TMI Blog2015 (7) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... GH COURT) where this Court confirmed the final order passed by the learned ITAT restricting the disallowance to 10% of the unexplained purchases, though not approving the method and manner in which the learned Tribunal has decided the appeal, however on merits and in the peculiar facts and circumstances narrated herein above, we confirm the ultimate final order passing by the ITAT. Consequently, present Tax Appeal is dismissed. - Decided against assessee. - TAX APPEAL NO. 1120 of 2007 - - - Dated:- 13-3-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ. FOR THE APPELLANT : MRS MAUNA M BHATT, ADVOCATE FOR THE RESPONDENT : MRS SWATI SOPARKAR, ADVOCATE (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad B Bench (hereinafter referred to as the ITAT ) dated 2.2.2007 passed in ITA No.425/AHD/2004 for AY 19992000, by which, the learned Tribunal has partly allowed the said appeal reducing the disallowance to the extent of 10% of unexplained purchases instead of 20% as disallowed by the CIT(A), the Revenue has preferred present Tax Appeal arisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Keeping in view of the circumstances and the facts of the case, it will meet the end of justice if 25% of such purchases is disallowed in the instant case respectfully following the findings of the Honorable ITAT, Ahmedabad Bench. However, since the assessee has already made disclosure of ₹ 8,50,000/A included the same in his name due to his inability to identity the suppliers and produce them, the same requires to be deducted before making addition in this regard. An amount of ₹ 53,57,040/being 25% of the said purchases of ₹ 2,48,28,174/as reduced by ₹ 8,50,000/( ₹ 62,07,040/) minus ₹ 8,50,000/is therefore, added to the assessee's total income. Since the assessee has provided inaccurate particulars leading to concealment of income penalty and tried to evade tax willfully, proceedings u/s 271(10(c) of the act are being initiated separately. 2.2. Feeling aggrieved and dissatisfied with the assessment order passed by the AO making addition at 25% of the purchases i.e. ₹ 53,57,040/being 25% of the said purchases of ₹ 2,48,28,174/as reduced by ₹ 8,50,000/( ₹ 62,07,040/minus 8,50,000/), to the assessee's tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has reduced / restricted the disallowances to 10% of the unexplained purchases without passing any further reasoned order. 3.2. It is further submitted by the Shri Manish Bhatt, learned counsel for the Revenue that the learned Tribunal has restricted to 10% of the unexplained purchase solely relying upon the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd (supra) . It is submitted that the learned Tribunal has materially erred in reducing / restricting the disallowance to 10% solely relying upon the decision in the case of Vijay Proteins Ltd (supra). It is submitted that learned Tribunal has not properly appreciated the fact that facts of Vijay Proteins Ltd (supra) cannot be applied to the present case. It is submitted that as such the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd (supra) came to be considered by the learned CIT(A) and only thereafter and considering the distinguishing facts in the case of Vijay Proteins Ltd (supra) only thereafter the learned CIT(A) reduced/ restricted the disallowance to 20% of the unexplained purchased. It is submitted that therefore, the learned Tribunal has materially erred in mecha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying upon the above decisions, it is requested to allow the present Tax Appeal and quash and set aside the impugned judgment and order passed by the learned ITAT and to restore the order passed by the learned CIT(A) by answering the substantial question of law raised in the present Tax Appeal in affirmative and in favour of the Revenue and against the assessee. 4.0. Shri S.N. Soparkar, learned Senior Advocate has appeared on behalf of the assesee. He has submitted that there cannot be any dispute that while exercising the appellate powers by the learned ITAT, the Tribunal is bound to consider the legality and validity of the order passed by the learned CIT(A) and has to give elaborate reasons why the Tribunal is not in agreement with the view taken by the learned CIT(A) and that the learned Tribunal is bound to give reasons and is required to pass a speaking order on the issue involved in the matter and in rejection and / or addition even on the basis of estimation permitted must reflect the due application of mind. Therefore, as such to the aforesaid extent, Shri Soparkar, learned Senior Advocate for the assessee is in agreement with the submissions made by Shri Bhatt, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. That the learned CIT(A) on appeal restricted the disallowance to 20% of the unexplained purchase by a speaking and reasoned order and even distinguishing the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd (supra). Therefore, the learned ITAT was required to consider the legality and validity of the order passed by the learned CIT(A) restricting the disallowance to the extent of 20% of the unexplained purchase. That by impugned judgment and order, learned ITAT has mechanically following the decision of Coordinate Bench / Appellate Tribunal in the case of Vijay Proteins Ltd (supra) had restricted the disallowance to the extent of 10% of unexplained purchase and without observing anything as to how the learned CIT(A) has committed an error in confirming the disallowance to the extent of 20% of the unexplained purchase. It also appears that learned ITAT has not made any observations how the decision in the case of Vijay Proteins Ltd (supra) would be applicable to the facts of the case on hand. At this juncture, it is required to be noted that as such the learned CIT(A) did consider the decision of the Appellate Tribunal in the case of Vijay Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of the Tribunal to consider all facts and give reasons for its decision. Relying upon the decision of the Hon'ble Supreme Court in the case of Omar Salay Mohamed Sait (supra), in the said decision the Division Bench has further observed and held that while deciding the appeal it is necessary, that every fact for and against the assessee must have been considered with due care by the Tribunal and it 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. It is further observed in the said decision that it is incumbent on the Tribunal before upsetting the order of Commissioner of Income Tax (Appeal) to consider the reasons given by that authority for its decision. 6.2. In the case of Mercury Metals (P) Ltd (supra), the Division Bench of this Court quashed and set aside the order passed by the learned Appellate Tribunal and remanded the matter to the learned Tribunal for reconsideration on the ground that it had committed an error in exercise of its jurisdiction by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of an order and in the absence of such reasons, which must be reflected on a reading of the order, it is not possible to state as to whether the Tribunal was aware as to what the controversy was before it and what were the factors pro and con in relation to the said issue and the reasons which ultimately weighed with the Tribunal for arriving at a decision. 6.6. In the case of Shiv Dawoodi Bohra Jamat (supra) the Division Bench of this Court again considered the judgment of the Tribunal and remanded the appeal to the Tribunal by observing that the Tribunal should give reasons for its decisions. Mere mention of Supreme Court or High Court cases without specifying how they are applicable to the case is not sufficient. In the said decision, it is again reiterated and emphasized that the Tribunal is the final fact finding authority, hence the order of the Tribunal should reflect findings of fact as well as the reasons for arriving at its conclusion on the basis of the findings recorded by it. 6.07. In the case of Surat Beverages Limited (supra) , once again the Division Bench of this Court reiterated and emphasized that the order passed by the learned Appellate Tribunal must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that not only administrative but also judicial orders must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice delivery system, to make it known that there had been proper and due application of mind to the issue before the court and also as an essential requisite of the principles of natural justice. 3... The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the court concerned had really applied its mind.* The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector, Consolidation reported in (2002)10 SCC 87, has held as under: The reasons are the flesh and blood of Judicial adjudication and such reasons must be shown in the orders which are liable to be challenged in the Superior Court. Considering the aforesaid law laid down by the Honble Supreme Court and the requirement of passing a reasoned and speaking order, considering the facts of the case on hand and the impugned common judgment and order passed by the ITAT, the impugned judgment and order cannot be sustained. No reasons at all have been assigned by the learned Tribunal while dismissing the appeal preferred by the Revenue and partly allowing the appeal preferred by the assessee and sustaining the addition of ₹ 30 lac. The impugned order passed by the learned Tribunal is absolutely on estimate basis without assigning any reasons and as such no reasons have been assigned at all while dismissing the appeal preferred by the Revenue. As stated hereinabove both, the Revenue as well as the assessee are aggrieved by the impugned judgment and order and a common grievance is made that the impugned order passed by the learned ITAT is a nonspeaking and nonreasoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of estimation, though permissible, if the learned Commissioner of Income Tax has passed an order by giving cogent reasons, the Tribunal on an appeal either by the Revenue and / or assessee is required to apply its mind and consider the reasons given by the learned CIT(A) and is required opine where the learned CIT(A) had committed an error and whether the order passed by the learned CIT(A) is required to be to be interfered with or not. Even if the learned Tribunal is having the discretion to pass any order of deletion and / or allowances on estimation, such discretion is required to be exercised judiciously and it must be supported by cogent reasons and it must reflect the application of mind by the learned Appellate Tribunal on the issue. Therefore, once again the observations made by the Hon'ble Supreme Court as well as this Court in catena of decisions referred to herein above are reiterated and all the Income Tax Appellate Tribunal are hereby directed to consider the observations made in catena of decisions of the Hon'ble Supreme Court as well as Division Bench of this Court referred to herein above as well as observations made in the present order while d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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