2024 (9) TMI 874 - HC - Income Tax

Maintainability of appeal to the High Court from a decision of the Tribunal - substantial question of law or fact - AO has rejected the books of the assessee u/s 145(3) and assessment was made ex-parte as per the manner provided in Section 144 - ITAT deleting the impugned additions, maintaining that the Assessing Officer has not pointed any specific defects especially in the rejection of books on account by the Assessing Officer under Section 145(3) - Whether non-determination of specific defects by learned ITAT emanates a substantial question of law u/s 260A(6) on this count? HELD THAT - 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.(See Madan Lal Vs. Mst. Gopi Anr. 1980 (8) TMI 204 - SUPREME COURT ,Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi 2008 (12) TMI 724 - SUPREME COURT and K.Ravindranathan Nair vs. CIT 2000 (11) TMI 3 - SUPREME COURT In the instant case 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. The Tribunal being a final fact finding authority, in the absence of demonstrated perversity in its finding, interference with the concurrent findings of the CIT (A) as well as the ITAT therewith by this Court is not warranted. No hesitation in holding that no question of law, much less any substantial question of law arises from the order of the Tribunal requiring consideration of this court. There is no merit in the appeal as making addition/deletion cannot be said to be erroneous and prejudicial to the interest of revenue. 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) for admitting the appeal. Assessee appeal allowed.

Issues Involved:
1. Whether the ITAT erred in law by not pointing out specific defects or remanding the matter back to the Assessing Officer.
2. Whether the ITAT erred in law by not considering the judgment in the case of Badri Prasad Bhagwandas & Co. vs. Commissioner of Income Tax.
3. Whether the assessee failed to submit quantitative details, thus making the ITAT's order perverse.
4. Whether the ITAT's judgment sets a wrong precedent by justifying business activities without proper books of account.
5. Whether the ITAT's judgment violates the essence of Section 145(3) of the Income Tax Act.
6. Whether the ITAT ignored the "mens rea" on the part of the assessee.
7. Whether the ITAT's order permits the assessee to violate various laws by not maintaining proper inventory or sales bills.
8. Whether the ITAT ignored the findings of handmade and self-made vouchers by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Specific Defects and Remanding the Matter:
The appellant contended that the ITAT erred by not pointing out specific defects or remanding the matter back to the Assessing Officer. The court noted that the ITAT, as the final fact-finding authority, either should have identified specific defects or remanded the matter. However, the ITAT's decision to delete the impugned additions without pointing out specific defects did not constitute a substantial question of law under Section 260A(6).

2. Judgment in Badri Prasad Bhagwandas & Co. Case:
The appellant argued that the ITAT ignored the judgment in Badri Prasad Bhagwandas & Co. vs. Commissioner of Income Tax, which was relevant to the case. The court found that the ITAT did not consider this judgment, which could have influenced the decision. However, the ITAT's decision to delete the additions without referencing this judgment did not amount to a substantial question of law.

3. Quantitative Details:
The appellant claimed that the assessee failed to submit quantitative details, making the ITAT's order perverse. The court observed that the ITAT accepted the receipts offered by the assessee without quantitative details. However, the absence of quantitative details did not constitute a substantial question of law, and the ITAT's decision was not perverse.

4. Wrong Precedent and Business Activities Without Proper Books:
The appellant contended that the ITAT's judgment set a wrong precedent by justifying business activities without proper books of account. The court found that the ITAT's decision did not set a wrong precedent and did not violate the essence of the purposive construction of law as delineated by Heydon's rule of mischief.

5. Violation of Section 145(3) of the Income Tax Act:
The appellant argued that the ITAT's judgment violated the essence of Section 145(3) of the Income Tax Act. The court noted that the ITAT's decision to delete reasoned additions made by the Assessing Officer after rejecting the books of account did not violate the spirit and substance of the legal maxim "ut res magis valeat quam pereat."

6. Ignoring "Mens Rea" on the Part of the Assessee:
The appellant claimed that the ITAT ignored the "mens rea" on the part of the assessee. The court observed that the ITAT did not consider the willful non-compliance with Section 145 of the Income Tax Act by the assessee. However, the ITAT's decision did not constitute a substantial question of law.

7. Permitting Violation of Various Laws:
The appellant argued that the ITAT's order permitted the assessee to violate various laws by not maintaining proper inventory or sales bills. The court found that the ITAT's decision did not permit the assessee to violate laws and did not constitute a substantial question of law.

8. Ignoring Findings of Handmade and Self-made Vouchers:
The appellant contended that the ITAT ignored the findings of handmade and self-made vouchers by the Assessing Officer. The court noted that the ITAT did not consider these findings, but this did not amount to a substantial question of law.

Conclusion:
The court concluded that no substantial question of law arose from the order of the Tribunal. The ITAT's decision was not perverse, and the Tribunal, being the final fact-finding authority, had dealt with all the grounds raised by the appellant. The appeal was dismissed in limine as it did not meet the provisions of Section 260(A) of the Act for admitting the appeal.

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