Kerala State Electricity Board, Trivandrum V. ACIT, Trivandrum

ITA 457/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69021 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PANJAKSHAN C G
• Keywords: Depreciation; Charitable institution; Principle of natural justice
• Section: 12A; 147; 27; 263

Judgement Text

1 ITA NO. 148/COCH/2012 ITA NO.457/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. 148/COCH/2012 - A.Y. 2007-08 I.T.A. NO.457/COCH.2013 - A.Y. 2008-09 KERALA STATE ELECTRICITY BOARD VS A.C.I.T., CIR.1 (1) THIRVANANTHAPURAM THIRUVANANTHAPURAM PAN : AABCK5896J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANJAKSHAN C.G. RESPONDENT BY : SHRI M ANIL KUMAR, C.I.T. SHRI K.K. JOHN DATE OF HEARING : 09-10-2013 DATE OF PRONOUNCEMENT : 11-10-2013 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF THE ADMINISTRATIVE COMMISSIONER PASSED U/ S 263 OF THE ACT FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. SINCE CO MMON ISSUE ARISES FOR CONSIDERATION WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSE OF THEM BY THIS COMMON ORDER. 2 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 2. SHRI PANJAKSHAN C.G., THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER INVO KED HIS REVISIONAL JURISDICTIONAL U/S 263 OF THE ACT ON THE GROUND THA T THE ASSESSING OFFICER HAS NOT CONSIDERED CARRIED FORWARD LOSS AND DEPRECI ATION. REFERRING TO THE ASSESSMENT ORDERS, THE LD.REPRESENTATIVE SUBMITTED THAT NO DOUBT THE ASSESSING OFFICER HAS NOT DISCUSSED ABOUT CARRIED F ORWARD LOSSES AND DEPRECIATION IN THE ASSESSMENT ORDER. HOWEVER, THE ASSESSING OFFICER CALLED FOR ALL THE NECESSARY DETAILS IN RESPECT OF CARRIED FORWARD LOSSES AND DEPRECIATION AND SATISFIED HIMSELF. THEREFORE, ON MERIT, ACCORDING TO THE LD.REPRESENTTIVE, THE ASSESSEE HAS VERY GOOD CASE. REFERRING TO THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2007-08, THE L D.REPRESENTTIVE SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER OBSE RVED THAT NO APPEAL / RECTIFICATION APPLICATION WAS FILED AGAINST THE ORD ER DATED 25-06-2007. THIS OBSERVATION OF THE ADMINISTRATIVE COMMISSIONER IS N OT CORRECT. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER DATED 25-06-2007. THEREFORE, THE OBSERVATION OF TH E ADMINISTRATIVE COMMISSIONER IS NOT CORRECT. WE HEARD SHRI M ANIL KUMAR, THE LD.DR ALSO. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ISSUE WITH REGARD TO CARRIED FORWARD LOSSES AND DEPRECIATION WAS NOT DISCUSSED BY THE 3 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 ASSESSING OFFICER IN THE ASSESSMENT ORDERS. IN FAC T THE APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE ISSUE OF CARRIED FO RWARD LOSSES AND DEPRECIATION IS NOT REFLECTED IN THE ASSESSMENT ORD ER. THE ONLY CONTENTION OF THE ASSESSEE BEFORE THIS TRIBUNAL IS THAT THE AS SESSING OFFICER HAS CALLED FOR ALL THE DETAILS AND ALLOWED THE CLAIM AFTER SAT ISFACTION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ASSESSMENT ORDER IS A QUASI JUDICIAL ORDER AND THE PROCEEDINGS BEFORE THE ASSESSING OFFICER AR E JUDICIAL PROCEEDINGS. THEREFORE, THE CONCLUSION REACHED BY THE ASSESSING OFFICER WITH REGARD TO CARRIED FORWARD LOSSES AND DEPRECIATION HAS TO BE S UPPORTED BY HIS OWN REASONING IN THE ASSESSMENT ORDER ITSELF. MERE CAL LING FOR EXPLANATION / DETAILS IS NOT SUFFICIENT. IF THE ASSESSING OFFICE R EXPRESSED HIS REASONING ONE WAY OR THE OTHER FOR THE CONCLUSION REACHED, TH EN IT WOULD ENABLE THE APPELLATE / REVISIONAL AUTHORITY TO APPRECIATE THE REASONS FOR THE CONCLUSION REACHED. IF THE ASSESSING OFFICER DOES NOT EXPRESS ANY REASON IN THE ASSESSMENT ORDERS, THE VERY PURPOSE OF PROVIDING AP PELLATE / REVISIONAL REMEDY IN THE INCOME-TAX ACT WOULD BE DEFEATED. TH EREFORE, AN ASSESSMENT SHALL SPEAK FOR ITSELF. IN OTHER WORDS, IT SHALL CONTAIN ALL THE REASONS FOR THE CONCLUSION REACHED THEREIN. THIS T RIBUNAL HAD AN OCCASION TO EXAMINE IDENTICAL ISSUE IN THE CASE OF SHRI K.V. PRAKASHAN IN ITA NO.178/COCH/2013 ORDER DATED 04-10-2013. 4 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 4. 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 J UDGMENT OF THE APEX COURT IN MUKHERJEE (S.N.) VS UOI (1990) 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 THE DEVELOPMENT OF LAW ON THIS SUBJECT IN INDIA, AUSTRA LIA, CANADA, ENGLAND AND THE UNITED STATES OF AMERICA AND AFTER MAKING REFERENCE TO A LARGE NUMBER OF JUDICIAL PRECEDENTS, THEIR LORDSHIPS CULLED OUT THE FOLLOWING PROPOSITIONS (PA GE 1995): THE DECISIONS OF THIS COURT REFERRED TO ABOVE IND ICATE THAT WITH REGARD TO THE REQUIREMENT TO RECORD REASO NS THE APPROACH OF THIS COURT IS MORE IN LINE WITH THAT OF THE AMERICAN COURTS. AN IMPORTANT CONSIDERATION WHICH HAS WEIGH ED WITH THE COURT FOR HOLDING THAT AN ADMINISTRATIVE AUTHOR ITY EXERCISING QUASI-JUDICIAL FUNCTIONS MUST RECORD THE REASONS FO R ITS DECISION, IS THAT SUCH A DECISION 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 THE CONSTITUTION AND THAT THE REASON S, IF RECORDED, WOULD ENABLE THIS COURT OR THE HIGH COURT S TO EFFECTIVELY EXERCISE THE APPELLATE OR SUPERVISORY P OWER. BUT THIS IS NOT THE SOLE CONSIDERATION. THE OTHER CONS IDERATIONS 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) INTRODUCE CLAR ITY IN THE DECISIONS; AND (III) MINIMIZE CHANCES OF ARBITRARIN ESS IN DECISION MAKING. IN THIS REGARD A DISTINCTION HAS BEEN DRAWN BETWEEN ORDINARY COURTS OF LAW AND TRIBUNALS AND AU THORITIES EXERCISING JUDICIAL FUNCTIONS ON THE GROUND THAT A JUDGE IS TRAINED TO LOOK AT THINGS OBJECTIVELY UNINFLUENCED BY CONSIDERATIONS OF POLICY OR EXPEDIENCY WHEREAS AN E XECUTIVE 5 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 OFFICER GENERALLY LOOKS AT THINGS FROM THE STAND PO INT OF POLICY AND EXPEDIENCY. REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHOR ITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUD ICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE O F ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHOR ITY. BUT THE OTHER CONSIDERATIONS, REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT AN ADMINIST RATIVE AUTHORITY MUST RECORD REASONS FOR ITS DECISION, ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE R ECORDED OF REASONS BY AN ADMINISTRATIVE AUTHORITY SERVICES A S ALUTARY PURPOSE, NAMELY, IT EXCLUDES CHANCES OF ARBITRARINE SS AND ENSURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECI SION- MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO AL L DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY 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 SHOULD BE AS ELABORATE AS IN THE DECISION O F A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DE PEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESS ARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICAT E THAT THE AUTHORITY HAS GIVEN 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 STAG E. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SU CH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL 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 SUBJEC T AND WE CAN DO NO BETTER THAN TO EXTRACT SOME OF THE OBSERV ATIONS MADE IN THE DECISION. THE SAME ARE (HEADNOTE OF AI R 1970 (GUJ)): 6 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 THE NECESSITY OF GIVING REASONS FLOWS AS A NECESS ARY COROLLARY FROM THE RULE OF LAW WHICH CONSTITUTES ON E OF THE BASIC PRINCIPLES OF THE INDIAN CONSTITUTIONAL SET-U P. THE ADMINISTRATIVE AUTHORITIES HAVING A DUTY TO ACT JUD ICIALLY CANNOT THEREFORE DECIDE ON CONSIDERATIONS OF POLICY OR EXP EDIENCY. 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 NECESSI TY OF GIVING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVA NCE OF THE DUTY TO ACT JUDICIALLY. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERAT IONS 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 P OSSESSED BY THE HIGH COURT UNDER ARTICLE 226 AND THE SUPREME CO URT 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 PO WER OF REVIEW CAN BE EFFECTIVELY EXERCISED ONLY IF THE ORD ER IS A SPEAKING ORDER. IN THE ABSENCE OF ANY REASONS IN S UPPORT OF THE ORDER, THE SAID COURTS CANNOT EXAMINE THE CORRE CTNESS OF THE ORDER UNDER REVIEW. THE HIGH COURT AND THE SUP REME 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 WOULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CITIZEN, THER E WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARINESS AND CAPRIC E. 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 SCRUTINIZED IN THE LIGHT OF THE AFOREMENTIONED PROPOSITION OF LAW, WE DO NOT FIND ANY DIFFICULTY IN SETTING ASIDE THE SAME ON THE GRO UND OF VIOLATION OF THE RULES OF NATURAL JUSTICE. THE FLO WERY LANGUAGE USED BY THE TRIBUNAL TO JUSTIFY ITS ACCEPTANCE OF T HE RESPONDENTS PLEA THAT HE DID NOT KNOW THE LAW DOES NOT WARRANT OUR AFFIRMATION. IN OUR OPINION, THE TRIBU NAL WAS DUTY BOUND TO RECORD TANGIBLE AND COGENT REASONS FOR UPS ETTING WELL REASONED ORDERS PASSED BY THE ASSESSING OFFICER AND THE 7 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 COMMISSIONER OF INCOME-TAX (APPEALS). IT SHOULD HA VE DIRECTED ITS ATTENTION TO THE LANGUAGE OF SECTION 2 71D AND 271E OF THE ACT IN CONJUNCTION WITH OTHER PROVISION S OF THE SAME FAMILY AND THEN DECIDED BY A REASONED ORDER WH ETHER THE RESPONDENT HAD BEEN ABLE TO MAKE OUT A CASE FOR DELETING THE PENALTY. THE ORDER PASSED BY THE TRIBUNAL SHOU LD HAVE CLEARLY REFLECTED THE APPLICATION OF MIND BY THE LE ARNED MEMBERS. 5. 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 FOLLOWS AT PAGE 53 OF THE ITR: WE ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNE D ORDER OF THE HIGH COURT. THE HIGH COURT HAS HELD THAT TH E ASSESSING OFFICER HAD DISPOSED OF THE PROCEEDINGS STATING THE PENALTY PROCEEDINGS INITIATED IN THIS CASE UNDER SECTION 27 1C READ WITH SECTION 274 OF THE INCOME-TAX ACT, 1961 ARE HE REBY DROPPED. ACCORDINGLY TO THE HIGH COURT, THERE WAS NO BASIS INDICATED FOR DROPPING THE PROCEEDINGS. THE TRIBUN AL REFERRED TO CERTAIN ASPECTS AND HELD THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 (IN S HORT, THE I.T. ACT) WAS IMPERMISSIBLE WHEN CONSIDERED IN THE BACKGROUND OF THE MATERIALS PURPORTEDLY PLACED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER. WHAT THE HI GH COURT HAS DONE IS TO REQUIRE THE ASSESSING OFFICER TO PAS S A REASONED ORDER. THE HIGH COURT WAS OF THE VIEW THA T THE TRIBUNAL COULD NOT HAVE SUBSTITUTED ITS OWN REASONI NGS WHICH WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFIC ER. 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 U P BY THE ASSESSING OFFICER ON REMAND, IT SHALL BE HIS DUTY T O TAKE INTO ACCOUNT ALL THE RELEVANT ASPECTS INCLUDING THE MATE RIALS, IF ANY, ALREADY PLACED BY THE ASSESSEE, AND PASS A REASONED ORDER. 8 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 6. 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 ORDERS ARE BEI NG PASSED. IN FACT, THE ASSESSEE, M/S FATEH CHAND CHARITABLE TRUST IN WRIT TAX NO.1629 OF 2010 (JUDGMENT DATED 27-05-2013) BEFORE THE ALLAHABAD HI GH COURT RECEIVED DONATION OF RS.5.23 CRORES. THE ASSESSING OFFICER ACCEPTED THE SAME WITHOUT ANY ENQUIRY AND REASONING IN THE ASSESSMENT ORDER. THE COMMISSIONER OF INCOME-TAX INITIATED PROCEEDINGS TO CANCEL THE REGISTRATION U/S 12A OF THE ACT. HOWEVER, IT WAS D ROPPED WITHOUT RECORDING ANY REASON. SUBSEQUENTLY, THE CASE WAS REOPENED AN D NOTICE WAS ISSUED U/S 147 OF THE ACT. THE ASSESSEE CHALLENGED THE NO TICE ISSUED FOR REOPENING THE ASSESSMENT BY WAY OF WRIT PETITION. WHILE CONSIDERING THE WIT PETITION, THE ALLAHABAD HIGH COURT EXPRESSED IT S SHOCK 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 ADMINI STER THE ACT. THE RIGHT TO ADMINISTER, CANNOT OBVIOUSLY INCLUDE THE RIGHT TO MAL-ADMINISTER. THUS, WE FIND NO WORDS TO EXPRESS ANGUISH AS WHAT KIND OF GOVERNANCE IT HAD BEEN. 9 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 THERE IS ANOTHER REASON FOR IGNORING THE AFORESAID ORDER, DROPPING THE CANCELLATION PROCEEDING OF REGISTRATIO N. THE SAID ORDER DOES NOT CONTAIN ANY REASON. REASONS INTRODU CE CLARITY IN AN ORDER. REASON IS THE HEART BEAT OF EVERY CON CLUSION AND WITHOUT THE SAME IT BECOMES LIFELESS. (SEE RAJ KIS HORE JHA VERSUS STATE OF BIHAR AND OTHERS, AIR 2003 SC 4664) . EVEN IN RESPECT OF ADMINISTRATIVE ORDERS LORD DENN ING M.R. IN BREEN VS. AMALGAMATED ENGINEERING UNION, (1 971) 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 SPHIN X, IT CAN, BY ITS SILENCE, RENDER IT VIRTUALLY IMPOSSIBLE FOR THE COURTS TO PERFORM THEIR APPELLATE FUNCTION OR EXERCISE THE PO WER OF JUDICIAL REVIEW ON ADJUDGING THE VALIDITY OF THE DE CISION. RIGHT TO REASON IS AN INDISPENSABLE PART OF A SOUND JUDIC IAL SYSTEM; REASONS AT LEAST SUFFICIENT TO INDICATE AN APPLICAT ION OF MIND TO THE MATTER BEFORE COURT. ANOTHER RATIONALE IS THAT THE AFFECTED PARTY CAN KNOW WHY THE DECISION HAS GONE AGAINST HI M. ONE OF THE SALUTARY REQUIREMENTS OF NATURAL JUSTICE IS SPELLING OUT REASONS FOR THE ORDER MADE; IN OTHER WORDS, A SPEAK ING-OUT. 10 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 THE INSCRUTABLE FACE OF THE SPHINX IS ORDINARILY INCONGRUOUS 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 INITIATI ON OF THE PROCEEDINGS AT THE INSTANCE OF ADDITIONAL COMMISSIO NER OF INCOME TAX IS BAD. IN VIEW OF OUR ABOVE CONCLUSION THAT THE ORDER DRO PPING THE PROCEEDING UNDER SECTION 12A WAS NOT A VALID AC TION ON THE PART OF THE COMMISSIONER OF INCOME TAX, THE SAI D ARGUMENT IS REJECTED. HAVING REGARD TO WHAT HAS BEEN SAID ABOVE. WE FIN D THAT IT IS A CASE WHERE THE THEN ASSESSING OFFICER (SHRI BHOPAL SINGH), THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-II, MUZAFFARNAGAR AND SHRI KUNDAN MISRA, THE THEN COMMISSIONER OF INCOME TAX, MUZAFFARNAGAR WHO PASSE D THE ORDER DATED 25.1.2008 HAVE ABDICATED THEIR DUTIES. THE COURT IN THE EXERCISE OF SUPERVISORY JURISDICTION UNDER A RTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA CANNOT BE A MU TE SPECTATOR. SUCH ACTIONS ON THE PART OF THE DEPARTM ENT NOT ONLY BRING DISREPUTE TO THE DEPARTMENT BUT ALSO ENCOURAG E THE DISHONEST ASSESSEES AND PROMOTES THE NEFARIOUS ACTI VITIES WHICH NOT ONLY CAUSES LOSS TO REVENUE BUT ALSO PROM OTES DISHONESTY. AN HONEST TAX PAYER FEELS CHEATED. LE T THE MATTER BE EXAMINED BY THE CHIEF COMMISSIONER OF INC OME 11 ITA NO. 148/COCH/2012 ITA NO.457/COCH/2013 TAX AND APPROPRIATE DEPARTMENTAL PROCEEDINGS MAY BE TAKEN OUT AGAINST THE ERRING OFFICIALS. A COPY OF THIS J UDGMENT MAY ALSO BE SENT TO THE CHAIRMAN OF THE CENTRAL BOARD O F DIRECT TAXES FOR AN APPROPRIATE ACTION. 7. IN THIS CASE ALSO, THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE ISSUE RAISED BY THE ASSESSEE; THEREFORE, THE NO N APPLICATION OF MIND TO THE ISSUE RAISED BY THE ASSESSEE WITH REGARD TO CAR RIED FORWARD LOSSES AND DEPRECIATION IS AN ERROR WITHIN THE MEANING OF SECT ION 263 OF THE ACT. HENCE, WE DO NOT FIND ANY ERROR IN THE ORDERS OF TH E ADMINISTRATIVE COMMISSIONER. ACCORDINGLY, WE CONFIRM HIS ORDER. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH OCTOBER, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 11 TH OCTOBER, 2013 PK/- COPY TO: 1. KERALA STATE ELECTRICITY BOARD, THIRUVANANTHAPUR AM 2. THE COMMISSIONER OF INCOME-TAX, THIRUVANANTHAPUR AM 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH