Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 9656 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-04-2016
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
30-03-2016
Assessment Year
2010-2011
Appeal Filed On
10-08-2015
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.1808/MDS/2015 ( )( / ASSESSMENT YEAR : 2010-11 M/S PEACOCK APPARELS (P) LTD., PLOT NO.2, MEENAKSHI NAGAR, GST ROAD, PASUMALAI, MADURAI 625 004. PAN : AACCP 2308 P V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I(1), MADURAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI R. SRINIVASAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. PATHLAVATH PEERYA, CIT 1 / 2% / DATE OF HEARING : 30.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 13.04.2016 / 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 -1, MADURAI, DATED 3 0.03.2015, PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 196 1 (IN SHORT 'THE ACT') FOR THE ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.1808/MDS/15 2. SHRI R. SRINIVASAN, THE LD.COUNSEL FOR THE ASSES SEE, SUBMITTED THAT THE ASSESSING OFFICER ALLOWED THE CL AIM OF THE ASSESSEE UNDER SECTION 10B OF THE ACT. HOWEVER, TH E COMMISSIONER FOUND THAT THE ASSESSEE IS NOT ELIGIBL E FOR DEDUCTION UNDER SECTION 10B OF THE ACT. ACCORDINGLY, HE REVI SED THE ORDER OF THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OF FICER TO REDO THE ASSESSMENT AFTER GIVING REASONABLE OPPORTUNITY TO T HE ASSESSEE. ON A QUERY FROM THE BENCH WHETHER ANY DISCUSSION WA S MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE LD.COUNSEL HAS FAIRLY SUBMITTED THAT NO SUCH DISCUSSION WAS MADE. HOWEVER, ACCORDING TO THE LD. COUNSEL, SUCH A DISCUSSION IS NOT NECESSARY IN THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. COUNSE L, THE DISCUSSION IS REQUIRED IN THE ASSESSMENT ORDER ONLY WHEN THE A SSESSING OFFICER DISALLOWS THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, IT IS THE PRACTICE OF THE DEPARTMENT NOT TO DISCUSS AN YTHING IN THE ASSESSMENT ORDER WHEN THE ASSESSEES CLAIM WAS ACCE PTED. PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COU RT IN THE ASSESSEE'S OWN CASE IN W.P. (MD) NOS.2950 TO 2952 O F 2015 DATED 13.10.2015, THE LD.COUNSEL SUBMITTED THAT THE ASSES SEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT. 3 I.T.A. NO.1808/MDS/15 3. WE HAVE HEARD SH. PATHLAVATH PEERYA, THE LD. DEP ARTMENTAL REPRESENTATIVE ALSO. ADMITTEDLY, THE ASSESSING OFF ICER HAS NOT DISCUSSED ANYTHING ABOUT THE CLAIM OF DEDUCTION UND ER SECTION 10B OF THE ACT. THE ASSESSMENT ORDER IS VERY SILENT AB OUT THE CLAIM OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE PROCEE DING BEFORE THE ASSESSING OFFICER IS A JUDICIAL PROCEEDING. IT IS A SETTLED PRINCIPLE OF LAW THAT WHETHER IT IS ADMINISTRATIVE ORDER OR JUDI CIAL ORDER, THE REASON FOR CONCLUSION SHOULD BE IN THE ORDER ITSELF . THE ORDER OF THE ASSESSING OFFICER IS SUBJECTED TO REVISION BY THE C OMMISSIONER AND APPEAL BEFORE THIS TRIBUNAL. FURTHER APPEAL IS ALS O POSSIBLE BEFORE THE HIGH COURT OR SUPREME COURT. THEREFORE, IT IS ALL THE MORE IMPORTANT FOR THE ASSESSING OFFICER TO RECORD HIS O WN REASON FOR CONCLUSION IN THE ORDER ITSELF. IF THE REASON WAS NOT RECORDED IN THE ASSESSMENT ORDER FOR THE CONCLUSION REACHED THEREIN , THE REVISIONAL/ APPELLATE AUTHORITY CANNOT APPRECIATE THE ORDER OF THE ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE MATERIAL AVAILABLE ON RECORD HAS TO BE EXAMINED BY THE ASSES SING OFFICER AND RECORD HIS OWN REASON FOR CONCLUSION IN THE ASS ESSMENT ORDER. RECORDING OF REASON IN THE ASSESSMENT ORDER WOULD B E THE LIVE-LINK TO THE MATERIAL AVAILABLE ON RECORD AND THE MIND OF THE DECISION 4 I.T.A. NO.1808/MDS/15 MAKER. THE REASON RECORDED IN THE ASSESSMENT ORDER WOULD REVEAL THE APPLICATION OF MIND BY THE CONCERNED AUTHORITY. IN FACT, THE PUNJAB & HARYANA HIGH COURT, AFTER CONSIDERING THE JUDGMENT OF APEX 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 199 0 SC 1984, A CONSTITUTION BENCH OF THE SUPREME COURT DISCUSSED THE DEVELOPMEN T OF LAW ON THIS SUBJECT IN INDIA, AUSTRALIA, CANADA, ENGLAND AND TH E UNITED STATES OF AMERICA AND AFTER MAKING REFERENCE TO A LARGE NUMBE R OF JUDICIAL PRECEDENTS, THEIR LORDSHIPS CULLED OUT THE FOLLOWIN G 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 COU RTS. AN IMPORTANT CON SIDERATION 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 DECISION IS SUBJECT TO THE APPELLATE JURISDICTION OF THIS COURT UNDER A RTICLE 136 OF THE CON STITUTION AS WELL AS THE SUPERVISORY JURISDICTION O F THE HIGH COURTS UNDER ARTICLE 227 OF THE CONSTITUTION AND THAT THE REASONS, IF RECORDED, WOULD ENABLE THIS COURT OR THE HIGH COURT S TO EFFECTIVELY EXERCISE THE APPELLATE OR SUPERVISORY POWER. BUT TH IS IS NOT THE SOLE 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 (II I) MINIMISE 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 FUNC TIONS ON THE GROUND THAT A JUDGE IS TRAINED TO LOOK AT THINGS OBJEC TIVELY UNINFLUENCED BY CONSIDE RATIONS OF POLICY OR EXPEDIENCY WHEREAS AN EXECUTIVE OFFICER GENERALLY L OOKS AT THINGS FROM THE STAND POINT OF POLICY AND EXPEDIENCY. REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHOR ITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTI ONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATIONS , REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THIS COURT IN H OLDING THAT AN ADMINISTRATIVE AUTHO RITY MUST RECORD REASONS FOR I TS DECISION, ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THA T THE RECORDING OF REASONS BY AN ADMI NISTRATIVE AUTHORITY SERVES A SA LUTARY PURPOSE, NAMELY, IT EXCLUDES CHANCES OF ARBITRARINESS AND EN SURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECISION-MAKING. THE SAI D PURPOSE WOULD APPLY EQUALLY TO ALL DECI SIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. 5 I.T.A. NO.1808/MDS/15 IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REA SONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AU THORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT W HETHER THE DECISION IS SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IT MAY, HOWEVER, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOU LD BE AS ELABORATE AS IN THE DECISION OF A COURT OF LAW. THE EXTENT AN D NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUM STANCES. WHAT IS NECESSARY IS THAT THE REA SONS ARE CLEAR AND EXPLIC IT SO AS TO INDICATE THAT THE AUTHORITY HAS GIVEN DUE CONSIDERATION TO T HE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS G REATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. TH E APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL AUT HORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. ' IN TESTEELS LTD. V. N. M. DESAI [1970] 37 FJR 7 ; A IR 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 THE OBSERVATIONS MADE IN THAT DECISION. THE SAME ARE (H EADNOTE 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 BASIC PRINCIPLES OF THE INDIAN CONSTITUTIONAL SET-UP. THE ADMINISTRATIVE AU THORITIES HAVING A DUTY TO ACT JUDICIALLY CANNOT THEREFORE DECIDE ON C ONSIDERATIONS OF POLICY OR EXPEDIENCY. THEY MUST DECIDE THE MATTER S OLELY ON THE FACTS OF THE PARTICULAR CASE, SOLELY ON THE MATERIAL BEFO RE THEM AND APART FROM ANY EXTRANEOUS CONSIDERATIONS BY APPLYING PRE- EXISTING LEGAL NORMS TO FACTUAL SITUATIONS. NOW THE NECESSITY OF G