PCIT (Central) Vs Tarun Devcon (P) Ltd. (Madhya Pradesh High Court)
The Madhya Pradesh High Court dismissed the Revenue’s appeal filed under Section 260A of the Income Tax Act, 1961, challenging the Income Tax Appellate Tribunal, Jabalpur order dated 23 November 2023 in ITA No.49/JAB/2018 for Assessment Year 2014-15. The ITAT had annulled the assessment framed under Section 143(3) and deleted the addition of Rs.2.88 crore made under Section 68 on account of an unsecured loan from M/s Little Star Securities Pvt. Ltd.
The Revenue proposed several substantial questions of law concerning whether the assessment should have been framed under Section 153C, the nature of the seized material, the requirement of incriminating material and satisfaction for invoking Section 153C, and the deletion of the Section 68 addition. The Revenue also questioned the ITAT’s findings concerning the lender and relied upon the Supreme Court decision in Abhisar Buildwell P. Ltd. and the decision in Sudarshan Silk and Sarees.
The High Court noted that a similar issue had already been considered by it in ITA No.113/2024, Pr. Commissioner of Income Tax (Central) Vs. Shri Kalyanika Infra Mega Ventures Pvt. Ltd. By order dated 28 August 2024, the Court had dismissed that appeal. Following that decision, the High Court dismissed the present appeal as well and directed that the earlier order dated 28 August 2024 would apply mutatis mutandis to the facts and circumstances of the present case. A complete copy of that earlier order was directed to be placed on the record.
Cases Discussed
- Pr. Commissioner of Income Tax (Central) Vs. Shri Kalyanika Infra Mega Ventures Pvt. Ltd. (Madhya Pradesh High Court), ITA No.113/2024
- Abhisar Buildwell P. Ltd., [ TS-202-SC-2023]
- Sudarshan Silk and Sarees (Supreme Court), 300 ITR 205 (SC)
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
Instant appeal is filed by the appellant-Revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) being aggrieved by the order dated 23/11/2023 passed by the Income Tax Appellate Tribunal (ITAT), Jabalpur in ITA No.49/JAB/2018 for the Assessment Year 2014-15.
2.2. The following substantial question of law has been proposed in this appeal :
“1. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT was justified in annuling the 143(3) assessment on the ground that the assessment should have been framed under Section 153 C of the Act, without appreciating that since seized documents in the instant case are not of incriminating nature, the AO is legally barred from framing assessment u/s 153C as confirmed by the Hon’ble Supreme Court judgment in the case ofin the case ofAbhishar Buildwell P. Ltd. [ TS-202-SC-2023]?Abhishar Buildwell P. Ltd. [ TS-202-SC-2023]?
2. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT was justified in holding that the mere financials of any entity,which were seized during search action are incriminating material?
3. Whether on the facts and circumstances of the case and in law, Hon’ble ITAT has erred in annulling the assessment made u/s 143(3) on theground that assessment should have been made u/s 153C and therebydeleting the addition of Rs.2,88,00,000/- made by the AO on account ofunexplained cash credit u/s 68 which was confirmed by the Ld. CIT(A)without appreciating that :
(a) in the absence of incriminating material having been found and seized, it would invalidate an assessment u/s 153C read with section 153A,in case the assessment had been made by the AO u/s 153C, as recentlyconfirmed in the judgment delivered by Hon’ble Supreme Court in the caseof Abhisar Buildwell P. Ltd. [TS-202-SC-2023]?
(b) for a case to fall u/s 153C, the jurisdictional requirement is the satisfaction of the AO that the books of accounts and documents or assestsseized or requisitioned have a bearing on the determination of the totalincome of the assessee and, in the instant case, there was no basis for the AOto proceed u/s 153C, since no incriminating material in relation to theassessee was found during the search conducted as per seized materialhanded over to the AO?
(c) the mere handing over of the seized material to the AO was not sufficient to take up assessment u/s 153C since there is nothingincriminating about the material seized in the present case?
(d) the AO cannot be compelled to be satisfied, since doing so would amount to questioning the judgment of the AO in the matter and,accordingly, the non-recording of satisfaction by the AO is to be taken asconclusive of his being not satisfied in the matter and, therefore, the questionof abatement of the pending assessment in such a case does not arise?
(e) the assessment u/s 143(3) is the determination of total income and an instance of search does not annul or dilute the same in the present case?
4. Whether, on the facts and circumstances of the case and in law, the Hon’ble ITAT was justified in quashing the assessment order u/s 143(3),made in consequence of the case being selected for complete scrutinythrough CASS, and deleting the addition of Rs.2,88,00,000/- made onaccount of unsecured loan of Rs.2,88,00,000/- from M/s Little Star SecuritiesPvt. Ltd. without appreciating the facts of the case brought on record by theAssessing Officer including that this ‘lender’ is an identified/establishedbogus company having no business and provided accommodation entriesonly and further, as established by learned CIT(A), that this loan is receivedin contravention of the Companies Act 2013?
5. Whether on the facts and circumstances of the case and in law, the findings given by ITAT in its order suffers from perversity as it failed toallude to relevant facts, misread the evidence and its probative value and thelegal position, which itself gives rise to question of law in view of ratio ofdecisions in several cases including the case of Sudarshan Silk and SareesSudarshan Silk and Sarees 300 ITR 205 (SC)300 ITR 205 (SC)?
AND/OR
Any other question of law that may arise during the course of hearing based on the relevant law in view of the factual backdrop in theinstant matter?”
3. Similar issue came up for consideration before this Court in ITA No.113/2024 [Pr. Commissioner of Income Tax (Central) Vs. Shri KalyanikaInfra Mega Ventures Pvt. Ltd.]. Vide order dated 28/8/2024 this Court haddismissed the appeal. In view of aforesaid, this appeal also stands dismissedappeal also stands dismissedin the light of order dated 28/8/2024in the light of order dated 28/8/2024 passed in ITA No.113/2024. Orderdated 28/8/2024 shall apply mutatis mutandis to the facts and circumstancesof the present case.
4. A complete copy of order dated 28/8/2024 passed in ITA No.113/2024 be placed in the record the present case.
