K.S. Paripoornan, J.
1. These are connected cases. Income-tax Reference No. 100 of 1986 and Income-tax Reference No. 116 of 1989 go together. They relate to the assessment year 1976-77, the accounting year ending December 31, 1973. Income-tax Reference No. 97 of 1989 relates to the assessment year 1978-79, the accounting year ending December 31, 1977. It is at the instance of the Revenue that certain questions of law are referred in all these three cases for the decision of this court by the Income-tax Appellate Tribunal. The common assessee is the respondent in all these cases. All the relevant papers to be looked into for the purpose of deciding these references are contained in the paper book filed in Income-tax Reference No. 100 of 1986. In Income-tax Reference No. 100 of 1986, one question has been referred for the decision of this court by the Income-tax Appellate Tribunal for the assessment year 1976-77. For the same year, as directed by this court, on motion by the Revenue, in O. P. No. 1151 of 1987, the Income-tax Appellate Tribunal has referred two additional questions for the decision of this court and they form the subject-matter of Income-tax Reference No. 116 of 1989. (Relevant papers are in the paper book relating to Income-tax Reference No. 100 of 1986). In Income-tax Reference No. 97 of 1989, only one question has been referred by the Income-tax Appellate Tribunal for the decision of this court, at the instance of the Revenue.
2. The questions referred to in Income-tax Reference No. 100 of 1986 and Income-tax Reference No. 116 of 1989, on the one hand (for the assessment year 1976-77), and the sole question referred to in Income-tax Reference No. 97 of 1989 (for the assessment year 1978-79) are as follows :
'Income-tax Reference No. 100 of 1986 :
Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 23,076 by way of E. C. G. C. premium is entitled to weighted deduction under Section 35B of the Income-tax Act Income-tax Reference No. 116 of 1989 :
1. Whether, on the facts and in the circumstances of the case, and in view of the fact that 'the assessee had declared the value of stock as on December 19, 1975, at Rs. 37,74,953 in a statement furnished to the bank, the Tribunal is right in relying on the profit and loss account wherein the assessee had declared the closing stock value at Rs. 3,22,061 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that 'there is no need to interfere with the order of the Commissioner of Income-tax (Appeals) in his deleting the addition of Rs. 12,65,658 although for a different reason' and is not the deletion and the reasons of the appellate authorities for the deletion wrong, untenable, unwarranted, illogical and unsupported by relevant materials?
Income-tax Reference No. 97 of 1989 : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in deleting the addition of Rs. 18,85,000 as difference in closing stock made by the Income-tax Officer ?'
3. We heard counsel on both sides. Mr. P.K.R. Menon, senior counsel, appeared for the Revenue, and Mr. P.C. Chacko, advocate, appeared for the assessee/respondent in all the cases. The sole question referred in Income-tax Reference No. 100 of 1986 raises the controversy as to whether the expenditure of Rs, 23,076 incurred by the assessee by way of E. C. G. C. premium will be entitled to weighted deduction under Section 35B of the Income-tax Act. The Appellate Tribunal, in paragraph 5 of its order dated April 19, 1985, held that the assessee is entitled to weighted deduction under Section 35B of the Act as held by the Commissioner of Income-tax (Appeals) in accord with the decision of the Special Bench of the Tribunal in the case of J. Hemchand and Co. Counsel for the Revenue brought to our notice the unreported decision of this court in CIT v. Indian Emporium (Income-tax Reference No. 139 of 1985). That is a judgment rendered by a Bench of this court, dated June 14, 1989, wherein one of us was a party. An identical question arose for consideration in the said case. It was noticed in the said decision that the decision of the Special Bench of the Tribunal in J. Hemchand and Co.'s case is pending in appeal before the Supreme Court. Even so, the Central Board of Direct Taxes has issued a circular dated December 28, 1981, substantially adopting the decision of the Special Bench of the Tribunal in J. Hemchand and Co.'s case and the assessee will be entitled to the benefit of the said circular as an administrative relief. In these circumstances, while declining to answer the question referred to this court in that case, which is similar to the one referred to this court in Income-tax Reference No. 100 of 1986, this court directed the Income-tax Appellate Tribunal to restore the appeal to file for the limited purpose of considering as to whether and to what extent the assessee will be entitled to weighted deduction under Section 35B of the Act in the light of the circular issued by the Central Board of Direct Taxes dated December 28, 1981. The said circular is referred to in two decisions in CIT v. Novelty Trading Corporation : [1984]150ITR453(All) at page 454, and CIT v. Jay Engineering Works : [1984]149ITR297(Delhi) , at page 298. The said circular has been extracted in detail in a Bench decision of this court in CIT v. Kerala Nut Food Co. : [1991]192ITR585(Ker) .
