KUSUM ARVIND SONI PROP MS. SAHARA EXPORT, SURAT V. INCOME TAX OFFICER, WARD-1(2)(2), SURAT, SURAT

ITA 160/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6376 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-05-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK K. KHANDELWAL
• Keywords: Unexplained cash credit; Gift; Depreciation; Additional evidence; Corroborative evidences; TDS; Set aside
• Section: 68; 250; 13; 119

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.160/SRT/2024 AY: (2014-15) (Physical court hearing) Kusum Arvind Soni Prop. M/s Sahara Export, Shop No.7054-55, Block No. T Radhakrishna Textile Market, Ring Road, Surt-395002 Vs. Income Tax Officer Ward-1(2)(2), Surat, Aaykar Bhavan, Majura Gate, Surat-395001 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AZCPS 9651 A (अपीलाथŎ / Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Assessee by Shri Ashok K. Khandelwal, AR राजˢ की ओर से /Revenue by Shri J. K. Chandnani, Sr. DR अपील पंजीकरण/Appeal instituted on 14.02.2024 सुनवाई की तारीख/Date of Hearing 29.05.2024 उद्घोषणा की तारीख/Date of Pronouncement 24.06.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) by the Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’], vide order dated 16.01.2024 for assessment year (AY) 2014-15. Grounds of appeal raised by the assessee are as under: “1.In law, on the facts and in the circumstances of the case, the Hon’able CIT(A) has erred in confirming the addition of Rs.21,50,000/- made by the Assessing Officer treating the unsecured loan as unexplained u/s 68 of the Act relying simply on the basis of remand report of Ld.AO. 2. On the facts and in the circumstances of case, Hon’able CIT(A) has erred in confirming the disallowance of interest expenses of Rs.28,478/-. 2 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni 3. In law, on the facts and in the circumstances of case, the Hon’able CIT(A) has erred in confirming the addition of Rs.8,00,000/ made by the Assessing Office treating the gift received as unexplained u/s 68 of the Act simply relying on the basis of remand report of ld. AO. 4. In law, on the facts and in the circumstances of the case, the Hon’able CIT(A) has erred in confirming the disallowance depreciation of Rs.3,55,740/- made by the Assessing Officer simply relying on the basis of remand report of ld.AO. 5. The appellant craves to leave to add, alter, amend, delete or withdraw any ground/s of appeal on or before hearing of the appeal.” 2. The facts of the case in brief are that the assessee filed her return of income on 19.10.2014 declaring total income of Rs.5,86,010/-. The case was selected for scrutiny under CASS. The Assessing Officer (‘AO’) issued various notices to the appellant which were duly served upon the assessee. In response to notices, husband of the assessee, CA, Shri Arvind Soni attended and filed details. The assessee was engaged in the business of textile trading in the name & style of M/s Sahara Export. The AO found that assessee had taken unsecured loan of Rs.21,50,000/- from 7 parties during the year under consideration. The AO asked the assessee to submit complete details and evidence in respect of identity, capacity and creditworthiness of the lenders and genuineness of the transactions. The reply of assessee was considered by AO and findings of the AO are given in tabular form at para-3.4 at page-3 of the assessment order. He has primarily observed that no evidence for capacity or creditworthiness of the lenders and genuineness of the transactions have been established. In two cases, no details were provided. Hence, he added Rs.21,50,000/- u/s 68 of the Act as unexplained cash credit. He also disallowed 3 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni interest of Rs.28,478/- in respect of 6 unsecured loans. The assessee had also credited her capital account by Rs.8,01,270/- and claimed that Rs.8,00,000/- was received as “gift” from her brothers-in-law and submitted the gift deeds. However, the AO added the impugned sum by stating that assessee could not submit any evidence for capacity and creditworthiness of the donors. Since the donors were close relatives, assessee could have produced them for examination. Due to failure on the part of assessee as above, he added Rs.8,00,000/-. The AO also disallowed depreciation of Rs.3,55,740/- because assessee could not submit details regarding addition of Rs.28,06,834/- on plant and machinery. In the result, total income was assessed at Rs.39,20,230/- as against the returned income of Rs.5,86,010/-. Aggrieved, assessee filed appeal before Ld.CIT(A). 3. In the order passed u/s 250 of the Act, the Ld.CIT(A) has stated that notices were issued on 26.12.2020, 20.01.2021, 22.07.2021, 01.10.2021, 27.12.2022 and 05.01.2023 respectively. The assessee had not filed submission in response to notices. At para-4 of the appellate order, the Ld.CIT(A) mentioned that assessee made submission on 27.04.2017 and he has reproduced the same in pages-3 to 8 of the appellate order. The assessee had given reply on all 4 grounds. In the said submission, assessee had also submitted additional evidence like confirmations etc., which are stated not to have been submitted during assessment proceedings. Hence, the Ld.CIT(A) called for remand report of the AO. In reply, the AO has submitted remand 4 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni report on 12.09.2018, which has also been reproduced at pages 9 to 13 of the appellate order. Thereafter, the Ld.CIT(A) has given his decision which at pae- 14 of the appellate order. He has dismissed all the rounds and in the result, the appeal was also dismissed. Further aggrieved by the order of Ld. CIT(A), assessee has filed present appeal before the Tribunal. 4. The Ld. AR of the assessee filed paper book containing 109 pages including copy of written statement dated 27.04.2017 before Ld.CIT(A); additional evidence under Rule-46A before Ld.CIT(A) in respect of unsecured loans from 6 parties; copy of rejoinder to the remand report filed before Ld.CIT(A); details of interest paid on unsecured loan and TDS; documents in respect of gift received from relative; and documents related to increased amount paid for plant and machinery imported from abroad due to increase in foreign exchange rate. The Ld.AR has taken us through the assessment order, appellate order and various submissions made during assessment proceedings before lower authorities as well as remand report etc. He stated that due explanation with supporting evidences have been furnished before Ld.CIT(A) who has not considered it while sustaining the additions made by the AO. He further stated that the details could not be submitted before AO because assessee gave birth to a child on 03.10.2016. After giving birth to a child, assessee took 2-3 months for regaining energy and health related issues. In view of above, assessee has complied with part details called for in the notices. The Birth Certificate issued by Surat Municipal Corporation in support of above 5 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni claim has been enclosed. The Ld. AR of the assessee stated that each and every issue has been duly explained and even the AO has also accepted some of the issues, which is clear from the remand report at pages 12 to 16 of the paper book. The same is also reproduced at pages 9 to 13 of the appellate order. Despite such reply, the Ld.CIT(A) has confirmed all additions made by the AO. The Ld.AR also relied on the decision of Hon’ble jurisdictional High Court in the case of DCIT vs. Rohini Builders 256 ITR 360 (Guj); CIT vs. Pragati Co-operative Bank Ltd. 278 ITR 170 (Guj.) and Hingorani Industries Ltd. vs. ITO in ITA No.2109/AHD/2008. He further stated that the AO and Ld.CIT(A) have not doubted the evidence given by the assessee. He also submitted that the gift received were from relatives of assessee within definition Sec.56(2) of the Act. In case of donors, no returns were filed because they are agriculturist. The AO has also not asked for further details in respect of submission and evidence placed before him and the Ld. CIT(A). 5. On the other hand, Learned Sr. DR for the Revenue relied on the orders of lower authorities The Ld. Sr. DR submits that during appellate proceedings assessee submitted additional evidences, which were duly considered by AO, but he found them not acceptable. 6. We have considered the submission of both the parties and perused the materials on record including paper book filed by the assessee. Before deciding the issues, it would be proper to discuss the contention of the Ld.AR that the Ld.CIT(A) has passed a cryptic order based only on the remand report. It is only 6 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni a one page order covering all four grounds. As per Section 250(6) of the Act “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 reasons for the decisions”. Thus, Section 250(6) ordains the appellate order passed by the Commissioner (Appeals) must be in writing and state the points for determination, the decision thereon and the reasons for the decision. The provisions of the said Section 250(6) are in the nature of