Keystone Property Developers, Bangalore V. Addl.CIT, Bangalore

ITA 13/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57498 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 10-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO13/BANG/2011 (ASSESSMENT YEAR : 2006-07) M/S. KEYSTONE PROPERTY DEVELOPERS, TUSCAN CENTRE, NO.70, INFANTRY ROAD, BANGALORE-560 001 . APPELLANT. PAN AADFK 3626M VS. ADDL. COMMISSIONER OF INCOME TAX OFFICER, RANGE 8, BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI PADAMCHAND KHINCHA. RESPONDENT BY : SMT. SUSAN THOMAS JOSE. DATE OF HEARING : 02.02.2012. DATE OF PRONOUNCEMENT : 24.2.2012. O R D E R PER SHRI N.K. SAINI, A.M. : THIS IS AN APPEAL BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER DATED 10.11.2010 OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-V, BANGALORE. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTI ON 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED AS 'THE ACT'). 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND FILED ITS RETURN OF INCOME ON 26.10.2006 DECLARING TOTAL INCOME 2 ITA NO.13/BANG/11 OF RS.2,06,84,820. HOWEVER, THE ASSESSMENT WAS FRA MED AT AN INCOME OF RS.2,46,69,820 UNDER SECTION 143(3) OF THE ACT ON 8.12.2008 BY BRI NGING TO TAX THE COMMISSION RECEIVED DURING THE YEAR FOR RS.39,85,000. THE ASSESSING OF FICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN RESPONSE TO THE NOTICE UNDER SECTION 271(1)( C ) OF THE ACT, THE ASSESSEE SUBMITTED THAT THERE WAS NO C ONCEALMENT ON THE PART OF THE ASSESSEE SINCE IT HAD DISCLOSED ALL THE RECEIPTS AS STATED IN THE TDS CERTIFICATE FURNISHED AND THERE WAS NO CONCEALMENT AT ALL. HOWEVER, THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND LEVIED PENALTY A MOUNTING TO RS.13,41,351 UNDER SECTION 271(1)( C ) OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED C IT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING IN PARA 3 OF THE IMPUGNED ORDER AS UNDER : I AM SATISFIED THAT THE CIRCUMSTANCES ENUMERATED ABOVE CLEARLY JUSTIFY LEVY OF PENALTY UNDER SECTION 271(1)( C ) OF THE ACT AS THE ASSESSEE HAS DELIBERATELY CONCEALED PARTICULARS OF INCOME AND FURNISHED INACC URATE PARTICULARS OF SUCH INCOME TO AVOID THE INCIDENCE OF TAX. THUS, HAVING ALL REGARDS TO THE FACTS AND CIRCUMSTANCES, I PROCEED TO LEVY PENALTY UNDER SECT ION 271(1) ( C ) OF THE ACT. 5. NOW THE ASSESSEE IS IN APPEAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IS A NON-SPEAKIN G ORDER SINCE HE HAD NOT CONSIDERED THE JUDICIAL PRONOUNCEMENTS/CASE LAWS FURNISHED BY THE ASSESSEE IN RIGHT PERSPECTIVE. 7. IN HER RIVAL SUBMISSION, THE LEARNED DEPARTMENTA L REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 ITA NO.13/BANG/11 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THE LEARNED CIT(A) WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER STATED THAT THE ASSESSEE QUOTED A NUMBER OF CASE LAWS IN THIS REGARD. HOWEVER, HE HAD NOT DISCUSSED THOSE CASE LAWS, RATIO LAID DO WN IN THOSE CASES, HOW AND IN WHAT MANNER THOSE WERE APPLICABLE TO THE FACTS OF THE AS SESSEE AND IF NOT APPLICABLE, HOW THEY WERE DISTINGUISHABLE. THE LEARNED CIT(A) FURTHER S TATED IN THE IMPUGNED ORDER THAT THE ASSESSING OFFICER WAS JUSTIFIED IN BRINGING THE EN TIRE COMMISSION TO TAX, THEREFORE, THE ASSESSEE CONCEALED INCOME AND PROVIDED INACCURATE P ARTICULARS OF INCOME. HOWEVER, HE HAD NOT DISCUSSED WHAT WERE THE SUBMISSIONS OF THE ASSESSEE. IT IS WELL SETTLED THAT THE ORDER/JUDGMENT UNSUPPORTED BY REASON IS NOT A JUDGM ENT IN THE EYES OF LAW. IT IS ALSO TRUE THAT THE REASONS ARE THE LINK BETWEEN THE MATERIAL ON RECORD AND THE CONCLUSION THEREAFTER BY THE COURT/APPELLATE AUTHORITY. IN OU R VIEW THE LD. CIT(A) SHOULD HAVE PROPERLY CONSIDERED THE ARGUMENTS OF THE ASSESSEE A S WELL AS FINDINGS GIVEN BY THE ASSESSING OFFICER AND THEREAFTER HE SHOULD HAVE MAD E INDEPENDENT FINDINGS EITHER IN FAVOUR OR AGAINST THE ASSESSEE. CONSIDERING THE ENT IRE FACTS, WE ARE OF THE OPINION THAT THE LD. CIT(A) HAD NOT PASSED A PROPER ORDER IN THE EYES OF LAW. AT THIS STAGE, WE MAY REFER TO THE DECISION OF ITAT AHMEDABAD BENCH IN TH E CASE OF GUJARAT THEMIS BIOSYN LTD. VS. J.C.I.T., (2000) 74 ITD 339 (AHD) . THE ITAT AHMEDABAD BENCH, WHILE INTERPRETING THE PROVISIONS OF SECTION 250(6) OF THE I.T. ACT, 1 961 HELD AS UNDER: 'THE PROVISIONS OF SECTION 250(6) PROVIDES THAT THE APPELLATE ORDERS OF THE COMMISSIONER (APPEALS) ARE TO STATE THE POINTS ARIS ING IN THE APPEAL, THE DECISION OF THE AUTHORITY THEREON AND THE REASONS F OR SUCH DECISION. THE UNDERLYING RATIONALE OF THE PROVISIONS IS THAT SUCH ORDERS ARE SUBJECT TO FURTHER APPEAL TO THE TRIBUNAL. SPEAKING ORDER WOU LD OBVIOUSLY ENABLE A PARTY 4 ITA NO.13/BANG/11 TO KNOW PRECISE POINTS DECIDED IN HIS FAVOUR OR AGA INST HIM. ABSENCE OF THE FORMULATION OF THE POINT FOR DECISION FOR WANT OF C LARITY IN A DECISION UNDOUBTEDLY PUTS A PARTY IN QUANDARY. SECTION 250(6 ) EXPRESSLY EMBODIES THE PRINCIPLE OF NATURAL JUSTICE AND SUCH A PROVISION I S CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPE ALS) IN VIOLATION OF THE PROVISIONS OF SECTION 250(6) COULD NOT, THEREFORE, BE SUSTAINED.' 9. THE RATIO LAID DOWN BY THE ITAT AHMEDABA D BENCH IN THE AFORESAID REFERRED TO CASE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRE SENT CASE. 10. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PALWAL COOPERATIVE SUGAR MILLS LTD. (2006) 284 ITR 153 HAS HELD AS UNDER: 'EVERY JUDICIAL/QUASI JUDICIAL BODY / AUTHORITY MUS T PASS A REASONED ORDER WHICH SHOULD REFLECT THE APPLICATION OF MIND OF THE CONCE RNED AUTHORITY TO THE ISSUES / POINTS RAISED BEFORE IT. THE REQUIREMENT OF RECOR DING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARIFY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSID ERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROCESS. ANOTH ER REASON WHICH MAKES IT IMPERATIVE FOR QUASI JUDICIAL AUTHORITIES TO GIVE R EASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJECT TO THE FIGHT OF THE AGGRIEVED PERS ONS TO CHALLENGE THEM BY FILING STATUTORY APPEAL AND REVISION BUT ALSO BY FI LING WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION. SUCH DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POWER TO ISSUE WRITS OF CERTIORARI TO QUASH THE ORDERS PA SSED BY QUASI JUDICIAL AUTHORITIES / TRIBUNALS. LIKEWISE IN APPEAL THE SUP REME COURT CAN NULLIFY SUCH ORDER / DECISION. THE POWER OF JUDICIAL REVIEW CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLEN GE CONTAINS REASONS. IF SUCH ORDER IS CRYPTIC AND DEVOID OF REASONS, THE COURTS CAN NOT EFFECTIVELY EXERCISE THE POWER OF JUDICIAL REVIEW. 11. THE HON'BLE SUPREME COURT IN THE CASE OF MANGALORE GANESH BEEDI WORKS VS. CIT AND ANOTHER (2005) 273 ITR 56 HAS HELD AS UNDER: 'THOUGH IN AN ORDER OF AFFIRMATION IN AN APPEAL U/S 260A OF INCOME TAX ACT, 1961 REPETITION OF THE REASONS ELABORATELY MAY NOT BE NECESSARY, THE ARGUMENTS ADVANCED / POINTS URGED HAVE TO BE DEALT WITH. REASONS FOR AFFIRMATION HAVE TO BE INDICATED, THOUGH IN APPROPR IATE CASES THEY MAY BE BRIEF. 5 ITA NO.13/BANG/11 IT HAS FURTHER BEEN HELD : 'RECORDING OF REASONS IS A PART OF FAIR PROCEDURE. REASONS ARE THE HARBINGER BETWEEN THE MIND OF THE MAKER OF THE DECISION IN TH E CONTROVERSY AND THE DECISION OR CONCLUSION ARRIVED AT. THEY SUBSTITUTE SUBJECTIVITY WITH OBJECTIVITY. FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTIC E. AS WE HAVE ALREADY POINTED OUT THAT IN THE PRESENT CASE, THE LD. CIT(A) HAS NOT RECORDED ANY REASON IN SUPPORT OF HIS DECISION, THEREFORE, T HE FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTICE AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID CASE AND THE PRESENT CASE REQUIRES READJUDICATION A T THE LEVEL OF LD. CIT(A). 12. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. VIKAS CHEMI GUM INDIA (2005) 276 ITR 32 HAS HELD AS UNDER : THE REQUIREMENT OF REASONS AND COMMUNICATION THER EOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE. TH E NECESSITY OF GIVING REASONS FLOWS FROM THE CONCEPT OF RULE OF LAW WHICH CONSTIT UTES ONE OF THE CORNER STONES OF OUR CONSTITUTIONAL SET UP. THE ADMINISTR ATIVE AUTHORITIES CHANGED WITH THE DUTY TO ACT JUDICIALLY CANNOT DECIDE THE M ATTERS ON CONSIDERATIONS OF POLICY OR EXPEDIENCY. THE REQUIREMENT OF RECORDING OF REASONS BY SUCH AUTHORITIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBS ERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF E XTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE D ECISION MAKING PROCESS. ANOTHER REASON WHICH MAKES IT IMPERATIVE FOR THE QU ASI JUDICIAL AUTHORITIES TO GIVE REASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJ ECT TO THE RIGHT OF THE AGGRIEVED PERSONS TO CHALLENGE THE SAME BY FILING S TATUTORY APPEAL AND REVISION BUT ALSO BY FILING WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION. SUCH DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL U NDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POW ER TO ISSUE WRIT OF CERTIORARI TO QUASH THE ORDERS PASSED BY A QUASI JU DICIAL AUTHORITY / TRIBUNAL. LIKEWISE IN APPEAL THE SUPREME COURT CAN NULLIFY SU CH ORDER / DECISION. THESE POWERS CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLENGE CONTAINS REASONS. 13. IN THE PRESENT CASE ALSO, AS WE HAVE ALR EADY POINTED OUT IN THE FORMER PART OF THIS ORDER THAT THE ORDERS PASSED BY THE LEARNED CIT(A) IS A NON-SPEAKING ORDER AND DEVOID OF REASONS SO, IT IS A CRYPTIC ORDER IN THE EYES OF LA W AND NOT SUSTAINABLE. WE, THEREFORE, 6 ITA NO.13/BANG/11 CONSIDERING THE FACTS OF THE PRESENT CASE, ARE OF T HE OPINION THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IS A NON-SPEAKING ORDE R IN THE EYES OF LAW. ACCORDINGLY, WE DEEM IT APPROPRIATE TO SET ASIDE THIS CASE BACK TO THE FILE OF THE LD. CIT(APPEALS) AND DIRECT HIM TO PASS A WELL-REASONED AND SPEAKING ORD ER, AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS. 14. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 24.2.2012.) SD/- SD/- (P. MADHAVI DEVI) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE, DATED: 24.2.2012. *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - B BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, BANGALORE .