4. Following the earlier Bench decision of this court in Income-tax Reference No. 139 of 1985, dated June 14, 1989, we direct the Income-tax Appellate Tribunal to apply its mind to the circular issued by the Central Board of Direct Taxes dated December 28, 1981, to the extent it affords administrative relief, by adopting the decision in J. Hemchand and Co.'s case, and adjudicate the matter afresh regarding the relief the assessee is entitled to by way of weighted deduction under Section 35B of the Income-tax Act in respect of the premium paid to the Export Credit Guarantee Corporation. We decline to answer the sole question referred to this court in Income-tax Reference No. 100 of 1986, but dispose of the reference as detailed above by directing the Income-tax Appellate Tribunal to consider the question afresh in the light of the circular of the Central Board of Direct Taxes dated December 28, 1981.
5. The more important controversy raised in this batch of cases is covered by the two questions referred to this court in Income-tax Reference No. 116 of 1989 and the sole question in Income-tax Reference No. 97 of 1989. A common aspect arises for consideration therein. The assessee-firm had obtained various loans from the bank while carrying on its business. The assessee had filed financial statements before the Income-tax Officer detailing or specifying the value of the closing stock. For example, for the assessment year 1976-77, the assessee had admitted the value of the closing-stock in the statement filed before the Income-tax Officer at Rs. 3,22,062. On enquiry, the Income-tax Officer found that the assessee had declared to the bank the value of the stock as on December 19, 1975, at Rs. 37,74,953 and the closing stock as on December 31, 1975, at Rs. 19,88,145. Admittedly, there was great disparity or variance in the figure furnishing the closing stock to the Department and to the bank. From the very beginning, the assessee pleaded before the Income-tax Officer that, in order to obtain higher loan facilities from the bank, it was in the habit of inflating its stock both in terms of quantity and value. The assessee's specific plea was that the figures given to the bank did not represent the actual closing stock. The Income-tax Officer declined to accept the above plea. According to him, the assessee had declared the value of stock as on December 19, 1975, at Rs. 37,74,953, in a statement furnished to the bank. He worked out the closing stock as on December 31, 1975, by taking the stock declared to the bank as on December 19, 1975, at Rs. 37,74,953 and by adding to the same the purchases from December 19, 1975, to December 31, 1975, and after deducting exports during the period and the difference in opening stock as on January 1, 1975, of Rs. 20,10,658. In this process, he arrived at the figure of Rs. 15,87,720 and fixed the said figure as the closing stock of the assessee as on December 31, 1975. The assessee's closing stock shown to the Department was only Rs. 3,22,062. So, the Income-tax Officer added the difference between Rs. 15,87,720 and Rs. 3,22,062, i.e., Rs. 12,65,658 as the closing stock of the assessee, for the assessment year 1976-77. In appeal, the Commissioner of Income-tax (Appeals) held that there were two types of inflations in stock. One was inflation in the quantity of stock declared to the bank and the other was the inflation in the value as per unit of the stock declared. He held that no addition could be made for the second, i.e., inflation in the value as per unit of the stock declared. Regarding the first type of inflation, the Commissioner of Income-tax (Appeals), after examining the employee of the assessee-firm who was personally present, and the other relevant papers, held that the stock declared to the bank were not true and cannot be acted upon. The Commissioner of Income-tax (Appeals) categorically held that the inflated figures were shown to the bank only for the purpose of obtaining loans. On the above hypothesis, the first appellate authority--Commissioner of Income-tax (Appeals)--held that there is no justification for making an addition to the income, based on the declaration given to the bank, since the stock declared to the bank was not true and cannot be acted upon. The matter was taken in appeal by the Revenue on the above aspect and by the assessee on certain other aspects and that is how Income-tax Appeal No. 231/(Coch) of 1982 (filed by the Revenue) and Income-tax Appeal No. 138/(Coch) of 1982 (filed by the assessee)--both for the assessment year 1976-77--were heard together and disposed of by a common order dated April 19, 1985, by the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal, after noticing the rival pleas put forward by the Revenue as well as the assessee and after noticing the reasoning and finding of the Commissioner of Income-tax (Appeals), upheld the conclusion of the Commissioner of Income-tax (Appeals) on a different reasoning. The Appellate Tribunal did not consider as to whether the plea of the assessee that it was in the habit of inflating its stock, both in terms of quantity and value in the statements furnished to the bank and such inflation was so made in order to obtain higher loan facilities, was true and correct. Instead of adjudicating that plea, which was put forward by the assessee from the beginning and substantially accepted by the Commissioner of Income-tax (Appeals), the Appellate Tribunal, on an entirely different reasoning, upheld the conclusion arrived at by the Commissioner of Income-tax (Appeals). According to the Appellate Tribunal, notwithstanding such discrepancies in the statements furnished to the bank and to the Department by the same assessee for the assessment years 1975-76, 1977-78, 1979-80 and 1980-81, the Department had acted and conducted itself in accord with the plea of the assessee and having done so, the Revenue should have adopted the same procedure for all the assessment years and should not single out certain assessment years only. In other words, in evaluating the plea of the assessee that, in order to obtain higher loan facilities from the bank, it was in the habit of inflating the stock and so no sanctity can be given to the stock statement as on December 31, 1975, and in view of the non-demur to the said plea by the Revenue for the year immediately preceding the relevant assessment year and also for subsequent years, the Revenue should have adopted the same procedure for all the assessment years and should not single out certain assessment years only. Briefly stated, the Appellate Tribunal has opined that, in the case of the same assessee, when identical questions come up for consideration for different assessment years, the Revenue should not be permitted or allowed to adopt inconsistent stands. It is on this reasoning that the Tribunal upheld the conclusion of the Commissioner of Income-tax (Appeals) without adjudicating as to whether the plea of the assessee that it furnished an inflated statement to obtain higher credit from the bank was true and tenable in law.
6. Both sides covered a wide spectrum in order to substantiate their respective view-points. Counsel for the Revenue attacked the reasoning and conclusion of the Appellate Tribunal as perfunctory, laconic and illegal. It was argued that the Appellate Tribunal failed to adjudicate the main plea put forward by the parties, side-tracked the real issue and upheld the conclusion of the Commissioner of Income-tax (Appeals) on a different reasoning which lacks legal basis and is also otherwise unsubstantial and vague. On the other hand, counsel for the assessee, Mr. P.C. Chacko, defended the order of the Appellate Tribunal as legal, proper and reasonable ; it was argued that, in effect, the Tribunal concurred with the Commissioner of Income-tax (Appeals) on facts, that the stock furnished by the assessee to the bank is inflated and unreal and cannot form the basis for the addition and that was so having regard to the conduct and act of the Revenue for the earlier and later years when such 'reality' of the situation was given effect to, about which the Tribunal made reference and sustained the conclusion of the Commissioner of Income-tax (Appeals). The Tribunal only gave effect to the state of affairs which resulted in a 'consistent pattern' in the matter regarding the assessee for all the years on a particular aspect and this is reasonable and fair. The Tribunal acted only properly in doing so.
7. Counsel for the Revenue, Mr. P.K.R. Menon, highlighted the following aspects in attacking the order of the Appellate Tribunal :
(i) The doctrine of res judicata or estoppel will not apply to income-tax assessments. Each year is an independent unit. The findings on questions of fact in an year may be good and cogent evidence in subsequent years when the same question falls to be determined. But they are not final and conclusive. Reliance was placed on the decision in M.M. Ipoh v. CIT : [1968]67ITR106(SC) at page 118.
