Focuz Corporation P.Ltd, Cochin V. DCIT, Cochin

ITA 211/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2528 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: P K SASIDHARAN
• Keywords: Revision of order; Principle of natural justice; Reasonable cause; Capital expenditure
• Section: 12A; 147; 263

Judgement Text

1 ITA NO. 211/COCH/2013 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. 211/COCH/2013 (ASSESSMENT YEAR 2008-09) FOCUZ CORPORATION (P) LTD VS DY.CIT, CIR.1(1) FOCUZ TOWERS, EDAPPALLY KOCHI KOCHI-24 PAN : AAACB9529J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PK SASIDHARAN RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 26-06-2013 DATE OF PRONOUNCEMENT : 28-06-2013 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 DATED 31-10-2012 FOR TH E ASSESSMENT YEAR 2008-09. 2. THERE IS A DELAY OF 101 DAYS IN FILING THE APPEA L BEFORE THIS TRIBUNAL. THE ASSESSEE FILED AN APPLICATION TO CONDONE THE DE LAY. ACCORDING TO THE LD.REPRESENTATIVE, IMMEDIATELY AFTER RECEIPT OF THE IMPUGNED ORDER OF THE ADMINISTRATIVE COMMISSIONER, A SCANNED COPY WAS MAI LED TO THE INCOME- 2 ITA NO. 211/COCH/2013 TAX CONSULTANT FOR FILING THE APPEAL. HOWEVER, DUE TO SOME TECHNICAL ERROR, THE COPY WAS NOT RECEIVED BY THE CHARTERED ACCOUNTA NT, THEREFORE, APPEAL COULD NOT BE PREPARED AND FILED. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE CHARTERE D ACCOUNTANT WOULD PREPARE AND FILE THE APPEAL IN TIME WHICH WAS NOT M ATERIALISED DUE TO THE ABOVE REASONS. THE LD.REPRESENTATIVE PLEADED THAT DUE TO THE ABOVE REASONS, THERE WAS A REASONABLE CAUSE FOR NOT FILIN G THE APPEAL IN TIME. WE HEARD THE LD.DR ALSO. HAVING HEARD THE PARTIES AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT TH E ASSESSEE HAD FORWARDED THE COPY OF THE IMPUGNED ORDER OF THE ADM INISTRATIVE COMMISSIONER TO THE CHARTERED ACCOUNTANT FOR PREPAR ING THE APPEAL. HOWEVER, IT APPEARS THAT THERE WAS A COMMUNICATION ERROR AND THE APPEAL COULD NOT BE PREPARED AND FILED IN TIME. THEREFORE , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FOR NOT FILING THE APPEAL ON TIME. ACCORDING LY, THE DELAY OF 101 DAYS IN FILING THE APPEAL IS HEREBY CONDONED AND THE APP EAL IS ADMITTED. 3. NOW COMING TO THE MERIT OF THE APPEAL, SHRI PK S ASIDHARAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE INCURRED AN EXPENDITURE OF RS. 3,37,000 FOR REGISTRATION OF TRA DE MARK AND RIGHTS REGISTRATION AND CLAIMED THE SAME AS REVENUE EXPEND ITURE. APART FROM THIS ANOTHER SUM OF RS. 18,046 WAS ALSO ALLOWED BY THE A SSESSING OFFICER. THE 3 ITA NO. 211/COCH/2013 LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFI CER, AFTER CONSIDERING THE ENTIRE MATERIAL ON RECORD ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE EXPENSES INCURRED FOR REGISTRATION OF TRADE MARK AND RIGHTS REGISTRATION IS A CAPITAL EXPENDITURE AND THAT THE ASSESSING OFFICER ALSO NEEDS TO DISALL OW THE PENALTY OF RS.18,406 ON THE GROUND THAT THE PENALTY IS FOR INF RACTION OF LAW. ACCORDING TO THE LD.REPRESENTATIVE, THERE IS NO ERROR, MUCH L ESS, A PRIMA FACIE ERROR, IN THE ORDER OF THE ASSESSING OFFICER. WE HEARD SMT. S VIJAYAPRABHA, THE LD.DR ALSO. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER PASSED BY THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE EXPENSES SAID TO BE INCURRED FOR REGISTRATION OF TRADE MARK AND THE SO- CALLED PENALTY FOR INFRACTION OF PROVISIONS OF LAW. IN FACT, THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER. ASSESSMENT ORDER BEING A QUASI J UDICIAL ORDER, THE ASSESSING OFFICER IS EXPECTED TO APPLY HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE ON THE BASIS OF THE MATER IAL AVAILABLE ON RECORD AND RECORD HIS OWN REASONS FOR THE CONCLUSION REACH ED THEREIN. THE ABSENCE OF REASONS IN THE ASSESSMENT ORDER WITH REG ARD TO A PARTICULAR 4 ITA NO. 211/COCH/2013 ISSUE WOULD NOT ONLY AMOUNT TO AN ASSESSMENT ORDER ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. IN FACT THE PUNJAB & HARYANA HIGH COURT HAD AN O CCASION TO EXAMINE THIS ISSUE IN COMMISSIONER OF INCOME-TAX VS SUNIL KUMAR GOEL (2005) 274 ITR 53 (P&H) AND AFTER CONSIDERING THE JUDGMENT OF THE APEX COURT IN MUKHERJEE (S.N.) VS UOI (1990) AI R 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 THE DEVELOPMENT OF LAW ON THIS SUBJECT IN INDIA, AUSTRALIA, CANADA, ENGLAND AND THE UNITED STATES OF AMERICA AND AFTER MAKING REFERENCE TO A LARGE NUMBE R OF JUDICIAL PRECEDENTS, THEIR LORDSHIPS CULLED OUT THE FOLLOWING PROPOSITIONS (PAGE 1995): THE DECISIONS OF THIS COURT REFERRED TO ABOVE INDICATE THAT WITH REGARD TO THE REQUIREMENT TO REC ORD REASONS THE APPROACH 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 A N ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS MUST RECORD THE REASONS FOR ITS DECISION, IS THAT S UCH A DECISION IS SUBJECT TO THE APPELLATE JURISDICTION O F THIS COURT UNDER ARTICLE 136 OF THE CONSTITUTION AS WELL AS TH E SUPERVISORY JURISDICTION OF THE HIGH COURTS UNDER A RTICLE 227 OF THE CONSTITUTION AND THAT THE REASONS, IF RE CORDED, WOULD ENABLE THIS COURT OR THE HIGH COURTS TO EFFEC TIVELY EXERCISE THE APPELLATE OR SUPERVISORY POWER. BUT T HIS IS NOT THE SOLE CONSIDERATION. THE OTHER CONSIDERATIO NS 5 ITA NO. 211/COCH/2013 WHICH HAVE ALSO WEIGHED WITH THE COURT IN TAKING TH IS VIEW ARE THAT THE REQUIREMENT OF RECORDING REASONS WOULD (I) GUARANTEE CONSIDERATION BY THE AUTHORITY; (II) INTR ODUCE CLARITY IN THE DECISIONS; AND (III) MINIMIZE CHANCE S OF ARBITRARINESS IN DECISION MAKING. IN THIS REGARD A DISTINCTION HAS BEEN DRAWN BETWEEN ORDINARY COURTS OF LAW AND TRIBUNALS AND AUTHORITIES EXERCISING JUDICIAL F UNCTIONS ON THE GROUND THAT A JUDGE IS TRAINED TO LOOK AT TH INGS OBJECTIVELY UNINFLUENCED BY CONSIDERATIONS OF POLIC Y OR EXPEDIENCY WHEREAS AN EXECUTIVE OFFICER GENERALLY L OOKS AT THINGS FROM THE STAND POINT OF POLICY AND EXPEDI ENCY. REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHORITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI- JUDICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE E XERCISE OF ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AU THORITY. BUT THE OTHER CONSIDERATIONS, REFERRED TO ABOVE, WH ICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT A N ADMINISTRATIVE AUTHORITY MUST RECORD REASONS FOR IT S DECISION, ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDED OF REASONS BY AN ADMINISTRATIVE AUTHORITY SERVICES A SALUTARY PURPOS E, NAMELY, IT EXCLUDES CHANCES OF ARBITRARINESS AND EN SURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECISION-MAK ING. THE SAID PURPOSE WOULD APPLY EQUALLY TO ALL DECISIO NS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHI CH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINIST RATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRES PECTIVE OF THE FACT WHETHER THE DECISION IS SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IT MAY, HOWEVER, 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 CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASO NS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHO RITY HAS GIVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERS Y. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE 6 ITA NO. 211/COCH/2013 THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APP ELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONA L AUTHORITY AGREES 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 EXTREMELY LUCID ENUNCIATION OF LAW ON THE S UBJECT AND WE CAN DO NO BETTER THAN TO EXTRACT SOME OF THE OBSERVATIONS MADE IN THE DECISION. THE SAME ARE (HEADNOTE OF AIR 1970 (GUJ)): THE NECESSITY OF GIVING REASONS FLOWS AS A NECESSARY COROLLARY FROM THE RULE OF LAW WHICH CONS TITUTES ONE OF THE BASIC PRINCIPLES OF THE INDIAN CONSTITUT IONAL SET- UP. THE ADMINISTRATIVE AUTHORITIES HAVING A DUTY T O ACT JUDICIALLY CANNOT THEREFORE DECIDE ON CONSIDERATION S 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 RE ASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE DUTY TO ACT JUDICIALLY. IT INTRODUCES CLARITY, CHECKS T HE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERAT IONS AND EXCLUDES OR, AT ANY RATE, MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. ANOTHER REASON WHICH COMPELS MAKING OF SUCH AN ORDER IS BASED ON THE POWER OF JUDICIAL REVIEW WHIC H IS POSSESSED BY THE HIGH COURT UNDER ARTICLE 226 AND T HE 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 SPEAKI NG ORDER. IN THE ABSENCE OF ANY REASONS IN SUPPORT OF THE ORD ER, THE SAID COURTS CANNOT EXAMINE THE CORRECTNESS OF THE O RDER 7 ITA NO. 211/COCH/2013 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 JUDICIAL REVIEW W OULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CI TIZEN, THERE WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARI NESS AND CAPRICE. IF THIS REQUIREMENT IS INSISTED UPON, THEN, THEY WILL BE SUBJECT TO JUDICIAL SCRUTINY AND CORRE CTION. IF THE ORDER PASSED BY THE TRIBUNAL IS SCRUTINIZED IN THE LIGHT OF THE AFOREMENTIONED PROPOSITION OF LAW, WE DO NOT FIND ANY DIFFICULTY IN SETTING ASIDE THE SAME O N THE GROUND OF VIOLATION OF THE RULES OF NATURAL JUSTICE . THE FLOWERY LANGUAGE USED BY THE TRIBUNAL TO JUSTIFY IT S ACCEPTANCE OF THE RESPONDENTS PLEA THAT HE DID NOT KNOW THE LAW DOES NOT WARRANT OUR AFFIRMATION. IN OUR O PINION, THE TRIBUNAL WAS DUTY BOUND TO RECORD TANGIBLE AND COGENT REASONS FOR UPSETTING WELL REASONED ORDERS P ASSED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX (APPEALS). IT SHOULD HAVE DIRECTED ITS ATTENTION TO THE LANGUAGE OF SECTION 271D AND 271E OF THE ACT IN CONJUNCTION WITH OTHER PROVISIONS OF THE SAM E FAMILY AND THEN DECIDED BY A REASONED ORDER WHETHER THE RESPONDENT HAD BEEN ABLE TO MAKE OUT A CASE FOR DEL ETING THE PENALTY. THE ORDER PASSED BY THE TRIBUNAL SHOU LD HAVE CLEARLY REFLECTED THE APPLICATION OF MIND BY T HE LEARNED MEMBERS. 6. THE APEX COURT ALSO HAD AN OCCASION TO CONSIDER THIS ISSUE IN TOYOTA MOTOR CORPORATION VS COMMISSIONER OF INCOME- TAX (2008) 306 ITR 52 (SC). THE APEX COURT HAS OBSERVED AS FOLLOW S AT PAGE 53 OF THE ITR: 8 ITA NO. 211/COCH/2013 WE ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNE D ORDER OF THE HIGH COURT. THE HIGH COURT HAS HELD T HAT THE ASSESSING OFFICER HAD DISPOSED OF THE PROCEEDINGS STATING THE PENALTY PROCEEDINGS INITIATED IN THIS C ASE UNDER SECTION 271C READ WITH SECTION 274 OF THE INCOME-TA X ACT, 1961 ARE HEREBY DROPPED. ACCORDINGLY TO THE HIGH C OURT, THERE WAS NO BASIS INDICATED FOR DROPPING THE PROCEEDINGS. THE TRIBUNAL REFERRED TO CERTAIN ASPE CTS AND HELD THAT THE INITIATION OF PROCEEDINGS UNDER S ECTION 263 OF THE INCOME-TAX ACT, 1961 (IN SHORT, THE I.T . ACT) WAS IMPERMISSIBLE WHEN CONSIDERED IN THE BACKGROUND OF THE MATERIALS PURPORTEDLY PLACED BY THE ASSESSEE BE FORE THE ASSESSING OFFICER. WHAT THE HIGH COURT HAS DON E IS TO REQUIRE THE ASSESSING OFFICER TO PASS A REASONED ORDER. THE HIGH COURT WAS OF THE VIEW THAT THE TRIBUNAL CO ULD NOT HAVE SUBSTITUTED ITS OWN REASONINGS WHICH WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSEE, ALL RELEVANT ASPECTS WER E PLACED FOR CONSIDERATION AND IF THE OFFICER DID NOT RECORD REASONS, THE ASSESSEE CANNOT BE FAULTED. WE DO NOT THINK IT NECESSARY TO INTERFERE AT THIS STAGE. IT GOES WITHOUT SAYING THAT WHEN THE MATTER BE TAKEN UP BY THE ASSESSING OFFICER ON REMAND, IT SHA LL BE HIS DUTY TO TAKE INTO ACCOUNT ALL THE RELEVANT ASPE CTS INCLUDING THE MATERIALS, IF ANY, ALREADY PLACED BY THE ASSESSEE, AND PASS A REASONED ORDER. 7. WE ALSO FIND THAT THE ALLAHABAD HIGH COURT IN A RECENT UNREPORTED JUDGMENT EXPRESSED ITS SHOCK AND ANGUISH THE WAY IN WHICH THE ASSESSMENT ORDERS AND THE REVISIONAL ORDE RS ARE BEING PASSED. IN FACT, THE ASSESSEE, M/S FATEH CHAND CHA RITABLE TRUST IN WRIT TAX NO.1629 OF 2010 (JUDGMENT DATED 27-05-2013 ) BEFORE THE 9 ITA NO. 211/COCH/2013 ALLAHABAD HIGH COURT RECEIVED DONATION OF RS.5.23 C RORES. THE ASSESSING OFFICER ACCEPTED THE SAME WITHOUT ANY ENQ UIRY AND REASONING IN THE ASSESSMENT ORDER. THE COMMISSIONE R OF INCOME- TAX INITIATED PROCEEDINGS TO CANCEL THE REGISTRATIO N U/S 12A OF THE ACT. HOWEVER, IT WAS DROPPED WITHOUT RECORDING ANY REASO N. SUBSEQUENTLY, THE CASE WAS REOPENED AND NOTICE WAS ISSUED U/S 147 OF THE ACT. THE ASSESSEE CHALLENGED THE NOTICE ISS UED FOR REOPENING THE ASSESSMENT BY WAY OF WRIT PETITION. WHILE CONS IDERING THE WIT PETITION, THE ALLAHABAD HIGH COURT EXPRESSED ITS SH OCK AND ANGUISH ON THE WAY IN WHICH THE ORDERS ARE BEING PASSED BY THE INCOME-TAX AUTHORITIES. IN FACT, THE ALLAHABAD HIGH COURT HAS OBSERVED AS FOLLOWS: THE INCOME TAX AUTHORITIES ARE REQUIRED TO ADMINISTER THE ACT. THE RIGHT TO ADMINISTER, CANNO T OBVIOUSLY INCLUDE THE RIGHT TO MAL-ADMINISTER. THU S, WE FIND NO WORDS TO EXPRESS ANGUISH AS WHAT KIND OF GOVERNANCE IT HAD BEEN. THERE IS ANOTHER REASON FOR IGNORING THE AFORESAID ORDER, DROPPING THE CANCELLATION PROCEEDING OF REGISTRATION. THE SAID ORDER DOES NOT CONTAIN ANY REASON. 10 ITA NO. 211/COCH/2013 REASONS INTRODUCE CLARITY IN AN ORDER. REASON IS T HE HEART BEAT OF EVERY CONCLUSION AND WITHOUT THE SAME IT BECOMES LIFELESS. (SEE RAJ KISHORE JHA VERSUS STAT E OF BIHAR AND OTHERS, AIR 2003 SC 4664). EVEN IN RESPECT OF ADMINISTRATIVE ORDERS LORD DENNING M.R. IN BREEN VS. AMALGAMATED ENGINEERING UNION, (1971) ALL. E.R. 1148) OBSERVED: THE GIVING OF REASONS IS ONE OF THE FUNDAMENTALS OF GOOD ADMINISTRATION. FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTI CE. REASONS ARE LIVE LINKS BETWEEN THE MIND OF THE DECI SION TAKER TO THE CONTROVERSY IN QUESTION AND THE DECISI ON OR CONCLUSION ARRIVED AT. REASONS SUBSTITUTE SUBJECTI VITY BY OBJECTIVITY. THE EMPHASIS ON RECORDING REASONS IS THAT IF THE DECISION REVEALS THE INSCRUTABLE FACE OF THE S PHINX, IT CAN, BY ITS SILENCE, RENDER IT VIRTUALLY IMPOSSIBLE FOR THE COURTS TO PERFORM THEIR APPELLATE FUNCTION OR EXERC ISE THE POWER OF JUDICIAL REVIEW ON ADJUDGING THE VALIDITY OF THE DECISION. RIGHT TO REASON IS AN INDISPENSABLE PART OF A SOUND JUDICIAL SYSTEM; REASONS AT LEAST SUFFICIENT TO INDICATE AN APPLICATION OF MIND TO THE MATTER BEFOR E COURT. ANOTHER RATIONALE IS THAT THE AFFECTED PARTY CAN KN OW WHY THE DECISION HAS GONE AGAINST HIM. ONE OF THE SALU TARY REQUIREMENTS OF NATURAL JUSTICE IS SPELLING OUT REA SONS FOR 11 ITA NO. 211/COCH/2013 THE ORDER MADE; IN OTHER WORDS, A SPEAKING-OUT. TH E INSCRUTABLE FACE OF THE SPHINX IS ORDINARILY INCO NGRUOUS WITH A JUDICIAL OR QUASI-JUDICIAL PERFORMANCE. A FEEBLE ARGUMENT WAS ADVANCED THAT THE COMMISSIONER OF INCOME TAX BEING HIGHER IN HIERARCH Y THAN ADDITIONAL COMMISSIONER OF INCOME TAX, THE INITIATION OF THE PROCEEDINGS AT THE INSTANCE OF AD DITIONAL COMMISSIONER OF INCOME TAX IS BAD. IN VIEW OF OUR ABOVE CONCLUSION THAT THE ORDER DROPPING THE PROCEEDING UNDER SECTION 12A WAS NOT A VALID ACTION ON THE PART OF THE COMMISSIONER OF INC OME TAX, THE SAID ARGUMENT IS REJECTED. HAVING REGARD TO WHAT HAS BEEN SAID ABOVE. WE FIND THAT IT IS A CASE WHERE THE THEN ASSESSING OFF ICER (SHRI BHOPAL SINGH), THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-II, MUZAFFARNAGAR AND SHRI KUNDAN MISRA, THE THEN COMMISSIONER OF INCOME TAX, MUZAFFARNAGAR WHO PASSED THE ORDER DATED 25.1.2008 HAVE ABDICATED THEIR DUTIES. THE COURT IN THE EXER CISE OF SUPERVISORY JURISDICTION UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA CANNOT BE A MUTE SPECTATOR. SUCH ACTIONS ON THE PART OF THE DEPARTMENT NOT ONLY BRIN G DISREPUTE TO THE DEPARTMENT BUT ALSO ENCOURAGE THE 12 ITA NO. 211/COCH/2013 DISHONEST ASSESSEES AND PROMOTES THE NEFARIOUS ACTIVITIES WHICH NOT ONLY CAUSES LOSS TO REVENUE BU T ALSO PROMOTES DISHONESTY. AN HONEST TAX PAYER FEELS CHE ATED. LET THE MATTER BE EXAMINED BY THE CHIEF COMMISSIONE R OF INCOME TAX AND APPROPRIATE DEPARTMENTAL PROCEEDINGS MAY BE TAKEN OUT AGAINST THE ERRING OFFICIALS. A C OPY OF THIS JUDGMENT MAY ALSO BE SENT TO THE CHAIRMAN OF T HE CENTRAL BOARD OF DIRECT TAXES FOR AN APPROPRIATE AC TION. 8. IN VIEW OF THE ABOVE JUDGMENTS OF THE PUNJAB & H ARYANA HIGH COURT AND ALLAHABAD HIGH COURT AS ALSO THE APEX COU RT, IT IS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO RECORD REASONS IN THE ASSESSMENT ORDER. RECORDING OF REASON WOULD NOT ON LY ENABLE THE REVISIONAL / APPELLATE AUTHORITIES TO DISCHARGE THE IR FUNCTION EFFECTIVELY BUT ALSO REPOSE CONFIDENCE IN THE SYSTEM. THEREFOR E, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS AN ERROR IN THE O RDER OF THE ASSESSING OFFICER INASMUCH AS THAT THE ASSESSING OF FICER HAS NOT RECORDED HIS REASONS FOR REACHING A CONCLUSION. TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER S HALL INDEPENDENTLY EXAMINE THE EXPENSES SAID TO HAVE BEEN INCURRED FOR REGISTRATION OF TRADE MARK AND RIGHTS REGISTRATION AS ALSO THE AMOU NT OF RS.18,046 BEING THE PENALTY PAID WITHOUT BEING INFLUENCED BY THE OBSERVATIONS 13 ITA NO. 211/COCH/2013 MADE BY THE ADMINISTRATION COMMISSIONER IN HIS ORDE R PASSED U/S 263 OF THE ACT. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH INDEPENDENTLY AFTER GIVING REASONABLE OPPORTUNITY O F HEARING TO THE ASSESSEE. 9. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH JUNE, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH JUNE, 2013 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