Case Laws on Requirement to pass reasoned order by ITAT: Gujrat High Court in Premkumar B. Rathi [2015] 59 taxmann.com 203 (Gujarat)

(1)		Omar Salay Mohamed Sait v. CIT [1959] 37 TR 151 (SC).
(2)		Board of Trustees of Martyrs Memorial Trust v. Union of India [2012] 10 SCC 734.
(3)		Real Estate Agencies v. State of Goa [2012] 12 SCC 170.
(4)		DIT (Exemption) v. Shia Dawoodi Bohra Jamat 2012(344) ITR 653/25 taxmann.com 90 (Guj)
(5)		Ramesh Chandra M Luthra v. Asstt. CIT [2002] 257 ITR 460/[2003] 128 Taxman 765 (Guj)
(6)		Mercury Metals (P) Ltd. v. Asstt. CIT [2002] 257 ITR 297/122 Taxman 737 (Guj).
(7)		Rajesh Babubhai Damania v. CIT [2001] 251 ITR 541/[2002] 122 Taxman 614 (Guj).
(8)		Mangalore Ganesh Beedi Works v. CIT [2005] 273 ITR 56/142 Taxman 720 (SC).
(9).		Gautam Harilal Gotecha v. Dy. CIT (Investigation) [2006] 281 ITR 283(Guj).
(10)		S.J. & S.P. Family Trust v. Dy. CIT (Assessment) [2005] 277 ITR 557 (Guj).
(11)		CIT v. Surat Beverages Ltd. [2013] 219 Taxman 39/37 taxmann.com 197 (Guj.). 6. In the case of Omar Salay Mohamed Sait (supra) as far as back in the year 1959, the Hon'ble Supreme Court had an occasion to consider the judgment of the Tribunal - Appellate Tribunal. In the aforesaid decision, the Hon'ble Supreme Court has specifically observed and held as under: "We are aware that the Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were was the reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this court." 6.1 In the case of Ramesh Chandra M Luthra (supra) the Division Bench has observed that it is the duty of the Tribunal to consider all facts and give reasons for its decision. Relying upon the decision of the Hon'ble Supreme Court in the case ofOmar Salay Mohamed Sait (supra), in the said decision the Division Bench has further observed and held that while deciding the appeal it is necessary, that every fact for and against the assessee must have been considered with due care by the Tribunal and it must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were was the reached on the evidence on record before it. It is further observed in the said decision that it is incumbent on the Tribunal before upsetting the order of Commissioner of Income Tax (Appeal) to consider the reasons given by that authority for its decision. 6.2 In the case of Mercury Metals (P.) Ltd. (supra), the Division Bench of this Court quashed and set aside the order passed by the learned Appellate Tribunal and remanded the matter to the learned Tribunal for reconsideration on the ground that it had committed an error in exercise of its jurisdiction by not drawing its attention to the reasoning given by the Commissioner of Income Tax against whose order the appeal was preferred by the revenue for its consideration. 6.3 In the case of Rajesh Babubhai Damania (supra), the Division Bench has observed that it is the duty of the Tribunal to ascertain the reasons given by the Commissioner of Income Tax (Appeals) in whose order the order of the Assessing Officer had merged. 6.4 In the case of Gautam Harilal Gotecha (supra) the Division Bench of this Court has observed and held that the Appellate Tribunal is the final fact finding body in the hierarchy of the appellate jurisdiction under the Act and its order is supposed to reflect not only the facts and contentions of the rival parties before it, but the issues which arise for its consideration and the reasons for deciding the issues. In the said decision, non reasoned and non speaking, incoherent and vague order by the Tribunal is considered to be a frivolous order. In the said decision, even the Division Bench of this Court had shown in its strong disapproval of passing such order by the learned Appellate Tribunal. In the said decision, the Division Bench had also observed that Court can only hope that the Tribunal applies its mind and take care in future to ensure that the approach of the Tribunal undergoes a change and it may regain its past glory. While remanding learned Tribunal to apply its mind the Division Bench was constrained to observe as under: "This Court has been constrained to remind the Tribunal of its duties time and again, but one can only lament that the Tribunal, it appears, is not amenable to constructive suggestions. The Tribunal fails to appreciate the basis fact that by making such slipshod orders, it only generates unwarranted litigation, apart from putting the parties to unwarranted hardship, harassment and cost for no fault of theirs." 6.5 In the case of S.J & S.P Family Trust (supra) the Division Bench again emphasised the duty of the Appellate Tribunal to give reasons for its decision. In the said decision, it is once again observed that the procedure required to be adopted by the Tribunal so as to ensure that the order is an appealable order, must be one which reflects not only its conclusion, but the decision making process also. It is further observed that the reasons however brief are the soul and backbone of an order and in the absence of such reasons, which must be reflected on a reading of the order, it is not possible to state as to whether the Tribunal was aware as to what the controversy was before it and what were the factors pro and con in relation to the said issue and the reasons which ultimately weighed with the Tribunal for arriving at a decision. 