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TMI Blog2020 (10) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the goods were received by the appellant assessee. CIT(A) after considering such facts, came to the conclusion that the goods in question belonged to M/s. Shubham Enterprise, which is also confirmed by both the parties and considering submissions as well as the documentary evidence produced by the appellant assessee, the CIT(A) has come to a clear finding of fact that the goods in question did not belong to appellant but belonged to M/s. Shubham Enterprise. Tribunal, however, has failed to consider the relevant documents on record and has taken into consideration the irrelevant facts with regard to the onus of the assessee to actual transportation of the goods in question, payment of octroi etc., and thereby discarded findings of facts arrived at by the CIT(A) based upon the material on record resulting into a perverse order. Tribunal has committed an error in reversing the order passed by the CIT(A) without giving any cogent reasons for the same in the impugned order. The conclusion reached by the Tribunal is coloured by the irrelevant consideration ignoring the relevant documents produced by the appellant assessee, resulting into the findings based on such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant assessee. During the course of survey, discrepancy of 25115 kg. of stock was worked-out. The appellant assessee submitted the explanation that the scrap material was received in two parts from M/s. Shubham Enterprise vide bill nos.5 and 6 and such bills were received during the course of survey in front of survey officials. 4. The assessing officer during the course of assessing proceedings issued show cause notice calling upon the appellant assessee to explain the discrepancy in the stock of scrap found during the course of survey. The assessee vide letter dated 16th February 2004 explained that during the course of survey itself the stock was cross verified. However, the assessing officer rejected the explanation of the assessee and made addition of ₹ 14,83,420/being the value of the excess stock of 22115 kg. and sum of ₹ 2437/being difference in cash. 5. The appellant assessee being aggrieved and dissatisfied with the assessment order preferred appeal before the CIT(A). 6. The CIT(A) allowed the appeal on the ground that proper explanation was submitted during the survey proceedings and it was duly cross verified by the department and found to be cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es paid for bringing the goods to Naghedi. 8. The assessee has denied the identity of the Shri Sagarmal J. Shah and the goods are claimed to be belonging to Shri Sagarmal J. Shah. 9. Shri Sagarmal J. Shah has filed revised return on 29.10.2001 i.e. after date of survey in the case of Sureshchandra D. Khatod. 10. Shri Pankajbhai Shah has stated in his statement that he is doing the business of Shri Sagarmal J. Shah who is his relative i.e. uncle however on the other side he says that he does not know the rates, transporters etc., during the course of survey. 8. Without controverting any of the above categorical findings and observations in the order of the Assessing Officer, the CIT(A) has deleted the entire addition by passing a non-speaking order in which the CIT(A) alleged that there was no logical reason for the AO for rejection of explanation of the assessee. It appears that the CIT(A) has just accepted the AR s submission on its face value as given by the AR during the course of appellate proceedings and no reason has been assigned for accepting the assessee s version or for rejecting the Assessing Officer s finding with respect to the excess stock found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of determinations and decision thereon and the reasons for the decision. Therefore, while exercising the powers u/s. 251, the CIT (A) should mandatorily give reasons and justification in writing for reaching to the decision. Provisions contained under subsection 6 of section 250 are not directory but mandatory in nature, which reads as under: Section 250(6): The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. 10. The use of word shall in place of may itself indicate that these directions are mandatory in nature and not merely directory. Had the Statute used the word may , it could be said that it is the discretion of CIT (A) while passing the order, either to pass order verbally or in writing or to give reasons for the decision and to state the points for determination. The CIT (A) is required to follow these mandatory provisions while exercising its quasijudicial powers given u/s. 251 of the Income tax Act. In the instant case the CIT (A) has neither controverted any of the observations and the findings recorded by the Assessing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that these goods were received for job work. e) Proof of goods lying at godown were delivered to the principal after job work were also produced in the form of bills for job work. f) Copy of confirmation charges of Job work and copy of acknowledgement of return of the principal were also produced. g) In Para No. 5 of assessment order quoted above it is stated that goods of bill Nos. 5 6 were found at the time of survey. These bills were of M/s Shubham Enterprises. h) Regarding transport charges its submitted that it was the responsibility of Pankajbhai to deliver the goods for cutting at the appellant's doorstep after cutting Bills of Shubham Enterprises show the truck No in which the goods were received. j) Naghedi godown of the appellant is beyond octroi limits k) Scarp of the kind found is normally kept in open plot and there is therefore nothing unusual if at Bhavnagar, no godown was found but it was only open plot. From the above facts it is abundantly clear that the goods in question belonged to M/s Shubham Enterprises. These facts were stated by the appellant and M/s Shubham enterprises also. The conduct of the appellant, the ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion thereof. We therefore do not agree with the findings of the CIT(A) and reverse the order of the CIT(A) and restore that of the AO. 10. Mr. B. S. Soparkar, learned advocate appearing for the appellant assessee submitted that after the matter was remanded back to the CIT(A), the assessee explained in detail each of the points raised by the Assessing Officer, which is recorded by the CIT(A) in his order as under: 6. As the matter was restored to the file of CIT(A), the matter was fixed for hearing. During the course of hearing, AR of the appellant submitted a paper book and made submission on the issues raised by AO which are reproduced as under :- 1. Goods of Bills No.5 and Bill No.6 were found at the business premises at 424/2, GIDC, Udyognagar, and Naghedi Godown. a) The lose scrap material was received in two parts from M/s.Subham Enterprises vide bill No.5 and 6. The copies of the bill are attached in the paper book. The bill No.5 contains brass scrap material for