2025 (1) TMI 875 - HC - Income Tax

Withdrawal of liberty to avail the remedy under the Direct Tax Vivad Se Vishwas Scheme, 2024 (Scheme of 2024) - whether Scheme of 2024 override the Scheme DTVSV of 2020 (Scheme of 2020)? - rejection order handed over captioned as rejection remarks - HELD THAT - First line of rejection remarks is not happily worded. It is difficult to gather exact meaning of the first line. It is incomprehensible. However, the first line gives an impression as if something is settled pursuant to Scheme of 2020 cannot result into refund of taxes paid. The second reason in the rejection remarks is that the Scheme of 2024 does not override the Scheme of 2020. This reason is also required to be relooked in the light of language employed in Section 90 reproduced hereinabove. In the considered opinion of this Court, the impugned order is too sketchy, too short and too cryptic in nature. The reasons are held to be heart beat of the conclusions . In the absence of reasons, conclusions cannot sustain judicial scrutiny. The Supreme Court in Kranti Associates (P) Ltd. v. Masood Ahmed Khan 2010 (9) TMI 886 - SUPREME COURT emphasized the need of assigning reasons in administrative, quasi-judicial and judicial orders. If the impugned order is tested on the anvil of principles laid down in Kranti Associates (P) Ltd. (supra), it cannot sustain judicial scrutiny because of its cryptic nature and non-disclosure of reasons. Thus rejection remarks in all the matters are set aside. The matters are restored back in the file of respondent No.1, who, shall give personal hearing to the petitioner and pass a fresh order, in accordance with law, without getting mechanically influenced by previous order and counter filed. Accordingly, the Writ Petitions are disposed of, without expressing any opinion on the merits of the case.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment by the Telangana High Court presents and considers the following core legal issues:

Whether the Direct Tax Vivad Se Vishwas Scheme, 2024 (Scheme of 2024) overrides the Direct Tax Vivad Se Vishwas Scheme, 2020 (Scheme of 2020) regarding the refund of taxes paid.
Whether the reasons provided in the "rejection remarks" for rejecting the petitioner's application under the Scheme of 2024 are valid and legally sustainable.
Whether the additional reasons provided in the counter affidavit can be considered in validating the rejection order.
Whether the impugned order satisfies the legal requirement for providing adequate reasons for its conclusions.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Override of Scheme of 2020 by Scheme of 2024

Relevant legal framework and precedents: The court examined Section 90 of the Scheme of 2024, which contains a non-obstante clause suggesting it overrides other laws, including the Scheme of 2020.
Court's interpretation and reasoning: The court found that the language of Section 90 implies an overriding effect, contradicting the rejection order's claim that the Scheme of 2024 does not override the Scheme of 2020.
Key evidence and findings: The court focused on the statutory language of Section 90, emphasizing its non-obstante clause.
Application of law to facts: The court concluded that the rejection order's reasoning was insufficient and potentially incorrect regarding the interplay of the two schemes.
Treatment of competing arguments: The court considered the petitioner's argument that the Scheme of 2024 should allow for refunds, contrary to the rejection order's stance.
Conclusions: The court deemed the rejection order's reasoning inadequate and requiring reevaluation.

Issue 2: Validity of "Rejection Remarks"

Relevant legal framework and precedents: The court referred to the principle that administrative orders must provide clear and adequate reasons, as established in Kranti Associates (P) Ltd. v. Masood Ahmed Khan.
Court's interpretation and reasoning: The court found the "rejection remarks" to be cryptic and lacking sufficient explanation, failing the requirement for reasoned decision-making.
Key evidence and findings: The court noted the unclear and sketchy nature of the "rejection remarks."
Application of law to facts: The court concluded that the rejection order did not meet the standards for reasoned administrative action.
Treatment of competing arguments: The court focused on the need for explicit reasoning in administrative decisions, dismissing the sufficiency of the "rejection remarks."
Conclusions: The court set aside the rejection remarks, directing a reevaluation with proper reasoning.

Issue 3: Consideration of Additional Reasons in Counter Affidavit

Relevant legal framework and precedents: The court cited Mohindhr Singh Gill's case, emphasizing that an order's validity must be judged based on the reasons originally provided, not supplemented by later explanations.
Court's interpretation and reasoning: The court adhered to the principle that additional reasons in a counter affidavit cannot validate an originally deficient order.
Key evidence and findings: The court focused on the original rejection remarks, disregarding supplementary reasons in the counter affidavit.
Application of law to facts: The court concluded that the rejection order could not be supported by reasons not initially provided.
Treatment of competing arguments: The court rejected the respondent's attempt to justify the rejection order with additional reasons.
Conclusions: The court invalidated the rejection order based on its original reasoning, ignoring supplementary justifications.

Issue 4: Adequacy of Reasons in Impugned Order

Relevant legal framework and precedents: The court emphasized the necessity of reasoned decision-making as outlined in Kranti Associates (P) Ltd. v. Masood Ahmed Khan.
Court's interpretation and reasoning: The court found the impugned order lacking in adequate reasoning, rendering it unsustainable.
Key evidence and findings: The court highlighted the absence of detailed reasoning in the rejection order.
Application of law to facts: The court determined that the impugned order failed to meet legal standards for reasoned administrative action.
Treatment of competing arguments: The court focused on the need for clear reasoning, dismissing the rejection order's adequacy.
Conclusions: The court set aside the impugned order, requiring a reevaluation with proper reasoning.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The reasons assigned in the counter, which do not form part of the rejection order, will not instill life or improve the rejection order."
Core principles established: Administrative orders must provide clear and adequate reasons, and additional reasons in a counter affidavit cannot validate an originally deficient order.
Final determinations on each issue: The court set aside the rejection remarks and impugned order, directing a reevaluation with proper reasoning and a personal hearing for the petitioner.

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