Madhya Pradesh High Court
Principal Commissioner Of vs M/S Agrawal Buildcon Pvt. Ltd. on 28 August, 2024
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari, Anuradha Shukla
NEUTRAL CITATION NO. 2024:MPHC-JBP:44551
1 ITA-193-2022
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SMT. JUSTICE ANURADHA SHUKLA
ON THE 28th OF AUGUST, 2024
INCOME TAX APPEAL No. 193 of 2022
PRINCIPAL COMMISSIONER OF
Versus
M/S AGRAWAL BUILDCON PVT. LTD.
Appearance:
Shri Siddharth Sharma - Advocate for the appellant.
ORDER
Per: Justice Sushrut Arvind Dharmadhikari
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 28.01.2022 passed by the Income Tax
Appellate Tribunal (ITAT), Indore in ITA No.39/IND/2021 for the
Assessment Year 2012-13.
2. The following substantial questions of law have been proposed in
this appeal :
“1. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in not appreciating the fact that land owners have
accepted the receipt of cash on sale of land from the present assessee?”
2. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in not appreciating the fact that the cash so
received on sale of land to the assessee, was deposited in bank
accounts of sellers who have no other income but for sale of the land
in question?
3. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in observing that no opportunity to cross
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examination was provided by the AO, whereas, ITAT has completely
ignored that the facts were brought in knowledge of the assessee vide
show cause notice dated 03.02.2015 and the assessee vide reply dated
12.05.2015 expressed his inability to explain/comment on it?
4. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in ignoring the decision of Hon’ble SC in the case
of Ayub Khan Noor Khan Pathan Vs State of Maharashtra & others in
civil appeal No. 7728 of 2012 and KL Tripathi Vs State Bank of
India & Others AIR 1984 SC 273 in which it was held that cross
examination has first to be sought by the person concerned. It was held
by Hon’ble SC that a party who does not wish to controvert the veracity
of evidence on record cannot expect to succeed in any
subsequent grievance raised by him stating that no opportunity of eross
examination was provided?
5. Whether, the Ld. ITAT erred in not appreciating that in absence of
any definition of the word “incriminating” under the IT Act, this
expression was to be understood in wider sense in the context of
provisions of the Act under which addition is being made and will
include additions not only based on the seized material but also any
damning statements, misrepresentation/suppression of facts, false
entries in books noticed as a result of search, because a penalty u/s
270A(9) of the Act for misreporting has also been provided for
such violations?
6. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in not appreciating that the land owners (Smt.
Rekha Bai, Shri Devi Singh and Shri Lalaram) furnished agreement
dated 27.11.2010, which makes it amply clear that the land in
question was sold at Rs.5,03,68,500/- to Shri Pradeep Sharma
& Others through Power Of Attorney. ITAT also ignored that the land
owners admitted having received On-money on sale of same land and
this is in conformity with the deposits in their bank accounts as well
as utilization of money. Further, Shri Pradeep Sharma & Others, who
sold the same land to assessee admitted having received total
consideration of Rs.5,30,30,000/- (out of which Rs. 3,53,80,000/- was
On-Money) from assessee?
7. Whether, on the facts and in the circumstances of the case and in
law, the ITAT erred in ignoring that the sellers Shri Pradeep Sharma &
Pradeep Hirani also offered additional income of Rs.9,12,000/- each
during the assessment proceedings. Therefore, considering the human
probability, business prudence and nature of real estate transaction), it
is established beyond doubt that Payment of On-money of Rs.
3,53,80,000/- was done in purchase transaction of said land?
8. Whether, on the facts and circumstances of the case and in law,
while deleting addition made U/S 69 of the Act, the ITAT has failed to
allude to relevant facts brought on record by AO, misread the
evidences and its probative value which itself gives rise to question of
law in view of ratio of decision in the case of Sudarshan Silk and
Sarees 300 ITR 205 (SC)?”
3. Brief facts of the case are that the assessee is a partnership firm
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NEUTRAL CITATION NO. 2024:MPHC-JBP:445513 ITA-193-2022
engaged in the business of builder and developer. Nil income was shown in
the return filed on 12.02.2014. Notice u/s 148 of the Act was served followed
with serving of notices u/s 143(2) & 142(1) of the Act. During the course of
assessment proceeding Ld. AO enquired about the issue of unexplained
investment in property. Search action was carried out u/s 132 of the Act in
M/s. Sagar Group. Various incriminating documents were found. Based on
the seized documents Annexure LPS-3 page 62 to 75 it was observed that the
assessee through its partner Sanjeev Agrawal purchased 1.495 hectare land
located at Gram Katara, Patawari Halka No.25, RI No.03, Vikashkhand,
Huzur Bhopal from Shri Pankaj Mikhija. Shri Pradeep Sharma and Shri
Pradeep Hirani Power of Attorney (POA) holder of Smt. Rekha Bai, Shri
Lala Ram and Shri Devi Singh and Agarwal Buildcon through partner Shri
Sanjeev Agarwal. During post search enquiry summons were issued to the
sellers. Smt. Rekha Bai, Shri Lalaram and Shri Devi Singh attended before
DDIT (Investment) and statements recorded on oath on 30 10.2011. During
the statement, these persons produced agreement dated 27.11.2010 between
Shri Raj Kumar Hirani, Shri Pradeep Sharma and Shri Lalaram, Shri Devi
Singh and Smt. Rekkha Bai for purchase of 1.495 acres of land located at
Gram Katara, Patwari Halka No.25, RI No.03, Vikashhand, Huzur, Bhopal
for total sale consideration of Rs. 5,03,68,500/-, The said land was sold to
Shri Rajkumar Hirani and Shri Pradeep Sharma for sale consideration of Rs
5,03,68,500/- and sum of Rs.4,03,68,500/- was paid on different dates.
Further it was mentioned that out of entire sale consideration sum ofRs.3,30,68,500/- was paid in cash and balance amount of Rs. 1,73,00,000/-
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NEUTRAL CITATION NO. 2024:MPHC-JBP:44551
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was paid through cheque by Shri Pradeep Sharma and Shri Pradeep Hirani.
Therefore, the land was sold by Shri Pradeep Hirani, Shri Pankaj Mikhija and
Shri Pradeep Sharma to the appellant for sale consideration of Rs.
1,76,50,000/-. During the course of assessment proceeding, the seller Shri
Pradeep Sharma and Shri Pradeep Hirani stated that they were broker for the
said land and the entire deal was for Rs.5,30,30,000/- and they have received
their commission. Therefore, the AO during the course of assessment
proceedings required the assessee to explain source of investment of
Rs.3,53,80,000/- paid in cash for purchase of The assessee in reply submitted
that no over and above consideration was paid to the amount mentioned in
registered sale deed. Further, the land was purchased from Shri Pradeep
Sharma and Pradeep Hirani and has no knowledge of agreement dated
27.11.2010. The AO after considering reply of the assessee did not find the
same acceptable and made additions for unexplained investment u/s 69 of the
act for alleged ‘on money’ paid at Rs.3,53,80,000/- for purchase of the above
said land through its partner Shri Sanjeev Agrawal and further observed that
the payment of ‘on money’ in cash is not recorded in the books of account of
the assessee nor in the books of account of the partner Shri Sanjeev Agrawal.
After making alleged addition u/s 69 of the Act income assessed at
Rs.3,53,80,000/-. Aggrieved assessee preferred an appeal before the ld.
CIT(A) and stated that during the course of search registered deeds were
found relating to appellant firm but during the post search inquiry summons
u/s 131 of the Act were issued only to the broker and his statements were
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NEUTRAL CITATION NO. 2024:MPHC-JBP:445515 ITA-193-2022
received ‘on money’ from the assessee. Further the appellant’s request for
providing opportunity of cross examination was declined by the Ld. AO and
thus the additions were made on assumption in presumption. Ld. CIT(A)
after considering the submission of the assessee deleted the addition
observing that the additions were made merely on the basis of statement of
seller but no opportunity of cross examination was provided and the
additions made only on the basis of oral evidences and the same are on
assumption basis without having any incriminating material on record.