cutting of 9365 Kg and bill no.6 contains the 12450 kgs of brass scrap material. These bills were not available during the course of survey proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedi, Jamnagar. a) Copies of the bills were produced at the time of Survey. Page No.16 17 of Paper Book filed with Hon. ITAT. If one refer the bills, it is clearly making out that actually copies of the bills are used as Delivery Memo. Sold to , the word highlighted is just pre printed word. b) If one reads the bill fully, it is clearly mentioned that the goods are sent for Job Work and that s why Rate and Amount column was kept empty. c) If the goods were sold to the assessee, then bill would not have prepared in such a way where rate and amount is not mentioned and For Cutting Job-Work is mentioned. To throw the light it seems that the sender may have prepared the same for the Octori purpose because, if the goods are not for the local consumption/sale, Octori cannot be levied. As the goods were not meant for local sale, this bill, if carried with the goods, Octroi cannot be levied. The learned AO has put more stress on the pre-printed word Sold To, however, he has not mentioned the other important facts about the bill though bills were with them right from the time of Survey. d) The goods are returned after job work cutting and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Hon. ITAT. The bills were found/ produced at the time of Survey only. b) Please refer issue no.1 where AO has stated that bills were found at the time of survey. c) This contradicts the stand of AO. 7. The assessee has denied the identity of Shri Sagarmal J. Shah and the goods are claimed to be belonging to Sagarmal J. Shah. a) The assessee has in fact never denied the identity of Sagarmal Shah, however, he has mentioned that he was not knowing and has not met Mr. Sagarmal before. However, is it necessary for all time to meet/ know the person personally before doing business and further to do only Job Work, which involves lower amount of income and risk. Mr. Sagarmal has talked on phone with the assessee. Without prejudice the assessee has produced all information at the time of survey, that s why the department could visit Bhavnagar place. All further information including copy of Incometax Return of Shri Sagarmal J. Shah was also submitted to the learned AO at the time of assessment. Please refer page No.7 of Paper Book filed with Hon. ITAT. b) since the party were not met/ know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the impugned order passed by the Tribunal is a perverse order as the Tribunal failed to take into consideration the relevant factors and has taken into consideration irrelevant factors and documents in form of statements of Pankajbhai Jain and Shri Sagarmal J. Shah, proprietor of M/s. Shubham Enterprise and the Tribunal has arrived at the conclusion that the assessee was unable explain the excess stock found during the course of survey without discussing as to how on the basis of such statements, such conclusion could be arrived at by the Tribunal. Learned advocate also submitted that in the first round of litigation before the Tribunal, directions were given to the CIT(A) to give reasons and justification in writing for reaching to the decision for deletion of the addition of value of excess stock. Accordingly, the CIT(A) has given detailed reasons in paras7 and 8 of the order passed after remand. The Tribunal has not given any reason as to how the findings arrived at by the CIT(A) were not justified on the basis of material available on record. 14. It was further submitted by Mr. Soparkar that the Tribunal has also not given any reason to come to the conclusion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent recorded by the Survey Party also confirmed the facts stated by Shri Satyanarayan Khatod. The statement of Sureshchandra Khatod was also recorded, wherein he stated that goods of bill no.5 were lying at Shed no.424/2 and goods of bill no.6 were lying at Naghedi godown. He also confirmed that the said goods were received for job work. By way of job work charges, the proof of goods lying at godown delivered after the job work was over were also produced in the form of bills for job work. M/s. Shubham Enterprise also issued confirmation with regard to return of the goods after the job work was over. The Assessing Officer has also recorded in the assessment order that the bill nos.5 and 6 were found at the time of survey pertaining to the goods of M/s. Shubham Enterprise received by the assessee for job work. With regard to the transportation charges, the assessee explained and submitted that it was the responsibility of the Pankajbhai to deliver the goods for job work at the door step of the appellant assessee and the bills of M/s. Shubham Enterprise also show the truck number in which the goods were received by the appellant assessee. 20. The CIT(A) after considering such fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. An assessment so made without disclosing to the assessee the information supplied by the departmental representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wanted to produce in support of his case constituted a violation of the fundamental rules of justice and called for exercise of the powers under article 136 of the Constitution. 28. The last case to which reference need be made in this context is that of Sree Meenakshi Mills, Madurai V. Commissioner of Incometax, where this court observed at page 720 : The position that emerges on the authorities may thus be summed up : (1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those findings is a question of law which can be reviewed by the court. (3) A finding on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is a fact finding Tribunal and as such it was the duty of the Tribunal to give its finding in a manner after due consideration of every facts for and against the assessee in a manner which could clearly indicate what were the questions which arose for determination and what was evidence pro and contra in regard to each of them and what were the findings based on the evidence on record before it. In the facts of the case, it appears that the conclusion reached by the Tribunal is coloured by the irrelevant consideration ignoring the relevant documents produced by the appellant assessee, resulting into the findings based on such conjecture and surmises without reference to the material and relevant evidence and therefore, such findings of the Tribunal even though on question of fact are liable to be set aside by this Court. 24. In view of the above, we are of the opinion that the impugned order passed by the Tribunal being perverse is liable to be quashed and set aside though it is on the facts of the case. As the CIT(A) has arrived at findings of fact based on material on record, which was also produced before it, it would not serve any purpose to remand the matter b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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