Muthoot General Finance, Trivandrum V. ACIT, Trivandrum

ITA 156/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61552 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDU
• Keywords: Principle of natural justice
• Section: 263; 90

Judgement Text

1 ITA NO. 156/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 156/COCH/2011 (ASSESSMENT YEAR 2007-08) M/ MUTHOOT GENERAL FINANCE VS A.C.I.T., CIR.1(2) PATTOM, TRIVANDRUM TRIVANDRUM PAN : AAIFM0603P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R SREENIVASAN REVENUE BY : SMT. A.S. BINDU DATE OF HEARING : 24-07-2012 DATE OF PRONOUNCEMENT : 24-07-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE INCOME-TAX ACT D ATED 20-02-2011 FOR THE ASSESSMENT YEAR 2007-08. 2. SHRI R SREENIVASAN, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER AFTER CALLING FOR THE DETAILS FRO M THE ASSESSEE FOUND THAT NO ADDITION IS REQUIRED. ACCORDINGLY, THE RETURN OF INCOME WAS AC CEPTED. HOWEVER, THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE ASSESSING OFFICER MADE THE ASSESSMENT WITHOUT APPLICATION OF MIND. ACCORDING TO THE LD.REPRESENTATIVE, THE A SSESSING OFFICER CALLED FOR ALL THE DETAILS AND EXAMINED THE SAME; THEREAFTER ACCEPTED THE RETURN OF INCOME. WE HEARD, THE LD.DR ALSO. 2 ITA NO. 156/COCH/2011 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFUL LY GONE THROUGH THE ASSESSMENT ORDER. THE ASSESSMENT ORDER IS VERY CRYPTIC AND NO N SPEAKING. THE ASSESSMENT ORDER IS A QUASI JUDICIAL ORDER WHICH IS SUBJECT TO FURTHER APPEAL AND REVISION BEFORE THE CONCERNED AUTHORITY; THEREFORE, THE REASON FOR ACCE PTING OR NOT ACCEPTING THE CLAIM OF THE ASSESSEE SHOULD CONTAIN IN THE ASSESSMENT ORDER ITSELF. THE ASSESSMENT ORDER SHALL SPEAK ITSELF. THE REASONS FOR A CONCLUSION CANNOT BE SUBSTITUTED EITHER BY WAY OF DOCUMENT OR AFFIDAVIT. IN OTHER WORDS, THE JUDICIA L ORDER SHALL SPEAK FOR ITSELF AND IT SHOULD REFLECT THE APPLICATION OF MIND BY THE CONCE RNED OFFICER. IN THIS CASE, THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING AND HE HAS SIMPLY ACCEPTED THE RETURN OF INCOME. THE ORDER DOES NOT REFLECT THE APPLICATION OF MIND. IT DOES NOT CONTAIN ANY REASON WHATSOEVER. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER DOES NOT CONFIRM THE STANDARD PRESCRIBED BY THE APEX COURT. IN FACT, THE PUNJAB & HARYANA HIGH COURT HAD AN OCCASION TO CONSIDER THE NECESSITY OF RECORDING OF REASONS IN THE JUDICIAL AND QUASI JUDICIAL ORDERS IN COMMISSIONER OF INCOME -TAX VS SUNIL KUMAR GOEL (2005) 274 ITR 53 (P&H). THE PUNJAB & HARYANA HIGH COURT AFTE R CONSIDERING THE JUDGMENT OF THE APEX COURT IN MUKHERJEE (S.N.) VS UOI (1990) AIR 19 90 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 T HE DEVELOPMENT OF LAW ON THIS SUBJECT IN INDIA, AUSTRALIA, CANADA, EN GLAND AND THE UNITED STATES OF AMERICA AND AFTER MAKING REFERENCE TO A L ARGE NUMBER OF JUDICIAL PRECEDENTS, THEIR LORDSHIPS CULLED OUT THE FOLLOWING PROPOSITIONS (PAGE 1995): THE DECISIONS OF THIS COURT REFERRED TO ABOVE IND ICATE THAT WITH REGARD TO THE REQUIREMENT TO RECORD REASONS THE APP ROACH OF THIS COURT IS MORE IN LINE WITH THAT OF THE AMERICAN COURTS. AN IMPORTANT CONSIDERATION WHICH HAS WEIGHED WITH THE COURT FOR HOLDING THAT AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS MUST RECORD THE REASONS FOR ITS DECISION, IS THAT SUCH A DECISI ON IS SUBJECT TO THE APPELLATE JURISDICTION OF THIS COURT UNDER ARTICLE 136 OF THE CONSTITUTION AS WELL AS THE SUPERVISORY JURISDICTION OF THE HIGH CO URTS UNDER ARTICLE 227 OF 3 ITA NO. 156/COCH/2011 THE CONSTITUTION AND THAT THE REASONS, IF RECORDED, WOULD ENABLE THIS COURT OR THE HIGH COURTS TO EFFECTIVELY EXERCISE TH E APPELLATE OR SUPERVISORY POWER. BUT THIS IS NOT THE SOLE CONSID ERATION. THE OTHER CONSIDERATIONS WHICH HAVE ALSO WEIGHED WITH THE COU RT IN TAKING THIS VIEW ARE THAT THE REQUIREMENT OF RECORDING REASONS WOULD (I) GUARANTEE CONSIDERATION BY THE AUTHORITY; (II) INTRODUCE CLAR ITY IN THE DECISIONS; AND (III) MINIMIZE CHANCES OF ARBITRARINESS IN DECISION MAKING. IN THIS REGARD A DISTINCTION HAS BEEN DRAWN BETWEEN ORDINARY COURTS OF LAW AND TRIBUNALS AND AUTHORITIES EXERCISING JUDICIAL FUNCTIONS ON TH E GROUND THAT A JUDGE IS TRAINED TO LOOK AT THINGS OBJECTIVELY UNINFLUENCED BY CONSIDERATIONS OF POLICY OR EXPEDIENCY WHEREAS AN EXECUTIVE OFFICER G ENERALLY LOOKS AT THINGS FROM THE STAND POINT OF POLICY AND EXPEDIENC Y. REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHOR ITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTION B Y THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATION S, REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY MUST RECORD REASONS FOR ITS DECISION, ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDED OF REAS ONS BY AN ADMINISTRATIVE AUTHORITY SERVICES A SALUTARY PURPOS E, NAMELY, IT EXCLUDES CHANCES OF ARBITRARINESS AND ENSURES A DEGREE OF FA IRNESS IN THE PROCESS OF DECISION-MAKING. THE SAID PURPOSE WOULD APPLY E QUALLY TO ALL DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IN OUR OPINIO N, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT WHETHER THE DECISION IS SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IT MAY, HOWEVER, BE ADDED THAT IT IS NOT R EQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION O F A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PA RTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASO NS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHORITY HAS G IVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL ST AGE. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL AUTHORITY AG REES WITH THE REASONS CONTAINED IN THE 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 EXTREME LY LUCID ENUNCIATION OF LAW ON THE SUBJECT AND WE CAN DO NO BETTER THAN TO EXTRACT SOME OF 4 ITA NO. 156/COCH/2011 THE OBSERVATIONS MADE IN THE DECISION. THE SAME AR E (HEADNOTE OF AIR 1970 (GUJ)): THE NECESSITY OF GIVING REASONS FLOWS AS A NECESS ARY COROLLARY FROM THE RULE OF LAW WHICH CONSTITUTES ONE OF THE B ASIC PRINCIPLES OF THE INDIAN CONSTITUTIONAL SET-UP. THE ADMINISTRATIVE A UTHORITIES HAVING A DUTY TO ACT JUDICIALLY CANNOT THEREFORE DECIDE ON CONSID ERATIONS OF POLICY OR EXPEDIENCY. THEY MUST DECIDE 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 JUDICIALLY. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND EXCLUDES OR, AT ANY RATE, MINIMIZES ARBITRARINESS I N THE DECISION-MAKING PROCESS. ANOTHER REASON WHICH COMPELS MAKING OF SUCH AN ORD ER IS BASED ON THE POWER OF JUDICIAL REVIEW WHICH IS POSSESSED BY THE HIGH COURT UNDER ARTICLE 226 AND THE SUPREME COURT UNDER ARTIC LE 32 OF THE CONSTITUTION. THESE COURTS HAVE THE POWER UNDER TH E 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 R EASONS IN SUPPORT OF THE ORDER, THE SAID COURTS CANNOT EXAMINE THE CORRECTNE SS OF THE ORDER UNDER REVIEW. THE HIGH COURT AND THE SUPREME COURT WOULD BE POWERLESS TO INTERFERE SO AS TO KEEP THE ADMINISTRATIVE OFFICER WITHIN THE LIMITS OF THE LAW. THE RESULT WOULD BE THAT THE POWER OF JUDICIA L REVIEW WOULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CI TIZEN, THERE WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARINESS AND CAPRIC E. IF THIS REQUIREMENT IS INSISTED UPON, THEN, THEY WILL BE SUBJECT TO JUD ICIAL SCRUTINY AND CORRECTION. IF THE ORDER PASSED BY THE TRIBUNAL IS SCRUTINIZED 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 TRIBUNAL TO JUSTIFY ITS ACCEPTANCE OF THE RESPONDENTS PLEA THAT HE DID NOT KNOW THE LAW DOES NOT WARRANT OUR AFFIRMATION. IN OUR OPINION, THE T RIBUNAL WAS DUTY BOUND TO RECORD TANGIBLE AND COGENT REASONS FOR UPSETTING WELL REASONED ORDERS PASSED BY THE ASSESSING OFFICER AND THE COMMISSIONE R OF INCOME-TAX (APPEALS). IT SHOULD HAVE DIRECTED ITS ATTENTION T O THE LANGUAGE OF SECTION 271D AND 271E OF THE ACT IN CONJUNCTION WITH OTHER PROVISIONS OF THE SAME FAMILY AND THEN DECIDED BY A REASONED ORDER WH ETHER THE 5 ITA NO. 156/COCH/2011 RESPONDENT HAD BEEN ABLE TO MAKE OUT A CASE FOR DEL ETING THE PENALTY. THE ORDER PASSED BY THE TRIBUNAL SHOULD HAVE CLEARL Y REFLECTED THE APPLICATION OF MIND BY THE LEARNED MEMBERS. 4. IN THE CASE ON HAND, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DOES NOT REFLECT THE APPLICATION OF MIND AND IT DOES NOT CONTAIN ANY REASONS. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE COMMISSIONER OF INCOME-TAX HAS RIGHTLY SET ASIDE THE ASSESSMENT ORDER. WE MAKE IT CLEAR THAT WHILE PASS ING THE ORDER AS PER THE DIRECTIONS OF THE ADMINISTRATIVE COMMISSIONER, THE ASSESSING OFFI CER SHALL GIVE REASONS FOR HIS CONCLUSION AND THE APPLICATION OF MIND TO THE MATER IAL AVAILABLE ON RECORD SHOULD ALSO REFLECT IN THE ASSESSMENT ORDER. 5. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THIS 24 TH JULY, 2012. (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 24 TH JULY, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH