2014 (5) TMI 435 - HC - Income Tax

Non-speaking order - Restriction of addition Section 145 not invoked - Liquor contractors Held that - Relying upon KRANTI ASSOCIATES PVT. LTD. Versus MASOOD AHMED KHAN 2010 (9) TMI 886 - SUPREME COURT OF INDIA - In an order of affirmation, repetition of the reasons elaborately may not be necessary but even then the arguments advanced/points urged deserves to be dealt with - Reasons for affirmation have to be indicated, though in appropriate cases they may be briefly stated - Recording of reasons is part of fair procedure and reasons are harbinger between the mind of the maker of the decision in the controversy and the decision or conclusion arrived at and they always substitute subjectivity with objectivity - the orders of the ITAT being stereo typed, nonspeaking, unreasoned, arbitrary and whimsical, and we have no option except to remand the matter back to the ITAT to re-visit the issue afresh de-novo in accordance with the guidelines.

Issues Involved:

1. Justification of ITAT and CIT(A) in restricting additions without assigning reasons.
2. Perversity of ITAT in reducing and restricting trading additions without assigning reasons and making estimation over estimation.

Issue-wise Detailed Analysis:

1. Justification of ITAT and CIT(A) in restricting additions without assigning reasons:

The appeals were directed against the orders of the ITAT, Jaipur Bench, concerning liquor contractors. The core issue was whether the ITAT and CIT(A) were justified in law in restricting the additions without assigning any reasons when the provisions of section 145 of the Income Tax Act were upheld. The court noted that the assessees, being liquor contractors, were awarded licenses by the State of Rajasthan for the sale of liquor. The CIT(A) and ITAT had made and restricted additions on an estimate basis without providing detailed reasoning. The court observed that the ITAT's orders were stereotyped, non-speaking, unreasoned, arbitrary, and whimsical. It emphasized that the ITAT failed to record arguments or provide a discernible basis for the additions or reductions. The court referenced its previous judgment in CIT Vs. Ram Singh, highlighting the need for the ITAT to revisit the issue afresh with proper guidelines.

2. Perversity of ITAT in reducing and restricting trading additions without assigning reasons and making estimation over estimation:

The court scrutinized the orders of the CIT(A) and ITAT in specific appeals, noting that the ITAT had either given further relief or upheld the CIT(A)'s order without applying its mind or referring to the contentions raised by either side. The court pointed out that the ITAT's actions were devoid of any factual findings or reasons for agreeing or disagreeing with the AO or CIT(A). The court held that the ITAT's approach was similar to the one criticized in the case of CIT Vs. Ram Singh, where the ITAT's orders lacked recording of facts, discussion of comparable cases, or reasons for the estimates. The court reiterated that recording reasons is part of a fair procedure and essential for substituting subjectivity with objectivity.

Conclusion:

The court found the ITAT's orders to be stereotyped, non-speaking, unreasoned, arbitrary, and whimsical. Consequently, it quashed and set aside the impugned orders, remanding the matter back to the ITAT for a fresh de-novo decision in accordance with the guidelines provided. The ITAT was directed to decide the matters expeditiously, within six months from the date the parties were called upon to appear before it. The court emphasized that the ITAT should independently decide on merits in accordance with the law, uninfluenced by the observations made in this judgment.

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