2002 (3) TMI 14 - HC - Income Tax

Assessment Excess Shortage - Has the Tribunal committed an error in exercise of its jurisdiction in setting aside the appellate order of the Commissioner of Income-tax (Appeals) without taking into consideration the reasons for which that order was made? - We refrain from commenting on the correctness or otherwise of the order of the Commissioner of Income-tax (Appeals) because we propose to remand the matter to the Tribunal for re-consideration on the ground that it has committed an error in exercise of its jurisdiction by not calling its attention to the above reasoning given by the Commissioner of Income-tax (Appeals) against whose order the appeal was preferred by the Revenue for its consideration. We are therefore of the view that the impugned order cannot be sustained and the Tribunal should reconsider the matter on the merits in accordance with law. The appeal is therefore allowed.

Summary

Issues:
- Error in exercise of jurisdiction by the Tribunal in setting aside the appellate order of the Commissioner of Income-tax (Appeals) without considering the reasons for the original order.

Analysis:
The case involved a dispute regarding an addition made by the Assessing Officer on account of sales of scrap outside the books of account. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal and deleted the addition, but the Tribunal partly allowed the Revenue's appeal and sustained the addition to the extent of Rs. 1,50,000. The Tribunal's decision was based on the grounds that the Commissioner of Income-tax (Appeals) had applied common sense only in arriving at the conclusion. However, the High Court noted that the Tribunal itself sustained the addition without proper reasoning, disregarding the detailed analysis provided by the Commissioner of Income-tax (Appeals) in support of the deletion of the addition.

The High Court emphasized the importance of the Tribunal considering all facts for and against the assessee with due care and providing clear findings based on evidence. Referring to previous judgments, the Court highlighted that the Tribunal should not base its findings on suspicions, conjectures, or surmises, and must not act on no evidence at all. The Court also noted that it was the duty of the Tribunal to ascertain the reasons given by the Commissioner of Income-tax (Appeals) in whose order the Assessing Officer's order had merged.

Consequently, the High Court held that the Tribunal had committed an error in exercise of its jurisdiction by not considering the detailed reasoning provided by the Commissioner of Income-tax (Appeals) and set aside the Tribunal's order. The matter was remanded to the Tribunal for reconsideration on the merits in accordance with the law. The appeal was allowed, and the impugned order was set aside with a direction to the Tribunal to reconsider the Revenue's appeal and make a decision expeditiously. No costs were awarded in the case.