Madhya Pradesh High Court Judgments — 2018

The High Court held that its observation granting liberty to the Income Tax Department to take appropriate steps against ICICI Bank in accordance with law does not warrant any interference. The court reasoned that the Income Tax Department is always free to take action against any individual or assessee in accordance with the provisions of the Income Tax Act, 1961. The court found no "error apparent on the face of the record" that would justify reviewing its previous order. It relied on Supreme Court judgments in *Haridas Das Vs. Usha Rani Bank* and *State of West Bengal and Ors. Vs. Kamal Sengupta and Anr.*, which emphasize that review is not an appeal in disguise and can only be granted for a mistake or error apparent on the record, or for any other sufficient reason, not for re-appreciation of evidence or for challenging an erroneous decision. The court concluded that the petitioner had not been able to point out any error apparent on the face of the record, and the previous decision was made on merits. Therefore, the review petition was dismissed.

The Tribunal dismissed the appeals filed by the Revenue, upholding the order of the Commissioner of Income Tax (Appeals). The Tribunal found that the assessee had provided detailed evidence, including names of agents, PAN numbers, descriptions of services rendered, TDS details, bank account information, and income tax returns of agents. Furthermore, the Assessing Officer had examined some of these agents under Section 131 of the Act, where they admitted to receiving commission for services rendered and justified the higher rate. The Tribunal noted that the question posed by the AO to government departments about requiring commission agents was inherently flawed, as agents were appointed by the assessee, not the government. The Tribunal acknowledged that the assessee's business, involving supplies like signboards, required site visits and measurements, for which experienced agents with expertise in government supplies were necessary. The PWD, MP's letter dated February 24, 2014, was also cited as evidence of the services required from agents or their representatives. The Tribunal relied on the jurisdictional High Court's decision in CIT v. Pure Pharma, which held that no substantial question of law arises in cases involving commission payments for business purposes where the identity and genuineness of payments are established. The Tribunal also considered that similar commission payments were accepted in earlier assessment years (1992-93, 2007-08, 2008-09). Therefore, the Tribunal concluded that the Commissioner of Income Tax (Appeals) was justified in deleting the additions made by the Assessing Officer.

The Tribunal dismissed the appeals filed by the Revenue, upholding the order of the Commissioner of Income Tax (Appeals). The Tribunal found that the assessee had provided detailed evidence, including names of agents, PAN numbers, descriptions of services rendered, TDS details, bank account information, and income tax returns of agents. Furthermore, the Assessing Officer had examined some of these agents under Section 131 of the Act, where they admitted to receiving commission for services rendered and justified the higher rate. The Tribunal noted that the question posed by the AO to government departments about requiring commission agents was inherently flawed, as agents were appointed by the assessee, not the government. The Tribunal acknowledged that the assessee's business, involving supplies like signboards, required site visits and measurements, for which experienced agents with expertise in government supplies were necessary. The PWD, MP's letter dated February 24, 2014, was also cited as evidence of the services required from agents or their representatives. The Tribunal relied on the jurisdictional High Court's decision in CIT v. Pure Pharma, which held that no substantial question of law arises in cases involving commission payments for business purposes where the identity and genuineness of payments are established. The Tribunal also considered that similar commission payments were accepted in earlier assessment years (1992-93, 2007-08, 2008-09). Therefore, the Tribunal concluded that the Commissioner of Income Tax (Appeals) was justified in deleting the additions made by the Assessing Officer.

The Tribunal dismissed the appeals filed by the Revenue, upholding the order of the Commissioner of Income Tax (Appeals). The Tribunal found that the assessee had provided detailed evidence, including names of agents, PAN numbers, descriptions of services rendered, TDS details, bank account information, and income tax returns of agents. Furthermore, the Assessing Officer had examined some of these agents under Section 131 of the Act, where they admitted to receiving commission for services rendered and justified the higher rate. The Tribunal noted that the question posed by the AO to government departments about requiring commission agents was inherently flawed, as agents were appointed by the assessee, not the government. The Tribunal acknowledged that the assessee's business, involving supplies like signboards, required site visits and measurements, for which experienced agents with expertise in government supplies were necessary. The PWD, MP's letter dated February 24, 2014, was also cited as evidence of the services required from agents or their representatives. The Tribunal relied on the jurisdictional High Court's decision in CIT v. Pure Pharma, which held that no substantial question of law arises in cases involving commission payments for business purposes where the identity and genuineness of payments are established. The Tribunal also considered that similar commission payments were accepted in earlier assessment years (1992-93, 2007-08, 2008-09). Therefore, the Tribunal concluded that the Commissioner of Income Tax (Appeals) was justified in deleting the additions made by the Assessing Officer.

The High Court held that no substantial question of law arises for consideration in the matter. The Court observed that the approach adopted by the Commissioner Appeals and upheld by the Income Tax Appellate Tribunal, which restricted the addition of the unaccounted amount after calculating additions and deletions, was reasonable. Consequently, the High Court found no reason to interfere with the impugned orders. The appeal was dismissed on the grounds that it did not involve a substantial question of law.

The High Court held that no substantial question of law arises in this case. The Court relied on the settled law as laid down by the Karnataka High Court in Commissioner of Income Tax Vs. Appasaheb Baburao Kamble and the Bombay High Court in CIT Vs. Vijay G. Patil. These judgments established that an assessee in service for more than ten years who exercises the option of voluntary retirement under an 'exit option scheme' and claims an ex-gratia/compensation amount is eligible for exemption under Section 10(10-C) of the Income Tax Act. Since the issue was similar and the law on the subject was well-settled, the High Court found no grounds to interfere with the ITAT's order. The appeal filed by the department was accordingly dismissed.

