IT- Case remanded as sec. 68 additions were deleted without considering evidences filed by the parties
IT: Where Tribunal while deleting addition made under section 68, did not consider material produced by respective parties, impugned order passed by it was to be set aside and, matter was to be remanded back for disposal afresh
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[2013] 33 taxmann.com 489 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax - I, Aligarh
v.
Arya Auto Financers*
PRAKASH KRISHNA AND Ram Surat Ram (Maurya), JJ.
IT Appeal No. 422 of 2005†
MARCH 21, 2013
Section 68 of the Income-tax Act, 1961 - Cash credits [Appreciation of material on record] - Assessment year 1997-98 - Assessee-firm was engaged in business of hire purchase finance - During relevant year, it received certain deposits from various persons - Assessing Officer taking a view that assessee had failed to prove identity of depositors and genuineness of transactions, added said amount to assessee's taxable income - Tribunal, however, deleted said addition - It was noted that Tribunal had not applied its mind to various aspects of case and had allowed assessee's appeal by making general remarks - Whether Tribunal being last fact finding authority, should have considered evidence and material produced by respective parties in support of its findings - Held, yes - Whether since Tribunal failed to do so, impugned order passed by it was to be set aside and, matter was to be remanded back for disposal afresh - Held, yes [Para 10] [Matter remanded]
CASES REFERRED TO
Jagmohan Ram Ram Chandra v. CIT [2005] 274 ITR 405/[2004] 141 Taxman 574 (All.) (para 5).
A.N. Mahajan and B.J. Agrawal for the Appellant. Shubham Agrawal for the Respondent.
JUDGMENT
1. The present appeal has been filed under section 260A of the Income Tax Act against the order dated 29th of March, 2005 passed by the Income Tax Appellate Tribunal, Agra Bench, Agra in ITA No.150/Agra/2001 for the Assessment Year 1997-1998.
2. The assessee respondent is a partnership firm and is engaged in the business of hire purchase finance. For the relevant Assessment Year 1997-1998 it filed return of income disclosing the same at Rs.280/-. The matter was taken up by invoking section 143(3) of the Income Tax Act by the Assessing Authority. During the course of assessment proceeding, the Assessing Authority has noticed that the assessee Firm has received deposits from various persons. All these deposits have been categorized under three heads-Fixed Deposits, Small Deposits and Cumulative Deposits.
3. The Assessing Officer was of the opinion that the assessee has not been able to prove these cash credits about nature and source whereof. Explanation offered by the assessee with regard to all these cash credits were found unsatisfactory. Additions were made under section 68 of the Income Tax Act. The matter was carried unsuccessfully in appeal before the CIT (A) -I, Agra. The assessee filed a second appeal before the Tribunal. The Tribunal by the order under appeal has allowed it. The above appeal has been admitted on the following substantial questions of law:-
| 1. | "Whether on the facts and in the circumstances of the case the Tribunal is justified in deleting the additions made by the A.O. u/s 68 of the Act?" | |
| 2. | "Whether on the facts and in the circumstances of the case the Tribunal is justified in holding that the assessee has proved the identity, their capacity and the genuineness of the transactions in respect of the cash credits found in the books of the assessee?" |
4. Heard Sri R.K. Upadhya, learned counsel for the appellant, and Sri Subham Agrawal, learned counsel for the assessee respondent.
5. The learned counsel for appellant submits that although the order of Tribunal is lengthy one but there is no application of mind by it to the controversy involved. The Tribunal while reversing the findings of the authorities below to it should have given some reasons. But the Tribunal has reversed the order of the authorities below to it by making some general and sweeping remarks. Further, reliance has been placed upon a Division Bench judgment of this Court in Jagmohan Ram Ram Chandra v. CIT [2004] 274 ITR 405/[2005] 141 Taxman 574 (All.)
6. In reply, the learned counsel supports the order of Tribunal and submits that the findings recorded by the Tribunal are essentially findings of fact which cannot be interfered with under section 260-A of the Act. He submits that only the few depositors were asked to be produced by the Assessing Authority and they were produced. The assessee Firm is a finance Firm and it has received deposits of small amount from various persons ranging from Rs.4500/- to Rs.9500/- and Rs.3,750/- to Rs.11,500/-.
