are perverse, which was not demonstrated in this case. The ITAT's order was found to be well-reasoned and based on the material available on record. Consequently, the appeal was dismissed in limine, as it did not meet the provisions of Section 260(A) of the Income Tax Act for admitting the appeal.