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TMI Blog2015 (9) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... sundry creditors, details of salary and bonus, rent paid, ledger copies of foreign commission payments and details of TDS deducted etc. The assessee also by his letter dated 10.11.2011 filed all the details called for by the Assessing Officer. The Assessing Officer, after considering all the details filed by the assessee, allowed the payment of commission to non-residents. However, the Administrative Commissioner in the guise of exercising his revisional jurisdiction u/s 263 of the Act, found that the payment of commission was made to non-residents, therefore, it was liable for TDS at the time of making payment. The CIT further found that u/s 40(a)(i)of the Act, the Assessing Officer ought to have disallowed a sum of Rs. 19,54,363/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not discussed anything in the assessment order. We have also gone through the order of this Tribunal in assessee's own case for assessment year 2011-12 . This Tribunal, by following the judgment of the Hon'ble Madras High Court in Faizan Shoes Pvt. Ltd. (supra) dismissed the Revenue's appeal. This Tribunal found that the assessee exported leather goods and paid a sum of Rs. 24,18,270/- towards commission to the foreign agents for procuring orders on behalf of the assessee. In those circumstances, this Tribunal, by following the judgment of the Hon'ble Madras High Court in Faizan Shoes Pvt. Ltd (supra), confirmed the order of the lower authority. In the case before us, it is not known the nature of the payment made by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 274 ITR 53. The P&H High Court, after considering the judgment of the Constitutional Bench of the Apex Court in S. N. Mukherjee vs Union of India, AIR 1990 SC 1984, has observed as follows: "In S. N. Mukherjee v. Union of India, AIR 1990 SC 1984, a Constitution Bench of the Supreme Court discussed the development of law on this subject in India, Australia, Canada, England and the United States of America and after making reference to a large number of judicial precedents, their Lordships culled out the following propositions (page 1995) : "The decisions of this court referred to above indicate that with regard to the requirement to record reasons the approach of this court is more in line with that of the American Courts. An important c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighed 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 recording of reasons by an administrative authority serves 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, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to factual situations. Now the necessity of giving reasons is an important safeguard to ensure observance of the duty to act judicially. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and excludes or, at any rate, minimises arbitrariness in the decision-making process. Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under article 226 and the Supreme Court under article 32 of the Constitution. These courts have the power under the said provisions to quash by certiorari a quasi-judicial order made by an administrative officer and this power of review can be effectively exercised only if the order is a speaking orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned members." 8. In view of the above, this Tribunal is of the considered opinion that it is incumbent on the part of the Assessing Officer to disclose the reasons in the assessment order for allowing or disallowing a claim of the assessee. This Tribunal is of the considered opinion that the CIT has rightly exercised his jurisdiction u/s 263 of the Act. However, the CIT has directed the Assessing Officer to disallow a sum of Rs. 19,54,363/- said to be paid to the non-residents for non-compliance of provisions of section 40(a)(i) of the Act. This Tribunal is of the considered opinion that an opportunity shall be given to the assessee to explain the nature of payment before the Assessing Officer. Accordingly, the order of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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