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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
M/s Om Shiva Traders Pvt. Ltd. – Appellant
Versus
Income Tax Officer Ward 13(4) New Delhi & Anr. – Respondents
ITA 428 of 2023
Decided On : 04-08-2023
Reasons - Income Tax Appeal - The court found that the Tribunal's order lacked reasoning and set it aside, remanding the matter for a fresh hearing.
Fact of the Case:
The appeal concerned the addition made by the Assessing Officer under Section 68 of the Income Tax Act, 1961, to the appellant's income, which was reversed by the Tribunal without providing adequate reasoning.
Finding of the Court:
The court found that the Tribunal's order lacked reasoning and set it aside, remanding the matter for a fresh hearing.
Issues: The main issue was whether the Tribunal misdirected itself in law in passing the impugned order, in view of the fact that it contained no reasons.
Ratio Decidendi: The court held that the Tribunal's order lacked reasoning and failed to articulate its disagreement with the order of the CIT(A), thus setting it aside and remanding the matter for a de novo hearing.
Final Decision: The impugned order was set aside, and the matter was remanded to the Tribunal for a de novo hearing, answering the question of law in favor of the appellant/assessee.
JUDGMENT
Rajiv Shakdher, J. (Oral)
CM No.39611/2023
1. Exemption allowed subject to just exceptions.
ITA 428/2023 & CM Nos.39610/2023
2. Issue notice.
3. Mr Shailendra Singh, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
4. We have heard the counsels for the parties.
5. We are of the view that the appeal should be admitted.
6. It is ordered accordingly.
7. The following question of law is framed for consideration of this Court:
(i) Whether the Tribunal misdirected itself in law in passing the impugned order, in view of the fact that it contains no reasons?
8. With the consent of the learned counsels for the parties, the writ petition is taken up for hearing and final disposal at this stage itself, based on the record presently made available to the Court.
9. This appeal concerns Assessment Year 2008-09.
10. Via this appeal, the appellant/assessee seeks to assail the order dated 01.03.2023 passed by the Income Tax Appellate Tribunal [in short, "The Act"].
11. A perusal of the impugned order shows that the respondent/revenue had preferred an appeal with the Tribunal, against the order of Commissioner of Income Tax (Appeals) [in short, "CIT(A)"] dated 31.03.2011.
12. The issue that the CIT(A), and thereafter the Tribunal, dealt with was, whether the addition made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961 [in short, "The Act"], was sustainable.
13. The AO had added Rs. 3 crores, to the appellant/assessee's income.
14. The record shows that this amount was apparently received by the appellant/assessee, in the form of share capital and share premium.
15. According to the appellant/assessee, Rs. 2 crores was invested by an entity going by the name, Bhawani Portfolio Pvt. Limited, while Rs. 1 crore was invested by another entity going by the name, Thar Steels Pvt. Limited.
16. It appears that Rs. 2.50 crores was invested towards share capital. The balance amount, i.e. Rs. 50 lakhs, was received in the form of share premium.
17. According to the CIT(A), the appellant/assessee had satisfied the triple test, i.e., i.e., established the identity, genuineness and creditworthiness of the investors.
18. This conclusion was reversed by the Tribunal, with a direction to the AO to make a fresh enquiry.
19. A perusal of the order shows that the Tribunal has not provided any reason whatsoever, as to why it disagrees with the conclusion arrived at by the CIT(A).
20. The CIT(A) has rendered a reasoned decision.
21. Furthermore, the Tribunal has simply quoted in extenso, the assertions made by the appellant/assessee and extracted a portion of the CIT(A)'s order.
22. This aspect runs through the entire order.
23. The Tribunal, thereafter, in one paragraph, i.e paragraph 11, has simply stated the following, which according to us, is not satisfactory. "Having heard arguments of both the parties and after going through the entire contents of the paper book and after perusing the facts on record, we do not find any strength in the ratio given by the ld. CIT(A), hence, owing to the absence of the pertinent facts, we deem it proper to remand the matter to file of the Assessing Officer to inquire into the issue afresh and pass a speaking order after affording due opportunity to the assessee".
24. As would be evident on a perusal of the aforementioned paragraph, the reversal of the CIT(A)'s order has taken place, without the Tribunal discussing as to what part of the order was unsustainable.
25. Furthermore, a direction of remand has been issued, without indicating to the AO what exactly he is required to examine afresh.
26. We are of the view that the Tribunal will have to deliberate on the matter afresh and articulate in the order its reasoning, if it chooses not to agree with the order of the CIT(A).
27. Consequently, the impugned order is set-aside.
28. Accordingly, the question of law is answered in favour of appellant/assessee, and against the respondent
The court emphasized the importance of addressing the misalignment in orders and the need for the Tribunal to consider the order on merits concerning the relevant assessment year.
The burden of proof lies with revenue authorities to establish that share capital investments are bogus, and suspicions alone cannot justify adverse findings against the assessee.
The Tribunal rightly deleted additions under Section 68 by confirming sufficient documentary evidence established the genuineness of transactions, with no substantial question of law arising.
The burden of proving the credibility of shareholders and the genuineness of transactions correctly shifted to the department after the assessee provided necessary documentation.
The court emphasized that for exercise of powers under Section 263 of the Income Tax Act, not only the order passed by the Assessing Officer would have to be categorized as erroneous, but it also has....
The onus lies with the assessee to prove the genuineness of share capital and creditworthiness of subscribers under Section 68 of the Income Tax Act.
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