The Pr. Commissioner Of Income Tax, Patiala v. M/S Shri Shyam Enterprises Pvt. Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. 109Income Tax Appeal No.185 of 2019 (O&M).Date of Decision: 09.12.2019. The Pr. Commissioner of Income Tax, Patiala....Appellant, Versus M/s Shri Shyam Enterprises Pvt. Ltd. ....Respondent. RRR CORAM: HON'BLE MR. JUSTICE AJAY TEWARIHON'BLE MR. JUSTICE LALIT BATRAHON'BLE MR. JUSTICE LALIT BATRA Present:Mr. Kunal Sharma, Senior Standing Counsel, withMr. Jitin Kohli, Junior Standing Counselfor the appellant.Mr. Jitin Kohli, Junior Standing Counselfor the appellant. '''' Ajay Tewari, J. (Oral) inThis appeal has been filed by the revenue under Section 260Aof the Income Tax Act, 1961 (for short ‘the Act’) against the order of IncomeTax Appellate Tribunal, Chandigarh Bench “B”, in ITA No. 1299(chd)/2017 dated 24.09.2018 for the assessment year 2014-2015, whereby it hasset aside the revisional order dated 27.07.2017 of the Commissioner ofIncome Tax under Section 263 of the Act. ?DBrief facts of the case are that the assessee had obtained certainunsecured loans during the year in question. The assessee had filed a returndeclaring income of Rs. Nil on 26.09.2015. His case was selected forlimited scrutiny through CASS and notice u/s 143 (2) of the Act was issuedand on being satisfied the Assessing Officer accepted the return income ofthe assessee. Thereafter, a show cause notice under Section 263 (1) of theAct was issued and the Commissioner of Income Tax set aside the order andJITENDER2019.12.19 17:39I agree to specifiedheld the Assessing Officer should have called a record of the computationportions of this document of income/balance sheet along with the returns of income to prove theircreditworthiness of the persons in providing the assessee unsecured loansand remitted the matter back for fresh order in accordance with law.3,Aggrieved against the order of the CIT, the assessee challengedthe same before the Tribunal and the Tribunal found as a fact that thedocuments relating to the persons who had granted the loans had not onlybeen submitted before the Assessing Officer but had also been producedbefore the Commissioner and at no stage was it pointed out that from aperusal of those documents, a case was made out for further requiring theassessee to obtain the balance sheets of all those persons and the Tribunal inthese circumstances firstly held that the Commissioner erred in holding thatthe hank statement and the income tax returns had not been filed before theAssessing Officer and secondly the Tribunal noticed and further held asfollows:- “And we find that no infirmity has been pointed out bythe Ld. Pr. CIT in the same in his entire order which wouldshow that the creditworthiness of the loanees was doubtful andthe AO having not taken cognizance ofthe same had committedan error causing prejudice to the Revenue. Further we fail tounderstand the relevance of the balance sheet of the loaneesfor establishing their creditworthiness when all other relevantdocuments for the same, 1.e. return of income of the loaneesand copy of their bank statement from which the loans wereadvanced were filed and no adverse observation with respectto the same has been made by the Ld. Pr. CIT effecting thecreditworthiness of the loanees. Nor was the same brought toour notice by the Ld. DR during the course of hearing beforeus. We therefore hold that the Ld. Pr. CIT has failed to pointout any error in the order of the AO vis-a-vis the loans takenby the assessee also.” 4Learned counsel for the appellant-revenue has argued that thefollowing substantial questions of law still arose in this case:- 4Learned counsel for the appellant-revenue has argued that thefollowing substantial questions of law still arose in this case:- (1)Whether on facts and circumstances of the case, theHon'ble ITAT, Chandigarh is right to set aside the orderpassed by the Worthy Pr. CIT u/s 263(1) of the I.T. Act, 1961on account ofnon-proper verification of unsecured loans madeby the A.O. with regard to the loans raised by the assesseeduring the year under consideration from various loanees/persons, whose creditworthiness to give these huge loans werenot justified according to their low income andfurther sourceof income shown in their returns of income & other documentsplaced on record. The Hon'ble Delhi High Court in ITANo.55/2017 dated 25.08.2017 in the case of Worthy Pr. CITVS. Bikram Singh has confirmed additions made on account ofunsecured loans ofRs.2,68,00, 000/- on account of non-provingthe transaction were genuine and the creditworthiness of theloanee persons were not justified according to their incomeand source of income shown in their return of income, whichwere deleted by the Hon'ble ITAT. (11)Whether on facts and circumstances of the case, theHon'ble ITAT, Chandigarh 1s right to ignore the decisionof theHon'ble Supreme Court in the case of Malabar IndustrialCompany Ltd. Vs. CIT reported at 243 ITR &3 (SC). Further, inthe case of Gee Vee Enterprises Vs. Addl. CIT & Ors. 99 ITR375 (Del), the Hon'ble Delhi High Court have held in that notmaking an inquiry warranted on the facts of a case will makethe assessment order erroneous. Similar view has been takenby the Hon'ble Madras High Court in the case of K.A,Ramaswamy Chettiar & Anr. Vs. CIT 220 ITR 657 (Mad.).Moreover, the facts of the case are squarely covered byExplanation 2 of Section 263 of the I.T. Act, 1961 which isinserted w.e.f. 01.06.2015." Tax vs. Infosys Technologies Ltd.