M/s. Arun Cotton Co., JODHPUR V. DCIT, SRIGANGANAGAR

ITA 499/JODH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78155 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-04-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 260A; 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.499/JODH/2013 (A.Y. 1999-2000) M/S. ARUN COTTON CO. VS. DCIT, CIRCLE, (SINCE DISSOLVED), SRIGANGANAGAR. C/O SHRI U.C. JAIN, ADVOCATE, SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. PAN NO. AAEFA 7893 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 23/04/2014. DATE OF PRONOUNCEMENT : 25/04/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 05/09/2013 OF LD. CIT(A), BIKANER. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) GROSSLY ERRED IN DISMISSING THE APPEAL WITHOUT ASSI GNING ANY REASON 2 AND WITHOUT PROVIDING THE REMAND REPORT RECEIVED FR OM THE OFFICE OF THE AO. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE APPEAL AS IT WAS THE DUTY OF THE ASSESSING OFFICER TO INCREASE THE VALUE OF OPENING STOCK WHEN HE DECIDES TO INCREASE THE VALUE OF CLOSING STOCK FOR THE PRECEDI NG YEAR AND THE FAILURE ON THE PART OF THE AO CANNOT BE A GROUND FO R REJECTION OF ASSESSEES APPLICATION U/S 154. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WHILE DISMISSING THE APPEAL FAILED TO CONSIDER THE SUBMISSION AND THE LEGAL SUBMISSION MADE BY THE APPELLANT BEFORE HIM. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE HON'BLE TRIBUNAL MAY PLEASE TO AWARD THE COST OF THE APPEAL AND THE ADVOCATE FEES. 5. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING . 6. THAT PETITIONER PRAYS FOR JUSTICE & RELIEF. 2 THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 154 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SING OFFICER WHILE PASSING THE ASSESSMENT ORDER, MADE AN ADDITION OF R S. 9,27,658/- IN THE VALUATION OF CLOSING STOCK AS ON 31/03/1998. THE L D. CIT(A) CONFIRMED THE SAID ADDITION, BUT THE ITAT VIDE ORDER DATED 29 /09/2006 IN I.T.A.NO. 725/JDPR/2005, REDUCED THE ADDITION TO RS. 6,85,539 /- AND AS SUCH THE ASSESSEE MOVED AN APPLICATION UNDER SECTION 154 OF THE ACT BEFORE THE 3 ASSESSING OFFICER ON 09/10/2006 TO GIVE THE BENEFIT OF THE SAID ADDITION FOR VALUATION OF OPENING STOCK IN THE SUCCEEDING YE AR. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MAHENDRA MILLS LTD. VS. P.B. DESAI AAC REPORTED IN 99 ITR 135. HOWEVER, THE ASSESSING OFFICER REJECTED THE APPLICATION ON T WO GROUNDS (1) THE DECISION OF THE HON'BLE SUPREME COURT REPORTED IN 9 9 ITR 135 WAS NOT APPLICABLE. (2) THE APPLICATION MOVED WAS BARRED BY LIMITATION. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS WHICH WERE FO RWARDED BY THE LD. CIT(A) TO THE ASSESSING OFFICER FOR HIS REMAND REPO RT. THE ASSESSING OFFICER FURNISHED THE REMAND REPORT DATED 08/02/201 3. HOWEVER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSION MADE. THE CONTENTION OF THE AO IS FAIR AND REASONABLE. THE A /R COULD NOT CONTROVERT THE FINDINGS OF THE AO. HENCE, IN VIEW OF THE REMAN D REPORT THE APPLICATION REJECTED BY THE AO IS CORRECT. THE APPELLANT FAILS ON THIS GROUND. NOW THE ASSESSEE IS IN APPEAL. 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WH EN THE ADDITION WAS MADE IN THE CLOSING STOCK, THE BENEFIT WAS TO B E GIVEN IN THE OPENING STOCK FOR THE NEXT YEAR AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME 4 COURT IN THE CASE OF MAHENDRA MILLS LTD. VS. P.B. DESAI AAC (SUPRA), THEREFORE, THE APPLICATION MOVED BY THE ASSESSEE UN DER SECTION 154 OF THE ACT OUGHT TO HAVE BEEN ACCEPTED BY THE ASSESSIN G OFFICER AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER. 6 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) PASSED THE IMPUGNED ORDER IN A SLIP SHOD MANNER AND HE HAD NOT GIVEN ANY REASON IN SUPP ORT OF HIS CONCLUSION. THEREFORE, THE ORDER PASSED BY HIM IS A NON-SPEAKING ORDER WHICH IS NOT TENABLE IN THE EYES OF LAW. 8 IT IS WELL SETTLED THAT THE ORDER/JUDGMENT UN-SUPP ORTED BY REASON IS NOT A JUDGMENT IN THE EYES OF LAW. IT IS ALSO TR UE THAT THE REASONS ARE THE LINKS BETWEEN THE MATERIAL ON RECORD AND THE CONCLU SION THEREAFTER BY THE COURT/APPELLATE AUTHORITY. IN OUR VIEW THE LD . CIT(A) SHOULD HAVE PROPERLY CONSIDERED THE ARGUMENTS OF THE ASSESSEE A S WELL AS FINDINGS GIVEN BY THE ASSESSING OFFICER AND THEREAFTER HE SH OULD HAVE MADE 5 INDEPENDENT FINDINGS EITHER IN FAVOUR OR AGAINST TH E ASSESSEE. CONSIDERING THE ENTIRE FACTS, WE ARE OF THE OPINION THAT THE LD . CIT(A) HAD NOT PASSED A PROPER ORDER IN THE EYES OF LAW. AT THIS STAGE, WE MAY REFER TO THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF GUJARAT THEM IS BIOSYN LTD. V. J.C.I.T. (2000) 74 ITD 339 (AHD). THE ITAT AHMEDABA D BENCH, WHILE INTERPRETING THE PROVISIONS OF SECTION 250(6) OF TH E I.T. ACT, 1961 HELD AS UNDER: ' THE PROVISIONS OF SECTION 250(6) PROVIDES THAT THE APPELLATE ORDERS OF THE COMMISSIONER (APPEALS) ARE TO STATE THE POINTS ARIS ING IN THE APPEAL, THE DECISION OF THE AUTHORITY THEREON AND THE REASONS F OR SUCH DECISION. THE UNDERLYING RATIONALE OF THE PROVISIONS IS THAT SUCH ORDERS ARE SUBJECT TO FURTHER APPEAL TO THE TRIBUNAL. SPEAKING ORDER WOULD OBVIOU SLY ENABLE A PARTY TO KNOW PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINS T HIM. ABSENCE OF THE FORMULATION OF THE POINT FOR DECISION FOR WANT OF C LARITY IN A DECISION UNDOUBTEDLY PUTS A PARTY IN QUANDARY. SECTION 250(6 ) EXPRESSLY EMBODIES THE PRINCIPLE OF NATURAL JUSTICE AND SUCH A PROVISION I S CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPE ALS) IN VIOLATION OF THE PROVISIONS OF SECTION 250(6) COULD NOT, THEREFORE, BE SUSTAINED.' 9. THE RATIO LAID DOWN BY THE ITAT AHMEDABAD B ENCH IN THE AFORESAID REFERRED TO CASE IS SQUARELY APPLICABLE T O THE FACTS OF THE PRESENT CASE. 10 SIMILARLY, THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PALWAL CO-OPERATIVE SUGAR MILLS LTD (2006) 28 4 ITR 153 HAS HELD AS UNDER: 6 'EVERY JUDICIAL / QUASI JUDICIAL BODY / AUTHORITY M UST PASS A REASONED ORDER WHICH SHOULD REFLECT THE APPLICATION OF MIND OF THE CONCERNED AUTHORITY TO THE ISSUES / POINTS RAISED BEFORE IT. THE REQUIREMENT O F RECORDING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR I RRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROC ESS. ANOTHER REASON WHICH MAKES IT IMPERATIVE FOR QUASI JUDICIAL AUTHOR ITIES TO GIVE REASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJECT TO THE RIGHT OF T HE AGGRIEVED PERSONS TO CHALLENGE THEM BY FILING STATUTORY APPEAL AND REVIS ION BUT ALSO BY FILING WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION. SUC H DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL UNDER ARTICLE 136 OF TH E CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POWER TO ISSUE WRITS OF CE RTIORARI TO QUASH THE ORDERS PASSED BY QUASI JUDICIAL AUTHORITIES / TRIBU NALS LIKEWISE IN APPEAL THE SUPREME COURT CAN NULLIFY SUCH ORDER / DECISION. TH E POWER OF JUDICIAL REVIEW CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLENGE CONTAINS REASONS. IF SUCH ORD ER IS CRYPTIC AND DEVOID OF REASONS, THE COURTS CANNOT EFFECTIVELY EX ERCISE THE POWER OF JUDICIAL REVIEW.' 11 . THE HON'BIE SUPREME COURT IN THE CASE OF MANGALOR E GANESH BEEDI WORKS VS. CIT AND ANOTHER (2005) 273 ITR 56 HAS HEL D AS UNDER: 'THOUGH IN AN ORDER OF AFFIRMATION IN AN APPEAL U/S 260A OF INCOME TAX ACT, 1961 REPETITION OF THE REASONS ELABORATELY MAY NOT BE NECESSARY, THE ARGUMENTS ADVANCED / POINTS URGED HAVE TO BE DEALT WITH. REASONS FOR AFFIRMATION HAVE TO BE INDICATED, THOUGH IN APPROPR IATE CASES THEY MAY BE BRIEF.' IT HAS FURTHER BEEN HELD - RECORDING OF REASONS IS A PART OF FAIR PROCEDURE. REASONS ARE THE HARBINGER BETWEEN THE MIND OF THE MAKER OF THE DECI SION IN THE CONTROVERSY AND THE DECISION OR CONCLUSION ARRIVED AT. THEY SUBSTITUTE SUBJECTIVITY WITH OBJECTIVITY. FAILURE TO GIVE REAS ONS AMOUNTS TO DENIAL OF JUSTICE.' 12. IN THE PRESENT CASE, AS WE HAVE ALREADY POINTED OU T THE LD. CIT(A) HAS NOT RECORDED ANY REASON IN SUPPORT OF HIS DECIS ION, THEREFORE, THE FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTIC E AS PER THE RATIO LAID 7 DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID CASE AND THE PRESENT CASE REQUIRES RE-ADJUDICATION AT THE LEVEL OF LD. CIT(A) . 13. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT V. VIKAS CHEMI GUM INDIA (2005) 276 ITR 32 HAS HELD AS UNDER : 'THE REQUIREMENT OF RECORDING OF REASONS AND COMMUN ICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAI R PROCEDURE. THE NECESSITY OF GIVING REASONS FLOWS FROM THE CONCEPT OF RULE OF LAW WHICH CONSTITUTES ONE OF THE CORNER STONES OF OUR CONSTIT UTIONAL SET UP. THE ADMINISTRATIVE AUTHORITIES CHANGED WITH THE DUTY TO ACT JUDICIALLY CANNOT DECIDE THE MATTERS ON CONSIDERATIONS OF POLICY OR E XPEDIENCY. THE REQUIREMENT OF RECORDING OF REASONS BY SUCH AUTHORI TIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROC ESS. ANOTHER REASON WHICH MAKES IT IMPERATIVE FOR THE QUASI JUDICIAL AU THORITIES TO GIVE REASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJECT TO THE RI GHT OF THE AGGRIEVED PERSONS TO CHALLENGE THE SAME BY FILING STATUTORY A PPEAL AND REVISION BUT ALSO BY FILING WRIT PETITION UNDER ARTICLES 226 OF THE CONSTITUTION. SUCH DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL U NDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POW ER TO ISSUE WRIT OF CERTIORARI TO QUASH THE ORDERS PASSED BY A QUASI JU DICIAL AUTHORITY / TRIBUNAL. LIKEWISE IN APPEAL THE SUPREME COURT CAN NULLIFY SUCH ORDER / DECISION. THESE POWERS CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLENGE CONTAINS REASONS. ' 14 . IN THE PRESENT CASE, AS POINTED OUT EARLIER THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS WITHOUT ANY REASO NING, THEREFORE, IN VIEW OF THE RATIO LAID DOWN IN THE AFORESAID REF ERRED TO JUDICIAL PRONOUNCEMENTS, IT DESERVES TO BE SET ASIDE AND REM ANDED BACK FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER PRO VIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD AT THE LEVEL OF LD. CIT(A). WE ORDER ACCORDINGLY. 8 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. (ORDER PRONOUNCED IN THE COURT ON 25 TH APRIL, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH APRIL, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.