Commissioner of Income Tax vs Sas Educational Society

Adarsh Kumar Goel, J.—The Revenue has preferred this appeal u/s 260A of the Income Tax Act, 1961 (in short, "the Act") against the order of the Income Tax Appellate Tribunal, Chandigarh Bench "A", dated April 17, 2008, in I. T. A. No. 57/Chandi/2008, proposing to raise the following substantial questions of law:

(i) Whether, on the facts and circumstances of the case and in law, the hon''ble Tribunal was correct in giving fresh opportunity to the assessee in view of the repeated and recorded failures on the part of the assessee ?

(ii) Whether, on the facts and circumstances of the case and in law, the hon''ble Tribunal was right in ignoring the repeated failures on the part of the assessee and remanding the case back to the file of the Assessing Officer for fresh adjudication ?

The assessee is running an educational institution but filed return of business income. The assessee is not registered u/s 12AA of the Act nor sought any exemption u/s 10(23C) of the Act. The Assessing Officer made assessment making addition to the declared income, holding that the assessee failed to produce books of account and supporting documents. Penalty proceedings were also initiated. The appeal of the assessee was dismissed. Finding was recorded that the assessee was non-co-operative and failed to avail of opportunity of producing the material. Reliance was placed on the judgment of the Delhi High Court in Commissioner of Wealth Tax, Delhi-I Vs. Gurdial Singh, , judgment of the hon''ble Supreme Court in Commissioner of Income Tax, Mysore Vs. Segu Buchiah Setty, , the judgment of this Court in Miri Mal Mahajan Vs. Commissioner of Income Tax and Another, and the judgment of the Madras High Court in Commissioner of Income Tax Vs. Rayala Corporation (P.) Ltd., . On further appeal to the Tribunal, the contention of the assessee was that it was in a position to substantiate its claim on the merits if opportunity was given. The Tribunal observed that without going into the controversy, the assessee ought to be given one opportunity.

We have heard learned Counsel for the parties.

Learned Counsel for the appellant submitted that sufficient opportunities having already been allowed to the assessee as observed by the Commissioner of Income Tax (Appeals) in paragraph 14 of the judgment, no fresh opportunity could be granted.

It is clear that in spite of there being a finding that the assessee had been given sufficient number of opportunities, the Tribunal has passed the order without recording any finding that sufficient opportunities had not been given. The observations of the Tribunal are as under:

However, without going into much controversy, we are of the view that the assessee be given opportunity afresh by the Assessing Officer, who will examine the details, purchases bills and other documents/details, if any, filed by the assessee and to decide the case of the assessee afresh. Needless to mention here that due opportunity be provided to the assessee. The assessee is also at liberty to produce evidence, if any, to substantiate its claim.

We find merit in the contention that without recording a finding whether the assessee was denied sufficient opportunity, the Tribunal could not direct further opportunity to be given. It is well-settled that in exercising the appellate power, the Tribunal has to give reasons for its conclusion. For justifying its direction for giving further opportunity, the Tribunal had to record a finding of denial of opportunity. In Esthuri Aswanthiah Vs. Commissioner of Income Tax, Mysore, , paragraph 6, it was observed that the Tribunal is under a duty to decide all questions of fact and law and must consider whether on the material relied upon, case for accepting a plea is made out. It cannot reach any arbitrary decision.

Accordingly, the question proposed has to be answered in favour of the Revenue.

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