ITAT Final Arbiter Of Facts, Its Order Can Be Interfered With Only If There Is Substantial Question Of Law, Manifest Illegality/ Perversity: Delhi HC

Observing that the Income Tax Appellate Tribunal (ITAT) is the final arbiter of the facts, the Delhi High Court has observed that the High Court can interfere with its order only if there is substantial question of law or there is manifest illegality or it suffers from perversity.

Justice Manmohan and Justice Dinesh Kumar Sharma was dealing with an appeal challenging the order dated 10.01.2019 passed by ITAT. The appellant had stated that the assessee had filed return of income for assessment year 2008-09 declaring an income of Rs.2,82,271 under sec. 139 (1) of the Income Tax Act, 1961.

On 28.09.2010, search and seizure operation under sec. 132 of the Act was carried out in Triveni Group and a search warrant under sec. 132 (1) of the Act was issued and executed in the name of the assessee as well. The assessee belonged to the Triveni Group. A notice under sec 153A of the Act was also issued to the assessee.

Pursuant to the notices, the assessee filed return of income for the concerned year declaring an income of Rs.7,26,490. The Assessing Officer found cash amounting to Rs.5,05,90,000 credited in assessee‟s bank account. 

The cash flow statement filed by the assessee was not accepted by the Assessing Officer except to the extent of Rs.4,00,000 and this sum was allowed by the AO being withdrawal made by the assessee on 19.09.2007. The assessing officer added a sum of Rs.5,01,90,000 as unexplained cash in the income of the assessee under sec. 68 of the Act.

The CIT (A) partly allowed the appeal of the assessee on the issue of addition of Rs.5,01,90,000. The CIT (A) held that the source of credit to the extent of Rs.43,62,500. The revenue preferred an appeal before the ITAT against the order of the CIT (A). The ITAT confirmed the order of the CIT (A) and the appeal of the department was dismissed.

The department in the appeal before High Court had only challenged the order of ITAT deleting the addition of Rs.4,63,18,300 (on account of unexplained cash credit and income from undisclosed sources). The department had challenged the order of the ITAT on the ground that the Tribunal had failed to appreciate that the assessee had deposited Rs.5,01,90,000 in cash on different dates in his bank account maintained with Axis Bank.

The department had also assailed the finding of the ITAT on the ground that a blind reliance on the Cash Flow Statement and Report of DIT (System) had wrongly been made and the same had to be corroborated by the other substantial evidence.

The Court observed that the scope of jurisdiction in sec. 260A is very well settled and that it was a settled proposition that ITAT is the final arbiter of the facts. 

"High Court can interfere in the order of the ITAT only if there is substantial question of law or there is manifest illegality or it suffers from perversity. The general rule is that High Court should be slow in interfering into the findings of ITAT, unless it suffers from any of the grounds mentioned hereinabove," the Court said.

The Court further was of the view that the Tribunal had minutely examined the case and marshaled the facts well and that the ITAT is final arbiter of the facts and appeal can be entertained by the High court only if there is a substantial question of law.

"We consider that there is no substantial question of law in the present case. We also do not find any perversity in the order passed by the tribunal," the Court said.

Accordingly, the Court dismissed the appeal.

Case Title: THE PR. COMMISSIONER OF INCOME TAX -2- AGRA v. MADHUR MITTAL

Citation: 2022 LiveLaw (Del) 400

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