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Issues: Appeal against deletion of addition made by Assessing Officer based on hawala transactions found during search.
Analysis: The appeal before the High Court of Madhya Pradesh was filed by the Revenue under section 260A of the Income-tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal. The Tribunal had deleted the addition of Rs. 55 lakhs made by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) based on hawala transactions found during a search conducted on the assessee's premises. The senior counsel for the appellant argued that the Assessing Officer had valid reasons for the addition, but the Tribunal unjustly deleted it. The primary question raised by the Department was whether the Tribunal was correct in holding that no estimation of hawala business income could be made for the entire period based on the seized documents. The High Court, comprising Judges S. K. Kulshrestha and Ashok Kumar Tiwari, carefully examined the submissions and the record. It noted that the Assessing Officer, Commissioner of Income-tax (Appeals), and the Tribunal based their conclusions on factual data obtained from the seized documents. The senior counsel contended that transactions totaling Rs. 12 lakhs over two days justified the addition, but the Court found this to be a matter of fact rather than a legal question under section 260A. Consequently, the Court concluded that the issue was factual and did not warrant interference under the Income-tax Act. In light of the above analysis, the High Court dismissed the appeal summarily, finding no merit in the Revenue's arguments. The judgment underscores the importance of distinguishing between questions of fact and questions of law in appeals under the Income-tax Act, emphasizing the need for a legal basis for challenging decisions of lower authorities.
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