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TMI Blog2015 (7) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... eading to the present Tax Appeal in nutshell are as under: 2.1. That the assessee is trader in edible oils on semiwhole sale basis. Survey proceedings under Section 133 A of the Income Tax Act was carried out on 12.1.2000 in the assessee's proprietorship concern, M/s. Mohta Agency. During the course of service, it was found that assessee purchased edible oil to the tune of Rs. 2,48,28,174/by purchase bills from 5 different partiesM/ s. Keshav Distributors and others. That the statement of Manager Shri Rajesh Mohta was recorded. Subsequent to survey proceedings, the said Manager was asked to produce above parties. However, he replied the aforesaid parties from whom the assessee is alleged to have purchased the edible oil are not willing to appear before the Assessing Officer and or hesitating in attending the proceedings before the Assessing Officer. That the aforesaid Manager Shri Rajesh Mohta offered additional income of Rs. 7 lakhs in AY 19992000 on account of inability to produce the above parties before AO in order to avoid litigation and buy peace. That the books of account came to be impounded under Section 133(3) on 5.2.2000. That during the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasons in para 3.2, learned CIT(A) partly allowed the said appeal and reduced the addition to 20% the aforesaid purchases. By reducing the addition and / or disallowance at 20% of such unverifiable purchases of Rs. 2,48,28,174/from 25% has been made by the AO, learned CIT(A) allowed the said appeal partly and confirmed the disallowance out unverifiable purchases to the extent of Rs. 41,15,635/as against the disallowance of Rs. 53,57,040/made in the assessment. 2.3. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) confirming the disallowance out of unverifiable purchases to the extent of Rs. 41,15,635/20% of the unverifiable purchases of Rs. 2,48,28,174/shown to have been made from the aforesaid five parties, the assessee preferred further appeal before the learned ITAT and relying upon the decision of the learned ITAT in the case of M/s. Vijay Proteins Ltd vs. ACIT in Appeal ITA No.5998/AHD/1994 delivered on 18.1.1996, the learned ITAT has partly allowed the said appeal and further reduced the disallowance to 10% of the alleged purchases. 2.4. Feeling aggrieved and dissatisfied with the the impugned judgment and order passed by the learned ITAT in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is conceded in such type of cases and while considering the disallowance on the unexplained purchased i.e. always there might be a discretion with the authority and on the basis of estimation, disallowance may be permissible. It is submitted that however such discretion is required to be exercised judiciously and must be supported by some cogent reasons. It is submitted that otherwise the disallowance on the unexplained purchases on the basis of such estimation without supporting the reasons would tantamount to give arbitrary exercise of power which is not permissible. 3.4. In support of his above submissions, Shri Bhatt, learned counsel for the Revenue has relied upon the following decisions. (1) Omar Salay Mohamed Sait vs. Commissioner of Income Tax, Madras reported in 1959(3&)ITR 151 (SC). (2) Board of Trustees of Martyrs Memorial Trust vs. Union of India reported in (2012) 10 SCC 734. (3) Real Estate Agencies vs. State of Goa reported in (2012) 12 SCC 170. (4) Director of Income Tax (Exemption) vs. Shia Dawoodi Bohra Jamat reported in 2012(344) ITR 653(Guj) (5) Rameshchandra M Luthra vs. Assistant Commissioner of Income Tax reported in 2002(297) ITR 460 (Guj) (6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned purchase has solely relied upon the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd (supra) and no independent reasonings have been assigned by the learned Tribunal on the order passed by the learned CIT(A) and how the decision of the learned CIT(A) can be said to be erroneous. Shri Soparkar, learned Senior Advocate for the assessee, however has requested to consider the facts emerging from the record and to consider the disallowance on the unexplained purchase accordingly. Shri Soparkar, learned Senior advocate for the assessee has vehemently submitted that in the present case it has come on record that GP disclosed at the rate of 1.11% by the assessee was found to satisfactory as compared to AY 200001 where the GP was of 0.98% and department by order under Section 143(3) of the Act accepted the said GP. It is submitted that therefore, in the aforesaid peculiar facts and circumstances of the case, learned Tribunal has not committed any error in sustaining the addition to the extent of 10%. In support of his above submissions, Shri Soparkar, learned Senior Advocate for the assessee has relied upon the decision of the Division Bench of this Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be non speaking and unreasoned order. At this stage, it is required to be noted that as such the learned ITAT was exercising the appellate jurisdiction or considering legality and validity of the order passed by the learned CIT(A). 