2021 (10) TMI 1059 - HC - Income Tax

Determining the income on mining activity - increase in expenditure of re-screening charges in the course of extraction of iron ore - HELD THAT - As assessee vehemently argued that the authorities have failed to consider the invoices in a proper perspective, we are unable to subscribe to her submissions. It is well settled that the Tribunal being the last fact finding authority, the finding recorded by the Tribunal with respect to the quality of material i.e., iron ore purchased by the assessee has some relevance. The arguments now advanced by the learned counsel for the assessee would not touch upon any question of law much less the substantial questions of law to be decided by this Court. On the contrary, the submissions would relate to the factual aspect of the expenses incurred towards the extraction/re-screening charges of iron ore purchased in the assessment year in question. Thus the attempt made by the assessee to establish the lower grade of material purchased by the assessee required more extraction/rescreening charges was not supported by any material evidence. The same being considered extensively by the Tribunal, we do not find any ground to interfere with the factual findings recorded by the Tribunal. Hence, we dismiss the appeal answering the substantial questions of law, in favour of the revenue and against the assessee.

Summary

Issues:
1. Disallowance of extraction/re-screening expenses by the Assessing Officer.
2. Appeal against the order of the Commissioner of Income Tax [Appeals].
3. Tribunal's decision on the appeal filed by the assessee.
4. Arguments presented by both parties before the High Court.
5. High Court's analysis and judgment on the substantial questions of law raised.

Issue 1: Disallowance of extraction/re-screening expenses by the Assessing Officer:
The appellant, an individual engaged in trading Iron Ore, filed an appeal under Section 260A of the Income Tax Act, challenging the order of the Income Tax Appellate Tribunal regarding the disallowance of extraction expenses claimed during the Assessment Year 2009-10. The Assessing Officer disallowed a portion of the extraction expenses due to a significant increase compared to the previous year. The appellant contended that the expenses were justified due to the poor quality of iron ore purchased, requiring higher extraction costs. The Tribunal upheld the disallowance, citing lack of evidence to support the appellant's claims.

Issue 2: Appeal against the order of the Commissioner of Income Tax [Appeals]:
The Commissioner of Income Tax [Appeals] restricted the disallowance of extraction expenses, granting partial relief to the appellant. Both the Revenue and the appellant appealed to the Tribunal, which partially allowed the Revenue's appeal and dismissed the appellant's appeal. The appellant then filed an appeal before the High Court, raising substantial questions of law regarding the Tribunal's decision.

Issue 3: Tribunal's decision on the appeal filed by the assessee:
The Tribunal analyzed the invoices provided by the appellant and found discrepancies in the quality and cost of the purchased iron ore. Despite the appellant's arguments, the Tribunal upheld the disallowance of extraction expenses, noting that the expenses claimed were significantly higher than in previous years. The Tribunal concluded that the disallowance made by the Assessing Officer was fair and reasonable, and the Commissioner of Income Tax [Appeals] had erred in granting relief without sufficient justification.

Issue 4: Arguments presented by both parties before the High Court:
The appellant argued that the Tribunal failed to consider the invoices properly and did not provide a reasonable opportunity for cross-examination. The Revenue contended that the Tribunal's decision was based on material evidence, and the disallowance of extraction expenses was justified. After considering the submissions, the High Court found merit in the Revenue's arguments and upheld the Tribunal's decision, dismissing the appeal filed by the assessee.

Issue 5: High Court's analysis and judgment on the substantial questions of law raised:
The High Court examined the arguments presented by both parties and concluded that the Tribunal's findings on the quality and cost of the purchased iron ore were relevant. The High Court upheld the Tribunal's decision, stating that the appellant failed to provide sufficient evidence to support the claim for higher extraction expenses. Therefore, the High Court dismissed the appeal in favor of the Revenue, confirming the disallowance of extraction/rescreening charges made by the Assessing Officer.

In conclusion, the High Court's judgment affirmed the Tribunal's decision, emphasizing the importance of providing substantial evidence to support claims of expenses, especially in cases involving significant discrepancies compared to previous years.