2021 (10) TMI 1262 - HC - Income Tax

Addition of security charge reimbursed - Assessee failure to credit HV AC charges to P L A/c - tribunal has set aside the disallowances made by assessing authority - Substantial question of law - Denial of natural justice - whether tribunal is right in law in allowing relief to assessee on the basis of fresh materials brought on record before Tribunal ? - no opportunity was provided to the AO to examine the material evidence furnished before the Tribunal for the first time - HELD THAT - Revenue challenge that no opportunity was provided to the Assessing Officer to examine the material evidence furnished before the Tribunal for the first time does not holds water for the reason that it was admitted by the CIT(A) as well, that the assessee has provided clarification in rectification proceedings under Section 154 of the Act before the Assessing Officer which came to be disposed of. If such material evidence was placed before the Assessing Officer even in the proceedings under Section 154 of the Act, regarding entries in P L A/c, the same being available, CIT(A) under hyper technicalities ought not to have confirmed the addition of HV AC charges on the premise that no documentary evidence was placed to substantiate the same. Tribunal is the last fact finding authority, irrespective of the material evidence examined by the authorities, the Tribunal is equally competent to examine the material evidence placed before it. Having considered the breakup figures available in the P L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. It is apt to refer the judgment of this Court in Soft Brands India (P) Ltd. 2018 (6) TMI 1327 - KARNATAKA HIGH COURT wherein it has been held that the finding of the Tribunal being one of the fact which has not been shown to be perverse, that unless the perversity in the finding of the fact is established before the High Court, no Substantial Questions of law arises for consideration under Section 260(A)

Summary

Issues:
1. Tribunal's decision based on fresh materials without giving opportunity to assessing authority.
2. Tribunal setting aside disallowances made by assessing authority without verifying new materials.

Analysis:
Issue 1:
The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal, challenging the relief granted to the assessee based on fresh materials presented before the Tribunal. The primary contention of the Revenue was that the Tribunal should have remanded the matter to the Assessing Authority for verification of the new evidence. The Revenue argued that without affording the Assessing Officer an opportunity to examine the fresh materials, the Tribunal's decision was unjustifiable. However, the assessee maintained that the reimbursement received from tenants was credited to related expenses, which was duly explained during assessment proceedings and rectification proceedings under Section 154. The Tribunal, being the final fact-finding authority, meticulously examined the materials and allowed the appeal of the assessee. The Court observed that the Tribunal had considered the breakup figures and clarifications provided by the assessee, and no perversity or infirmity was found in the Tribunal's decision.

Issue 2:
The second issue revolved around the disallowances made by the Assessing Officer, which were set aside by the Tribunal based on new materials presented by the assessee. The Revenue contended that the Tribunal's decision was perverse as the disallowances were made by the Assessing Officer based on available records during assessment. However, the Tribunal, after examining the evidence placed before it, found in favor of the assessee. The Court emphasized that the Tribunal, as the final fact-finding authority, had the competence to evaluate the evidence before it. Citing precedent, the Court highlighted that unless the perversity in the Tribunal's findings was established, no substantial questions of law would arise. Consequently, the Court found no irregularity or perversity in the Tribunal's decision and dismissed the appeal, ruling in favor of the assessee.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the Tribunal's authority as the final fact-finding body and dismissing the Revenue's appeal.