Idea Cellular Ltd. vs CIT and Others

Shantanu Kemkar, J.—With consent, heard finally. By filing this petition under Art. 226 of the Constitution of India, the petitioner has challenged the order dated 30-3-2012 (Annex. PI) passed by the ITO (TDS-II) u/s 201(1) /201(1A) of the Income Tax Act, 1961 (for short, the Act) as also the order dated 25-5-2012 (Annex. P2) passed by CIT (OSD), TDS, Indore by which the petitioners application filed u/s 220(6) of the Act for stay of demand dated 30-3-2012 made u/s 156 of the Act has been rejected by granting facility of making the payment of outstanding demand in three equal installments starting from 5-6-2012 and ending on 6-8-2012.

We find that against the order of the Income Tax Officer the petitioner has already filed an appeal before the Commissioner of Income Tax (Appeal) and therefore, in our considered view when the matter is pending before the appellate authority, no question arises for interfering into order Annex. PI. Facing with the situation the learned senior counsel for the petitioner submitted that the order dated 25-5-2012 (Annex. P2) which has also been impugned deserves to be quashed as the same is a non-speaking order as the Commissioner of Income Tax has failed to consider the various grounds raised by the petitioner in the application for grant of stay. According to him, though no prayer for grant of facility of installments was made, the stay application has been disposed of by the Commissioner of Income Tax by granting facility of installments that too of only two months which in fact amounts to denial of installment facility. He also argued that the rejection of the application has been ordered without giving an opportunity of hearing to the petitioner, and as such the impugned order Annex. P2 is violative of the principles of natural justice.

On the other hand, learned senior counsel appearing for the respondents supported the said order Annex. P2 and argued that the prayer to stay the demand was already rejected by the Income Tax Officer by passing a reasoned order, in the circumstances, it was not necessary for the CIT to have passed a detailed order.

Having considered the submissions made by learned counsel for the parties, we find ourselves in agreement with the submissions made by the learned senior counsel for the petitioner.

We find that the learned Commissioner of Income Tax while deciding petitioners stay application has not passed a reasoned order. The various grounds raised by the petitioner have not been taken into consideration. When the prayer was made to Commissioner of Income Tax for stay of demand, the Commissioner of Income Tax was required to have independently dealt with the ground raised by the petitioner in the application for stay. Merely because the Income Tax Officer has rejected the prayer to stay the demand, the Commissioner of Income Tax cannot be absolved from passing a reasoned order.

It has now been well-settled that 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. Right of reason is an indispensable part of the sound judicial system. 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 orders made, in other words a speaking out. (See Breen v. Amalgamated Engg. Union (1971) 1 AR ER 1148 (CA), Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120 (NIRC) , Steel Authority of India Ltd. Vs. Sales Tax Officer, Rourkela-I Circle and Others, State of Himachal Pradesh Vs. Paras Ram and Others, , State of Punjab Vs. Bhag Singh,

In the case of Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota Vs. Shukla and Brothers, , the Supreme Court reiterating its earlier view has stated that recording of reasons is an essential feature of dispensation of justice. A litigant, who approaches the Court with any grievance, in accordance with law, is entitled to know the reasons for grant or rejection of his prayer. Reasons are soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly hamper the proper administration of justice. These principles are not only applicable to the administrative or executive auctions, but they apply with equal force and, in fact with a greater degree of precision to judicial pronouncements. The orders of the Court must reflect what weighed with the Court in granting or declining the relief claimed by the applicant. It is the reasoning alone that can enable a higher or an appellate Court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach.

Having regard to the aforesaid and keeping in view the fact that the order Annex. P2 is a non-speaking order in view of the law laid down by the Supreme Court in various cases, the impugned order dated 25-5-2012, is not sustainable.

Accordingly, we quash the order dated 25-5-2012 (Annex. P2) passed by the Commissioner of Income Tax (OSD) and remit the matter back to the Commissioner of Income Tax for deciding the petitioners application for stay afresh in accordance with law after affording opportunity of hearing to the petitioner. The petition stands allowed to the extent indicated above.