2017 (5) TMI 990 - HC - Income Tax

Block assessment u/s 158BC - Genuineness of purchase transactions - claim of deduction u/s 80HHC - Did the ITAT fail to adhere to the specific mandate issued to it by this Court in the previous order in CIT v. Arun Malhotra (2013 (11) TMI 1493 - DELHI HIGH COURT )? - Held that - If one peruses the impugned order of the ITAT in the present case, it is unmistakable that large portions of it have been virtually lifted verbatim from the order of the Assessing Officer ( AO ) as well as the order of this Court by which the matter was remanded to it. Worse still, these portions are not placed in quotation marks. Contrary to what was expected to be done, as explained by the Supreme Court in CIT v. P.V. Kalyanasundaram (2007 (9) TMI 25 - SUPREME COURT OF INDIA), there is no attribution by the ITAT in the impugned order to the source from which the said portions have been lifted. There was a specific mandate before the ITAT that had been spelt out in para 24 of this Court s previous order. The ITAT was to consider afresh all the issues and contentions that arose before it. That the ITAT simply failed to do. It has chosen to adopt a shortcut by verbatim reproducing the portions of the order of the assessment order or the order of this Court whether for the purposes of setting out the facts or even the reasoning and conclusion. It is one thing the ITAT to quote from an order of the AO or the CIT (A) and then explain whether the ITAT agreed with or differed from the said portion. It is another to simply incorporate into the order those very words and passages without any attribution to the source leaving the reader wondering if that could be the actual reasoning of the ITAT. The present impugned order of the ITAT falls in the latter category. Looking at it from any point of view, the Court is unable to accept the impugned order of the ITAT as having satisfied the mandate of this Court, as spelt out in para 24 of its earlier order extracted hereinbefore.Consequently, the question framed is answered in the affirmative i.e. in favour of the Assessee and against the Revenue

Summary

Issues:
- Failure of the Income Tax Appellate Tribunal to adhere to the specific mandate issued by the High Court in a previous order.
- Allegation of lack of independent assessment by the ITAT.
- Verbatim lifting of portions without attribution in the impugned order.
- Request to ignore aberrations and proceed to decide on merits.
- Court's disagreement with the submission to ignore aberrations.
- Court's conclusion on the failure of the ITAT to satisfy the mandate.
- Setting aside the impugned order and restoring the appeals to the ITAT.
- Directions for listing the appeals before a different Bench and timeframe for final decision.

Analysis:

The High Court addressed the issue of the Income Tax Appellate Tribunal's failure to adhere to a specific mandate issued in a previous order. The Court framed a question regarding whether the ITAT failed to comply with the directions given by the High Court in a previous order. The Court noted that the ITAT had verbatim lifted portions from the Assessing Officer's order and the High Court's order without proper attribution. This lack of independent assessment was a critical concern raised by the Assessee's counsel. The Court referenced a Supreme Court decision emphasizing the importance of acknowledging borrowed words in a judgment. The Revenue contended that the Court should overlook these aberrations and proceed to decide on the merits, but the Court disagreed. The Court highlighted that the ITAT failed to consider all issues afresh as mandated, opting for a shortcut by reproducing portions without proper analysis.

The Court concluded that the ITAT's order did not satisfy the mandate set out in the previous order, emphasizing the need for a fresh examination of all issues and contentions. As a result, the Court answered the question in favor of the Assessee and set aside the impugned order, restoring the appeals to the ITAT. The Court directed the appeals to be listed before a different Bench and imposed a timeframe for a final decision to be made within six months from the date of the remand. This decision aimed to expedite the resolution of the ongoing litigation, acknowledging that it would be the third round of litigation in this case.