The Madras High Court held that the tribunal failed in calculating undisclosed income on the basis of the evidence.
The assessee, Rakesh Sarin is an individual engaged in the business of financing. A search was conducted in the assessee’s premises under Section 132 of the Act. Thereafter, the block assessment was completed under Section 153BC read with Section 143 (3) of the Act.
The assessing officer computed the total undisclosed income and calculated the income tax payable. The assessee preferred appeal before the CIT(A). The appeal was allowed and all 28 additions made by the assessing officer were deleted, which was confirmed by the ITAT.
The revenue filed the appeal stating that the Appellate Tribunal was incorrect in confirming the CIT(A)‘s order even though the CIT(A) admitted additional evidence under Rule 46A without providing an opportunity of being heard to the Assessing Officer, while finalising the Block Assessment.
The division bench of Justice T.S. Sivagnanam and Justice Bhawani Subbaroyan observed that the finding of the tribunal, directly and substantially interferes in the interest of revenue and the finding are not based on the evidence brought on record by the assessing officer and the order of the Tribunal suffers from material irregularities without any independent reasons, it has glossed over the relevant facts, which were brought on record by the assessing officer.
The court therefore held that the impugned orders are perverse and undoubtedly, perversity can be taken up in an appeal under Section 260A of the Act. A finding on a question of fact can be challenged as being erroneous in law, when there is no evidence to support it or when it is based on surmises and conjectures.
“The argument that generally, the Court under Section 260A would not interfere with the Tribunal’s finding of fact cannot be applied to the facts of this case because the Tribunal did not record any finding of fact that the finding of fact recorded by the assessing officer is erroneous and not borne out by records,” the court said.
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