Commissioner of Income Tax vs Jadeja Consultants (P) Ltd.

The matter has been called out twice but there is no appearance on behalf of the assessee.

We have heard learned Counsel for the revenue and frame the following substantial question of law for consideration:

Whether the Tribunal was correct in law in disposing of the appeal filed by the revenue without independently examining the facts of the case and merely relying upon the order passed by the Commissioner (Appeals)?

The revenue is aggrieved by an order dated 25-11-2005 passed by the Income Tax Appellate Tribunal, Delhi Bench ''C, New Delhi (''the Tribunal''), in ITA(SS)A No. 48/Del/2003 relevant for the block period 1-4-1990 to 20-7-2000.

A search was carried out in the office premises of the assessee and thereafter, a notice was issued to the assessee u/s 158BC of the Income Tax Act 1961 (hereinafter referred to as ''the Act''). After considering the entire material on record the assessing officer assessed the undisclosed income of the assessee for the block period at Rs. 42,99,100.

Feeling aggrieved, the assessee preferred an appeal before the Commissioner (Appeals) (Commissioner (Appeals)). The Commissioner (Appeals) allowed the appeal filed by the assessee after hearing both the parties on two issues namely (i) with regard to commission payable to IMG at Rs. 5,75,000 and Sports Inc Ltd. at Rs. 2,60,000 and (ii) deleting the addition of Rs. 14,09,000 made on account of ''bogus commission''.

The Commissioner (Appeals) gave a rather detailed order but the revenue was aggrieved by that order and, therefore, filed an appeal before the Tribunal.

All that the Tribunal has done is to reproduce the relevant paras of the order passed by the Commissioner (Appeals). After doing so, it has stated in respect of the first issue as follows:

We have examined the rival submissions. We find no infirmity in the order of the Commissioner (Appeals). He has written a well reasoned order after correctly appreciating the facts of the case. The appeal of the revenue is therefore, dismissed on the first ground.

Similarly, on the second issue the Tribunal had reproduced the relevant para of the order passed by the Commissioner (Appeals) and concluded as follows:

We have examined the rival submissions. The Commissioner (Appeals) has considered the facts of the case and written a very well reasoned order. We find no infirmity in the order of the Commissioner (Appeals), which is confirmed.

We are of the opinion that the Tribunal was not correct in failing to independently examine the contentions urged by the parties. The purpose of an appeal is to enable the parties to have their say on the issues and grounds that have been raised before the appellate authority. Obviously, the issues and grounds that are raised arise out of the order that is challenged by the appellant. It is, therefore, inadequate for an appellate authority to merely rely upon the order, which is under appeal and to say that because it is a very well reasoned order, there is no infirmity in it. The appellate authority (in this case the Tribunal) is expected to apply its mind to the facts of the case and thereafter arrive at a conclusion, since it is the final fact-finding authority and the facts determined by the Tribunal would be conclusive unless they are perverse.

It is another matter that the Supreme Court and the High Courts may (in appeal) rely upon the facts and reasons given in orders passed by the sub-ordinate authorities because the jurisdiction of the Supreme Court and the High Courts in that sense is .substantially limited. The Tribunal, however, cannot entirely rely upon the order passed by the sub-ordinate authority without any independent application of mind. If the Tribunal does not give its independent opinion the High Court will be deprived of a considered view which would be of immense value.

Under the circumstances, we have no o