Madhya Pradesh High Court
Pr. Commissioner Of Income Tax ... vs M/S Tirupati Buildcon Pvt. Ltd., on 24 January, 2025
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari, Anuradha Shukla
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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 24 th OF JANUARY, 2025
INCOME TAX APPEAL No. 235 of 2024
PR. COMMISSIONER OF INCOME TAX (CENTRAL),
Versus
M/S TIRUPATI BUILDCON PVT. LTD.,
Appearance:
Shri Siddharth Sharma - learned Senior Standing Counsel for the appellant.
Shri Abhijeet A. Awasthi - learned counsel for the respondent.
ORDER
Per: Justice Sushrut Arvind Dharmadhikari
Heard on I.A. No. 617/2025, which is an application for ignoring the
defaults pointed out by the Office.
On due consideration, I.A. No. 617/2025 stands allowed and defaults
pointed out by the Office are hereby ignored.
Also heard on I.A. No. 616/2025, which is an application filed under
Section 5 of the Limitation Act for condonation of 11 days delay in filing the
appeal.
For the reasons mentioned in the application, I.A. No. 616/2025 stands
allowed and delay of 11 days in filing the instant appeal is hereby condoned.
Further heard on admission.
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 28/06/2024 passed by the Income Tax Appellate
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Tribunal (ITAT), Jabalpur in IT(SS)A No. 7/JAB/2018 for the Assessment Year
2011-2012.
2. The following substantial question of law has been proposed in this
appeal :
"(1) Whether on the facts and in the circumstances of the case and
in law, the Appellate Tribunal: was justified in deleting the addition of
Rs.5,27,33,613/-, made on account of disallowance of deduction u/s
80IA of the IT Act, on the ground that no incriminating material was
found during the course of search, without appreciating:
(a) That, there are plethora of incriminating documents for the AY
under consideration, as captured in questions below, and thus in terms of
para 14(iii) of Abhisar Buildwell (P.) Ltd. [2023] 150 taxmann.com 257
(SC) "in case any incriminating material is found/unearthed, even, in
case of unabated/completed assessments, the AO would assume the
jurisdiction to assess or reassess the 'total income' taking into
consideration the incriminating material unearthed during the search and
the other material available with the AO including the income declared
in the returns ?
(b) That Tally accounts were seized during search (as stated at page
120. of the assessment order) which evidenced that the assessee was
found to benot maintaining separate books for the claimed 'eligible'
business u/s 8O IA of the IT Act and had it not for the said seizure of
Tally accounts, such incriminating | act of non-maintenance of separate
accounts for the claimed 'eligible' business would not have come to
notice of the Department ?
(c) That, the judgment of Hon'ble Supreme Court in Arisudana
Spinning Mills Ltd. [2012] 26 taxmann. com 39 (SC) which held in the
context of the deduction u/s801A that the assessee should have
maintained separateaccounts for the 'eligible' business?
(d) That, the statement recorded | during the searchproceedings of the
key person of the assessee (page 121-123 of the assessment order) shows
the complete failure of the assessee to' produce the separate accounts for
the claimed 'eligible' business?
(e) That, the judgment of the Hon'ble Apex Court in the case of
Abhisar Buildwell (P.) Ltd. [2023] 150 taxmann.com 257 (SC) , relied
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upon by the Hon'ble ITAT, applies squarely in favour of the Revenue as
the addition made by the "Assessing Officer had its firm foundations on
account of seized material and statement recorded during the search
proceedings?
2. Whether on the facts and in the circumstances of the case andin
law, the Appellate Tribunal was justified in deleting the addition of
Rs.5,27,33,613/ - made on account of disallowance of deduction u/s 80
IA of the IT Act, completely ignoring that the assessee is not engaged in.
"Development work" rather assessee is a "works contractor" in terms of
the provisions of section8O0IA(4) of the Act the intention of legislature
for grant of benefit u/s 80IA(4), captured in the Explanation at the
bottom of the section, which specifically excludes "works contract" and
moreover without appreciating the:
(a) That, the detailed finding of AO in the assessment order that the
assessee is-not engaged in "Development work" rather assessee is a
"works contractor" and accordingly not eligible for deduction u/s 801A
of the IT Actsince the 'assessment order clearly brings out concrete
evidences that assessee has not done any projects on BOT basis, the
26AS statement shows that assessee is merely a works contractor,
assessee 'is merely executing 'work order' received from different
agencies and accordingly assessee raises cunning account bills' after
completion of various stages of work, and there is no evidence that
assessee maintains the road as claimed for 3 - 5 years and accordingly
the ITAT grievously erred in law since it violated 'the decision of the
Hon'ble Apex Court in Walchandand Co P Ltd [1967] 65 ITR 381 (SC)
because the order of the Tribunals not supported by evidence?
(b) That, the judgment of Hon'ble Gujarat High Court in the case of
Katira Construction Ltd. V/s Union of India 31Taxman.com 250 (4,
March 2013) which has upheld the constitutional validity of the said
Explanation to the section 80IA(4)?
3. Whether on the facts and circumstances of the case and in law, the
Appellate Tribunal was right in deleting the addition of Rs.1,37,00,000/-
and Rs.70,00,000/- made for AY 2011-12 and AY 2012-13 u/s 40A(3)
on the basis of seized incriminating document A-1/LPS-6/Page-35 & 36
and admission in statement u/s 132(4) of Shri Padam Singhania being
amounts paid in cash by Shri Guddu Rastogi between 29.04.2010 to
29.12.2010 against the purchase of cements, stating that the AO has not
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made even more corroborative verifications from Shri Guddu Rastogi
and that the statement was later retracted by Shri Singhania, without:
(a) Appreciating that the decision in Jansampark advertising &
Marketing (P.) Ltd. [2015] 56 taxmann.com 286(Delhi) where Hon'ble
Delhi High Court has held that, though it is obligation of AO to conduct
proper scrutiny of material, in event that ITAT felt that AO failed to
discharge his functions properly (here assuming, but not admitting, AO
not making even more corroborative verifications), the obligation to
conduct proper inquiry/addition shifts to ITAT and the Tribunal cannot
simply delete addition made by AO ?
(b) That, testing the so-called retraction to the test of the dictum of
law pronounced in case of Banna lal Jat Construction (P.) Ltd. vs. ACIT
106 Taxmann 128(SC) and in ignoring that the statement recorded u/s
132(4) of the act has evidentiary value and burden lays on the person
who made the statement, to provide a reasoned explanation for retracting
from the statement, specifically, when he himself declared that the
statement is made in sound state of mind and without coercion ?
4. Whether on the facts and in the circumstances of the case and in
law, the Appellate Tribunal was right in deleting the addition made on
account unrecorded cash transaction, without appreciating the fact that
the assessee has stated that the transaction are not recorded in the regular
books of assessee and surrendered the amount of Rs.70,00,000/- and
Rs.97,50,000/- as its undisclosed income for A.Y. 2012-13 and 2011-12
respectively, however, the same has not been disclosed in the ITR?
5. Whether on the facts and in the circumstances of the case and
in law, the Hon'ble Appellate Tribunal has erred in law in deleting the
addition of Rs.16,75,000/- made on account of bogus sub-contract
payment to government functionaries:
(a) completely ignoring the plethora of evidence and aspects quoted
in detail in the assessment order, including seized incriminating
documents available with department giving date wise illegal payments
to government functionaries; the fact that Shri Govind Prasad Pandey
senior employee (Project Director) of the assessee having admitted in his
statement recorded u/s 132(4) of the IT Act of cash payment on behalf of
the assessee to the government functionaries; the AO has brought the
corroborative evidence on records in terms of correlation between the
cash withdrawal from assessees bank account and such-illegal payment
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dates, the detailed test of human probability applied by the AO?
(b) without testing the matter on the touch stone of 'Human
Probability' and to check if the apparent was real on the basis of the ratio
laid down by the Hon'ble Supreme Court in the case of Sumati Dayal
214 ITR 801 (SC)?
6. Whether on the facts and circumstances of the case and in law, the
findings given and decision made by ITAT suffers from perversity on
facts and law asit failed to allude. To relevant facts,misread the evidence
and its probative value and the legal position, which itself gives rise to
question of law in view of ratio of decisions in several cases including in
the case of Sudarshan Silk and Sarees 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 the instant
matter?"
3. Brief facts of the case are that the ITAT decided the appeals ITA
No.82/JAB/2019 for A.Y. 2007-08, IT(SS)A Nos. 5 to 10/JAB/2018 for AY 2009-
10 to 2014-15, ITA No. 22/JAB/2018 for A.Y 2015-16 in the impugned
composite order. The tax effects in the appeals for A.Y. 2007-08, 2010-11 and
2014-15 are below the monetary limit i.e. Rs.2,00,00,000/- as prescribed in
CBDT's Circular No. 9/2024 dated 17/09/2024, therefore, the issues do not fall in
any of the exceptions as laid down in CBDT Circular No.5/2024 dated 15/03/2024
for filing of appeal before the High Court. A search and seizure operation under
Section 132(1) of the Act of 1961 was carried out in the case of Singhania Group,
Shahdol (M.P.) on 16/10/2014. The search action under Section 132 of the Act of
1961 was executed on 27 premises pertaining to Singhania Group Shahdol and
M/s Shobha Mineral, Jabalpur. The assessee was one of the persons of Singhania
Group. The assessee, Tirupati-Build-Con Pvt. Ltd. was engaged in various road
development projects as the main contractor and sub-contractor at various sites in
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M.P. and Chattisgarh. The administrative office cum business premises of the
Company located at Opp. Railway Station, Burhar, District Shahdol and registered
Office of the Company located at 50, Western Street Kolkata were also covered
under Section 132 of the Act of 1961. On 23/12/2016, consolidated assessment
orders for the Assessment Years 2009-2010 to 2015-2016 were issued under
Section 153A read with Section 143(3) of the Act of 1961 and the order for
Assessment Year 2015-2016 was issued under Section 143(3) of the Act of 1961.
Thereafter, the respondent preferred an appeal against the aforementioned
assessment order before the learned CIT(A), wherein the learned CIT(A) passed
its order dated 23/11/2017. Being aggrieved by the aforesaid order, learned
Revenue preferred an appeal before the Income Tax Appellate Tribunal, wherein
learned CIT(A) passed impugned order dated 28/06/2024, whereby order dated
23/11/2017 passed by AO got affirmed. Feeling aggrieved by the same, present
appeal has been filed on the substantial questions of law, which have been
enumerated in the preceding paragraphs.
4. Learned counsel for the appellant contended that the learned ITAT has erred
in allowing the appeal filed by the assessee-company, therefore, on the aforesaid
substantial questions of law, this appeal is fit to be entertained.
5. Per contra, learned counsel for the respondent/assessee 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 on
questions of facts and on this ground also present appeal is not maintainable.
No question of law muchless 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
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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
samewithin 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
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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 the court to hear, for reasons to be recorded, the appeal
on any other 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:
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"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 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."
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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 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
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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.
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.
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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
skt
