The Commissioner Of Income-Tax, Faridabad v. M/S Rashtriya Vikas Party, Faridabad

ITA No. 8 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 8 of 2015 (O&M) Date of Decision: 11.8.2015 The Commissioner of Income-tax, Faridabad ....Appellant. Versus M/s Rashtriya Vikas Party, Faridabad ...Respondent. CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Tajender K. Joshi, Advocate for the appellant. Mr. Vineet Garg, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 30.6.2014 passed by the Income Tax Appellate Tribunal, DelhiBench “F”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No.4079/DEL/2009, for the assessment year 2005-06, claiming thesubstantial questions of law as mentioned in para 3 of the appeal. 2.Put shortly, the facts necessary for disposal of the presentappeal as mentioned therein are that the assessee filed his return ofincome on 28.10.2005 declaring a total income of ` 3,21,596/-. The saidreturn was processed under Section 143(1) of the Act on 31.3.2006 andthe case was selected for scrutiny. During the course of assessmentproceedings, the Assessing Officer found that the party receiveddonation of ` 3,90,75,102/- against which the assessee had claimed expenditure of ` 3,81,33,355/-. The assessee had claimed the excess ofthe two as an exemption of income under Section 13A of the Act. Theassessment was completed at a total income of ` 2,93,06,330/- on28.12.2007 (Annexure A-I) after making certain additions. Feelingaggrieved, the assessee filed an appeal before the Commissioner ofIncome Tax (Appeals), Faridabad [hereinafter referred to as “the CIT(A)”]. The CIT(A), Faridabad vide order dated 3.8.2009 (Annexure A-II)allowed the appeal by granting the relief of ` 2,93,06,330/-. Beingdissatisfied with the order, Annexure A-II, the revenue has filed theappeal before the Tribunal, who vide order dated 30.6.2014 (AnnexureA-III) dismissed the said appeal. Hence, the present appeal by therevenue. 3.Learned counsel for the appellant submitted that theTribunal while reversing the findings of the Assessing Officer and the CIT(A) had not passed the reasoned speaking order which is the mandateas laid down by the Hon'ble Apex Court. 4.On the other land, learned counsel for the assesseesupported the order passed by the Tribunal. 5.After hearing learned counsel for the parties, we find merit inthe submission of learned counsel for the revenue. 6. The Hon'ble Apex Court in M/s Kranti Associates Pvt. Ltd.and another v. Sh. Masood Ahmed Khan and others, (2010) 9 SCCand another v. Sh. Masood Ahmed Khan and others, (2010) 9 SCC 496 while dealing with the requirement of passing a reasoned order byan authority whether administrative, quasi judicial or judicial, had laiddown as under:- “17. The expression 'speaking order' was first coinedby Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining theambit of Writ of Certiorari, referred to orders witherrors on the face of the record and pointed outthat an order with errors on its face, is a speakingorder. (See 1878-97 Vol. 4 Appeal Cases 30 at 40 ofthe report). 18. This Court always opined that the face of anorder passed by a quasi-judicial authority or even anadministrative authority affecting the rights of parties,must speak. It must not be like the 'inscrutable face ofa Sphinx'. 19 to 50XXXXXX 51. Summarizing the above discussion, this Courtholds:holds: (a) In India the judicial trend has always been torecord reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially.record reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially. (b)A quasi-judicial authority must record reasons insupport of its conclusions. support of its conclusions. 18. This Court always opined that the face of anorder passed by a quasi-judicial authority or even anadministrative authority affecting the rights of parties,must speak. It must not be like the 'inscrutable face ofa Sphinx'. 19 to 50XXXXXX 51. Summarizing the above discussion, this Courtholds:holds: (a) In India the judicial trend has always been torecord reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially.record reasons, even in administrative decisions, ifsuch decisions affect anyone prejudicially. (b)A quasi-judicial authority must record reasons insupport of its conclusions. support of its conclusions. (c)Insistence on recording of reasons is meant toserve the wider principle of justice that justice mustnot only be done it must also appear to be done aswell.serve the wider principle of justice that justice mustnot only be done it must also appear to be done aswell. (d)Recording of reasons also operates as a validrestraint on any possible arbitrary exercise of judicialand quasi-judicial or even administrative power.restraint on any possible arbitrary exercise of judicialand quasi-judicial or even administrative power. (e)Reasons reassure that discretion has been exercised by the decision maker on relevant groundsand by disregarding extraneous considerations. (f)Reasons have virtually become asindispensable component of a decision makingprocess as observing principles of natural justice byjudicial, quasi-judicial and even by administrativebodies. (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 decisions basedon relevant facts. This is virtually the life blood ofjudicial decision making justifying the principle thatreason is the soul of justice. (i)Judicial or even quasi-judicial opinions thesedays can be as different as the judges and authoritieswho deliver them. All these decisions serve onecommon purpose which is to demonstrate by reasonthat the relevant factors have been objectivelyconsidered. This is important for sustaining thelitigants' faith in the justice delivery system. (j)Insistence on reason is a requirement for bothjudicial accountability and transparency. judicial accountability and transparency. (k)If a Judge or a quasi-judicial authority is notcandid enough about his/her decision making processthen it is impossible to know whether the personcandid enough about his/her decision making processthen it is impossible to know whether the person deciding is faithful to the doctrine of precedent or toprinciples of incrementalism. (l)Reasons in support of decisions must becogent, 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 judicial powers.Transparency in decision making not only makes thejudges and decision makers less prone to errors butalso makes them subject to broader scrutiny. (SeeDavid Shapiro in Defence of Judicial Candor (1987)100 Harward Law Review 731-737). (n)Since the requirement to record reasonsemanates from the broad doctrine of fairness indecision making, the said requirement is now virtuallya component of human rights and was consideredpart of Strasbourg Jurisprudence. See (1994)19EHRR 553, at 562 para 29 and Anya vs. Universityof Oxford, 2001 EWCA Civ 405, wherein the Courtreferred to Article 6 of European Convention ofHuman Rights which requires, "adequate andintelligent reasons must be given forjudicialdecisions". (o)In all common law jurisdictions judgments playa 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 andis virtually a part of "Due Process". (n)Since the requirement to record reasonsemanates from the broad doctrine of fairness indecision making, the said requirement is now virtuallya component of human rights and was consideredpart of Strasbourg Jurisprudence. See (1994)19EHRR 553, at 562 para 29 and Anya vs. Universityof Oxford, 2001 EWCA Civ 405, wherein the Courtreferred to Article 6 of European Convention ofHuman Rights which requires, "adequate andintelligent reasons must be given forjudicialdecisions". (o)In all common law jurisdictions judgments playa 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 andis virtually a part of "Due Process". 7. According to the revenue, the assessee had initially claimedthat the books of account were lost and the same were not produced onthat count. Lateron, the books of account were recovered. However, nodate and time etc. were given as to when they were lost and when theywere recovered. The entirety of the facts were required to be gone intoto test the veracity of the plea taken by the assessee. The order dated30.6.2014 (Annexure A-III) passed by the Tribunal is not a speakingorder giving the detailed reasons dismissing the appeal exceptmentioning that we find no infirmity in the findings of the CIT (Appeals).The Tribunal being final fact finding authority was required to deal with allaspects of factual matrix and then record its conclusions based thereon.8.Therefore, the order dated 30.6.2014 (Annexure P-III) doesnot satisfy the requirements of being a reasoned order as enunciated bythe Apex Court in M/s Kranti Associates Pvt. Ltd's case (supra),noticed herein above. Thus, the substantial questions of law standanswered accordingly. Consequently, after setting aside the order of theTribunal dated 30.6.2014, the matter is remanded to the Tribunal todecide afresh after affording an opportunity of hearing to the parties inaccordance with law. The appeal stands disposed of. (AJAY KUMAR MITTAL) JUDGE August 11, 2015 gbs (RAMENDRA JAIN) JUDGE