Ita/4/2008 Of Commissioner Of Income Tax v. M/S. Universal Pipes P Ltd

ITA 4/2008BEFORE THE HON’BLE MR JUSTICE RANJAN GOGOITHE HON’BLE MR JUSTICE B.P.KATAKEYGogoi,J. This appeal under Section 260-A of the Income Tax Act (hereinafter referred to as the Act) has been admitted on the following substantial questions of law: �1)Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in setting aside the order of the Commissioner dated 30.03.2007 passed u/s 263 of the Income Tax Act, 1961?2)Whether on the facts and in the circumstances of the case, is not the decision of the Tribunal dated 31.08.2007 vitiated by perversity? � 2.We have heard Sri U. Bhuyan, learned counsel for the appellant and Sri GK Joshi, learned senior counsel for the respondent-assessee. 3.The facts in brief may be noticed, at the outset. The assessment of the respondent for the assessment year 2004-2005 was completed on 26.9.2006 by Assistant Commissioner of Income Tax, Circle-3, Guwahati. In the said assessment, benefit of deduction of a sum of Rs.1,15,00,000/-(Rupees one crore and fifteen lakhs only) under Section 35AC of the Act was granted to the respondent-assessee. The order of assessment in so far as the said deduction is concerned was sought to be suo motu revised by the Commissioner of IncomeTax in exercise of powers under Section 263 of the Act. In the suo motu revisional proceeding, which was contested by the assessee, the deduction allowed by the Assessing Officer was sought to be substantiated on the basis of the followingdocuments which were placed by the assessee before the learned Commissioner: �a)A request letter dt. 24.01.2003 from Rural Development Centre, Manipur to Managing Director of Universal Pipes(P) Ltd.b)Letter dt. 06.02.2003 addressed to Chairman/Secretary of Rural Development Centre, Motbung by Registrar of societies.c)Registration certificate No.379 of 1993 along with their memorandum of association. d)Notification u/s 35 AC of the I.T. Act, 1961 dt. 21.02.2003 as recommended by National Committee for promotion of social & economic welfare dulysigned by Director National Committee. e)Gazette Notification New Delhi dt. 22.01.2003 incorporating Rural Development Centre being eligible for obtaining the donation for A.Y. 2003-04,2004-05 and 2005-06. f)Confirmation of payment of donation dt. 13.01.2006 in respect ofdonation received by Rural Development Centre for their project confirming total amount of Rs.1,15,00,000/- addressed to Asstt. Commissioner of Income Tax. � 4.The suo motu revisional proceeding was decided by the learned Commissioner by order dated 30th March, 2007 holding the assessee not to be entitled to the benefit of deduction allowed by the assessing officer. The learned Commissioner in arriving at the said conclusion took note of the fact that from letter dated 30th March, 2006 of Assistant Commissioner of Income Tax, Imphal as well as the letter dated 15th November, 2006 of the Deputy Commissioner, Income Tax, Imphal, it was clear that the Rural Development Centre to whom donation was claimed to have been made by the assessee did not exist at the address furnished in Manipur. The learned Commissioner also recorded the finding that enquiries revealed that the administrative office/branch of the Rural Development Centre at the address given in Gurgaon was also not found to be in existence. It was also recorded by the learned Commissioner that the Rural Development Centre was not an assessee under the Act and no PAN number was allotted to it and no Return had been filed. As the aforesaid requirements were to be fulfilled under Rule 11L(2) of theIncome Tax Rules the Commissioner doubted the recommendation of the National Committee and the authenticity of the basis for the Gazette notification dated 22nd January, 2003 mentioning the Rural Development Centre along with the scheme undertaken by it to be eligible for the purpose of Section 35AC of the Act. Thereafter, the learned Commissioner proceeded to examine the entitlement of the assesseee under the provisions of Section 35CCA of the Act. In this regard, the finding of the learned Commissioner was to the effect that the conditions of eligibility or the prerequisites laid down had not been fulfilled by the Rural Development Centre. Consequently, the interference with the part of the assessment order was made by the learned Commissioner by the order dated 30th March, 2007. 5.The Assessee, being aggrieved, filed an appeal before the Income Tax Appellate Tribunal, which was allowed by the impugned order dated 31st August, 2008. Aggrieved, the Revenue has filed the present appeal under Section 260A of the Act, which has been admitted on the questions already noted above. 6.We have perused the order of the learned Tribunal under challenge. The findings of the learned Tribunal leading to the dismissal of the appeal filed by the Revenue are in the following terms: �We have given our careful consideration to the rival submissions made before us and have perused the orders of tax authorities. We have also consideredthe paper book filed by the ld. Counsel for the assessee. From the record, it is evident that the recipient society was fulfilling all the criteria to be eligible for deduction under section 35AC and the prescribed authority has also recognized such recipient society as eligible society under section 35AC. The societyhas also communicated with the A.O. in respect of such donation made by the assessee to it. Since the A.O. has completed the assessment after perusing the details and evidences filed by the assessee in respect of such donation made, the action of ld. CIT in treating such order of A.O. as erroneous is without any cogent material evidence on record and, therefore, in our considered opinion, such order of ld. CIT in holding the order of A.O. as erroneous is not correct. We, therefore, set aside the order of ld. CIT(A) and accept the ground raised by the assessee. � 7.The Tribunal is the highest appellate authority under the Act and the last �Court � on facts. Wide powers have been conferred on the Tribunal by the provisions of the Act. In the present case, the learned Tribunal has decided the appeal on the basis of bald conclusions reached by it, ostensibly on a consideration of the submissions advanced and the records produced, without, however, disclosing the basis therefor. As already noticed, the learned Commissioner in the order dated 30th March, 2007 had indicated the reasons and the basis on which the said authority had come to the conclusion that the relevant part of the assessment order should be interfered with as the same is erroneous and prejudicial to the interest of the Revenue. It was the bounden duty of the learned Tribunal to discuss the basis on which the learned Commissioner had come to his conclusions and thereafter arrive at its own conclusions in the matter. Surprisingly, the learned Tribunal did not feel it necessary to do so and had thought it proper to dismiss the appeal on the conclusions reached without, however, any discussions as to how such conclusions have been reached. 8.Under section 260A of the Act, appeals lie to the High Court against orders passed by the learned Tribunal on substantial questions of law. Such questions have been framed at the time of admission of the appeal. The manner in which the learned Tribunal had passed the presently impugned order does not permit us to answer any of the questions framed, as necessary materials and discussions to enable us to do so are absent in the order of the learned Tribunal. 9.We are, therefore, unable to answer the questions framed. At the same time having regard to the discussions above we have no other option but to set aside the order of the learned Tribunal dated 31st August 2007 passed in I.T.A. No.130 (Gau) of 2007 and remand the matter for a fresh decision on merit, keeping in mind the principles of law in this regard and our observations as contained above. Consequently, the appeal shall stand disposed of in the above terms.