2018 (8) TMI 522 - HC - Income Tax

Rectification Application under Section 254(2) - non-speaking order - guienity of shareholding investment by the five Companies - Held that - Though the order dated 13th February, 2015 does render a finding that no positive material was brought on record, there is no discussion whatsoever of the various case laws detailed in the submissions which according to the petitioner clinches the issues in support of its case that the shareholding investment by the five Companies was genuine. In the above view, the Tribunal ought to have allowed the petitioner s Rectification Application and considered the petitioner s Appeal before it on merits, inter-alia, taking into account the material and case laws which has been already filed by the petitioner s during the hearing leading to the order dated 13th February, 2015. In view of the peculiar facts of the present case, we are not only setting aside the impugned order dated 4th May, 2018 but also the order dated 13th February, 2018 to the extent it dismissed the petitioner s Appeal before it. This for the reason that, we find the order dated 13th February, 2015 in the context of the material available on record, to be a non-speaking order as it gives no reasons to reject the appeal in the context of the decisions admittedly relied upon at the hearing by the petitioners.

Summary

Issues:
Challenge to order of Income-Tax Appellate Tribunal under Article 226 of the Constitution of India - Dismissal of Rectification Application under Section 254(2) of the Income-Tax Act, 1961 - Genuine investment in shareholding - Failure to consider submissions and case laws - Mistake apparent on record.

Analysis:
The petition challenged the order of the Income-Tax Appellate Tribunal dated 4th May, 2013, which dismissed the petitioner's Rectification Application under Section 254(2) of the Income-Tax Act, 1961. The Tribunal's order dated 13th February, 2015, disposed of appeals by both the Revenue and the petitioner-assessee regarding the Assessment Year 2007-08. The issue revolved around the genuineness of investments made by various entities in the shareholding of the petitioner. The petitioner contended that the Tribunal's order did not consider their detailed written submissions and case laws supporting their appeal. The Rectification Application filed on 1st February, 2018, highlighted these aspects, but the Tribunal, in its impugned order dated 4th May, 2018, failed to address the raised issues and concluded that no rectification was necessary.

The respondent argued that the Tribunal's order in 2015 already concluded that the petitioner failed to provide positive material, indicating no apparent mistake on record. However, the Court noted that the Tribunal's order lacked discussion on the case laws detailed in the submissions, crucial for determining the genuineness of the investments. The Court held that the Tribunal should have considered the Rectification Application and the petitioner's appeal on merits, taking into account the materials and case laws presented during the hearing leading to the 2015 order. Due to the absence of reasons to reject the appeal in light of relied-upon decisions, the Court set aside both the impugned order of 2018 and the 2015 order that dismissed the petitioner's appeal.

In a unique turn of events, the Court allowed the petition, emphasizing the nonspeaking nature of the 2015 order in rejecting the appeal without providing reasons in the context of the relied-upon decisions during the hearing. The Court's decision to set aside both orders aimed to address the lack of consideration given to the petitioner's submissions and case laws, ensuring a fair assessment of the genuineness of the investments in the petitioner's shareholding.