TMI Blog2014 (7) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the claim of loss in the earlier assessment year. The assessment order does not reflect the application of mind nor does it contain any reason for allowing the claim of the assessee - the Administrative Commissioner has rightly exercised his jurisdiction since the order is not only erroneous but also prejudicial to the interest of the revenue – there was no infirmity in the order of the lower authority – Decided against Assessee. - ITA No.122/Coch/2014 - - - Dated:- 4-7-2014 - N R S Ganesan And Chandra Poojari, JJ. For the Appellant : Shri P K Sasidharan For the Respondent : Shri M Anil Kumar, CIT DR ORDER :- PER : N R S Ganesan This appeal of the assessee is directed against the order of the Administrative Commissioner in exercise of his jurisdiction u/s 263 of the Income-tax Act. 2. Shri P.K. Sasidharan, the ld.representative for the assessee submitted that for the assessment year 2008-09, the assessee claimed loss of ₹ 13,10,540. However, the same was converted into positive income to the extent of ₹ 46,33,530. During the year under consideration, the assessee claimed set off of the loss claimed in the assessment year 2008-09. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or disallowing a claim of the assessee. The basic principles of law require that the application of mind shall be reflected in the assessment order as also the reasons for conclusion available in the order itself. The assessing officer cannot strengthen his order by filing an affidavit or by supplementing by any other document before the appellate or revisional proceedings. The assessment order has to stand on its own leg on the reasons stated in the order itself. 5. In fact the Punjab Haryana High Court had an occasion to examine this issue in Commissioner of Income-tax vs Sunil Kumar Goel (2005) 274 ITR 53 (P H) and after considering the judgment of the Apex Court in Mukherjee (S.N.) vs UOI (1990) AIR 1990 SC 1984 has observed as follows: In S.N. Mukherjee v. Union of India, AIR 1990 SC 1984, a Constitution Bench of the Supreme Court discussed the development of law on this subject in India, Australia, Canada, England and the United States of America and after making reference to a large number of judicial precedents, their Lordships culled out the following propositions (page 1995): The decisions of this court referred to above indicate that with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. In Testeels Ltd v. N.M. Desai (1970) 37 FJR 7; AIR 1970 Guj 1, a Full Bench of the Gujarat High Court has made an extremely lucid enunciation of law on the subject and we can do no better than to extract some of the observations made in the decision. The same are (headnote of AIR 1970 (Guj)): The necessity of giving reasons flows as a necessary corollary from the rule of law which constitutes one of the basic principles of the Indian Constitutional setup. The administra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent had been able to make out a case for deleting the penalty. The order passed by the Tribunal should have clearly reflected the application of mind by the learned members. 6. The Apex Court also had an occasion to consider this issue in Toyota Motor Corporation vs Commissioner of Income-tax (2008) 306 ITR 52 (SC). The Apex Court has observed as follows at page 53 of the ITR: We are not inclined to interfere with the impugned order of the High Court. The High Court has held that the Assessing Officer had disposed of the proceedings stating the penalty proceedings initiated in this case under section 271C read with section 274 of the Income-tax Act, 1961 are hereby dropped. Accordingly to the High Court, there was no basis indicated for dropping the proceedings. The Tribunal referred to certain aspects and held that the initiation of proceedings under section 263 of the Income-tax Act, 1961 (in short, the I.T. Act ) was impermissible when considered in the background of the materials purportedly placed by the assessee before the Assessing Officer. What the High Court has done is to require the Assessing Officer to pass a reasoned order. The High Court was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is one of the fundamentals of good administration. Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the inscrutable face of the sphinx, it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review on adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. A feeble argument was advanced that the Commissioner of Income Tax being higher in hierarchy than Additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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