Madhya Pradesh High Court
Nitin Pahadiya vs Union Of India (Uoi) on 4 August, 2005
Equivalent citations: (2006)202CTR(MP)321
Author: A.M. Sapre
Bench: R.V. Raveendran, Chief Justice, A.M. Sapre
ORDER A.M. Sapre, J.
1. This is an appeal filed by the assesses under Section 260A of the IT Act against a common order, dt. 7th Sept., 2001 (Annex. P-2), passed by Tribunal in ITA No. 253/Ind/1996 and ITA No. 512/Ind/1996. The appeal was admitted for final hearing on following substantial question of law :
Whether the payments made to the agriculturists in the facts and circumstances of the case, would fall under Section 69C of the IT Act ?
2. In order to appreciate the issue involved, few relevant facts need to be mentioned.
3. The appellant-an assessee is a proprietor of one concern known as Mahavir Ginning Factory at Kukshi. He is engaged in the business of ginning. In his manufacturing activity, the appellant is required to purchase cotton.
4. In the assessment year in question (1992-93), the dispute arose on certain purchases made by the assessee of cotton from some agriculturists, amounting to Rs. 3,00,779. In order to decide this issue, the AO called those agriculturists from whom the assessee claimed to have purchased the cotton. They were twice examined. In the first instance, their statement was recorded behind the back of assessee whereas in the second instance, their statements were recorded in presence of assessee. The AO however doubted the genuineness of these transactions. According to him (AO) the credit entries shown by assessee in his account books in the name of different persons from whom he claimed to have purchased cotton were not genuine and that payments had already (been) made to them. Accordingly, the AO by his order, dt. 31st March, 1995 added a sum of Rs. 3,00,779 as an income by taking recourse to Section 69C of the IT Act. The assessee felt aggrieved of the order of AO, filed an appeal to CIT(A). The CIT(A) by order dt. 9th Jan., 1996 (Annex. D) allowed the appeal and set aside the impugned addition. The Revenue then felt aggrieved of the order passed by CIT(A) filed further appeal to Tribunal. By impugned order, the learned Members of the Tribunal allowed the appeal and set aside the order of CIT(A). As a consequence, the order of AO making addition of Rs. 3,00,779 was restored. It is against this order, the assessee has felt aggrieved and filed this appeal. As observed supra, this appeal was admitted for final hearing on the aforementioned substantial question of law.
5. Heard Shri S.C. Bagadia, learned senior counsel with Shri D.K. Chhabra, learned Counsel for the appellant and Shri A.P. Patankar, learned Counsel for the respondent.
6. Having heard learned Counsel for the parties and having perused record of the case, we are inclined to allow the appeal, set aside the impugned order and remand the case to the Tribunal for deciding the appeal afresh on merits.
7. Since, we have formed an opinion to remand the case to Tribunal and hence, we do not wish to give any finding on merits nor we wish to take note of the facts in detail except what we have narrated supra for appreciating the issue sought to be urged by the parties in these proceedings.
8. In our opinion, the need to remand has arisen on account of following finding recorded by the Tribunal while allowing the appeal of Revenue as contained in para 6 of the impugned order :
We have also perused the statements of different parties filed in the compilation of Revenue pp. 1 to 18 and we find that except for two cases all the seven parties have either stated that payment was received within 10 to 15 days or within one month.
On being asked, learned Counsel for Revenue was unable to point out any such statement having been made by any of the witnesses. In other words, he was unable to read from the statement of any of the witnesses what the Tribunal has taken note of while allowing ,the appeal.
9. When the Tribunal was reversing the finding of fact recorded by the CIT(A) on the question involved, in exercise of its second appellate jurisdiction then it was obligatory upon the Tribunal to have discussed the factual evidence led by the assessee in its proper perspective. Referring to a factual statement of a witness without giving his name and actually quoting what he said and where he said, the finding of Tribunal cannot be said to be a legally sustainable finding. It is a finding which is rendered de hors the evidence led. It is not supportable by evidence on record. Such finding is not binding on this Court and is incapable of being sustained.
10. This Court in its appellate jurisdiction cannot appreciate the evidence led by the parties for deciding the issue because our jurisdiction is confined to only substantial question of law framed. Similarly, we do possess power under Section 260A ibid to remand the case to Tribunal for deciding the appeal afresh on merits if we find that finding of fact recorded by the Tribunal for reversing the decision of CIT(A) was based on no evidence or non-consideration of evidence led. It then becomes a case of improper appreciation of oral evidence calling for interference. It is for this reason, we have formed an opinion to remand the case to Tribunal. In our view, the remand if made would not cause any prejudice to either of the parties as both will get an opportunity to put forth their submission again before the Tribunal in appeal.
11. In view of aforesaid discussion, which alone is necessary for remanding the case to Tribunal, we allow the appeal, set aside the impugned order and remand the case to Tribunal for deciding the appeal afresh on merits. It is made clear that while deciding the appeal, the Tribunal will only take into consideration those statements of witnesses which were recorded by AO second time and in presence of assessee. We also make it clear that since the issue involved in the appeal need to be decided on facts and hence, the Tribunal will decide the same strictly in accordance with law and uninfluenced by any of our observations made on merits. Let the appeal be decided by Tribunal within 6 months as an outer limit. Parties to appear before the Tribunal on 1st Aug., 2005. Registry to sent the record of the case to Tribunal if requisitioned for deciding this appeal forthwith.
No costs.