The High Court condoned the delay in filing the appeals, finding the reasons provided by the assessees to be sufficient. The Court admitted the appeals on the substantial question of law regarding the ITAT's justification in dismissing the appeals despite the payment of differential court fees. With the consent of both parties, the appeals were heard finally. The Court held that once the defect (short payment of court fees) was rectified, the matter should have been decided on its merits. The Court answered the question in favor of the assessees, setting aside the impugned ITAT order. The High Court directed the ITAT to verify the payment of deficit court fees made on August 11, 2016, and thereafter decide the assessees' appeals on merit. The appeals were allowed and disposed of.

The High Court condoned the delay in filing the appeals, finding the reasons provided by the assessees to be sufficient. The Court admitted the appeals on the substantial question of law regarding the ITAT's justification in dismissing the appeals despite the payment of differential court fees. With the consent of both parties, the appeals were heard finally. The Court held that once the defect (short payment of court fees) was rectified, the matter should have been decided on its merits. The Court answered the question in favor of the assessees, setting aside the impugned ITAT order. The High Court directed the ITAT to verify the payment of deficit court fees made on August 11, 2016, and thereafter decide the assessees' appeals on merit. The appeals were allowed and disposed of.

The High Court condoned the delay in filing the appeals, finding the reasons provided by the assessees to be sufficient. The Court admitted the appeals on the substantial question of law regarding the ITAT's justification in dismissing the appeals despite the payment of differential court fees. With the consent of both parties, the appeals were heard finally. The Court held that once the defect (short payment of court fees) was rectified, the matter should have been decided on its merits. The Court answered the question in favor of the assessees, setting aside the impugned ITAT order. The High Court directed the ITAT to verify the payment of deficit court fees made on August 11, 2016, and thereafter decide the assessees' appeals on merit. The appeals were allowed and disposed of.

The High Court condoned the delay in filing the appeals, finding the reasons provided by the assessees to be sufficient. The Court admitted the appeals on the substantial question of law regarding the ITAT's justification in dismissing the appeals despite the payment of differential court fees. With the consent of both parties, the appeals were heard finally. The Court held that once the defect (short payment of court fees) was rectified, the matter should have been decided on its merits. The Court answered the question in favor of the assessees, setting aside the impugned ITAT order. The High Court directed the ITAT to verify the payment of deficit court fees made on August 11, 2016, and thereafter decide the assessees' appeals on merit. The appeals were allowed and disposed of.

The High Court held that the proposed substantial questions of law did not arise for adjudication in the facts and circumstances of the case. The Court observed that the Tribunal's reasoning was perfectly in accordance with law. The Tribunal had noted that the assessee, upon receiving notice for non-filing and delayed filing of the advance surtax return, immediately deposited the tax and subsequently filed the return. Crucially, the Tribunal found that the penalty order was passed under Section 8 of the Companies (Profits) Surtax Act, 1964, which was not considered a 'Regular Assessment' as defined by the Act itself (meaning assessment under Section 6). Therefore, the Tribunal's decision to cancel or reduce the penalty was upheld. The application filed by the Revenue was dismissed.

The High Court held that both questions raised by the Revenue were purely questions of fact, not substantial questions of law. The Court noted that the ITAT had decided these issues as the last authority on facts after analyzing relevant documents and facts. The first appellate authority (Commissioner Appeals) had also decided in favour of the assessee, resulting in concurrent findings of fact by both appellate authorities. Therefore, the Court was of the considered opinion that the appeal did not involve any substantial question of law and consequently dismissed the appeal. The operative direction was the dismissal of the appeal.

The High Court held that both questions raised by the revenue were purely questions of fact, not substantial questions of law. The Tribunal, as the final authority on facts, had analyzed the relevant documents and facts. The first appellate authority had also decided the issue in favour of the assessee, resulting in concurrent findings of fact by both appellate authorities. Therefore, the appeal did not involve any substantial question of law. The High Court dismissed the appeal, applying its earlier decision in Principal Commissioner of Income Tax (Central), Bhopal v. M/s. Ratlam Wires Private Limited, Ratlam.

The Tribunal held that the Assessing Officer's order was erroneous and prejudicial to the interest of the revenue. The assessment order was found to be non-speaking, lacking any discussion or application of mind regarding the deduction claimed under Section 80IA. The Tribunal noted that the AO mechanically accepted the assessee's claim without proper examination, inquiry, or verification. Specifically, the AO failed to examine the nature of the contract work performed by the assessee and whether the conditions laid down in Section 80IA(4) were satisfied, including whether contract receipts from P.W.D. were eligible. The Tribunal also found that the assessee's claim was prima facie inadmissible as it related to a work order from MPRRDA, which might not fall under the definition of infrastructure facility development, operation, and maintenance. Relying on various case laws, including CIT vs. Deepak Kumar Garg and decisions of co-ordinate benches, the Tribunal concluded that the CIT had rightly exercised his revisional jurisdiction under Section 263. The High Court, in its judgment, agreed with the ITAT's findings, stating that the issue was concluded by findings of fact and did not involve a substantial question of law, thus dismissing the appeal.

The High Court held that the order passed by the learned Appellate Tribunal was based on 'best judgment assessment'. It stated that the power to levy assessment on the basis of best judgment is not arbitrary but an assessment based on the best judgment. Therefore, the Tribunal was in error in confirming the decision of the Commissioner of Income Tax (Appeal). The High Court found no case to interfere with the impugned order dated 15.12.2016 passed by the learned Appellate Tribunal, and concluded that no substantial question of law arises in this appeal. The appeal was dismissed. The ITAT's decision to reduce the profit addition to 1% was based on comparing the projected net profit with preceding years, deeming the AO's 2% addition excessive. The High Court, however, found this reasoning flawed in the context of best judgment assessment.