Maa Badi Khermai Marketing Private Limited vs. Deputy Commissioner Of Income

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON'BLE SHRI JUSTICE HIRDESH INCOME TAX APPEAL No. 32 of 2023 BETWEEN:- MAA BADI KHERMAI MARKETING PRIVATE LIMITED THROUGH ITS DIRECTOR TARACHAND KHATRI S/O SHRI GHANSHYAM KHATRI, AGED ABOUT 47 YEARS, R/O D-24, DIXIT ENCLAVE, BANDARIYA

TIRAHA,

RAMPUR, JABALPUR (MADHYA PRADESH) .....APPELLANT (BY SHRI ANURAG GOHIL, SHRI UMANG MEHTA & SHRI PUNEET JAIN - ADVOCATES) AND DEPUTY COMMISSIONER OF INCOME CENTRAL CIRCLE, CENTRAL REVENUE BUILDING, STATION ROAD, NAPIER TOWN, JABALPUR (MADHYA PRADESH) .....RESPONDENT (BY SHRI SIDDHARTH SHARMA AND SHRI SHUBHAM MANCHANI – ADVOCATES) ----------------------------------------------------------------------------------------------- Reserved on : 04.05.2023 Pronounced on : 12.06.2023 ---------------------------------------------------------------------------------------- 2 This petition having been heard and reserved for orders, coming on for pronouncement this day, Hon’ble Shri Justice Sheel Nagu pronounced the following: ORDER This appeal preferred u/S.206A of Income Tax Act, 1961 assailing final orders passed by Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur (for brevity “Tribunal”) in ITA. Nos.29 & 30/JAB/2021 on 06.06.2022 and ITA. Nos.29 & 30/JAB/2021 on 14.12.2022 in regard to assessment years 2014-15 and 2015-16 proposes following substantial questions of law:- “(i) Whether the ld. ITAT has erred in not appreciating that the assessment order under Section 147 of the Income Tax Act deserves to be quashed as the grant of approval u/S.151 of the Act by the Principal Commissioner was mechanical, arbitrary and without application of mind? (ii) Whether the ld. ITAT has erred in not appreciating that the non application of mind in granting approval is evident from the fact that the approval was given without looking into the supporting documents of the reasons recorded and mandatory requirement of Section 151 was undertaken as an empty formality not as a procedural safeguard ? (iii) Whether the ld. ITAT has erred in not appreciating that the jurisdiction u/S.147 cannot be exercised in respect of information based on material seized during search and seizure operation u/S.132 ? (iv) Whether the ld. ITAT has factually erred in holding that no material relating to the appellant company was seized during the search proceedings ? (v) Whether the ld. ITAT has erred in not appreciating that the notice u/S.143(2) dated 17.01.2019 is premature as it was issued prior to passing the order disposing the objections to reopening raised by the appellant company ? (vi) Whether the ld. ITAT has erred in not appreciating that the addition for unexplained cash credit under section 68 cannot be sustained as the appellant assessee had proved the identity, capacity 3 and genuineness of the loan transactions and the respondent department has not adduced any evidence except conjecture and surmises to demonstrate that loan transaction between the appellant and lender Little Star was a sham transaction ? (vii) Whether the ld. ITAT has erred in not appreciating that in the mere fact that the lender company has given an interest free loan to a concern is no ground to lift the corporate veil and treat the transaction as a sham transaction ?” 2. During the course of arguments, learned counsel for appellant presses only for three substantial questions of law enumerated at Clause (i), (iii) and (vi) above. 3. Learned counsel for rival parties were heard on the question of admission. 4. The findings rendered by the Tribunal are tested on the anvil of aforesaid three proposed substantial questions of law and this Court finds thus:- (a) The first proposed substantial question of law questions the approval granted by Principal Commissioner of Income Tax u/S.151 of Income Tax Act, 1961 (for brevity “Act of 1961”) for passing of an order u/S147 of Act of 1961 on the ground that there is no application of mind. In this regard, it is seen from impugned order of Tribunal that factual findings are recorded by Tribunal in Para 4.5 of impugned order after relying upon certain earlier judicial pronouncements, which in the considered opinion of this Court are purely factual in nature which do not give rise to any substantial question of law. 4 (b) As regards second proposed substantial question of law is concerned, which is enumerated at Clause (iii), questioning the legality of invocation of jurisdiction u/S.146 of Act of 1961 in cases relating to search and seizure operation conducted u/S.132 of Act of 1961, learned counsel for appellant has not pointed out any statutory provision prohibiting or restricting invocation of Section 147 in cases of search and seizure. When statute itself does not prescribe any bar, the necessary implication is that the jurisdiction u/S.147 can very well be invoked even in cases of search and seizure. Thus, this ground too in the considered opinion of this Court does not give rise to any substantial question of law. (c) As regards third substantial question of law enumerated in Clause (vi) above, it is seen that the same relates to sustainability of addition of unexplained cash u/S.68 of Act of 1961 despite the assessee having proved the identity, capacity and genuineness of loan transaction. The Tribunal in the impugned order has considered this aspect in detail and rendered finding, which again are essentially factual and, therefore, beyond the pale of substantial question of law. 5. In view of above discussion, this Court is of the view that neither any of the proposed substantial questions of law nor any other substantial question of law arises for consideration herein. 6. Consequently, in the absence of any substantial question of law having been made out by the assessee, present appeal preferred by the 5 assessee against orders of Tribunal in ITA. Nos.29 & 30/JAB/2021 on 06.06.2022 and ITA. Nos.29 & 30/JAB/2021 on 14.12.2022 deserves to be rejected in limine. 7. Accordingly, present appeal stands dismissed. (SHEEL NAGU) (HIRDESH) JUDGE JUDGE mohsin Digitally signed by MOHAMMED MOHSIN QURESHI Date: 2023.06.13 10:26:42 +05'30'