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TMI Blog2020 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently recorded a perverse finding? (ii) Whether the Tribunal was correct in holding that the disallowance of Rs. 1,82,83,210/- was not justified even though the same was contrary to Section 40a(ia) of the Act without assigning any reason and consequently recorded a perverse finding? (iii) Whether the Tribunal was correct in holding that a sum of Rs. 36,56,642/- disallowed under Section 40A(3) of the Act is liable to be allowed despite the assessee not satisfying Rule 6DD of the Income Tax Rules and consequently recorded a perverse finding? 2. Facts giving rise to filing of this appeal in nutshell are that the assessee is a partnership firm carrying on the business of export of silk waste and sale of iron ore fines. A search was conducted under Section 132 of the Act on 14.12.2005 in the office as well as the residential premises of M/s Rajmahal Silks Group and its partners respectively. The assessing officer issued a notice under Section 153A of the Act. The assessee filed the return of income on 21.07.2006 in response to the notice under Section 153A of the Act for the Assessment Year 2005-06 declaring a total income of Rs. 99,15,140/-. The Assessing Officer thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax (Appeals), it is pointed out that the Commissioner of Income Tax (Appeals) by assigning cogent reasons has held that transportation expenses incurred by the assessee are not incurred for the purposes of business carried on by the assessee and therefore are not allowable under Section 37(1) of the Act. It was also held that payments were made to the transporters in cash in violation of the limit and therefore, the provisions of Section 40A(3) of the Act are applicable to the fact situation of the case. It is argued that the Tribunal which is the final fact finding authority in a cryptic and cavalier manner without assigning any reasons has directed deletion of additions made by Assessing Officer as well as Commissioner of Income Tax (Appeals) except confirming the addition of Rs. 31 Lakhs. It is also pointed out that neither any reasons have been assigned nor any basis have been disclosed for deleting the additions. Therefore, the order passed by the Tribunal suffers from the vice of non application of mind and the finding with regard to deletion of the addition made by Assessing Officer and the Commissioner of Income Tax (Appeals) is perverse. It is also arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings before the Assessing Officer And also filed the copies of income tax returns. It was further submitted that all expenses incurred through the aforesaid two transporters were transacted through banking channels in compliance with the provisions of the Act. The transporters in their statement recorded under Section 131 of the Act have accepted the fact that they have rendered transportation services to the assessee and the assessee had discharged the onus by producing the transporters, submitting their confirmations and affidavits, their complete address and Permanent account Number etc. and had discharge the burden. Therefore, no addition could have been made by the Assessing Officer. It is also pointed out that the assessee has produced the material evidence to state that entire expenses were claimed under Section 37(a) of the Act. It is also urged that the entire issue in this appeal are only questions of fact and disallowance of Rs. 1,82,83,210/- under Section 40(a)(ia) of the Act is contrary to law and is covered against the revenue by decision of the Supreme Court in CIT VS. CALCUTTA EXPORT COMPANY supra. It also pointed out that the assessee had produced all details an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts. They further stated that they have not done any transportation work for any other person except the assessee. The Assessing Officer therefore, came to the conclusion that genuineness of the transportation done by the aforesaid persons is doubtful and the expenditure cannot be considered as incurred wholly and exclusively for purposes of business. The Commissioner of Income Tax (Appeals) inter alia has held that payments made to the transporters were made in cash and are not reflected in the return of income, confirmations and in the affidavits filed in the course of the proceedings. Thus, it was held that the amount incurred as expenditure in transportation charges represents the inflation of transportation expenses. It was also held that no material was produced to show in the form of weighing slip, vehicle used for transport of mineral, the Octroi receipts as well as the delivery challans etc. to prove that the quantity of minerals was actually transported by the transporters. Accordingly, it was held that the transportation expenses have not been incurred for the purposes of business carried on by the assessee and are not allowable under Section 37(1) of the Act. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs are holier than the assessee? The revenue has no answer. 18. Accordingly, we delete all the additions made by the assessing authority as well as by the CIT(A), except confirming the addition of Rs. 31 Lakhs made by the assessing authority. 10. Thus, it is evident that the Tribunal has neither assigned any reasons nor has disclosed any basis for directing deletion of additions made by the assessing authority as well as Commissioner of Income Tax (Appeals) except confirming the addition of Rs. 31 Lakhs made by the assessing authority. It is also pertinent to mention here that the Tribunal has not assigned any reasons on the issues raised before it and has not given any reasons in support of its conclusion. The order passed by the Tribunal is cryptic and suffers from the vice of non application of mind. 11. The second substantial question of law framed by a bench of this court is no longer respondent integra and is covered by a decision of the Supreme Court in Calcutta Exports Company supra and the same does not require any adjudication. Therefore, the same is answered in favour of the assessee and against the revenue. Though we are conscious of the legal principle that finalit ..... 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