Amrutlal Gangaji Choudhary, Pune V. Deputy Commissioner of Income tax, Pune

ITA 1343/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1414 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 29-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHNAN
• Keywords: Unexplained cash credit; Principle of natural justice; Source of fund
• Section: 13; 131; 68

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENC H B , PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM ITA NO.1343/PUN/2017 / ASSESSMENT YEAR : 2012-13 SHRI AMRUTLAL GANGAJI CHOUDHARY, PROP. M/S. AMBIKA METAL ENTERPRISES, S.NO.103/2, NEHRU NAGAR, PIMPRI, PUNE 411 018. PAN : AAJPC8405A. . / APPELLANT V/S THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE. REVENUE BY : SHRI MAHADEVAN A.M. KRISHNAN. / DATE OF HEARING : 06.07.2021 / DATE OF PRONOUNCEMENT : 06.07.2021 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 9, PUNE (HERE INAFTER REFERRED AS LD.CIT(A)) DATED 23.03.2017 FOR THE ASSESSMENT YEAR 2012-1 3. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS A N INDIVIDUAL, WHO ENGAGED IN THE BUSINESS OF FERROUS AND NON-FERROUS SCR AP MATERIAL. THE RETURN OF INCOME FOR THE A.Y. 2012-13 WAS FILED ON 27.09.2012 DECLARING INCOME OF RS.40,37,896/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DCIT, CIRCLE 8, PUNE (HEREINAFTER RE FERRED AS THE 2 ASSESSING OFFICER) VIDE ORDER DATED 19.01.2015 AT A TOTAL IN COME OF RS.2,80,30,920/- AFTER MAKING ADDITION OF RS.16,40,000/- U/S 6 8 OF THE INCOME TAX ACT (HEREINAFTER REFERRED AS THE ACT). 3. THE BRIEF FACTUAL MATRIX LEADING TO THE ABOVE ADDITION IS AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER FOUND THAT THE ASSESSEE HAD RECEIVED UNSECURED LOANS FR OM THE FOLLOWING PERSONS AS SET OUT BY THE ASSESSING OFFICER VIDE PARA 9 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : SR. NO. NAME OF THE LENDER 1 ANITA NAVIN AGARWAL 2 DEEPIBAI AMRUTA CHOUDHARY 3 LATA RAJENDRA AGARWAL 4 NARESH GOVERDHANDAS AGRAWAL 5 PRAKASH A. CHOUDHARY 6 RESHAM RAMESHWAR AGARWAL 7 SHANTIDEVI NARESH AGARWAL 8 SUNIL NARAYANDAS KUKREJA 9 TAYAL SUMIT SUBHASH 10 TAYAL KUSHAL SUBHASH 11 VIJAYASHREE ALLOYS PUNE PVT. LTD 12 V.P. ENTERPRISES 13 RANCHODRAM K. CHOUDHARY 14 VANARAM K. CHOUDHARY 15 VIJAYKUMAR K. CHOUDHARY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLAN T HAD FILED DETAILS OF THE ABOVE SUNDRY CREDITORS SUCH AS NAMES, ADD RESSES, PAN NUMBERS ETC. BASED ON THE DETAILS FILED, THE ASSESSING OFFICE R HAD EXAMINED TWO SUNDRY CREDITORS BY ISSUING SUMMONS U/S 131 OF THE ACT, NAMELY, TAYAL SUNIL SUBHASH AND NARESH GOVERDHANDAS AGARWAL, WHO CO NFIRMED THAT THEY GIVEN THE LOANS TO THE APPELLANT COMPANY. BASED ON THE INFORMATION FILED BY THE APPELLANT, THE ASSESSING OFFICER HAD MADE AN ANALYSIS O F EACH LOAN RECEIVED BY THE ASSESSEE AND COME TO A CONCLUSION THAT THE CREDITORS HAD NO 3 INDEPENDENT SOURCE OF INCOME TO GIVE HUGE LOANS TO THE A PPELLANT AND SOURCE OF FUNDS FOR GIVING LOAN TO THE APPELLANT IS EXPLAINED TO THE AMOUNTS RECEIVED FROM THE RELATIVES. ACCORDINGLY, CONCLUDED THAT THE CRED ITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS WAS NOT PROVED, THEREFORE, THE ASSESSING OFFICER BROUGHT TO TAX THE SUNDRY CREDITS AS UNEXPLAINED CASH CREDITS U/S 68 OF THE I.T. ACT. 4. BEING AGGRIEVED BY THE ABOVE ADDITION, AN APPEAL WAS FILE D BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER HAD DELETED THE ADDITION OF RS.12 LAKHS RECEIVED FROM SMT. DEEPIBAI AMRUTLAL CHOUDHARY BY HOLDING TH AT THE AMOUNT REPRESENTS OPENING BALANCE. IN RESPECT OF OTHER CREDITS RECEIVE D, HE CONFIRMED THE ADDITION BY CITING THAT THE CREDITWORTHINESS OF THE CR EDITORS WAS NOT PROVED. 