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TMI Blog2013 (1) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 21.60 lakhs, its order to that extent cannot be sustained. Remand back to AO As regards the F.D.Rs. to the tune of Rs.7.50 lakhs comprising Rs. 6.10 lakhs in the names of the employees of the assessee and Rs. 1.40 lakhs in the names of five relatives and friends of the Managing Director are concerned, The I.T.A.T. had given reasons for concurring with the more elaborate reasons given by the A.O. As decided in case of S.N.Mukherjee (1990 (8) TMI 345 - SUPREME COURT) that an appellate authority, if it affirms an order of an original authority which contains reasons, need not give separate reasons if it agrees with the reasons contained in the order of the original authority. Therefore it's decision in regard to the FDRs of Rs. 7.50 lakhs does not warrant any interference and the substantial questions of law answered in favour of revenue - I.T.T.A.Nos. 22 and 24 of 2000 - - - Dated:- 16-8-2012 - SRI GODA RAGHURAM AND SRI M.S. RAMACHANDRA RAO JJ. SENIOR COUNSEL FOR THE ASSESSEE (APPELLANT IN ITTA NO.22 OF 2000 AND RESPONDENT IN ITTA NO.24 OF 2000):SRI C.KODANDARAM SENIOR STANDING COUNSEL FOR THE REVENUE(RESPONDENT IN ITTA NO.22 OF 2000 AND APPELLANT IN ITTA NO.24 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company and offered Rs.30.00 lakhs as undisclosed income apart from offering it to tax for the block period. In the background of the above facts and circumstances, the assessing officer initiated block assessment proceedings u/s.158 BC of the Income Tax Act, 1961 against the assessee, its associate company HHL and Managing Director Sri G.V.K. Rao for the period 01-04-1986 to 28-11-1996. The Managing Director, while filing the block return on behalf of the assessee, retracted the earlier admission and statements made before the officers and returned an undisclosed income of Rs.2.00 lakhs only, that too pertaining to the cash seized at the time of search operations. After examining the entire search material, the assessing officer issued summons to the various persons stated to have made fixed deposits with HHL and took the statements on oath of those persons who responded. After considering the same, he came to the conclusion in the assessment order dated 27-11-1997 that the F.D.Rs. in the names of the employees of the assessee company and the friends and relatives of the Managing Director and other Directors of the assessee are bogus, that all those fixed deposits represent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aram, Senior Counsel for the assessee, contended that the order of the I.T.A.T. insofar as it had held that there was an undisclosed income of Rs.7,50,000/- with the assessee is erroneous, that the Managing Director Sri G.V.K. Rao was forced to give a statement at the time of the search that the deposits found in the names of the persons found at the time of the search belonged to the assessee on account of fear and tension, that the Tribunal should have accepted the statements of the employees about their capacity to invest the amounts covered by the F.D.Rs., and that the Tribunal erred in holding that majority of investors in HHL are bogus investors, that they have no source of income and their external appearance would show that they did not have the capacity to invest in the above associate company. 11. Per contra, Sri S.R.Ashok, Senior Counsel for the Revenue, contended that the assessing officer had painstakingly recorded the evidence of 43 workers of HHL and 40 persons who were relatives or friends of the Managing Director and other Directors of the assessee company, elaborately discussed this evidence apart from other evidence and rightly held that Rs.29,10,000/- (the agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as affected by the irrelevant material used by it in arriving at its decision, a question of law arises, whether the finding of the court is not vitiated by reason of its having relied upon conjectures, surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises, nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures and surmises.... If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." He also contended that scrutiny of evidence by this Court u/s.260-A of the Act can be done only in very exceptional cases and only if there is extreme perversity as held by the Supreme Court in a decision reported in JAI SINGH V. SHAKUNTALA AIR 2002 SC 1428 wherein the Supreme Court held in para 6 as follows: "6. Mr Jain, the learned Senior Advocate appearing in support of the appeal contended that in the event of due compliance with the four requirements as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as follows: "Hence it is reasonable to assume that those cash credit entries are capital receipts though for one reason or other the assessee had not come out with the true story as regards the person from whom it got those amounts. It is true that in the absence of satisfactory explanation from the assessee the Income Tax Officer may assume that cash credit entries in its book represent income from undisclosed sources. But what inference should be drawn from the facts proved is a question of fact and the Tribunal's finding on that question is final." He contended that this Court should not interfere as regards the deletion of Rs.21,60,000/- as ordered by the Tribunal from the undisclosed income of the assessee. 