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Facts
The Revenue filed appeals against the orders of the CIT(A) which had deleted additions made by the AO after a search and seizure operation. The CIT(A) had allowed the appeals by relying on a group case decision without independently deciding the issues.
Held
The Tribunal held that the CIT(A)'s order was cryptic and did not decide the issues independently or on merits. The CIT(A) had borrowed findings from another case, rendering its decision erroneous.
Key Issues
Whether the CIT(A) erred by not independently deciding the issues and borrowing findings from a group case, and whether the additions made by AO were sustainable.
Sections Cited
132, 153A, 143(3)
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Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
A search and seizure operation was carried out u/s 132 of Income Tax Act, 1961 ('Act' for short) on 10/03/2015 on Appu Ghar Group of cases and the Assessee herein was also covered u/s 132 of the Act. The assessment order came to passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 ('Act' for short) against the captioned Assessees by making certain additions. The assessment orders were called in question by the Assessees before the Ld. CIT(A). The Ld. CIT(A) vide combined orders dated 23/05/2017 and 12/05/2017 along with other Assessees, allowed the Appeals of the Assessees herein on the ground that the Ld. CIT(A)
has considered the issue involved in the Appeal in the order dated 04/05/2017 in the group case of ‘Surana Buildtech Pvt. Ltd’.
Aggrieved by the order of the Ld. CIT (A) dated 12/05/2017, the Department of Revenue preferred the present Appeal.
The Ld. Department's Representative vehemently submitted that the order of the Ld. CIT(A) is cryptic, not decided any of the issues involved in the Appeals independently on its merit and in a vague manner, by mentioning the case of ‘Surana Buildtech Pvt. Ltd’., allowed the Appeals of the Assessees, which cannot be sustained in the eyes of law. Thus, sought for allowing the Appeals of the Revenue.
None appeared for the Assessees. Even after sending several notices of hearing.
We have heard the Department's Representative and perused the material available on record. The Ld. CIT(A) deleted the additions made by the A.O. at the hands of the Assessees on the ground that the Ld. CIT(A) has considered the matter in great detail in its order dated 04/05/2017 in the group cases of Surana Buildtech Pvt. Ltd. and following the same, deleted the additions made in the hands of the Assessees herein. For the sake of convenience, the relevant portion of the Ld. CIT(A) in the case of ACIT Vs. Appu Ghar Entertainment for Assessment Year 2011-12 (ITA No. 4882/Del/2017) is reproduced as under:-
“3.1.3 The facts of the matter, as mentioned above, have been considered in great detail in my order dt. 04.05.2017 in the group case of Surana Buildtech Pvt. Ltd. in Appeal Nos. 337 & 338/16-17 for AYs 2011-12 at paras-4.1 to 4.1.9 wherein I have held that "the AO was not within the jurisdiction bestowed on him by law to make the impugned additions in the assessment u/s 153A of the Act, and therefore the impugned assessment orders for both the assessment years cannot be sustained. It is held accordingly and the reassessment orders for both assessment years are quashed." (para-4.1.7). and that, "no addition could be made without providing opportunity for cross-examination of the persons whose statements were relied upon by the AO make the addition and for this reason as well the addition is not sustainable." (para-4.1.5), and that, "no addition could be made on the basis of a retracted statement and for this reason as well the addition is not sustainable." (para-4.1.6), and having considered the facts related to the share application/share capital/unsecured loan in respect of M/s Surana Buildtech Pvt. Ltd. and all these other cases of the group at paras-4.1.8 to 4.1.8.2 in my order in the case of Surana Buildtech Pvt Ltd. for AYS 2011-12 (supra) I have held that, "the addition made is not sustainable on merits as well. I hold accordingly.", and I have deleted the addition in the case of Surana Buildtech Pvt Ltd. for AYs 2011-12 (supra). Following the same the additions in all the above 16 assessments in the group cases listed at page-1 are deleted.”
As could be seen from the above, the Ld. CIT(A) has not discussed regarding the ‘incriminating material’ qua the Assessee and qua the Assessment Year under consideration to conclude that the additions made by the A.O. are without incriminating material gathered during the search. The Ld. CIT(A) has also not discussed the issue of not providing opportunity to the Assessees for cross examination of the persons who’s statement were relied upon by the A.O. to make the addition in the hands of the Assessees. The Ld. CIT(A) has also not stated anything in its order regarding the evidentiary value of the ‘retracted statement’ which has been made as basis for the addition. However, the Ld. CIT(A) has allowed the Appeals by impliedly borrowing the findings made in the case of Surana Buildtech Pvt. Ltd. vide order dated 04/05/2017. We find such approach of the Ld. CIT(A) is not only erroneous but also cryptic. Considering the peculiar facts and circumstances of the case, we set aside the impugned orders of the Ld. CIT(A) and remand the matter to the file of the Ld. CIT(A) to decide all the above three issues in detail qua the facts and qua the documents of the Assessees and pass speaking order in accordance with law. Needless to say, the Assessees shall be provided the opportunity of being heard before passing the order.
In the result, Appeals of the Revenue are partly allowed for statistical purpose.