2015 (2) TMI 711 - HC - Income Tax

Unaccounted withdrawal and deposit of in the savings bank account - ITAT deleted the addition - whether nature and source of receipt proved? - Held that - Tribunal order deleting the addition does not satisfy the requirements of being a reasoned order as enunciated by the apex court noticed in Kranti Associates P. Ltd. v. Masood Ahmed Khan 2010 (9) TMI 886 - SUPREME COURT OF INDIA . Consequently, the matter is remanded to the Tribunal to decide afresh after affording an opportunity of hearing to the parties in accordance with law. - Decided in favour of revenue.

Summary

Issues:
1. Justification of accepting reasons for withdrawal and subsequent deposit in savings bank account without documentary evidence.
2. Deletion of addition of Rs. 43,01,000 in the case where sources of deposits were not furnished.
3. Requirement of passing a reasoned order by the Tribunal as per judicial mandate.

Analysis:
1. The appeal was filed by the Revenue under section 260A of the Income-tax Act, 1961, challenging the Tribunal's order for the assessment year 2008-09. The Tribunal had deleted the addition of Rs. 43,01,000 made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals). The Tribunal accepted the explanation provided by the assessee regarding cash deposits in bank accounts, stating that the cash was withdrawn for a property purchase that did not materialize, and was subsequently deposited back. However, the Tribunal's order lacked a reasoned explanation, contravening the requirement set by the apex court. The court emphasized the importance of recording reasons in decisions to ensure transparency and fairness in the decision-making process.

2. The assessee had failed to provide a satisfactory explanation for the sources of investment amounting to Rs. 43,01,000 in bank accounts during the assessment proceedings. Consequently, the Assessing Officer treated this amount as income from undisclosed sources, leading to the addition in the total taxable income. The Commissioner of Income-tax (Appeals) upheld this addition, albeit adjusting the agricultural income for rate purposes. The Tribunal, in its order, overturned the additions without providing a cogent and convincing rationale, which was deemed necessary as per legal precedents. The court highlighted the significance of passing reasoned orders to ensure accountability and transparency in judicial and quasi-judicial decisions.

3. The court referred to the judicial trend emphasizing the recording of reasons in administrative, quasi-judicial, and judicial decisions, as illustrated in the case of Kranti Associates P. Ltd. v. Masood Ahmed Khan. The lack of a reasoned order by the Tribunal in this case led to the decision being set aside, and the matter was remanded to the Tribunal for a fresh decision after affording an opportunity of hearing to the parties in accordance with the law. The appeal filed by the Revenue was allowed based on the absence of a justified and reasoned order by the Tribunal, highlighting the importance of adhering to principles of natural justice and transparency in decision-making processes.

In conclusion, the judgment underscored the necessity of providing cogent and clear reasons in judicial decisions to uphold fairness, accountability, and transparency, thereby ensuring the integrity of the justice delivery system.