Judgment:
Dipak Misra, J.
1. The present appeal preferred under Section 260A of the Income-tax Act, 1961 (in short 'the Act'), involves the following substantial question of law:
Whether, in the facts and circumstances of the case, the Income-tax Appellate Tribunal has committed illegality by failing to consider all material facts and evidence brought on record and further failed to record the finding on all the issues before it and has erroneously remanded the matter to the Commissioner of Income-tax (Appeals) though it was obligatory on the part of the Tribunal to decide the matter being the final authority of facts.
2. The facts which are essential to be stated are that for the assessment year 1998-99, the assessment was reopened under Section 147 of the Act and notice under Section 148 of the Act was served by affixture on the last date of the period of limitation, i.e., on March 31, 2005. In pursuance of the notice, the appellant filed its regular return before the Income-tax Officer, Ward 1(1) who had the territorial jurisdiction over the place where the assessee was residing. In the course of the assessment proceeding, the assessee filed objection against the assessment proceeding as also against the jurisdiction of respondent No. 1, the Assistant Commissioner of Income-tax 2(1), Jabalpur. Those objections were not accepted by the Assessing Officer who framed the assessment under Section 147 of the Act on May 9, 2006.
3. Being aggrieved by the order of assessment, the appellant-assessee preferred an appeal before the Commissioner of Income-tax (Appeals) challenging on many an aspect including the jurisdiction of the Assessing Officer as well as the addition made by him. The Commissioner of Income-tax (Appeals) allowed the appeal preferred by the assessee on the grounds that the Assessing Officer did not have the jurisdiction to assess the appellant and the addition made by the Assessing Officer was not justified both on facts as well as in law.
4. Being aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue went in appeal before the Income-tax Appellate Tribunal (in short 'the Tribunal'). The assessee in support of the order passed by the Commissioner of Income-tax (Appeals) filed a cross-objection. The case of the assessee was that the Revenue did not file any appeal against the deletion of Rs. 17,50,900 which was made on account of the refund issued to M/s. Valabh Refractories. It was contended that the Department had accepted the order of the Commissioner 'of Income-tax (Appeals) in so far as the deletion is concerned and, therefore, the Revenue could not have challenged the other addition which was not the basis of the reopening.
5. The Tribunal, as set forth, heard the matter at length and delivered the judgment on August 20, 2008, and remanded the matter to the Commissioner of Income-tax (Appeals) on the ground that the Commissioner of Income-tax (Appeals) had not passed a speaking order.
6. Questioning the order passed by the Tribunal, it is submitted by Mr. Sumit Nema, learned Counsel for the appellant, that the Tribunal has fallen into grave error by holding that the Commissioner of Income-tax (Appeals) had passed a cryptic and non-speaking order though it was obligatory on its part to deliver a judgment on the merits as the same was argued at length. It is urged by him that the Commissioner of Income-tax (Appeals) accepted the lack of jurisdiction and also addressed himself with regard to the merits of the case in paragraphs 6 and 7 which do exhibit a detailed discussion and, therefore, the Tribunal was not justified in remanding the matter on the ground that the Commissioner of Income-tax (Appeals) had passed a cryptic and non-speaking order. The learned Counsel has further canvassed that the Tribunal has failed to assign any reason as to why the order of the first appellate authority is a non-speaking one and in the absence of findings in this regard the order of remand is unjustified.
