ACIT, New Delhi V. M/s R.L. Traders, New Delhi

ITA 4773/DEL/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5459 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Assessee Lawyers: K R MANJANI
• Keywords: Opportunity of being heard
• Section: 260A

Judgement Text

1 I.T.A .NOS.-4768 TO 4774/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NOS.-4768 TO 4774 /DEL/2010 (ASSESSMENT YEARS-2000-01, 2001-02,2002-03, 2003-04, 2004-05, 2005-06, 2006-07) ACIT, CENTRAL CIRCLE-17, ROOM NO-353, ARA CENTRE, E-2, JHANDEWALAN EXT., NEW DELHI (APPELLANT) VS R.L. TRADERS, 2046, KATRA TOBACCO, KHARI BAOLI, NEW DELHI. PAN-AAAFR5508C (RESPONDENT) APPELLANT BY SH.M.B.REDDY, CIT DR RESPONDENT BY SH.K.R.MANJANI, ADV. ORDER PER BENCH THESE SEVEN APPEALS FILED BY THE DEPARTMENT ARE BEI NG DECIDED BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE RECORD SHO WS THAT THESE WERE DECIDED BY A CONSOLIDATED ORDER DATED 31.08.2010 OF CIT(A)-II, NEW DELHI PERTAINING TO 2000- 01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07 ASSESSMENT YEARS. AGAINST THE SAID CONSOLIDATED ORDER THE DEPARTMENT AL APPEALS WERE DECIDED VIDE ITS ORDER DATED 17.06.2011 BY THE CO-ORDINATE BENCH. THE SAID DECISION WAS CHALLENGED BY THE REVENUE IN APPEAL U/S 260A BEFORE THE HONBLE HIGH COURT. AS PER THE COPY AVAILABLE ON RECORD IT IS SEEN THAT TH E HONBLE HIGH COURT VIDE ITS ORDER DATED 10.07.2012 REMITTED THE ISSUE PERTAININ G TO CASH LOANS RECEIVED BY THE ASSESSEE AND THE INTEREST THEREON BACK TO THE ITAT. IT WAS A COMMON STAND OF THE PARTIES BEFORE THE BENCH THAT THE SAID ISSUE IS AGI TATED BY THE REVENUE IN EACH OF THESE YEARS VIDE GROUND NOS.-3 & 4 IN THE RESPECTIV E APPEALS. 2 I.T.A .NOS.-4768 TO 4774/DEL/2010 2. LD. CIT DR RELYING UPON THE JUDGEMENT OF THE HON BLE HIGH COURT SUBMITTED THAT THE FINDING IN THE IMPUGNED ORDER IS NO FINDING AS SUCH BEING PERVERSE SHOULD BE SET ASIDE AND THE MATTER BE REST ORED TO THE CIT(A) FOR PASSING A SPEAKING ORDER. 3. LD. AR, SH.K.R. MANJANI INVITING ATTENTION TO TH E IMPUGNED ORDER CONTENDED THAT THE CIT(A) HAS CONSIDERED ALL THE FACTS AND TH E ARGUMENTS OF THE ASSESSEE AND BEING SATISFIED BY THE SAME HAS DECIDED THE ISSUE I N ASSESSEES FAVOUR. IT WAS HIS VEHEMENT PLEA THAT THE ISSUE HAD BEEN ARGUED AT LE NGTH BEFORE THE CIT(A) AND ON CONSIDERING THE ARGUMENTS THE ISSUE HAD BEEN DECIDE D BY THE ITAT IN ASSESSEES FAVOUR VIDE ITS ORDER DATED 17.06.2011. EMPHASIS W AS LAID ON THE OBSERVATION OF THE HONBLE HIGH COURT THAT NON-CONSIDERATION OF TH E REMAND REPORT WHICH WAS AGITATED