(ii) The fact that a wrong evaluation or method or principle was given effect to or followed in one year cannot form the basis for an assessee to insist that the same principle should be followed for other years. There is no vested right in an erroneous order. Reference was made to the decision in CIT v. Central India Industries Ltd. : [1971]82ITR555(SC) , at page 560.
(iii) If at all, the principle of estoppel can apply only to the same assessment and not to different or successive assessments. In other words, in making an assessment for a particular year, the Revenue may not adopt an inconsistent attitude or yardstick. Reliance was placed on the decision in M.K. Mohammad Kunhi v. CIT : [1973]92ITR341(Ker) .
(iv) The assessee itself furnished the statement to the bank regarding the 'stock'. It is bound by such solemn statement. It cannot be departed from. The assessee cannot adopt inconsistent stands in such matters, by giving different statements to the bank and to the Income-tax Department. The Inspecting Assistant Commissioner as also the assessing authority have worked out the closing stock as on December 31, 1975, as is evident from paragraph 9 of the proceedings of the Inspecting Assistant Commissioner and also page 28 of the paper book. If the assessee was aggrieved by any different principle adopted for a different year, he should have taken up the matter in appeal. But, such act or conduct adopted for a different year cannot in any way deter or preclude the Department from taking a different stand for another year.
8. On the other hand, counsel for the assessee, Mr. P.C. Chacko, laid stress on the following aspects :
(i) The Commissioner of Income-tax (Appeals) accepted the plea of the assessee that the 'stock' furnished to the bank is unreal and inflated. That was so done after adverting to materials available in the case. Cogent reason has been given for accepting the plea of the assessee. The Appellate Tribunal adverted to the entire history of the case--the assessment order passed, the findings thereon, the appellate order passed by the Commissioner of Income-tax (Appeals) and the relevant findings and the rival arguments put forward by the Revenue and the assessee before the Tribunal--and then upheld the conclusion of the Commissioner of Income-tax (Appeals). The entire order of the Appellate Tribunal should be read as a whole to understand what the Appellate Tribunal has said in the matter. Reliance was placed on the decision in CIT v. Karam Chand Thapar and Brothers P. Ltd. : [1989]176ITR535(SC) .
(ii) Though the principle of res judicata may not apply, the findings or the conduct in an earlier year will be cogent evidence when an identical question of fact or law comes up for consideration in a later year. Reference was made to the decisions in M.M. Ipoh v. CIT : [1968]67ITR106(SC) , at page 118 ; B.V. Koradu v. Commr. of Agrl. I.T. : [1980]122ITR615(Ker) and CIT v. Velimalai Rubber Co. Ltd. : [1990]181ITR299(Ker) . In the absence of compelling circumstances, the previous decision should not be departed from. (See CIT v. Belpahar Refractories Ltd. : [1981]128ITR610(Orissa) .
(iii) The Appellate Tribunal has referred to the fact that, for the earlier assessment year and the subsequent assessment years, the Department has in effect accepted the conduct of the assessee and given effect to the reality of the situation--that the assessee has given an inflated figure of the closing stock to the bank and that did not represent the correct state of affairs. Having in terms accepted the said reality of the position or situation for prior years and for subsequent years, it was not open to the Revenue to pick out a particular year and to take an inconsistent stand. In other words, the Revenue cannot approbate and reprobate or blow hot and cold or adopt inconsistent positions. Reference was made to the decision of the Supreme Court in Nagubai Ammal v. B. Shama Rao, AIR 1956 SC 595 , highlighting the principle of approbate and reprobate. (See also Verschures Greameries Ltd. v. Hull and Netherlands Steamship Co, Ltd. [1921] 2 KB 608 and Kuppanna Gounder v. Peruma Gounder, AIR 1961 Mad 511, paragraph 15. Great stress was also laid that the Department cannot blow hot and cold or take up inconsistent positions, by reference to the following decisions : Deoniti Prasad Singh v. CIT : [1947]15ITR165(Patna) ; C.T. Narayanan Chettiar v. CIT : [1966]60ITR690(Mad) and Baijnath Brijmohan and Sons P. Ltd. v. CIT : [1986]161ITR234(Bom) .
