COMMISSIONER OF INCOME TAX Vs. PREMKUMAR B. RATHI

JUDGEMENT

(1.) FEELING aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad "B" Bench (hereinafter referred to as the "ITAT") dated 2.2.2007 passed in ITA No. 425/AHD/2004 for AY 1999 -2000, by which, the learned Tribunal has partly allowed the said appeal reducing the dis -allowance to the extent of 10% of unexplained purchases instead of 20% as disallowed by the CIT(A), the Revenue has preferred present Tax Appeal arising the following substantial question of law.

(2.) 2 Feeling aggrieved and dissatisfied with the assessment order passed by the AO making addition at 25% of the purchases i.e. Rs. 53,57,040/ - being 25% of the said purchases of Rs. 2,48,28,174/ - as reduced by Rs. 8,50,000/ - (Rs. 62,07,040/ - minus 8,50,000/ -), to the assessee's total income, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) called the remand report of the AO on the assessee's letter dated 26.3.2002. The AO submitted the report dated 17.11.2003. The AO remand report was furnished to the assessee to which, the assessee vide letter dated 23.12.2003 commented on the same. That by giving cogent reasons in para 3.2, learned CIT(A) partly allowed the said appeal and reduced the addition to 20% the aforesaid purchases. By reducing the addition and/or dis -allowance at 20% of such unverifiable purchases of Rs. 2,48,28,174/ - from 25% has been made by the AO, learned CIT(A) allowed the said appeal partly and confirmed the disallowance out unverifiable purchases to the extent of Rs. 41,15,635/ - as against the dis -allowance of Rs. 53,57,040/ - made in the assessment.

(3.) HEARD the learned advocates for the respective parties at length. At the outset, it is required to be noted that AO restricted the dis -allowance to 25% of the unexplained purchases made from 5 different parties which were not produced before the AO though ample opportunity was given to the assessee. That the learned CIT(A) on appeal restricted the dis -allowance to 20% of the unexplained purchase by a speaking and reasoned order and even distinguishing the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd. (supra). Therefore, the learned ITAT was required to consider the legality and validity of the order passed by the learned CIT(A) restricting the disallowance to the extent of 20% of the unexplained purchase. That by impugned judgment and order, learned ITAT has mechanically following the decision of Coordinate Bench/Appellate Tribunal in the case of Vijay Proteins Ltd. (supra) had restricted the dis -allowance to the extent of 10% of unexplained purchase and without observing anything as to how the learned CIT(A) has committed an error in confirming the disallowance to the extent of 20% of the unexplained purchase. It also appears that learned ITAT has not made any observations how the decision in the case of Vijay Proteins Ltd. (supra) would be applicable to the facts of the case on hand. At this juncture, it is required to be noted that as such the learned CIT(A) did consider the decision of the Appellate Tribunal in the case of Vijay Proteins Ltd. (supra) and had observed that on facts the decision in the case of Vijay Proteins Ltd. (supra) shall not be applicable. From the impugned judgment and order passed by the learned ITAT, it also appears that no reasons whatsoever have been assigned by the learned ITAT restricting the dis -allowance to the extent 10% of the unexplained purchases. Thus, the impugned judgment and order passed by the learned ITAT restricting the disallowance to the extent of 10% of unexplained purchase can said to be non -speaking and unreasoned order. At this stage, it is required to be noted that as such the learned ITAT was exercising the appellate jurisdiction or considering legality and validity of the order passed by the learned CIT(A).