BY THE REVENUE BEFORE THE HONBLE HIGH COU RT WAS NOT AN ISSUE BEFORE THE TRIBUNAL AS MUCH IT WAS SUBMITTED THAT THE ISSUE NE ED NOT BE RESTORED. THE LD. AR WAS REQUIRED TO READ THE JUDGEMENT IN ENTIRETY AND MAKE HIS SUBMISSION THEREON. ON GOING THROUGH THE ENTIRE JUDGEMENT THOUGH RELIAN CE WAS PLACED ON THE ONE LINED CRYPTIC FINDING IN THE IMPUGNED ORDER HE FAIR LY CONCEDED THAT THE JUDGEMENT DELIVERED BY THE HONBLE HIGH COURT WAS VERY SPECIF IC AND CATEGORIC AS SUCH THE ISSUE HAS TO GO BACK IN THE ABSENCE OF A SPECIFIC F INDING IN THE IMPUGNED ORDER. 4. WE HAVE HEARD BOTH THE PARTIES. IT IS SEEN THAT THE RELIEF GRANTED BY THE CIT(A) WAS CONFIRMED BY THE ITAT IN THE FIRST ROUND WHICH ON BEING CHALLENGED BY THE REVENUE WAS SET ASIDE TO THE ITAT BY THE HO NBLE HIGH COURT. 4.1. IN VIEW OF THE FACT THAT THE LD. AR INITIALLY AS PER HIS STATED RESPONSE HAD CHOSEN TO ARGUE THAT MERELY BECAUSE OF THE FACT THA T THE REMAND REPORT WAS NOT CONSIDERED BY THE ITAT THE ISSUE WAS RESTORED TO TH E ITAT, WE DEEM IT APPROPRIATE TO EXTRACT THE RELEVANT DISCUSSION QUA THE REMAND R EPORT FROM THE JUDGEMENT OF THE HONBLE HIGH COURT. WHILE DOING SO WE OBSERVE THAT THE SAID ARGUMENT OF THE REVENUE WAS CONSIDERED BUT NOT ACCEPTED TO BY THE H ONBLE HIGH COURT AS IS EVIDENT FROM THE PARAS EXTRACTED IN THE SUBSEQUENT PARAS. 3 I.T.A .NOS.-4768 TO 4774/DEL/2010 4.2. WE FURTHER EXTRACT THE RELEVANT PORTION FROM T HE SAID JUDGEMENT TO HOLD THAT LACK OF A SPEAKING ORDER BY THE CIT(A) WHEREIN HE HAS FAILED TO ADDRESS HIS REASONING FOR GRANTING RELIEF TO THE ASSESSEE IS NO LONGER RES INTEGRA AS WOULD BE EVIDENT FROM THE FOLLOWING PARAS FROM THE JUDGEMENT OF THE HONBLE HIGH COURT:- 7. IN THE APPEALS BY THE REVENUE, THE DELETION OF THE ADDITION TO THE INCOME MADE ON ACCOUNT OF UNEXPLAINED LOANS WAS RAISED AS A GROUND. THE APPEAL IN RESPECT OF THE ORDER FOR THE ASSESSMENT YEAR 2003-2 004 URGES THIS GROUND:- 3(A) THE LEARNED CIT(A) ERRED IN LAW AND FACT IN D ELETING THE ADDITION MADE ON ACCOUNT OF UNSECURED LOAN OF RS.2,70,350/- WITHO UT EXPLAINING THE HISTORY OF THE CASE OF THE LEGAL POSITION. WHEREAS CREDITORS DID NOT RESPOND TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. (B) THE CIT(A) HAS ERRED IN LAW IN ACCEPTING LOANS AS GENUINE EVEN THROUGH THE CREDIT WORTHINESS OF THE CREDITORS AND THE GENU INENESS OF THE TRANSACTIONS WAS DOUBTED BY THE ASSESSING OFFICER. 