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Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR
Before: SHRI NRS GANESAN & SHRI SANJAY ARORA
ORDER
Per NRS Ganesan, JM:
1. This appeal of the assessee is directed against the order of the Pr. Commissioner of Income Tax- 1.
Jabalpur dated 22.02.2019 passed u/s. 263 of the Income Tax Act. 1961 (in short "the Act'.) 2. Shri Dhiraj Ghai, ld. Representative of the assessee submitted that the Pr. CIT in the guise of exercising his power u/s. 263 of the Act found that the Assessing Officer has not conducted any enquiry with regard to unsecured loan disclosed in the balance sheet. Referring to the query raised by the AO, as Question No.154, the ld. counsel submitted that the AO himself called for details of the Bank loan obtained during the year and interest paid thereon. The assessee has also furnished all the details before the AO. The AO, after considering all the details filed by the assessee, has not made any addition with regard to unsecured loan, therefore, the Pr.CIT is not correct in saying that the AO has not conducted any query. The ld. counsel further submitted that in the reassessment proceedings, the AO has not made addition.
3. On the contrary, Shri A.K. Singh, ld. DR submitted that the AO has not made any enquiry. Moreover, the assessee has given wrong statement in the course of assessment proceedings regarding the fresh loan received by assessee from two parties. Moreover, the AO has not applied his mind and he has not passed any reasoned order, therefore, the Pr. CIT has rightly found that the order of the AO is not only erroneous but also prejudicial to the interest of the Revenue. Accordingly, the Pr. CIT set aside the order of the AO and remanded back to him for fresh adjudication.
4. Having heard the ld. counsel for the assessee and the ld. Departmental Representative, This Tribunal finds that it is a matter of fact that the AO called for details of Bank loan obtained during the year and interest paid thereof. Even though the assessee claims that details were furnished to the AO, the copies of such details were not furnished before this Tribunal. Moreover, the assessment order does not reflect application of mind of the AO to the material said to be filed by the assessee in response to the questionnaire issued to him. It is a well settled principle of law that in administrative/judicial proceedings, the Officer exercising his power has to give reason for the conclusion reached in the order itself. It is not in dispute that the proceedings, before the AO is a judicial proceeding, therefore, it is also more important for AO to give reason for the conclusion reached in the assessment order. Admittedly, with regard to unsecured loan, there is no discussion in the assessment order and the AO does not discuss anything about the so called bank loan obtained during the year and interest paid thereon.
Application of mind to the material available on record shall be reflected in the order itself. The Department cannot file any additional material to support the conclusion reached in the assessment order. We are conscious that various Benches of this Tribunal and some of the High Courts, in the country have found that the reason may not be recorded in the assessment order, but in fact the Supreme Court in various judgments categorically held that reason shall be recorded in the order itself. In the latest Allahabad High Court judgment, it is made very clear, after referring to this judgment of Supreme Court that live link to the material available on record and the application of mind of the Officer shall be reflected only if the reasons were recorded in the assessment order. Recording of the reason not only bring confidence on the litigant public but also avoid arbitrariness in decision making process. In this case, admittedly, no reasons were recorded in the assessment order in respect of unsecured loan even though that detail said to be called by AO. In the absence of recording of reasons by the AO, this Tribunal is of the considered opinion that the order of the assessment is not only erroneous but also prejudicial to the interest of the Revenue, therefore, Pr. CIT has rightly set aside the order of the AO and remanded back to him for fresh enquiry. This Tribunal do not find any reason to interfere with the order of the Pr. CIT. Accordingly the same is confirmed.
In the result, the appeal of the assessee is dismissed.