The Rajasthan High Court has held that income tax addition cannot be made on mere admission of assessee without any corroborative evidence.
The division bench of Justice Shree Chandrashekhar and Justice Kuldeep Mathur has observed that an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition.
The bench relied on the decision of Supreme Court in the case of M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another in which it was held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect.
Background
The appellant-Principal Commissioner of Income Tax has pleaded that the overall tax effect involved in this case is Rs.92,25,000/- which is below the prescribed monetary limit for filing further appeal before the High Court under section 260-A of the Income Tax Act, 1961; vide Circular No.5/2024 dated 15th March 2024.
The Income Tax Appeal has been filed by the department in view of para no.3.1(h) of the Circular which provides for filing of the appeal where the case involves organised tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries.
The Income Tax Department submitted that on 9th April 2013 a search was conducted at the residence and offices of Shirish Chandrakant Shah and also at the residences of his employees and associates and it was detected that he was engaged in providing accommodation entries of share capital, share premium, share application money, unsecured loans, long term capital gains, short term capital gains etc. in lieu of cash received by him.
A notice under section 148 of the Income Tax Act, 1961 was issued to him on 10th November 2014 for initiating the reassessment proceedings on the ground of escapement of income to the tune of Rs.2,90,00,000. On completion of the assessment under section 143(3) read with Section 147 of the Income Tax Act, 1961, the total income assessed was Rs.3,75,06,610 by making additions on account of bogus share application money and commission for bogus accommodation entries.
The assessment order was passed under section 143(3)/147 of the Income Tax Act, 1961 was challenged by the assessee by filing Appeal. The appellate order was put to challenge by the Income Tax Department by filing the income tax appeal.
Arguments
The department contended that the findings recorded by the Tribunal are ex-facie erroneous and contrary to the materials on record. On examination of the soft data seized and impounded in course of the search proceeding, it was detected that Shirish Chandrakant Shah had provided one-time entry of Rs.3,00,00,000/- to the assessee-company through a broker named Hiren Shah and the transaction was not genuine.
Read More: Kerala High Court Upholds Income Tax Disallowance On Revenue Expenditure Incurred By Broker On IPO
Conclusion
The court has concluded that the ground taken by the appellant-department that the findings recorded by the Tribunal are contrary to records seems to have been raised just for the sake of creating a ground, which has not been shown to the Court. The findings recorded by the appellate Authority and the Tribunal are in consonance with the law of evidence and the Income Tax Act, in particular.
The court held that no substantial question of law arises between the parties and the Income Tax Appeal by the department is not maintainable.
Case Title: PCIT Vs. M/s Esspal International Pvt. Ltd.
Case No.: D.B. Income Tax Appeal No. 25/2024
Date: 03/09/2024
Counsel For Appellant: K.K. Bissa
Counsel For Respondent: None