8. NOW BARE READING OF THE ABOVE GROUNDS WOULD UNDO UBTEDLY LEAVE THE READER WITH THE IMPRESSION THAT THEY ARE GENERIC AN D DID NOT SPECIFY THE PRECISE ERROR WHICH THE TRIBUNAL FELL INTO. MORE PARTICULARLY, THE REVENUE UNDENIABLY DID NOT MENTION THE REMAND REPORTS WHICH THE REVENU E URGES NOW BEFORE THIS COURT. THE QUESTION WHICH ARISES, THEREFORE, IS WH ETHER THE TRIBUNALS REASONING CAN BE FAULTED AS UNREASONABLE AND THE IN FERENCES DRAWN BY IT-BY CONFIRMING THE ORDER OF THE CIT(APPEALS), JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE. WHILST THE ASSESSEE MAY BE RIGHT IN CONTENDING TH AT THE TRIBUNAL PER SE CANNOT BE FAULTED IN NOT DELVING INTO THE MATTER AND DEALING WITH THE REMAND REPORTS, WHAT NEVERTHELESS IS A MATTER OF RECORD IS THAT THE CIT(APPEALS) EVEN AFTER BEING AWARE OF THE ENTIRE CIRCUMSTANCES MEREL Y PROCEEDED TO RECORD THE SUBMISSIONS OF THE APPELLANT WITHOUT IN ANY MANNER INDICATING THE SOUNDNESS OR MERIT OF THOSE ARGUMENTS. AT THIS STAGE, THIS COUR T IS NOT CONCERNED WITH THE SOUNDNESS OF THE REASONING OF THE CIT(APPEALS) OR T HE FACT THAT THE CIT(APPEALS) DID OR DID NOT ADDRESS ITSELF TO THE R EMAND REPORTS. WHAT STRIKES THIS COURT IS THE FACT THAT THE TRIBUNAL BEING THE APPELLATE AUTHORITY VIS--VIS CIT(APPEALS) WAS UNDER THE DUTY TO SATISFY ITSELF T HAT THE REASONING ADOPTED BY THE CIT(APPEALS) WAS UNDER THE DUTY TO SATISFY ITSE LF THAT THE REASONING ADOPTED BY THE CIT(APPEALS)- IN A CASE WHERE THE APPEAL WAS ALLOWED AND THE REASONING OF THE ASSESSING OFFICER DISPLACED-WAS BOUND TO ENS URE THAT THERE WERE ADEQUATE AND SOUND REASONS FOR DOING SO. UNFORTUNATELY, THE TRIBUNAL DID NOT DISPLAY THE DILIGENCE THAT WAS CALLED FOR AND RECOR D ITS SATISFACTION THAT THE CIT(APPEALS) REASONING OVERTURNING THE ASSESSING O FFICERS FINDINGS WERE SOUND AND JUSTIFIED. AS IS APPARENT FROM THE EXTRA CTS OF THE CIT(APPEALS) ORDER, IT MERELY RECOUNTED THE ARGUMENTS MADE ON BE HALF OF THE ASSESSEE AND IN THREE LINES THE AUTHORITY RECORDED ITS SATISFACT ION THAT THEY ARE SUFFICIENT TO SET ASIDE THE ASSESSING OFFICERS ORDER. THESE CAN BE HARDLY CALLED THE REASONS, MUCH LESS REASONS THAT CAN BE ENDORSED BY THE TRIBUNAL (WHICH IS REQUIRED TO GO INTO THE RECORDS) WHILE CONSIDERING THE APPEALS WHETHER THEY ARE BY REVENUE OR BY THE ASSESSEE. 4 I.T.A .NOS.-4768 TO 4774/DEL/2010 9. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE O PINION THAT THE APPEALS REQUIRE TO BE ALLOWED. WE ACCORDINGLY REMIT THE MA TTER FOR RECONSIDERATION ON THE QUESTION OF ADDING, BACK OF THE CASH LOANS AND INTEREST THEREON FOR THE CONCERNED ASSESSMENT YEARS TO THE TRIBUNAL WHICH SH ALL INDEPENDENTLY CONSIDER THE RECORDS AND HEAR THE SUBMISSIONS OF THE PARTIES . ALL CONTENTIONS OF THE PARTIES ARE LEFT OPEN. OBSERVATIONS MADE IN THIS O RDER SHALL NOT BE CONSTRUED AS A REFLECTION ON MERITS OF THE CASE. 10. ITA NOS.115, 116, 117, 118, 121, 123 & 124/2012 ARE ALLOWED IN THE ABOVE TERMS. (EMPHASIS PROVIDED BY THE BENCH) 4.3. IT MAY ALSO NOT BE OUT OF PLACE TO EXTRACT THE RELEVANT PORTION FORM THE IMPUGNED ORDER:- 2. LOANS AND INTEREST THEREFORE:- SUBMISSIONS OF THE APPELLANT ARE THAT THE LOANS IS A REGULAR FEATURE OF THE BUSINESS AND THESE ARE RAISED ALMOST EVERY YEAR AND SO FAR SO LONG NO ADDITION HAD BEEN MADE. THE LOANS RAISED ARE FROM PERSONS W HO ARE EXISTING ASSESSEE, THEIR CONFIRMATIONS AS MENTIONED IN LETTER DATED 25 .03.2008 AS MENTIONED IN LETTER DATED 25.3.2008 AS MENTIONED IN LETTER DATE D 25.3.2008 HAVE BEEN FILED, LOANS ARE THROUGH BANKING CHANNEL, THESE ARE INTERE ST BEARING LOANS. TDS HAS BEEN DEDUCTED FROM THE INTEREST PAID, NECESSARY DET AILS FOR WHICH HAVE BEEN FILED. THE APPELLANT ALSO CONTENDED THAT THE LOAN S HAVE BEEN ADDED BECAUSE THE PEOPLE DID NOT RESPOND TO SUMMONS SENT BY THE A.O. BECAUSE THE MATTER WAS OLD ONE. THE APPELLANT HAD REPEATEDLY REQUESTED A.O. T O ENFORCE THE ATTENDANCE OF CREDITORS IF THEY ARE NOT RESPONDING BUT NO ACTION ON THIS WAS TAKEN BY A.O. THE APPELLANT HAD EVEN OFFERED TO THE A.O. THAT IF HE D EPUTES HIS INSPECTOR, HE CAN GET FRESH SUPPORTING CONFIRMATIONS FROM MAJORITY OF THESE PARTIES. THE LEARNED A.O. DID NOT ACCEDE TO THIS REQUEST. IT WAS ALSO PLEADED THAT MAJORITY OF THE LOAN CREDI TORS EVEN SENT CONFIRMATION SECOND TIME DIRECTLY TO THE ITO AND ABOUT THIS THE LENDERS EVEN INFORMED THE APPELLANT, WHO HAS FILED THE SPEED POSTAGE PROOF OF SENDING THE INTIMATION TO THE A.O. IT WAS PLEADED THAT WHERE PAYMENTS ARE THROUG H CHEQUE, GENUINENESS OF PAYMENT COULD NOT BE DOUBTED WHEN THESE ARE ALSO SU PPORTED BY DEDUCTION OF TDS. IT IS CONTENDED THAT WHERE THE PERSONS ARE EX ISTING ASSESSEES, IT IPSO FACTO PROVES THE CREDIT WORTHINESS AS PER 82 TTJ 13. SEV ERAL JUDGEMENTS HAVE BEEN QUOTED IN SUPPORT AND ON THESE FACTS OF THE APPELLA NT, NO ADDITION IN RESPECT OF LOANS AND INTEREST THEREON IS CALLED FOR. IT IS AL SO PLEADED THAT SIMILAR ADDITION IN THE CASE OF THE SISTER CONCERN M/S SHRI RAGHUNAT H TRADERS HAS ALSO BEEN DELETED EXCEPT FOR RS.2,50,000 AND RS.1,00,000 IN R ESPECT OF THE PARTIES WHO HAVE CHANGED THEIR ADDRESSES AND THEIR PRESENT ADDR ESSES ARE NOT KNOWN. APPEALS AGAINST THESE ADDITIONS HAVE BEEN FILED BEC AUSE TAKING OF THE LOAN DOES NOT MEAN THAT APPELLANT CAN KEEP WATCH