Shri Keshubhai G Mandalia, RAJKOT-GUJARAT v. The Income Tax Officer, Ward 2 (4), RAJKOT-GUJARAT

ITA 810/RJT/2010 | 2005-2006
Pronouncement Date: 21-07-2011 | Result: Dismissed

Appeal Details

RSA Number 81024914 RSA 2010
Assessee PAN AAHHN4986J
Bench Rajkot
Appeal Number ITA 810/RJT/2010
Duration Of Justice 1 year(s) 3 month(s) 29 day(s)
Appellant Shri Keshubhai G Mandalia, RAJKOT-GUJARAT
Respondent The Income Tax Officer, Ward 2 (4), RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 21-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 21-07-2011
Date Of Final Hearing 04-07-2011
Next Hearing Date 04-07-2011
Assessment Year 2005-2006
Appeal Filed On 22-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.810/RJT/2009 (ASSESSMENT YEAR 2005-06) SHRI KESHUBHAI G MANDLIA VS THE ITO WD.2(4) PANCHRATNA TOWER RAJKOT OPP PARIMAL SCHOOL KALAWAD ROAD RAJKOT PAN : AAHHN4986J (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY: SHRI JM SAHAY O R D E R PER N.R.S. GANESAN JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE INCOME-TAX ACT 1961 DATED 03-03-2010 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. NO ONE APPEARED FOR THE ASSESSEE IN SPITE OF ISS UE OF NOTICE. HOWEVER THE ASSESSEE HAS FILED WRITTEN SUBMISSION. THEREFO RE WE HEARD THE LD.DR AND PROCEED TO DISPOSE OFF THE APPEAL AFTER CONSIDERING THE WRITTEN SUBMISSION FILED BY THE ASSESSEE. 3. THE ASSESSEE CONTENDED IN THE WRITTEN SUBMISSION THAT THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE ASSESSING OFFICER HAS N OT EXAMINED THE SOURCE OF CASH AMOUNT OF RS.13 LAKHS BEFORE COMPLETING THE AS SESSMENT. AFTER REFERRING TO THE JUDGMENT OF THE RAJATHAN HIGH COURT IN GANPAT R AM BISHNOI 296 ITR 292 (RAJ) THE ASSESSEE CONTENDED IN THE WRITTEN SUBMISS ION THAT MERELY BECAUSE THE REFERENCE TO ENQUIRIES CONDUCTED BY THE ASSESSING O FFICER WAS NOT MADE IN THE ASSESSMENT ORDER THE ADMINISTRATIVE COMMISSIONER C ANNOT EXERCISE HIS POWERS U/S 263 OF THE INCOME-TAX ACT. ITA NO.810/RJT/2010 2 4. ON THE CONTRARY SHRI JM SAHAY THE LD. DR SUBMI TTED THAT THE ADMINISTRATIVE COMMISSIONER FOUND CASH CREDIT OF RS .13 LAKHS IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS BROUGHT RS.13 LAKHS IN THE CASH BOOK ON VARIOUS DATES. HOWEVER THE SOURCE OF SUCH CASH CREDIT WAS MENTIONED AS RESERVE FOR ASSET. THE ASSESSING OFFICER HAS NOT EXAMINED THE SOURCE OF SUCH DEPOSITS. WITHOUT CONDUCTING ANY ENQUIRY THE ASSESSING OFFICER COMPLETED THE ASSESSMENT. THERE WAS NEITHER ANY REFERENCE IN THE ASSESSMENT ORDER NOR ANY REASON WAS RECORDED IN THE ASSESSMENT ORDER AS TO HOW RS.13 LAKHS WAS BROUGHT IN THE CASH BOOK OF THE ASSESSEE. REFERRIN G TO THE JUDGMENT OF THE RAJASTHASN HIGH COURT IN THE CASE OF GANPAT RAM BIS HNOI (SUPRA) THE LD.DR SUBMITTED THAT IN THE CASE BEFORE THE RAJASTHAN HIG H COURT THE PROCEEDINGS BEFORE THE ASSESSING OFFICER SHOWED THAT HE HAD CAL LED FOR DETAILS AND APPLIED HIS MIND AFTER MAKING OF ENQUIRIES. HOWEVER IN THE CA SE BEFORE US ACCORDING TO THE LD.DR THE ASSESSMENT ORDER DOES NOT REFLECT THE AP PLICATION OF MIND WITH REGARD TO THE CASH CREDIT OF RS.13 LAKHS. THEREFORE THE JUDGMENT OF THE RAJASTHAN HIGH COURT MAY NOT BE APPLICABLE TO THE FACTS OF THE CAS E. 5. THE CONTENTION OF