Point of Law: Section 115 of Indian Evidence Act, 1872 which reads as estoppel.

JUDGMENT :

K.Somashekar, J.

1.This appeal is filed by the appellants/revenue seeking to set aside the order passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short “ITAT”) in ITA No.653 (Bang) 2015, dated 29.07.2016; to confirm the order passed by the Deputy Commissioner of Income Tax, Central Circle 1(3), Bengaluru (for short “DCIT”) and to pass such other suitable order as deems fit in this appeal.

2.Heard the learned standing counsel Shri Y.V. Raviraj for appellants/revenue and the learned counsel Shri Mayank Jain for respondent/assessee. Perused the order dated 29.07.2016 passed by the ITAT in ITA Nos.653 (Bang) 2015 for the Assessment Year 2010-11.

3.The factual matrix of this appeal is that the assessee Company is engaged in the business of iron ore mining and has been allotted 131 acres of mining area by the Government of Andhra Pradesh. It transpired that the mining activities consisted of extraction and excavation of iron ore, screening, crushing, breaking, quality assignment through labor and machinery and sale in the domestic and international market. The assessment came to be completed by the Assessing Authority under Section 143(3) of the Income Tax Act after making various additions to the income declared and assessing the income of the assessee at Rs.619,91,32,272/-as against the income declared at Rs.225,13,29,740/-. The main additions made to the assessment, which are the subject matter of this appeal relating to the claim of bogus transportation expenses of iron ore; illegal mining expenses; & personal expenses of Directors. The appeal filed against the order of assessment by the assessee/respondent came to be dismissed by the Commissioner of Income Tax (Appeals). Further, the appeal filed by the assessee/respondent came to be partly allowed by the Tribunal on the issue towards claim of bogus transportation expenses, being the payment to transporters of iron ore, the Tribunal deleted holding that, the statement recorded from these transporters were not made available to the assessee and the assessee was not given an opportunity for crossexamining the transporters whose statement were recorded by the assessing authority under Section 131 of the Act. Insofar as illegal mining expenses claimed, the Tribunal deleted the disallowance of expenditure relating to the illegal mining by holding that explanation to Section 37 is not attracted. Further, details towards personal expenses were sought by the assessing authority with regard to the use of the helicopter of the assessee, as one of its Directors was a Minister of the State Government and the helicopter was said to have been used by him for his personal use during the time of elections. The assessing authority disallowed 50% of the expenditure while completing the assessment as the assessee had not discharged its onus to prove that the claim of expenditure was genuine and the entire expenditure had been incurred wholly and exclusively for the purpose of its business.

4. This Court on 02.04.2018, formulated the following substantial questions of law for consideration, which reads as under:

i) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition made towards the claim of bogus transportation expenses. holding that the assessee was not given the opportunity of cross examining the payees without recording any finding as to the genuineness of the expenditure?

ii) Whether the Tribunal being the final fact finding authority is justified in deleting the addition towards claim of bogus transportation expenses without giving a finding of fact by itself or in the absence of it. by exercising its power of remand with proper direction to the lower authorities in the face of rival claims as to the claim of genuineness of the expenditure?

iii) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that. Explanation-1 to section 37 is not attracted to cas