SRI BAIRAPPA KRISHNAPPA V. COMMISSIONER OF INCOME TAX (APPEALS)

WP/35998/2018

AI Insights

The case involves Sri Bairappa Krishnapppa, the petitioner, who challenged the order passed by the Commissioner of Income Tax (Appeals) and the Income Tax Officer, which dismissed his appeal regarding hand loans received amounting to Rs.18,86,000. The petitioner, engaged in agriculture and sericulture, had declared these loans in his income tax return for the assessment year 2014-15. Both the assessing and appellate authorities rejected the claim of these hand loans, considering them unexplained cash credits under Section 68 of the Income Tax Act, 1961. The High Court found that the authorities had not adequately considered the petitioner's evidence, specifically the letters of confirmation for the hand loans, and thus quashed the impugned orders, remanding the matter back for a re-assessment.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 755027 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-07-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: GAUTAM BHARADWAJ
• Keywords: Assessment Year 2014-15; Quasi-judicial authority; Scrutiny; Unexplained cash credit; Hand loans
• Section: 143(2); 250; 68

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JULY, 2019 BEFORE THE HON’BLE MRS. JUSTICE S. SUJATHA WRIT PETITION No.35998/2018(T-IT) BETWEEN: SRI BAIRAPPA KRISHNAPPA SON OF B.N. BYRAPPA AGED ABOUT 54 YEARS R/AT HIREBALLA JANGAMAKOTE, SIDLAGHTTA CHIKKABALLAPUR - 562 105. ... PETITIONER (BY SRI. GAUTAM S. BHARADWAJ., ADVOCATE) AND: 1. COMMISSIONER OF INCOME TAX (APPEALS) ROOM NO.753, BMTC BUILDING 7TH FLOOR, KORAMANGALA 6TH BLOCK, BENGALURU - 560 095. 2. INCOME TAX OFFICER, WARD-I CHIKKABALLAPURA - 562 101. ... RESPONDENTS (BY SRI. E.I. SANMATHI., ADVOCATE FOR SRI. K.V. ARVIND., ADVOCATE FOR R-1 AND R-2) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH 2 THE ORDER PASSED BY THE R-1 DATED:07.05.2018 MARKED AS ANNEXURE-A. THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The Petitioner has challenged the order passed by the respondent No.1 in appeal No. ITA No-e-file/W- 1/CIT(A)-6/2018-19 dated 07.05.2018 at Annexure-A wherein the appeal filed by the petitioner under Section 250 of the Income Tax Act, 1961 (‘Act’ for short) has been dismissed. 2. The petitioner is an individual assessee, who is involved in agriculture and sericulture activities. The petitioner has filed his return of income relating to the assessment year 2014-15 on 28.11.2014, wherein it was declared that he had availed loans from bank and hand loans from the private individuals to meet various expenses and the said persons have also confirmed the 3 hand loans given by them to the petitioner to the tune of Rs.18,86,000/-. 3. Petitioner’s case was selected for scrutiny and a notice under Section 143(2) of the Act was issued. It is contended that the petitioner has furnished the letter of confirmation in relation to the amount borrowed by way of hand loan, which has not been properly appreciated by the assessing authority as well as appellate authority. 4. Both the authorities have rejected the claim of hand loans received by the assessee to the extent of Rs.18,86,000/- and brought the same to the tax net. Hence, this writ petition. 5. I have heard the learned counsel for the petitioner as well as the Revenue and perused the material on record. 4 6. The finding given by the Assessing Authority relating to the hand loans of Rs.18,86,000/- to consider the same as unexplained cash credit under Section 68 reads thus: “ The assessee was unable to provide details of parties from whom hand loans were received. After discussion and perusal of details on record, the assessment is completed by adding Rs.18,86,000/- as unexplained cash credit under Section 68.” 7. Similarly the finding given by the Appellate Authority reads thus: “ The appellant has not produced any documentary evidence in support of his stand that he has received hand loans to the extent of Rs.18,86,000/- even during appellate proceedings. In the absence of evidence, relief cannot be given based on mere statements. The addition therefore stands confirmed. 5 8. Both these findings indicate that there was no application of mind by the Authorities while arriving at a decision insofar as this issue is concerned. It is the specific case of the assessee that the letter of confirmation [Annexure-B series] issued by various persons to establish the hand loans received by the assessee has not been considered. It is apparent that this specific issue relating to the documents furnished by the assessee has not been addressed by the Authorities albeit a specific ground raised in the appeal memo. It is well settled law that reasons are the heart beat/soul of an order. Any order passed by the quasi judicial Authority sans reasons is void ab initio. The cryptic orders passed by the Assessing Authority as well as the Appellate Authority cannot be approved. 9. It is necessary for the quasi judicial authorities to pass a speaking order giving reasons for the decision while arriving at a decision. Reasons would 6 reflect the mind of the quasi judicial authorities and the same would be helpful to the appellate Forums while adjudicating upon such orders. In the absence of reasons, both the orders at Annexures-‘A’ and ‘C’ deserve to be set aside. Hence, the following : ORDER The orders impugned at Annexure-A dated 7.5.2018 as well as Annexure-C dated 27.12.2016 are quashed. The proceedings are restored to the file of the Assessing Officer to re-do the assessment in accordance with law, considering the documents furnished by the assessee and arrive at a decision by passing a speaking order, giving reasons, after hearing the parties concerned. Since the parties are represented by their respective counsels, the petitioner is directed to appear before the Assessing Officer-respondent No.2 on 22.07.2019 without expecting any notice. The Assessing Officer shall consider the objections of the 7 petitioner and conclude the assessment in accordance with law as aforesaid in an expedite manner. With the aforesaid observations and directions, writ petition stands disposed of. Sd/- JUDGE DR/Dvr: "