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TAXAP/1543/2009 6/ 6 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1543 of 2009
=========================================================
COMMISSIONER
OF INCOME TAX-I - Appellant(s)
Versus
V
K PATEL & CO - Opponent(s)
=========================================================
Appearance
:
MR
MANISH R BHATT Sr Advocate with Ms MAUNA M BHATT
for
Appellant
RULE SERVED BY DS for
Opponent
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI 18th April 2011
ORAL
ORDER
(Per : HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in Appeal against the judgment of the Tribunal dated 15th
December 2008, raising following questions for our consideration :-
[A] “Whether
on the facts and in the circumstances of the case, and in law, the
Appellate Tribunal erred in granting relief and determining the
total income on its own and without any definite basis while
ignoring altogether the non-compliance and hostile attitude of the
assessee in course of assessment proceedings by way of not
substantiating the bills and vouchers which were found to be
self-serving ?”
[B] “Whether
on the facts and in the circumstances of the case, and in law, the
Appellate Tribunal erred in ignoring the evidence and basis of
disallowance relating to water charges even when there were vouchers
with all the defects and infirmities discussed in detail in the
assessment order and thus, whether the Tribunal’s order is perverse
in so far as it has ignored the evidence relied upon by the
Assessing Officer ?”
[C] “Whether
on the facts and in the circumstances of the case, and in law, the
Appellate Tribunal erred in ignoring the evidence and basis of
disallowance relating to tractor hires and transport charges even
when there were vouchers with all the defects and infirmities
discussed in detail in the assessment order and thus, whether the
Tribunal’s order is perverse in so far it has ignored the evidence
relied upon by the Assessing Officer ?”
[D]
“Whether on the facts and in the circumstances of the case,
and in law, the Appellate Tribunal erred in ignoring the evidence
and basis of disallowance relating to site kitchen expenses even
when there were vouchers with all the defects and infirmities
discussed in detail in the assessment order and thus, whether the
Tribunal’s order is perverse in so far it ignored the evidence
relied upon by the Assessing Officer ?”
[E] “Whether
on the facts and in the circumstances of the case, and in law, the
Appellate Tribunal erred in ignoring the evidence and basis of
disallowance relating to sand carting expenses even when there were
vouchers with all the defects and infirmities discussed in detail in
the assessment order and thus, whether the Tribunal’s order is
perverse in so far it has ignored the evidence relied upon by the
Assessing Officer ?”
[F] “Whether
on the facts and in the circumstances of the case, and in law, the
Appellate Tribunal erred in ignoring the evidence and basis of
disallowance relating to transportation expenses even when there
were vouchers with all the defects and infirmities discussed in
detail in the assessment order in and thus, whether the Tribunal’s
order is perverse in so far it has ignored the evidence relied upon
by the Assessing Officer ?”
Previously, when the
appeal had come up for admission hearing, counsel for the Revenue
drew our attention to the impugned order of the Tribunal to contend
that the Tribunal has disposed of the appeal of the Revenue without
assigning any reasons. We had, therefore, by our Order dated 8th
March 2011, issued notice for final disposal. Though served, no one
appeared for the respondent.
We have heard learned
counsel for the Revenue. We find that various issues were presented
before the Tribunal in the appeal of the Revenue. The Tribunal
dismissed the appeal with following observations :-
“6. We
have considered the rival submissions. After considering all the
facts of the case, we are of the view that net profit rate of
assessee at 5.75% should be applied by the Assessing Officer in order
to determine the income of the assessee (considering the provisions
for depreciation).”
Other than above observation, the Tribunal had not made any
remark with regard to the merit or de-merit on the contention of the
Revenue. We, thus, find that the Tribunal’s order totally lacks
reasoning. In a separate order passed today in Tax Appeal No. 1379 of
2009, we had highlighted the requirement of recording the reasons,
particularly when the Tribunal was inclined to allow the appeal,
interfering with the Order of CIT [A]. In the said order, following
observations have been made :-
“As
a final fact finding authority, Tribunal’s factual conclusions hold
immense importance in Tax Appeal carried before us. Being a
specialized Tribunal, it’s appreciation on legal questions also holds
considerable importance to us. When a Tribunal’s judgment is bereft
of any discussion either on facts or in law, it besides being an
unreasoned order of a quasi judicial tribunal, also increases our
burden together facts from other record and to verify whether the
ultimate conclusion that the Tribunal arrived at, calls for any
interference or not. In absence of any discussion on facts or on law
by the Tribunal, we are left to imagine what must have weighed with
the Tribunal to arrive at a particular conclusion.
Requirement
of recording reasons by all authorities discharging judicial or quasi
judicial functions has been considered by the Apex Court in time
without numbers. In recent decision in case of Kranti
Associates Private Limited & Anr. Vs. Masood Ahmed Khan and Ors.,
reported in (2010) 9 SCC 496, the Apex Court referring to large
number of judgments on the point summarized the position as thus.
“47. Summarizing
the above discussion, this Court holds:
a.
In India the judicial trend has always been to record reasons, even
in administrative decisions, if such decisions affect anyone
prejudicially.
b. A
quasi-judicial authority must record reasons in support of its
conclusions.
c.
Insistence on recording of reasons is meant to serve the wider
principle of justice that justice must not only be done it must also
appear to be done as well.
d.
Recording of reasons also operates as a valid restraint on any
possible arbitrary exercise of judicial and quasi-judicial or even
administrative power.
e.
Reasons reassure that discretion has been exercised by the decision
maker on relevant grounds and by disregarding extraneous
considerations.
f.
Reasons have virtually become as indispensable a component of a
decision making process as observing principles of natural justice by
judicial, quasi-judicial and even by administrative bodies.
g.
Reasons facilitate the process of judicial review by superior Courts.
h.
The ongoing judicial trend in all countries committed to rule of law
and constitutional governance is in favour of reasoned decisions
based on relevant facts. This is virtually the life blood of judicial
decision making justifying the principle that reason is the soul of
justice.
i.
Judicial or even quasi-judicial opinions these days can be as
different as the judges and authorities who deliver them. All these
decisions serve one common purpose which is to demonstrate by reason
that the relevant factors have been objectively considered. This is
important for sustaining the litigants’ faith in the justice
delivery system.
j.
Insistence on reason is a requirement for both judicial
accountability and transparency.
k.
If a Judge or a quasi-judicial authority is not candid enough about
his/her decision making process then it is impossible to know whether
the person deciding is faithful to the doctrine of precedent or to
principles of incremental ism.
l.
Reasons in support of decisions must be cogent, clear and succinct. A
pretense of reasons or ‘rubber-stamp reasons’ is not to
be equated with a valid decision making process.
It
cannot be doubted that transparency is the sine qua non of restraint
on abuse of judicial powers. Transparency in decision making not
only makes the judges and decision makers less prone to errors but
also makes them subject to broader scrutiny.
(See
David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law
Review 731-737).
n.
Since the requirement to record reasons emanates from the broad
doctrine of fairness in decision making, the said requirement is now
virtually a component of human rights and was considered part of
Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and
Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court
referred to Article 6 of European Convention of Human Rights which
requires, “adequate and intelligent reasons must be given for
judicial decisions”.
o.
In all common law jurisdictions judgments play a vital role in
setting up precedents for the future. Therefore, for development of
law, requirement of giving reasons for the decision is of the essence
and is virtually a part of “Due Process”.
Under
the circumstances, the impugned order is set aside. Proceedings are
remanded to the Tribunal for fresh consideration and disposal in
accordance with law after giving its reasons. We have not expressed
any opinion on merits of the issue decided by the CIT (A).”
We find that the issues
are required to be remanded to the Tribunal for fresh consideration
in accordance with law. In the above premise, impugned order
of the Tribunal dated 15th December 2008 is set-aside.
Proceedings are placed before the Tribunal for fresh consideration
and decision in accordance with law.
Tax Appeal is disposed
of accordingly.
{Akil
Kureshi, J.}
{Ms.
Sonia Gokani, J.}
Prakash*
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