Commissioner Of Income Tax vs Mandsour Ferro Alloys Ltd. on 20 February, 2006

Madhya Pradesh High Court
Commissioner Of Income Tax vs Mandsour Ferro Alloys Ltd. on 20 February, 2006
Equivalent citations: 2008 296 ITR 176 MP
Author: A Sapre
Bench: A Sapre, A K Tiwari


A.M. Sapre, J.

1. This is an appeal filed by Revenue (GIT) under Section 260A of the IT Act against an order dt. 20th July, 2000, passed by Income-tax Appellate Tribunal (for brevity hereinafter referred to as Tribunal) in ITA No. 264/Ind/1998. This appeal was admitted for final hearing on following substantial questions of law:

1. Whether Tribunal was justified in setting aside of an order passed by the GIT under Section 263 of the IT Act without giving any finding much less categorical finding as to how and on what basis the case of the assessee falls in the excepted categories as defined under Section 40A(3) r/w Clause (j) of Rule 6DD of the IT Rules, 1962?

2. In an order of reversal, was it not obligatory upon the Tribunal to have given a categorical finding of fact that assessee has satisfied the requirement of the concerned section, i.e., Section 40A(3) r/w Clause (j) of Rule 6DD of the IT Rules, 1962, by giving cogent explanation thereby disentitling the CIT from invoking the provisions of Section 263 and holding it to be a case prejudicial to the interest of Revenue ?

2. Heard Shri R.L. Jain, learned senior counsel with Ku. V Mandlik, learned Counsel for the appellant and, Shri G.M. Chafekar, learned senior counsel with Shri D.K. Chhabra, learned Counsel for the respondent.

3. At the outset, we are constrained to observe the manner in which the Tribunal decided the issue involved in this appeal in the impugned order in para 3 :

Para 3. We have carefully considered the submissions of the rival parties, the facts of the case and have perused the documents filed before us, We find that on both the issues, the AO had raised specific queries and accordingly the assessee had also furnished all the details required by the AO from time to time. Therefore, we do not agree with the order of the learned CIT that the AO had passed the order without calling for the requisite details and without examining the issues. Therefore, the order of the CIT holding the order of the AO as erroneous and prejudicial to the interests of Revenue cannot be upheld and the same is accordingly set aside.

4. Perusal of the aforequoted para which is the total discussion made by Tribunal on the issue to say the least can never be regarded as a judicial finding recognized in law. Time and again, the judicial precedents have reminded the Tribunal that they being the last Court of facts in hierarchical system, it is their legal duty rather legal obligation to deal and discuss the issue of fact in detail and then give categorical findings for their eventual conclusion. Casual approach while deciding the issue exhibits non-application of mind. It is much more so when the factual finding recorded by the CIT(A) is assailed specifically by the appellant in the appeal on facts. It must appear from the order that sincere efforts were made to go into the factual arena and then keeping in view the legal position applicable to the facts of the case, a categorical finding is recorded by the Tribunal. This Court exercising the appellate powers under Section 260A of the Act cannot travel in facts, nor it can appreciate the factual evidence. It is for this reason it gives weightage to the factual finding recorded by the Tribunal on any issue relating to facts which have travelled upto Tribunal from AO arid CIT(A).

5. Coming to the facts of this case, what we notice is that Tribunal having taken note of the facts involved in the case in earlier paras of the order summed up the issue against the Revenue in para 3 quoted supra and allowed the appeal filed by the assessee by setting aside of the order passed by CIT. In a case of reversal, it is all the more necessary to record the dissent, as to why the Tribunal does not agree with the finding of lower appellate authority, i.e., CIT(A) and then give their own reasoning. The issue involved in this case has a large tax effect either way, if answered against the Revenue and in favour of assessee or vice versa.

6. In short, the question relates to an amount of Rs. 43,15,849 namely, whether it can be allowed by way of business expenditure during the asst. yr. 1993-94 or not, to the assessee as claimed. It needs to be examined in-depth on facts and then finding about its bona fide and genuineness of transactions, etc. need to be recorded by the Tribunal. We are constrained to observe that Tribunal while allowing the appeal filed by assessee did not undertake any (such judicial exercise and simply proceeded to allow the appeal by granting benefit. We cannot countenance with such approach. It is neither legal, nor proper.

7. Accordingly and in view of foregoing discussion, we allow the appeal and set aside the impugned order. As a consequence and keeping in view the facts involved, we remand the case to the Tribunal for again deciding the appeal afresh within 6 months, on merits, keeping in view the aforementioned observations.

8. Needless to say, we do possess the power to remand the case under Section 260A ibid and in this case, a case for remand is called for. Parties to appear before the Tribunal on 20th March, 2006 so as to enable the Tribunal to decide the appeal as directed. No costs.

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