Madras HC quashes Non-Speaking Order of NFAC in Appeal against Addition u/s 115BE, remands matter [Read Order]

A single judge of the Madras High Court set aside an order against an assessee. The Court questioned the application of mind of the Assessing Officer in fixing the liability of the Asseessee.

The petitioner, Sohan Raj Khanted Guvanthraj submitted income tax returns for the assessment year 2020-2021 on December 30, 2020, declaring a total income of Rs. 53,10,01,450/-. The assessment order for this return was issued on September 28, 2022. In this order, the assessing officer had included a sum of Rs. 23 Crores as income under Section 68 of the Income Tax Act, 1961, proposing taxation under Section 115BBE of the Income Tax Act.

The appeal focuses on the inclusion of the Rs. 23 Crores sum. According to the petitioner, this amount represents a genuine unsecured loan from M/s. Magunta Exports, Nellore. The assessing officer did not accept this claim due to M/s. Magunta Exports filing a return indicating nil income in the relevant assessment year. The appellate authority upheld the assessing officer's conclusions, leading to the rejection of the appeal. The petitioner filed a writ petition seeking remedy.

Respondent argued that the impugned order does not call for any interference and that the said order is supported by reasons. He contended that the entire transaction lacks credibility and was entered into for dubious purposes.

The petitioner pointed out that the appellate authority reproduced the grounds of appeal, the facts of the case, the written submissions of the appellant and the inferences and conclusions drawn by the assessing officer. The petitioner further contended that the findings and conclusions are not accompanied by reasons in support of such conclusions.

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Senthil Kumar Ramamoorthy, in a single judge judgment of the court observed that the appellate authority has drawn the conclusion that the inferences and findings of the assessing officer are acceptable. The court observed that there is nothing to indicate that the appellate authority independently applied its mind and observed that the conclusions are in the nature of ipse dixit and no supporting reasons are discernible. The Court set aside the impugned order

The petitioner was represented by Joseph Prabakar. The Respondent was represented by B.Ramasamy, Sr. Standing Counsel (IT).

To Read the full text of the Order CLICK HERE

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