9. We considered the rival pleas aforesaid with care and evaluated them in the light of the appellate order passed by the Appellate Tribunal. On a reading of the order of the Appellate Tribunal, we are left with the impression that the above rival pleas were never highlighted before the Appellate Tribunal. Even the basic premises have not been stressed or highlighted before the Appellate Tribunal, though an attempt has been made by both parties to explain the order of the Appellate Tribunal from the various angles now pressed before us for the first time. The various aspects pressed before us require scanning of the various materials in a very different perspective and questions of fact, the conduct of the parties and the circumstances in which the various pleas were taken up, or the assessments made, should be evaluated with care. In other words, the facts will have to be ascertained and evaluated. In the absence of relevant facts or findings, it will not be proper to adjudicate the various legal aspects, now stressed before us.
10. Reading the order of the Appellate Tribunal as a whole, we are left with the impression that the Tribunal has simply sidetracked the issue. We will extract the operative portion of the order of the Appellate Tribunal, dated April 19, 1985, in disposing of the appeal (paragraph 4.5):
'. . . . From the beginning it is the case of the assessee that in order to obtain higher loan facilities from the bank it was in the habit of inflating its stock, both in terms of quantity and value. From the statement (marked item No. 14 in the paper book filed by the assessee) filed by the assessee, it is clear that no additions have been made by the Department when the discrepancies were there in the stocks declared to the Department and the stock declared to the bank for the assessment years 1975-76, 1977-78, 1979-80 and 1980-81. When the assessee is urging that much reliance cannot be placed on the statements given to the bank for obtaining loans, it is not known why the Department has attached sanctity to the statement of stock given as on December 19, 1975, and why they have not given such equal sanctity to the stock statement given as on December 31, 1975. If at all the Department wanted to rely on the statements given to the bank, they should have adopted the same procedure for all the assessment years and not single out certain assessment years only. Further there is no reason for the Department for not treating the closing stock as on December 31, 1975, at Rs. 15,87,720 as adopted by them for the purpose of assessment year 1976-77 as the opening stock as on January 1, 1976, for the purpose of assessment year 1977-78. In these circumstances, there is no need to interfere with the order of the Commissioner of Income-tax (Appeals) in his deleting the addition of Rs. 12,65,658, although for a different reason. This ground is also decided against the Department.'
11. The Appellate Tribunal, in an earlier paragraph (paragraph 4), dealt with the plea of the Department that the Commissioner of Income-tax (Appeals) was in error in deleting the entire addition on account of excess stock fully accepting the arguments of the manager of the assessee-firm. In paragraph 4, the finding of the Income-tax Officer in the assessment order was adverted to. In paragraph 4.2, the plea of the assessee before the Commissioner of Income-tax (Appeals) is catalogued. In paragraph 4.3, the plea of the Revenue is highlighted. In paragraph 4.4, the stock statements as on December 31, 1974, and December 31, 1975, declared to the bank, letter dated June 28, 1980, from the assessee to the Indian bank, bank's letter dated November 7, 1970, to the assessee, a copy of the report dated April 28, 1980, by the statutory auditors of the Indian Bank, and other details are adverted to and also the plea of the assessee that the Department has not followed a 'consistent practice', in that, notwithstanding the discrepancy in the stock statement given to the bank, the Department has not made any addition in the earlier and later assessment years. It is after adverting to these aspects that the Appellate Tribunal came to its own decision in paragraph 4.5 (extracted hereinabove--paragraph 10 (see page 919)). We are stressing these aspects only to show that though there Was an elaborate review of the rival pleas put forward by the assessee and the Revenue before the Tribunal as also reference to various documents on which the parties placed reliance, the Appellate Tribunal preferred to base its decision highlighting only the inconsistent practice or stand taken by the Department for different assessment years. The Appellate Tribunal did not enter any definite finding on the merits, namely, whether, in the light of the admitted difference in the stock statements furnished to the Department and the bank, the plea of the assessee that it gave an inflated account of the stock to the bank to enable it to get higher margin of credit was true and borne out by records and even so whether it was a valid or tenable plea that could be urged by the assessee. That was the sole factor on which the Revenue as well as the assessee joined issue all along and a large volume of material was let in to adjudicate the said controversy. What deterred the Appellate Tribunal from entering a definite finding on that score is anybody's guess.
