2005 (3) TMI 51 - HC - Income Tax

Tribunal reversing order of CIT - Whether, Tribunal was justified in law in reversing the order of the Commissioner of Income-tax (Appeals) without assigning any reasons and without controverting findings recorded in the order of the Commissioner of Income-tax (Appeals)? - In 1959 in case of Omar Salay Mohamed Suit v. CIT, the apex court had observed that if the Tribunal arrives at its own conclusion of fact after due consideration of evidence before it the court will not interfere, but for this purpose it was necessary that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the points for determination before it, and what was the evidence pro and contra in regard to each of the issues and what were the findings reached on the evidence on record - This position has been reiterated once again in 2002 by this court after referring to the aforesaid judgment in the two decisions therefore, impugned order of the Tribunal is quashed and set aside and the matter is restored to the file of the Tribunal for the purposes of adjudication afresh in the light of the well established legal principles enunciated by the apex court and this court.

Summary

Issues:
1. Whether the Tribunal was justified in reversing the order of the Commissioner of Income-tax (Appeals) without assigning any reasons and without controverting findings recorded in the order of the Commissioner of Income-tax (Appeals)?

Analysis:
The case involved an appeal regarding the disallowance of a sum treated as excessive rebate and discount allowed to various parties, including a sister concern of the appellant, for the assessment year 1995-96. The Assessing Officer disallowed a substantial amount, which was later reduced by the Commissioner (Appeals) to 2% of total sales, rounding off to a specific figure. Both the assessee and the Revenue filed cross-appeals before the Tribunal, leading to a common order by the Tribunal.

The Tribunal's order lacked reasoning for disagreeing with the Commissioner of Income-tax (Appeals) and failed to address the basis on which the Commissioner accepted the assessee's explanation. The High Court emphasized the necessity for the Tribunal to provide reasons if reversing the first appellate authority's decision. Citing legal precedents, the High Court highlighted the importance of the Tribunal considering all facts and evidence before arriving at a conclusion. Due to the Tribunal's failure to provide adequate reasoning, the High Court quashed the Tribunal's order and restored both appeals for fresh adjudication.

In conclusion, the High Court allowed both appeals to the extent mentioned, emphasizing the importance of providing clear reasons for decisions. The case was disposed of with no order as to costs, ensuring a fair and reasoned adjudication process moving forward.