AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (6) TMI 834
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....atisfied for invoking the jurisdiction of revision u/s 263 of the Act. According to the ld.senior counsel, the order should be erroneous and also should be prejudicial to the interest of the revenue. If anyone of the conditions is absent, recourse to section 263 cannot be made. The ld.senior counsel placed his reliance on the judgment of the Apex Court in the case of Malabar Industrial Co Ltd vs CIT (2000) 243 ITR 83 (SC). 4. The ld.senior counsel further submitted that in the assessee's own case for the assessment year 2008-09, this Tribunal had an occasion to examine the issue and found that a similar interest paid was allowable u/s 36(1)(iii) of the Act. Since this Tribunal had already taken a decision in respect of the payment of interest, according to the ld.senior counsel, the order of the assessing officer is not erroneous. 5. Referring to the notice issued by the Administrative Commissioner proposing to revise the order u/s 263 of the Act, the ld.senior counsel pointed out that the notice issued to the assessee was not signed by the Administrative Commissioner himself, but the Income-tax Officer has signed the notice on behalf of the Administrative Commissioner. Therefore....
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....s such, it is not only erroneous but also prejudicial to the interest of the revenue. Therefore, in the given circumstances, this Tribunal is of the considered opinion that the judgment of the Apex Court in the case of Malabar Industrial Co Ltd (supra) may not be of any assistance to the assessee. 9. No doubt, this Tribunal for the assessment year 2008-09 found that the interest on the borrowed funds is an allowable expenditure u/s 36(1)(iii) of the Act. However, each assessment year is separate and independent. The assessing officer has to verify whether the very same borrowed funds continued for the year under consideration or not; or the assessee has borrowed any other loans. Since the assessing officer has not verified / examined the nature of the borrowed funds for the year under consideration, this Tribunal is of the considered opinion that merely because this Tribunal allowed the claim of the assessee u/s 36(1)(iii) that does not mean that the assessing officer need not discuss the matter in the assessment order. The assessing officer is expected to consider the order of this Tribunal and express his opinion as to how it is applicable or otherwise to the facts which arose f....
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....that the Punjab & Haryana High Court had an occasion to examine this issue in Commissioner of Income-tax vs Sunil Kumar Goel (2005) 274 ITR 53 (P&H) and after considering the judgment of the Apex Court in Mukherjee (S.N.) vs UOI (1990) AIR 1990 SC 1984 has observed as follows: " In S.N. Mukherjee v. Union of India, AIR 1990 SC 1984, a Constitution Bench of the Supreme Court discussed the development of law on this subject in India, Australia, Canada, England and the United States of America and after making reference to a large number of judicial precedents, their Lordships culled out the following propositions (page 1995): "The decisions of this court referred to above indicate that with regard to the requirement to record reasons the approach of this court is more in line with that of the American Courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this court under article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under article 227 ....
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.... appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge." In Testeels Ltd v. N.M. Desai (1970) 37 FJR 7; AIR 1970 Guj 1, a Full Bench of the Gujarat High Court has made an extremely lucid enunciation of law on the subject and we can do no better than to extract some of the observations made in the decision. The same are (headnote of AIR 1970 (Guj)): "The necessity of giving reasons flows as a necessary corollary from the rule of law which constitutes one of the basic principles of the Indian Constitutional set-up. The administrative authorities having a duty to act judicially cannot therefore decide on considerations of policy or expediency. They must decide the matter solely on the facts of the particular case, solely on the material before them and apart from any extraneous considerations by applying pre-existing legal norms to factual situations. Now the necessity of giving reasons is an important safeguard to ensure observance of the duty to act judicially. It introduces clarity, checks the introduction of extraneous or irrelevant co....
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....isposed of the proceedings stating the penalty proceedings initiated in this case under section 271C read with section 274 of the Income-tax Act, 1961 are hereby dropped. Accordingly to the High Court, there was no basis indicated for dropping the proceedings. The Tribunal referred to certain aspects and held that the initiation of proceedings under section 263 of the Income-tax Act, 1961 (in short, "the I.T. Act") was impermissible when considered in the background of the materials purportedly placed by the assessee before the Assessing Officer. What the High Court has done is to require the Assessing Officer to pass a reasoned order. The High Court was of the view that the Tribunal could not have substituted its own reasonings which were required to be recorded by the Assessing Officer. According to the assessee, all relevant aspects were placed for consideration and if the officer did not record reasons, the assessee cannot be faulted. We do not think it necessary to interfere at this stage. It goes without saying that when the matter be taken up by the Assessing Officer on remand, it shall be his duty to take into account all the relevant aspects including the materials, if a....
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....g the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. 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 the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance." A feeble argument was advanced that the Commissioner of Income Tax being higher in hierarchy than Additional Commissioner of Income Tax, the initiation of the proceedings at the instance of Additional Commissioner of Income Tax is bad. In view of our above conclusion that the order dropping the proceeding under section 12A was not a valid action on the part of the Commissioner of Income Tax, the said argument is rejected. Having regard to what has been said above. We find that it is a case where the then Assessing Officer (Shri Bhopal Singh), the Additional Commissioner of Income Tax, Range-II, Muzaffarnagar and Shri Kundan Misra, the then Commissioner of Income T....