Aswad Jaidas Patil, Raigad V. Dy, Commissioner of Income Tax, Circle-Panvel, Panvel

ITA 344/PUN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0989 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GIVING BALD FINDING
• Keywords: Principle of natural justice
• Section: 144; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.344/PUN/2024 िनधा रण वष /Assessment Year : 2012-13 Aswad Jaidas Patil, Sushila Villa Sadan, Ambepur, Pezavi, Poynad, Alibag, Raigad-402108 Maharashtra PAN : AFYPP0472L Vs. DCIT, Circle-Panvel, Panvel Appellant Respondent आयकर अपील सं. / ITA No.462/PUN/2024 िनधा रण वष /Assessment Year : 2012-13 ACIT, Panvel Vs. Aswad Jaidas Patil, Sushila Villa Sadan, Ambepur, Pezavi, Poynad, Alibag, Raigad-402108 Maharashtra PAN : AFYPP0472L Appellant Respondent आदेश आदेशआदेश आदेश / ORDER PER INTURI RAMA RAO, AM: These are the Cross appeals filed by the assessee as well as the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi dated 28.12.2023 for the assessment year 2012-13. Assessee by : None Revenue by : Shri Ramnath P. Murkunde Date of hearing : 09.07.2024 Date of pronouncement : 10.07.2024 ITA Nos.344 & 462/PUN/2024 2 2. Brief facts of the case are that the appellant is an individual and running a Petrol pump. The Return of Income for the A.Y. 2012-13 was filed on 30.09.2012 declaring total income of Rs.5,65,920/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 18.03.2015 under the provisions of section 144 at a total income of Rs.4,51,10,240/-. The factual background leading to the above addition is as under : During the course of assessment proceedings, the Assessing Officer found that the appellant made cash deposit of Rs.3,68,76,096/- with HDFC Bank Ltd. and also received unsecured loans of Rs.54,00,000/-, made a provision of expenses of Rs.15,92,941/-. On noticing the above, the Assessing Officer called upon the appellant to substantiate the source of cash deposit as well as prove the identity, creditworthiness and genuineness of the unsecured loans/lenders and also provision for expenditure vide notices issued u/s.143(2) and 142(1) of the Act. The appellant has failed to comply the said notices. Therefore, the Assessing Officer drew adverse inference and proceeded to make ex parte assessment after disallowing the above items as well as 20% of the expenditure claim of Rs.33,76,425/-. 3. Being aggrieved by the above additions, an appeal was filed before the CIT(A)/NFAC who vide impugned order deleted the addition of Rs.4.00 lakh in respect of unsecured loans of Rs.54,00,000/-, while confirming the balance addition of Rs.50,00,000/-. The CIT(A)/NFAC directed the Assessing Officer to allow 10% of the expenses disallowed out of the total expenditure of Rs.33,76,425/- against 20% made by the Assessing Officer. The CIT(A)/NFAC also directed the Assessing Officer to make disallowance of only Rs.83,000/- against the provision ITA Nos.344 & 462/PUN/2024 3 of Rs.15,92,941/-. The CIT(A)/NFAC deleted the addition of cash deposit by holding that the actual cash deposit was only to the extent of Rs.1,84,38,048/- as cash deposits are made out of the sale proceeds of petrol, diesel and lubricant oil of Rs.18,77,16,250/-. 4. Being aggrieved by that part of the CIT(A)/NFAC which is against the assessee, the assessee is in appeal ITA No.344/PUN/2024. Being aggrieved by that part of the order of CIT(A)/NFAC which is against the Revenue, the Revenue is in appeal No.462/PUN/2024. 5. When the appeal was called on, there was none to represent the case of the assessee despite due service of notice of hearing. We, therefore, proceed to dispose of the appeal after hearing the ld. Departmental Representative ex parte qua the assessee. Now we shall take up the assessee’s appeal ITA No.344/PUN/2024 first. 6. The assessee raised the following grounds of appeal : “1. On facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the disallowance of provisions for routine expenses pertaining to audit fees, accounting charges and legal & professional fees amounting to Rs.83,000/-. 2. On facts and circumstances of the case and in law the Ld.. CIT(A) erred in confirming the addition u/s.68 of unsecured loan received from Janardhan Patil of Rs.50,00,000/-. 