9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1029 - HC - Income TaxBlock Assessment - Unexplained cash - Whether CIT(A) admitted additional evidence under Rule 46A without providing an opportunity of being heard to the Assessing Officer? - applicability of Rule 46A - Whether ITAT was correct in confirming the learned CIT(A)'s order in giving relief on all the issues? - HELD THAT - CIT-A has criticized the conduct of the search party and considered the status of the assessee and his family members and therefore, held that the cash cannot be treated as undisclosed income. We do not approve of this finding. In Paragraph No.5.3, the CIT-A held that having regard to the volume of transaction of the company, the income returned as also the amount involved cannot be treated as undisclosed income. This finding is also not borne out by any records. With regard to the pronotes, which do not have the name of the person, the CIT-A held that the amounts represented by the Pronotes should be treated as bad debts, to be set off against the assesses pronotes advances and income there for. This appears to have never been the assessee's case and it is a finding rendered by the CIT-A on presumptions and assumptions, because the assessee did not furnish the details, when called upon to do so by letter dated 25.01.2005. In his subsequent reply dated 25.02.2005, the assessee stated he has not claimed any money in respect of the pronotes.Therefore, finding in Paragraph No.6.3 is wholly erroneous. CIT-A faults the assessing officer for not having made verifications with the borrowers, who are all assessees and accordingly, deleted the addition. This conclusion has been arrived at by the CITA without noting that it is for the assessee to establish by producing books of accounts. CIT-A states that the assessee has flatly denied having any unaccounted transactions and faulted the assessing officer for not bringing on record any material, though the CIT-A states that the assessing officer proceeded on assumptions and presumptions, we find it is CIT-A which proceeded on assumptions. CIT-A records the submissions of the assessee that the said addition of ₹ 1,26,73,370/- is more comical than illegal. Without taking note of the fact that upon considering the explanation, the assessing officer found that except transaction with M/s Akhand Pharma represented by its proprietor, Dr.Shivbushan Sharma, the assessee stated that no one is his creditor and no loan has been borrowed from him. CIT-A ought to have seen that the assessee should have established the same. Therefore, we do not approve the finding in Paragraph No.9.3. With regard to the investments CITA proceeded to accept the explanation given by the assessee before the assessing officer without taking note of the discussion contained in Paragraph Nos.10.1 and 10.2 of the assessment order, therefore, we hold that the finding in Paragraph No.14.3 is unsubstantiated and without reasons. CIT-A held that additions were baseless and this finding is rendered based on written submissions filed by the assessee - presumptive statement and personal opinion made by the CITA and could not have lead to deletion of the addition. CIT-A comes to a conclusion that some of the shares have been repeated by the assessing officer and has not listed out which are those shares, but given only a few illustrations and such observation, cannot automatically lead to the deletion of the addition of ₹ 20 Lakhs. The said finding is wholly erroneous. Addition in the name of the assessee's minor daughter - Assessee's daughter inherited more than of ₹ 43 Lakhs from the assessee's mother, who passed away in the year 1991 and after considering all aspects, made the addition - CIT- A held that assessing officer has disregarded all evidence and proceeded on the basis of conjunctures and surmises. In fact, the order passed by the CITA is based on conjunctures and surmises because he has not recorded any reasons as to why the finding of the assessing officer in Paragraph No.20 is factually incorrect. CITA holds that the assessee does not own any such bungalow. It is not clear as to where from he came to such a conclusion, when the assessing officer has recorded that in Page 95 of the seized documents shows that assessee entered into an agreement for purchase of Bungalow at Mumbai, therefore, the finding is perverse. With regard to the fixed deposits - AO found that the fixed deposits are not reflected in the books of accounts maintained by the assessee and his relatives in the tally package and hence, the fixed deposits mentioned in Paragraph No.22 of the assessment order except that of Akshay Sarin was assessed as undisclosed income. CIT-A states that considering the status of the assessee and the other relatives, the amount of deposits there is no warrant to treat them as undisclosed income, this finding is utterly perverse. Tribunal has not given any independent finding on the correctness of the order of the assessing officer, but merely goes by the observations rendered by the CITA, which we have found to be erroneous, therefore, the decision relied on by the Tribunal can in no manner help the assessee's case. Admittedly, in the instant case, the search was concluded between 27.03.2003 to 28.08.2003, the assessing officer had issued several letters, collected the response of the assessee and then proceeded to decide the matter. In several places, it was found that the assessee attempted to buttress his case based on records / returns submitted after the search. These issues were never considered by the Tribunal. Thus, we find that the impugned order passed by the Tribunal is wholly unsustainable without noting the factual and legal position. Finding of the tribunal, directly and substantially interferes in the interest of revenue and the finding are not based on the evidence brought on record by the assessing officer and the order of the Tribunal suffers from material irregularities without any independent reasons, it has glossed over the relevant facts, which were brought on record by the assessing officer and therefore, the impugned orders are perverse and undoubtedly, perversity can be taken up in an appeal under Section 260A of the Act. A finding on a question of fact can be challenged as being erroneous in law, when there is no evidence to support it or when it is based on surmises and conjunctures. The order of the CITA suffers from perversity, which has travelled up to the Tribunal, which confirmed the order of the CIT-A. Therefore, the argument that generally, the Court under Section 260A would not interfere with the Tribunal's finding of fact cannot be applied to the facts of this case because the Tribunal did not record any finding of fact that the finding of fact recorded by the assessing officer is erroneous and not borne out by records. - Decided in favour of the Revenue.