instructions to the Appellate Authority emphasising that the order disposing of the appeal shall be a speaking order. The order shall not to be cryptic and it should be self- explanatory. As held by the Hon’ble Supreme Court in case of Mukhtiar Singh vs. State of Punjab (1995) 1 SCC 760, 766 (SC) a ‘decision’ does not merely mean the ‘conclusion’. It embraces within its fold the reasons which form the basis for arriving at the conclusions. A judgment unsupported by reasons is no judgment in the eye of law. It is well-settled that reasons are the links between the material on record and the conclusion arrived at by the court [CIT vs. Surendra Singh Pahwa (1995) 79 Taxman 298, 301 (All)]. The Hon’ble Punjab High Court in case of [Banarsi Das Cotton Mills (P.) Ltd. vs. State of Haryana (1996) 103 STC 32, 33, 34 (Punj.] held that it is an elementary rule of law that even in the absence of a statutory provisions requiring recording of reasons in support of the orders, the quasi-judicial authority must pass speaking orders so as to stand the test of scrutiny. Thus, an order passed by an appellate authority dismissing an appeal without recording reasons is liable to be quashed. The 7 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni Hon’ble Guwahati High Court in case of Tata Ta Ltd. vs. Superintendent of Taxes (2000) 119 STC 440, 442 (Gauh) held that where the appellate authority while disposing of the appeal by its order, did not at all consider the points in proper perspective, without discussing the issues raised and without recording reasons as to why the contention has been rejected or accepted, the appeal can be said to have been disposed of in a most casual and cavalier manner. Therefore, the matter should go back to the appellate authority for fresh disposal. The Hon’ble Madras High Court in case of Ajji Basha vs. CIT [2019] 111 taxmann.com 348 (Mad) held a speaking order on merits with reasons and findings is to be passed by the Commissioner (Appeals) on basis of grounds raised in assessee’s appeal; he cannot dispose of the appeal mere by holding that Assessing Officer order is speaking order which requires no interference. The relevant part of the decision may be reproduced hereunder for better appreciation: “... ... Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion” 7. When the order of the Ld.CIT(A) is considered in the light of the decisions cited (supra), it is clear that he has not at all passed a speaking order as per the mandate u/s 250(6) of the Act and the ratio of the decisions cited 8 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni supra. It may be stated that even rejoinder of the assessee to the remand report of the AO has not been considered in the appellate order. Such rejoinder is at page 67 to 69 of the paper book. It is also seen that that the Ld.CIT(A) sustained all the additions made by the AO in the assessment order despite the fact that some of the explanations and evidence given by the assessee during the appellate proceedings, which were forwarded to the AO, have been accepted by the AO in the remand report; for example, unsecured loans from Arvind Soni, Bharti Kankani, Pooja Kankani, Pushpa Kankani, Siddharth Maheshwari and Shiv Ratan Kankani and similarly, interest expenses in respect of six parties etc.. His discussion on all 4 grounds are in one page (page-14) having only a few sentences. It is a cryptic and non-speaking order. It is, therefore, established that the Ld. CIT(A) has not applied his mind while disposing the appeal of the assessee. In view of the above facts, the impugned order passed by the Ld. CIT(A) is set aside and matter is remitted back to the file of Ld. CIT(A) for passing fresh order in accordance with law after giving reasonable opportunity of hearing to assessee. The fresh order to be passed by Ld. CIT(A) shall be a speaking order with reasons and findings. The Ld. CIT(A) should consider all the materials which have been furnished before him and he may also call for additional information and explanation from the assessee as deemed fit. The assessee is also directed furnish all the details called for by the Ld. CIT(A). Ground No.1 of assessee is allowed for statistical purposes in above terms. 9 ITA No. 160/SRT/2024 /AY 14-15 Kusum Arvind Soni 8. Consequently, we find that adjudication of other grounds by the appellant on merits becomes academic. 9. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 24/06/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 24/06/2024 Dkp Outsourcing Sr.PS/SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat