Regen Infrastructure & Services Pvt Ltd., CHENNAI V. DCIT, CHENNAI

ITA 133/CHNY/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7758 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V M PRASAD
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Principle of natural justice
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.133/MDS/2016 ' (' / ASSESSMENT YEAR : 2010-11 M/S REGEN INFRASTRUCTURE & SERVICES PVT. LTD. (FORMERLY M/S RENEWABLE ENERGY GENERATION PVT. LTD.), KRM PLAZA, 8 TH FLOOR, NORTH TOWER, NO.2, HARRINGTON ROAD, CHETPET, CHENNAI - 600 031. PAN : AADCR 9647 J V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(1), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. B. RAMAKRISHNAN, FCA ,-*+ . / / RESPONDENT BY : SH. M.S.V.M. PRASAD, CIT 0 . 1$ / DATE OF HEARING : 15.02.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX, CHENNAI-5, CHENNAI, DATED 23.02.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.133/MDS/16 2. THERE WAS A DELAY OF 266 DAYS IN FILING THIS APP EAL BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CO NDONATION OF DELAY. WE HAVE HEARD THE LD. REPRESENTATIVE AND TH E LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DEL AY AND ADMIT THE APPEAL. 3. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER COMP LETED THE ASSESSMENT AFTER CALLING FOR THE RELEVANT DETAILS F ROM THE ASSESSEE IN RESPECT OF INFRASTRUCTURE DEVELOPMENT CHARGES, S ITE DEVELOPMENT CHARGES, EVACUATION COST, CRANE HIRE CHARGES, ETC. THE ASSESSING OFFICER HAS ALSO CALLED UPON THE ASSESSEE TO EXPLAI N THE DELAY IN FILING THE RETURN FOR THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING ALL THE MATERIAL FILED BY THE ASSESSEE, THE ASSESSI NG OFFICER ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE ADMINISTRA TIVE COMMISSIONER IN THE GUISE OF EXERCISING HIS JURISDI CTION UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT') FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDING TO THE LD. REPRESENTATIVE, THE COMMISSIONER HAS NOT ADJUDICATED THE ISSUE ON T HE BASIS OF 3 I.T.A. NO.133/MDS/16 EXPLANATION FILED BY THE ASSESSEE. THE COMMISSIONE R HAS SIMPLY DIRECTED THE ASSESSING OFFICER TO VERIFY AND CONFIR M THE CONTENTION OF THE ASSESSEE ON EACH OF THE EXPENDITURE. ACCORD ING TO THE LD. REPRESENTATIVE, THE COMMISSIONER OUGHT TO HAVE APPL IED HIS MIND TO THE EXPLANATION OF THE ASSESSEE AND OUGHT TO HAVE R ECORDED HIS OWN FINDINGS. MOREOVER, WHEN THE ASSESSING OFFICER APPLIED HIS MIND TO THE FACTS OF THE CASE, THE COMMISSIONER CAN NOT SAY THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PRE JUDICIAL TO THE INTERESTS OF REVENUE. IN VIEW OF THE ABOVE, ACCORD ING TO THE LD. REPRESENTATIVE, THE COMMISSIONER IS NOT JUSTIFIED I N EXERCISING HIS JURISDICTION UNDER SECTION 263 OF THE ACT. 4. ON THE CONTRARY, SHRI M.S.V.M. PRASAD, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R HAS NOT APPLIED HIS MIND TO THE MATERIAL FILED BY THE ASSES SEE. THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY WIT H REGARD TO CLAIM MADE BY THE ASSESSEE BEFORE HIM. THE NON-APP LICATION OF MIND, ACCORDING TO THE LD. REPRESENTATIVE, IS AN ER ROR WITHIN THE MEANING OF SECTION 263 OF THE ACT, CONSEQUENTLY THE ORDER PASSED BY THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTE RESTS OF REVENUE. THEREFORE, THE COMMISSIONER HAS RIGHTLY DIRECTED TH E ASSESSING 4 I.T.A. NO.133/MDS/16 OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE AND PA SS APPROPRIATE ORDER IN ACCORDANCE WITH LAW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT A NY DISCUSSION IN THE ASSESSMENT ORDER. THE ASSESSEE NOW CLAIMS THAT THE ASSESSING OFFICER CALLED FOR ALL THE DETAILS WITH R EGARD TO THE ISSUE RAISED BY THE COMMISSIONER. THE FACT REMAINS THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE MATERIAL FI LED BY THE ASSESSEE. THEREFORE, THERE IS AN ERROR OF NON-APPL ICATION OF MIND BY THE ASSESSING OFFICER. SINCE THE ASSESSING OFFICER IS HAVING JUDICIAL POWER UNDER SECTION 136 OF THE ACT, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THE APPLICATION OF MIND TO THE MATERIAL AVAILABLE ON RECORD SHALL BE REFLECTED IN THE ASSES SMENT ORDER. THE CORRECTNESS OR OTHERWISE OF THE ORDER HAS TO BE DEC IDED ON THE BASIS OF THE REASONS RECORDED IN THE ASSESSMENT ORDER. T HE ASSESSING OFFICER CANNOT SUPPORT THE ORDER OF THE ASSESSMENT BY WAY OF FILING AN AFFIDAVIT OR OTHER MATERIAL BEFORE THE REVISIONA L OR APPELLATE AUTHORITIES. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE ASSESSMENT ORDER SHOULD BE A SPEAKING ONE AND IT SH OULD CONTAIN 5 I.T.A. NO.133/MDS/16 THE REASONS FOR CONCLUSION. UNFORTUNATELY, THE ISS UE RAISED BY THE ASSESSEE IS NOT EVEN DISCUSSED BY THE ASSESSING OFF ICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THERE IS AN ERROR IN THE ORDER OF THE ASSESSING OFFICER WHICH I S PREJUDICIAL TO THE INTERESTS OF REVENUE. 6. WE FIND THAT THE PUNJAB &HARYANA HIGH COURT HAD AN OCCASION TO EXAMINE THIS ISSUE IN CIT V. SUNIL KUMAR GOEL [2 005] 274 ITR 53. THE PUNJAB &HARYANA HIGH COURT, AFTER CONSIDERING T HE JUDGMENT OF THE CONSTITUTIONAL BENCH OF THE APEX COURT IN S.N.M UKHERJEE V. UNION OF INDIA, AIR 1990 SC 1984, HAS OBSERVED AS F OLLOWS: IN S.N.MUKHERJEE V. UNION OF INDIA, AIR 1990 SC 1984, A CONSTITUTION BENCH OF THE SUPREME COURT DISCUSSED TH E DEVELOPMENT OF LAW ON THIS SUBJECT IN INDIA, AUSTRALIA, CANADA, ENGLAND AND THE UNITED STATES OF AMERICA AND AFTER MAKING REFERENCE TO A LARGE NUMBER OF JUDICIAL PRECEDENTS, THEIR LORDSHIPS CULL ED OUT THE FOLLOWING PROPOSITIONS (PAGE 1995) : 'THE DECISIONS OF THIS COURT REFERRED TO ABOVE INDI CATE THAT WITH REGARD TO THE REQUIREMENT TO RECORD REASONS TH E APPROACH OF THIS COURT IS MORE IN LINE WITH THAT OF THE AMER ICAN COURTS. AN IMPORTANT CONSIDERATION WHICH HAS WEIGHED WITH T HE COURT FOR HOLDING THAT AN ADMINISTRATIVE AUTHORITY EXERCIS ING QUASI- JUDICIAL FUNCTIONS MUST RECORD THE REASONS FOR ITS DECISION, IS THAT SUCH A DECISION IS SUBJECT TO THE APPELLATE JU RISDICTION OF THIS COURT UNDER ARTICLE 136 OF THE CONSTITUTION AS W ELL AS THE SUPERVISORY JURISDICTION OF THE HIGH COURTS UNDER A RTICLE 227 OF THE CONSTITUTION AND THAT THE REASONS, IF RECORDED, WOULD ENABLE THIS COURT OR THE HIGH COURTS TO EFFECTIVELY EXERCIS E THE APPELLATE OR SUPERVISORY POWER. BUT THIS IS NOT THE SOLE 6 I.T.A. NO.133/MDS/16 CONSIDERATION. THE OTHER CONSIDERATIONS WHICH HAVE ALSO WEIGHED WITH THE COURT IN TAKING THIS VIEW ARE THAT THE REQ UIREMENT OF RECORDING REASONS WOULD (I) GUARANTEE CONSIDERATION BY THE AUTHORITY; (II) INTRODUCE CLARITY IN THE DECISIONS; AND (III) MINIMISE CHANCES OF ARBITRARINESS IN DECISION MAKIN G. IN THIS REGARD A DISTINCTION HAS BEEN DRAWN BETWEEN ORDINAR Y COURTS OF LAW AND TRIBUNALS AND AUTHORITIES EXERCISING JUDICIA L FUNCTIONS ON THE GROUND THAT A JUDGE IS TRAINED TO LOOK AT THING S OBJECTIVELY UNINFLUENCED BY CONSIDERATIONS OF POLICY OR EXPEDIEN CY WHEREAS AN EXECUTIVE OFFICER GENERALLY LOOKS AT THINGS FROM THE STAND POINT OF POLICY AND EXPEDIENCY. REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHORI TY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL F UNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISD ICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CO NSIDERATIONS, REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THI S COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY MUST RECOR D REASONS FOR ITS DECISION, ARE OF NO LESS SIGNIFICANCE. THES E CONSIDERATIONS SHOW THAT THE RECORDING OF REASONS B Y AN ADMINISTRATIVE AUTHORITY SERVES A SALUTARY PURPOSE, NAMELY, IT EXCLUDES CHANCES OF ARBITRARINESS AND ENSURES A DEGR EE OF FAIRNESS IN THE PROCESS OF DECISION-MAKING. THE SAI D PURPOSE WOULD APPLY EQUALLY TO ALL DECISIONS AND ITS APPLIC ATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREFORE, THE REQ UIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL F UNCTIONS IRRESPECTIVE OF THE FACT WHETHER THE DECISION IS SU BJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IT MAY, HOWEVE R, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION OF A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CI RCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHORITY HAS GIVEN DUE CON SIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING O F REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELL ATE OR REVISIONAL AUTHORITY AGREES WITH THE REASONS CONTAI NED IN THE 7 I.T.A. NO.133/MDS/16 ORDER UNDER CHALLENGE.' IN TESTEELS LTD. V. N. M. DESAI [1970] 37 FJR 7; AIR 1970 GUJ 1, A FULL BENCH OF THE GUJARAT HIGH COURT HAS MADE AN EXTREMELY LUCID ENUNCIATION OF LAW ON THE SUBJECT AND WE CAN DO NO BETTER THAN TO EXTRACT SOME OF THE OBSERVATIONS MADE IN THAT DECISI ON. THE SAME ARE (HEADNOTE OF AIR 1970 (GUJ): 'THE NECESSITY OF GIVING REASONS FLOWS AS A NECESSA RY COROLLARY FROM THE RULE OF LAW WHICH CONSTITUTES ONE OF THE B ASIC PRINCIPLES OF THE INDIAN CONSTITUTIONAL SET-UP. THE ADMINISTRA TIVE AUTHORITIES HAVING A DUTY TO ACT JUDICIALLY CANNOT THEREFORE DE CIDE ON CONSIDERATIONS OF POLICY OR EXPEDIENCY. THEY MUST DE CIDE THE MATTER SOLELY ON THE FACTS OF THE PARTICULAR CASE, SOLELY ON THE MATERIAL BEFORE THEM AND APART FROM ANY EXTRANEOUS CONSIDERATIONS BY APPLYING PRE-EXISTING LEGAL NORMS TO FACTUAL SITUATIONS. NOW THE NECESSITY OF GIVING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE DUTY TO ACT J UDICIALLY. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRA NEOUS OR IRRELEVANT CONSIDERATIONS AND EXCLUDES OR, AT ANY RA TE, MINIMISES ARBITRARINESS IN THE DECISION-MAKING PROCESS. ANOTHER REASON WHICH COMPELS MAKING OF SUCH AN ORDE R IS BASED ON THE POWER OF JUDICIAL REVIEW WHICH IS POSSESSED BY THE HIGH COURT UNDER ARTICLE 226 AND THE SUPREME COURT UNDER ARTICLE 32 OF THE CONSTITUTION. THESE COURTS HAVE THE POWER UNDER THE SAID PROVISIONS TO QUASH BY CERTIORARI A QUASI-JUDICIAL ORDER MADE BY AN ADMINISTRATIVE OFFICER AND THIS POWER OF REVIEW CAN BE EFFECTIVELY EXERCISED ONLY IF THE ORDER IS A SPEAKING ORDER. IN THE ABSENCE OF ANY REASONS IN SUPPORT OF THE ORDER, THE SAID COURT S CANNOT EXAMINE THE CORRECTNESS OF THE ORDER UNDER REVIEW. T HE HIGH COURT AND THE SUPREME COURT WOULD BE POWERLESS TO I NTERFERE SO AS TO KEEP THE ADMINISTRATIVE OFFICER WITHIN THE LIMIT S OF THE LAW. THE RESULT WOULD BE THAT THE POWER OF JUDICIAL REVIEW W OULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CI TIZEN, THERE WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARINESS AND CAP RICE. IF THIS REQUIREMENT IS INSISTED UPON, THEN, THEY WILL BE SU BJECT TO JUDICIAL SCRUTINY AND CORRECTION.' 8 I.T.A. NO.133/MDS/16 IF THE ORDER PASSED BY THE TRIBUNAL IS SCRUTINISED IN THE LIGHT OF THE AFOREMENTIONED PROPOSITION OF LAW, WE DO NOT FIND A NY DIFFICULTY IN SETTING ASIDE THE SAME ON THE GROUND OF VIOLATION O F THE RULES OF NATURAL JUSTICE. THE FLOWERY LANGUAGE USED BY THE T RIBUNAL TO JUSTIFY ITS ACCEPTANCE OF THE RESPONDENT'S PLEA THAT HE DID NOT KNOW THE LAW DOES NOT WARRANT OUR AFFIRMATION. IN OUR OPINION, T HE TRIBUNAL WAS DUTY BOUND TO RECORD TANGIBLE AND COGENT REASONS FO R UPSETTING WELL REASONED ORDERS PASSED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX (APPEALS). IT SHOULD HAVE DIRECTED ITS ATTENTION TO THE LANGUAGE OF SECTIONS 271D AND 271E OF THE ACT IN CONJUNCTION WITH OTHER PROVISIONS OF THE SAME FAMIL Y AND THEN DECIDED BY A REASONED ORDER WHETHER THE RESPONDENT HAD BEEN ABLE TO MAKE OUT A CASE FOR DELETING THE PENALTY. THE ORDER PASS ED BY THE TRIBUNAL SHOULD HAVE CLEARLY REFLECTED THE APPLICATION OF MI ND BY THE LEARNED MEMBERS. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE COMMISSIONER HAS RIGHTLY EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE ACT. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 18 TH MARCH, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 18 TH MARCH, 2016. KRI. 9 I.T.A. NO.133/MDS/16 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 /CIT, CHENNAI-5, CHENNAI 4. 69 ,1 /DR 5. :' ; /GF.