RAICHAND KOTHARI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference as per direction given by this Court in Civil Rule No. 9(M) of 1992, the following four questions have been referred under S. 256(2) of the INCOME TAX ACT, 1961 (for short, "the Act"), for opinion of this Court :

(2.) THE facts for the purpose of answering these questions are : The assessee in order to meet its business requirement took loans from various persons during the asst. year 1982 -83 and in the preceding assessment year which were reflected in the balance -sheet. Confirmation of loan statement of account by the creditors had been furnished to the AO. The assessee had also furnished the income -tax file numbers of the creditors and some of the creditors were produced before the AO for examination. However, the AO was not satisfied with the explanation given by the assessee and the creditors invoking the power under S. 68 of the Act as income from other sources. The AO also disallowed the interest paid to all the creditors including the interest paid on amount obtained from them in the preceding assessment year. The assessee being dissatisfied with the order passed by the AO preferred an appeal before the CIT (A). The CIT(A) after hearing the parties allowed the appeal in respect of the loan given by six out of seven creditors as mentioned in page 31 of the paper book. The CIT(A) remanded the matter to the AO directing him to give another opportunity to the assessee to prove the transaction. The Revenue, therefore, preferred an appeal in respect of the income of Rs. 5,95,000 ordered to be deleted by the CIT(A) given by the six creditors. The Tribunal after hearing the parties reversed the finding of the CIT(A) on the ground that the explanations offered were not satisfactory and the reasons given by the CIT(A) could not be sustained. The assessee, therefore, requested to refer the above questions to this Court. However, the Tribunal refused to do so. Situated thus, the aforesaid Civil Rule No. 9(M) of 1992 was filed before this Court for giving directions to refer the above questions. Hence, this present reference.

(3.) MR . J.P. Bhattacharjee, learned senior counsel assisted by Mr. R.K. Joshi, appearing on behalf of the assessee, submits before us that the Tribunal erred in law by reversing the order of the CIT(A) without giving any reason whatsoever. Mr. Bhattacharjee submits that the order of reversal by the Tribunal was passed without discussing the materials on record including the statements recorded and without giving reasons as to why the conclusions arrived at by the CIT(A) could not be accepted. Learned counsel further submits that while passing the order, the Tribunal did not come to an independent finding. The Tribunal simply restored the order of the AO setting aside the order passed by the CIT(A) without recording any reasons whatsoever. Learned counsel has also submitted that the Tribunal was absolutely wrong in coming to the conclusion that the decision of Tolaram Daga vs. CIT (supra) was not applicable in the present case on the ground that the said decision was recorded by this Court under the Indian IT Act, 1922, where there was no such provision similar to that of S. 68 of the present Act. Learned counsel submits that it is true that similar provision of S. 68 of the present Act was not there in the Indian IT Act, 1922; but the principles enunciated in the said decision are very much applicable in the present case inasmuch as the law laid down by this Court in Tolaram Daga's case (supra) was based on as to how the AO should be satisfied regarding the genuineness of the documents.