2020 (11) TMI 912 - HC - Income Tax

Cash sales unaccounted - Peak negative cash balance -Interest income addition as it cannot adjusted and set off against other cost/business expenditure after setting up of business - turnover reflected as per cash book does not reflect the sales as per bill book and the assessee has not been able to reconcile the same with evidences during the course of assessment proceedings and appellate proceedings - Tribunal deleted the additions - HELD THAT - From a perusal of paragraph No.10 of the Order passed by the Tribunal, it is evident that the Tribunal has not assigned any reasons worth naming for confirming the finding recorded by the Commissioner of Income-Tax (Appeals). From a perusal of paragraph No.6 of the Order passed by the Tribunal, it is evident that the Tribunal has remitted the matter to the Assessing Officer with regard to the substantial question of law No.3 involved in this appeal. We find that substantial questions of law No.1 and 2 are inextricably involved with substantial question of law No.3. Since the Order of the Tribunal, which is a final fact finding authority is cryptic and suffers from the vice of non-application of mind, the same is hereby quashed. The matter is remitted to the Tribunal to consider the substantial questions of law No.1 and 2 afresh by assigning reasons. Since the matter has been remitted to the Tribunal for decision afresh, it is not necessary for us to answer the substantial questions of law framed in this appeal.

Summary

Issues:
1. Deletion of addition made in respect of cash sales not accounted
2. Deletion of addition made in respect of peak negative cash balance
3. Deletion of addition made in respect of interest income

Analysis:
1. The appeal under Section 260-A of the Income Tax Act, 1961 was filed by the revenue challenging the deletion of additions in the Assessment Years 2003-04 and 2005-06. The Tribunal deleted the addition made in respect of cash sales not accounted, peak negative cash balance, and interest income. The Tribunal's decision was based on the grounds that the revenue failed to provide evidence to challenge the conclusions drawn by the Commissioner of Income-Tax (Appeals). However, the Tribunal did not provide sufficient reasoning for confirming the decision of the Commissioner of Income-Tax (Appeals). The High Court found the Tribunal's order to be cryptic and lacking in application of mind. As a result, the matter was remitted back to the Tribunal for reconsideration of substantial questions of law No.1 and 2 by providing detailed reasons.

2. The facts of the case revealed that the assessee, engaged in trading in bullion, was subjected to a search and seizure operation, leading to the issuance of a Notice under Section 153A of the Act for the Assessment Years 2003-04 and 2005-06. The Assessment Orders were passed subsequently. The Commissioner of Income-Tax (Appeals) partly allowed the assessee's appeals, which led to the revenue's appeal before the Tribunal. The Tribunal dismissed the appeal for the Assessment Year 2005-06 and partly allowed the appeal for the Assessment Year 2003-04. The revenue contended that the Tribunal should have remitted the matter to the Assessing Officer due to the interconnection of substantial questions of law. The High Court, upon review, found the Tribunal's order lacking in detailed reasoning and remitted the matter back for a fresh consideration.

3. The High Court's decision to remit the matter back to the Tribunal for reconsideration of substantial questions of law No.1 and 2 signifies the importance of providing detailed and reasoned judgments in tax matters. The lack of thorough reasoning in the Tribunal's decision led to the High Court's intervention to ensure a fair and just determination of the issues raised in the appeal. It highlights the significance of adherence to procedural fairness and the requirement for tribunals to provide clear and comprehensive justifications for their decisions, especially in matters involving substantial financial implications and tax assessments. The case underscores the need for meticulous consideration of evidence and legal provisions to arrive at well-founded conclusions in tax disputes.