[.T.A. No.588 of 2006,particularly Paras23 to 27, which are reproduced hereunder:- 23.In the present situation, the Commissioner having onlydirected the assessing authority to compute it or re-compute itand make it explicit as to the entitlement of the assessee, anorder of this nature, in fact, could not have been contended asdetrimental to the interest of the assessee, as it was alwaysopen to the assessee to justify the claim in terms of the doubletaxation avoidance agreements. In a situation of this nature,we are also of the opinion that it was not a case whichwarranted interference by the tribunal, more so far settingaside the order of the commissioner andfor ensuring that theorder passed by the assessing authority was left in tact. D4One should bear in mind that a relief which is requiredto be given to any litigant in any given case should becommensurate to the gravity of the situation, to the needs andnecessity of the situation and warranting such relief and withreference to the governing statutory provisions. Just becausethe tribunal has appellate jurisdiction over the orders passedby the commissioner, it does not mean that the tribunal shouldinterfere with each and every order of the commissioner whenit is really not warranted and in a situation of the presentnature, by calling in aid all legal principles, particularlyquestions of jurisdiction and by interpreting a_ statuarprovision, to limit or curtail the scope and operation of theprovision even when there 1s no needfor it. 245.We are also not in a position to accept the submissionthat the materials had been placed before the assessingauthority and therefore there should be a conclusion that theauthority has applied his mind to the same and there was noquestion of the commissioner interfering by taking a differentview etc. 6 245.We are also not in a position to accept the submissionthat the materials had been placed before the assessingauthority and therefore there should be a conclusion that theauthority has applied his mind to the same and there was noquestion of the commissioner interfering by taking a differentview etc. 6 D6.Assessing authority performs a quasi-judicial functionand the reasons for his conclusions and findings should beforthcoming in the assessment order. Though it is urged onbehalf of the assessee by its learned counsel that reasonsshould be spelt out only in a situation where the assessingauthority passes an order against the assessee or adverse tothe interest of the assessee and no need for the assessingauthority to spell out reasons when the order is accepting theclaim of the assessee and the learned counsel submit that thisis the legal position on authority, we are afraid that to accept asubmission of this nature would be to give a free hand to theassessing authority, just to pass orders without reasoning andto spell out reasons only in a situation where the finding is tobe against the assessee or any claim putforth by the assessee1§ denied. 27.We are of the clear opinion that there cannot be anydichotomy of this nature, as every conclusion and finding bythe assessing authority should be supported by reasons,however brief it may be, and in a situation where it is only aquestion ofcomputation in accordance with relevant articles ofa double taxation avoidance agreements and that should beclearly indicated in the order of the assessing authority,whether or not the assessee had given particulars or details ofit. It is the duty of the assessing authority to do that and 1f theassessing authority had failed in that, more so in extending atax relief to the assessee, the order definitely constitutes anorder not merely erroneous but also prejudicial to the interestof the revenue and therefore while the commissioner wasjustified in exercising the jurisdiction under Section 265 of theAct, the tribunal was definitely not justified in interfering withthis order ofthe commissioner in its appellatejurisdiction. In this view of the matter, the above paragraphs would not 8+8 vaConsequently, we find no merit in the appeal and the same is dismissed. 8.Since the main case is dismissed, pending civil misc,application, if any, stands disposed of,