1999 PLP 1931 (PTD)

Counsel for the petitioners has questioned the validity of the notice on two grounds: (a) Reasons have not been communicated despite demand after compliance with the notice in regard to return. Notice under section 148 of the Act is a serious proceeding resulting in dislodgement of earlier proceeding and eventual order. No person should be compelled to face another innings of assessment without disclosure of reasons in an esoteric manner. The notice, thus, merits to be mortalished. (b) Reasons are now furnished during the course of this petition. These are to a large extent irrelevant and inadequate. Irrelevance and irrationality are recognised grounds of judicial review and affect the very jurisdiction of the authority. The notice is, thus, without jurisdictional competence and deserves to be quashed. Counsel for the respondents has dubbed both the grounds merit less and prayed for dismissal of the petition on the fulcrum of remedy available under the Act itself. It is contended that communication or disclosure is not essential and that existence is not disputed. Shri Bagadia has placed reliance on Thanthi Trust v. I.T.O. (1973) 91 ITR 261 (Mad.); British Electrical and Pumps (P.) Ltd. v. I.T.O. (1978) 113 ITR 143 (Cal.) and K. M. Bansal v. C.I.T. (1992) 195 ITR 247 to contend that communication of reasons are unavoidable and essential for tenability of the proceedings under section 148 of the Act. Section 147(a) postulate two conditions. Ore that the officer must, on the basis of material facts on record, prima facie, be satisfied that .the income, exigible to tax, had escaped assessment and two that escapement is attributable to the omission or failure on the part of the assessee to fully and truly disclose all material facts necessary for proper assessment. These are conditions precedent to the exercise of jurisdiction under section 147 read with section 148 of the Act. Even if the notice revealed no satisfaction, yet it can be sustained if the record disclosed it. Law is settled. In I.T.O. v. Biju Patnaik (1993) 188 ITR 247 (SC) and Phool Chand Bajrang Lal v. I.T.O. (1993) 203 ITR 456 (SC) the position of law has been stated in classic terms. As to the ground (a) it needs to be stated that when the aforesaid conditions alone confer the jurisdiction, then it becomes all the more obligatory on the part of the authority concerned to disclose and communicate the reasons for appreciation and proper defence at least on demand after submission of the return in compliance with the notice. At that stage, refusal is unwarranted in law and citation of absence of provision in the Act tantamounts to closure of the eyes to realities. Law in fact permits not privilege in that behalf. The assessee is entitled to contest .the issue effectively. This is possible only on obtaining the reasons. It cannot be gainsaid that the satisfaction of the conditions, being sine qua non, can be judged only on the basis of the reasons. Refusal is, thus, arbitrary and prejudicial. However, for this lapse, this point now pales into insignificance because the reasons have since been furnished. As such, the debate centered round the necessity of declaration of the position of law. In his dissenting judgment in Breen v. Amalgamated Engineering Union (1971) 2 QB 175 (CA), Lord Denning #AR, has observed that (page 191; "The giving of reasons is one of the fundamentals of good administration." . And in Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120, Sir John Donaldson, as President of the National Industrial Relations Court, has expressed that "Failure to give reasons amounts to denial of justice. And Lord Lane, C.J. has observed in Regina v. Immigration Tribunal that: "A party appearing before a Tribunal is entitled to know either expressly stated by the Tribunal or inferentially stated what it is to which the Tribunal is addressing its mind" (underlined by me). Ideally, the answer then should be "yes". It is, thus, stated that respondent No.2 was not right in saying "no" In the result, it is found that the contention has substance. It should then be permitted to prevail. Point is answered as above. As to the ground (b), I find that the prayer is premature because no such objection, in the absence of communication 'of reasons, was raised before the authority. This can be done now. I, therefore, find it inept to express any opinion on the merits of the contention. It is, thus, luculent that the petitioners may, if they so elect, point out irrelevant, irrationality or inadequacy to the authority concerned and may seek termination of the proceedings through detailed reply or contest it four proper verdict on reassessment. Needless to say that the authority shall consider the objections if raised and decide the same in conformity with law. In sum, I do not feel persuaded to quash the notice on this ground in exercise of this extraordinary jurisdiction. It is manifest and undisputed that the remedy is available on the terms of the statute itself. In Shyam Kishor v. Municipal Corporation of Delhi AIR 1992 SC 2279, it is held that (page 2294): .... the resort to Articles 226 and 227 should be discouraged when there is an alternative remedy, a more satisfactory solution is available on the terms of the statute itself." In the light of what is stated above, I am satisfied that there survives no further case or cause for adjudication in this petition. The petition is, therefore, disposed of finally with observations as above but without any orders as to costs. Respondent No.2 may now proceed further in the matter in accordance with law. M.B.A./1928/FC Order accordingly