2025 (11) TMI 1173 - HC - Income Tax

Relief affirmed where s.153A assessment invalid as no incriminating material found; Article 260-A concurrent findings upheld

Pr. Commissioner of Income Tax-Central-3, Mumbai Versus Surendra B. Jiwrajka.

The HC upheld the Commissioner (Appeals) and ITAT orders granting relief to the Assessee in an assessment under s.153A, finding the statutory prerequisite ... Assessment u/s 153A - any incriminating material during the search or not? - HELD THAT:- Since this was an assessment u/s 153A, the jurisdictional prerequisites of finding any incriminating material during the search had to be fulfilled. The two authorities have held that such a prerequisite was not fulfilled. Therefore, following the law laid down in Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] the Assessee was entitled to relief, which has been granted by the Commissioner (Appeals) and ITAT. This is a case where the Commissioner (Appeals) and ITAT have, on a concurrent review of the factual material on record held in favour of the Assessee and against the Revenue. The findings of fact have been concurrently recorded, and they are not based on “no evidence or on any relevant evidence having been excluded from consideration”. Even the aspect of retraction has been duly considered. Ultimately, when exercising our jurisdiction under Article 260-A of the Income Tax Act, we cannot be expected to re-appreciate, re-evaluate, or delve into the factual material on record, particularly when we find no perversity. The two authorities have also taken cognisance of the orders made by SEBI and other regulatory authorities, finding no fault with the Assessee’s role or conduct. ISSUES PRESENTED AND CONSIDERED 1. Whether an appeal under Article 260-A raises any substantial question of law where concurrent factual findings in proceedings under Section 153A hold that no incriminating material was found during search and consequent relief was granted by lower authorities. 2. Whether initiation of assessment proceedings under Section 153A is without jurisdiction when no incriminating material is found during search, in light of the principles laid down in relevant precedent. 3. Whether concurrent findings of fact by the Commissioner (Appeals) and the Tribunal - including consideration of retracted statements and regulatory orders - can be reappreciated by this Court on appeal under Article 260-A absent perversity or legal error. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether an appeal under Article 260-A raises a substantial question of law when concurrent factual findings favor the assessee. Legal framework: Article 260-A jurisdiction is limited to substantial questions of law arising out of the Tribunal's decision. Courts exercising this jurisdiction should not re-evaluate or re-appreciate pure findings of fact unless there is perversity or a legal error in the approach. Precedent Treatment: The Court applied the established principle that concurrent findings of fact by two fact-finding authorities are ordinarily conclusive and not ordinarily open to re-examination under Article 260-A. Relevant precedent (as relied on in the judgment) is treated as binding in principle on the need to demonstrate a substantial question of law to warrant admission. Interpretation and reasoning: The Commissioner (Appeals) and the Tribunal independently reviewed the factual matrix and recorded concurrent findings that the assessee did not indulge in manipulation or fraud. Those findings included assessment of statements (including retractions) and consideration of regulatory orders. The Court emphasised that, in absence of perversity, this Court should not re-appreciate factual evidence. The Court expressly declined to disturb concurrent factual conclusions because they were not based on no evidence nor resulting from exclusion of relevant evidence. Ratio vs. Obiter: Ratio - Article 260-A does not permit reappreciation of concurrent factual findings absent perversity; such findings do not give rise to a substantial question of law. Obiter - observations on the sufficiency of factual material or the precise weight of regulatory findings are ancillary. Conclusion: No substantial question of law arises from the concurrent factual findings; appeal not liable to be admitted on this ground. Issue 2: Jurisdictional requirement for initiation of proceedings under Section 153A where search yields no incriminating material. Legal framework: Proceedings under Section 153A can be validly initiated only if the statutory/jurisdictional prerequisites are satisfied - specifically, discovery of incriminating material during a search. If such prerequisite is absent, initiation or continuation of assessment under Section 153A can be without jurisdiction. Precedent Treatment: The Court followed the principle established by higher authority that absence of incriminating material during search negates the jurisdictional basis for Section 153A proceedings; that principle was applied as controlling in the facts before the Court. Interpretation and reasoning: The authorities below found that no incriminating material was discovered during the search. Applying the precedent, the Court held that the assessee was entitled to relief on this jurisdictional ground. The Court considered submissions to the contrary, including reliance on retracted statements, but concluded that where the jurisdictional prerequisite is not fulfilled, relief granted by lower authorities is proper. Ratio vs. Obiter: Ratio - Absence of incriminating material during search defeats the jurisdictional basis for Section 153A proceedings and supports relief to the assessee. Obiter - procedural nuances regarding how retracted statements should be weighed were considered but are not foundational to the Court's jurisdictional conclusion. Conclusion: The Section 153A proceedings lacked the required jurisdictional foundation on the facts; this supports dismissal of the appeal. Issue 3: Treatment of retracted statements and regulatory (SEBI) findings in appellate review under Article 260-A. Legal framework: Appellate review under Article 260-A is limited to questions of law. Evaluation of statements, their retraction, and findings of regulatory authorities are fact-sensitive inquiries to be assessed by fact-finding bodies; this Court will not re-weigh such material absent legal error or perversity. Precedent Treatment: The Court adhered to the principle that regulatory findings and the probative value of statements are elements of factual determination. Where lower authorities have considered these elements and recorded concurrent findings, higher courts will not intervene on the merits. Interpretation and reasoning: The Commissioner (Appeals) and the Tribunal explicitly considered the initial statement invoking withdrawal of exemption and its subsequent retraction, as well as SEBI's investigatory conclusions that found no wrongdoing by the assessee. The Court emphasized that those factual determinations were taken into account and were not shown to be perverse or legally erroneous. Consequently, they cannot furnish a substantial question of law for admission. Ratio vs. Obiter: Ratio - Consideration of retracted statements and regulatory orders, when resulting in concurrent factual findings, do not give rise to substantial questions of law for Article 260-A review unless shown to be perverse or legally flawed. Obiter - detailed comment on the evidentiary weight of SEBI orders is ancillary. Conclusion: The treatment of retracted statements and regulatory findings by the lower authorities does not create a substantial question of law; appellate intervention is not warranted. Cross-references and Overall Conclusion Cross-reference: Issues 1-3 are interlinked - the jurisdictional defect under Section 153A (Issue 2) and the concurrent factual findings including regulatory orders and retracted statements (Issues 1 and 3) together negate any substantial question of law. The Court declined to admit the appeal for all these reasons.