Asianet Communications Limited, CHENNAI V. JCIT, CHENNAI

ITA 1465/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9696 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR VARMA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Principle of natural justice
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1465/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 M/S ASIANET COMMUNICATIONS LIMITED, 15, JAGANATHAN ROAD, NUNGAMBAKKAM, CHENNAI - 600 034. PAN : AAACA 2460 P V. THE JOINT COMMISSIONER OF INCOME TAX, MEDIA RANGE, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. AJIT KUMAR VARMA, CIT 1 / 2% / DATE OF HEARING : 28.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 07.04.2016 / 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 IV, CHENNAI, DATED 28.03.2014, PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 196 1 (IN SHORT 'THE ACT') AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.1465/MDS/14 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY CALLING THE ASSESSEE TO FURNISH NECESSARY MATERIAL WITH REGARD TO DEMERGER OF THE COMPANY. ACCORDING TO THE LD. COUN SEL, ALL THE ASSETS AND LIABILITIES OF THE UNDERTAKING WERE TRAN SFERRED TO THE RESULTING COMPANY DUE TO DEMERGER. THE SECURED LOA NS WERE USED BY DEMERGED COMPANY. ACCORDING TO THE LD. COUNSEL, THE ASSETS AND LIABILITIES WERE TRANSFERRED PURSUANT TO THE DE MERGER APPROVED BY THE BOMBAY HIGH COURT. THE LD.COUNSEL FURTHER S UBMITTED THAT THE SECURED LOANS BORROWED BY THE COMPANY WERE USED FOR THE PURPOSE OF FILM AND PROGRAMME INVENTORY. THE INVEN TORY SCHEDULE PERTAINS TO ONLY FILM AND PROGRAMME INVENTORY, WHIC H WAS RETAINED BY THE DEMERGED COMPANY. AFTER DEMERGER, THE ACCOU NTING PRINCIPLES OF COMPANY WERE CHANGED THAT CANNOT BE C ONSIDERED AS VIOLATION OF SECTION 2(19AA) OF THE ACT. THE CHANG E IN ACCOUNTING POLICY IN CONNECTION WITH DEPRECIATION RELATES TO W RITING OFF OF THE FILM BUSINESS WHICH HAS BEEN RETAINED BY THE DEMERGED CO MPANY. THEREFORE, IT WILL NOT AFFECT / VIOLATE THE PROVISI ONS OF SECTION 2(19AA) OF THE ACT. 3 I.T.A. NO.1465/MDS/14 3. REFERRING TO THE TRANSFER OF SHARES AFTER DEMERG ER, THE LD.COUNSEL SUBMITTED THAT THIS CANNOT BE CONSIDERED AS VIOLATION OF SECTION 2(19AA) OF THE ACT. ON A QUERY FROM THE BE NCH WHETHER THE ASSESSING OFFICER CONSIDERED THE VIOLATION OF SECTI ON 2(19AA) OF THE ACT? THE LD.COUNSEL SUBMITTED THAT THERE IS NO DIS CUSSION IN THE ASSESSMENT ORDER. HOWEVER, IT IS NOT NECESSARY TO DISCUSS EACH AND EVERYTHING IN THE ASSESSMENT ORDER. REFERRING TO THE JUDGEMENT OF DELHI HIGH COURT IN CIT V. VIKAS POLYM ERS (2012) 341 ITR 537, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN AN ASSESSING OFFICER RAISED A QUERY DURING THE COURSE OF ASSESSMENT PROCEEDING, WHICH WAS ANSWERED BY THE ASSESSEE, AND IF THE QUERY OR THE REASON WAS NOT REFLECTED IN THE ASSESSMENT O RDER THAT WOULD NOT LEAD TO THE CONCLUSION THAT THE ORDER OF THE AS SESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. IN VIEW OF THE JUDGMENT OF THE DELHI HIGH COURT, ACCORDING TO THE LD. COUNSEL, IT MAY NOT BE NECESSARY TO DISCUSS EACH AND EVERYTHING IN THE ASSESSMENT ORDER. 4. WE HAVE HEARD SHRI AJIT KUMAR VARMA, THE LD. D. R. ALSO. ADMITTEDLY, THE ASSESSMENT PROCEEDING BEFORE THE AS SESSING OFFICER IS A JUDICIAL PROCEEDING. THE ORDER OF THE ASSESSING OFFICER 4 I.T.A. NO.1465/MDS/14 IS SUBJECTED TO REVISION BY THE PRINCIPAL COMMISSIO NER / COMMISSIONER AND ON APPEAL BEFORE THE CIT(APPEALS). FURTHER APPEAL ALSO PROVIDED TO THIS TRIBUNAL AND HIGH COUR T AND SUPREME COURT. THEREFORE, THE REVISIONAL / APPELLATE AUTHO RITIES COULD KNOW THE REASONS PROVIDED THE ASSESSING OFFICER DISCUSSE S THE SAME IN THE ASSESSMENT ORDER. FOR ANY REASON, IF THE LD.CO UNSEL THINKS THAT IT IS NOT NECESSARY FOR THE ASSESSING OFFICER TO RE CORD THE REASONS IN THE ASSESSMENT ORDER FOR ALLOWING THE CLAIM OF THE ASSESSEE, THE VERY SAME