The Madras High Court quashed the addition of Rs. 23 Crores under section 68 of the Income Tax Act, 1961 as it was added without any evidence. The Court remanded the matter for reconsideration by the appellate authority.
Sohan Raj Khanted Guvanthraj, the petitioner had filed his income tax returns for the assessment year 2020 – 2021 on 30.12.2020 declaring a total income of Rs.53,10,01,450/-. The assessment order for such a return was issued on 28.09.2022. In the said order, the assessing officer included a sum of Rs.23 Crores as income under Section 68 of the Income Tax Act, 1961 (the Income Tax Act) and proposed to tax the same under Section 115BBE of the Income Tax Act. The said inclusion of the sum of Rs.23 Crores formed the subject of the appeal.
According to the petitioner, the sum of Rs.23 Crores represented a genuine unsecured loan from an entity called M/s.Magunta Exports, Nellore. The assessing officer did not accept this contention because M/s.Magunta Exports had filed a return indicating nil income in the relevant assessment year. The appellate authority accepted all the conclusions of the assessing officer and rejected the appeal.
Dr. B. Ramasamy, senior standing counsel (IT), accepted the notice on behalf of the respondents. He submitted that the impugned order does not call for any interference and that the said order is supported by reasons.
It was found that the appellate authority has set out the grounds raised by the appellant, the written submissions of the appellant and the inferences and conclusions drawn by the assessing officer.
The appellate authority has concluded that the inferences and findings of the assessing officer are acceptable. However, there is nothing to indicate that the appellate authority independently applied his mind. The conclusions are in the nature of ipse dixit and no supporting reasons are discernible.
The Single bench of Justice Senthilkumar Ramamoorthy allowed the petition by quashing the impugned order and remanded the matter for reconsideration by the appellate authority. After providing a reasonable opportunity to the petitioner, the appellate authority is directed to dispose of the appeal by a reasoned order within a maximum period of four weeks from the date of receipt of a copy of the order. The petitioner is directed to extend full cooperation to ensure that the appeal is disposed of within the time limit specified above.
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