Kundanmal Kothari (HUF) vs Commissioner of Income Tax

D.N. Baruah, J.—As per the direction given by this Court in Civil Rule No. 1 (M) of 1994, the Tribunal, Gauhati Bench, Guwahati, has referred the following question u/s 256(2) of the income tax Act, 1961 (''the Act'') for opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal being the final finding authority was justified in law in reversing the decision of the Commissioner (Appeals) relating to the assessment year 1983-84 without any independent consideration of issue relating to the cash credit in question and without recording its own findings thereon and in rendering its conclusion by merely following its earlier order passed in the case of another assessee in respect of the assessment year 1982-83 ?"

Facts are : The assessee received an amount of Rs. 1,25,000 from a creditor and this was entered into the books, of account and the creditor was also identified. The creditor himself was an assessee under the Act. In spite of that the Assessing Officer did not accept the entries made in the books of account as well as in the returns and required further proof. Confirmatory letters were produced and the creditor himself appeared before the ITO to give his statement confirming the fact that the amount had been paid by him to the assessee. Even then the Assessing Officer did not believe this and made an addition of Rs. 1,25,000 u/s 68 of the Act. Being aggrieved, the assessee preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeal after considering the documents. However, the revenue approached the Tribunal and the Tribunal following the decision in Appeal No. 392 (Gau.) of 1987, without discussing independently about the present case allowed the appeal preferred by the revenue. Thereafter, the assessee requested the Tribunal to refer the above question which was refused. Situated thus, the assessee filed application before this Court which was numbered as Civil Rule No. 1(M) of 1994. By order dated 21-3-1994, this Court directed the Tribunal to refer the above question for opinion. Hence, the present reference.

In Raichand Kothari v. CIT [IT Reference No. 8 of 1995], this Court held that the Tribunal is not competent to reverse a finding without discussing the facts available and without giving reasons as to why the Tribunal came to a finding contrary to the finding arrived at by the Commissioner (Appeals). Following the decision in IT Reference 8 of 1995, we answer the question in the negative, in favour of the assessee and against the revenue.