13. We have considered the above submissions of the counsel for the assessee and the Revenue. 14. While we are in respectful agreement with the principles laid down in the decisions cited by Sri C.Kodandram, learned Senior Counsel for the assessee, we however feel that , in the facts and circumstances of the present case, the order of the ITAT suffers from a serious defect as explained below. 15. A reading of the assessment order passed by the Deputy Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why the reasoning of the assessing officer in that regard should be considered as erroneous. It made sweeping statements such as "all these persons are by and large agriculturists..... the identity of these persons has been established.........as they are all outsiders and not employees of the appellant company, we cannot take the view that all these persons were under the influence of the appellant company to render the statements before the assessing officer to suit the convenience of the appellant company in explaining away the fixed deposits made in their names.......unless the deposits made by them are genuine, they would not have appeared and admitted having made those deposits of huge sums, that too before the assessing officer in the income tax proceedings..... Merely because some are not income tax assesses, deposits made by them cannot be disbelieved doubting their creditworthiness, because as admitted by the assessing officer, all these depositors are agriculturists, whose income from agriculture is exempt from tax.....When the depositors have appeared before the assessing officer and admitted having made deposits of substantial amounts, the genuineness of the deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the entire evidence must be considered and discussed in detail." 20. The I.T.A.T. in its order having observed that one is not justified in making a general presumption on the basis of a general legal ground and every item has to be considered individually on its own merit and generalization ought not to be done, proceeded to do exactly the same while reversing the findings of the assessing officer in regard to the FDRs amounting to Rs.21,60,000. The ITAT ought to have taken up the statement of each of the 35 persons who had spoken about the deposits made by them in the associate company HHL , should have considered the same and then give a finding why the conclusion of the assessment officer in regard to them cannot be accepted. In our opinion no valid reasons have been given by the I.T.A.T. in coming to the conclusion that the creditworthiness of the depositors is established and the genuineness of the deposits cannot be doubted. In our view the I.T.A.T. has not acted in the manner laid down in the above judgments of the Supreme Court. 21. In Union of India Vs. M.L.Capoor AIR 1974 S.C. 87=(1973) 2 S.C.C. 836, at para 28, the Supreme Court also observed as follows: "Reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e materials on which certain conclusions are based and the actual conclusions. In the absence of reasons based on consideration of facts by the I.T.A.T. in the impugned order to support its conclusion as regards the F.D.Rs. of Rs.21,60,000/- mentioned above, its order to that extent cannot be sustained. The conclusion of the ITTA is not based on evidence and it has to be held to be perverse. (D.R.Rathna Murthy v. Ramappa (2011) 1 SCC 158 para 9) Therefore the substantial question of law in ITTA 24/2000 filed by the Revenue has to be answered in favour of the Revenue. 24. However as regards the F.D.Rs. to the tune of Rs.7,50,000/- comprising Rs.6,10,000/- in the names of the employees of the assessee and Rs.1,40,000/- in the names of five relatives and friends of the Managing Director are concerned, we are of the opinion that the I.T.A.T. had given reasons for concurring with the more elaborate reasons given by the assessing officer. It is settled law that an appellate authority, if it affirms an order of an original authority which contains reasons, need not give separate reasons if it agrees with the reasons contained in the order of the original authority (see S.N.Mukherjee ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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