The Delhi High Court has held that the High Court, while entertaining an appeal under Section 260A of the Income Tax Act, 1961 cannot interfere with the finding of fact if it involves re-appreciation of the evidence.
A Division Bench, consisting of Justices Manmohan and Sudhir Kumar Jain, held that if a particular receipt has been disclosed in the income and expenditure account, the same cannot be considered as unaccounted income in the hands of the Assessee and be subject to proceedings under Section 263 of the Act.
The Assessee had filed an appeal against the invocation of jurisdiction under Section 263 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemptions) (CIT (E)) on the ground that the Assessing Officer (AO) had failed to make an enquiry withrespect to the unaccounted income of the Assessee. The ITAT, in the appeal filed by the Assessee, had held the invocation of jurisdiction under Section 263 as untenable in view of the fact that the alleged unaccounted income was included in the total receipts of the Assessee and had been assessed by the AO.
On appeal, the Tribunal held that since the Assessee had explained all the issues related to his assessment before the AO as well as the CIT (E) in proceedings under Section 263 of the Act, it was not a fit case for invocation of Section 263.
The CIT (E) approached the High Court on appeal contending that the ITAT had not considered the fact that the AO, in the original assessment, had passed an order without making the required enquiry or verification of claims made by the Assessee.
Section 263 of the Income Tax Act, 1961 confers power upon the Commissioner to examine the record of the proceedings under the Act and revise any order if he considers the same to be erroneous and prejudicial to the interest of the revenue. The Delhi High Court observed that the ITAT in its order had given detailed reasons as to why the exercise of jurisdiction by the CIT (E) under Section 263 of the Act was not warranted in the present case. The High Court held that since the particular receipt hadbeen disclosed in the income and expenditure account, the same could not have been considered as unaccounted income in the hands of the Assessee.
The court held that an appeal under Section 260A of the Act was to be entertained only when it directly and substantially affected the rights of the parties, or when the factual findings were perverse. The court ruled that any interference with the finding of the fact was not warranted if it involved re-appreciation of evidence. Holding that the factual findings of the ITAT were clear and cogent, the High Court dismissed the appeal as being bereft of merits.
COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI vs M/S SHUGAN CHANDRA KOTHARI TRUST
CITATION: 2022 TAXSCAN (HC) 124
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