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2025 (1) TMI 577 - HC - Income TaxAddition under the head of unproved cash purchases - initiation of proceedings u/s 271(1)(c) - HELD THAT - It is trite law that this Court in exercise of powers under Section 260A of the Act cannot interfere with a finding of fact unless and until the same is shown to be perverse (See Syeda Rahimunnisa vs. Malan Bi by LRs 2016 (10) TMI 1233 - SUPREME COURT and Softbrands India Private Limited 2018 (6) TMI 1327 - KARNATAKA HIGH COURT . The assessee in the course of reassessment proceeding did not produce stock register or any other evidence to indicate the receipt of raw material in the factory. Thus, the finding with regard to the addition is based on meticulous appreciation of evidence on record. The aforesaid finding of fact by no stretch of imagination can be said to be either perverse or based on no evidence. Substantial question of law framed by this Court is answered against the assessee. 1. ISSUES PRESENTED and CONSIDERED The primary legal question considered in this judgment is:
2. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The appeal was filed under Section 260A of the Income-tax Act, 1961. The relevant legal framework involves the provisions of the Income-tax Act concerning the assessment and reassessment procedures, particularly Sections 115J, 143(1)(a), 143(3), and 271(1)(c). The legal precedents cited include the principle that a court exercising powers under Section 260A cannot interfere with a finding of fact unless it is shown to be perverse, as established in Syeda Rahimunnisa vs. Malan Bi by LRs and Principal Commissioner of Income Tax, Bangalore vs. Softbrands India Private Limited. Court's interpretation and reasoning: The court emphasized that it is not within its purview to interfere with factual findings unless they are demonstrated to be perverse. The Tribunal's findings were based on the lack of evidence provided by the assessee to substantiate the cash purchases, which the court found to be a meticulous appreciation of the evidence on record. Key evidence and findings: The assessee failed to produce crucial documents such as the stock register and other evidence indicating the receipt of raw materials. The authorities noted that while the assessee maintained a stock register for subsequent years, it did not provide such documentation for the relevant assessment year. This lack of evidence led to the conclusion that the purchases were unverified and unproved. Application of law to facts: The court applied the legal principles concerning the reassessment of income and the burden of proof on the assessee to substantiate claims of purchases. The absence of evidence from the assessee supported the Tribunal's decision to treat the purchases as unproved. Treatment of competing arguments: The assessee argued that the addition of Rs.25,88,026/- was unjustified and contrary to the record. However, the Revenue contended that no substantial question of law arose, as the matter was concluded by findings of fact based on available evidence. The court sided with the Revenue, noting that the findings were not perverse. Conclusions: The court concluded that the Tribunal's decision was justified and the substantial question of law was answered against the assessee and in favor of the Revenue. 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "It is trite law that this Court in exercise of powers under Section 260A of the Act cannot interfere with a finding of fact unless and until the same is shown to be perverse." Core principles established:
Final determinations on each issue:
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