Champaklal M. Parikh v. Income Tax Officer-20(1)(2), Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 425 OF 2005 Champaklal M. Parikh .. Appellant V/s Income Tax Officer-20(1)(2), Mumbai and Anr. .. Respondents Mr.A.K. Jasani i/b Mr.V.S. Hadade for the Appellant. Mr.R. Ashokan for the Respondents. CORAM : SWATANTER KUMAR, C.J. & A.P. DESHPANDE, J. DATE : 16TH SEPTEMBER 2008 P.C. P.C. : 1. We have heard the learned counsel appearing for the parties. 2. The challenge in the present appeal is to the order of the Income Tax Appellate Tribunal dated 24th January 2005. The Tribunal noticed that no inquiry was made by the Assessing Officer regarding correctness of the valuation as per the valuation report and therefore the judgment cited before it was of no help to the assessee. After discussing the deficiencies in the - 2 - order of the Assessing Officer, as has been pointed out by the Commissioner of Income Tax in his order dated 26th March 1999, he also noticed that the Assessing Officer had accepted the Long Term Capital Gains without making any proper inquiry and found that the order was erroneous insofar as it was prejudicial to the interest of revenue. 3. The learned counsel appearing for the Appellant relies upon a Division Bench judgment of this Court in the case of Commissioner of Income Tax v. Gabriel India Ltd., reported in 203 ITR 108 to argue that merely because the order of the Assessing Officer was not a detailed one, on that ground it could not be held that the order was erroneous for lack of elaborate discussion. We are afraid, this judgment is of no help to the Appellant inasmuch as in that case in response to a notice, the assessee had submitted a detailed explanation vide its written reply with all the documents and it was examined by the Income Tax Officer, who being satisfied with the explanation of the assessee had recorded the order. Further more, the another distinguishing feature of that case was that the order of the other authority, i.e. the Commissioner of Income Tax, did not hold that the order was erroneous and thus prejudicial to the interest of revenue. - 3 - 4. In the present case, the order of the Assessing Officer has dealt with the entire aspect where the assessee had shown income from other sources and Long Term Capital Gains has been dealt with in just two lines. There is no reference to the notice issued by the Assessing Officer under section 142 of the Income Tax Act or any response thereto with explanation from the assessee. 5. We may also notice a Division Bench judgment in the case of M/s Pipe Arts (India) Pvt. Ltd. v. Gangadhar Nathuji Golamare decided on 13th March 2008 (Coram: Swatanter Kumar, CJ. & J.P. Devadhar, J.) in Letters Patent Appeal No.50 of 2008, where it was observed that an authority discharging its judicial or quasi-judicial function is expected to give reasons, may be not in great detail but at least with some grounds or reasons which would justify arriving at the conclusion by the concerned authority. Under the provisions of the Income Tax Act, any party aggrieved by an order of the Assessing Officer has a right to appeal. To make that right of appeal effective, it is essential that the order of the Assessing Officer should provide some reasoning, failing which the right of appeal itself would stand frustrated and put the appellant at a disadvantageous situation. - 4 - 6. Be that as it may. The order of the Assessing Officer gives no reason and does not refer to the notice under section 142 of the Income Tax Act as has been concurrently recorded by the Commissioner of Income Tax as well as the Tribunal that no inquiry was conducted and there was lack of proper application of mind by the by the concerned authority. Under the provisions of the Income Tax Act, any party aggrieved by an order of the Assessing Officer has a right to appeal. To make that right of appeal effective, it is essential that the order of the Assessing Officer should provide some reasoning, failing which the right of appeal itself would stand frustrated and put the appellant at a disadvantageous situation. - 4 - 6. Be that as it may. The order of the Assessing Officer gives no reason and does not refer to the notice under section 142 of the Income Tax Act as has been concurrently recorded by the Commissioner of Income Tax as well as the Tribunal that no inquiry was conducted and there was lack of proper application of mind by the Assessing Officer. No question of law is involved. The appeal is dismissed. CHIEF JUSTICE A.P. DESHPANDE, J.