The Principal Commissioner Of Income Tax, Panaji. vs. Narayan Rajarm Bandekar.

Held

The Court found the explanation provided by the Appellant regarding the reliance on DRI information satisfactory, justifying the pursuit of the appeals despite the low tax effect. Regarding the substantial questions of law, the Court identified question (B) concerning under-invoicing as the main one. However, it noted that this precise issue had been decided against the Revenue and in favour of the assessee in a previous case, Tax Appeal No.4/2019, which arose from related ITAT decisions. Therefore, the Court found no reason to admit the present appeals on this substantial question of law. For questions (A) and (C), concerning unpaid creditors and contingent liability respectively, the Court observed that these were primarily questions of fact with concurrent findings by both the CIT(Appeals) and the ITAT. The Court was not persuaded that there was any perversity in these concurrent findings of fact. Consequently, in the absence of any substantial question of law arising from these factual findings, the appeals were dismissed. No issue was expressly left undecided.

Facts

The Principal Commissioner of Income Tax (Appellant) filed two tax appeals against orders of the Income Tax Appellate Tribunal (ITAT) concerning Shri Narayan Rajaram Bandekar and Smt. Manda Narayan Bandekar (Respondents). The appeals were filed despite the tax effect being less than ₹50 lakhs, which was below the enhanced monetary limit of ₹1 crore stipulated by CBDT Circular No. 17 of 2019. The Appellant argued that these appeals should be contested on merits as per instructions dated 20.08.2018, citing additions based on information from external law enforcement agencies like the Directorate of Revenue Intelligence (DRI). The additions in question related to unpaid creditors, under-invoicing, and contingent liability.

Key Issues

1. Whether the ITAT was justified in deleting the addition on account of unpaid creditors under Section 41(1) of the Income Tax Act, 1961, as the assessee failed to produce confirmations from creditors, rendering the finding legally perverse? 2. Whether the ITAT erred in deleting the addition on account of under-invoicing as per the DRI report, given the admitted non-crediting of full sales value, non-claiming of corresponding expenditure for alleged commission, lack of proof of commission genuineness, non-deduction of TDS on commission, and the foreign agent being a close family member of the assessee? 3. Whether the ITAT acted with perversity in deleting the addition on account of contingent liability when the dispute was pending in civil court? Contentions of the Appellant (Revenue): The Appellant argued that additions should be sustained where they are based on information from external sources like the DRI. For issue 1, the Appellant contended that the ITAT's deletion was unjustified as the assessee failed to provide creditor confirmations as mandated by law. For issue 2, the Appellant argued that the ITAT erred in deleting the addition on under-invoicing, highlighting the admitted facts and circumstances surrounding the transaction. For issue 3, the Appellant argued that the ITAT's deletion of the addition on contingent liability was perverse given the ongoing civil dispute. Contentions of the Respondent (Assessee): The judgment does not record specific arguments made by the Respondent. However, the ITAT's decisions, which the Appellant sought to challenge, were in favour of the assessee.