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2006 Supreme(P&H) 2353
PUNJAB & HARYANA HIGH COURT
Adarsh Kumar Goel and Rajesh Bindal JJ.
Roadmaster Industries Of India (P) Ltd.
Versus
Inspecting Assistant Commissioner Of Income Tax
Civil Writ Petition No. 69 of 1990,1080 of 1990,1724 of 1990,
Decided On : MAY 29, 2006
Quasi-judicial authorities must pass speaking orders supported by reasons to ensure decisions are reached according to law and allow for effective appellate and supervisory review.
Headnote:
IT Act - Revision petitions under Section 264 - Section 244(1A)/214(1A) - Acts and sections referenced: IT Act, 1961, Section 264, Section 244(1A), Section 214(1A) - The court discussed the requirement for quasi-judicial authorities to pass speaking orders supported by reasons, citing various judgments including National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India, CIT v. Leader Engineering Works, and others. The court emphasized that the recording of reasons ensures decisions are reached according to law and not the result of caprice, whim, or policy, and allows for effective appellate and supervisory review.
Fact of the Case:
The petitioner challenged an order passed by the CIT, Patiala, dismissing revision petitions under Section 264 of the IT Act, 1961, for the asst. yrs. 1978-79, 1979-80, 1980-81, claiming improper calculation of interest entitlement under Section 244(1A)/214(1A). The CIT's order lacked reasons to support the decision.
Finding of the Court:
The court found that the CIT's order did not satisfy the prerequisites of a speaking order, as it lacked reasons to support the decision.
Issues: The issues revolved around the requirement for quasi-judicial authorities to pass speaking orders supported by reasons, and the proper calculation of interest entitlement under the IT Act.
Ratio Decidendi: The court emphasized the necessity for quasi-judicial authorities to provide reasons in support of their decisions, citing various judgments and principles that ensure decisions are reached according to law and allow for effective appellate and supervisory review.
Final Decision: The writ petitions were allowed, the impugned order was quashed, and the matter was remitted back to the CIT, Patiala, for re-decision in terms of law laid down on the subject, after hearing the petitioner.
1. This order will dispose of four writ petitions bearing CWP Nos. 69, 1080 and 1724 of 1990 and 8499 of 1993. For the sake of convenience, facts are being taken from CWP No. 69 of 1990.
2. The petitioner challenged an order dt. 27th June, 1989, copy Annex. P-10, passed by the CIT, Patiala, whereby revision petitions filed by the petitioner under Section 264 of the IT Act, 1961 (for short the Act), for the asst. yrs. 1978-79, 1979-80, 1980-81 were dismissed by a common order.
3. The claim of the petitioner was that the interest entitlement of the petitioner under Section 244(1A)/214(1A) of the Act has not been worked out properly by the IAC (Asst.), Patiala. The petition filed by the assessee against the order of 1AC, Patiala, was dismissed by the CIT, by passing a sketchy and non-speaking order. Though, the assessee at the time of hearing, while referring to a series of judgments, which according to him support its case, argued that the claim of the petitioner needs to be accepted in toto and the petitioner is entitled to interest on delayed refund of interest as well. The judgments being National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India and Ors. , CIT v. Leader Engineering Works, Modi Industries Ltd. v. CIT , CIT v. Saswad Mali Sugar Factory Ltd. , Sandvik Asia Ltd. v. CIT and CIT v. Orissa Cement Ltd. (2001) 119 Taxman 742 (Del).
4. On a perusal of impugned order, even the counsel for the Revenue could not dispute that the order passed by the CIT cannot be termed to be a speaking order which could stand in judicial scrutiny. As to whether in exercise of quasi-judicial powers, the authorities are required to pass orders by giving reasons in support thereof is well settled by a series of judgments by Hon ble the Supreme Court of India.
5. In Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala and Ors., 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 of a company to register the transfer of shares, Hon ble the Supreme Court observed:
If the Central Government acts as a Tribunal exercising quasi-judicial powers and the exercise of that power is subject to the jurisdiction 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.
6. Another Constitution Bench of Hon ble the Supreme Court in Bhagat Raja v. Union of India considered the question whether, while exercising revisional power under Section 30 of the Mines and Minerals (Regulation and Development) Act, 1957 r/w Rules 54 and 56 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". In such a case, this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the appeal. This will certainly be a very unsatisfactory method of dealing with the appeal.
7. In Travancore Rayon Ltd. v. Union of India , Hon ble the Supreme Court observed:
The Court insists upon disclosure of reasons in support of the order on two grounds : one, that the party aggrieved in a proceeding before the High Court or this Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous; the other, that the obligation to record reasons ope