IVING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE DUT Y TO ACT JUDICIALLY. IT INTRODUCES CLARITY, CHECKS THE INTRO DUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND EXCLUDES OR, AT AN Y RATE, MINIMISES ARBI TRARINESS 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 ARTIC LE 32 OF THE CON STITUTION. THESE COURTS HAVE THE POWER UNDER THE SA ID 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 AN Y REASONS IN SUPPORT OF THE ORDER, THE SAID COURTS CANNOT EXAMIN E THE CORRECTNESS OF THE ORDER UNDER REVIEW. THE HIGH COURT AND THE S UPREME COURT WOULD BE POWERLESS TO INTERFERE SO AS TO KEEP THE A DMINISTRATIVE OFFICER WITHIN THE LIMITS OF THE LAW. THE RESULT WO ULD BE THAT THE POWER OF JUDICIAL REVIEW WOULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CITIZEN, THERE WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARINESS AND CAPRICE. IF THIS REQUIREMENT IS I NSISTED UPON, THEN, THEY WILL BE SUBJECT TO JUDICIAL SCRUTINY AND CORRE CTION.' 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 OF THE RULES OF NAT URAL JUSTICE. THE FLOWERY LANGUAGE USED BY THE TRIBUNAL TO JUSTIFY ITS ACCEPT ANCE OF THE RESPONDENT' S PLEA THAT HE DID NOT KNOW THE LAW DOES NOT WARRANT OUR A FFIRMATION. IN OUR OPINION, THE 6 I.T.A. NO.1808/MDS/15 TRIBUNAL WAS DUTY BOUND TO RECORD TANGIBLE AND COGE NT REASONS FOR UPSETTING WELL REASONED ORDERS PASSED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME- TAX (APPEALS). IT SHOULD HAVE DIRECTED ITS ATTENTIO N TO THE LANGUAGE OF SECTIONS 271D AND 271E OF THE ACT IN CONJUNCTION WITH OTHER PROVISIONS OF THE SAME FAMILY AND THEN DECIDED BY A REASONED ORDER WHETHER THE RE SPONDENT HAD BEEN ABLE TO MAKE OUT A CASE FOR DELETING THE PENALTY. THE ORDER PASSED BY THE TRIBUNAL SHOULD HAVE CLEARLY REFLECTED THE APPLICATION OF MIND BY T HE LEARNED MEMBERS. 4. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THERE IS ERROR IN THE ORDER OF THE ASS ESSING OFFICER WHICH IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THEREF ORE, THE COMMISSIONER HAS RIGHTLY EXERCISED HIS POWER UNDER SECTION 263 OF THE ACT. 5. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF M ADURAI BENCH OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CA SE IN W.P. (MD) NOS. 2950 TO 2952 OF 2015 DATED 13.10.2015. T HE ASSESSEE CHALLENGED THE NOTICE ISSUED BY THE ASSESSING OFFIC ER FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT FOR THE ASSESSMENT YEARS 2007-08 TO 2009-10. THE MADRAS HIGH COURT FO UND THAT THERE WAS NO TANGIBLE MATERIAL WARRANTING THE ASSESSING O FFICER TO REOPEN THE ASSESSMENT. ACCORDINGLY, THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 OF THE ACT FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT WAS QUASHED. IN THE C ASE BEFORE US, IT IS NOT THE ISSUE OF REOPENING OF ASSESSMENT. IT IS AN ISSUE OF EXERCISING POWER UNDER SECTION 263 OF THE ACT FOR T HE FAILURE OF THE 7 I.T.A. NO.1808/MDS/15 ASSESSING OFFICER TO DISCUSS THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ASSESSMENT ORDER. THE ASSESS ING OFFICER ALLOWED THE CLAIM WITHOUT DISCUSSING THE SAME IN TH E ASSESSMENT ORDER AND WITHOUT MAKING ANY ENQUIRY. THEREFORE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENT OF MADURAI BENCH OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE IN W.P . (MD) NOS. 2950 TO 2952 OF 2015 DATED 13.10.2015 IS NOT APPLIC ABLE TO THE FACTS OF THE CASE. 6. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL D O NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON 13 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 13 TH APRIL, 2016. KRI. 8 I.T.A. NO.1808/MDS/15 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 /CIT, MADURAI-1, MADURAI 4. 7: -2 /DR 5. ;( < /GF.
