2013 (11) TMI 684 - HC - Income Tax

High Court quashes ITAT judgment, remands for fresh consideration.

COMMISSIONER OF INCOME TAX II. Versus SURAT BEVERAGES LTD.

The High Court allowed both appeals, quashed the ITAT's judgment, and remanded the matters for fresh consideration with a directive to pass reasoned and ... Non-speaking order – sustainability - Additions u/s 69C made by the AO was deleted by the ITAT in part – Held that:- No reasons have been assigned at all while dismissing the appeal preferred by the revenue and partly allowing the appeal preferred by the assessee and sustaining addition of Rs.30 lac except observing that “On an overall examination of the facts, we are of the considered view that an addition of Rs.30,00,000/requires to be sustained to meet the end of justice”. Thus, as such the impugned judgment and order passed by the learned ITAT is absolutely a non-reasoned and nonspeaking order. Reliance has been placed on the judgment in the case of Ravi Yashwant Bhoir vs. Collector reported in [2011 (3) TMI 1489 - SUPREME COURT], the Hon’ble Supreme Court had an occasion to consider the rationale behind the requirement of recording reasons in order. In the said decision, it is observed and held by the Hon’ble Supreme Court that requirement of recording reasons is one of the principles of natural justice. It is further observed and held by the Hon’ble Supreme Court that right to reasons is an indispensable part of sound judicial system - in the case of Certified Area Committee vs. Additional Director, Consolidation reported in [2001 (5) TMI 921 - SUPREME COURT], wherein it was held by Hon’ble Apex court that “The reasons are the flesh and blood of Judicial adjudication and such reasons must be shown in the orders which are liable to be challenged in the Superior Court”. - matter remanded back for reconsideration and passing speaking order. Issues:1. Challenge to the judgment and order passed by the Income Tax Appellate Tribunal (ITAT) by both the Revenue and the assessee.2. Non-reasoned and nonspeaking order passed by the ITAT.3. Requirement of passing a reasoned and speaking order by the ITAT.Analysis:Issue 1: Challenge to the ITAT JudgmentThe appeals were against the same judgment and order passed by the ITAT, with the Revenue challenging the order partly allowing the appeal by the assessee and dismissing the appeal of the Revenue. The assessee, on the other hand, challenged the judgment for not allowing its appeal in toto.Issue 2: Non-Reasoned OrderBoth the Revenue and the assessee contended that the ITAT's judgment was non-reasoned and nonspeaking. They argued that the ITAT failed to provide any reasons for modifying the CIT(A)'s order and sustaining the addition of Rs.30 lac. The ITAT's decision to sustain the addition was based on an estimate basis without proper justification, leading to the request to quash the judgment and remand the matter for a fresh decision.Issue 3: Requirement of a Reasoned OrderThe High Court emphasized the importance of passing reasoned and speaking orders by judicial authorities like the ITAT. Citing Supreme Court decisions, the High Court highlighted that the requirement of recording reasons is essential for transparency, fairness, and sound judicial system. It noted that the ITAT, as a judicial authority, must apply its mind and provide clear reasons for its decisions to ensure proper adjudication. The High Court, considering the lack of reasons in the ITAT's judgment, quashed the order and remanded the appeals for fresh consideration, emphasizing the need for a reasoned and speaking order in line with legal principles.In conclusion, the High Court allowed both appeals, quashed the ITAT's judgment, and remanded the matters for fresh consideration with a directive to pass reasoned and speaking orders, emphasizing the importance of providing clear justifications for judicial decisions.