Law Point : Principles of Natural Justice is Mandatory in Quasi-Judicial Proceedings
Case Title : Amrutlal Gangaji Choudhary Vs. Deputy Commissioner Of Income Tax
Court : Income Tax Appellate Tribunal
Order Date : 06 Jul 2021
Brief of Case : In facts of the present case, the Appellant is an individual, who engaged in the business of Ferrous and Non-Ferrous Scrap Material. The return of income for the Assessment Year 2012-13 was filed declaring income of Rs.40,37, 896. Against the said return of income, the assessment was completed by the DCIT, (“the Assessing Officer”) vide order at a total income of Rs.2,80,30,920 after making addition of Rs.16,40,000 under Section 68 of the Income Tax Act, 1961 (IT Act).
During the course of assessment proceedings, the Assessing Officer found that, the assessee had received unsecured loans. Based on the information filed by the Appellant, the Assessing Officer had made an analysis of each loan received by the assessee and come to a conclusion that, the creditors had no independent source of income to give huge loans to the Appellant and source of funds for giving loan to the Appellant is explained to the amounts received from the relatives. Accordingly, the creditworthiness of the creditors and the genuineness of the transactions was not proved, therefore, the Assessing Officer brought to tax the sundry credits as unexplained cash credits under Section 68 of the IT Act.
Being aggrieved by the addition, an appeal was filed before the learned Commissioner Of Income Tax, Appeals [CIT(A)] who vide impugned order had deleted the addition of Rs.12 lakhs received from a lender by holding that, the amount represents opening balance. In respect of other credits received, the addition was confirmed by citing that the creditworthiness of the creditors was not proved.
The issue in the present appeal refers to the unexplained cash credits under Section 68 of the IT Act. The onus lies upon the assessee to prove to the satisfaction of the Assessing Officer as to identity, creditworthiness, genuineness of the credits received during the year under consideration. From the perusal of the assessment order, it is clear that it is not the case of the Assessing Officer that, the Appellant had failed to file the details establishing the identity, creditworthiness and genuineness of the credit transactions during the year under consideration. The Assessing Officer has merely disbelieved the evidence produced before him and concluded that, the creditworthiness of the creditors and genuineness of the transactions was not proved.
On appeal before the learned CIT(A), the Appellant had filed the full details of sundry creditors from whom he had received loans during the year under consideration. The learned CIT(A) without adverting to the evidence filed before him, had simply concluded that, the creditworthiness of the creditors and genuineness of the credit transactions was not proved and confirmed the addition. From the material filed before learned CIT(A), it is clear that, the Appellant had filed the details of each and every receipt of loan received. The learned CIT(A) without adverting to the evidence filed before him, without discussing the evidence in respect of each credit and assigning reasons, confirmed the addition by holding that, the Appellant had failed to prove the creditworthiness of creditors. The learned CIT(A) is a quasi-judicial authority. An order passed by the quasi-judicial authority should be in conformity with the principles of natural justice. Recording of reasons for the conclusions reached by an authority is a part and parcel of the principles of natural justice.
The learned CIT(A) had given bald findings without giving any cogent and convincing reasons based on evidence on record. Therefore, the order of learned CIT(A) cannot be sustained in the eyes of the law. The matter remanded back to the file of learned CIT(A) for denovo adjudication of the matter in accordance with the law. Appeal of the assessee is partly allowed.
Tags : Principles of Natural Justice is Mandatory