5. ON THE OTHER HAND, THE LD.CIT D.R. PLACED RELIANCE ON T HE ORDER OF LD.CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL REFERS TO THE UNEXPLAINED CASH CREDITS U/S 68 OF THE I.T ACT. THE ONUS LIES UPON THE ASSESSEE TO PR OVE TO THE SATISFACTION OF THE ASSESSING OFFICER AS TO IDENTITY, CREDITWORTHINESS, GENUIN ENESS OF THE CREDITS RECEIVED DURING THE YEAR UNDER CONSIDERATION. F ROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT IT IS NOT THE CASE OF T HE ASSESSING OFFICER THAT THE APPELLANT HAD FAILED TO FILE THE DETAILS ESTABLISHING T HE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE CREDIT TRANSACTIO NS DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS MERELY DISBE LIEVED THE EVIDENCE PRODUCED BEFORE HIM AND CONCLUDED THAT THE CR EDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS WAS NOT PROVED. 4 7. ON APPEAL BEFORE THE LD.CIT(A), THE APPELLANT HAD FILED THE FULL DETAILS OF SUNDRY CREDITORS FROM WHOM HE HAD RECEIVED LOANS DURING THE YEAR UNDER CONSIDERATION. THE LD.CIT(A) WITHOUT ADVERTING TO THE EVIDEN CE FILED BEFORE HIM, HAD SIMPLY CONCLUDED THAT THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE CREDIT TRANSACTIONS WAS NOT PROVED A ND CONFIRMED THE ADDITION. FROM THE MATERIAL FILED BEFORE LD.CIT(A), IT IS CLEAR THAT THE APPELLA NT HAD FILED THE DETAILS OF EACH AND EVERY RECEIPT OF LOAN REC EIVED. THE LD.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 CREDITW ORTHINESS OF CREDITORS. THUS, THE ORDER OF THE LD.CIT(A) IS DEVOID OF AN Y REASONS. NEEDLESS TO SAY THAT THE LD.CIT(A) IS A QUASI-JUDICIAL AUTHO RITY. AN ORDER PASSED BY THE QUASI-JUDICIAL AUTHORITY SHOULD BE IN CONFO RMITY WITH THE PRINCIPLES OF NATURAL JUSTICE. RECORDING OF REASONS FOR THE CONCLUSIONS REACHED BY AN AUTHORITY IS A PART AND PARCEL OF THE PRI NCIPLES OF NATURAL JUSTICE. THE HON'BLE APEX COURT IN M/S KRANTI ASSOCIATE S PVT. LTD. AND ANOTHER V. SH. MASOOD AHMED KHAN AND OTHERS, (2010) 9 SC C 496 WHILE DEALING WITH THE REQUIREMENT OF PASSING A REASONED ORDER BY AN AUTHORITY WHETHER ADMINISTRATIVE, QUASI JUDICIAL OR JUDICIAL, HAD LAID DOWN AS UNDE R:- 51. SUMMARIZING THE ABOVE DISCUSSION, THIS COURT H OLDS: A. IN INDIA THE JUDICIAL TREND HAS ALWAYS BEEN TO R ECORD REASONS, EVEN IN ADMINISTRATIVE DECISIONS, IF SUCH DECISIONS AFFECT ANYONE PREJUDICIALLY. B. A QUASI-JUDICIAL AUTHORITY MUST RECORD REASONS I N SUPPORT OF ITS CONCLUSIONS. C. INSISTENCE ON RECORDING OF REASONS IS MEANT TO S ERVE THE WIDER PRINCIPLE OF JUSTICE THAT JUSTICE MUST NOT ONLY BE DONE IT MUST A LSO APPEAR TO BE DONE AS WELL. D. RECORDING OF REASONS ALSO OPERATES AS A VALID RE STRAINT ON ANY POSSIBLE ARBITRARY EXERCISE OF JUDICIAL AND QUASI-JUDICIAL O R EVEN ADMINISTRATIVE POWER. E. REASONS REASSURE THAT DISCRETION HAS BEEN EXERCI SED BY THE DECISION