2021 (7) TMI 293 - AT - Income Tax

Addition u/s 68 - unexplained cash credits - assessee had received unsecured loans - onus to prove - HELD THAT - From the material filed before ld.CIT(A), it is clear that the appellant had filed the details of each and every receipt of loan received. CIT(A) without adverting to the evidence filed before him, without discussing the evidence in respect of each credit and assigning reasons, confirmed the addition by holding that the appellant had failed to prove the creditworthiness of creditors. Thus, the order of the ld.CIT(A) is devoid of any reasons. Needless to say that the ld.CIT(A) is a quasi-judicial authority. An order passed by the quasi-judicial authority should be in conformity with the principles of natural justice. Recording of reasons for the conclusions reached by an authority is a part and parcel of the principles of natural justice. CIT(A) had given bald findings without giving any cogent and convincing reasons based on evidence on record. Therefore, the order of ld.CIT(A) cannot be sustained in the eyes of the law. In order to meet the ends of justice, we remand the matter back to the file of ld.CIT(A) for denovo adjudication of the matter in accordance with the law. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
Appeal against order of Commissioner of Income Tax (Appeals) for A.Y. 2012-13 - Unexplained cash credits u/s 68 of the Income Tax Act - Assessment of credits received from various lenders - Deletion of addition of certain credits by CIT(A) - Confirmation of addition for other credits - Lack of reasons in CIT(A)'s order - Requirement of recording reasons for decisions - Remand for denovo adjudication.

Analysis:
The appeal pertains to the assessment year 2012-13 where the appellant, engaged in the business of Ferrous and Non-Ferrous Scrap Material, filed a return declaring income of ?40,37,896. The Assessing Officer completed the assessment at a total income of ?2,80,30,920 after adding ?16,40,000 under section 68 of the Income Tax Act due to unexplained cash credits. The credits were received from various lenders, and the Assessing Officer questioned the creditworthiness and genuineness of the transactions, leading to the addition.

During the appeal before the CIT(A), the addition of ?12 lakhs received from one lender was deleted, while the addition for other credits was confirmed due to lack of proof of creditworthiness of the creditors. The Tribunal noted that the CIT(A) failed to provide reasons for the decision, emphasizing the importance of recording reasons in quasi-judicial orders. Citing legal precedent, the Tribunal highlighted the necessity of reasons for transparency, accountability, and fairness in decision-making.

The Tribunal found the CIT(A)'s order lacking in cogent and convincing reasons based on evidence, leading to the partial allowance of the appeal for statistical purposes. The matter was remanded back to the CIT(A) for denovo adjudication in accordance with the law. The decision underscored the significance of reasoned orders in upholding the principles of justice and ensuring the integrity of the judicial process.

In conclusion, the Tribunal partially allowed the appeal, highlighting the importance of providing detailed reasons in quasi-judicial decisions. The remand for denovo adjudication aimed to address the deficiencies in the CIT(A)'s order and ensure a fair and transparent resolution of the matter in accordance with legal principles.