The Allahabad High Court recently ruled that no substantial question of law arises in cases where no evidence of perversity is presented concerning the order issued by the Income Tax Tribunal during an appeal under Section 260A of the Income Tax Act, 1961.
According to Section 260A of the Income Tax Act, 1961, an appeal can be made to the High Court against the decision made by an Appellate Tribunal.
Background of the Case
The case of the assessee was selected for scrutiny through the Computer-Assisted Scrutiny Selection for the Assessment Year 2017-18. Subsequently, the Assessing Officer (A.O.) issued notices under Section 142(1) of the Act, which included several questionnaires.
The assessee provided responses to all notices, and upon reviewing the records, the A.O. found no adverse implications and accepted the income returns for the year 2017-18. However, the Principal Commissioner of Income Tax (P.C.I.T.) deemed the order from the A.O. to be erroneous and detrimental to the revenue’s interests. As a result, the P.C.I.T. issued notices under Section 263 of the Act.
The assessee responded to these notices, but the P.C.I.T. set aside the A.O.’s order, mandating a specific inquiry into the highlighted issues. The petitioner, dissatisfied with this decision, appealed to the Tribunal. The Tribunal determined that the A.O. had followed all necessary regulations prior to issuing the order under Section 143(3), granting the appeal. Consequently, the P.C.I.T. filed an Income Tax Appeal with the High Court.
The appellant department argued that the A.O. had issued orders without appropriate inquiry or verification, which fell under Explanation 2 to Section 263(1) of the Act, suggesting the emergence of a substantial question of law. They maintained that the Tribunal had failed to adequately consider certain provisions of the Act and referenced documents not included in the record, suggesting that either the assessee did not present them or the A.O. was negligent.
Conversely, the respondent-assessee argued that the assessment order under Section 143(3) was made after adhering to all relevant rules and regulations. They contended that the P.C.I.T.’s claims of insufficient inquiries by the A.O. were unsubstantiated and did not give rise to any significant legal questions.
Ruling of the High Court
The Court concluded that the Tribunal had issued its order after carefully reviewing the evidence on record and evaluating the assessee’s returns. Therefore, it could not be claimed that the order in question contained any significant faults or illegalities.
“Once the Tribunal, after a detailed review of the record, reached the conclusion that the P.C.I.T.’s reasoning based on Explanation 2 to Section 263 regarding the A.O.’s failure in making inquiries or verifications was unfounded and contrary to the records, and allowed the appeal on grounds that the P.C.I.T.’s order was beyond jurisdiction, without any evidence of perversity pointed out by the appellants’ counsel, we find that the present facts do not give rise to any substantial question of law as per the appellants’ counsel’s assertion,” stated Chief Justice Arun Bhansali and Justice Vikas Budhwar.
In conclusion, the appeal was dismissed.
Case Title: The Pr. Commissioner of Income Tax, Aaykar Bhawan, Noida and Anr. v. M/s Sampark Management Consultancy LLP [INCOME TAX APPEAL]