4. Learned counsel for the appellant submitted that the ITAT erred in
observing that no opportunity to cross-examination was provided by the AO.
This fact is overlooked by the learned appellate tribunal. He further
submitted that the ITAT erred in passing the impugned order as the same has
been passed without appreciating the law laid down by the Apex Court in the
case of Ayub Khan Noor Khan Pathan vs. State of Maharashtra & ors. Civil
Appeal No.7728 of 2012 and KL Tripathi vs. State Bank of India & ors. AIR
1984 SC 273 in which it was held that cross examination is first to sought by
the person concerned. He further submitted that the ITAT erred in ignoring
the fact that the sellers Shri Pradeep Sharma and Pradeep Hirani also offered
additional income of Rs.9,12,000/- each during the assessment proceedings.
Therefore, considering the human probability, business prudence and nature
of real estate transaction, it is established beyond doubt that payment of On-
money of Rs.35,38,000/- was done in purchase transaction of said land and
prayed for admitting the appeal on the aforesaid substantial questions of law.
5 . Per contra, learned counsel for the respondent/assessee
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vehemently opposed the prayer and submitted that the learned ITAT has not
committed any error so as to admit this appeal. He further contended that
present ITA is based merely questions of facts and on this ground also
present appeal is not maintainable. No question of law much less any
substantial question of law is involved in the appeal, therefore, same
deserves to be dismissed.
6 . Heard learned counsel for the parties and perused the substantial
questions of law.
7. Before dealing with the aforesaid controversy, it would be
expedient to refer to Section 260-A of the Act of 1961. The provisions,
relevant for our purpose, read thus:
“260-A. Appeal to High Court – (1) An appeal shall lie to the High
Court from every order passed in appeal by the Appellate Tribunal, if
the High Court is satisfied that the case involves a substantial question
of law.
(2) The Principal Chief Commissioner or Chief Commissioner or the
Principal Commissioner or Commission or an assessee aggrieved by
any order passed by the Appellate Tribunal may file an appeal to the
High Court and such appeal under this sub- section shall be
(a) filed within one hundred and twenty days from the date on which
the order appealed against is received by the assessee or the Principal
Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner;
(b) xxx
(c) in the form of a memorandum of appeal precisely stating therein
the substantial question of law involved.
(2A) The High Court may admit an appeal after the expiry of the
period of one hundred and twenty days referred to in clause (a) of sub-
section
(2), if it is satisfied that there was sufficient cause for not filing the
same within that period.
(3) Where the High Court is satisfied that a substantial question of
law is involved in any case, it shall formulate that question.
(4) The appeal shall be heard only on the question so formulated, and
the respondents shall, at the hearing of the appeal, be allowed to argue
that the case does not involve such question : Provided that nothing in
this sub-section shall be deemed to take away or abridge the power of
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substantial question of law not formulated by it, if it is satisfied that the
case involves such question,
(5) The High Court shall decide the question of law so formulated
and deliver such a judgment thereon containing the grounds on which
such decision is founded and may award such cost as it deems fit.
(6) The High Court may determine any issue which-
(a) has not been determined by the Appellate Tribunal; or
(b) has been wrongly determined by the Appellate Tribunal, by
reasons of a decision on such question of law as is referred to in sub-
Section (1).
(7) Save as otherwise provided in this Act, the provisions of the
Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the
High Court shall, as far as may be, apply in the case of appeals under
this section.”
8. From a bare reading of the Section, it is apparent that an appeal to
the High Court from a decision of the Tribunal lies only when a substantial
question of law is involved, and where the High Court comes to the
conclusion that a substantial question of law arises from the said order, it is
mandatory that such question(s) must be formulated. The expression
“substantial question of law” is not defined in the Act. Nevertheless, it has
acquired a definite connotation through various judicial pronouncements.
9. While explaining the import of the said expression, the Apex
Court in case of Sir Chunilal V. Mehta & Sons, Ltd. Vs. Century Spinning
and Manufacturing Co. Ltd., AIR 1962 SC 1314, observed that:
“6. The proper test for determining whether a question of law raised
in the case is substantial would, in our opinion, be whether it is of
general public importance or whether it directly and substantially
affects the rights of the parties and if so whether it is either an open
question in the sense that it is not finally settled by this Court or by the
Privy Council or by the Federal Court or is not free from difficulty or
calls for discussion of alternative views. If the question is settled by the
highest Court or the general principles to be applied in determining the
question are well settled and there is a mere question of applying those
principles or that the plea raised is palpably absurd the question would
not be a substantial question of law.”
10. Similarly, in Santosh Hazari Vs. Purushottam Tiwari, (2001) 3
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SCC 179 it was observed that:
“A point of law which admits of no two opinions may be a proposition
of law but cannot be a substantial question of law. To be “substantial” a
question of law must be debatable, not previously settled by law of the
land or a binding precedent, AIR 1962 SC 1314 (2001) 3 SCC 179 and
must have a material bearing on the decision of the case, if answered
either way, insofar as the rights of the parties before it are concerned.
To be a question of law “involving in the case” there must be first a
foundation for it laid in the pleadings and the question should emerge
from the sustainable findings of fact arrived at by court of facts and it
must be necessary to decide that question of law for a just and proper
decision of the case. An entirely new point raised for the first time
before the High Court is not a question involved in the case unless it
goes to the root of the matter. It will, therefore, depend on the facts and
circumstance of each case whether a question of law is a substantial
one and involved in the case, or not; the paramount overall
consideration being the need for striking a judicious balance between
the indispensable obligation to do justice at all stages and impelling
necessity of avoiding prolongation in the life of any lis.”
11. In Hero Vinoth (Minor) Vs. Seshamma, (2006) 5 SCC 545 , the
Apex Court has observed that:
“The general rule is that High Court will not interfere with the
concurrent findings of the courts below. But it is not an absolute rule.
Some of the wellrecognised exceptions are where (i) the courts below
have ignored material evidence or acted on no evidence; (ii) the courts
have drawn wrong inferences from proved facts by applying the law
erroneously; or (iii) the courts have wrongly cast the burden of proof.
When we refer to “decision based on no evidence”, it not only refers to
cases where there is a total dearth of evidence, but also refers to any
case, where the evidence, taken as a whole, is not reasonably capable
of supporting the finding.”
12. 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) 4 SCC 255; Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi, (2009) 3
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SCC 287; Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel
(2007) 4 SCC 118; Metroark Ltd. Vs. Commissioner of Central Excise,
Calcutta (2004) 12 SCC 505; West Bengal Electricity Regulatory
Commission Vs. CESC Ltd. (2002) 8 SCC 715).
13. The Apex Court in case of K.Ravindranathan Nair vs. CIT, (2001)
1 SCC 135 has observed as under :
”The High Court overlooked the cardinal principle that it is the
Tribunal which is the final fact finding authority. A decision on fact of
the Tribunal can be gone into by the High Court only if a question has
been referred to it which says that the finding of the Tribunal on facts is
perverse, in the sense that it is such as could not reasonably have been
arrived at on the material placed before the Tribunal. In this case, there
was no such question before the High Court. Unless and until a finding
of fact reached by the Tribunal is canvassed before the High Court in
the manner set out above, the High Court is obliged to proceed upon
the findings of fact reached by the Tribunal and to give an answer in
law to the question of law that is before it.”
14. When tested on the anvil of the afore-noted legal principles, we
are of the opinion that 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.
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15. For the aforesaid reasons, we have 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) of the Act for admitting the appeal.
16. In view of the aforesaid discussion, we do not find any merit in
this appeal, which in our opinion deserves to be and is hereby dismissed in
limine.
(SUSHRUT ARVIND DHARMADHIKARI) (ANURADHA SHUKLA)
JUDGE JUDGE
anand
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