6.0. In the case of Omar Salay Mohamed Sait (supra) as far as back in the year 1959, the Hon'ble Supreme Court had an occasion to consider the judgment of the Tribunal - Appellate Tribunal. In the aforesaid decision, the Hon'ble Supreme Court has specifically observed and held as under: "We are aware that the Incometax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were was the reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served and held that the Appellate Tribunal is the final fact finding body in the hierarchy of the appellate jurisdiction under the Act and its order is supposed to reflect not only the facts and contentions of the rival parties before it, but the issues which arise for its consideration and the reasons for deciding the issues. In the said decision, non reasoned and non speaking, incoherent and vague order by the Tribunal is considered to be a frivolous order. In the said decision, even the Division Bench of this Court had shown in its strong disapproval of passing such order by the learned Appellate Tribunal. In the said decision, the Division Bench had also observed that Court can only hope that the Tribunal applies its mind and take care in future to ensure that the approach of the Tribunal undergoes a change and it may regain its past glory. While remanding learned Tribunal to apply its mind the Division Bench was constrained to observe as under: "This Court has been constrained to remind the Tribunal of its duties time and again, but one can only lament that the Tribunal, it appears, is not amenable to constructive suggestions. The Tribunal fails to appreciate the basis fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ITAT and passing the order on estimate basis by deleting and/or making addition by observing that to meet with the ends of justice. It cannot be disputed that ITAT, while deciding the appeals, is required to pass the order judiciously and it should reflect that the Tribunal has applied the mind on a particular issue. ITAT is a judicial authority and it should exercise the powers under section 254 of the Act and as per subsection (4) of section 254 save as provided in section 256 or section 260A, orders passed by the appellate tribunal on appeal shall be final. Therefore, a great care should be taken by the ITAT while exercising the powers under section 254 of the Act and while deciding the appeals in exercise of powers under section 254 of the Act. It is true that subsection (1) of section 254 provides that the appellate tribunal may pass such orders as it thinks fit, but that does not mean that the tribunal is not required to assign any reasons and/or the Tribunal is not required to pass a speaking order. In the case of Ravi Yashwant Bhoir vs. Collector reported in (2012)4 SCC 407, the Honble Supreme Court had an occasion to consider the rationale behind the requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nx', it can be its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. In other words, a speaking out, the inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasijudicial performance. In the case of Board of Trustees of Martyrs Memorial Trust vs. Union of India reported in (2012)10 SCC 734, in para 22, the Honble Supreme Court has held as under: 22. Brevity in judgment writing has not lost its virtue. All long judgments or orders are not great nor are brief orders always bad. What is required of any judicial decision is due application of mind, clarity of reasoning and focused consideration. A slipshod consideration or cryptic order or decision without due reflection on the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in the controversy and the decision on conclusion arrived at. They substitute subjectivity with objectivity. Failure to give reasons amounts to denial of justice. 7.0. Despite the above decisions of the Hon'be Supreme Court as well as this Court drawing the attention of the learned Appellate Tribunal that it is the duty to pass reasoned and speaking order on the issue; to consider the order passed by the learned CIT(A) and the reasoning given by the learned CIT against which the appeal is preferred before it and even while making estimate either on deletion and / or addition to pass speaking and reasoned order in respect of such estimation either on deletion and / or addition, it appears that massage has not reached to the Appellate Tribunal. Despite the above decisions and even the hope and trust by the Division Bench that in future the Appellate Tribunal to take care and pass speaking and reasoned order, the Appellate Tribunal had continued to pass such non speaking and non reasoned order. The Appellate Tribunal is bound to obey the decision of the Hon'ble Supreme Court as well as High Court. They cannot ignore the observations and the decisions of the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal fails to appreciate the basic fact that by making such slipshod orders, it only generates unwarranted litigation, apart from putting the parties to unwarranted hardship, harassment and cost for no fault of their and despite the reminder to the Appellate Tribunal with a hope that the Tribunal applies its mind and take care in future to ensure that the approach of the Tribunal undergoes a change and it may regain its past glory, the things have not much improved and the Appellate Tribunals have continued to pass such non speaking and non reasoned order and has continued to pass orders on estimation without any supporting reasons. 8. Now, coming to the facts of the case on hand, considering the impugned order passed by the learned Tribunal, it appears that it is non speaking and non reasoned order and as such no reasons have assigned while restricting the disallowance to 10% of the unexplained purchases. Therefore, as such the matter is required to be remanded. However, instead of remanding the matter to the learned ITAT considering the request made by the learned counsel for the respective parties, on merits we ourselves have considered the matter on merits and on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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