CIT vs. Promain Ltd (Delhi High Court)

Tribunal has to deal with factual findings of AO & give reasons for its conclusion

Pursuant to a search u/s 132, the AO passed a block assessment order u/s 158BC. The Tribunal allowed the assessee’s appeal on the ground that (i) the search warrant did not mention the assessee’s name and (ii) the assessment was not based on material found during the search. The department filed an appeal claiming that (a) the search warrant & panchnama did refer to the assessee’s name and (b) the detailed assessment order exposing the assessee’s modus operandi had not been dealt by the Tribunal. HELD by the High Court allowing the appeal:

The Tribunal recorded a wrong factual finding that the search warrant did not include the assessee’s name. The Tribunal has not specifically referred to and dealt with the findings of the AO. which are detailed, specific & with reference to several factual aspects, documents, etc. The Tribunal is required to deal with the factual findings recorded by the AO and give its factual conclusions. The factual conclusion should be based upon reasons and should be outcome of analysis and discussion. The Tribunal being the final fact finding authority cannot merely record its conclusions without discussing the factual matrix, evidence and material. Merely stating that the papers etc. do not pertain to the assessee and the contents of the document cannot be utilized, is the conclusion or the final inference which is not sufficient in the light of what has been held by the AO in the block assessment order. The fact that the assessee filed a detailed written synopsis does not mean that the order of the Tribunal meets the legal requirement. The law mandates that the Tribunal should give reasons which are discernible and apparent from the order. What weighed with the Tribunal cannot be assumed in the absence of discussion.