STAND WOULD BE APPLICABLE WHEN THE ASSESS ING OFFICER DISALLOWS THE CLAIM OF THE ASSESSEE. THEREFORE, IF THE ASSESSING OFFICER, AFTER CALLING FOR DETAILS AND INFORMATION FROM THE ASSESSEE, SIMPLY DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT RECORDING ANY REASONS, CAN THE ASSESSEE AGAIN CONTEND BEFORE THIS TRIBUNAL THAT THE ASSESSING OFFICER HAS CALLED FOR DETAILS THAT W OULD BE SUFFICIENT ENOUGH? IN THAT CASE, THE ASSESSEE NATURALLY WOULD COME AND CONTEND BEFORE THE APPELLATE AUTHORITIES THAT THE A SSESSING OFFICER HAS NOT PASSED ANY SPEAKING ORDER. THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT WHETHER IT IS ADMINISTRATIV E ORDER OR JUDICIAL ORDER, THE REASONS FOR CONCLUSION SHALL BE CONTAINE D IN THE ASSESSMENT ORDER ITSELF SO AS TO ENABLE THE APPELLA TE / REVISIONAL AUTHORITIES TO APPRECIATE THE REASONS FOR CONCLUSIO N REACHED THEREIN. 5 I.T.A. NO.1465/MDS/14 IF THE ASSESSING OFFICER HAS NOT RECORDED ANY REASO N IN THE ASSESSMENT ORDER FOR THE CONCLUSION REACHED THEREIN IN RESPECT OF THE ISSUE AROSE FOR CONSIDERATION, THEN THE APPELLA TE / REVISIONAL REMEDIES PROVIDED UNDER THE SCHEME OF THE INCOME-TA X ACT WOULD BE MEANINGLESS. IN FACT, THE PUNJAB &HARYANA HIGH COURT HAD AN OCCASION TO EXAMINE THIS ISSUE IN CIT V. SUNIL KUMA R GOEL [2005] 274 ITR 53. THE PUNJAB &HARYANA HIGH COURT, AFTER CONSIDERING THE JUDGMENT OF THE CONSTITUTIONAL BENCH OF THE APE X COURT IN S.N.MUKHERJEE V. UNION OF INDIA, AIR 1990 SC 1984, HAS OBSERVED AS FOLLOWS: 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 CONSIDERATION. THE OTHER CONSIDERATIONS WHICH HAVE ALSO WEIGHED 6 I.T.A. NO.1465/MDS/14 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 ORDER UNDER CHALLENGE.' 7 I.T.A. NO.1465/MDS/14 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.' 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 8 I.T.A. NO.1465/MDS/14 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. 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT IT IS OBLIGATORY ON THE PART OF THE AS SESSING OFFICER TO RECORD HIS OWN REASONS FOR THE CONCLUSION REACHED T HEREIN. IN THIS CASE, THE ASSESSING OFFICER HAS NOT RECORDED ANY RE ASON WITH REGARD TO ASSESSMENT OF CAPITAL GAIN. THEREFORE, T HE APPELLATE / REVISIONAL AUTHORITIES COULD NOT APPRECIATE THE REA SONS FOR ALLOWING THE CLAIM OF THE ASSESSEE. IN VIEW OF THE ABOVE JU DGMENT OF THE SUPREME COURT REFERRED BY PUNJAB & HARYANA HIGH COU RT IN SUNIL KUMAR GOEL (SUPRA), THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE JUDGMENT OF DELHI HIGH COURT IN VIKAS POLYMERS (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE. THE REASONS F OR THE CONCLUSION REACHED IN THE JUDICIAL / ADMINISTRATIVE ORDER CANN OT BE DISPENSED WITH AT ANY CIRCUMSTANCE. THE REASONS RECORDED IN THE ASSESSMENT 9 I.T.A. NO.1465/MDS/14 ORDER WOULD BE THE LINK TO THE MATERIAL AVAILABLE O N RECORD AND THE MIND OF THE DECISION MAKER. TRANSPARENCY IS MORE I MPORTANT IN THE JUDICIAL AND ADMINISTRATIVE MATTERS. THE REASONS R ECORDED IN THE ORDER WOULD ELIMINATE ARBITRARINESS IN THE DECISION MAKING PROCESS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE REASONS NEED TO BE RECORDED BY THE ASSESSING OFFICE R EVEN THOUGH THE DETAILS WERE FILED BY THE ASSESSEE. IN THE CAS E BEFORE US, ADMITTEDLY, THE ASSESSING OFFICER HAS NOT RECORDED ANY REASON. THE ASSESSING OFFICER ALSO HAS NOT EXAMINED THE PROVISI ONS OF SECTION 2(19AA) OF THE ACT WHICH WOULD BE PREJUDICIAL TO TH E INTERESTS OF REVENUE. MOREOVER, THE ORDER OF THE ASSESSING OFFI CER IS ALSO ERRONEOUS. 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. ACCORDINGLY, THE SAM E IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 10 I.T.A. NO.1465/MDS/14 ORDER PRONOUNCED ON 7 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 7 TH APRIL, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 /CIT-IV, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.