2024 (2) TMI 1580 - HC - Income Tax

Revision allowed and order set aside as revisional authority ignored petitioner's uncontested hospitalization; matter remitted for fresh consideration

HC allowed the revision, holding that the revisional authority failed to consider the petitioner's uncontested claim of hospitalization for heart and ... Revision petition u/s 264 - petitioner had not produced evidence to substantiate the income declared and not explained the source of cash deposits - HELD THAT:- Despite the specific contentions / grounds urged by the petitioner before the 1st respondent, his inability and omission to appear before the 2nd respondent and file his response / objections etc., was due to hospitalization on account of heart and kidney ailments and due to bonafide reasons, unavoidable circumstances and sufficient cause, the said contention / aspect has not been considered by the 1st respondent – revisional authority and consequently, the impugned order passed by the 1st respondent deserves to be set aside and the matter be remitted back to the 1st respondent for reconsideration afresh in accordance with law. ISSUES PRESENTED AND CONSIDERED 1. Whether the revisional authority's order under Section 264, rejecting the taxpayer's revision petition, is vitiated for being non-speaking and for failing to consider the petitioner's explanation that inability to participate in earlier proceedings was due to hospitalization for heart and kidney ailments. 2. Whether the appropriate remedy for such omission is to set aside the revisional order and remit the matter to the revisional authority for fresh consideration, with liberty to the petitioner to place additional pleadings and documents. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of the revisional order under Section 264 where the revision authority failed to consider medical incapacity/explanation Legal framework: Section 264 empowers the revisional authority to call for and examine records and to satisfy itself as to correctness, legality or propriety of any order passed under the Act. Administrative/tribunal decisions must be reasoned so that grounds urged by a party are considered; failure to consider relevant grounds, especially bona fide and supported by evidence, renders the order unsustainable. Precedent Treatment: The judgment does not cite or rely on specific precedents; the Court proceeds on established principles that orders must be speaking and that material excuses (e.g., hospitalization) supported by records merit consideration. Interpretation and reasoning: The Court examined the revisional order and found it to be a summary rejection on the ground that the petitioner failed to produce evidence to substantiate declared income and did not explain cash deposits. However, the revisional order did not address the petitioner's specific contention that his non-appearance and failure to file responses before the assessing authority were due to hospitalization for serious ailments (heart and kidney), supported by hospital records. The revisional authority thus omitted consideration of a material and factually supported explanation, resulting in an unreasoned/conclusory outcome. Given that Section 264 confers power to examine correctness and legality, a revisional order that does not consider relevant, pleaded, and evidenced grounds is legally infirm. Ratio vs. Obiter: Ratio - A revisional order under Section 264 that summarily dismisses a revision petition without considering material and evidenced explanations (such as hospitalization) is vitiated for being non-speaking and must be set aside. Obiter - Observations regarding the sufficiency of the petitioner's evidence on substantive income issues are not decisive here, since the Court remits for fresh consideration. Conclusions: The revisional order is set aside on the ground that the revisional authority failed to consider the petitioner's hospitalisation and other explanations; the omission constitutes a legal infirmity warranting interference. Issue 2 - Appropriate remedy: remittal and liberty to produce additional pleadings/documents Legal framework: Where a quasi-judicial authority has failed to consider relevant material or has issued a non-speaking order, the appropriate judicial remedy is ordinarily to quash the impugned order and remit the matter to the authority for fresh consideration in accordance with law, permitting the parties to place on record any relevant material. Precedent Treatment: The Court does not reference specific authorities but applies standard remedial principles of administrative law and appellate/revisional judicial review. Interpretation and reasoning: Given the revisional authority's failure to deal with the petitioner's explanation of hospitalization, the Court found that remediation by reconsideration is necessary to secure a lawful decision on the merits. The Court provided a procedural directive: the revisional authority shall reconsider the revision petition afresh, and the petitioner is granted liberty to file additional pleadings and documents (including hospital records) for consideration. A time-bound direction (three months from receipt of the order) was imposed to ensure expedition. Ratio vs. Obiter: Ratio - Remittal for fresh consideration with liberty to produce additional material and a time-limit is the appropriate remedy where a revisional authority has issued a non-speaking order and omitted consideration of material, evidenced grounds. Obiter - Specific instructions as to how the revisional authority should evaluate substantive evidentiary issues were not mandated. Conclusions: The Court quashed the revisional order and remitted the matter to the revisional authority for fresh consideration in accordance with law within three months, with liberty to the petitioner to produce additional pleadings and documents. Cross-reference and scope of determination The Court confined its decision to the correctness of the revisional order under Section 264 and the appropriate remedial course; other reliefs sought in the petition (quashing of assessment under Section 144, demand/penalty notices, and injunctions against recovery/attachments) were not adjudicated on merits and remain unaddressed pending fresh consideration by the revisional authority.