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TMI Blog2024 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is bereft of any reason and consequently, notice u/s 148 is also liable to be quashed and set aside. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA FOR THE PETITIONER: MS SN SOPARKAR, SR. ADVOCATE WITH MR B S SOPARKAR FOR THE RESPONDENT: MR.VARUN K.PATEL ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned senior advocate Mr.S.N. Soparkar with learned advocate Mr.B.S. Soparkar for the petitioner and learned senior standing counsel Mr.Varun Patel for the respondent appearing on advance copy. 2. Rule, returnable forth with. Learned advocate Mr.Varun Patel waives service of notice of Rule on behalf of the respondent. 2.1 Having regard to the controversy in narrow compass, with the consent of the learned advocates appearing for both the sides, the matter is taken up for final hearing. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged notice under Section 148A(b) dated 27th March, 2024, order under Section 148A(d) and the notice under Section 148 dated 19th April, 2024 of the Income Tax Act, 1961 (for short the Act ) for the A.Y. 2017-18. 4. The brief facts of the case are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out and no order under Section 148A(d) of the Act is received by the petitioner. 4.7 It is the case of the petitioner that the petitioner received the impugned show-cause notice under Section 148A(b) on 27th March, 2024 which was responded by the petitioner on 15th April, 2024 conveying the past correspondence on the above issues as well as filing detailed objections on merits as well. 4.8 Subsequently, the respondent passed the impugned order under Section 148A(d) on 19th April, 2024 alleging escapement of income to the tune of Rs.08,69,73,215/- and the consequential impugned notice under Section 148 of the even date is also issued requesting the petitioner to file return of income. 5. Learned senior advocate Mr. Soparkar for the petitioner submitted that the respondent, while passing the order under Section 148A(d) of the Act has not assigned any reason dealing with the detailed contentions raised by the petitioner comprising nine different issues. It was, therefore, submitted that the impugned order is liable to be quashed and set aside and as such the initiation of re-assessment proceedings be also quashed along with notice under Section 148 of the Act. 5.1 It was submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Insight Portal, you have advanced interest free ECB loan of Rs.165,97,94,188/- to an Indian Company namely, M/s. Hazira Port P Ltd (AAACH9142D), Gujarat which is your subsidiary. By not charging interest on this loan, you have suppressed your corresponding income resulting in escapement of that income. In this regard it is relevant to mention that the Addl CIT (TPO) has also during the TP proceedings in the case of M/s. Hazira Port Pvt. Ltd, after detailed discussion and analysis, worked out interest of Rs.8,69,73,215/- pertaining to loan given by you to your subsidiary viz. Hazira Port Pvt Ltd. 3. As a corollary, the said amount is chargeable to tax in your hand for the previous year relevant to AY 2017-18. As you had not filed return of income u/s. 139(1) of the IT Act, income to the tune of Rs.8,69,73,215/-has escaped assessment. 4. On the basis of above information which suggests that income chargeable to tax of Rs.8,69,73,215/-have escaped assessment in your hand, you are requested to show me the cause as to why order u/s 148A(d) may not be passed and notice u/s. 148 of the IT Act may not be issued. On the basis of the above information that income chargeable to tax has esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court in the case of S.N. Mukherjee v. Union of India, (1990) 4 SCC 594 has emphasised importance of reasons to be given in the order, whether it may be passed by a quasi judicial authority or it may be an administrative order as under: 22. The question as to whether an administrative authority should record the reasons for its decision has come up for consideration before this Court in a number of cases. 23. In Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala [(1962) 2 SCR 339 : AIR 1961 SC 1669 : (1961) 31 Comp Cas 387] a Constitution Bench of this Court, while dealing with an order passed by the Central Government in exercise of its appellate powers under Section 111(3) of the Companies Act, 1956 in the matter of refusal by a company to register the transfer of shares, has held that there was no proper trial of the appeals before the Central Government since no reasons had been given in support of the order passed by the Deputy Secretary who heard the appeals. In that case it has been observed : (SCR p. 357) If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this Court under Article 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to disclose its mind. The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity and excludes or at any rate minimizes arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellate or supervisory court to keep the tribunals within bounds. A reasoned order is a desirable condition of judicial disposal. ...If tribunals can make orders without giving reasons, the said power in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuses of power. But, if reasons for an order are given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrelevant considerations, will be subject to judicial scrutiny and correction. A speaking order will at its best be a reasonable and at its worst be at least a plausible one. The public should not be deprived of this only safeguard. ...There is an essential distinction between a court and an administrative tribunal. A Judge is trained to look at things objectively, uninfluenced by considerations of policy or expediency; but, an executive officer generally looks at things from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal. This will certainly be a very unsatisfactory method of dealing with the appeal. 28. Reference has already been made to Som Datt Datta case [(1969) 2 SCR 177 : AIR 1969 SC 414 : 1969 Cri LJ 663] wherein a Constitution Bench of this Court has held that the confirming authority, while confirming the findings and sentence of a court martial, and the Central Government, while dealing with an appeal under Section 165 of the Act, are not required to record the reasons for their decision and it has been observed that apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, it could not be said that there is any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision. In that case the court was primarily concerned with the interpretation of the provisions of Act and the Army Rules, 1954. There is no reference to the earlier decisions in Harinagar Sugar Mills case [(1962) 2 SCR 339 : AIR 1961 SC 1669 : (1961) 31 Comp Cas 387] and Bhagat Raja case [(1967) 3 SCR 302 : AIR 1967 SC 1606] wherein the duty to record reasons was imposed in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put 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. 32. In Siemens Engineering Manufacturing Co. of India Limited case [(1976) 2 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, it would be laying down the proposition too broadly to say that even an ordinary concurrence must be supported by reasons. 34. In Raipur Development Authority v. Chokhamal Contractors [(1989) 2 SCC 721] a Constitution Bench of this Court was considering the question whether it is obligatory for an arbitrator under the Arbitration Act, 1940 to give reasons for the award. It was argued that the requirement of giving reasons for the decision is a part of the rules of natural justice which are also applicable to the award of an arbitrator and reliance was placed on the decisions in Bhagat Raja case [(1967) 3 SCR 302 : AIR 1967 SC 1606] and Siemens Engineering Co. case [(1976) 2 SCC 981 : 1976 Supp SCR 489] . The said contention was rejected by this Court. After referring to the decisions in Bhagat Raja case [(1967) 3 SCR 302 : AIR 1967 SC 1606], Som Datt Datta case [(1969) 2 SCR 177 : AIR 1969 SC 414 : 1969 Cri LJ 663] and Siemens Engineering Co. case [(1976) 2 SCC 981 : 1976 Supp SCR 489] this Court has observed : (SCC pp. 751-52, para 35) It is no doubt true that in the decisions pertaining to administrative law, this Court in some cases has observed that the giving of reasons i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) no one shall be a judge in his own cause (nemo debet esse judex propria causa), and (ii) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must he held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. 38. A similar trend is discernible in the decisions of English courts wherein it has been held that natural justice demands that the decision should be based on some evidence of probative value. (See: R. v. Deputy Industrial Injuries Commissioner ex p. Moore [(1965) 1 QB 456 : (1965) 1 All ER 81]; Mahon v. Air New Zealand Ltd.[1984 AC 648 : (1984) 3 All ER 201]) 39. The object underlying the rules of natural justice is to prevent miscarriage of justice and secure fair play in action . As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi- judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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