National Centre For Cell Science vs Deputy Commissioner Of Income Tax ...
2023 Latest Caselaw 10534 Bom

2023:BHC-OS:11802-DB                                             1/4                           11-ITXAL-24310-2023.doc




            PURTI
                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
            PRASAD
            PARAB                   ORDINARY ORIGINAL CIVIL JURISDICTION
           Digitally signed by
           PURTI PRASAD
           PARAB
           Date: 2023.10.12
           16:12:31 +0530

                                   INCOME TAX APPEAL (L) NO. 24310 OF 2023

           National Centre For Cell Science                                      ....Appellant

                V/s.
           Deputy Commissioner of Income Tax
           Exemption Circle, Pune                                                ...Respondent

                                         ----
           Mr. Dharan V. Gandhi a/w Ms. Aanchal Vyas for Appellant.
           Mr. Suresh Kumar for Respondent.
                                         ----

                                                             CORAM : K.R. SHRIRAM &
                                                                     NEELA GOKHALE, JJ.

DATED : 11th OCTOBER 2023

P.C. :

1. Out of the five substantial questions of law proposed,

Mr.Gandhi presses only substantial questions (b) and (c), which read as

under :

QUESTION OF LAW

(b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the amount to be carried forward cannot exceed the unspent amount, without giving any reason or justification and by way of a non- speaking and cryptic order?

(c) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the amount to be carried forward cannot exceed the unspent amount, without even considering the judgments and the orders relied upon by the Appellant including that of the co-ordinate benches of the Tribunal?

2. Mr. Gandhi states in paragraph 9 of the impugned order

pronounced on 26th September 2022, the Income Tax Appellate Tribunal

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("ITAT") firstly, states that "the order of the learned Commissioner of

Income Tax (Appeals) [CIT(A)] is in consonance with the settled position

of law on issue but later says the learned CIT(A) had failed to observe that

the amount to be carried forward cannot exceed the unspent amount and

modified the order of the learned CIT(A)." Mr. Gandhi is correct in saying

that there is no reason given by the ITAT as to why the Tribunal disagrees

with the view of the learned CIT(A) and opines that amount to be carried

forward cannot exceed the unspent amount.

3. In the circumstances, we remand the matter to the ITAT to

give reasons as to why it has opined that the CIT(A) was not correct in

concluding that the amount to be carried forward cannot exceed the

unspent amount. It will be apposite to reproduce paragraphs 6 and 7 of

the judgment of the Hon'ble Apex Court in Udhavdas Kewalram vs.

Commissioner of Income-tax1

"6. The Tribunal performs a judicial function under the Indian IT Act: it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the CIT in the light of the evidence and the relevant law.

7. The judgment of the Tribunal suffers from a manifest infirmity. The Tribunal has not adjudicated upon the truth of the case of the assessee on the light of the evidence adduced by the assessee in support of his case. The infirmity becomes more pronounced when regard is had to fact that, relying upon the documentary evidence tendered by the assessee, the AAC had accepted the claim of the assessee relating to the sale of Gopi Bai's ornaments. The Tribunal was undoubtedly competent to disagree with the view of the AAC. But in proceeding to do so, 1 (1967) 66 ITR 462 (SC) Purti Parab

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the Tribunal had to act judicially, i.e. to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal."

4. This issue, i.e., reasons shall be given after hearing the

parties. Importance of reasons can be found in paragraph Nos. 15 to 17 of

Indusind Bank Ltd. vs. Income Tax Settlement Commission and Others2

15. Before we part, we should also note, in our view no reasons have been given by the Settlement Commission. In Jyotendrasinhji (supra) Revenue had argued that the Commission is not even required or obligated to pass a reasoned order. The Hon'ble Apex Court held that the principle of natural justice (audi alteram partem) has been incorporated in Section 245 D itself which should mean, in our view, reasons have to be given. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at.

16. The Hon'ble Apex Court in Uttar Pradesh State Road Transport Corporation vs. Jagdish Prasad Gupta 3 has stated reasons introduce clarity in an order. The order howsoever brief, should indicate an application of mind all the more when the same could be further challenged. Paragraph No. 8 of Uttar Pradesh State Road Transport Corporation (supra) read as under :

8. "5.... Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the [High Court's judgment] not sustainable. ....

6. Even in respect of administrative orders Lord Denning M.R. in Breen v. Amalgamated Engg. Union1 observed: (WLR p. 750 G) "The giving of reasons is one of the fundamentals of good administration". In Alexander Machinery (Dudley) Ltd. v. Crabtree2 it was observed:

"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 2 (2023) 456 ITR 376 (Bom) 3 (2009) 12 Supreme Court Cases 609 Purti Parab

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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 in 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 a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.

17. In view of the above, we set aside the impugned order to this extent. Consequently, the Assessment Order also, to the extent mentioned above, is quashed and set aside.

5. Appeal disposed.

6. We clarify that we have not given any opinion on the merits of

the matter.

(NEELA GOKHALE, J.)                                             (K.R. SHRIRAM, J.)




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