Issues Involved:
1. Admittance of additional evidence under Rule 46A without providing an opportunity to the Assessing Officer (AO). 2. Confirmation of CIT(A)'s order despite incomplete books of accounts. 3. Deletion of additions towards loans and advances not accounted in the books. 4. Justification of ITAT in deleting additions of undisclosed income when no return was filed before the search. 5. Onus on the assessee to prove the source of investments and advances. 6. Contradictory findings between CIT(A) and ITAT. Detailed Analysis: 1. Admittance of Additional Evidence under Rule 46A: The revenue contended that the CIT(A) admitted additional evidence under Rule 46A without providing an opportunity to the AO. However, the court found that the CIT(A) did not admit any fresh evidence but proceeded to consider the correctness of the AO's findings. Thus, this issue was reframed and did not arise for consideration. 2. Confirmation of CIT(A)'s Order Despite Incomplete Books: The court examined whether the ITAT was correct in confirming the CIT(A)'s order, which provided relief on certain issues by stating that the amounts were properly accounted for in the books, while on other issues, it was admitted that the books were incomplete. The court found that the CIT(A) and ITAT's orders lacked detailed reasoning and failed to address the AO's detailed findings, thus concluding that the orders were perverse and unsustainable. 3. Deletion of Additions Towards Loans and Advances: The AO had made several additions towards loans and advances not accounted for in the books. The CIT(A) and ITAT deleted these additions, but the court found that the CIT(A)'s findings were based on assumptions and lacked proper verification. The court held that the CIT(A) and ITAT failed to provide cogent reasons for deleting the additions made by the AO, thus the deletions were unsustainable. 4. Justification of ITAT in Deleting Additions of Undisclosed Income: The court examined whether the ITAT was justified in deleting additions made on account of undisclosed income when the assessee had not filed any return before the search. The court found that the AO was justified in assuming that the assessee would not have disclosed its total income, especially since returns were filed only after the initiation of block assessment proceedings. The ITAT's deletion of the additions was found to be erroneous. 5. Onus on the Assessee to Prove Source of Investments and Advances: The court addressed whether the ITAT correctly appreciated the onus on the assessee to prove the source of investments and advances. The AO had made additions based on unexplained investments and advances found during the search. The CIT(A) and ITAT's findings were based on the assessee's submissions without proper verification. The court held that the ITAT failed to appreciate the onus on the assessee, leading to erroneous deletions of the additions. 6. Contradictory Findings Between CIT(A) and ITAT: The court found that the CIT(A) and ITAT's findings were contradictory and lacked proper reasoning. The CIT(A) had criticized the AO's findings without substantial evidence or verification, and the ITAT merely endorsed the CIT(A)'s order without independent analysis. The court concluded that the orders were perverse and unsustainable. Conclusion: The court allowed the revenue's appeals, set aside the orders passed by the ITAT, and answered the substantial questions of law in favor of the revenue. The court emphasized that the orders of the CIT(A) and ITAT were perverse, lacked proper reasoning, and failed to address the AO's detailed findings. The court's decision underscores the importance of providing detailed and reasoned orders, especially when dealing with issues of substantial tax implications.
|