3. The Ld. CIT(A) before confirming the addition of sec.68 of unsecured loan of Rs.50,00,000/- ought to have considered the understated vital facts being : a) The 1 st provision to sec.68 would not apply for impugned A.Y.2012-13, accordingly, the appellant is not required to prove the source of lender’s fund. b) The appellant had proved the complete identity, genuineness and creditworthiness of lender on filing the copies of PAN, A/C details, Ledger a.c. confirmation of loan, own bank statement and bank statement of the lender filed on record. ITA Nos.344 & 462/PUN/2024 4 c) The entire loans has been received through proper banking channels. d) The Ld.AO did not conduct any independent inquiry and had not brought any contrary material on record to disprove the loan received during the year. e) The part repayment of loan has been accepted as genuine in the assessment order 4. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the ad-hoc disallowance of expense of Rs.3,23,704/- (20% of Rs.16,18,250/-).” 7. The assessee vide Ground of appeal No.1 challenges the addition on account of provision for expenditure of Rs.83,000/- as confirmed by CIT(A)/NFAC. During the course of assessment proceedings, the Assessing Officer had disallowed provision for expenses of Rs.15,92,941/- on failure of the assessee to furnish full particulars of provision for expenditure as well as substantiate the same. However, on appeal before the CIT(A)/NFAC, the NFAC confirmed the addition of Rs.83,000/- only and balance was deleted. Being aggrieved, the appellant is in appeal before us. 8. We heard the ld. DR and perused the assessment order as well as the order of CIT(A)/NFAC. We find that the CIT(A)/NFAC merely extracted the submissions made by the assessee by giving bald finding, simply confirmed the addition only to the extent of Rs.83,000/- without giving any cogent reason. Therefore, we are of the considered opinion that the matter is required to be sent back to the file of CIT(A)/NFAC with a direction to pass a reasoned order after adverting to the written submissions of the assessee as well as the evidence filed during the course of assessment proceedings. Thus, Ground of appeal No.1 stands partly allowed. ITA Nos.344 & 462/PUN/2024 5 9. In Grounds of appeal No.2 and 3, the assessee challenges the addition of Rs.50,00,000/- on account of unsecured loans as confirmed by the CIT(A)/NFAC. 10. The facts relating to this addition are that the Assessing Officer made addition of Rs.54,00,000/- on account of unsecured loans on failure of the assessee to furnish any explanation with regard to unsecured loans establishing identity of the loan creditors, their creditworthiness and the genuineness of the transactions. The CIT(A)/NFAC deleted the addition of Rs.4,00,000/- as the assessee produced evidences in respect of unsecured loan of Rs.4,00,000/-, confirmed balance of addition in respect of unsecured loan of Rs.50,00,000/- obtained from Mr. Janardhan Anant Patil by holding that the appellant only filed PAN and bank statement of the said lender but not submitted any evidence as to the creditworthiness of the lender. 11. On perusal of the relevant material on record, bank statement of Mr. Janardhan Anant Patil, we are of the considered opinion that it can be found out whether there are any deposits in his account before giving loan to the assessee. It can also be found out whether said person has given the unsecured loans out of the money standing to his credit. From the reading of para 9.2 of the CIT(A)/NFAC’s order, it would show that the ld.CIT(A)/NFAC swayed away by the remand report of the Assessing Officer. It is also clear that the CIT(A)/NFAC has passed the order without any independent application of mind. Therefore, in the interest of justice, we are of the opinion that the matter requires remission to the file of CIT(A)/NFAC. Accordingly, Grounds of appeal No.2 and 3 of the assessee stands partly allowed. 12. In the result, the appeal filed by the assessee stands partly allowed. ITA Nos.344 & 462/PUN/2024 6 Now we take up to the appeal ITA No.462/PUN/2024 filed by the Revenue. 13. The Revenue raised the following grounds of appeal : “1. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in fact by simply relying on the remand report submitted by the AO, without verification of the same. 2. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in considering the remand report without exercising his coterminous powers u/s.250(4) of the Act. 3. In view of the facts and circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the correct facts. 4. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that the contention of the assessee as per the additional evidences furnished, wherein it is categorically submitted by the assessee that the cash withdrawals from assessee’s other banks were Rs.1,91,33,353/- which were majorly from Union Bank of India (Rs.6,60,000/-) and RDCC Cash Credit Account No.37545 (Rs.1,84,73,353/-) is not correct. 5. On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that verification of sources of cash deposits in HDFC Bank Ltd. has not been carried out properly in the remand report proceedings. 6. It is humbly requested that the order of CIT(A) may be set-aside back to the file of the Assessing Officer for verification afresh.” 14. The Revenue in the above grounds challenge the addition of Rs.3,68,76,096/- on account of cash deposit with HDFC Bank Ltd. ITA Nos.344 & 462/PUN/2024 7 15. Learned DR submits that the ld.CIT(A)/NFAC without discussing any factual evidences merely deleted the addition. Therefore, the matter be remitted back to the file of ld.CIT(A)/NFAC for denovo disposal. 16. We heard the ld.Sr.DR and perused the relevant material on record. The Assessing Officer had made addition of Rs.3,68,76,096/- with HDFC Bank Ltd. on failure of the assessee to furnish the explanation in support of the source of cash deposits. During the proceedings before the NFAC, it appears that the appellant had filed certain information/documents in support of the sources of the cash deposits. The ld.CIT(A)/NFAC had rightly called for the remand report from the Assessing Officer, however, deleted the addition without any discussion on facts of the case and the law governing the facts. However, the ld.CIT(A)/NFAC had failed to discuss the evidences as well as the remand report submitted by the Assessing Officer while reaching the satisfaction as to the sources of cash deposits. Needless to mention that in respect of the additions made on account of cash deposits, the sources of cash deposits, the evidences filed in support of the each cash deposits should be examined and then only the ld.CIT(A)/NFAC could have reached the satisfaction about the sources of the cash deposits. In the present case, the ld.CIT(A)/NFAC deleted the addition by recording a bald findings which does not meet the requirements of principles of natural justice and a reasoned order. 17. The Hon'ble Apex Court in Kranti Associates (P.) Ltd. v. Masood Ahmed Khan [2010] 9 SCC 496 while dealing with the requirement of passing a reasoned order by an authority whether administrative, quasi judicial or judicial, had laid down as under:— '51. Summarizing the above discussion, this Court holds: ITA Nos.344 & 462/PUN/2024 8 (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior Courts. (h) The ongoing judicial trend in all countries committed 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) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible 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 reasons' is not to be equated with a valid decision making process. ITA Nos.344 & 462/PUN/2024 9 (m) It cannot be doubted that transparency is the sine 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 is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent 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 development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".' The Hon’ble Supreme Court had given the above guidelines to be followed by the Appellate Authorities while passing the order. 18. The Hon’ble Supreme Court in the case of Pankaj Garg vs. Meenu Garg (2013) 3 SCC 246 reiterated the settled position of law an order which does not contain any reason is no order in the eyes of law. Therefore, the order passed by the NFAC does not meet the requirements of being a reasoned order as enunciated by the Hon’ble Supreme Court in the decisions referred above and cannot be sustained in the eyes of law. In the light of the above discussion, we are of the considered opinion that the order passed by the ld.CIT(A)/NFAC is bereft of any factual discussion and simply gave a bald finding which cannot be sustained in the eyes of law. Therefore, in the interest of justice, we deem it appropriate to remit the matter to the file of ld.CIT(A)/NFAC to pass a reasoned order after discussing the evidences ITA Nos.344 & 462/PUN/2024 10 in respect of each cash deposit made. Accordingly, the Grounds of appeal of the Revenue stands partly allowed. 19. In the result, the appeal filed by the Revenue stands partly allowed. 20. To sum up, the appeal filed by the assessee as well as Revenue is partly allowed. Order pronounced on this 10 th day of July, 2024. Sd/- Sd/- (VINAY BHAMORE) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; दनांक / Dated : 10 th July, 2024 Satish आदेश आदेशआदेश आदेश क क क क ितिलिप ितिलिप ितिलिप ितिलिप अ ेिषत अ ेिषतअ ेिषत अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. यथ / The Respondent. 3. The Pr.CIT concerned 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “A” ब च, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाड फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune