Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S. Banna Ali Girdhari Singh & Party (Jhunjhunu Group) C

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 366/2005 Commissioner of Income Tax, Jaipur-II, Jaipur. ----Appellant Versus M/s. Banna Ali Girdhari Singh & party (Jhunjhunu Group) C-23,Malkhera House, Vijay Vihar Colony, Naya Khera, Ambabari,Jaipur. ----Respondent For Appellant(s) : Mr. Prateek Kedawat for Mr. R.B. MathurFor Respondent(s): Mr. P.K. Kasliwal HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE ASHOK KUMAR GAUR 31/07/2018 Judgment 1.By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has partlyallowed the appeal of the department. 2.This court while admitting the appeal on 2.1.2006 framedfollowing substantial question of law:- 1. Whether in the facts and circumstances ofthe case the ITAT and CIT(A) were justifiedin law in restricting the additions withoutassigning any reasons when the invoking ofthe provisions of section 145 of the Act hasbeen upheld? 2. Whether in the facts and circumstances ofthe case, the ITAT & CIT(A) has not actedperversely in reducing and restricting thetrading additions without assigning anyreasons and making estimation overestimation? 3.In view of the decision of this court in Commissioner ofIncome Tax vs. Ram Singh & ors. (2014) 363 ITR 417 (Raj.)wherein it has been held as under:- Similar view has been considered by this Courtin: (2005) 199 CTR (Raj) 422 Commissioner ofIncome Tax v. Sunil Talwar Murlidhar & Partyand followed in : (2005) 199 CTR (Raj.) 427. InSunil Talwar's case supra, it has been observedwhich reads ad infra- In our opinion, on the face of it, it is contradictoryin terms that the very foundation on which thebooks of account rejected by the AO and whichorder has been affirmed by the Tribunal, should betaken to be the basis for accepting the assessee'sresults because no material was produced by theAO. It is to set at naught the initial presumptionwhich at least shifted the burden on the assesseeto prove that results declared by his books ofaccount are still correct. The burden of provingexact facts to sustain the additions made on bestjudgment with definiteness is to convert bestjudgment, which is in the very nature aguesswork, to an assessment in accordance withrejected books of account to a definiteness. Thetribunal has failed to consider the undisputed andunquestionable fact on which the AO hasproceeded to make the assessment, even the factwas not disputed by the assessee that cost pricewas verifiable for carrying the guesswork.Therefore, in our opinion, the decision of theTribunal in deleting the additions made by the AOas reduced by the CIT(A) cannot be sustained inlaw. The principles fully hold the present case also. Inthe entire order the Tribunal has not recorded anyfinding of fact and no reasons are assigned as towhy the Tribunal does not agree with the findingrecorded by the AO or CIT (Appeals) as the casemay be. 40. The Hon'ble Apex Court in the case of KrantiAssociates (P) Ltd. v. Masood AhmedKhan: MANU/SC/0682/2010 : (2010)9 SCC 496,while dealing with the requirement of passingreasoned order by an authority whetheradministrative, quasi-judicial or judicial, has laiddown as under:-- a. In India the judicial trend has always been torecord reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons insupport of its conclusions. c. Insistence on recording of reasons is meant toserve the wider principle of justice, that justicemust not only be done it must also appear to bedone as well. d. Recording of reasons also operates as a validrestraint on any possible arbitrary exercise ofjudicial and quasi-judicial or even administrativepower. a. In India the judicial trend has always been torecord reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons insupport of its conclusions. c. Insistence on recording of reasons is meant toserve the wider principle of justice, that justicemust not only be done it must also appear to bedone as well. d. Recording of reasons also operates as a validrestraint on any possible arbitrary exercise ofjudicial and quasi-judicial or even administrativepower. e. Reasons reassure that discretion has beenexercised by the decision maker on relevantgrounds and by disregarding extraneousconsiderations. f. Reasons have virtually become as indispensablea component of a decision making process asobserving principles of natural justice by judicial,quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial reviewby superior Courts. h. The ongoing judicial trend in all countriescommitted to rule of law and constitutionalgovernance is in favour of reasoned decisionsbased on relevant facts. This is virtually the lifeblood of judicial decision making justifying theprinciple that reason is the soul of justice. i. Judicial or even quasi-judicial opinions thesedays can be as different as the judges andauthorities who deliver them. All these decisionsserve one common purpose which is todemonstrate by reason that the relevant factorshave been objectively considered. This is importantfor sustaining the litigants' faith in the justicedelivery system. j. Insistence on reason is a requirement for bothjudicial accountability and transparency. k. If a Judge or a quasi-judicial authority is notcandid enough about his/her decision makingprocess then it is impossible to know whether theperson deciding is faithful to the doctrine ofprecedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent,clear and succinct. A pretence of reasons or'rubber-stamp reasons' is not to be equated with avalid decision making process. m. It cannot be doubted that transparency is thesine qua non of restraint on abuse of judicialpowers. Transparency in decision making not onlymakes the judges and decision makers less proneto errors but also makes them subject to broaderscrutiny. (See David Shapiro in Defence of JudicialCandor (1987) 100 HLR 731-737). n. Since the requirement to record reasonsemanates from the broad doctrine of fairness indecision making, the said requirement is nowvirtually a component of human rights and wasconsidered part of Strasbourg Jurisprudence.See (1994) 19 EHRR 553, at 562 para 29 and Anyav. University of Oxford MANU/UKWA/0114/2001:2001 EWCA Civ 405, wherein the Court referred toArticle 6 of European Convention of Human Rightswhich requires, "adequate and intelligent reasonsmust be given for judicial decisions". o. In all common law jurisdictions judgments playa vital role in setting up precedents for the future.Therefore, for development of law, requirement ofgiving reasons for the decision is of the essenceand is virtually a part of "Due Process".a vital role in setting up precedents for the future.Therefore, for development of law, requirement ofgiving reasons for the decision is of the essenceand is virtually a part of "Due Process". We have noticed following observations of theKarnataka High Court in CIT v. GauthamchandBhandarireportedin MANU/KA/1788/2010 :(2012) 347 ITR 491, 499:-- We cannot avoid observing that of late the qualityof orders that are come out from the Tribunal inexercise of its appellate power undersection256of the Act are found to be wanting andin many respect and many a times the orders arevery prefecture, even non-speaking orders and hasno correlation to the fact situation that prevails ina given case. We have noticed following observations of theKarnataka High Court in CIT v. GauthamchandBhandarireportedin MANU/KA/1788/2010 :(2012) 347 ITR 491, 499:-- We cannot avoid observing that of late the qualityof orders that are come out from the Tribunal inexercise of its appellate power undersection256of the Act are found to be wanting andin many respect and many a times the orders arevery prefecture, even non-speaking orders and hasno correlation to the fact situation that prevails ina given case. We also notice that the members of the Tribunalhave developed an unhealthy habit of quotingtotally unrelated judgments which are notapplicable at all to the facts of the case, to passorders not otherwise sustainable on facts or in law.We strongly deprecate such a tendency on the partof the members of the Tribunal, which is quitenaturally a professional Tribunal comprised ofexpert members, one member from the Revenueside and another member from the accountingside, with considerable experience in theirrespective fields and to whom we can attributeexpertise. We feel sorry that the confidence posedby the Legislature is not being justified by passingorders that are outcome from the Tribunal now-a-days. It is high time the method of recruitment tothe Tribunal is also reviewed by the authority concerned and at least henceforth it is ensuredthat the members of some standing, integrity andcompetence are put in place as members of theTribunal and not all and sundry. The Legislature, particularly the Union Parliamentmay also take note of such tendency on the part ofthe Tribunal and ensure for suitable legislativemeasure so that the purpose and the object withwhich such Tribunals are constituted reallysubserve not only the interest of aggrievedassessee but also to ensure that the Revenue'sinterest is not simply scarified or jeopardized byerrant members. Registrar General of this court is directed to sendcopies of this judgment to the Law Commission ofIndia, Secretary to Department of Revenue,Ministry of Finance,. Government of India,Secretary to Government, Ministry of law andParliamentary Affairs, Government of India and theCentral Board of Direct Taxes, New Delhi. 42. The impugned orders passed by the Tribunaldo not satisfy the requirements enunciated by theApex Court noticed here-in-above. 43. It is no doubt true that in an order ofaffirmation, repetition of the reasons elaboratelymay not be necessary but even then thearguments advanced/points urged deserves to bedealt with. Reasons for affirmation have to beindicated, though in appropriate cases they may bebriefly stated. Recording of reasons is part of fairprocedure and reasons are harbinger between themind of the maker of the decision in thecontroversy and the decision or conclusion arrivedat and they always substitute subjectivity withobjectivity and as observed in AlexanderMachiniery (Dudley) Ltd. Crabtree, 1974 L.C.R.120, failure to give reasons amounts to denial ofjustice and this is what was also observed by theApex Court in MANU/SC/0069/2005 : 2005 (2) SC329 Mangalore Ganesh Beedi Works v. CIT & Anr.44. We find the judgments of the ITAT being thestereo typed, non-speaking, unreasoned, arbitraryand whimsical, and we have no option except toremand the matter back to the ITAT to re-visit theissue afresh de-novo in accordance with theguidelines, referred to herein above and assummarized herein above. Resultantly, in ourconsidered view, all the impugned orders passedby the ITAT, wherein appeals (Schedule-A) havebeen filed either by the revenue or by theassessees cannot be sustained in the eyes of lawand are hereby quashed & set aside to be decidedafresh and de-novo in accordance with law. TheCross Objection No. 100/2011 filed in DB ITA No. 372/2005 also stands disposed of in the aboveterms. We also direct the ITAT to decide all thematters expeditiously but in no case later than sixmonths from the date parties are called upon toput their appearance before the ITAT. However, it ismade clear that the ITAT may not beinfluenced/inhibited by any of the observations,referred to herein above and may decideindependently on merits in accordance with law.Parties are directed to appear before the ITAT on10/03/2014. No costs. 4.In that view of the matter, the order of the tribunal isquashed and set aside and the matter is remitted back to thetribunal to decide the same afresh. 5.The appeal stands allowed. (ASHOK KUMAR GAUR),J (K.S. JHAVERI),J Brijesh 38.