ON THEIR MOV EMENTS ESPECIALLY WHEN THE LOANS HAVE ALREADY BEEN RETURNED AND MORE THAN 8 YE ARS HAVE PASSED. IN THIS CASE, THERE IS NO SUCH LOAN FOR WHICH ADDRESSES ARE NOT AVAILABLE. THE ARGUMENTS OF THE APPELLANT WERE SENT TO THE A.O . AND A.O.S ONLY OBJECTION IS THAT THEY ARE NOT RESPONDING TO THE SUMMONS. TO THIS APPELLANT ADDED THAT FOR THIS, HE IS HELPLESS BECAUSE POWER TO ENFORCE THEIR ATTENDANCE IS WITH THE A.O. 5 I.T.A .NOS.-4768 TO 4774/DEL/2010 AND THE MATTER BEING OLD ONE. THEY ARE NOT CO-OPE RATING ESPECIALLY BECAUSE IN FEW CASES, THE LOAN CREDITORS WHO HAD ATTENDED, WER E SENT BY TO COME AGAIN AS IS CLEAR FROM AFFIDAVIT OF SHRI RAJESH BHATIA, ONE OF THE PARTNERS OF THE APPELLANT. CONSIDERING THE HISTORY OF THE CASE AND LEGAL POSIT ION, THIS ADDITION IS UNCALLED FOR AND IS DELETED ALONGWITH INTEREST FOR ALL THE ABOVE YEARS. (EMPHASIS PROVIDED BY THE BENCH) 4.4. ACCORDINGLY IN THE LIGHT OF THE ABOVE FACTUAL AND LEGAL POSITION WHICH THE PARTIES HAVE ADDRESSED, WE DEEM IT APPROPRIATE TO R ESTORE THE ISSUE BACK TO THE FILE TO THE CIT(A) AS THERE IS NO LONGER ANY DEBATE ON T HE ASPECT THAT THERE WAS NO INDEPENDENT REASONING GIVEN BY THE CIT(A) IN THE IM PUGNED ORDER AS HE HAS MERELY RECORDED THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE. THE IMPUGNED ORDER IS NOT IN CONSONANCE WITH THE STATUT ORY REQUIREMENT OF SETTING OUT REASONS FOR COMING TO THE CONCLUSION AS THE SAME AR E FOUND MISSING. SECTION 250(6) SPECIFICALLY MANDATES THE SAID REQUIREMENT. IT IS SEEN THAT THERE IS NOTHING IN THE IMPUGNED ORDER TO THROW LIGHT ON THE ASPECT AS TO WHAT REASONS PREVAILED IN THE MIND OF THE LD. CIT(A) TO GRANT RELIEF. IN THE ABSENCE OF THE SAME THE CORRECTNESS OF THE ORDER CANNOT BE CONSIDERED. ACC ORDINGLY IN THE ABSENCE OF ANY REASONING IN THE IMPUGNED ORDER, GROUND NO-3 & 4 IN EACH OF THE APPEALS IS REMITTED BACK TO THE CIT(A) IN EACH OF THE APPEALS IS RESTORED BACK TO THE FILE TO THE CIT(A) WHO IS DIRECTED TO DECIDE THE ISSUE OF L OANS AND INTEREST THEREON BY WAY OF A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GI VING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE SAID ORDER WAS PRO NOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IN THE PRESENCE OF THE PARTIES. 5. IN THE RESULT THE APPEALS OF THE DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST OF FEBRUARY 2014. -SD/- -SD/- (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 21 /02 /2014 *AMIT KUMAR* 6 I.T.A .NOS.-4768 TO 4774/DEL/2010 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI