2019 (10) TMI 1529 - HC - Income Tax

Stay petition - first respondent has taken steps to attach the bank accounts of the petitioner - HELD THAT - As it could be seen that without adducing any reason the second respondent (ITAT) has passed the order impugned herein that too without extracting the relevant portion of the earlier judgment of the co-ordinate Bench of the Tribunal in RMKV Fabrics 2019 (4) TMI 2072 - ITAT CHENNAI Though the Tribunal is empowered to pass any order in the stay applications it has to consider each and every issue independently and render its findings with proper reasonings since reasoning is the heartbeat of every conclusion. Without following this rudimentary principle of law the second respondent has passed the impugned order merely referring to the case number of the earlier judgment of the co-ordinate Bench of the Tribunal. Such course adopted by the Tribunal in the opinion of this Court cannot be countenanced. In such view of the matter and also in the light of the admitted facts that the petitioner has already paid a substantial amount and is also inclined to pay a further sum of Rs.2 crores in addition to the third instalment of Rs.75, 00, 000/- this Court without expressing any opinion on the merits of the grounds raised by the petitioner in the stay applications as it is tantamount to dealing with the legal issues involved in the main appeals.

Summary

Issues Involved:
Challenge to common order by ITAT in Stay Petitions, Disallowance of depreciation on brand value, Disallowances in assessment orders, Dismissal of stay petitions, Proper reasoning in passing orders by ITAT.

Analysis:

Challenge to Common Order by ITAT in Stay Petitions:
The writ petitions challenged a common order by the ITAT in Stay Petitions related to Assessment Years from 2010-11 to 2016-17. The facts and issues in the petitions were found to be identical and intertwined, leading to a joint hearing and decision.

Disallowance of Depreciation on Brand Value:
The petitioner, a firm converted into a limited company, claimed depreciation on brand value from Assessment Year 2012-13 onwards. However, the first respondent disallowed the depreciation on brand value for the years 2012-13 to 2016-17, stating that no cost was incurred to acquire the brand value. This disallowance was part of several other disallowances made by the first respondent in the assessment orders.

Dismissal of Stay Petitions:
The stay petitions filed by the petitioner seeking to stay the recovery of alleged tax arrears were dismissed by the ITAT, citing a previous judgment by a co-ordinate Bench of the Tribunal. The petitioner challenged this dismissal, arguing that the Tribunal erred in not considering the case in a proper perspective and without examining other aspects.

Proper Reasoning in Passing Orders by ITAT:
The High Court found fault with the ITAT's order, noting that it lacked proper reasoning and failed to consider each issue independently. The Court emphasized the importance of providing adequate reasons for decisions, stating that the Tribunal's passing of the order without detailed reasoning was unacceptable.

In conclusion, the High Court set aside the ITAT's order, subject to the petitioner making specified payments within a given timeframe. The ITAT was directed to take up the main appeals for disposal within a set period after the payment, ensuring a fair hearing to all parties. An interim stay on recovery was ordered until the main appeals were disposed of.