Board Of Secondary Education vs Pr. Commissioner Of Income Tax
2021 Latest Caselaw 7493 MP

                                                                  ITA No.10/2021

                                      -1-
               The High Court of Madhya Pradesh

                             ITA No.10/2021
        (BOARD OF SECONDARY EDUCATION Vs PR. COMMISSIONER OF INCOME TAX)


Jabalpur, Dated: 17/11/2021
      Shri Mukesh Agrawal, learned counsel for the appellant.
      Shri Sanjay Lal, learned counsel for the respondent.

1. The present Income Tax Appeal is preferred u/S.260-A of the Income Tax Act, 1961 assailing the order dated 06.11.2020 passed in ITA No.164/Ind/2018 by the Income Tax Appellate Tribunal, Indore Bench, dismissing the appeal of assessee, who had raised the following grounds:-

"1. On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax (Appeals- II), Bhopal was not justified in holding that the payment of Income Tax of Rs.2,16,50,650/- paid on deemed income u/s 11(3) for A.Y. 2013-14 should not be allowed as a deduction or application of the income of the current year (ASSESSMENT YEAR 2014-15) & is hence also wrong in upholding the following:

a) Tax demand of Rs.84,72,830/-

b) Interest payable u/s 234A, 234B & 234C."

2. Learned counsel for the appellant raises singular ground that the impugned order of Income Tax Appellate Tribunal, Indore Bench is non speaking.

3. Learned counsel for the revenue on the other hand contends that the impugned order contains sufficient reasons to sustain the same. It is submitted by counsel for the revenue that the reasons are contained in para 7 of the impugned order. It is further submitted that the mind of the Income Tax Appellate Tribunal is reflected therein, and therefore, the order cannot be termed to be non-speaking.

4. Accordingly, this Court after hearing learned counsel for the rival parties frames the following substantial question of law:-

"Whether the impugned order dated 06.11.2020 ITA No.10/2021

passed by the Income Tax Appellate Tribunal, Indore Bench in ITA No.164/Ind/2018 in unlawful for being non- speaking in as much as not containing enough reasons to disclose the mind of the appellate authority to save it from being sacrificed at the alter of principle of natural justice?"

5. Considering the nature of substantial question framed above, this appeal does not require any detailed hearing and can be disposed of at this stage itself.

6. Learned counsel for the rival parties have no objection in regard to appeal being disposed of at this stage.

7. A bare perusal of the impugned order reveals that in para 1, grounds of the appeal raised by the assessee are mentioned followed by para 2, wherein various stages through which the case travelled have been mentioned including the foundational facts. Para 3 contains the grievance of appellant in short. In para 4, contentions of the assessee in his appeal are detailed. Para 6 gives an impression that the same contains findings but in actuality the said para merely reproduces the order impugned before the ITAT passed by the CIT(A). Lastly comes para 7, which has some semblance of disclosure of mind of the ITAT; but a bare perusal of the same reveals that the ITAT has stated that they have given thoughtful consideration to the findings of CIT(A), and thereafter without recording reasons as to why the appeal is being dismissed, the ITAT jumped to the conclusion that there is no infirmity in the order impugned before it. The only short and cryptic reason assigned is that the present case is not a case of change of accounting system, which is not sufficient to disclose the mind of the ITAT while deciding the appeal.

8. Reasons are the bridge between the facts, circumstances on one side and the conclusion on the other, in absence of which, a judicial order becomes a lifeless piece of paper.

9. The Apex Court in Kranti Associates Private Limited and another Vs. Masood Ahmed Khan and others, (2010) 9 SCC 496 ITA No.10/2021

has held thus:-

47. Summarizing the above discussion, this Court holds:

(a). In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

(b). A quasi-judicial authority must record reasons in support of its conclusions.

(c). Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

(d). Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.

(e). Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.

(f). Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

(g). Reasons facilitate the process of judicial review by superior Courts.

(h). The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.

(i). Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system.

(j). Insistence on reason is a requirement for both judicial accountability and transparency.

(k). If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is ITA No.10/2021

faithful to the doctrine of precedent or to principles of incrementalism.

(l). Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process.

(m). It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737).

(n). Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija Vs. Spain, (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions".

(o). In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".

10. Testing the impugned order on the anvil of law laid down by the Apex Court and the principles of natural justice, this Court has no hesitation to hold that the impugned order passed by the Income Tax Appellate Tribunal, Indore Bench in ITA No.164/Ind/2018 is non-speaking.

11. Before parting, it would be appropriate to mention that though the jurisdiction of ITAT u/S.253 to 255 is not only to decide the questions of law but also of fact and therefore, the scope of interference is much larger than the scope before a revisional authority. Thus, the least that is expected of an appellate judicial authority vested with such wide powers is to record reasons so that ITA No.10/2021

it's mind is disclosed thereby informing the aggrieved person the exact reasons behind the conclusion and thus in the process facilitating availing of remedy before the higher forum.

12. In the conspectus of above discussion, the present appeal on the aforesaid short substantial question of law is allowed.

(i) The impugned order dated 06.11.2020 passed by the Income Tax Appellate Tribunal, Indore Bench in ITA No.164/Ind/2018 is set aside.

(ii) The Income Tax Appellate Authority, Indore Bench is expected to decide ITA No.164/Ind/2018 pertaining to the assessment year 2014-2015 by passing a fresh speaking order.

13. It is made clear that in case the composition of the Appellate Tribunal has since changed, then prior to passing speaking order, the rival parties ought to be given a hearing in accordance with the Income Tax Act.

14. It is also made clear that we have not commented upon merits of the claim before the Tribunal.

       (Sheel Nagu)                   (Purushaindra Kumar Kaurav)
          Judge                                Judge

  SS
Digitally signed by SATEESH
KUMAR SEN
Date: 2021.11.23 13:38:29
+05'30'