THE LD.DR AND THE CONTENTIONS IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE WERE CONSIDERED AND MATERIAL AVAILABLE ON RECORD ARE PERUSED. THE CONTENTION OF THE ASSESSEE IN THE WRI TTEN IS THAT THE ASSESSING OFFICER HAD CALLED FOR ALL DETAILS AND EXAMINED THE SAME. HOWEVER THE FAILURE OF THE ASSESSING OFFICER TO MAKE REFERENCE ABOUT THE E NQUIRY CONDUCTED BY HIM IN THE ASSESSMENT ORDER DOES NOT GIVE JURISDICTION TO THE COMMISSIONER TO EXERCISE HIS POWERS U/S 263 OF THE ACT. WE HAVE CAREFULLY G ONE THROUGH THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN GANPAT RAM BISHNOI (SUP RA). IN THE CASE BEFORE THE RAJASTHAN HIGH COURT THE ADMINISTRATIVE COMMISSION ER HAD PRIMARILY FOUND THAT NO ENQUIRY WAS CONDUCTED IN RESPECT OF CERTAIN ITEM S OF INCOME. THE HIGH COURT AFTER REFERRING TO THE RECORDING OF THE PROCEEDINGS OF THE ASSESSING OFFICER FOUND THAT NO PRESUMPTION COULD BE DRAWN THAT THE ASSESSI NG OFFICER HAD NOT APPLIED HIS MIND TO VARIOUS ASPECTS OF THE MATTER. THE HIGH CO URT FURTHER FOUND THAT WHEN ENQUIRY ABOUT THE FACT HAS BEEN CONDUCTED AND THE A SSESSING OFFICER HAS ITA NO.810/RJT/2010 3 REACHED A PARTICULAR CONCLUSION THOUGH REFERENCE T O SUCH ENQUIRY HAS NOT BEEN MADE IN THE ORDER OF ASSESSMENT ORDER BUT THE SAM E IS APPARENT FROM RECORD OF THE PROCEEDINGS WITHOUT HAVING ANYTHING TO SHOW HO W AND WHY THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS NOT IN ACCOR DANCE WITH LAW THE INVOCATION OF THE JURISDICTION BY THE COMMISSIONER WAS UNSUSTAINABLE. THE HIGH COURT FURTHER FOUND THAT EXERCISE OF JURISDICTION B Y THE COMMISSIONER IS FOUNDED ON NO MATERIAL. WE FIND THAT THE PUNJAB & HARYANA HIGH COURT HAD AN OCCASION TO CONSIDER THE REASONS FOR RECORDING A FINDING IN THE ASSESSMENT ORDER IN CIT VS SUNIL KUMAR GOYAL (2005) 274 AITR 53 (P&H). THE PU NJAB & HARYANA HIGH COURT AFTER REFERRING TO THE JUDGMENT OF THE APEX COURT IN SN MUKHERJEE VS UOI AIR 1990 SC 1984 AND THE JUDGMENT OF THE GUJARAT HI GH COURT IN TESTEELS LTD V N.M. DESAI AIR 1970 GUJ 1 FOUND THAT THE TRIBUNAL W AS BOUND TO RECORD TANGIBLE AND COGENT REASON FOR CONCLUSION. FOR THE PURPOSE OF USEFUL REFERENCE THE JUDGMENT OF THE APEX COURT IN SN MUKHERJEE (SUPRA) AND THE JUDGMENT OF THE GUJARAT HIGH COURT IN TESTEELS LTD (SUPRA) AS REPRO DUCED BY THE PUNJAB & HARYANA HIGH COURT IS REPRODUCED BELOW: IN S.N. MUKHERJEE V. UNION OF INDIA AIR 1990 SC 1 984 A CONSTITUTION BENCH OF THE SUPREME COURT DISCUSSED T HE DEVELOPMENT OF LAW ON THIS SUBJECT IN INDIA AUSTRA LIA 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 DECISION OF THIS COURT REFERRED TO ABOVE INDIC ATE THAT WITH REGARD TO THE REQUIREMENT TO RECORD REASONS TH E APPROACH OF THIS COURT IS MORE IN LINE WITH THAT OF THE AMERICAN COURTS. AN IMPORTANT CONSIDERATION WHICH H AS WEIGHED WITH THE COURT FOR HOLDING THAT AN ADMINIST RATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS MUST RECORD REASONS FOR ITS DECISIONS IS THAT SUCH A DECISIONS IS SUBJECT TO THE APPELLATE JURISDICTION OF THIS COURT UNDER A RTICLE 137 OF THE CONSTITUTION AS WELL AS THE SUPERVISORY JURISDI CTION OF THE HIGH CURT UNDER ARTICLE 227 OF THE CONSTITUTION AND THAT THE REASONS IF RECORDED WOULD ENABLE THIS COURT OR TH E HIGH COURTS TO EFFECTIVELY EXERCISE THE APPELLATE OR SUP ERVISORY POWER. BUT THIS IS NOT THE SOLE CONSIDERATION. THE OTHER CONSIDERATIONS WHICH HAVE ALSO WEIGHED WITH THE COU RT IN ITA NO.810/RJT/2010 4 TAKING THIS VIEW ARE THAT THE REQUIREMENT OF RECORD ING REASONS WOULD (I) GUARANTEE CONSIDERATION BY THE AU THORITY; (II) INTRODUCE CLARITY IN THE DECISIONS; AND (III) MINIMIZE CHANCES OF ARBITRARINESS IN DECISION MAKING. INA T HIS REGARD A DISTINCTION HAS BEEN DRAWN BETWEEN ORDINARY COURT S OF LAW AND TRIBUNALS AND AUTHORITIES EXERCISING JUDICIAL F UNCTIONS ON THE GROUND THAT A JUDGE IS TRAINED TO LOOK AT THING S OBJECTIVELY UNINFLUENCED BY CONSIDERATION OF POLICY OR EXPEDIEN CY WHEREAS AN EXECUTIVE OFFICER GENERALLY LOOKS AT THI NGS FROM THE STAND POINT OF POLICY AND EXPEDIENCY. REASONS WHEN RECORDED BY AN ADMINISTRATIVE AUTHOR ITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICI AL FUNCTIONS WOULD NO DOUBT FACILITATE THE EXERCISE O F ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHOR ITY. BUT THE OTHER CONSIDERATIONS REFERRED TO ABOVE WHICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT AN ADMINIST RATIVE AUTHORITY MUST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE R ECORDING OF REASONS BY AN ADMINISTRATIVE AUTHORITY SERVE A S ALUTARY PURPOSE NAMELY IT EXCLUDES CHANCES OF ARBITRARINE SS AND ENSURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECI SION- MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO AL L DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL REVISION OR JUDICIAL R EVIEW. IN OUR OPINION THEREFORE THE REQUIREMENT6 THAT REASO NS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINIST RATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRES PECTIVE OF THE FACT WHETHER THE DECISIONS IS SUBJECT TO APPEAL REVISION OR JUDICIAL REVIEW. IT MAY HOWEVER BE ADDF3ED TH AT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE 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 I NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHO RITY HAS GIVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERS Y. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLA TE OR REVISIONAL AUTHORITY IT IT AFFIRMS SUCH AN ORDER NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL AUT HORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDE R 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 M ADE AN EXTREMELY LUCID ENUNCIATION OF LAW ON THE SUBJECT A ND WE CAN DO NO ITA NO.810/RJT/2010 5 BETTER THAN TO EXTRACT SOME OF THE OBSERVATIONS MAD E IN THAT DECISION. THE SAME ARE (HEADNOTE O AIR 1970 (GUJ): THE NECESSITY OF GIVING REASONS FLOWS AS A NECESSA RY COROLLARY FROM THE RULE OF LAW WHICH CONSTITUTES ON E OF THE BASIC PRINCIPLES OF THE INDIAN CONSTITUTIONAL SET-U P. THE ADMINISTRATIVE AUTHORITIES HAVING A DUTY TO ACT JUD ICIALLY CANNOT THEREFORE DECIDE ON CONSIDERATION OF POLICY OR EXPEDIENCY. THE MUST DECIDE THE MATTER SOLELY ON T HE FACTS OF THE PARTICULAR CASE SOLELY ON THE MATERIAL BEFO RE THEM AND APART FROM ANY EXTRANEOUS CONSIDERATIONS BY APPLYIN G PRE- EXISTING LEGAL NORMS TO FACTUAL SITUATIONS. NOW TH E NECESSITY OF GIVING REASONS IS AN IMPORTANT SAFEGUARD TO ENSU RE OBSERVANCE OF THE DUTY TO ACT JUDICIALLY. IT INTROD UCES CLARITY CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND EXCLUDES OR AT ANY RATE MINIMI ZES ARBITRARINESS IN THE DECISION-MAKING PROCESS. ANOTHER REASON WHICH COMPELS MAKING OF SUCH AN ORD ER IS BASED ON THE POWER OF JUDICIAL REVIEW WHICH IS P OSSESSED BY THE HIGH COURT UNDER ARTICLE 226 AND THE SUPREME COURT UNDER ARTICLE 32 OF THE CONSTITUTION. THESE COURTS HAVE THE POWER UNDER THE PROVISIONS TO QUASH BY CERTIORARI A QUASI- JUDICIAL ORDER MADE BY AN ADMINISTRATIVE OFFICER AN D THIS POWER OF REVIEW CAN BE EFFECTIVELY EXERCISED ONLY I F THE ORDER IS A SPEAKING ORDER. IN THE ABSENCE OF ANY REASONS IN SUPPORT OF THE ORDER THE SAID COURTS CANNOT EXAMIN E THE CORRECTNESS OF THE ORDER UNDER REVIEW. THE HIGH CO URT AND THE SUPREME COURT WOULD BE POWERLESS TO INTERFERE S O AS TO KEEP THE ADMINISTRATIVE OFFICER WITHIN THE LIMITS O F THE LAW. THE RESULT WOULD BE THAT THE POWER OF JUDICIAL REVI EW WOULD BE STULTIFIED AND NO REDRESS BEING AVAILABLE TO THE CITIZEN THERE WOULD BE INSIDIOUS ENCOURAGEMENT TO ARBITRARI NESS AND CAPRICE. IF THIS REQUIREMENT IS INSISTED UPON THE N THEY WILL BE SUBJECT TO JUDICIAL SCRUTINY AND CORRECTION. 6. IN VIEW OF THE ABOVE JUDGMENT OF THE APEX COURT AND THE JUDGMENT OF THE GUJARAT HIGH COURT AN ORDER PASSED BY QUASI JUDICI AL AUTHORITY HAS TO FACILITATE THE APPELLATE / SUPERVISORY AUTHORITIES TO ADJUDICA TE THE DISPUTE. THE RECORDING OF REASON BY ADMINISTRATIVE AUTHORITY IN ORDER PASSED BY IT WHILE EXERCISING QUASI JUDICIAL FUNCTION WOULD FACILITATE THE EXERCISE OF JURISDICTION BY THE APPELLATE AND SUPERVISORY AUTHORITY. THE JURISDICTIONAL HIGH COUR T IN TESTEELS LTD (SUPRA) FOUND THAT NECESSITY OF GIVING REASONS FLOWS AS A NECESSA RY COROLLLARY FROM THE RULE OF ITA NO.810/RJT/2010 6 LAW WHICH CONSTITUTES ONE OF THE BASIC PRINCIPLES O F CONSTITUTIONAL SET UP. THE JURISDICTIONAL HIGH COURT FURTHER OBSERVED THAT NEC ESSITY OF GIVING REASON IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF DUTY TO ACT JUDICIALLY. THIS BENCH OF THE TRIBUNAL IS SITTING WITHIN THE TERRITORIAL JURI SDICTIONAL OF THE GUJARAT HIGH COURT. THEREFORE THIS BENCH IS BOUND BY THE JUDGMENT OF T HE JURISDICTIONAL HIGH COURT AND THE JUDGMENT OF THE APEX COURT. THEREFORE THE ASSESSING OFFICER THOUGH AN ADMINISTRATIVE AUTHORITY WHILE EXERCISING HIS POWE R FOR PASSING THE ORDER HAS TO GIVE REASONS IN THE ASSESSMENT ORDER WHICH WILL DEF INITELY FACILITATE TO APPRECIATE THE ASSESSMENT ORDER BY THE APPELLATE / SUPERVISORY AUTHORITIES. IN THIS CASE ADMITTEDLY THE ASSESSING OFFICER HAS NOT GIVEN ANY REASONING WITH REGARD TO THE SOURCE OF CASH CREDIT OF RS.13 LAKHS. THEREFORE B Y RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COURT IN THE CASE OF SN MUKHER JEE (SUPRA) AND THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN TESTEE LS LTD (SUPRA) WE UPHOLD THE ORDER OF THE ADMINISTRATIVE COMMISSIONER AS WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. THE ORDER OF THE LOW ER AUTHORITY IS CONFIRMED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-07-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 21 ST JULY 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT-II RAJKOT 4. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT