Rakesh Taparia vs Commissioner of Income Tax

A.M. Sapre, J.—This is an appeal filed by assessee u/s 260A of the Income Tax Act against an order dated 23-9-2003, passed by I.T.A.T., Indore in I.T. (SS) A. No. 05 /Ind. /2001. This appeal was admitted for final hearing on following substantial questions of law:

1 Whether Tribunal was justified in holding that the amount disclosed in VDIS by the assessee prior to commission of raid effected u/s 132 of the Income Tax Act cannot be considered against the estimation of income from alleged Hawala business ?

Whether assessee is entitled to claim any benefit of VDIS disclosure in block assessment period cases to avoid assessment in respect of the income which according to him he had already disclosed in VDIS as admittedly the estimated income did not exceed the disclosure made in VDIS ?

Heard Shri G.M. Chafekar, learned senior counsel with Shri P. Prasad, learned Counsel for the assessee/appellant and Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned Counsel for respondent/revenue.

The issue in question arises out of block assessment period, i.e., assessment years 1988-89 to 1998-99. In view of order that we propose to pass in this appeal, we do not consider it necessary to take note of facts in detail.

We feel appropriate at the outset, to quote in verbatim the manner in which the issue involved in this appeal was decided by the Tribunal:

8A. Ground No. 5 - In support. of this ground the learned AR draws our attention to the contents of page Nos. 36 and 37 of the paper which are certificates u/s 68(2) of the Voluntary Disclosure of Income Scheme, 1997 respectively in the case of Shri Ramanand Tapadia (HUF) and the assessee, so far disclosure in the case of assessee is concerned as apparent from the certificate it has been made against the investment in the immovable properties and nothing to do with money in question. This ground is thus rejected.

In result appeal is partly allowed.

Mere perusal of aforesaid para of impugned order under appeal would indicate the manner in which the Tribunal dealt with the issue and eventually decided the same against the assessee. Indeed, neither there is a reference to narration of facts, nor discussion nor finding much less categorical finding and nor any reasoning. What is present in the impugned order is only the ''conclusion'', i.e., rejection of ground. It may be good for the parties to appeal because they are more concerned with the eventual conclusion. In other words, the winning side is least concerned with even reasoning once the issue is decided in their favour. It is the loosing party who is more concerned with non-assigning of the reasoning because they have to challenge the reasoning in further appeal to get rid of the order.

We feel most appropriate to quote the subtle observations of Supreme Court made from time to time on this issue consistently reminding the Courts in the country the need to assign the reasons by any quasi-judicial, judicial and administrative authorities in support of their conclusions when they are assigned the task of deciding the rights of parties. These observations came to be made in one of the recent decisions by their Lordships in the case of D.P.S. Rural Regional Bank v. Munna Lal Jain AIR 2005 SCW 95. The learned Judge A. Pasayat speaking for the Bench held:

Para 18. It needs no emphasis that when a court feels that the punishment is shockingly disproportionate, it must record reasons for coming to such a conclusion. Mere expression that the punishment is shockingly disproportionate would not meet the requirement of law. Even in respect of administrative order Lord Denning M.R. in Breen v. Amalgamated Engineering Union (1971)(1) All ER 1148; observed "The giving of reasons is one of the fundamentals of good administration". In Alexander Machinery (Dudley) Ltd v. Crabtree (1974) LCR 120, 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 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. 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.

In this present case, we are at a loss to know as to what were the facts of the case, the issue raised, issue decided, what was the reasoning of Tribunal which resulted in rejection of ground against the assessee. There is no discussion, much less categorical finding on any of the legal submission, urged by assessee. Whole issue was decided so cursorily that it does not exhibit any application of judicial mind. The issue involved and sought to be raised was legal one. It required to be dealt with in detail both on facts and in law. Proper facts in relation to issue should have been mentioned. The detailed reference to VDIS, its effect in the context of relevant case law should have been examined. In the absence of any of these material issues not being examined, we are unable to know as to whether, Tribunal really decided the issue and if so, on what reasoning. We, therefore, cannot countenance such type of casual approach of the Tribunal in deciding the legal issue sought to be urged by the parties.

We are, therefore, constrained to make the aforementioned observations which we do it with rather reluctance. It is not for the High Court to remind the Tribunal as to how and in what manner the orders are required to be passed because Tribunal is presided over by matured experienced and well versed members in the subject.

Be that as it may, we have now two options open in such eventuality for deciding this appeal. First is to discover the reasoning by asking the parties to argue the appeal like the first appeal and then decide the appeal on merits. Second is to set aside the impugned order on the ground of it being ''totally unreasoned'' and remand the case to Tribunal for deciding the appeal afresh keeping in view the observations made by this Court supra

After giving our thoughtful view to the whole scenario, we are inclined to follow the second option as in our opinion, it is more appropriate in the facts of this case. It is also to avoid such recurrence in future.

Under these circumstances and in view of foregoing discussion, we are constrained to allow the appeal, set aside the impugned order insofar as it relates to aforementioned two issues involved in this appeal and remand the case to Tribunal for deciding the appeal afresh on merits. Since, we are remanding the case; we do not wish to apply our mind to the factual/legal issues involved in the appeal though argued by learned Counsel for the parties at length. It is for them to raise all their submissions in appeal before Tribunal which will be decided by the Tribunal keeping in view, the latest judicial pronouncement, narration of facts necessary for the disposal of appeal and the legal submissions urged by the respective parties in support of their respective case, etc. Let this be done within six months from the date of appearance of parties before the Tribunal on 3-7-2006.