7. Mr. Sanjay Lal, learned Counsel appearing for the Revenue, supported the order passed by the Tribunal.
8. The singular question that arises for consideration is whether the Tribunal was justified in remanding the matter on the ground that the Commissioner of Income-tax (Appeals) had passed a cryptic and non-speaking order. To appreciate the said aspect, we have carefully perused the order passed by the Commissioner of Income-tax (Appeals) as well as that of the Tribunal. The Commissioner of Income-tax (Appeals) has dealt with the issue of jurisdiction in paragraphs 3 to 6 of the order. On a scrutiny of the same, it is noticeable that the Commissioner of Income-tax (Appeals) has ascribed reasons. The first appellate authority has also dealt with the case on the merits ascribing reasons and, on the basis of delineation of the facts, dislodged the order passed by the Assessing Officer. The Tribunal, as is evincible from the order, though had the benefit of paper book of more than hundred pages, referred to the grounds raised by the Revenue in paragraph 2 and the ground urged by the assessee in paragraph 3 and, thereafter, noted certain contentions of both the sides and stated thus:
6. After hearing the rival submissions, and on a careful perusal of the material available on record, it is observed that the learned Commissioner of Income-tax (Appeals) has not passed any speaking order in annulling the order passed under Section 143(3)/147. The relevant observation/contents of the learned Commissioner of Income-tax (Appeals) at paragraph No. 2 are as under:
The facts of this case is that the appellant was filing reruns of income before the Income-tax Officer, Ward 1(1), Jabalpur, for the last several years. On the midnight of March 31, 2005, the Assistant Commissioner of Income-tax, Circle 2(1), Jabalpur, affixed a notice under Section 148 of the Income-tax Act, 1961, in the premises of the assessee. The assessee objected to the legal validity of services of notice by the Assistant Commissioner of Income-tax, Circle 2(1), Jabalpur, in the aforesaid manner also, inter alia, raising objections regarding jurisdiction of the Assistant Commissioner of Income-tax, Circle 2(1), Jabalpur. In view of the silence of the Assistant Commissioner of Income-tax, Jabalpur, the assessee had filed a writ petition before the hon'ble Madhya Pradesh High Court. The High Court while disposing of the assessee's appeal directed the Department to dispose of the basic objections raised by the assessee before proceeding with reassessment, This Department did wherein objections raised by the assessee were treated as not valid.
Finally, he concluded that notice issued under Section 148 by the learned Assistant Commissioner of Income-tax was without jurisdiction, the assessment order stands annulled.
7. Since the learned Commissioner of Income-tax (Appeals) has not passed any speaking order in annulling the order passed under Section 143(3)/147, we consider it fit case to set aside the same to the file of the learned Commissioner of Income-tax (Appeals) to readjudicate the legal issue of jurisdiction first and then decide the case on the merits, if required. We order accordingly.
9. In our considered opinion, the Commissioner of Income-tax (Appeals) had passed a reasoned order while the Tribunal has passed a cryptic order. In this context, we may refer with profit to the decision rendered in Shivsagar Veg. Restaurant v. Asst. CIT : [2008] 220 CTR 563 (Bom) : [2009] 317 ITR 433, wherein it has been held as under (page 435):
6. It is needless to mention that the appellate authority being the final authority of facts it is incumbent upon it to appreciate the evidence, consider the reasons of the authorities below and assign its own reasons as to why he disagrees with the reasons and findings of the authority below. Merely because the Tribunal happened to be an appellate authority it does not get right to brush aside reasons or findings recorded by the first authority or the lower appellate authority. It has to examine the validity of the reasons given and findings recorded. Mere recording that the conclusions arrived at did not require discussion of the case law and other propositions of law is no consideration. Merely by saying that the findings of the Commissioner of Income-tax (Appeals) are just, fair and in accordance with the law can hardly tantamount to giving reasons. The absence of reasons has rendered the impugned order of the Tribunal unsustainable.
7. The reasons introduced clarity in an order. The requirement of indicating reasons has been judicially recognised as imperative by the apex court in the case of Suga Ram v. State of Rajasthan : [2006] 8 SCC 641.
8. The above view was reiterated by the apex court in the case of Jawahar Lal Singh v. Naresh Singh : [1987] 2 SCC 222. The court has also referred to the judgment of Lord Denning, M.R. in Breen v. Amalgamated Engg. Union [1971] 1 All ER 1148 (CA) wherein the court observed: 'The giving of reasons is one of the fundamentals of good administration'. In Shri Swamiji of Shir Admar Mutt v. Commissioner, Hindu Religious and Charitable Endowment Department : AIR 1980 SC 1, the Supreme Court noted with approval the legal maxim cessante ratione legis cessat ipsa lex, which means reason is the soul of law and when reason of any particular law ceases, so does the law. In State of West Bengal v. Atul Krishna Shah reported in : AIR 1990 SC 2205, the Supreme Court of India, reiterated that giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving justice, but also a valid discipline for the Tribunal itself. Therefore, statement of reasons is one of the essentials of justice. Judicial discipline to abide by declaration of law by this court, cannot be forsaken.
10. In view of the aforesaid enunciation of law, we have no hesitation in remanding the matter to the Tribunal as it was obligatory on the part of the Tribunal to adjudicate the lis on the merits.
11. Resultantly, the appeal preferred by the assessee is allowed. The order passed by the Tribunal is set aside and the matter is remanded to the Tribunal for adjudication of the matter by ascribing cogent and germane reasons after dealing with the factual issue in detail.