TMI Blog2013 (9) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income- tax initiated proceedings to cancel the registration u/s 12A of the Act. However, it was dropped without recording any reason. Subsequently, the case was reopened and notice was issued u/s 147 of the Act. The assessee challenged the notice issued for reopening the assessment by way of writ petition. While considering the wit petition, the Allahabad High Court expressed its shock and anguish on the way in which the orders are being passed by the income-tax authorities. Assessment order does not reflect the application of mind by the assessing officer to the material filed by the assessee. The non application of mind to the material filed by the assessee is an error which is prejudicial to the interest of the revenue. Therefore, the Administrative Commissioner has rightly exercised his jurisdiction u/s 263 of the Act - Decided against Assessee. - I.T.A Nos. 257 & 258/Coch/2013 - - - Dated:- 5-9-2013 - Shri N. R. S. Ganesan (JM) And Shri B. R. Baskaran (AM),JJ. For the Appellant : Shri K. I. John For the Respondent : Shri M. Anil Kumar, CIT / Smt. S Vijayaprabha / Shri K. K. John ORDER Per N.R.S. Ganesan (JM) Both the appeals of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order itself. The reasons for the conclusion reached cannot be substituted by way of filing documents or further affidavits in the appellate / judicial proceedings. In other words, the assessing officer is bound to pass a speaking order. In this case, even though the assessing officer called for the details, he has not discussed the same in the assessment orders. Therefore, the reasons for allowing the claim of the assessee / not including the increase in wealth in the assessment are not forthcoming from the assessment orders. This Tribunal is of the considered opinion that the failure of the assessing officer to record reasons for the conclusions reached in the assessment orders is an error which is prejudicial to the interest of the revenue. The non application of mind to the materials filed by the assessee is an error which warrants the exercise of powers by the Administrative Commissioner u/s 263 of the Act. 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision 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 Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t our affirmation. In our opinion, the Tribunal was duty bound to record tangible and cogent reasons for upsetting well reasoned orders passed by the Assessing Officer and the Commissioner of Income-tax (Appeals). It should have directed its attention to the language of section 271D and 271E of the Act in conjunction with other provisions of the same family and then decided by a reasoned order whether the 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." 5. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain any reason. Reasons introduce clarity in an order. Reason is the heart beat of every conclusion and without the same it becomes lifeless. (See Raj Kishore Jha Versus State of Bihar and others, AIR 2003 SC 4664). Even in respect of administrative orders Lord Denning M.R. in Breen Vs. Amalgamated Engineering Union, (1971) All. E.R. 1148) observed: "The giving of reasons 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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