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TMI Blog2013 (9) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... s. According to the ld.representative, the order passed by the Commissioner of Income-tax u/s 263 lacks clarity, therefore, it cannot be enforced. For the assessment orders, 2005-06 and 2006-07 the Commissioner of Income-tax directed the assessing officer to disallow payments made towards advertisement, sale promotion, etc. For the assessment year 2007-08 the Commissioner of Income-tax directed the assessing officer to disallow commission and brokerage paid by the assessee. According to the ld.representative, the Commissioner of Income-tax directed the assessing officer to disallow expenditure u/s 40(a)(ia) and 40A(3) of the Act without specifying the amount. According to the ld.representative, the Commissioner of Income-tax cannot direct the assessing officer to disallow the expenditure without examining the books of account. From the copy of the ledger account, according to the ld.representative, not a single item of expenditure exceeded the limit of Rs.20,000 when the commission and brokerage was paid. Therefore, the Administrative Commissioner is not correct in directing the assessing officer to disallow any part of the payment made towards commission and brokerage. The ld.repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricted to 5% in the absence of bills and vouchers. Section 263(1)(c) clearly says that the powers of the Commissioner of Income-tax shall extend to such matter as had not been considered and decided in appeals. In this case, the application of section 5 40(a)(ia) was not considered and decided either by CIT(A) or by this Tribunal. Therefore, this Tribunal is of the considered opinion that in view of specific provision of section 263(1)(c) of the Act, the Administrative Commissioner has rightly exercised his revisional jurisdiction. 6. Now coming to application of section 40A(3), admittedly, this was not considered by the assessing officer in any of the assessment years under consideration. The only contention of the assessee is that the assessing officer simply directed the assessing officer to disallow the claim without examining the books of account and without giving opportunity to the assessee. This Tribunal is of the considered opinion that the Administrative Commissioner instead of directing the assessing officer to disallow the claim of the assessee ought to have directed the assessing officer to examine the books of account and consider the claim of the assessee in the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking. In this regard a distinction has been drawn between ordinary courts of law and tribunals and authorities exercising judicial functions on the ground that a judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi- judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this court in holding that an administrative authority must record reasons for its decision, are of no less significance. These considerations show that the recorded of reasons by an administrative authority services a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effectively exercised only if the order is a speaking order. In the absence of any reasons in support of the order, the said courts cannot examine the correctness of the order under review. The High Court and the Supreme Court would be powerless to interfere so as to keep the administrative officer within the limits of the law. The result would be that the power of judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then, they will be subject to judicial scrutiny and correction." If the order passed by the Tribunal is scrutinized in the light of the aforementioned proposition of law, we do not find any difficulty in setting aside the same on the ground of violation of the rules of natural justice. The flowery language used by the Tribunal to justify its acceptance of the respondent's plea that he did not know the law does not warrant our affirmation. In our opinion, the Tribunal was duty bound to record tangible and cogent reasons for upsetting well reasoned orders passed by the Assessing Officer and the Commissioner of Income-tax (Appeals). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any enquiry and reasoning in the assessment order. The Commissioner of Income- tax initiated proceedings to cancel the registration u/s 12A of the Act. However, it was dropped without recording any reason. Subsequently, the case was reopened and notice was issued u/s 147 of the Act. The assessee challenged the notice issued for reopening the assessment by way of writ petition. While considering the wit petition, the Allahabad High Court expressed its shock and anguish on the way in which the orders are being passed by the income-tax authorities. In fact, the Allahabad High Court has observed as follows: " The income tax authorities are required to administer the Act. The right to administer, cannot obviously include the right to mal-administer. Thus, we find no words to express anguish as what kind of governance it had been. There is another reason for ignoring the aforesaid order, dropping the cancellation proceeding of registration. The said order does not contain any reason. Reasons introduce clarity in an order. Reason is the heart beat of every conclusion and without the same it becomes lifeless. (See Raj Kishore Jha Versus State of Bihar and others, AIR 2003 SC 4664). E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Let the matter be examined by the Chief Commissioner of Income Tax and appropriate departmental proceedings may be taken out against the erring officials. A copy of this judgment may also be sent to the Chairman of the Central Board of Direct Taxes for an appropriate action." 11. In view of the above judgments of the Punjab & Haryana High Court and Allahabad High Court as also the Apex Court, it is obligatory on the part of the assessing officer to record reasons in the assessment order. Recording of reason would not only enable the revisional / appellate authorities to discharge their function effectively but also repose confidence in the system. Therefore, we are of the considered opinion that there was an error in the order of the assessing officer inasmuch as that the assessing officer has not recorded his reasons for reaching a conclusion. 12. We also find that the Apex Court in the case of Appropriate Authority, Ahmedabad & Another vs Hindumal Balmukand Investment Co Pvt Ltd & Another (2001) 251 ITR 660 (SC) found that a speaking order must speak for itself and a reference to show cause notice is uncalled for. It is also well settled principles of law that judicial order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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