MAKER ON RELEVANT GROUNDS AND BY DISREGARDING EXTRANEOUS CONSIDERATIONS. F. REASONS HAVE VIRTUALLY BECOME AS INDISPENSABLE C OMPONENT OF A DECISION MAKING PROCESS AS OBSERVING PRINCIPLES OF NATURAL J USTICE BY JUDICIAL, QUASI- 5 JUDICIAL AND EVEN BY ADMINISTRATIVE BODIES. G. REAS ONS FACILITATE THE PROCESS OF JUDICIAL REVIEW BY SUPERIOR COURTS. H. THE ONGOING JUDICIAL TREND IN ALL COUNTRIES COMMI TTED TO RULE OF LAW AND CONSTITUTIONAL GOVERNANCE IS IN FAVOUR OF REASONED DECISIONS BASED ON RELEVANT FACTS. THIS IS VIRTUALLY THE LIFE BLOOD OF JUDICIAL DECISION MAKING JUSTIFYING THE PRINCIPLE THAT REASON IS THE SOUL OF JUSTICE. I. JU DICIAL OR EVEN QUASI-JUDICIAL OPINIONS THESE DAYS CAN BE AS DIFFERENT AS THE JUDG ES AND AUTHORITIES WHO DELIVER THEM. ALL THESE DECISIONS SERVE ONE COMMON PURPOSE WHICH IS TO DEMONSTRATE BY REASON THAT THE RELEVANT FACTORS HAV E BEEN OBJECTIVELY CONSIDERED. THIS IS IMPORTANT FOR SUSTAINING THE LI TIGANTS' FAITH IN THE JUSTICE DELIVERY SYSTEM. J. INSISTENCE ON REASON IS A REQUIREMENT FOR BOTH J UDICIAL ACCOUNTABILITY AND TRANSPARENCY. K. IF A JUDGE OR A QUASI-JUDICIAL AUT HORITY IS NOT CANDID ENOUGH ABOUT HIS/HER DECISION MAKING PROCESS THEN IT IS IM POSSIBLE TO KNOW WHETHER THE PERSON DECIDING IS FAITHFUL TO THE DOCTRINE OF PRECEDENT OR TO PRINCIPLES OF INCREMENTALISM. L. REASONS IN SUPPORT OF DECISIONS MUST BE COGENT, CLEAR AND SUCCINCT. A PRETENCE OF REASONS OR 'RUBBER-STAMP RE ASONS' IS NOT TO BE EQUATED WITH A VALID DECISION MAKING PROCESS. M. IT CANNOT BE DOUBTED THAT TRANSPARENCY IS THE SI NE QUA NON OF RESTRAINT ON ABUSE OF JUDICIAL POWERS. TRANSPARENCY IN DECISION MAKING NOT ONLY MAKES THE JUDGES AND DECISION MAKERS LESS PRONE TO ERRORS BUT ALSO MAKES THEM SUBJECT TO BROADER SCRUTINY. (SEE DAVID SHAPIRO IN DEFENCE OF JUDICIAL CANDOR (1987) 100 HARWARD LAW REVIEW 731-737). N. SINCE THE REQUIREMENT TO RECORD REASONS EMANATES FROM THE BROAD DOCTRINE OF FAIRNESS IN DECISION MAKING, THE SAID REQUIREMENT I S NOW VIRTUALLY A COMPONENT OF HUMAN RIGHTS AND WAS CONSIDERED PART OF STRASBOU RG JURISPRUDENCE. SEE (1994) 19EHRR 553, AT 562 PARA 29 AND ANYA VS. UNIV ERSITY OF OXFORD, 2001 EWCA CIV 405, WHEREIN THE COURT REFERRED TO ARTICLE 6 OF EUROPEAN CONVENTION OF HUMAN RIGHTS WHICH REQUIRES, 'ADEQUATE AND INTEL LIGENT REASONS MUST BE GIVEN FOR JUDICIAL DECISIONS'. O. IN ALL COMMON LAW JURISDICTIONS JUDGMENTS PLAY A VITAL ROLE IN SETTING UP PRECEDENTS FOR THE FUTURE. THEREFORE, FOR DEVELOPME NT OF LAW, REQUIREMENT OF GIVING REASONS FOR THE DECISION IS OF THE ESSENCE A ND IS VIRTUALLY A PART OF 'DUE PROCESS'. ON READING THE ORDER OF LD.CIT(A) IT WOULD SHOW THAT THE LD. CIT(A) HAD GIVEN BALD FINDINGS WITHOUT GIVING ANY COGENT AND CONVINCING REASO NS 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 JUS TICE, WE REMAND THE MATTER BACK TO THE FILE OF LD.CIT(A) FOR DENOVO ADJUDICATION OF THE MATTER IN ACCORDANCE WITH THE LAW. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 6 TH DAY OF JULY, 2021. SD/- SD/- (S. S. VISWANETHRA RAVI) (IN TURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 6 TH JULY, 2021. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-9, PUNE. 4. THE PR.CIT-5, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.