Board Of Secondary Education v. Pr. Commissioner Of Income Tax

-1-The High Court of Madhya Pradesh ITA No.10/2021 (BOARD OF SECONDARY EDUCATION Vs PR. COMMISSIONER OF INCOME TAX) Jabalpur, Dated: 17/11/2021 Shri Mukesh Agrawal, learned counsel for the appellant. Shri Sanjay Lal, learned counsel for the respondent. 1. The present Income Tax Appeal is preferred u/S.260-A ofthe Income Tax Act, 1961 assailing the order dated 06.11.2020passed in ITA No.164/Ind/2018 by the Income Tax AppellateTribunal, Indore Bench, dismissing the appeal of assessee, who hadraised the following grounds:- “1. On the facts and in the circumstances of thecase, the ld. Commissioner of Income Tax (Appeals-II), Bhopal was not justified in holding that thepayment of Income Tax of Rs.2,16,50,650/- paid ondeemed income u/s 11(3) for A.Y. 2013-14 should notbe allowed as a deduction or application of theincome of the current year (ASSESSMENT YEAR2014-15) & is hence also wrong in upholding thefollowing: a) Tax demand of Rs.84,72,830/- b) Interest payable u/s 234A, 234B & 234C.” 2. Learned counsel for the appellant raises singular groundthat the impugned order of Income Tax Appellate Tribunal, IndoreBench is non speaking. 3. Learned counsel for the revenue on the other hand contendsthat the impugned order contains sufficient reasons to sustain thesame. It is submitted by counsel for the revenue that the reasons arecontained in para 7 of the impugned order. It is further submitted thatthe mind of the Income Tax Appellate Tribunal is reflected therein,and therefore, the order cannot be termed to be non-speaking. 4. Accordingly, this Court after hearing learned counsel for therival parties frames the following substantial question of law:- “Whether the impugned order dated 06.11.2020 passed by the Income Tax Appellate Tribunal, IndoreBench in ITA No.164/Ind/2018 in unlawful for being non-speaking in as much as not containing enough reasons todisclose the mind of the appellate authority to save itfrom being sacrificed at the alter of principle of naturaljustice?” 5. Considering the nature of substantial question framedabove, this appeal does not require any detailed hearing and can bedisposed of at this stage itself. 6. Learned counsel for the rival parties have no objection inregard to appeal being disposed of at this stage. 7. A bare perusal of the impugned order reveals that in para 1,grounds of the appeal raised by the assessee are mentioned followedby para 2, wherein various stages through which the case travelledhave been mentioned including the foundational facts. Para 3contains the grievance of appellant in short. In para 4, contentions ofthe assessee in his appeal are detailed. Para 6 gives an impressionthat the same contains findings but in actuality the said para merelyreproduces the order impugned before the ITAT passed by theCIT(A). Lastly comes para 7, which has some semblance ofdisclosure of mind of the ITAT; but a bare perusal of the samereveals that the ITAT has stated that they have given thoughtfulconsideration to the findings of CIT(A), and thereafter withoutrecording reasons as to why the appeal is being dismissed, the ITATjumped to the conclusion that there is no infirmity in the orderimpugned before it. The only short and cryptic reason assigned isthat the present case is not a case of change of accounting system,which is not sufficient to disclose the mind of the ITAT whiledeciding the appeal. 8. Reasons are the bridge between the facts, circumstances onone side and the conclusion on the other, in absence of which, ajudicial order becomes a lifeless piece of paper. 9. The Apex Court in Kranti Associates Private Limited andanother Vs. Masood Ahmed Khan and others, (2010) 9 SCC 496 has held thus:- 47. Summarizing the above discussion, this Court holds: (a). In India the judicial trend has always been to recordreasons, even in administrative decisions, if suchdecisions affect anyone prejudicially. 8. Reasons are the bridge between the facts, circumstances onone side and the conclusion on the other, in absence of which, ajudicial order becomes a lifeless piece of paper. 9. The Apex Court in Kranti Associates Private Limited andanother Vs. Masood Ahmed Khan and others, (2010) 9 SCC 496 has held thus:- 47. Summarizing the above discussion, this Court holds: (a). In India the judicial trend has always been to recordreasons, even in administrative decisions, if suchdecisions affect anyone prejudicially. (b). A quasi-judicial authority must record reasons insupport of its conclusions. (c). Insistence on recording of reasons is meant to servethe wider principle of justice that justice must not only bedone it must also appear to be done as well. (d). Recording of reasons also operates as a validrestraint on any possible arbitrary exercise of judicialand quasi-judicial or even administrative power. (e). Reasons reassure that discretion has been exercisedby the decision maker on relevant grounds and bydisregarding extraneous considerations. (f). Reasons have virtually become as indispensable acomponent of a decision making process as observingprinciples of natural justice by judicial, quasi-judicialand even by administrative bodies. (g). Reasons facilitate the process of judicial review bysuperior Courts. (h). The ongoing judicial trend in all countries committedto rule of law and constitutional governance is in favourof reasoned decisions based on relevant facts. This isvirtually the life blood of judicial decision makingjustifying the principle that reason is the soul of justice. (i). Judicial or even quasi-judicial opinions these dayscan be as different as the judges and authorities whodeliver them. All these decisions serve one commonpurpose which is to demonstrate by reason that therelevant factors have been objectively considered. This isimportant for sustaining the litigants' faith in the justicedelivery system. (j). Insistence on reason is a requirement for both judicialaccountability and transparency. (k). If a Judge or a quasi-judicial authority is not candidenough about his/her decision making process then it isimpossible to know whether the person deciding is faithful to the doctrine of precedent or to principles ofincrementalism. (l). Reasons in support of decisions must be cogent, clearand succinct. A pretence of reasons or `rubber-stampreasons' is not to be equated with a valid decision makingprocess. (m). It cannot be doubted that transparency is the sinequa non of restraint on abuse of judicial powers.Transparency in decision making not only makes thejudges and decision makers less prone to errors but alsomakes them subject to broader scrutiny. (See DavidShapiro in Defence of Judicial Candor (1987) 100Harward Law Review 731-737). (n). Since the requirement to record reasons emanatesfrom the broad doctrine of fairness in decision making,the said requirement is now virtually a component ofhuman rights and was considered part of StrasbourgJurisprudence. See Ruiz Torija Vs. Spain, (1994) 19EHRR 553, at 562 para 29 and Anya vs. University ofOxford, 2001 EWCA Civ 405, wherein the Court referredto Article 6 of European Convention of Human Rightswhich requires, "adequate and intelligent reasons must be given forjudicial decisions". (o). In all common law jurisdictions judgments play avital role in setting up precedents for the future.Therefore, for development of law, requirement of givingreasons for the decision is of the essence and is virtuallya part of "due process". 10. Testing the impugned order on the anvil of law laid downby the Apex Court and the principles of natural justice, this Court hasno hesitation to hold that the impugned order passed by the IncomeTax Appellate Tribunal, Indore Bench in ITA No.164/Ind/2018 isnon-speaking. "adequate and intelligent reasons must be given forjudicial decisions". (o). In all common law jurisdictions judgments play avital role in setting up precedents for the future.Therefore, for development of law, requirement of givingreasons for the decision is of the essence and is virtuallya part of "due process". 10. Testing the impugned order on the anvil of law laid downby the Apex Court and the principles of natural justice, this Court hasno hesitation to hold that the impugned order passed by the IncomeTax Appellate Tribunal, Indore Bench in ITA No.164/Ind/2018 isnon-speaking. 11. Before parting, it would be appropriate to mention thatthough the jurisdiction of ITAT u/S.253 to 255 is not only to decidethe questions of law but also of fact and therefore, the scope ofinterference is much larger than the scope before a revisionalauthority. Thus, the least that is expected of an appellate judicialauthority vested with such wide powers is to record reasons so that -5- it’s mind is disclosed thereby informing the aggrieved person theexact reasons behind the conclusion and thus in the processfacilitating availing of remedy before the higher forum. 12. In the conspectus of above discussion, the present appealon the aforesaid short substantial question of law is allowed. (i) The impugned order dated 06.11.2020 passed by theIncome Tax Appellate Tribunal, Indore Bench in ITANo.164/Ind/2018 is set aside. (ii) The Income Tax Appellate Authority, Indore Bench isexpected to decide ITA No.164/Ind/2018 pertaining to theassessment year 2014-2015 by passing a fresh speaking order. 13. It is made clear that in case the composition of theAppellate Tribunal has since changed, then prior to passing speakingorder, the rival parties ought to be given a hearing in accordance withthe Income Tax Act. 14. It is also made clear that we have not commented uponmerits of the claim before the Tribunal. (Sheel Nagu) (Purushaindra Kumar Kaurav) Judge Judge SS Digitally signed by SATEESH KUMAR SEN Date: 2021.11.23 13:38:29 +05'30'