R.K.ABICHANDANI,J. - (1.) ADMIT . The following question of law is formulated. Has the Tribunal committed an error in exercise of its jurisdiction in setting aside the appellate order of CIT(A) without taking into consideration the reasons for which that order was made ?
(2.) AT the request of the learned counsel appearing for both the sides, since the matter involves a short point, it has been taken up for final disposal. The matter pertains to the asst. year 1993 94. The assessee filed returns of income on 31st Jan., 1994, declaring the total income of Rs. 1,29,000. In response to the notice issued under S. 143(2) of the Act, the assessee appeared through its authorised representative and during the proceedings, it was found that the assessee had maintained two sets of accounts, one is respect of processing division and the other construction division. The business of processing division was in the name and style of Girish Silk Mill. The construction division business was in the name of Garden Avenue Apartments. During the Search proceedings under S. 132 which was carried out on 17th Nov., 1992, a disclosure of Rs. 25 lacs was made in the group of assessees including the disclosure of Rs. 5 lacs in the name of the assessee for the accounting year relevant to the said assessment year. An unaccounted expenditure incurred towards construction work of Garden Avenue Apartments of Rs. 3 lacs was disclosed in the said disclosure of Rs. 5 lacs. The assessee debited a sum of Rs. 3,14,964 on account of miscellaneous construction expenses. The AO disallowed the said construction expenses and found that the disclosed income of Rs. 3 lacs had been nullified by debiting miscellaneous construction account and correspondingly crediting to construction account. In the appeal before the CIT(A) I, the District Valuation Report was brought to the notice of the appellate authority pointing out that as per that valuation report, the cost of construction of Garden Avenue Apartments, came to Rs. 68,12,280 against the cost Rs. 63,83,693 recorded in the books of account leaving out an amount of Rs. 4,24,587. It was submitted before the appellate authority that this difference was because of the fact that the appellant had understated the cost of construction to that extent in the books of account showing that an amount of Rs. 3 lacs was invested in the construction of Garden Avenue Apartments. It was therefore, argued that the AO was not justified in disallowing the cost of construction to the extent of Rs. 3 lacs. The CIT(A) considered these contentions in the following terms. "I have carefully considered the submissions made by the learned counsel of the appellant. It is seen that the appellant has given clear and unequivocal bifurcation of the undisclosed income of Rs. 5 lakhs. In the bifurcation, the appellant has clearly mentioned that the amount of Rs. 3 lakhs has been spent for construction of Garden Avenue Apartment. It has also seen that in his statement under s 132(4) during the course of search, the appellant has also made it clear in reply to question No. 6 that a part of the undisclosed income has been used in building construction in apartment. The fact that the appellant has invested a part of undisclosed income for the purpose of construction of Garden Avenue Apartment has also been proved by the valuation report of the DVO wherein the cost of construction has been estimated at Rs. 68,12,280 as against the cost of construction disclosed by the appellant in the books of account amounting to Rs. 63,87,693 whereby leaving to a difference of Rs. 4,24,587 which apparently represents the undisclosed income of Rs. 3 lakhs."
(3.) IT appears from the order of the Tribunal that it has not bestowed its attention to the above material reasoning adopted by the CIT(A) for deciding the appeal. It was incumbent on the Tribunal before upsetting the order of CIT(A) to consider the reasons given by that authority for its decision. As held by the Supreme Court in Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC) : TC 8R.721 it is necessary that every fact for and against the assessee must have been considered with due care by the Tribunal and it must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. This Court in Rajesh Babubhai Damania vs. CIT (2001) 169 CTR (Guj) 346 : (2001) 251 ITR 541 (Guj) observed that it was the duty of the Tribunal to ascertain the reasons which were given by the CIT(A) in whose order, the order of the AO had merged.;