2024 (9) TMI 965 - HC - Income Tax

Appeal to High court u/s 260A - receipt of cash on sale of land from the present assessee - HELD THAT - From a bare reading of the Section, it is apparent that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression substantial question of law is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. Thus, we are of opinion no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. This Court refrains from entertaining this appeal as there is no perversity in the order passed by the ITAT since the ITAT has dealt with all the grounds raised by the appellant in the order impugned and has passed a well reasoned and speaking order taking into consideration all the material available on record. Thus, in our opinion, the present case does not involve any substantial question of law so as to meet the provisions of Section 260(A) of the Act for admitting the appeal.

Issues Involved:
1. Receipt of cash on sale of land.
2. Deposit of cash received from the sale in sellers' bank accounts.
3. Opportunity for cross-examination not provided by the AO.
4. Ignoring Supreme Court decisions on the necessity of seeking cross-examination.
5. Definition and interpretation of "incriminating" under the IT Act.
6. Agreement indicating sale price and receipt of On-money.
7. Additional income offered by sellers during assessment proceedings.
8. Deletion of addition made under Section 69 of the Act.

Issue-Wise Detailed Analysis:

1. Receipt of Cash on Sale of Land:
The appellant-Revenue contended that the ITAT failed to appreciate that landowners accepted the receipt of cash on the sale of land to the assessee. The assessment involved scrutiny of the sale transaction where it was alleged that a significant portion of the consideration was paid in cash, which was not reflected in the official sale deed.

2. Deposit of Cash in Sellers' Bank Accounts:
The Revenue argued that the cash received from the sale was deposited in the bank accounts of the sellers, who had no other income sources apart from the sale of the land in question. This was used to support the claim of unexplained investment by the assessee.

3. Opportunity for Cross-Examination:
The ITAT's observation that no opportunity for cross-examination was provided by the AO was challenged. The Revenue highlighted that the facts were brought to the assessee's knowledge via a show-cause notice, and the assessee expressed an inability to comment on it. The ITAT's stance was that the additions were based on statements without providing the assessee a chance to cross-examine the sellers.

4. Ignoring Supreme Court Decisions:
The appellant cited the Supreme Court cases of Ayub Khan Noor Khan Pathan vs. State of Maharashtra and KL Tripathi vs. State Bank of India, which held that cross-examination must be sought by the concerned party. The ITAT was accused of ignoring these precedents, asserting that the assessee did not seek cross-examination initially.

5. Definition and Interpretation of "Incriminating":
The Revenue argued that the term "incriminating" should be understood in a broader sense under the IT Act, encompassing not just seized material but also any misrepresentation or false entries discovered during the search. The ITAT was criticized for not appreciating this broader interpretation.

6. Agreement Indicating Sale Price and Receipt of On-money:
The Revenue pointed to an agreement dated 27.11.2010, which indicated that the land was sold for Rs. 5,03,68,500, and the sellers admitted to receiving On-money. This was in line with the deposits in their bank accounts. The ITAT was accused of ignoring these facts.

7. Additional Income Offered by Sellers:
During the assessment proceedings, the sellers offered additional income, which the Revenue argued substantiated the claim of On-money payment. The ITAT's failure to consider this was highlighted as an oversight.

8. Deletion of Addition under Section 69:
The ITAT deleted the addition made under Section 69 for unexplained investment. The Revenue contended that the ITAT misread the evidence and did not consider the relevant facts brought on record by the AO. The ITAT's decision was seen as erroneous and prejudicial to the interest of the Revenue.

Conclusion:
The High Court concluded that no substantial question of law arose from the ITAT's order. The Tribunal's findings were based on a thorough examination of the evidence, and there was no perversity in its conclusions. The appeal was dismissed as it primarily involved questions of fact rather than law. The Tribunal's role as the final fact-finding authority was emphasized, and the High Court refrained from interfering with its concurrent findings. The case did not meet the criteria under Section 260A of the Income Tax Act for admitting the appeal, leading to its dismissal.

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