PCIT Vs Hadoti Punj Vikas Ltd. (Supreme Court of India)
The Rajasthan High Court considered a group of 18 Income Tax Appeals arising from search action against the concerned group of assessees. The Revenue challenged the ITAT’s orders concerning additions made under Section 68 of the Income Tax Act, 1961 for unexplained unsecured loans and partners’ capital receipts, as well as additions made during proceedings under Section 153A.
Read HC Judgment in this case: Rajasthan HC Dismisses Revenue Appeals as ITAT Findings on Section 68 Additions Were Factual
The Assessing Officer had made additions, which were deleted by the Commissioner (Appeals). The ITAT subsequently dismissed the Revenue’s appeals, resulting in concurrent findings in favour of the assessees.
Before the High Court, the Revenue raised five questions, principally concerning whether the ITAT was justified in deleting the additions under Section 68, including where alleged lenders were claimed to be shell companies and alleged partners were not produced for examination. The Revenue also questioned the sustainability of additions under Section 153A based on information or reports of the Information Wing, Kolkata.
The High Court held that, although five questions had been framed, the central issue was the deletion of the additions under Section 68. On examining the ITAT’s order, the Court found that its conclusions were based on assessment of evidence on record and were therefore purely factual. The ITAT had found, among other things, that the companies through which alleged bogus accommodation entries were made were not managed or controlled by Anand Sharma, stated to be the kingpin; no link was found in the relevant documents and financial statements; affidavits and notices issued under Sections 131 and 133(6) had been complied with by the creditors; and the director of Royal Crystal Dealers Pvt. Ltd. had confirmed the loan transaction.
The ITAT had also observed that the assessment order was based solely on the Investigation Wing, Kolkata report, containing narration of statements recorded during investigation, while the Assessing Officer had only the statement of Anand Sharma. The assessee was not privy to the Investigation Wing proceedings and was not granted an opportunity to cross-examine persons whose statements had been recorded. The High Court noted that in some cases the ITAT had additionally held the reassessment invalid, but it did not examine that issue since no question of law arose regarding deletion of the additions.
Accordingly, the Rajasthan High Court dismissed all the appeals, holding that no question of law arose.
The Revenue thereafter approached the Supreme Court in PCIT Vs Hadoti Punj Vikas Ltd. The Supreme Court, after hearing the learned Additional Solicitor General, found no ground to interfere with the impugned order(s). It accordingly dismissed the Special Leave Petitions, with pending applications also disposed of. Thus, the Supreme Court declined interference with the High Court’s order.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Heard learned Additional Solicitor General appearing for the petitioner.
We do not find any ground to interfere with the impugned order(s). The Special Leave Petitions are, accordingly, dismissed.
Pending application(s), if any, also stand disposed of.
