Brief of the case
In course of assessment, AO made addition under Section 68. CIT (A) remanded matter back for obtaining confirmation of creditors. AO gave a remand report that he was satisfied with confirmation given by creditors and loan appeared to be genuine. CIT(A) relying upon said report , deleted addition. Assessee repeatedly submitted that matter remain unverified. Tribunal held that revenue’s appeal against said order was totally merit-less and deserved to be dismissed.
Facts of the case
- The search and seizure operation u/s 132 was carried out in case of another assessee i.e. Sh.Mukesh , wherein details of unsecured loan was found, in the name of assessee.
- A notice u/s 153C was issued requiring the assessee to provide the details in regard to its income derived mainly from interest income. As a result thereof return was filed by the assessee .
- The AO observed that the assessee did not filed supporting evidence of confirmations of loans taken from the parties. Accordingly he concluded that the genuineness of the transactions was not proved. Thus, he opined that those were just accommodation entries and therefore, he made addition u/s 68 in assesse’s income.
- The CIT(A) remanded back the matter to AO.
- In the remand report, AO confirmed that he was satisfied with confirmation given by creditors and loan appeared to be genuine. Further, CIT(A) relying upon said report , deleted addition.
- The revenue, however challenged the said order of CIT(A) on the ground of admission of fresh evidence under Rule 46A of the Income Tax Rules 1963 on facts.
Contention of Assessee
- Assessee repeatedly submitted that matter remained unverified.
HELD by ITAT
- The court have heard the rival submissions and thus in the absence of any evidence to the contrary the finding of the CIT(A) under challenge that “adequate and real opportunities was lacking during the assessment proceedings” is upheld.
- Considering the grievance posed by the Revenue, The court find on facts that since the claim has been given up in the second Remand Report by the AO himself, the AO cannot claim to be aggrieved by the findings arrived at relying upon his own Remand Report. The .CIT(A) has accepted the assessee’s claim based on the strength of the second Remand Report Reference to this material document i.e. Remand Report in the grounds raised is curiously missing. This omission appears to be deliberated and leads us to conclude that the Revenue has consciously indulged in engaging in meritless litigation. Once the A.O. in the Remand Report had already communicated that the enquiries made after issuing notices u/s 133(6) to the parties/persons who had confirmed the assessee’s version and the AO concluded that the loans taken stood verified. No further legitimate grievance can then be said to remain for examination by the AO. In the said factual position, it is not possible for the AO to still have a grievance as he himself reports that having examined he is satisfied by the claim put forth.
- In order to address the issue of levying costs on the Revenue, we deem it appropriate to refer to salient facts on record. A careful reading of the grounds shows that in the Ground No.-3 reference is made only to the First Remand Report. It appears that while framing the Grounds the concerned Assessing Officer and the Commissioner made an attempt to justify the filing of the appeals by referring to the fact that the relief was granted on the basis of the Remand Report dated 06.06.2012 thereby consciously ignoring making reference to the Remand Report dated 22.06.2012 wherein the AO accepts that “In view of the reply furnished by respective parties (lenders) in response to notice issues u/s 133(6) issued during remand proceedings loans taken by the assessee appear to be verified”. The Court is pained to address the serious damage done by this deliberate, mischievous and selective reference to facts by such responsible persons which grievously damages the public faith and belief in the honest fair play of the tax administration. The conscious and selective reference to facts demonstrates that at the very stage of filing of the appeal its fate and conclusion was known for which specific purpose the facts were attempted to be obfuscated. The filing of present appeal with complete knowledge of its fate by the Revenue only reflects the mischievous adamancy to attempt to mislead the Tribunal and waste the time of the Court and the officers concerned. The present appeal as a part of a search cannot be a case of non-application of mind where the grounds presumably proposed by the AO have been approved carelessly. The present appeal is a prime example of meritless litigation for reasons best known to the few departmental officers having powers of directing authorization for filing appeals. This over confidence of the concerned Departmental officers
- In filing an appeal completely devoid of merit prima facie shows that these officers endowed with the onerous task of handling Department’s actions in litigation matters have willfully and deliberately failed to exercise their powers mindfully as required of them as per law and thereby abused government machinery to initiate a litigation which entails financial costs and tarnishes the image of the Department and also strains the government resources. This obduracy and adamancy of the concerned officers in filing a meritless appeal only because officially they are entitled/empowered to do so, strikes a blow to the blind faith reposed in them by the tax administration in always acting fairly as evident from the orders passed in the Remand proceedings and the order of the CIT(A) in the present appeals. However only because of the conduct of few Departmental officers who appear to be unconcerned or rather mock the sincere efforts made by CBDT with impunity unmindful of the consequences to the system by their sense of entitlement the reputation of the tax administration suffers, this needs to be addressed at the earliest. The entitlement of always believed to be acting in good faith cannot be abused by irresponsibly setting in motion the entire justice delivery system where admittedly there was no grievance to the AO. The Assessing Officer including all the officers in the tax administration are functionaries of “the State” exist for “the State” and perform the functions of “the State”. For this specific purpose they are entrusted with vast powers to discharge “the State functions”. In the discharge of their onerous duties and responsibilities these officers are armed with wide and sweeping powers. The officers who have authorized the filing of the appeals and have filed the appeals have made a travesty of justice. Mocking at the system by filing the appeals and highlighting the apathy of the Department by issuing specific instructions from time to time that necessary due diligence and caution is not being exercised while granting authorization for filing appeals and to pursue litigation only in deserving cases. Filing of an appeal by an Assessing Officer is a right which is vested by the statue in the “State” herein the tax department i.e. the Assessing Officer as and when he is aggrieved by the order of the First Appellate Authority can file an appeal before the ITAT. However, where as in the present case, admittedly the Assessing Officer, consciously and carefully after due and proper enquiry carried out by issuance of notices u/s 133(6) to the concerned persons/parties and considering the material comes to the conclusion that he is satisfied by the claim of the assessee on verification, then in such a situation the filing of the present appeals cannot be justified and can only be termed as a farce. The court are aware that the tax administration has put in place robust checks and balances to ensure that the filing of appeals is not done carelessly and as per the procedures set in place the grounds to be raised by the Assessing Officer have to be duly approved by a Senior Commissioner of Income Tax. The evidence that the said exercise in the facts of the present case has been done is on record. The said exercise in the facts of the present appeals has been reduced to a mere ritual cannot be ignored. Thus in the face of the above precedent where costs of Rs.10,000/- have been awarded to the assessee by the Co-ordinate Bench having giving our serious consideration to the same in the facts of the present case where the Revenue has indulged in frivolous meritless litigation, The court desist from awarding costs considering the statement of the Ld. CIT DR that due care shall be taken in future. It is our earnest hope and endeavour that having invited the attention of the Chairman, CBDT to this grave assault on the trust and reputation of fair play enjoyed by the tax administration the malaise is immediately addressed. The court have taken cognizance of the fact that the present cases are group of appeals in a search case, however where the issue is given up by the AO in the remand proceedings in such an eventuality the mischievous manner of filing the appeals needs careful attention as the Revenue in the appeals before the ITAT cannot be allowed to waste the time of all concerned where the issue for all intents and purposes has been given up by him.