2002 (12) TMI 47 - HC - Income Tax

Finding of fact - Whether the Income-tax Appellate Tribunal was justified in treating the share application money as explained even though the major share investing companies were non-existing? - Whether the Income-tax Appellate Tribunal was correct in holding that the assessee had discharged its onus of proving the identity and creditworthiness of both the creditors as well as the genuineness of the transactions? - Admittedly, the aforenoted finding of the Tribunal is factual. Therefore, the only question for consideration is whether the said finding could be said to be without any evidence or material or is it contrary to the evidence on record or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. It is only under any one of these circumstances, a finding of fact may be interfered with. Otherwise, a bare question of fact cannot be turned into a question of law by asking whether as a matter of law the authority came to a correct conclusion upon a matter of fact.

Issues:
1. Whether the Income-tax Appellate Tribunal was justified in deleting the additions of Rs. 1,34,50,000 to the income of the assessee?
2. Whether the share application money was correctly treated as explained despite major share investing companies being non-existing?
3. Whether the assessee had discharged its onus of proving the identity and creditworthiness of the creditors and the genuineness of the transactions?
4. Whether the director of the companies could be considered non-existent?
5. Whether the order of the Income-tax Appellate Tribunal was perverse in law and on facts?

Analysis:

1. The case involved an appeal by the Revenue against the order of the Income-tax Appellate Tribunal regarding the addition of Rs. 1,34,50,000 to the assessee's income for the assessment year 1992-93. The Assessing Officer doubted the genuineness of share subscription money received by the assessee from two companies. The Tribunal upheld the deletion of the addition by the Commissioner of Income-tax (Appeals) based on evidence proving the existence and identity of the companies. The High Court found the concurrent factual findings of the appellate authorities to be based on relevant material, concluding that the appeal lacked merit.

2. The Tribunal had to determine whether the share application money could be considered explained despite the non-existence of major share investing companies. The Assessing Officer raised concerns about the companies' existence, locations, and tax assessments. However, the Commissioner of Income-tax (Appeals) accepted the evidence provided by the assessee, including confirmation letters, accounts, and official documents, to establish the companies' identity and existence. The High Court upheld the Tribunal's decision, emphasizing the relevance of the material considered by the appellate authorities.

3. The issue of whether the assessee proved the identity and creditworthiness of the creditors and the genuineness of the transactions was crucial. The Assessing Officer questioned the legitimacy of the share subscription based on various circumstances, including discrepancies in company details and locations. The Commissioner of Income-tax (Appeals) relied on official documents and letters confirming the companies' existence in Gangtok. The Tribunal upheld this decision, and the High Court found the factual findings to be well-supported by relevant evidence.

4. The question of the director's existence in the companies was raised during the proceedings. The Assessing Officer highlighted the non-cooperation of a common director in responding to summons. However, the Commissioner of Income-tax (Appeals) and the Tribunal considered the evidence provided by the assessee to establish the director's presence and the companies' legitimacy. The High Court supported the Tribunal's findings, emphasizing the factual basis and relevant material considered in reaching the decision.

5. The final issue revolved around the alleged perversity of the Tribunal's order in law and on facts. The Revenue contended that the Tribunal overlooked crucial factors in determining the transaction's genuineness. However, the High Court found the Tribunal's decision to be based on factual findings supported by relevant material, dismissing the appeal due to lack of merit.

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