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TMI Blog2020 (1) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - PUNJAB AND HARYANA HIGH COURT] as held order passed by the CIT does not satisfy the prerequisites of a speaking order, as the same does not contain reasons to support the order. Penalty u/s 271(1)(c)(iii) - mechanism for quantification of penalty - HELD THAT:- assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the additions made to the income of the assessee. Upto and until, the issue regarding determination of the taxable income is finalized, penalty under section 271(1)(c) of the Act cannot be imposed upon the assessee. Once we have set aside the quantum proceedings, then very basis to compute penalty gets extinguished. Therefore, we set aside the penalty order passed by the AO as well as by the ld.CIT(A). This issue is also required to be adjudicated on the basis of outcome of quantum proceedings. - ITA No.991/Ahd/2016 AND ITA No.2574/Ahd/2017 - - - Dated:- 9-1-2020 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty income at ₹ 20,35,116/- after giving deduction under section 24(a) of the Act at ₹ 6,10,535/-, he made addition of ₹ 14,24,581/-. In this way, total income of the assessee has been determined at ₹ 22,03,058/-. Dissatisfied with this treatment, the assessee carried the matter in appeal. The ld.CIT(A) has dismissed the appeal of the assessee. 5. With the assistance of the ld.representatives, we have gone through the record carefully. A perusal of the impugned order would suggest that it is running into 13 pages. The ld.CIT(A) has reproduced the assessment order from pages 2 to 11. He thereafter reproduced submissions of the assessee on pages 11 and 12. The discussion made by the ld.CIT(A) is available only in paragraph 3.3 on page no.3, which reads as under: 3.3. I have considered the submissions of the learned Authorized Representative and the order of the Assessing Officer. From the order of the assessment, it transpires that the submissions of the assessee made above were also made before the Assessing Officer and Assessing Officer has analyzed the same in minute details and controverted the explanations of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l exercising [quasi] judicial powers and the exercise of that power is subject to the jurisdic- tion of this Court under article 136 of the Constitution, we fail to see how the power of this Court can be effectively exercised if reasons are not given by the Central Government in support of its order. . . . (p. 1678) 6. Another Constitution Bench of Hon'ble the Supreme Court in Bhagat Raja v. Union of India AIR 1967 SC 1606 considered the question whether while exercising revisional power under section 30 of the Mines and Minerals (Regulation and Development) Act, 1957 read with Rules 54 and 55 of the Mineral Concession Rules, 1960, the Central Government was required to give reasons in support of its decision and held : . . . The decisions of Tribunals in India are subject to the supervisory powers of the High Courts under article 227 of the Constitution and of appellate powers of this Court under article 136. It goes without saying that both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word 'rejected' or 'dismissed'. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Second, it is a well-known principle that justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. Third, it should be remembered that an appeal generally lies from the decision of judicial and quasi-judicial authorities to this Court by special leave granted under article 136. A judgment which does not disclose the reasons will be of little assistance to the Court. . . . (p. 2761) 10. The same view was reiterated in Ajantha Industries v. CBDT AIR 1976 SC 437 and Siemens Engg. Mfg. Co. of India Ltd. v. Union of India AIR 1976 SC 1785. 11. In S.N. Mukherjee v. Union of India AIR 1990 SC 1984, a Constitution Bench reviewed various judicial precedents on the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a Court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. [Emphasis supplied] (p. 1995) 12. In Testeels Ltd. v. N.M. Desai, Conciliation Officer AIR 1970 Guj. 1, a Full Bench of Gujarat High Court speaking through P.N. Bhagwati, J. (as his Lordship then was) made a lucid enunciation of law on the subject in the following words:- The necessity of giving reasons flows as a necessary corollary from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit. 8. As far as penalty appeal is concerned, sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the additions made to the income of the assessee. Upto and until, the issue regarding determination of the taxable income is finalized, penalty under section 271(1)(c) of the Act cannot be imposed upon the assessee. Once we have set aside the quantum proceedings, then very basis to compute penalty gets extinguished. Therefore, we set aside the penalty order passed by the AO as well as by the ld.CIT(A). This issue is also required to be adjudicated on the basis of outcome of quantum proceedings. The ld.CIT(A) shall adjudicate the issue with regard to levy of penalty after adjudication of quantum appeal. In view of the above, both appeals of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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