12. As stated by us earlier, in paragraph 9 of this judgment (see page 919), both sides explained the order of the Appellate Tribunal from different angles. We are of the view that the finding and conclusion of the Appellate Tribunal in paragraph 4.5 of its order is rather vague and ambiguous. The Appellate Tribunal highlighted two aspects in paragraph 4.5 of its order. It noticed the plea of the assessee that, in order to obtain higher loan facilities from the bank, it was in the habit of inflating its stock, both in terms of quantity and value. There were discrepancies in the stock declared to the Department and to the bank. It was so done by the assessee for the assessment years 1975-76, 1977-78, 1979-80 and 1980-81 also. The Revenue did not make any addition for the other years though the circumstances that prevailed were similar to the assessment year 1977-78, According to the Tribunal, the Department should have adopted the same procedure for all the assessment years and not single out certain assessment years only. This was the main reason which prompted the Tribunal to decline to interfere with the order of the Commissioner of Income-tax (Appeals) in deleting the addition. There was also a subsidiary reason, in that no reason existed for the Department in not treating the closing stock as on December 31, 1975, as adopted by them, for the assessment year 1976-77 as the opening stock as on January 1, 1976, for the purpose of the assessment year 1977-78. We are of the view that the subsidiary reasoning given is a matter which should be agitated by the assessee in any appeal that it may file from the assessment order for the assessment year 1977-78. Referring to the main reason given by the Tribunal for declining to interfere with the deletion of the addition ordered by the Commissioner of Income-tax (Appeals), we are unable to discern the exact legal basis on which the Tribunal held that the Department should adopt the same procedure for all the assessment years. Had the Tribunal in mind the principle of estoppel in stating so It is not clear. Will the principle of estoppel apply, if an inconsistent stand is taken for different years and not for the same year That requires an in-depth study. Or, had the Tribunal in mind only the morality of the stand taken by the Revenue in adopting different procedure for different years Is such an approach permissible or valid in law, is a matter which requires elucidation. When and in what circumstances the Department is precluded from taking an inconsistent stand, in a different year, is a matter which requires analysis on the legal basis. Or is it a case where the Tribunal had in mind the principle of 'election'--that a party cannot 'approbate and reprobate' or 'blow hot and cold' or 'play fast and loose', at the same time (See Spencer Bower, Third edition-Estoppel by Representation, page 359--paragraph 336). How far this species of estoppel applies, for all the assessment years is another aspect which requires investigation. We are posing the above queries just to highlight our difficulty in understanding the legal basis for the order of the Tribunal when it said that the Department should adopt the same procedure for all the assessment years and not single out certain assessment years only. What is the legal basis for stating this and what aspect operated in the mind of the Tribunal in coming to the said conclusion defies an answer. It is vague and ambiguous. It should be made clear ; then only, the further evaluation as to whether the basis on which it is so said and the conclusion is valid in law will arise for consideration. In coming to a definite conclusion on the above aspect, the rival pleas urged before us (stated by us in paragraphs 7 and 8 (see pages 917-918 supra) as also the problem in adjudicating the rival pleas which we have indicated in paragraph 9 (see page 919) hereinabove have their impact and role to play in reaching the decision.
13. We are also of the view that certain other aspects may also arise for consideration. It is trite law that statutory power should be exercised bona fide, reasonably and without negligence and for the purpose for which they were conferred. (See Halsbury's Laws of England, Third edition, volume 30, page 688, paragraph 1327). It is now well-settled by the decisions of the courts that a decision rendered by a statutory authority can be successfully attacked, if it is : (1) illegal or (2) unfair and (3) unreasonable or irrational. (See Balakrishna Pillai v. State of Kerala [1988] 2 KLT 1039. What these three labels connote has been explained in very many decisions. We do not know whether the Tribunal had in mind the view that the Revenue should act 'fairly' (and not arbitrarily) and so should adopt the same procedure for all the assessment years and not single out certain assessment years only. Was the Tribunal of the view that to adopt different procedure for different assessment years is unfair and arbitrary If this is the legal basis to sustain the order of the Tribunal, the matter may require a deeper analysis quantitatively and qualitatively in the light of the decisions of the Supreme Court in E. P. Royappa v. State of Tamil Nadu, : (1974)ILLJ172SC ; Ajay Hasia v. Khalid Mujib Sehrawardi, : (1981)ILLJ103SC and other similar cases. The matter has got far-reaching consequences, since the duty to act 'fairly' is an inbuilt safeguard enshrined in Article 14 of the Constitution of India. This is not a plea akin to estoppel, but stems from a constitutional guarantee under Article 14 of the Constitution of India. That is why we stated that the matter has got various dimensions. The same aspect can be viewed from a different focus also. Was the Tribunal of the view that failure to adopt the same procedure for all the assessment years and singling out certain assessment years only is unreasonable or irrational In other words, consistency is a hallmark of being reasonable. This aspect is different from fairness and is based on the Wednesbury principle (Associated Provincial Picture Houses Ltd, v. Wednesbury Corporation [1948] 1 KB 223 )--see G.B. Mahajan v. Jalgaon Municipal Council, : AIR1991SC1153 . In an article, 'Beyond Wednesbury : Substantive Principles of Administrative Law' (1987 Public Law, 368 at page 377) the authors Jeffrey Jowell and Anthony Lester deal with the principle of consistency in these words:
'The principle of consistency is applied without hesitation in community law. It was confirmed at least tentatively in English law in H. T. V. Ltd. v. Price Commission [1976] ICR 170 and in In re Preston [1985] 1 A. C. 835 where it was acknowledged that fairness requires officials to follow their rules in like cases and not to breach their own contracts or representations. In the recent case of Asif Khan, the Court of Appeal held that the home office was bound by the terms of a circular although there was no prejudicial reliance upon it.'
14. How far the above statement of the law is applicable is a moot question.
15. In the light of the above discussion, we hold that the Appellate Tribunal has failed to enter a decision in accordance with law. The appellate order rendered by the Appellate Tribunal is vague and ambiguous. The Appellate Tribunal has failed to consider very important points and aspects that arose for consideration. It has abruptly concluded that the Department cannot take inconsistent stands for different years and in that perspective affirmed the decision of the Commissioner of Income-tax (Appeals) which was rendered on a different finding. In such circumstances, we are of the view that it is not possible or proper to answer the two questions referred to this court in Income-tax Reference No. 116 of 1989 and the sole question in Income-tax Reference No. 97 of 1989 without causing injustice to the parties. Therefore, we decline to answer the two questions referred to this court in Income-tax Reference No. 116 of 1989 and the sole question in Income-tax Reference No. 97 of 1989. At the same time, we direct the Income-tax Appellate Tribunal to restore the appeals to its file and dispose of the appeals in accordance with law and in the light of the observations contained herein. We are fortified in doing so in the light of the decisions of the Supreme Court in CIT v. Greaves Cotton and Co. Ltd. : [1968]68ITR200(SC) , CIT v. Indian Molasses Co. P. Ltd. : [1970]78ITR474(SC) and the Bench decision of this court in CIT v. Seshasayee Bros. (Travancore) Pvt. Ltd. : [1976]102ITR372(Ker) .
16. As stated in paragraph 4 of the judgment, we decline to answer the sole question referred to this court in Income-tax Reference No. 100 of 1986 ; but we direct the Appellate Tribunal to consider that question afresh in the light of the circular of the Central Board of Direct Taxes dated December 28, 1981.
17. The references are disposed of as above.
18. A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.