7. Considered the respective submissions of learned counsel for the parties and perused the record.
8. A bare perusal of the order of Tribunal would show that it runs into fourteen pages and is divided in 18 paragraphs. Upto paragraph 13, the Tribunal has noticed the facts of the case and argument of counsel for parties. Without assigning any reason, the Tribunal has jumped to its conclusion as recorded in paragraph-14 of its order. For the sake of convenience, the said paragraph is reproduced below:-
14. After careful consideration of the rival submissions and facts and circumstances of the case, we are of the opinion that so far as deposits under various heads are concerned, the assessee being carrying on the business of financing and having filed confirmations as well as produced some of the depositors and also having requested the Assessing Officer to call for further information or personal presence of the depositors by exercising his power under section 133(6) or 131 of the Act, had discharged the onus put on it by the provisions of section 68 of the Act and the Revenue Authorities did not consider the assessee's request (supra), the addition cannot be sustained in law. This conclusion of ours is supported by the decision in various cases as listed in para no.9 of this order (supra). Respectfully following the decisions in aforesaid cases and in the fact that Revenue Authorities failed to consider the assessee's request for calling for information under section 133(6) or under section 131 of the Act, we delete the addition in question.
9. A perusal of the above quoted para would show that the Tribunal has not applied its mind to the various aspects of the case and has allowed the appeal of the assessee by making general remarks. The Tribunal being last fact finding authority should have considered the evidence and material produced by the respective parties in support of its findings. The order of Tribunal is far from satisfactory and therefore, the same cannot be allowed to stand.
10. Besides the above, the learned counsel for the department submits that in view of the aforesaid judgment of this Court in the case of Jagmohan Ram Ram Chandra (supra) the finding recorded by the Tribunal in paragraph-16 is unjustified which is being disputed by the learned counsel for the assessee. In view of the fact that we are remanding the matter back to the Tribunal, it is not necessary for us to say anything in this regard. By way of clarification, it is added that the entire order of the Tribunal is set aside and the matter is restored back to the Tribunal to decide the appeal afresh in the light of observations made above keeping in view the ingredients of section 68 of the Income Tax Act and other relevant provisions.
11. In the result, the order of Tribunal cannot be allowed to stand. The appeal succeeds and is allowed. The order dated 29th of March, 2005 is hereby set aside and the matter is restored back to the Tribunal to rehear and redecide the ITA No.150/Agra/2001. It will do good by deciding the appeal preferably within a period of six months from the date of production of certified copy of this order.
Sunil Cobrapost expose II: Big PSUs named, banks facilitate forged PAN cards
In his second expose on irregularities in the Indian financial system, Aniruddha Bahal on Monday accused 23 public and private financial institutions of facilitating money laundering.
Cobrapost has named public banks including State Bank of India, Canara Bank, IDBI, Punjab National Bank, Oriental Bank of Commerce and Central Bank.
The Cobrapost investigations were conducted for more than half a year in many states including Uttar Pradesh, Rajasthan, Delhi, Haryana, Andhra Pradesh and Karnataka.
The second round of secret videos claim to reveal violation of several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act, said Bahal in a press conference today.
"The revelations amounts to crystal clear offenses under IPC as well as the PMLA (Prevention of Money laundering Act)," said Bahal.
He also alleged that banks accept unaccounted cash and invest them into insurance products and said that banks split transactions among themselves to avoid detection of money laundering.
"Money laundering services are being offered openly as a standard product across the board. Even a walk-in customer can avail of such services that help him launder all his unaccounted cash. Money laundering practices are part and parcel of banking and insurance business across the board," added Bahal.
The expose has named Andhra politician Sailijanath Saake in the money laundering expose and also alleged that senior bank executives personally go to collect cash to help customers launder black money.
According to the expose, banks provide facilities to customers such as multiple lockers and machines to count money.
For money laundering, banks enable creation of forged pan cards and multiple accounts, said Bahal, adding that they advise investors to maintain fictitious accounts for seven years saying that all details vanish after this period.
Thanks & Regards,
CA AMRESH VASHISHT, FCA, LLB, DISA (ICAI)
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