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2018 (6) TMI 1546 - HC - Income TaxUnexplained investment in purchase of the land - Penalty u/s 271(1)(c) - Held that - On going through the orders passed by the AO as well as learned CIT(A), we are of the opinion that in absence of any explanation by the assessee on the investment in question, AO was justified in making the addition of unexplained investment and thereafter learned CIT(A) was justified in confirming the same. Therefore, even the order passed by the learned CIT(A) which was on merits was not required to be interfered with by the learned CIT(A) and ought not to have been quashed and set aside without assigning any reasons. Under the circumstances, the impugned orders passed by the learned Tribunal cannot be sustained. - decided against assessee.
Issues Involved:
1. Whether the Appellate Tribunal erred in setting aside the order passed by the CIT(A) on the ground that CIT(A) had not rendered any decision on merits. 2. Whether the Appellate Tribunal erred in setting aside the matter to CIT(A) for fresh adjudication without considering justifiable grounds for the assessee's noncompliance. Issue-wise Detailed Analysis: Issue 1: Error in Setting Aside CIT(A)'s Order on Merits The Revenue contended that the Appellate Tribunal erred in setting aside the CIT(A)'s order on the ground that the CIT(A) had not rendered any decision on merits. The Tribunal's decision was criticized for lacking justification and being unreasoned. The Tribunal had remitted the matter back to the CIT(A) solely by stating, "we consider it expedient to restore the matter back to the file of the CIT(A) in the larger interest of justice with a view to enable the assessee to avail opportunity once more," without providing any substantial reasoning or addressing the merits of the CIT(A)'s order. The High Court observed that the Tribunal's order was non-speaking and lacked cogent reasons, making it arbitrary and unreasonable. The High Court emphasized that orders must be backed by substantial reasons and cannot be remitted casually or lightly. Consequently, the High Court quashed the Tribunal's order and restored the CIT(A)'s decision, which had been made on the merits. Issue 2: Error in Setting Aside for Fresh Adjudication Without Considering Justifiable Grounds The Tribunal's decision to remand the matter for fresh adjudication by the CIT(A) was also challenged on the grounds that it did not consider whether there were justifiable reasons for the assessee's noncompliance before the CIT(A) and the Assessing Officer (AO). The High Court noted that the assessee had been non-cooperative throughout the assessment proceedings and the appeals before the CIT(A), despite being given multiple opportunities to present their case. The AO had made additions based on unexplained investments due to the lack of response from the assessee. The CIT(A) had confirmed these additions after conducting ex parte proceedings due to the assessee's non-appearance. The High Court held that the Tribunal should have evaluated whether there were valid reasons for the assessee's noncompliance before deciding to remand the matter. The Tribunal's failure to provide reasons for setting aside the CIT(A)'s order and remitting the matter back was deemed arbitrary and unjustifiable. Therefore, the High Court set aside the Tribunal's order, restored the orders of the AO and CIT(A), and emphasized that remand orders must be supported by substantial reasons and not issued whimsically. Conclusion: The High Court quashed and set aside the impugned common judgment and order passed by the Tribunal, restoring the orders passed by the AO and CIT(A). The Tribunal's decision was found to be arbitrary, unreasonable, and lacking substantial reasoning. The High Court emphasized the necessity of cogent reasons for remanding matters and upheld the decisions made on the merits by the AO and CIT(A). The appeals were allowed in favor of the Revenue, and no costs were imposed.
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