6.6 In the case of Shiv Dawoodi Bohra Jamat (supra) the Division Bench of this Court again considered the judgment of the Tribunal and remanded the appeal to the Tribunal by observing that the Tribunal should give reasons for its decisions. Mere mention of Supreme Court or High Court cases without specifying how they are applicable to the case is not sufficient. In the said decision, it is again reiterated and emphasized that the Tribunal is the final fact finding authority, hence the order of the Tribunal should reflect findings of fact as well as the reasons for arriving at its conclusion on the basis of the findings recorded by it. 6.7 In the case of Surat Beverages Ltd (supra), once again the Division Bench of this Court reiterated and emphasized that the order passed by the learned Appellate Tribunal must be a reasoned and speaking order on the issue involved in the matter. In the said decision, the Division Bench also noted that while taking up such appeal, we come across similar non speaking and non reasoned orders passed by the learned ITAT and passing order on estimate basis by deleting and/or making addition by observing that "to meet with the ends of justice". In para 5, the Division Bench has observed and held as under: "[5.0] While taking up tax appeals, we have come across similar non-speaking and non-reasoned orders passed by the ITAT and passing the order on estimate basis by deleting and/or making addition by observing that to meet with the ends of justice. It cannot be disputed that ITAT, while deciding the appeals, is required to pass the order judiciously and it should reflect that the Tribunal has applied the mind on a particular issue. ITAT is a judicial authority and it should exercise the powers under section 254 of the Act and as per sub-section (4) of section 254 save as provided in section 256 or section 260A, orders passed by the appellate tribunal on appeal shall be final. Therefore, a great care should be taken by the ITAT while exercising the powers under section 254 of the Act and while deciding the appeals in exercise of powers under section 254 of the Act. It is true that sub-section (1) of section 254 provides that the appellate tribunal may pass such orders as it thinks fit, but that does not mean that the tribunal is not required to assign any reasons and/or the Tribunal is not required to pass a speaking order. In the case of Ravi Yashwant Bhoir v.Collector [2012] 4 SCC 407, the Honble Supreme Court had an occasion to consider the rationale behind the requirement of recording reasons in order. In the said decision, it is observed and held by the Honble Supreme Court that requirement of recording reasons is one of the principles of natural justice. It is further observed and held by the Honble Supreme Court that right to reasons is an indispensable part of sound judicial system. In the said decision the Honble Supreme Court in paras 44 and 46 has observed as under: 44. This Court while deciding the issue in Sant Lal Guptaand Ors. v. Modern Co-operative Group Housing Society Ltd., placing reliance on its various earlier judgments held as under: (SCC pp.345-46, para 27) 27. It is a settled legal proposition that not only administrative but also judicial orders must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice delivery system, to make it known that there had been proper and due application of mind to the issue before the court and also as an essential requisite of the principles of natural justice. 3... The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the court concerned had really applied its mind.* The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is the principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected." 46. The emphasis on recording reason is that if the decision reveals the 'inscrutable face of the sphinx', it can be its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. In other words, a speaking out, the inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. In the case of Board of Trustees of Martyrs Memorial Trust v. Union of India [2012] 10 SCC 734, in para 22, the Honble Supreme Court has held as under: 22. Brevity in judgment writing has not lost its virtue. All long judgments or orders are not great nor are brief orders always bad. What is required of any judicial decision is due application of mind, clarity of reasoning and focused consideration. A slipshod consideration or cryptic order or decision without due reflection on the issues raised in a matter may render such decision unsustainable. Hasty adjudication must be avoided. Each and every matter that comes to the court must be examined with the seriousness it deserves. In the case of Real Estate Agencies v. State of Goa reported in [2012] 12 SCC 170 while emphasizing the necessity of giving reasons by the Courts/Tribunals/Judiciary, it is held that, manner of reaching a decision and reasons for reaching such decisions are sacrosanct to judicial process. While emphasizing the need to pass a reasoned order, the Honble Supreme Court in the case of Certified Area Committee v. Additional Director, Consolidation reported in [2002] 10 SCC 87, has held as under: The reasons are the flesh and blood of Judicial adjudication and such reasons must be shown in the orders which are liable to be challenged in the Superior Court. Considering the aforesaid law laid down by the Honble Supreme Court and the requirement of passing a reasoned and speaking order, considering the facts of the case on hand and the impugned common judgment and order passed by the ITAT, the impugned judgment and order cannot be sustained. No reasons at all have been assigned by the learned Tribunal while dismissing the appeal preferred by the Revenue and partly allowing the appeal preferred by the assessee and sustaining the addition of Rs.30 lac. The impugned order passed by the learned Tribunal is absolutely on estimate basis without assigning any reasons and as such no reasons have been assigned at all while dismissing the appeal preferred by the Revenue. As stated hereinabove both, the Revenue as well as the assessee are aggrieved by the impugned judgment and order and a common grievance is made that the impugned order passed by the learned ITAT is a non-speaking and non-reasoned order and it is prayed to remand the matter to the ITAT for its fresh decision." 6.8 In the case of Mangalore Ganesh Beedi Works (supra) the Hon'ble Supreme Court has observed and held that in an appeal to the High Court, even while affirming the order, the High Court will have to deal with point urged before it and the reasons for affirmation are required to be given though not elaborately. In the said decision, it is observed by the Hon'ble Supreme Court that recording of reason is a part of fair procedure. The reasons are the harbinger between the mind of the maker of the decision in the controversy and the decision on conclusion arrived at. They substitute subjectivity with objectivity. Failure to give reasons amounts to denial of justice. 7. Despite the above decisions of the Hon'be Supreme Court as well as this Court drawing the attention of the learned Appellate Tribunal that it is the duty to pass reasoned and speaking order on the issue; to consider the order passed by the learned CIT(A) and the reasoning given by the learned CIT against which the appeal is preferred before it and even while making estimate either on deletion and/or addition to pass speaking and reasoned order in respect of such estimation either on deletion and/or addition, it appears that massage has not reached to the Appellate Tribunal. Despite the above decisions and even the hope and trust by the Division Bench that in future the Appellate Tribunal to take care and pass speaking and reasoned order, the Appellate Tribunal had continued to pass such non speaking and non reasoned order. The Appellate Tribunal is bound to obey the decision of the Hon'ble Supreme Court as well as High Court. They cannot ignore the observations and the decisions of the Hon'ble Supreme Court as well as this Court. Despite the specific observations and the directions of the Hon'ble Supreme Court as well as this Court in various decisions which are referred to and reproduced herein above, the Appellate Tribunal has continued to pass non speaking, unreasoned order and are passing non speaking order on estimate without supportive reasons and the grounds which as such would tantamount to disobedience to the decisions of the Hon'ble Supreme Court as well as High Court and the same cannot be permitted to be continued and same deserves serious consideration. Even in the case of estimation, though permissible, if the learned Commissioner of Income Tax has passed an order by giving cogent reasons, the Tribunal on an appeal either by the Revenue and/or assessee is required to apply its mind and consider the reasons given by the learned CIT(A) and is required opine where the learned CIT(A) had committed an error and whether the order passed by the learned CIT(A) is required to be to be interfered with or not. Even if the learned Tribunal is having the discretion to pass any order of deletion and/or allowances on estimation, such discretion is required to be exercised judiciously and it must be supported by cogent reasons and it must reflect the application of mind by the learned Appellate Tribunal on the issue. Therefore, once again the observations made by the Hon'ble Supreme Court as well as this Court in catena of decisions referred to herein above are reiterated and all the Income Tax Appellate Tribunal are hereby directed to consider the observations made in catena of decisions of the Hon'ble Supreme Court as well as Division Bench of this Court referred to herein above as well as observations made in the present order while deciding the appeals against the order passed by the learned Commissioner of Income Tax (Appeals), in its true spirit, failing which the matter shall be viewed very seriously and it would tantamount to disobedience of the order/orders passed by the Higher Courts/Forum. This Court is constrained to make the above observations as despite specific observations made by the Division Bench of this Court that this Court is constrained to remind the Tribunal to its duty time and again, but one can only lament that the Tribunal, it appears, is not amenable to constructive suggestions and the Tribunal fails to appreciate the basic fact that by making such slipshod orders, it only generates unwarranted litigation, apart from putting the parties to unwarranted hardship, harassment and cost for no fault of their and despite the reminder to the Appellate Tribunal with a hope that the Tribunal applies its mind and take care in future to ensure that the approach of the Tribunal undergoes a change and it may regain its past glory, the things have not much improved and the Appellate Tribunals have continued to pass such non speaking and non reasoned order and has continued to pass orders on estimation without any supporting reasons.