The High Court of Orissa rejected the Revenue's appeal and dismissed it without admitting, as no substantial question of law arose regarding the Tribunal's factual findings and reasoning on expenditure disallowances.
The appeal seeking admission of the Revenue's appeal is dismissed. The order of the ITAT stands.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF ORISSA AT CUTTACK
ITA No.4 of 2021
Principal Commissioner of Income ..... Appellant Tax (Central), Visakhapatnam
-versus-
Smt. Indrani Patnaik ..... Respondent
Advocates appeared in this case:
For Appellant :Mr. S.C. Mohanty, Sr. Standi n g Counsel (Revenue) along with Mr. A. Kedia, Jr. Standing C o unsel
For Responden t : Mr.J. Sahoo, Senior Advocat e along with Mrs. Kajal Sahoo, Advo c ate
CORAM:
THE HON'BLE MR. JUSTICE ARINDAM SINHA
AND
THE HON'BLE MR. JUSTICE M.S. SAHOO
J U D G M E N T
------------------------------------------------------------------------------------- - ----------------- Date of hearing and judgment : 21st November, 2024
------------------------------------------------------------------------------------- - -----------------
ARINDAM SINHA, J.
1. Revenue seeks admission of its appeal against order dated
26th August, 2 0 20 made by the Income Tax Appella t e Tribunal, Cuttack Bench in ITA nos. 389, 390/CTK/2017, ITA n os.393 and
394/CTK/2017 pertaining to assessment years 2012-2013 and 2013ITA no.4 of 2021 Page 1 of 4
2. Mr. Mo h anty submits, there were two heads of expenditure disallowed and an addition made, by the Assessing O f ficer (AO). Assessee prefe r red appeal before the Commissioner a n d thereafter the matter trav e lled to the Tribunal. All three were delet e d. Revenue is aggrieved.
3. On perusal of the suggested questions we find the three heads firstly, commi s sion expenses of ₹3,92,80,961/-. Sec o nd head is addition of ₹1, 3 8,66,243/- as expenditure disallowed u n der section 14-A in Incom e Tax Act, 1961. Lastly, disallowance o f peripheral development c h arges of ₹3,99,28,438/-.
4. Reasons w ere given by the Tribunal, inter alia, o n confirming decision in the order of the CIT(A) on commission, di s allowed by the AO. The c o nfirmation was on appreciation of fact s , regarding circumstances i n which no material was said to be br o ught before
the Tribunal t o show that the commission was a ctually an
Page 2 of 4
ITA no.4 of 2021
accommodatio n entry for the money to come back to t h e assessee.
The Tribunal b eing the last forum for finding on facts, we do not appreciate a s u bstantial question of law arising on th e concurrent finding.
5. The next is addition of expenditure disallowed u n der section 14-A. The Trib u nal quoted the AO as having said, the a ssessee had not claimed an y expenditure for the exempt income. T h e AO said, there is every possibility that the investment, from w hich such exempt incom e is earned, might have been made out of the loan amount, for w h ich the assessee paid interest. The Trib u nal said the reasoning was w ithout compliance with mandate of su b -section (2) and (3) in secti o n 14-A. We appreciate the finding. No question of law can be fra m ed on this count.
6. So far as disallowance of expenditure on peripheral development c harges is concerned, the Tribunal s a id that the assessee infor m ed name of the contractor, who was pai d the amount for upgradatio n of roads in the periphery area of the mi n es. The AO had not pointed out any defect in the quantum of e xpenses by payment made. The Tribunal found omission on part of the AO to
have issued sh o w cause notice to the assessee to obtain satisfaction. ITA no.4 of 2021 Page 3 of 4
Page 3 of 4
The Tribunal f u rther said, for obtaining satisfaction th e AO could have issued no t ice to the recipient contractor as well. T he Tribunal had also extr a cted reasoning given by the CIT(A ) . The first appellate auth o rity had expressed inability to unde r stand what business exped i ency the AO was looking for, to allow t h e expenses. From all this it becomes clear that the assessee paid th e contractor for effective upgradation of periphery roads in the mine s . It is again finding on fac t s. The AO is not only an adjudicato r , to do the assessment but also an investigator. We agree with the T ribunal that the AO should h ave sought satisfaction on the facts.
8. In view o f aforesaid, no substantial question of l a w arises for
the appeal to b e admitted. It is dismissed.
(Arindam Sinha) Judge
(M.S. Sahoo ) Judge
Gs/Radha
Signature Not Verified
Digitally Signed Signed by: GAGAN BIHARI SAMAL Reason: Authentication Location: ohc ITA n o.4 o f 2021 Date: 22-Nov-2024 15:09:20
Page 4 of 4
1 issue framed by the court
Whether a substantial question of law arises regarding the Tribunal's findings on commission expenses, section 14-A disallowance, and peripheral development charges?
1 provisions across 1 enactments
Principal Commissioner of Income Tax (Central), Visakhapatnam
Smt. Indrani Patnaik
Arindam Sinha
M.S. Sahoo
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
