2024 (9) TMI 652 - HC - Income Tax

Additions on account of bogus share application money and commission for bogus accommodation entries - Substantial question of law or fact - examination of the soft data seized and impounded in course of the search proceeding, it was detected that Shirish Chandrakant Shah had provided one-time entry to the assessee-company through a broker named Hiren Shah and such transaction was not genuine - ITAT deleted addition - HELD THAT - We find that the question sought to be raised in this Income Tax Appeal is not even a question of law. The ground taken by the appellant that the findings recorded by the Tribunal are contrary to records seems to have been raised just for the sake of creating a ground; nothing has been shown to this Court on this point. The findings recorded by the appellate Authority and the Tribunal are in consonance with the law of evidence and the Income Tax Act, in particular. On a glance at materials on record, we find that the Assessing Officer assessed M/s Esspal International Pvt. Ltd. under section 143(3) of the Income Tax Act, 1961 only on the basis of the statement given by Shirish Chandrakant Shah; though he has recorded that the assessment order is being passed after considering the totality of the facts and circumstances the case . Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the AO - Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another 1971 (9) TMI 64 - SUPREME COURT Therefore, we hold that no substantial question of law arises between the parties.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under section 260-A of Income Tax Act, 1961. Appellant's plea regarding tax evasion and accommodation entries. Assessment order challenged by respondent. Findings of Tribunal disputed by appellant. Determination of substantial questions of law.

Analysis:

1. The Income Tax Appeal before the High Court challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding accommodation entries and tax evasion. The appellant, the Principal Commissioner of Income Tax, raised substantial questions of law related to the validity of the ITAT's decision.

2. The appellant contended that the tax effect involved was below the prescribed limit for filing an appeal, but the appeal was filed due to organized tax evasion and accommodation entries. The case involved providing accommodation entries for various financial transactions, leading to the reassessment proceedings.

3. The Tribunal's findings were challenged by the appellant, arguing that the transactions were not genuine and were based on soft data seized during search proceedings. However, the Tribunal found that the appellant had provided all necessary documents to prove the genuineness of the transactions.

4. The High Court analyzed the details of the case, including the identity and creditworthiness of the share applicants. It noted that the CIT(A) had correctly deleted the addition made by the Assessing Officer under section 68 of the Income Tax Act, as the appellant had proven the genuineness of the transactions.

5. The High Court referred to previous decisions and upheld the CIT(A)'s findings, stating that the appellant had discharged the onus of proving the transactions' authenticity. The Court found no legal infirmity in the CIT(A)'s decision and concluded that the ITAT's findings were based on the evidence on record.

6. The Court also discussed the concept of substantial questions of law, citing relevant Supreme Court judgments. It determined that the questions raised by the appellant did not qualify as substantial questions of law and were not maintainable for appeal.

7. Ultimately, the High Court dismissed the Income Tax Appeal, ruling that no substantial question of law existed between the parties. The Court held that the appeal was not maintainable based on the facts and legal precedents cited in the judgment.