Commissioner of Income Tax and Another vs Sunrise Sales Corporation

K.L. Manjunath, J.—The revenue has come up in this appeal challenging the legality and correctness of the order passed by the Tribunal, Bangalore Bench for the block assessment period 1989-90 to 1998-99. The appeal is admitted on the following substantial questions of law:

Whether the Tribunal was correct in ignoring the statement of one Sri. Chandra Sha partner in one of the firms of the, assessees group and financier of the assessee that 3 to 5 per cent sales were taking place outside the books of account which was not disputed and the discrepancy in stock which was added back by the assessing officer was totally ignored in order to arrive at a conclusion that the additions could not be made and consequently recorded a perverse finding?

Whether the Tribunal arrived at a perverse finding that the department has not found any material evidence to support the additions made, during the search when admittedly there was evidence of one of the parties as well as discrepancy in the deficit of stock to support the claim of the department?

Whether the Tribunal relied on the view expressed by it in the case of the same group of assessee when each case had to be appreciated on the facts and circumstances prevailing in that case and the entire set of facts could not be equated to one other case and consequently, there was no consideration by the Tribunal in respect of facts and controversy which arose in the present case?

We have heard the learned counsel for the parties.

Sri. Seshachala, learned counsel for the revenue taking us through the order of the Tribunal submits that the Tribunal while considering the case of the assessee in para 4 of its order has stated that after going through the records, the Tribunal is convinced that there is no scope for making additions in these two cases. Further it is stated that the department has not found any material or evidence found in the course of search and there is no basis for making an addition when all purchases which according to the assessing officer are found accounted in the books of account. Therefore the learned counsel for the revenue submits that the Tribunal without considering the documents and without discussing the documents produced by the department has come to the conclusion that the members of the Tribunal are convinced that there is no scope for making additions in these two cases. Therefore he contends that the order of the Tribunal is without application of mind and the Tribunal went on to reverse the order of the assessing officer. It is the duty of the Tribunal to give cogent reasons for reversing the order of assessment. Without doing so, by one sentence the Tribunal has reversed the finding. Therefore he contends that the order of the Tribunal should be set aside.

Learned senior counsel Sri. Kumar supporting the order submits since the members of the Tribunal have gone through the records and stock inventory and all other documents produced by the department. The Tribunal has reversed the finding of the assessing officer and that there is no infirmity in the order. Therefore he requests the court to dismiss the appeal.

We have perused the entire order of the Tribunal. The Tribunal has considered the case of the parties only in para 4 of its order. After going through para 4 we are of the opinion that the learned counsel for the revenue is justified in making a statement in contending that the Tribunal has reversed the finding of the assessing officer without considering each and every document produced by the department. Therefore we are of the opinion that the order of the Tribunal is without application of mind. Therefore without answering the substantial questions of law formulated, we pass the following order:

The order of the Tribunal is set aside and the matter is remanded to the Tribunal for fresh consideration in accordance with law. Accordingly the appeal is allowed.